Gov't, Court Slap Down Claimant Hopefuls in NYC Tower Suit

By: Natalie Rodriguez

Law360, New York (February 19, 2015, 4:09 PM ET)

The U.S. government on Wednesday blasted a family looking to intervene in a suit over the sale of Iran's interest in a Manhattan tower as being too late to the table, on the heels of a New York federal judge denying another party looking to become a claimant to the assets.

In a letter to U.S. District Judge Katherine B. Forrest, U.S. Department of Justice attorneys argued that a motion to intervene by Jeremy Levin, who was kidnapped in 1984 by terrorists allegedly funded by Iran, and Lucille Levin should be denied for untimeliness, the potential prejudice to current plaintiffs and failure to show a legally protectable interest.

The objection was filed after Judge Forrest denied on Wednesday another would-be claimant’s motion to consolidate his case with the suit over 650 Fifth Ave.

In the letter, the government blasted the Levins’ argument that it had failed to properly notify them that they were potential claimants to the suit. The family holds a $28.8 million judgment against Iran from a 2009 Washington, D.C., case.

“The government provided notice to such reasonably ascertainable potential claimants … But the law contains no support for the proposition that the government must provide direct notice to any entity that may have a potential judgment against Iran, which itself was not even a potential claimant with a clear stake in the action at the time of its inception,” the U.S. government said.

It argued under the Levins’ interpretation, the government would have had to assume the outcome of a Terrorism Risk Insurance Act litigation question that did not exist when the government filed its action in the 650 Fifth Ave. case. Further, it noted that the published notice allowed vigilant parties with an interest to intervene and that more than a dozen judgment creditor claimants were able to do so.

“The government takes seriously the tragic circumstances that led to the Levins’ judgment against the government of Iran, and the frustration that holders of such judgments often encounter in getting those judgments enforced. The recognition of such sympathetic factors does not, however, excuse an untimely bid for an easy judgment, at the expense of other litigants — including other victims of terrorism — who actually acted timely in vindicating their interests,” the government said in its letter.

The Levins have argued, though, that it would be a “miscarriage of justice” to allow other judgment creditors in a similar position to be paid out from the asset sale, while their judgment is left unfulfilled.

On Wednesday, however, the court also leaned on similar arguments in blocking Amir Reza Oveissi, whose grandfather was an Iranian general killed during the 1979 Iranian revolution, from consolidating his Washington, DC., case — which has a $307.5 million claim against Iran — with the New York case.

Judge Forrest contended that the consolidation would be unfair to the current plaintiff-claimants who have a settlement agreement to distribute funds from the property’s sale on a pro rata basis.

“Consolidation would complicate the current settlement agreement between the judgment-creditor plaintiffs and the government … Consolidation at this stage would also undermine plaintiffs’ extensive efforts over several years, including significant discovery, preparation for trial, and ultimately winning summary judgment in their favor,” the order said.

Oveissi had offered to agree to be bound by certain stipulations if he was let in on the case, including not seeking to reopen discovery in the long-running New York suit and being bound by a decision from the U.S. Court of Appeals for the Second Circuit, as well as any further appeal.

"Allowing Mr. Oveissi to participate in the distribution of the forfeited assets would have only had a negligible impact on the amounts received by the other terrorist victims, and it was very disappointing that the court did not allow Mr. Oveissi to participate in that distribution. The outcome of this case will favor some terrorist victims over others, and that is disappointing," James W. Spertus of Spertus Landes & Umhofer LLP, an attorney for Oveissi, told Law360.

He added that the outcome would have made sense if the property was privately located by the plaintiffs, but since the government located and forfeited it, more should have been done to more equally protect citizens' rights.

Oveissi is represented by James W. Spertus of Spertus Landes & Umhofer LLP.

The Levins are represented by Suzelle M. Smith and Don Howarth of Howarth & Smith.

The U.S. Government is represented by United States Attorney for the Southern District of New York Preet Bharara and Assistant United States Attorneys Michael D. Lockard, Martin S. Bell and Carolina A. Fornos.


The case is In re: 650 Fifth Avenue and Related Properties, case number 1:08-cv-10934-KBF, in the U.S. District Court for the Southern District of New York.

--Editing by Kelly Duncan.