Chichakli v. Szubin ( 2008 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
September 26, 2008
No. 07-10851 Charles R. Fulbruge III
Summary Calendar Clerk
RICHARD A CHICHAKLI
Plaintiff-Appellant
v.
ADAM SZUBIN, Director, Office of Foreign Assets Control of the United
States Department of the Treasury, in his official capacity; JOHN SNOW,
SECRETARY, DEPARTMENT OF TREASURY, in his official capacity;
CONDOLEEZZA RICE, SECRETARY, DEPARTMENT OF STATE, in her
official capacity; OFFICE OF FOREIGN ASSETS CONTROL
Defendants-Appellees
Appeal from the United States District Court
for the Northern District of Texas
Before STEWART, OWEN and SOUTHWICK, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
Plaintiff-appellant Richard Chichakli challenged a “Blocking Notice”
issued by the Office of Foreign Assets Control (“OFAC”). He asserts the Blocking
Notice was unconstitutional and the evidence was insufficient to support entry
of the Notice against him. The district court granted summary judgment on all
claims in favor of Defendants. We affirm the district court except for the ruling
regarding a taking. We vacate that part of the judgment, as explained below.
No. 07-10851
In July 2004, President Bush issued Executive Order 13348, which
declared a national emergency with respect to Liberia. Important for purposes
of this appeal, the Executive Order authorized the freezing of the assets of 28
individuals who were deemed to be contributing to the unstable situation in
Liberia as well as anyone found “acting or purporting to act for or on behalf of,
directly or indirectly, any person whose property and interests in property are
blocked pursuant to this order.” Viktor Bout was one of the individuals
specifically listed in the Order. After an investigation, OFAC determined that
Appellant Chichakli was acting on behalf of Bout. A Blocking Notice was issued,
subjecting Chichakli to the sanctions set out in the Executive Order. After
OFAC denied reconsideration of the denial, Chichakli filed this suit, asserting
violations of his due process rights, of the Takings Clause, and of the
Administrative Procedures Act.
We review the district court’s summary judgment de novo, applying the
same test as the district court. XL Specialty Ins. Co. v. Kiewit Offshore Servs.,
Ltd., 513 F.3d 146, 148 (5th Cir. 2008). Therefore, judgment is properly entered
if the summary judgment record shows that there is no material fact issue and
that the movant is entitled to judgment as a matter of law.
We consider each of Chichakli’s claims. The first is an alleged violation of
Fifth Amendment due process rights. Chichakli argues that he was entitled to
notice and a hearing before the government froze his assets. The due process
clause generally requires notice and a hearing prior to a constitutional
deprivation, yet “procedural due process is a flexible concept whose contours are
shaped by the nature of the individual’s and the state interests in a particular
deprivation.” Patel v. Midland Mem’l Hosp. and Med. Ctr., 298 F.3d 333, 339
(5th Cir. 2002) (citation omitted). A post-deprivation process will suffice in
exigent circumstances. Beck v. Lynaugh, 842 F.2d 759, 761 (5th Cir. 1988).
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No. 07-10851
The district court held (1) that the pre-notice deprivation was necessary
to secure an important government interest as demonstrated by the Executive
Order that declared conditions in Liberia to be a serious threat to the foreign
policy of the United States, (2) that there was a special need for prompt action
to protect against the transfer of the assets that were subject to the Executive
Order, and (3) that the Executive Order narrowly set out the criteria that the
Treasury Department could use to identify affected individuals to ensure that
the deprivation was not baseless. Bd. of Governors of Fed. Reserve Sys. v. DLG,
29 F.3d 993, 1001 (5th Cir. 1994). Because of the need for prompt action in these
circumstances, and the availability of post-deprivation avenues to challenge the
deprivation, there were exigent circumstances justifying the holding of a hearing
only after Chichakli’s assets were frozen.
Chichakli’s second claim is that the Government’s actions in freezing his
assets constituted an unconstitutional taking without compensation in violation
of the Fifth Amendment. The district court held that OFAC’s blocking action
was not a taking within the meaning of the Fifth Amendment because title to
the property never vested in the government.
On appeal, the Government suggests we vacate this part of the order
because the district court lacked jurisdiction. The Government points out that
the Tucker Act grants the Court of Federal Claims exclusive jurisdiction over
takings claims against the United States that seek monetary damages in excess
of $10,000. See 28 U.S.C. § 1346(a)(2). To the extent Chichakli seeks damages
greater than $10,000, the Government is correct. Paradissiotis v. Rubin, 171
F.3d 983, 989 (5th Cir. 1999).
It is not clear from the face of the Complaint that Chichakli is seeking
greater than $10,000 in damages. Nonetheless, Chichakli alleged that the
blocking order had the effect of destroying his business, freezing all of his
accounts, depriving him of his automobile, and preventing use and collection of
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No. 07-10851
rents from rental property for over two years. These allegations, along with
Chichakli’s failure to dispute the Government’s allegation that his claim is in
excess of $10,000, justify a finding that his claim is for more than $10,000. It
therefore falls under the exclusive jurisdiction of the Court of Federal Claims.
Because the district court did not have jurisdiction to decide this issue, we
vacate the district court’s judgment as it relates to Chichakli’s takings claim
under the Fifth Amendment.
Chichakli’s final challenge is to the sufficiency of the evidence that he was
purporting to act on behalf of Viktor Bout. We review OFAC’s designation of
him as someone who was assisting Bout for whether the determination was
“arbitrary and capricious, an abuse of discretion, or otherwise not in accordance
with law.” Kinder Canal Co., Inc. v. Johanns, 493 F.3d 543, 547 (5th Cir. 2007).
Chichakli’s specific challenge is to the relevance and reliability of certain
information utilized by OFAC to justify the blocking order. The district court
pointed out that the evidence supports the conclusions that Chichakli held senior
level positions in several businesses connected with Bout, that Chichakli had a
close relationship with Bout, and that he had intimate knowledge of Bout’s
businesses. Therefore, the district court correctly held that OFAC did not act in
an arbitrary and capricious manner in determining that Chichakli acted for or
on behalf of Viktor Bout.
AFFIRMED in part and VACATED in part.
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