Eleventh Circuit Protects the Right of Kidnapping Victims to Collect Against Agents of a Terrorist Organization

In Stansell v. Revolutionary Armed Forces of Colombia, No. 13-11339 (Oct. 16, 2014), the Eleventh Circuit held that the plaintiffs’ failure to give notice of the execution and garnishment of the claimants’ property amounted to a violation of due process, but that because the claimants either sat on their rights or failed to rebut the plaintiffs’ charges, the attachment of property by the district court was appropriate.

Plaintiffs Stansell, Gonsalves, Howes, and Janis were conducting a counter narcotics reconnaissance mission when their plane was shot down by the Revolutionary Armed Forces of Colombia (FARC).  Janis was executed, and the rest were kidnapped for five years.  After being rescued, they filed a complaint against FARC and associated individuals.  The district court entered a default judgment for $318,030,000.  The difficulty of collecting against terrorists led Plaintiffs to begin collection efforts against individuals and organizations associated with FARC.

The authority to seize assets of associated individuals comes under §201(a) of  the Terrorism Risk Insurance Act (TRIA), which allows blocked assets of any agency or instrumentality of a terrorist party to be subject to attachment to satisfy judgments against the terrorist organization.  To collect, it is necessary to show that the assets are blocked and that the agency or instrumentality is in fact an agency or instrumentality.  Courts determine that assets are blocked by an inquiry into whether the United States Department of Treasury’s Office of of Foreign Assets Control (OFAC) has designated the owner of assets as a specially designated narcotics trafficker (SDNT).  Courts determine whether the agency or instrumentality is in fact an agency or instrumentality based on the definition provided by the Foreign Sovereign Immunities Act, which says that any entity “which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof” is an agency or instrumentality. Foreign Sovereign Immunities Act, 28 U.S.C. § 1603(b).

In this case, the claimants claimed that the plaintiffs failed to prove that they were agencies or instrumentalities of FARC, that they did not meet the “blocked asset” requirement, and that, since they did not receive notice of the garnishment, their due process rights were violated.

The court determined that the claimants were denied due process because no notice was provided of the collection of their assets, but such notice was not necessary for attachment of their property.  Because property is at issue, the lower court determined that, under Helicopteros Nacionales de Colom., S.A. v. Hall 466 U.S. 408, 413-19 (1984), owners of such property have a right to notice.  Although there was precedent to support the proposition that post-judgment motions do not require notice, the Eleventh Circuit held that this rule should not extend to third parties since they never received notice at the commencement of the suit.  On the other hand, notice is not necessary for the attachment of property.  The court, following the three factor test from Matthews v. Eldridge, 424 U.S. 319 (1976), said that (1) the private interest affected by attachment was substantial, but that (2) there was little risk of erroneous deprivation since the Claimants had already been shown to be SDNTs, and (3) without attaching the property, the likelihood of a remedy was substantially lessened for the plaintiffs.  Since the last two factors weighed heavily toward the plaintiffs, the court determined that notice and opportunity for a hearing before attachment was not necessary.  However, the court concluded that the claimants sat on their rights based on the delay in their complaint about lack of notice.

The court disagreed with the claimants’ contention that, because their assets were recently unblocked, plaintiffs could no longer reach their assets under TRIA.  Under the regulations of OFAC, being de-listed as an SDNT does not have a retroactive effect.  In this case, because the suit commenced before the de-listing as an SDNT, the claimants’ assets were still reachable under TRIA.

The court also disagreed with the Claimants’ argument that the standard used to determine whether they were an agency of FARC and the resulting determination that they were agencies was erroneous.  The court said the standard that the claimants sought to apply would leave the TRIA only able to reach assets for agencies of terrorist states and would in effect protect agents of non-state terrorist organizations from garnishment.  Under the standard used by the lower court (the FSIA definition), the determination that the Claimants were agents or instrumentalities was appropriate because, according to OFAC, they were involved in FARC’s money laundering operations.

This court, with the exception of the judgment against Brunello’s account, affirmed the district court.  This court reversed the turnover judgment against Brunello because the district court improperly related back the writ of garnishment.  Therefore, the court required the district court to quash the writ of garnishment and return funds taken from Brunello.

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