Paradissiotis v. United States

49 Fed. Cl. 16, 2001 U.S. Claims LEXIS 45, 2001 WL 334253
CourtUnited States Court of Federal Claims
DecidedMarch 27, 2001
DocketNo. 00-354C
StatusPublished
Cited by2 cases

This text of 49 Fed. Cl. 16 (Paradissiotis v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Paradissiotis v. United States, 49 Fed. Cl. 16, 2001 U.S. Claims LEXIS 45, 2001 WL 334253 (uscfc 2001).

Opinion

OPINION

FUTEY, Judge.

This takings case is before the court on defendant’s motion to dismiss for failure to state a claim upon which relief may be granted, and plaintiffs opposition thereto, or, in the alternative, for leave to amend his complaint. Plaintiff Chris Paradissiotis, a Cypriot citizen with business ties to the government of Libya, has brought a claim for just compensation pursuant to the Takings Clause of the Fifth Amendment, stemming from an alleged governmental regulatory taking of certain securities that he owned. Acting pursuant to applicable law, the Office of Foreign Asset Control (OFAC), on behalf of the government of the United States (defendant), prohibited plaintiff from exercising certain stock options in a U.S. company. The options subsequently expired while still blocked by OFAC. Defendant argues that plaintiff cannot show a compensable taking, because the prohibition of the exercise of the options was backed by overwhelming national security interests, and because plaintiff had no reasonable expectation that he would be allowed to exercise his options due to strained relations between the United States and Libya. Plaintiff states that he could not have possibly been able to foresee the string of occurrences that led to the blocking of his stock options, and that the preservation of national security did not rely upon the destruction of those options. If the court finds that defendant’s motion to dismiss should be granted, plaintiff asks that he be able to amend his complaint to remedy any deficiencies.

Factual Background

Pursuant to the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-1706 (1994 & Supp. II 1996) (IEEPA), the president may order sanctions against nations that endanger national security and interests. In early January 1986, President Reagan issued two executive orders “to deal with the threat to the national security and foreign policy of the United States” posed by Libya. Exec. Order No. 12,543, 51 Fed.Reg. 875 (Jan. 7, 1986); Exec. Order No. 12,544, 51 Fed.Reg. 1235 (Jan. 8, 1986). Later that month, OFAC promulgated the Libyan Sanction Regulations (LSRs), codified at 31 C.F.R. pt. 550 (2000), in accordance with the executive orders. The LSRs mandated the freezing or blocking of all assets categorized as owned or controlled by the government of Libya. All so-called “U.S. persons,” the definition of which includes corporations organized in this country, see 31 C.F.R. § 550.308, were immediately prohibited from business dealings with the government of Libya.

The LSRs state,

The term Government of Libya includes:
(a) The state and the Government of Libya, as well as any political subdivision, agency, or instrumentality thereof, including the Central Bank of Libya;
(b) Any partnership, association, corporation, or other organization owned or controlled directly or indirectly by the foregoing;
(c) Any person to the extent that such person is, or has been, or to the extent that there is reasonable cause to believe that such person is, or has been, since the effective date, acting or purporting to act directly or indirectly on behalf of any of the foregoing;
(d) Any other person or organization determined by the Secretary of the Treasury to be included within this section. [18]*1831 C.F.R. § 550.304. Persons falling under the scope of this section are referred to as Specially Designated Nationals (SDNs). SDNs or U.S. persons wishing to do business regulated by the LSRs must apply to OFAC for a license to do so. OFAC will make the determination and allow licenses when it is proper pursuant to the LSRs.

Plaintiff is a citizen and resident of Cyprus.1 For at least 17 years, plaintiff has been an employee or official in some capacity for, or has been otherwise involved with, either Coastal Corporation (Coastal), a Delaware corporation, or its subsidiaries. In 1985, plaintiff received options to buy 2,250 shares of Coastal stock at $20.91. In 1986, plaintiff became a director of Holborn Oil Trading, Ltd. (HOTL), a Bermuda corporation owned by Coastal. HOTL controls an oil refinery on behalf of Libya in Germany. HOTL, in turn, owns one-third of the stock of Holborn Investment Company, Ltd. (HICL), a Cyprus corporation involved in maintaining and operating the aforementioned refinery. The majority owner of HICL is Oilinvest International N.V. (Oilin-vest), which was owned by the government of Libya from 1990 to 1993. Pursuant to its contractual right, HOTL installed plaintiff as a director on the board of HICL, at the time the government of Libya had majority interest in HICL. By April 1991, the board of HICL had three Libyan members in its five-member board. These Libyan directors served contemporaneously as managers of Libyan-controlled Oilinvest. Thus, by 1990, (1) the government of Libya controlled HICL, for which plaintiff served as a director, and (2) plaintiff was president and a director of HOTL, which owned an oil refinery for the benefit of Libya. Paradissiotis v. Rubin, 171 F.3d 983 (5th Cir.1999) (Paradis-siotis II).

Coastal informed OFAC of Libya’s ownership of Oilinvest in 1990. OFAC thereafter determined that Oilinvest was the “government of Libya” for the purpose of the LSRs. As a result, OFAC listed plaintiff as an SDN in the Federal Register on August 5, 1991. At all times from this date, plaintiff was listed as an SDN. Id. Plaintiffs personal assets, including the stock options, were frozen as a result of this designation. The options were set to expire on March 19,1997. Plaintiff applied for licenses under the LSRs in order to sell or exercise his stock options in Coastal, but OFAC refused his applications. As a result, plaintiff brought a lawsuit in the United States District Court for the Southern District of Texas (District Court) on July 17,1996, arguing that the LSRs were invalid and that plaintiffs status as an SDN was improper. Plaintiff alleged violations of a number of his constitutional rights as well. Plaintiff also asked the court to issue injunc-tive relief that would force OFAC to allow the exercise of his stock options. In addition, during the litigation plaintiff requested that OFAC allow the options to be exercised and then immediately placed in a blocked account. OFAC refused this request. Plaintiff asked the District Court for leave to amend his complaint to include his Fifth Amendment takings claim, but the District Court denied this motion, stating that such amendment would be futile because he could not state a viable takings claim. Paradis-siotis v. Rubin, No. H-96-2314 (S.D.Tex. 1997) (order denying motion to vacate opinion, or, in the alternative, for reconsideration, and motion to amend complaint) (Paradis-siotis I). The District Court granted summary judgment for the named government officials on all counts on March 17, 1997, and two days later the options formally expired.

[19]

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Bluebook (online)
49 Fed. Cl. 16, 2001 U.S. Claims LEXIS 45, 2001 WL 334253, Counsel Stack Legal Research, https://law.counselstack.com/opinion/paradissiotis-v-united-states-uscfc-2001.