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Click here for the full text of this decision FACTS:Charles Hegna was murdered by members of the Iranian-backed Hezbollah during the 1984 hijacking of a Kuwaiti airline. Pursuant to the Victims of Trafficking and Violence Protection Act of 2000, which created an exception to the general immunity afforded foreign states, Hegna’s family sued the Republic of Iraq and obtained a $375 million judgment against the republic. The Hegnas then moved under the Terrorism Risk Insurance Act, which states that plaintiffs who secure judgments against foreign states may attach and execute against the “blocked assets” of terrorist parties, to attach several properties owned by Iran in Texas, Maryland, New York and Illinois. A property in Lubbock served as a home of the then-Crown Prince of Iran while he received fighter pilot training. A property in Houston previously served as the residence of Iran’s general counsel The Hegnas also filed to receive payment under the VTVPA, which allows payment of funds to victims who cannot satisfy all of their requests for payment from the foreign entity. The United States, as current custodian of the Texas properties, moved to invalidate the family’s actions. The district court granted a writ of attachment for the Lubbock property and scheduled a sale of the property. The government made an initial payment to the Hegnas under the VTVPA and moved to void the sale. Without providing a written analysis, the district court granted the motion to void the sale and the levy. The district court issued a writ of execution on the Houston property. When the government moved to quash the write, the judge referred the matter to a magistrate. The magistrate concluded that the property fell with an exclusion to the “blocked asset” definition and recommended that the district court quash the writ, which the district court did. The Hegnas appeal both orders. HOLDING:Affirmed. The court holds that by requesting and receiving partial payment according to the terms of the VTVPA, the Hegnas relinquished the ability to enforce against the Lubbock property. Though the Hegnas argue that the partial payment does not trigger the provision, the court finds that VTVPA 2002(d)(5) states that a party receiving partial payment does not have to relinquish his rights to compensatory damages, but must give up other rights listed in two subsections of the statute, including punitive damages and recovery against “at issue” properties. The fact that the Hegnas received less than they were entitled to initially � though they were paid the full amount later � does not matter, as any partial payment, even $1, would trigger the section. The Hegnas also argue that any relinquishment may occur only prospectively, not to property already attached for sale. The court characterizes the argument as being an “interesting rift in the space-time continuum,” and finds that because the family members already applied for a payment from the government, they cannot now argue with the government’s attempts to hold them to the terms of the payment. The argument “places form above common sense,” and above the district court’s ability to reevaluate its ruling before the property is sold. The Hegnas additionally argue that any possible relinquishment does not apply to the Lubbock property because the property is not “at issue” before an international tribunal; property that is “at issue” is not subject to execution under VTVPA. The court points out that both properties are currently the subject of a dispute between Iran and the United States Claims Tribunal, so the properties are at issue. The court then turns to decide whether TRIA allows the Hegnas to attach or execute against the Houston property, that is, whether the property is a “blocked asset,” or whether it falls within the exception to that definition. A “blocked asset” would generally cover the property, but for the exemption, in which the property is subject to the Vienna Convention on Consular Relations and is used exclusively for diplomatic or consular purposes. The consul’s residence in Houston certainly falls under the VCCR. And although the government has rented the Houston property to private parties and used proceeds from the rentals to satisfy domestically created obligations, the court rules that the property has nevertheless been used exclusively for diplomatic or consular purposes. Two factors weigh in favor of this conclusion: 1. purpose differs from effect or result, and the United States may rent the property for the purpose of using the funds to maintain and preserve the property pursuant to the VCCR; and 2. although the United States allocates funds to satisfy VTVPA judgments, and although the payment regime arises from a domestic payment arrangement, the issues concern diplomatic matters. OPINION:Smith, Circuit Judge. Smith, Prado and Pickering, JJ.

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