Hegna v. Islamic Republic of Iran

United States Court of Appeals

Fifth Circuit

F I L E D

July 19, 2004

In the

Charles R. Fulbruge III

United States Court of Appeals Clerk

for the Fifth Circuit

_______________

m 03-10994

m 03-20984

_______________

EDWENA HEGNA; INDIVIDUALLY AND AS EXECUTRIX OF

THE ESTATE OF CHARLES HEGNA; CRAIG HEGNA; STEVEN HEGNA;

LYNN HEGNA; PAUL HEGNA,

Plaintiffs-Appellants,

VERSUS

ISLAMIC REPUBLIC OF IRAN;

IRANIAN MINISTRY OF INFORMATION AND SECURITY,

Defendants-Appellees,

UNITED STATES OF AMERICA

Movant-Appellee.

_________________________

Appeals from the United States District Court

for the Northern District of Texas

and the United States District Court

for the Southern District of Texas

_________________________

Before SMITH, PRADO, AND PICKERING, The Victims of Trafficking and Violence

Circuit Judges. Protection Act of 2000 (“VTVPA”), Pub. L.

No. 106-386, § 2002, 114 Stat. 1464, 1541

JERRY E. SMITH, Circuit Judge: (2000), created a regime whereby a party who

secured a judgment under § 1605(a)(7) could

Charles Hegna died at the hands of receive payment from the Secretary of the

terrorists who received partial support from Treasury. In exchange for that payment, the

the Islamic Republic of Iran. Members of the recipient would relinquish certain rights to col-

Hegna family have attempted to collect a lect against the terrorist state.3

default judgment against property previously

owned by Iran and currently held by the Unit- The Terrorism Risk Insurance Act

ed States. Based on domestic statutes and (“TRIA”), Pub. L. No. 107-297, § 201(a), 116

international treaties, the two district courts a Stat. 2322 (2002), provided additional rights

quo quashed writs of attachment and to parties possessing judgments under § 1605-

execution issued respectively against two (a)(7). TRIA states that a successful plaintiff

parcels of real property. Finding no error, we may attach and execute against the “blocked

affirm both judgments. assets”4 of terrorist parties.5

I. Additionally, TRIA § 201(c)(4) amends the

A. VTVPA by inserting a section describing the

The Federal Sovereign Immunities Act procedures the government must follow in the

(“FSIA”) articulates the general rule that “a event available funds cannot satisfy all the

foreign state shall be immune from the outstanding requests for payment for § 1605-

jurisdiction of the courts of the United States (a)(7) claims. Although those receiving partial

and of the States.” 28 U.S.C. § 1604. As part payments do not have to relinquish as many

of the 1996 Antiterrorism and Effective Death

Penalty Act (“AEDPA”), Congress created an

exception for state-sponsored terrorist actions. 3

Additionally, VTVPA § 2002(b)(2) lists the

28 U.S.C. § 1605(a)(7).1 To be subject to sources of funding for payments arising out of

§ 1605(a)(7), a nation must be designated as a judgments against Iran: “rental proceeds . . . from

state sponsor of terrorism. § 1605(a)(7)(A).2 Iranian diplomatic and consular property located in

the United States; and . . . funds not otherwise

made available in an amount not to exceed the total

of the amount in the Iran Foreign Military Sales

1

“A foreign state shall not be immune . . . in Program account within the Foreign Military Sales

any case . . . in which money damages are sought Fund[.]”

against a foreign state for personal injury or death

4

that was caused by an act of torture, extrajudicial TRIA § 201(d)(2) defines “blocked asset.”

killing, aircraft sabotage, hostage taking, or the

5

provision of material support or resources” in aid “[I]n every case in which a person has ob-

of a terrorist action. 28 U.S.C. § 1605(a)(7). tained a judgment against a terrorist party on a

claim based upon an act of terrorism[,] the blocked

2

The Secretary of State has designated Iran as assets of that terrorist party . . . shall be subject to

a state sponsor of terrorism. 49 Fed. Reg. 2836-02 execution or attachment in aid of execution in order

(Jan. 23, 1984). to satisfy such judgment . . . .” TRIA § 201(a).

2

rights as they would have forfeited had they judgment for $42,000,000 in compensatory

received full payment via the VTVPA, the damages and $333,000,000 in punitive

recipients must give up some recovery rights. damages against the Islamic Republic of Iran

VTVPA § 2002(a)(2)(C) requires the and the Iranian Ministry of Information and

relinquishment of punitive damages against a Security.7

terrorist entity, and § 2002(a)(2)(D) prevents

parties from executing or attaching property Relying upon TRIA § 201(a), the Hegnas

“that is[, inter alia,] at issue in claims against have attempted to attach and execute against

the United States before an international numerous properties that Iran owned at the

tribunal[.]” time of the 1979 hostage crisis.8 Specifically,

Thus, in response to a family member’s

death, a party may seek a judgment against a 6

(...continued)

state sponsor of terrorism. The party may sat- action against officials, employees, and

isfy such a judgment by seeking and receiving agents of a foreign state, not against the

payment under the VTVPA and by attaching foreign state itself.

and enforcing against “blocked assets”

pursuant to the TRIA. Id. at 1033.

B. Although Acree and Cipio considered statutes

In 1984, Hezbollah terrorists hijacked a Ku- at issue in the current appeal, they involved

waiti airliner and diverted it to Tehran, fatally different circumstances and issues. Both cases

shooting Charles Hegna in the process. In considered the validity of the underlying judgment.

2001, the Hegna family sought and obtained, In the instant matter, neither party contests the

validity of the Hegna family’s original judgment.

pursuant to 28 U.S.C. § 1605(a)(7),6 a default

Because neither side has briefed the issue or had an

opportunity to argue the point diligently, we choose

only to address the family’s ability to satisfy its

6

Few courts of appeals have considered the judgment against these two particular pieces of

application of § 1605(a)(7). But see Acree v. Re- property. If the United States wishes to argue the

public of Iraq, 2004 U.S. App. LEXIS 10972 reach of § 1605(a)(7), it may do so in a subsequent

(D.C. Cir. June 4, 2004) (vacating a § 1605(a)(7) case.

award for failing to state a claim); Cicippio-Puleo

v. Islamic Republic of Iran, 353 F.3d 1024 (D.C. 7

Hegna v. Islamic Republic of Iran, No.

Cir. 2004). Cicippio-Puleo held: 1:00CV00716 (D.D.C. Feb. 7, 2002).

8

[N]either 28 U.S.C. § 1605(a)(7) nor the In the midst of the Iranian revolution of 1979,

Flatow Amendment[, which granted punitive numerous “students” aligned with Ayatollah Koh-

damages pursuant to § 1605(a)(7)], nor the meini took Americans hostage in the American

two considered in tandem, creates a private Embassy. The President froze all property and

right of action against a foreign government. assets of the government of Iran that fell within or

Section 1605(a)(7) merely waives the would fall within the jurisdiction of the United

immunity of a foreign state without creating States. Exec. Order No. 12170, 44 Fed. Reg.

a cause of action against it, and the Flatow 65729 (Nov. 14, 1979). The United States ulti-

Amendment only provides a private right of mately severed diplomatic and consular relations

(continued...) (continued...)

3

they have pursued properties in New York,9 Although the two countries promised, as

Illinois,10 Maryland,11 and Texas. Additionally, part of the Algiers Accords,13 to exchange

they filed for a payment pursuant to the seized consular property, each has retained

VTVPA.12 previously-seized property. Consequently, the

United States acts as a custodian of the

property that the Hegnas have attempted to

8

(...continued) attach, and, in every case, has moved to

with Iran. The hostage crisis ended with the sign- invalidate the family’s actions.

ing of the Algiers Accords in January 1981.

9

In the instant matter, the family attached

Hegna v. Islamic Republic of Iran, 299 F. two pieces of Iranian property located in Tex-

Supp. 2d 229 (S.D.N.Y. 2004). The district court as. One, located in Lubbock, served as a

denied the application for attachment based on the

home from which the then-Crown Prince of

conclusion that the Hegnas had relinquished the

Iran could receive fighter pilot training.14 The

right to attach the New York property after ac-

cepting payment via the VTVPA. property located in Houston previously served

as the residence of the General Consul of

10

Hegna v. Islamic Republic of Iran, 2003

U.S. Dist. LEXIS 14039 (N.D. Ill. Aug. 11, 2003).

The magistrate judge recommended denying the

United States’ motion to quash the family’s writ of

attachment. The Illinois proceedings occurred after

12

the Hegnas had applied for payment pursuant to (...continued)

VTVPA but before payment from the government. fulness. The notice, however, contains ample lang-

Because the Hegnas sought to rescind their ap- uage to indicate that a party may file for a VTVPA

plication for payment, the magistrate judge rec- payment and does not indicate that a plaintiff may

ommended staying further proceedings until the pursue relief only through the VTVPA.

resolution of the VTVPA payment issue. As dis-

13

cussed, infra, the Hegnas received payments in In part, the Accords established the Iran-Unit-

July and November 2003. ed States Claims Tribunal, a nine-member

commission charged with resolving “claims of

11

Hegna v. Islamic Republic of Iran, 287 F. United States nationals against Iran and of Iranian

Supp. 2d 608 (D. Md. 2003). The district court nationals against the United States[;] certain ‘offi-

granted the United States’ motion to quash the fam- cial claims’ between the two Governments relating

ily’s writ after concluding that the property at issue to the purchase and sale of goods and services;

fell outside TRIA’s definition of “blocked asset.” disputes between the two Governments concerning

the interpretation or performance of the Algiers

12

The Hegnas argue that the Department of the Declarations; and certain claims between United

Treasury issued guidelines that ordered plaintiffs States and Iranian banking institutions.” Iran-

such as themselves to apply for the VTVPA funds. United States Claims Tribunal Background

Because the language of the VTVPA states that the Information, available at http://www.iusct.org/-

payment regime initiates only “at the person’s background-english.html (accessed June 18, 2004).

election,” the family’s argument warrants slightly

more discussion. VTVPA, § 2002(a)(1).

14

We agree that the Treasury Guideline does not The Crown Prince received training at Lub-

stand as a model of clarity, directness, or help- bock’s Reese Air Force Base, which was closed in

(continued...) 1997.

4

Iran.15 writ. The respective cases, however, present

distinct questions of law. With respect to the

With respect to the Lubbock property, the Houston property, we must determine whether

district court granted a writ of attachment and the property fits within the “blocked asset”

a motion for expedited levy of a writ of exclusion in TRIA § 201(d)(2)(B)(ii). With

execution16 and scheduled the sale of the respect to the Lubbock property, we must de-

property for August 26, 2003. The United cide exactly how a partial payment pursuant to

States provided an initial VTVPA payment to VTVPA and TRIA affects a party’s ability to

the Hegnas on July 30, 2003, and filed an collect against non-consular property. We re-

emergency motion to void the sale on August view the district court’s legal analyses de no-

22, 2003. Without providing a written vo. Kennedy v. Tangipahoa Parish Library

analysis, the district court granted the motion Bd. of Control, 224 F.3d 359, 365 (5th Cir.

to void the levy and the sale on August 25, 2000).

2003.

III.

With respect to the Houston property, the By requesting and receiving partial payment

district court issued a writ of execution on No- according to the terms of the VTVPA, the

vember 27, 2002. After the United States Hegnas relinquished the ability to enforce

moved to quash the writ, the district court re- against the Lubbock property. The parties do

ferred the matter to a m agistrate judge, who, not disagree that the Hegnas applied for

on August 21, 2003, concluded that the payment from the Secretary of the Treasury,

property fell within an exclusion to the pursuant to VTVPA § 2002(a)(1),17 and that

“blocked asset ” definition in TRIA § 201(d)- they received a partial payment before the sale

(2)(B)(ii) and recommended that the district of the Lubbock property.

court quash the writ. The district court adopt-

ed the recommendations without amendment. The Hegnas challenge the order to quash on

The Hegnas appeal the district courts’ failure three grounds. First, they maintain that the

to enforce the original writs of attachment and partial payment received on July 30 does not

execution. trigger the relinquishment provisions of the

amended VTVPA. Second, they assert that

II. any relinquishment may occur only

In each case, the district court granted a prospectively and cannot apply to property

dispositive motion by terminating the relevant already attached and set for sale. Third, they

claim that any possible relinquishment does not

apply to the Lubbock property, because such

15

property is not “at issue” before an

Although the two properties are the subjects

of two separate actions and are located in different

federal judicial districts, we consolidated the

matters for argument and disposition. The cases

present similar questions regarding the same set of

17

statutes. Because the Secretary of the Treasury could

not make a full payment and gave the family only

16

The United States unsuccessfully opposed the a partial payment, the amended portions of

Hegna family’s motion. VTVPA § 2002(d)(5)(A) and (d)(5)(B), apply.

5

international tribunal.18 To affirm the quashing fore an international tribunal or that is the

of the writ of execution, we must agree with subject of awards by such tribunal.

the district court on all three matters.19

The phrase “such person” refers to the in-

A. dividual “receiving less than the full amount of

The Hegnas’ acceptance of a partial compensatory damages.” No other person is

payment triggered the relinquishment referred to in that subsection. Thus, a party

provisions of the VTVPA. Amended VTVPA receiving partial payment does not have to re-

§ 2002(d)(5) states that linquish his rights to compensatory damages

but must give up those rights listed in the two

[a]ny perso n receiving less than the full subsections. Subsection (a)(2)(C) concerns

amount of compensatory damages awarded punitive damages, and subsection (a)(2)(D)

to that party in a judgment . . . shall not be addresses recovery against the “at issue”

required to make the [relinquishment set properties.

forth in previous sections,] except that such

person shall be required to relinquish rights The Hegnas would have us draw a line be-

set forth – (A) in subsection (a)(2)(C); and tween a partial-partial paymentSSone that falls

(B) in subsection (a)(2)(D) with respect to below the statutorily-defined portion that the

enforcement against property that is at is- government must paySSand a completely-paid

sue in claims against the United States be- partial payment. In essence, the Hegnas con-

tend that they should have received more than

18

the government paid them and that the insuffi-

Specifically, the Hegnas argue that “[u]ntil ciency of the amount allowed them to pursue

the matter of the [Iran-United States Claims] Tri-

the sale of the Lubbock property.

bunal’s subject matter jurisdiction over the Lub-

bock Property is determined, Iranian properties in

the United States, including the Lubbock Property, That theory fails for two reasons. First, the

are simply not property that is ‘at issue’ before the statute does not draw a distinction among

Tribunal[.]” types of partial payments, but merely states

that “[a]ny person receiving less than the full

19

Though the amended VTVPA requires a par- amount” will relinquish punitive and “at issue”

ty to relinquish only its general claims for punitive rights. The receipt of any partial

damagesSSVTVPA § 2002(a)(2)(C)SSit also man- paymentSSeven $1SSwould limit the Hegnas’

dates relinquishment of all claimsSSpunitive or recovery options.

otherwiseSSagainst property “at issue in claims

against the United States.” § 2002(a)(2)(D). Be- Secondly, the government eventually paid

cause the amended VTVPA § 2002(d)(5) expressly the Hegnas their full share of their

states that one receiving less than the full amount

proportional payment. The second payment

of compensatory damages “shall not be required to

make the [relinquishment] set forth in subsection

occurred in November 2003. Thus, whatever

(a)(2)(B) or with respect to subsection (a)(2)(D),” relinquishment provisions are contained within

a party may continue to pursue compensatory the partial payment regime apply to the

awards. That party, however, may not pursue Hegnas.

those awards against “at issue” property. Thus, we

must address whether the Lubbock property is “at B.

issue.”

6

Although receiving the VTVPA payment Fifth Circuit case23 that concerned bankruptcy

causes them to relinquish “all rights” to and an 1884 Supreme Court opinion24 that ad-

execute against designated property, the dressed competing judgment liens from

Hegnas advance a creative but questionable Tennessee. These cases do not remotely apply

argument that they still may sell the Lubbock to a situation resembling the instant case.25

property. Because payment did not arrive

until after the district court attached the The family’s interesting theory would re-

property and scheduled a sale, the Hegnas quire the sale to proceed regardless of the cor-

maintain that the sale should proceed.20 Under rectness of the attachment or the validity of the

this theory, Texas law21 places the court’s levy sale. Courts would not have the ability to alter

against the Lubbock property in custodia legis their rulings in the event of a change in

and ties all sales proceedings to the date of circumstances. The situation, however, did

seizureSSnamely, July 2, 2003.22 change once the United States made a partial

VTVPA payment to the Hegnas.

The Hegnas support this interesting rift in

the space-time-continuum by citing a 1927 Because the family members already

applied for a payment from the government,

they should not argue with the government’s

attempts to hold them to the terms of the

20

The Hegnas contend that, “[s]ince the date of payment. Receipt of the partial payment

actual sale relates back to the levy date, the date of forced them to relinquish “all rights to execute

sale of the Lubbock Property is July 2, 200[3].” against or attach property that is at issue in

21

claims . . . before an international tribunal[.]”

The Hegnas cite the general rule that “[t]he

VTVPA § 2002(a)(2)(D) (emphasis added).

procedure on execution . . . shall be in accordance

with the practice and procedure of the state in

which the district court is held, existing at the time Assuming, arguendo, that the Hegnas’

the remedy is sought, except that any statute of the argument has some validity and that the “right

United States governs to the extent that it is . . . to execute” now lies strictly with the dis-

applicable.” FED. R. CIV. P. 69(a). trict court, the court certainly possesses the

ability to revisit its ruling. A court may “re-

22

The Hegnas assert that the train toward judi- lieve a party or a party’s legal representative

cial sale had proceeded past the point of no return: from a final judgment, order, or proceeding”

“[W]hen the U.S. Marshal levied on the Lubbock for a variety of reasons, including the open-

Property[,] the procedure for taking the property

into the custody of the District Court was complete

. . . . All that remained to be done was the judicial 23

Wilkinson v. Goree, 18 F.2d 455, 456-57

sale, and V[TV]PA’s relinquishment provisions (5th Cir. 1927).

have no application to post-levy sales.”

24

Freeman v. Dawson, 110 U.S. 264, 270

Additionally, the Hegnas suppose that they (1884).

should have the right to pursue sale to satisfy the

25

full value of their judgment against Iran. As shown Wilkinson relied on the workings of the for-

in part III.A., supra, however, even a partial mer Bankruptcy Act and had no connection to en-

payment triggers the VTVPA’s full relinquishment forcing judgments in Texas. Freeman has a sim-

provisions. ilarly non-existent connection.

7

ended “any . . . reason justifying relief from the In support of their argument, the Hegnas offer

operation of the judgment.” FED. R. CIV. P. a definition from a 1979 edition of BLACK’S

60(b). See also FED. R. CIV. P. 59(e) LAW DICTIONARY and citations to two Florida

(describing the period of time in which a party state court opinions. “At issue,” however, in-

must file a motion to alter or amend a cludes a broader swath of conflict than the

judgment).26 Hegnas assert. The most recent BLACK’S LAW

DICTIONARY (8th ed. 2004) defines “at issue”

The Hegnas’ theory places form above as “[t]aking opposite sides; under dispute; in

common sense and above the district court’s question.” Although the United States has

ability to re-evaluate its ruling before the prop- contested the jurisdiction of the Iran-United

erty is sold. Thus, we turn to whether the States Claims Tribunal over the properties,

Lubbock property fits within the “at issue” both matters currently pend before that very

language of § 2002(a)(2)(D). body. Even if the government ultimately pre-

vails, the Lubbock property will have remained

C. “at issue” before the tribunal during the instant

Because the Lubbock property was “at is- appeal.28

sue” in a claim before an international tribunal,

amended VTVPA § 2002(d)(5)(B) prevents The only question with respect to the “at

the Hegnas from executing on the property. issue” analysis concerns the evidence that the

The United States asserts that the Lubbock government has offered. The aforementioned

property is at issue in the Iran-United States declaration from Clodfelter vaguely but

Claims Tribunal (“Claims Tribunal”). In coherently states his familiarity with the Claims

support, the government offers a declaration Tribunal and that the Lubbock property falls

from Mark Clodfelter, who lists himself as the within a list of properties “specifically

“Assistant Legal Adviser for, and director of identified as the subject of the Tribunal case.”

the office of, International Claims and

Investment Disputes in the Office of the Legal Though Clodfelter’s declaration could have

Adviser of the Department of State.” included more specific information or

The Hegnas respond by contending (1) that

the property cannot be “at issue” until after a

27

court determines its jurisdiction over the prop- (...continued)

erty; and (2) that the Claims Tribunal does not should not be subject to the Claims Tribunal.

have proper jurisdiction over the property.27 28

The Claims Tribunal has existed since July 1,

1981, and, as of December 31, 2003, has finalized

approximately 3,935 claims. Iran-United States

26 Claims Tribunal Background Information,

After the district court granted the motion to

void the sale, the Hegnas filed a FED. R. CIV. P. available at http://www.iusct.org/background-eng-

59(e) motion. lish.html (accessed June 18, 2004); Iran-United

States Claims Tribunal Quarterly Communique of

27

In a related matter, the United States has as- Jan. 20, 2004, http://www.iusct.org-

serted that consular property should fall under the /communique-english.pdf (accessed June 18,

Vienna Convention on Consular Relations and 2004). It apparently has not, however, addressed

(continued...) the Lubbock property.

8

documentary support,29 the Hegnas did not Before we may consider whether the

deny the substance of the declaration in their VTVPA blocks collection against the Houston

response, so they are foreclosed from property, we must determine whether the

requesting a hearing to offer additional TRIA would allow the Hegnas to attach or ex-

evidence. ecute against the property in the first place. In

essence, we must make the same inquiry as did

Consequently, the Hegna family’s the magistrate judge. Although we may affirm

acceptance of partial payment triggered the for any reason the record supports,31 we

relinquishing provisions of the VTVPA. choose to follow the magistrate judge’s

Because the acceptance required the family to analysis.

relinquish all rights to attach and execute the

judgment, the Hegnas, through the court, TRIA § 201(a) empowers an individual

cannot sell the property. Finally, because the who secures a judgment pursuant to 28 U.S.C.

Lubbock property currently stands at issue § 1605(a)(7) to attach and execute against

before an international tribunal, VTVPA § “blocked assets . . . to satisfy such judgment to

2002(a)(2)(D) and (c)(5)(B) prevent the the extent of any compensatory damages.”

Hegnas from attaching or executing any Section 201(d)(2) defines “blocked asset” in

further judgments against that property. such a way that it includes the Houston

property.32 Section 201(d)(2)(B)(ii), however,

IV. exempts otherwise-attachable property from

The government argues that the VTVPA the “blocked asset” category. To fall within

payment bars the attachment and sale of the the exemption, the property must satisfy two

Houston property in the same manner as for criteria.

the Lubbock property. In considering the

Houston property, however, the magistrate First, the property must be “subject to the

judge expressly avoided the issues discussed in Vienna Convention on . . . Consular

the analysis of the Lubbock property.30 Relations[.]” TRIA § 201(d)(2)(B)(ii).

29 30

We wonder why the United States could not (...continued)

have offered some documentation to support Clod- based on their acceptance of payment under the

felter’s declaration. Presumably, some formal doc- VTVPA on July 30, 2003.”

ument exists to report the proceedings of the

31

Claims Tribunal. When a family’s ability to LLEH, Inc. v. Wichita County, Tex., 289

satisfy a legitimate judgment depends on the status F.3d 358, 364 (5th Cir. 2002).

of a piece of property, and when that status

32

requires evidence to make a determination, it is “The term ‘blocked asset’ means– (A) any as-

preferable for the government to include more than set seized or frozen by the United States under

a declaration from one of its own employees. section 5(b) of the Trading With the Enemy Act

(50 U.S.C. App. 5(b)) or under sections 202 and

30

“Having determined that Plaintiffs may not 203 of the International Emergency Economic

execute against the [Houston] property, the court Powers Act (50 U.S.C. 1701; 1702)[.]” The Pres-

need not reach the issue of whether Plaintiffs have ident froze Iranian property pursuant to the Inter-

relinquished their right to execute on the judgment national Emergency Economic Powers Act. See

(continued...) supra note 8.

9

Secondly, the property must be “used substantial weight to the interpretation of a

exclusively for diplomatic or consular treaty by the government agency charged

purposes.” Id. Because we answer both with interpreting it.

queries in the affirmative, the Houston

property does not qualify as a “blocked asset” More v. Intelcom Support Servs., Inc., 960

for purposes of TRIA § 201(a). F.2d 466, 472 (5th Cir. 1992).

A. The United States, in its brief, “interprets

As to the first matter, a consul’s residence the reference to ‘property of the consular post’

falls within the sweep of the Vienna in Article 27(1)(a) to include real property

Convention on Consular Relations (“VCCR”), such as the Consul General’s residence at issue

April 24, 1963, 21 U.S.T. 77, 596 U.N.T.S. here.” Although the government certainly

8638. The signatories to the VCCR pledge could craft a self-serving or opportunistic in-

that, if one country severs consular relations terpretation, the Hegnas have offered no evi-

with another, the severing countries will “re- dence to suggest such a motivation and have

spect and protect the consular premises, not given a citation to a case or to a

together with the property of the consular post compelling opposing argument.

and the consular archives” of one another.

VCCR, art. 27(1)(a). Consequently, the language of the VCCR

and the government’s reasonable interpreation

The definition of “consular post” includes of that language lead us to conclude that, un-

“any consulate-general, consulate, vice-consul- der the VCCR, the United States has an

ate or consular agency.” VCCR, art. 1(1)(a). obligation to “respect and protect” property

A consulate typically includes a consul’s that served as the residence of the Iranian

residence, and no language in the treaty General Consul. The Houston property is

deviates from this norm. BLACK’S LAW within the ambit of the VCCR.34

DICTIONARY (8th ed. 2004) (defining

“consulate” as “the location of a consul’s B.

office or residence”). Although the government has rented the

Houston propert y to private parties and has

Additionally, the United States has used some of those rental proceeds to satisfy

interpreted the VCCR so as to include the domestically-created obligations, it has used

Houston property. Not surprisingly, this court

has not heretofore considered the VCCR.33

34

We note that the federal courts have long The Hegnas also have asserted that the

VCCR does not apply, because TRIA applies

been loathe [sic] to involve themselves in

“Notwithstanding any other provision of law[.]”

matters of foreign policy, preferring to TRIA § 201(a). The VCCR, however, does not

leave such issues to the Executive Branch. conflict with the TRIA. Instead, TRIA (1) gives

Therefore, we have always given parties who have secured judgments against ter-

rorist states a new opportunity to satisfy their judg-

ment; but also (2) attempts to insulate properties

33

The courts that have considered it largely subject to international agreementsSSlike the

have done so in the context of criminal trials. VCCRSSfrom liquidation procedures.

10

the consular residence “exclusively for The rental, however, may generate additional

diplomatic or consular purposes.” The Hegnas revenue that, at Congressional direction, the

emphasize the fact of the rental and argue that United States may allocate for other purposes.

the government has used the proceeds for a The Hegnas have not shown evidence

nondiplomatic purpose. The magistrate judge regarding the government’s intent. Given such

described the two uses of the proceeds a lack of evidence and the government’s

generated from renting the former consulate obligation to “respect and protect” the

home: property pursuant to the VCCR, we are

reluctant to impute nondiplomatic motivations

The funds received from the rentals have to the government’s renting of the Houston

been deposited into segregated accounts, property.

with the funds necessary for repairs and

maintenance placed in a special Iranian con- Secondly, the Hegnas read “diplomatic pur-

sular account and the excess funds de- pose” too narrowly. Although the United

posited into separate “blocked asset” States allocates funds to satisfy VTVPA judg-

accounts. Funds in the blocked asset ments, and although the payment regime aris-

accounts have recently been utilized to es from a domestic payment arrangement,35 the

compensate victims of terrorism under the issues certainly concern diplomatic matters.

VTVPA.

The United States purportedly has attempt-

Congress has directed the United States to ed to fulfil the obligations of the VCCR. By

provide some of its rental proceeds to victims not selling the Houston property and by using

of terrorism. As part of its payment-and-re- rental proceeds to carry out routine

linquishment regime, the VTVPA designates maintenance, the government “respect[s] and

“rental proceeds accrued on the date of the en- protect[s]” the property presumably for the

actment of this Act from Iranian diplomatic time when the two countries might resume

and consular property located in the United

States” as a primary source of funding.

VTVPA § 2002(b)(2)(A).

The mixed uses of the funds and the fact

35

that some funds have gone to satisfy a domes- The entire exchange between Congress and

tically-crafted payment regime require us to the Executive nicely illustrates the tensions that

consider whether the United States has used may develop between governmental actors with dif-

the Houston property “exclusively” for ferent institutional roles. Congress, through

diplomatic and consular purposes. Two AEDPA and TRIA, has attempted to provide great-

er opportunities for victims of terrorism to collect

factors ultimately weigh in favor of an

on judgments against the states that sponsor and

affirmative answer. support such actions. By exempting properties

subject to international tribunals and treaties such

First, purpose differs from effect or result. as the VCCR, VTVPA and TRIA acknowledge the

The United States may rent the property for Executive’s general power to administer diplomatic

the purpose of using the funds to maintain and affairs. U.S. CONST. art. II, § 2(2). The Executive

preserve the property pursuant to the VCCR. has taken full advantage of the congressional

exception.

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diplomatic and consular relations.36 the Hegnas cannot satisfy their otherwise

proper and valid judgment and cannot collect

The Executive Branch has simultaneously against the property involved in this case. If

attempted to compensate parties harmed as a some injustice exists, those two bodies have

result of Iran’s support of terrorism and to ad- the responsibility to correct it.

minister consular property in accord with the

VCCR. By maintaining the property, the The judgments at issue are AFFIRMED.

United States has used the former General

Consul’s residence within the terms of the

TRIA exclusion. Consequently, the district

court did not err in its determination that the

Houston property fell outside the definition of

a “blocked asset” and did not err in its grant of

the United States’ motion.

V.

Consequently, the district courts did not err

by quashing the writs of attachment and

execution. By applying for a payment under

the VTVPA, the Hegnas agreed, on receipt of

a partial payment, to relinquish the right to

execute against Iranian property “at issue”

before bodies such as the Iran-United States

Claims Tribunal. The Lubbock property fits

that description. Additionally, although

Congress gave families of terror victims

greater rights to satisfy their judgments, it

expressly exempted consular property such as

that located in Houston.

Based on the regime that Congress has en-

acted and that the Executive has implemented,

36

If, in accordance with the Hegnas’ theory,

the United States risks exposing consular property

to attachment and sale whenever it uses any rental

proceeds to pay a judgment pursuant to the

VTVPA, it may merely choose not to use any

rental proceeds to satisfy any judgments against

terrorist states. The government would still use the

property for a diplomatic or consular purpose, but

families seeking recovery under the VTVPA would

have fewer sources of proceeds with which to

satisfy their judgments.

12