Plaintiffs-Appellants,

v.

Defendants-Appellees,

and

Appeal from the United States District Court

for the District of Maryland, at Baltimore.

J. Frederick Motz, District Judge.

(CA-03-2050-JFM)

Argued: May 4, 2004

Decided: July 14, 2004

Before LUTTIG and MICHAEL, Circuit Judges,

and Bobby R. BALDOCK, Senior Circuit Judge of the

United States Court of Appeals for the Tenth Circuit,

sitting by designation.

Affirmed by published opinion. Judge Luttig wrote the opinion, in

which Judge Michael and Senior Judge Baldock joined.

ARGUED: Ralph P. Dupont, DUPONT & RADLAUER, Stamford,

Connecticut, for Appellants. Lewis Stanley Yelin, Appellate Staff,

Civil Division, UNITED STATES DEPARTMENT OF JUSTICE,

Washington, D.C., for Appellees. ON BRIEF: Robert B. Kershaw,

WARD, KERSHAW & MINTON, P.A., Baltimore, Maryland; Barbara

J. Radlauer, DUPONT & RADLAUER, Stamford, Connecticut,

for Appellants. Barbara C. Hammerle, Chief Counsel, Foreign Assets

Control, Office of the General Counsel, UNITED STATES

DEPARTMENT OF THE TREASURY, Washington, D.C.; Mark A.

Clodfelter, Lisa J. Grosh, Attorney-Advisers, Office of the Legal

Adviser, UNITED STATES DEPARTMENT OF STATE, Washington,

D.C.; Peter D. Keisler, Assistant Attorney General, Thomas M.

DiBiagio, United States Attorney, Gregory G. Katsas, Deputy Assistant

Attorney General, Douglas N. Letter, H. Thomas Byron, III,

Appellate Staff, Civil Division, UNITED STATES DEPARTMENT

OF JUSTICE, Washington, D.C., for Appellees.

OPINION

LUTTIG, Circuit Judge:

Appellants, the Hegna family, are judgment-creditors of the Islamic

Republic of Iran ("Iran"). Invoking section 201(a) of the newlyenacted

Terrorism Risk Insurance Act of 2002 ("TRIA"), Pub. L. No.

107-297, § 201(a), 116 Stat. 2,322, 2,337 (codified at 28 U.S.C.

§ 1610 note), the Hegnas attempted to enforce their judgment against

Iran by obtaining writs of attachment in aid of execution on two

Iranian-owned properties in Bethesda, Maryland. Due to the severance

of diplomatic relations between Iran and the United States, both

properties are currently in the possession of the United States government.

At the motion of the United States, the district court quashed

both writs of attachment, on the ground that the properties were not

"blocked assets" as that term is defined in section 201(d)(2) of TRIA

and, therefore, not subject to execution or attachment under the Act.

We affirm, though for different reasons than those relied upon by

the district court. Regardless of whether the Bethesda properties are

subject to execution or attachment under TRIA, we hold that, by

accepting a compensatory payment under section 2002 of the Victims

of Trafficking and Violence Protection Act of 2000 ("Victims Protection

Act"), Pub. L. No. 106-386, § 2002, 114 Stat. 1,464, 1,541, the

Hegnas have relinquished their rights to effect the sale of the properties

in satisfaction of their judgment. See Victims Protection Act

§ 2002(d)(5) (as amended by TRIA § 201(c)(4)). Accordingly, the

writs of attachment in aid of execution levied on the Bethesda properties

must be quashed.

I.

On or about December 4, 1984, Charles Hegna was murdered by

members of Hezbollah, a terrorist organization with ties to the Islamic

Republic of Iran ("Iran"), during that organization’s hijacking of a

Kuwaiti Airlines passenger airplane over the Gulf of Oman.

Until 1996, Hegna’s wife and children — the appellants in this case

— were barred by the Foreign Sovereign Immunities Act (FSIA) from

bringing suit against Iran for its role in his murder. See 28 U.S.C.

§ 1604 (providing that "a foreign state shall be immune from the

jurisdiction of the courts of the United States and of the States,"

except as expressly provided in subsequent provisions of the FSIA).

In that year, however, as part of the Antiterrorism and Effective Death

Penalty Act ("AEDPA"), Congress amended the FSIA to allow victims

of terrorism to sue countries that have been designated state

sponsors of terrorism by the State Department, like Iran, for those

countries’ provision of "material support" for terrorist acts. See 28

U.S.C. § 1605(a)(7). The Hegna family took advantage of this exception

to Iran’s immunity from suit, and, on April 3, 2000, brought suit

in federal court against Iran and its agent, the Iranian Ministry of

Information and Security (MOIS), for their complicity in Charles

Hegna’s murder. Iran did not appear to defend itself in this action. In

February 2002, the Hegnas obtained a default judgment of

$42,000,000 in compensatory damages against Iran and the MOIS

and $333,000,000 in punitive damages against the MOIS alone.

Hegna v. Islamic Republic of Iran, No. 1:00CV00716 (D.D.C. Feb.

7, 2002) (amended order and judgment); J.A. 5-6.

Congress has devised two avenues by which individuals like the

Hegnas — successful plaintiffs in suits brought under section

1605(a)(7)’s exception to sovereign immunity — may satisfy their

judgments against state sponsors of terrorism. First, Congress has

subjected an increasingly broad class of property owned by these

nations in the United States to execution and attachment in aid of execution.

Congress’ latest effort in this regard is embodied in section

201(a) of the TRIA, 28 U.S.C. § 1610 note. Section 201(a) states:

Notwithstanding any other provision of law, and except as

provided in subsection (b), in every case in which a person

has obtained a judgment against a terrorist party on a claim

based upon an act of terrorism, or for which a terrorist party

is not immune under section 1605(a)(7) of title 28, the

blocked assets 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.

28 U.S.C. § 1610 note.

Second, in the Victims Protection Act, Congress directed the Secretary

of the Treasury to make direct payments to certain judgmentcreditors

of Iran and Cuba from funds belonging to those nations but

being held by the United States government. See Victims Protection

Act § 2002. As first enacted, the group of individuals eligible to

receive these payments under the Act was relatively small and, with

five specific exceptions, did not include individuals, such as the

Hegnas, who obtained their judgments after July 20, 2000. See Victims

Protection Act, Pub. L. No. 106-386, § 2002(a)(2)(A), 114 Stat.

1,464, 1,542 (2002), amended by TRIA § 201(c)(1). Payments under

the Act were not designed merely to supplement the plaintiffs’ recoveries

on their judgments, but rather to replace them. The initial payments

authorized by the VPA were equal to the amount of

compensatory damages awarded in judgments, and the VPA required

the recipients of those payments to relinquish both their "rights and

claims" to compensatory damages and, depending on the size of the

payment the recipient elected to receive, either their rights to punitive

damages or their rights "to execute against or attach" certain properties

owned by Iran or Cuba, respectively, in satisfaction of those damages.

Victims Protection Act § 2002(a)(2)(B)-(D).

The Victims Protection Act was amended substantially in November

2002 by section 201(c) of TRIA. See TRIA § 201(c), 116 Stat.

2,322, 2,337-39. First, section 201 of TRIA expanded the group of

judgment holders eligible for payments to include persons, like the

Hegnas, who filed suit against Iran before October 28, 2000. See

TRIA § 201(c)(1) (amending Victims Protection Act § 2002(a)(2)

(A)(ii)). Second, in anticipation that the funds designated for payments

under the Victims Protection Act would not be sufficient to

provide the newly-eligible judgment creditors with a payment in the

full amount of their compensatory damages, the 2002 amendments

directed the Secretary to distribute the remaining funds to qualified

judgment holders on a pro-rata basis, based on the size of their

respective compensatory damage awards. TRIA § 201(c)(4) (amending

Victims Protection Act § 2002(d)). Finally, because these pro-rata

payments were likely to be substantially smaller than the full amount

of compensatory damages, the amendments no longer required recipients

of payments under the Act to relinquish their rights to pursue

compensatory damages; however, the Act did require them to forego

their "rights and claims" to punitive damages, as well as "all rights to

execute against or attach property that is at issue in claims against the

United States before an international claims tribunal." TRIA

§ 201(c)(4) (amending Victims Protection Act § 2002(d)(5)).

In this case, the Hegna family attempted to satisfy their judgment

against Iran by pursuing both avenues of recovery. The Hegnas first

sought to recover on their judgment through the execution of Iranian

properties located in the United States. Relying on the rights given

them by section 201(a) of TRIA, the Hegnas obtained writs of attachment

upon judgment from the district court in the district of Maryland

on two Bethesda, Maryland properties owned by Iran and in the possession

employees of the Iranian embassy until April 7, 1980, when President

Carter severed diplomatic relations with Iran and ejected all of its diplomatic

and consular employees from the country in response to the refusal

of the government of Iran to end the detention of the United States diplomatic

and consular staff at the American Embassy in Tehran, Iran. J.A.

28 (Declaration of Francis X. Taylor, Asst. Secretary of State for Diplomatic

Security). Since that time, the properties have been held in the cus-

December 27, 2002 issuing writs of attachment on both properties).

on the Bethesda properties on May 28, 2003, and formally executed

the writs by filing a return with the clerk’s office on June 3, 2003,

J.A. 2. Butler v. Tilghman, 711 A.2d 859, 864-65 (Md. 1998). The

district court quashed the writs at the motion of the United States on

August 25, 2003, on the ground that the Bethesda properties were not

"blocked assets" under TRIA — and therefore not subject to attachment

under the Act — because the properties were "being used exclusively

for diplomatic . . . purposes," TRIA § 201(d)(2)(B)(ii). Hegna

v. Islamic Republic of Iran, 287 F. Supp. 2d 608, 610 (D. Md. 2003).

The Hegnas were not willing to rest on the execution of the

Bethesda properties alone, however. In July 2003 — before the district

court quashed the writs of attachment but after a marshal levied

on the Bethesda properties — the Hegnas accepted a pro-rata payment

from the United States treasury (represented by the government at

argument to exceed $8,000,000) under the Victims Protection Act.

See Victims Protection Act § 2002(d)(1)(A) (as amended by TRIA

§ 201(c)(4)). As required by statute, by their receipt of the pro-rata

payment, the Hegnas relinquished, "all rights and claims to punitive

damages awarded in connection with" their judgment and, of critical

relevance here, "all rights to execute against or attach property that is

at issue in claims against the United States before an international tribunal."

See Victims Protection Act § 2002(d)(5)(B) (as amended by

TRIA § 201(c)(4)) (emphasis added); Hegna v. Islamic Republic of

Iran, 299 F. Supp. 2d 229, 230 (S.D.N.Y. 2004).

tody of the United States government pursuant to the United States’

obligation, under section 45 of the Vienna Convention on Diplomatic

Relations, to "respect and protect" the premises of a foreign mission

when diplomatic relations between a "receiving state" and a "sending

the notice" contained in the underlying writ. Helinski v. Harford

Memorial Hosp., Inc., 831 A.2d 40, 48 (Md. 2003); Md. Rule § 3-642

(providing that a "sheriff shall levy on a judgment debtor’s real interest

in property pursuant to a writ of execution by entering a description of

the property on a schedule and posting a copy of the writ and the schedule

in a prominent place on the property").

II.

In this appeal, the Hegnas challenge the district court’s order

quashing the writs of attachment on the Bethesda properties. We

affirm the district court’s order without deciding whether the district

court erred in holding that the two Bethesda properties are not

"blocked assets" under section 201(d)(2)(B)(ii) of TRIA. Even assuming

the Bethesda properties are "blocked assets" and therefore subject

to execution and attachment in aid of such execution under TRIA, we

conclude that the properties may not be executed against or attached

by the Hegnas because the Hegnas have relinquished any right they

previously possessed to force the sale of the Bethesda properties in

The Hegnas vigorously resist this conclusion. First and foremost,

they argue that their relinquishment has no application to the judicial

sale of the Bethesda properties because, at the time of the relinquishment,

After a levy, the Hegnas argue, a property is formally "attached" and,

as a consequence, placed "in custodia legis" (in the custody of the

of rights under section 2002(d) of the Victims Protection Act,

on the ground that the issue was not raised before the district court. This

objection may be easily dismissed. The record makes clear that the

United States raised the issue of the Hegnas’ relinquishment before the

district court in a supplemental memorandum, filed August 14, 2003.

Supplemental Appendix at 2. We are therefore entitled to affirm the district

court’s judgment on that alternative ground. MM ex rel. DM v.

School Dist. of Greenville Cty., 303 F.3d 523, 536 (4th Cir. 2002); Cochran

was May 28, 2003, when the marshal physically levied on the Bethesda

properties. Appellant’s Reply Br. at 9. This is technically inaccurate.

Under Maryland law, a writ of attachment is not legally executed until

the marshal files a return on the writ with the clerk’s office. Butler v.

Tilghman, 711 A.2d 859, 864-65 (Md. 1998); Md. R. Civ. P. 3-642(d).

Thus, in this case, the writs of attachment were executed on June 3,

2003. J.A. 2 (providing that the marshal filed returns on both properties

on that date).

rights of execution or attachment remaining, prior to the judicial sale

of the property in satisfaction of his judgment.

We cannot agree. By their receipt of a payment from the United

States treasury, the Hegnas relinquished "all rights to execute against

or attach" certain properties. See Victims Protection Act § 2002(d)(5)

(as amended by TRIA § 201(c)). These rights include not only the

rights that the Hegnas had already exercised at the time of relinquishment,

the rights to obtain a writ of attachment on judgment and to

have a marshal levy against the property under that writ, but also

rights of "execution" that the Hegnas had not yet exercised, such as

the rights to proceed under that writ of attachment on judgment and,

eventually, to have the property sold by the marshals and to receive

the proceeds of that sale. See Thomas D. Crandall et al., 1 The Law

of Debtors and Creditors § 6:50 (2004) (explaining that "the final step

of the execution process involves the sale of the property levied

upon"). Thus, while the marshal’s levy on the Bethesda properties

represented an important step in the Hegnas’ execution of those properties,

it did not exhaust the Hegnas’ bundle of rights "to execute

against" the properties because it did not complete the sale of the

properties in satisfaction of the Hegnas’ judgment.

The procedures that govern both the execution of judgments, and

the processes in aid of execution, such as the writ of attachment on

judgment issued by the district court in this case, are dictated by the

state in which the district court is located. Fed. R. Civ. P. 69. Hence,

the determination of whether, at the time of relinquishment, further

execution against the Bethesda properties was necessary to satisfy the

Hegnas’ judgment turns on Maryland law.

Under Maryland law, an attachment on judgment is a form of execution,

allowing "a judgment creditor [to] reach the assets of a judgment

debtor in the hands of a third party." Northwestern National Life

Ins. Co. v. William G. Wetherall, Inc., 298 A.2d 1, 5 (Md. 1972);

Steed Mortgage Co. v. Arthur, 378 A.2d 690, 694 (Md. App. 1977);

see Md. Code, Cts. & Jud. Proc. § 3-301(a) (authorizing the issuance

of "an attachment on a judgment or decree in lieu of any other execution").

A marshal’s levy on a property pursuant to a writ of attachment

on judgment formally "attaches" the properties for the purpose

of satisfying a judgment. See Butler, 711 A.2d at 864-65 (providing

that a writ of attachment is executed on the date a marshal or sheriff

files a return with the clerk’s office); cf. Helinski, 831 A.2d at 48

(describing the effect that a levy has on a writ of execution). As

noted, this is a critical step in the eventual execution of the property.

The post-judgment attachment of a property establishes an inchoate

lien on a property and provides notice to those individuals currently

in possession of the property that the judgment creditor who caused

the writ to be issued intends to have the property sold, putting that

person on notice not to dispose of the property. Fico, Inc. v.

Ghingher, 411 A.2d 430, 437 (Md. 1980) (explaining that, "until

judgment of condemnation absolute, the attachment serves the useful

function of preventing the garnishee from prematurely disposing of

any of the judgment debtor’s assets"). Moreover, the levy of a writ of

attachment on judgment instigates proceedings by which the individual

then in possession of the property may appear and challenge the

judgment creditor’s claim to the property. See Northwestern, 298

A.2d at 7 (providing that, upon the attachment of a property, the "garnishee

is [ ] entitled to a hearing as to his contention that a part or all

of the assets he has are not subject to condemnation in favor of the

executing judgment creditor").

Standing alone, however, the levy of a writ of attachment upon

judgment on a property is not sufficient to cause the property to be

sold by a marshal in satisfaction of the judgment. To effect the actual

sale of the property, the judgment creditor must, at the very least,

obtain a judgment of condemnation absolute or a writ of execution

proceedings begun by a writ of attachment on judgment culminate in

a judgment of absolute condemnation); Md. Code, Cts. & Jud. Proc.

on the Bethesda properties envisioned precisely this process. Though the

court’s order directed the clerk to issue writs of attachment on the

Bethesda properties forthwith and directed the marshal to levy on the

properties by posting a copy of each attachment upon the premises, it

provided the defendants with 60 days after the service of the writs of

attachment to appear and "show cause why a Judgment of Condemnation

or a Writ of Execution as to the attached property should not be entered."

J.A. 11-12.

execution is directed may seize and sell the legal or equitable interest

of the defendant named in the writ in real or personal property").

After a marshal has levied a writ of attachment on judgment on a

property, the eventual sale of the property in satisfaction of the judgment

is by no means assured. To obtain a judgment of condemnation

absolute, the judgment creditor must demonstrate, among other

things, the amount of the judgment debtor’s assets in the hands of the

garnishee, see Steed Mortgage, 378 A.2d at 694 (requiring such a

showing even where the garnishee did not appear to contest the judgment

debtor’s interest in the property), and show that his interest is

superior to the interests of other creditors in the property, Northwestern,

298 A.2d at 7-8. Similarly, after a writ of execution has been

issued and levied on a property, the sale of the property is not automatic:

a judgment creditor must proceed diligently to cause the property

to be sold in a reasonable time, see, e.g., W. D. Curran and

Assoc., Inc. v. Cheng-Shum Enterprises, Inc., 667 A.2d 1013, 1022

(Md. App. 1995); Joshi v. Kaplan, Freeland, Schwartz & Bloomberg,

P.C., 532 A.2d 712, 714-15 (Md. App. 1987), and the marshal must

give prior, public notice of his intention to do so. Md. Code, Cts. &

Jud. Proc. § 11-502. Indeed, at any time until the sale of the property,

a judgment debtor may intervene to have the property released from

the levy. Md. Rule § 2-643(c).

In sum, at any point until the marshal’s sale of a property, we conclude

that, under Maryland law, the judgment creditor can be said to

possess rights "to execute against" the property. Yet, at the time the

Hegnas relinquished their existing rights "to execute against" the

Bethesda properties, they had not undertaken the final stage of execution

by securing either a judgment of condemnation absolute or a writ

of execution on the properties. We hold that their relinquishment bars

them from proceeding with any effort to do so now.

Accordingly, so long as the Bethesda properties are within the

scope of the relinquishment and the Hegnas have received a payment

from the Treasury sufficient to trigger their relinquishment, their

relinquishment of rights requires that the writs of attachment executed

on the properties be quashed. We address these issues in turn.

The Hegnas’ relinquishment of rights did not extend to all Iranian

properties in the United States, but only to those "at issue in claims

against the United States before an international tribunal." Thus, we

must determine whether the Bethesda properties fall within this class

of properties. We have no difficulty deciding that they do. In 1982,

Iran filed claims against the United States in the Iran-U.S. Claims Tribunal

("Claims Tribunal") alleging that the "United States has

breached its obligations under the Algiers Declarations by failing to

grant Iran custody of its diplomatic and consular properties in the

United States." See Islamic Republic of Iran v. United States of America,

No. DEC129-A4/A7/A15 (I:F & III), 33 Iran-U.S. Cl. Tr. Rep.

362 ¶ 1 (1997). The Bethesda properties are former Iranian diplomatic

properties, J.A. 35 (declaration of Francis X. Taylor), and, therefore,

"at issue" in these claims. The Claims Tribunal has postponed hearing

on Iran’s claims in order to allow the two nations to settle their dispute,

but, as the Hegnas concede, the claims remain pending before

the tribunal. Thus, it would appear rather straightforward that the

Bethesda properties fall within the contours of the Hegnas’ relinquishment.

The Hegnas argue, nevertheless, that the Bethesda properties are

not "at issue . . . before" the Iran-U.S. Claims Tribunal because it has

not yet been established that the tribunal has "subject matter jurisdiction"

over the claims. As an initial matter, the Hegnas have offered

no evidence to support their claim that the United States contests the

jurisdiction of the Claims Tribunal to consider Iran’s claims, and the

decisions rendered by the Claims Tribunal thus far fail to so much as

hint that its jurisdiction has been challenged. To the contrary, the

Claims Tribunal has provided that, "[t]he final determination of the

rights to [the diplomatic and consular properties] will be made in due

course, either by the Parties themselves in the settlement process or

by the Tribunal if the Parties fail to reach a settlement." Id. at ¶ 10;

see also id. at ¶ 12 (explaining that the "Tribunal’s jurisdiction to

determine these claims will not be prejudiced if [Iran’s] present

request is not granted"). In any event, even if the jurisdiction of the

Claims Tribunal to hear Iran’s claims regarding its diplomatic and

consular properties in the United States was in dispute and yet undecided,

the Hegnas’ argument could still not be sustained. The Claims

Tribunal’s consideration of its jurisdiction would not change the fact

that the Bethesda properties are "at issue" in Iran’s claims, nor would

it mean that Iran’s claims are no longer "before" the Iran-U.S. Claims

Tribunal. As was recently explained in rejection of an identical argu-

ment, "a jurisdictional issue is still an issue, and until and unless the

Tribunal determines it lacks jurisdiction over Iran’s claim to the property,

the property is ‘at issue’ before the Tribunal." Hegna v. Islamic

Republic of Iran, 299 F. Supp. 2d 229, 230 (S.D.N.Y. 2004).

Finally, the Hegnas argue that section 2002(d)(5) of the Victims

Protection Act does not require them to relinquish their rights until

they have received the full amount to which they are entitled under

section 2002(d)(1) of the Act. This argument too is unavailing. Section

2002(d)(5) states that, "any persons receiving less than the full

amount of compensatory damages awarded to that party in a judgment

. . . shall be required to relinquish rights set forth" in sections

2002(a)(2)(C) and (D). Victims Protection Act § 2002(d)(5). We see

no reason to read this statutory provision to mean anything other than

what it says: whenever an eligible judgment creditor of either Iran or

Cuba receives a payment of "less than the full amount of compensatory

damages" from the Treasury under section 2002(d), he must

relinquish the rights described in the Act. It is uncontested that the

Hegnas have received such a payment here, and, therefore, by operation

of statute, they have relinquished their rights to punitive damages

and "to execute against or attach" certain properties. Accord Hegna,

299 F. Supp. 2d at 230. It may be that the Hegnas ultimately are entitled

to more under the Victims Protection Act than they have received

thus far (the record is barren on this account), but, even assuming that

they are, such a grievance does not provide a defense to the relinquishment

effected by their receipt of a smaller payment.

III.

In summary, by their receipt of a payment "less than the full

amount of [their] compensatory damages award," the Hegnas relinquished

"all rights to execute against or attach" the Bethesda properties,

on which they had caused a writ of attachment on judgment to

be levied. We hold that their relinquishment prohibits them from taking

the additional steps necessary to complete the execution of the

properties in satisfaction of their judgment against Iran. The order of

the district court quashing the Hegnas’ writs of attachment in aid of

such execution is accordingly affirmed.

AFFIRMED