Case of the Day: Levinson v. Kuwait Finance House

The case of the day is Levinson v. Kuwait Finance House (Malaysia) Berhad (2d Cir. 2022). Robert Levinson, a former FBI agent, was, according to the FBI, taken hostage by the government of Iran and tortured. He is presumed dead. His wife Christine, on her own behalf and as conservator of his estate, obtained a default judgment against Iran for $1.5 billion under the FSIA’s provisions on state sponsors of terrorism. She brought a turnover proceeding under New York law against Citibank. Citibank held assets of KFH, a bank that, she alleged, was an agency or instrumentality of Iran. She also sought, ex parte, a writ of execution, seeking to seize the assets in the Citibank account.

The court granted the motion for an execution, and the marshal served the writ on Citibank. This resulted in a freeze of KFH’s account, which had assets of $1.457 billion. KFH moved to intervene and vacate the execution. Among other things, it argued that the court had not made a finding that KFH was an agency or instrumentality of Iran.

The judge granted the motion to intervene but denied the motion to vacate as premature because of disputes of fact, noting that discovery would be necessary. KFH appealed.

The first question was appellate jurisdiction. Levinson moved to dismiss the appeal on the grounds that the order granting the motion for execution was not a final order, especially given the court’s view that discovery would be necessary to resolve the issue whether the KFH was an Iranian agency or instrumentality. But the court rejected this argument, reasoning that a grant of a writ of execution–a command to the marshal to levy and collect the assets, usually issued at the end of a lawsuit–is by its nature a final order. The court pointed to precedent on the point, which seems pretty logical. I do wonder, though, whether on the facts of this case, the execution functioned more like a writ of attachment. After all, the marshal didn’t actually collect the money from Citibank, as maybe he should have done. The case is under seal on PACER, so I can’t read what the parties wrote about this point. The court addressed the issue of attachment at the end of the opinion, as we’ll see.

On the merits, the key statute was § 201(a) of the Terrorism Risk Insurance Act, which provides:

Notwithstanding any other provision of law . . . in every case in which a person has obtained a judgment against a terrorist party on a claim based upon an act of terrorism . . . the blocked assets of that terrorist party (including the blocked assets of any agency or instrumentality of that terrorist party) shall be subject to execution or attachment in aid of execution in order to satisfy such judgment to the extent of any compensatory damages for which such terrorist party has been adjudged liable.

The court held that in a turnover action against a third party, the statute required a finding that the third party is an agency or instrumentality of the foreign state before an execution could issue. This seems obviously right. As the court said, “before ordering assets to be seized under TRIA, a district court must make findings as to whether TRIA indeed permits those assets to be seized.”

At the end of the decision, the court makes a point of saying that even if the execution was improper, Levinson could seek a writ of attachment. I don’t really understand this. The TRIA makes foreign sovereign property in the hands of a third person subject to execution or attachment. Why would the TRIA apply to allow an attachment without the same showing the court required before an execution could issue?

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