Opinion

Francis Gates v. Patrick Scott Baker

755 F.3d 568
2014 U.S. App. LEXIS 11811
2014 WL 2757477

Court: Court of Appeals for the Seventh Circuit
Filed: Jun 18, 2014
Status: Published
Author: Hamilton
On the bench: Bauer, Flaum, Hamilton
Nature of suit: civil
Cited by: 11 cases
Authority: More cited than 67.8%

Overruled on other grounds by Jenny Rubin v. Islamic Republic of Iran, 830 F.3d 470 (2016)

stating that Congress intended the 2008 amendments to the FSIA “to make it easier for terrorism victims to obtain judgments and to attach assets”

How later courts described this case

stating that Congress intended the 2008 amendments to the FSIA “to make it easier for terrorism victims to obtain judgments and to attach assets”
affirming district court’s decision to enjoin plaintiffs from pursuing duplicative litigation in another district because “[s]uch duplicative litigation ... wastes judicial and party resources and needlessly muddles proceedings in both districts”
“[The] plaintiffs made this argument for the first time in their motion for reconsideration of the Illinois district court’s turnover order regarding the BCS funds. That was too late to raise a new legal theory that could have been raised earlier in the case. Accordingly the argument is forfeited.”
earlier appeal involving same Syrian assets at issues in these appeals

Written by the judges who cited it.

Later courts went against this

Overruled on other grounds by Jenny Rubin v. Islamic Republic of Iran, 830 F.3d 470 (2016)
” Id.; see also Gates v. Syrian Arab Republic, 755 F.3d 568, 580 (7th Cir. 2014), overruled on other grounds by Rubin v. Islamic Republic of Iran, 830 F.3d 470 (7th Cir. 2016), cert. granted, — U.S. —, 137 S.Ct. 2326, 198 L.Ed.2d 754 (June 27, 2017) (concluding that “[t]he equities ... weighted] decisively in favor” of granting an anti-suit injunction); Asset Allocation & Mgmt.
Court of Appeals for the Seventh CircuitJul 19, 20163 citing opinionsother groundsRead it

The opinion

In the

United States Court of Appeals

For the Seventh Circuit

____________________

Nos. 13-2280 & 14-1452

FRANCIS GATES, et al.,

Plaintiffs-Appellees,

and

AT&T CORPORATION,

Respondent-Appellee,

SYRIAN ARAB REPUBLIC, et al.,

Defendants.

Appeals of:

PATRICK SCOTT BAKER, et al.,

Intervenors-Appellants.

____________________

Appeals from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 11-cv-08715 — Virginia M. Kendall, Judge.

____________________

ARGUED FEBRUARY 19, 2014 — DECIDED JUNE 18, 2014

____________________

2 Nos. 13-2280 & 14-1452

Before BAUER, FLAUM, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge. State-sponsored terrorism is an

exception to the immunity usually available to foreign sov-

ereigns in United States courts. The Foreign Sovereign Im-

munities Act (FSIA) expressly allows civil claims against for-

eign governments and their agencies and instrumentalities

for acts of state-sponsored terrorism. See 28 U.S.C. § 1605A.

The execution of such judgments against assets found in the

United States is governed by 28 U.S.C. § 1610. In these ap-

peals, we interpret § 1610 to resolve a dispute between two

groups of victims of terrorism over the priority of their com-

peting claims to the same assets to execute final judgments

against the Syrian Arab Republic.

The origins of these appeals lie in terrorist violence spon-

sored by Syria. The appellants here are the Baker plaintiffs.

Their claims stem from the 1985 hijacking of EgyptAir flight

648 by terrorists from Abu Nidal, a group supported by the

Syrian government. In a standoff at the airport in Malta, hi-

jackers shot plaintiffs Patrick Scott Baker and Jackie Nink

Pflug in the head. Both survived somehow, but with serious

injuries and permanent disabilities. Scarlett Marie Rogen-

kamp was also shot in the head and died. By the time the hi-

jacking was resolved, 58 of the 95 passengers and crew had

died. The Baker plaintiffs in these appeals are Mr. Baker,

Mrs. Pflug, their family members, and the family of Ms.

Rogenkamp.

The appellees are the Gates plaintiffs. They are the moth-

er and sister of Olin Eugene “Jack” Armstrong and the wid-

ow and daughter of Jack L. Hensley. Mr. Armstrong and Mr.

Hensley were civilian contractors working with the U.S. mil-

itary in Iraq. They were kidnapped in September 2004 by al-

Nos. 13-2280 & 14-1452 3

Qaeda in Iraq, which was also sponsored by the Syrian gov-

ernment. Mr. Armstrong and Mr. Hensley were then mur-

dered. The gruesome murders of both men, who were con-

scious as they were slowly killed, were recorded on video

that was made public by the terrorists.

Under the FSIA, both the Baker plaintiffs and the Gates

plaintiffs have secured nine-figure judgments against the

Syrian Arab Republic. The judgments hold Syria, designated

by the United States government as a state sponsor of terror-

ism, responsible for the brutal acts of terror that gave rise to

the plaintiffs’ suits. Both groups’ judgments against Syria

remain unsatisfied, and both have sought to satisfy them in

part by attaching Syrian assets in the Northern District of

Illinois.

In a series of decisions, the district court in the Northern

District of Illinois held that the Gates plaintiffs’ liens on as-

sets in Illinois are entitled to priority over those of the Baker

plaintiffs. In the two orders we review here, the district court

ordered those holding the assets to turn them over to the

Gates plaintiffs. The Baker plaintiffs, who were intervenors

in the district court, have appealed both final turnover or-

ders. We affirm both orders in favor of the Gates plaintiffs.

We explain in Part I the legal structures and rules for ob-

taining and enforcing judgments under the FSIA in cases of

state-sponsored terrorism. In Part II, we lay out the detailed

procedural background for these appeals. In Part III, we hold

for two independent reasons that 28 U.S.C. § 1610(c) does

not give the Baker plaintiffs priority over the Gates plaintiffs.

In Part IV, we address several remaining issues and hold that

parallel proceedings brought by the Baker plaintiffs in the

4 Nos. 13-2280 & 14-1452

Southern District of New York do not provide any basis for

disturbing the decisions of the Northern District of Illinois.

I. The FSIA and Civil Remedies for State-Sponsored Terrorism

Congress has chosen civil litigation under the FSIA rather

than international diplomacy as the monetary remedy for

U.S. victims of state-sponsored acts of terror. These appeals

stem from the fact that the FSIA does not provide a mecha-

nism for distributing equitably among different victims any

Syrian assets in the United States that are subject to attach-

ment. Instead, victims who finally obtain judgments must

then engage in the costly, burdensome, and often fruitless

task of searching for available assets.

These victims of terror can then find themselves pitted in

a cruel race against each other–a race to attach any available

assets to satisfy the judgments. The terms of the race are es-

sentially winner-take-all rather than any equitable sharing

among victims of similar losses. Under the FSIA’s compensa-

tion scheme, a terrorism judgment against Syria can be satis-

fied only at the expense of other terrorism victims. 1

Lawsuits against foreign states in United States courts

raise special substantive and procedural problems. The cen-

1 Judge Lamberth has presided over numerous terrorism-related FSIA

cases. He has observed that the executive branch of the United States

government frequently opposes FSIA judgment-holders’ attempts to at-

tach foreign assets because it views those assets as providing important

leverage in negotiations with foreign powers. FSIA judgment-holders

thus often find themselves fighting not only each other but also the fed-

eral government. See In re Islamic Republic of Iran Terrorism Litigation, 659

F. Supp. 2d 31, 125–29 (D.D.C. 2009).

Nos. 13-2280 & 14-1452 5

tral substantive problem such suits must confront is foreign

sovereign immunity. The FSIA codifies the general rules with

respect to both immunity from suit and immunity from at-

tachment of assets. See 28 U.S.C. § 1604 (immunity from

suit), § 1609 (immunity from attachment and execution); Ru-

bin v. Islamic Republic of Iran, 637 F.3d 783, 793–94 (7th Cir.

2011). The FSIA also recognizes several exceptions to these

general immunities. See 28 U.S.C. §§ 1605–07 (exceptions to

foreign state immunity from suit), §§ 1610–11 (exceptions to

foreign state property’s immunity from attachment and exe-

cution).

The FSIA adopted a “comprehensive set of legal stand-

ards governing claims of immunity in every civil action

against a foreign state.” Republic of Argentina v. NML Capital,

Ltd., No. 12-842, 573 U.S. ---, --- (2014) (slip op. at 6), quoting

Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 488

(1983). The FSIA is therefore the sole basis for jurisdiction

over a foreign state in a United States court. Rubin, 637 F.3d

at 793–94; In re Islamic Republic of Iran Terrorism Litigation, 659

F. Supp. 2d 31, 38–39 (D.D.C. 2009). Any suit against a state

sponsor of terrorism and any attachment pursuant to a

judgment against a state sponsor of terrorism must fall with-

in the FSIA’s statutory exceptions to foreign sovereign im-

munity.

Among the exceptions, the FSIA allows victims of state-

sponsored terrorism to pursue actions against and to attach

the property of state sponsors of terrorism. Section 1605A

creates an exception to foreign sovereign immunity for suits

seeking money damages for personal injury or death result-

ing from an act of state-sponsored terrorism. Plaintiffs win-

ning judgments against state sponsors of terrorism can then

6 Nos. 13-2280 & 14-1452

use several FSIA exceptions to the attachment and execution

immunity of foreign states’ United States property. See 28

U.S.C. § 1610. These provisions make it possible to sue a

state sponsor of terrorism in a United States court and to at-

tach assets to satisfy judgments against such foreign states.

Suing foreign states in United States courts also raises

procedural issues. In particular, it is difficult to ensure that a

foreign state receives notice of a United States proceeding

against it and has a meaningful opportunity to participate.

The FSIA establishes special service and notice requirements

for suits against foreign states, including notice of default

judgments obtained against them. See 28 U.S.C. § 1608(e).

Section 1610(c) delays attachment and execution to satisfy

most judgments against foreign states until a court deter-

mines that a reasonable period of time has elapsed following

the entry of judgment and (in case of a default judgment)

service of the judgment on the foreign state under § 1608(e).

These provisions work together to ensure that foreign

states receive sufficient notice of United States legal proceed-

ings instituted against them, as well as an opportunity to

participate in those proceedings and an opportunity to re-

spond to a default judgment before attachment of and execu-

tion against the foreign state’s assets in the United States.

The lien priority dispute between the Gates and Baker

plaintiffs presents two principal legal issues under this statu-

tory scheme. The first is whether § 1610(c), which requires a

court’s permission before a judgment-holder begins to attach

a foreign state’s assets in the United States, applies to judg-

ments based on state-sponsored terrorism under §1605A that

are executed pursuant to § 1610(g), which is an exception to

foreign sovereign attachment immunity that applies only to

Nos. 13-2280 & 14-1452 7

execution of judgments for state-sponsored terrorism. The

second question arises if § 1610(c) applies at all here. It is

whether a judgment-holder must obtain a new § 1610(c) or-

der in each district where she seeks to attach assets, or

whether just one such order suffices.

II. Factual and Procedural Background

A. Securing the Judgments

Against this legal backdrop, we turn to the details of the

dispute in these appeals. Syria has been designated a state

sponsor of terrorism since 1979. The Gates plaintiffs and the

Baker plaintiffs both filed suits against Syria in the United

States District Court for the District of Columbia under the

FSIA’s then-current terrorism exception to foreign sovereign

immunity, which was codified at 28 U.S.C. § 1605(a)(7).

While both suits were pending, Congress repealed

§ 1605(a)(7) in January 2008 and replaced it with a new ter-

rorism exception to foreign sovereign immunity, codified at

28 U.S.C. § 1605A. See National Defense Authorization Act

for Fiscal Year 2008, Pub. L. No. 110-181, § 1083, 122 Stat. 3,

338–44 (2008).

Both cases then proceeded under § 1605A, and both

groups of plaintiffs eventually prevailed. The D.C. District

Court entered a judgment for $413 million for the Gates

plaintiffs, while the Baker plaintiffs obtained a judgment for

$602 million. See Gates v. Syrian Arab Republic, 580 F. Supp.

2d 53 (D.D.C. 2008); Baker v. Socialist People’s Libyan Arab

8 Nos. 13-2280 & 14-1452

Jamahirya, 775 F. Supp. 2d 48 (D.D.C. 2011). Both judgments

are final. 2

B. The Race for Syrian Assets

The District Court for the District of Columbia issued an

order pursuant to 28 U.S.C. § 1610(c) for the Gates plaintiffs

on August 23, 2011, finding that “a reasonable period of time

has elapsed from the entry of final judgment and notice to

Syria thereof to the date of entry of this Order for attachment

and execution to proceed, and accordingly, Plaintiffs are

hereby authorized to enforce this Court’s judgment.” The

District of Columbia court issued a similar order for the

Baker plaintiffs on September 1, 2011.

The Gates plaintiffs and the Baker plaintiffs each sub-

poenaed the U.S. Department of Treasury Office of Foreign

Assets Control to obtain information about any Syrian assets

in the United States that could be attached to satisfy their

judgments. The Office responded pursuant to a protective

order and told both groups that some Syrian assets were lo-

cated in the Northern District of Illinois. Both groups of

plaintiffs rushed to register their judgments there and to at-

tach the funds pursuant to 28 U.S.C. § 1610(g). That’s a spe-

cial provision allowing attachment of assets in the United

States belonging to foreign states and their agencies and in-

strumentalities to execute judgments based on acts of state-

sponsored terrorism.

Section 1610(c) applies to “attachment or execution re-

ferred to in subsections (a) and (b) of this section.” Subsec-

tions (a) and (b) establish a number of specific exceptions to

foreign sovereign immunity from attachment or execution.

Those exceptions apply based upon a variety of factors, in-

cluding the type of property, the use of the property, wheth-

er it was related to the lawsuit in question, and in some cases

the type of lawsuit.

The Gates plaintiffs are not seeking attachment under

§ 1610(a) or (b). They seek attachment under § 1610(g),

which authorizes attachment of property of foreign state

sponsors of terrorism and their agencies or instrumentalities

Nos. 13-2280 & 14-1452 13

to execute judgments under § 1605A for state-sponsored ter-

rorism. Section 1610(g) is not mentioned in § 1610(c). By its

terms, then, § 1610(c) simply does not apply to execution or

attachment under § 1610(g). That conclusion is also con-

sistent with the more general tools of statutory interpretation

and the structure of the FSIA.

The decision to include references to § 1610(a) and

§ 1610(b) while not including a reference to § 1610(g) is a

strong indication that § 1610(c)’s requirement applies only to

attachments under § 1610(a) and (b), and not to attachments

under § 1610(g). See Walters v. Industrial and Commercial Bank

of China, Ltd., 651 F.3d 280, 297 (2d Cir. 2011) (“Through this

explicit cross-reference to § 1610(a) and (b), § 1610(c) clearly

signals that execution depends on a judicial determination

that the property at issue falls within one of the exceptions to

immunity set forth in those subsections.”).

Section 1610(g) was added to the FSIA as part of the 2008

FSIA Amendments. The other 2008 FSIA Amendments un-

dermine any suggestion that Congress’ omission of a refer-

ence to § 1610(g) in § 1610(c) might have been an oversight

that courts should “correct” by interpretation. Congress re-

placed the then-existing terrorism exception to immunity

from suit, then codified at 28 U.S.C. § 1605(a)(7), with a

broader terrorism exception now codified at 28 U.S.C.

§ 1605A. See In re Islamic Republic of Iran Terrorism Litigation,

659 F. Supp. 2d at 58–59.

Congress also made several changes to the FSIA’s at-

tachment provisions to facilitate satisfaction of judgments

obtained under § 1605A. Id. at 61–62. Congress amended the

FSIA’s existing attachment provisions, codified at § 1610(a),

(b), and (f), to make them available to holders of state-

14 Nos. 13-2280 & 14-1452

sponsored-terrorism judgments under § 1605A. See 28 U.S.C.

§ 1610(a)(7), 1610(b)(3), 1610(f)(1)–(2). Congress also added

§ 1610(g), a new, powerful attachment provision available

only to victims of state-sponsored terrorism who hold judg-

ments under § 1605A. See 28 U.S.C. § 1610(g)(1) (allowing

attachment of property of a foreign state “against which a

judgment is entered under section 1605A”). 4

Despite having amended § 1610(a), (b) and (f) to add ref-

erences to § 1605A, Congress did not amend § 1610(c) to add

a reference to § 1610(g). Surrounded by other references,

Congress’ silence is a strong textual indication that § 1610(c)

does not apply to efforts to enforce judgments under § 1605A

through § 1610(g).

Faced with § 1610(c)’s lack of a reference to § 1610(g), the

Baker plaintiffs essentially argue that § 1610(a) and (b), both

of which are referenced in § 1610(c), are so similar to

§ 1610(g) that we should extend the scope of § 1610(c) to at-

tachments under § 1610(g). We are not convinced. Section

1610(g) differs substantially from § 1610(a) and (b). Both

§ 1610(a) and (b) are available to all holders of FSIA judg-

ments, not just to victims of state-sponsored terror. Sections

1610(a) and (b) are available to satisfy a wide variety of

judgments, but they allow attachment of only specific cate-

gories of assets to satisfy those judgments. See, e.g., § 1610(a)

(allowing attachment of foreign state property located in the

United States and used for commercial activity there);

4 Section 1610(g) is unavailable even to holders of judgments pursuant to

the now-repealed § 1605(a)(7), unlike the terrorism-specific portions of

§ 1610(a) and § 1610(b), which remain available to judgment-holders un-

der both provisions. See § 1610(a)(7) and (b)(3).

Nos. 13-2280 & 14-1452 15

§ 1610(b) (allowing attachment of property of foreign state

agency or instrumentality engaged in United States com-

mercial activity).

By contrast, § 1610(g) is available only to holders of

judgments under the § 1605A exception for state-sponsored

terrorism, but it allows attachment of a much broader range

of assets to satisfy those judgments. Specifically, § 1610(g)

allows attachment of the property of a foreign state but also

property of an agency or instrumentality “that is a separate

juridical entity or is an interest held directly or indirectly in a

separate juridical entity.” Attachment is allowed “regardless

of” whether the foreign state exercises economic control over

the property, receives the profits of the property, manages

the property, controls its daily affairs, or is the sole benefi-

ciary in interest of the property. § 1610(g)(1).

This language was intended to avoid limits the Supreme

Court had imposed on the ability of litigants to attach the

assets of foreign state agencies and instrumentalities under

§ 1610(b). The Court had held that U.S. courts should ordi-

narily respect the separate juridical identities of such agen-

cies and instrumentalities, with narrow exceptions. See First

National City Bank v. Banco Para el Comercio Exterior de Cuba,

462 U.S. 611, 626–27 (1983) (cannot attach property of sepa-

rate juridical entity unless entity is exclusively controlled by

foreign state or recognizing separate status of entity and

state would work fraud or injustice). Section 1610(g) pro-

vides that in cases of state-sponsored terrorism, assets of the

defendant’s agencies and instrumentalities are subject to at-

tachment and execution regardless of factors that would or-

dinarily insulate such assets in other contexts governed by

§ 1610(a) and (b).

16 Nos. 13-2280 & 14-1452

Finally, our interpretation of § 1610(c) is consistent with

the broader legislative purpose of the 2008 FSIA Amend-

ments to make it easier for terrorism victims to obtain judg-

ments and to attach assets. See In re Islamic Republic of Iran

Terrorism Litigation, 659 F.Supp.2d at 58–63 (D.D.C. 2009) (de-

tailed discussion of 2008 Amendments). Exempting attach-

ments under § 1610(g), that is, attachments stemming from

terrorism-related judgments, from § 1610(c)’s solicitous no-

tice requirements is entirely consistent with the liberalizing

purpose of the 2008 Amendments.

B. One § 1610(c) Order Per Judgment is Enough

Even if § 1610(c) applied to attachment efforts under

§ 1610(g), the Gates plaintiffs complied with § 1610(c) in the

District of Columbia before they sought attachment of the

Syrian assets in the Northern District of Illinois. Sec-

tion 1610(c) requires “the court” to determine “that a reason-

able period of time has elapsed following the entry of judg-

ment and the giving of any notice required under section

1608(e) of this chapter.”

Where such a determination is required, one suffices for

attachment efforts throughout the United States. There is no

reason for later courts to revisit an earlier determination that

sufficient time has passed to allow attachment. Time’s arrow

always moves in the same direction. As the district court ex-

plained here, the amount of time between the entry of judg-

ment and the attempt to attach property will only grow, so

the passage of time between the first and later attachment

attempts can only strengthen the case for a § 1610(c) order,

not weaken it. In fact, requiring later courts to revisit the is-

Nos. 13-2280 & 14-1452 17

sue would waste judicial resources and create the possibility

of inconsistent rulings. See Agudas Chasidei Chabad of United

States v. Russian Federation, 798 F. Supp. 2d 260, 270–71

(D.D.C. 2011) (“The purpose of obtaining an order finding

compliance with § 1610(c), then, is to permit a FSIA plaintiff

to establish that one of the prerequisites is satisfied so that

the plaintiff may pursue specific attachments without worry

over any lingering § 1610(c) requirements.”).

The Baker plaintiffs rely on Levin v. Bank of New York,

2011 WL 812032 (S.D.N.Y. March 4, 2011), to support a con-

trary result. Among the various plaintiffs in Levin, two

groups are relevant to this issue. The Levins obtained a

judgment against Iran under § 1605(a)(7) and sought at-

tachment to satisfy that judgment in the Southern District of

New York. The Heisers, who also held a judgment against

Iran, challenged the Levins’ priority lien on Iranian assets in

New York. The court held that the Levins could not attach

the Iranian funds because they had not obtained any

§ 1610(c) order from any court before seeking attachment of

assets in the Southern District of New York, as required to

attach property to satisfy a judgment under § 1605(a)(7). Id.

at *11. The court then held that the Heisers were similarly

unable to attach the assets because they had served their

garnishment writs on the New York banks in Maryland,

when they should have served them in New York. Id. at *12.

Both situations differed markedly from this case. First

and foremost, since the Levins had obtained their judgment

under § 1605(a)(7), not § 1605A, they were not pursuing at-

tachment under § 1610(g), which is available only to holders

of judgments under § 1605A. See Levin, 2011 WL 812032, at

*8. Second, the Levins had failed to obtain any § 1610(c) or-

18 Nos. 13-2280 & 14-1452

der at all before pursuing attachment in the Southern Dis-

trict of New York. Id. The question before the Southern Dis-

trict of New York, therefore, was whether plaintiffs need to

obtain a § 1610(c) order in any court before pursuing attach-

ment under § 1610(a) or (b). Under the plain text of § 1610(c),

the answer was yes, of course, but the questions we decide

are different and are governed by different statutory lan-

guage.

The Heisers’ situation also is not similar to this case. The

problem with the Heisers’ lien was not any issue with their

§ 1610(c) order but a venue issue. They served New York

banks in Maryland, which was held improper under New

York attachment law. Id. at *11. The court said nothing about

the Heisers’ § 1610(c) order beyond noting that they had ob-

tained one.

The Gates plaintiffs obtained a determination from the

D.C. District Court that sufficient time had passed following

the entry of their judgment for attachment to proceed. They

were not required to seek a duplicative determination of the

same question by the Northern District of Illinois before at-

taching the Syrian assets. For two independent reasons, then,

§ 1610(c) does not bar the priority of the Gates plaintiffs’

liens on the Syrian assets in the Northern District of Illinois

ahead of the Baker plaintiffs’ liens.

IV. The New York Proceedings and Related Issues

The Gates plaintiffs attached the Syrian assets in the

Northern District of Illinois before the Baker plaintiffs did,

and as noted above, under Illinois law, the parties first in

time are treated as first in right. We turn now to several re-

Nos. 13-2280 & 14-1452 19

maining issues, including whether proceedings filed by the

Baker plaintiffs in the Southern District of New York affect

the priority of the Gates plaintiffs’ liens on the Syrian assets.

A. The Baker Plaintiffs’ New York Writs of Execution

After the Gates plaintiffs had registered their judgment

in the Northern District of Illinois and served citations to

discover assets, the Baker plaintiffs filed separate, parallel

proceedings in the Southern District of New York. United

States Marshals served JP Morgan Chase Bank in New York

with two New York writs of execution: one on February 23,

2012, and the other on November 9, 2012.

The Baker plaintiffs claim that these writs of execution

perfected a lien under New York law over the Banque Cen-

trale de Syrie (BCS) funds in the hands of JP Morgan Chase

Bank. The Baker plaintiffs also claim that the Gates plaintiffs’

citations were not enough to perfect liens over the Syrian

funds under Illinois law and that liens are not perfected un-

der Illinois law until entry of a turnover order. If that were

correct, the Gates plaintiffs would not have perfected a lien

on the BCS funds until the district court entered a turnover

order regarding those funds on November 15, 2013, after the

Baker plaintiffs claim they perfected a lien on the BCS funds

under New York law.

We disagree. For starters, the Baker plaintiffs made this

argument for the first time in their motion for reconsidera-

tion of the Illinois district court’s turnover order regarding

the BCS funds. That was too late to raise a new legal theory

that could have been raised earlier in the case. Russell v.

Delco Remy Division of General Motors Corp., 51 F.3d 746, 749

20 Nos. 13-2280 & 14-1452

(7th Cir. 1995) (motions for reconsideration “may not be

used to raise novel legal theories that a party had the ability

to address in the first instance”). Accordingly, the argument

is forfeited.

In any event, on the merits the Baker plaintiffs are wrong

about Illinois law. Service of a citation to discover assets both

creates and perfects a lien under Illinois law at the time of

service. 735 ILCS 5/2-1402(m) (“The judgment or balance due

on the judgment becomes a lien when a citation is served”);

TM Ryan Co. v. 5350 South Shore, L.L.C., 836 N.E.2d 803, 808–

09 (Ill. App. 2005) (a lien is “perfected at the time of ser-

vice”); Cacok v. Covington, 111 F.3d 52, 54 (7th Cir. 1997)

(“under 735 ILCS 5/2-1402(m) … [t]he lien is considered per-

fected as of the date of service of the citation”). The lien ap-

plies to the judgment debtor’s assets in possession of the ci-

tation respondent. In re Swartz, 18 F.3d 413, 416–17 (7th Cir.

1994). Under Illinois law, therefore, the Gates plaintiffs per-

fected a lien over the BCS funds held by JP Morgan Chase

Bank when they served the bank with a citation to discover

assets on December 8, 2011, well before the Baker plaintiffs

served the bank with their New York writs of execution in

2012. The Gates plaintiffs hold a priority lien over the BCS

funds held by JP Morgan Chase Bank. Kuipers, 732 N.E.2d at

726. 5

5 To the extent that the Baker plaintiffs argue that New York law should

determine lien priority, the result would be the same. See New York v.

Panzirer, 23 A.D.2d 158, 160 (N.Y. App. Div. 1965) (New York law fol-

lows first-in-time, first-in-right rule to determine priority of liens).

Nos. 13-2280 & 14-1452 21

B. The Baker Plaintiffs’ Request for Dismissal

Next, the Baker plaintiffs ask us to dismiss this case alto-

gether in favor of their proceedings in the Southern District

of New York. They argue that the Syrian assets held by

AT&T are actually located in New York rather than Illinois.

Because the Baker plaintiffs have already commenced ac-

tions in the Southern District of New York to attach the Syri-

an assets, dismissal of the Gates plaintiffs’ Illinois case

would place the Baker plaintiffs ahead of the Gates plaintiffs.

We see utterly no reason to dismiss this case. It is undis-

puted that the Northern District of Illinois has personal ju-

risdiction over all the parties, including AT&T and JP Mor-

gan Chase Bank. It is also undisputed that the Northern Dis-

trict of Illinois can attach the funds even if they are located in

New York. Under Illinois law, a court can attach a party’s

intangible assets as long as it has jurisdiction over the party,

even if the assets are located outside the judicial district. In

other words, jurisdiction does not depend on the location of

the debtor’s intangible assets. Park v. Townson & Alexander

Inc., 679 N.E.2d 107, 109 (Ill. App. 1997). The Northern Dis-

trict of Illinois therefore had jurisdiction to decide the par-

ties’ dispute and to attach the Syrian assets.

Parallel proceedings in separate federal courts should

ordinarily prompt judicial action to avoid duplicative efforts.

See Colorado River Water Conservation Dist. v. United States,

424 U.S. 800, 817 (1976) (general rule to avoid duplicative lit-

igation in federal courts); Kerotest Manufacturing Co. v. C-O-

Two Fire Equipment Co., 342 U.S. 180, 183–84 (1952); Crowley

Cutlery Co. v. United States, 849 F.2d 273, 279 (7th Cir. 1988)

(dismissing later-filed duplicative case); Martin v. Graybar

Electric Co., 266 F.2d 202, 203 (7th Cir. 1959) (reversing denial

22 Nos. 13-2280 & 14-1452

of injunction against duplicative case); 6 Wright & Miller,

Federal Practice & Procedure § 1418.

Here the district court chose not to dismiss the earlier-

filed Gates action but instead enjoined the Baker plaintiffs

from pursuing their duplicative action in New York. The dis-

trict court weighed the relevant considerations and did not

abuse its discretion in doing so. The Northern District of Illi-

nois obtained jurisdiction over the parties and the Syrian

funds before the Southern District of New York did, and

there is no claim that the Northern District of Illinois is an

inconvenient forum. Deferring to the later-filed case would

encourage piecemeal litigation rather than avoid it. It would

be a mistake to reward the Baker plaintiffs’ attempt to trump

priority in the Northern District of Illinois by filing a later,

duplicative action in another district seeking to attach the

same assets. The equities thus weigh decisively in favor of

the Illinois court retaining jurisdiction.

We are mindful of the fact that the Baker plaintiffs, like

the Gates plaintiffs, are the victims of horrific terrorist acts

for which Syria is responsible. We also understand that the

current statutory scheme pushes the holders of judgments

based on state-sponsored terrorism to pursue all possible

avenues to secure even partial justice. Such duplicative liti-

gation, however, wastes judicial and party resources and

needlessly muddles proceedings in both districts.

C. The Gates Plaintiffs’ Motion to Dismiss Appeals

Finally, showing that neither side has a monopoly on

slick procedural maneuvers, after we held oral argument the

Gates plaintiffs filed a motion to dismiss or for summary af-

firmance. The motion argues that the Baker plaintiffs made a

Nos. 13-2280 & 14-1452 23

decisive procedural error by failing to file a separate notice

of appeal in the interpleader action filed by JP Morgan Chase

Bank. In the district court, Judge Kendall wrote one order

dated February 3, 2014, and docketed it in both the Gates

plaintiffs’ attachment suit and the interpleader action.

The Gates plaintiffs contend that the order was in effect a

double judgment and that the Baker plaintiffs, by appealing

only in the Gates plaintiffs’ attachment proceeding, allowed

the identical order to become final in the interpleader case.

As the Gates plaintiffs see things, when the time to appeal

ran out in the interpleader action, the same order that is on

appeal here in No. 14-1452 became a final judgment in the

interpleader action that is entitled to res judicata or collateral

estoppel effect, meaning that we should either summarily

dismiss these appeals or affirm on that basis.

We have no doubt that such a result would stun Judge

Kendall, who carefully framed her order of February 3, 2014

to resolve the interpleader action while also avoiding any

interference with the then-pending appeal to this court in

No. 13-2280. The February 3, 2014 order resolved the inter-

pleader action by ordering JP Morgan Chase Bank to deposit

the BCS funds in question into the district court’s registry

pursuant to Federal Rule of Civil Procedure 67, to be held

there during the pendency of these appeals for later distribu-

tion by order of the district court.

Under these circumstances, we agree with the Baker

plaintiffs that there was no need for them to have filed a sec-

ond notice of appeal. Both res judicata and collateral estop-

pel are rooted in equity. Blonder-Tongue Laboratories, Inc. v.

University of Illinois Foundation, 402 U.S. 313, 333–34 (1971)

(“no one set of facts, no one collection of words or phrases,

24 Nos. 13-2280 & 14-1452

will provide an automatic formula for proper rulings on es-

toppel pleas. In the end, decision will necessarily rest on the

trial courts’ sense of justice and equity.”); see also Commis-

sioner of Internal Revenue v. Sunnen, 333 U.S. 591, 597 (1948).

In light of the district court’s careful efforts to limit the ef-

fects of its order, it would not be equitable to resolve these

appeals by applying either doctrine.

Conclusion

The Gates plaintiffs have complied with the requirements

of the FSIA and have established a priority lien on the Syrian

funds at issue in these appeals. Under the winner-take-all

system established by the applicable legislation and legal

principles, we AFFIRM both of the district court’s orders to

have Syrian assets turned over to the Gates plaintiffs.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.