Case 1:14-cv-00890-KPF Document 429 Filed 03/29/18 Page 1 of 93 USDC SDNY UNITED STATES DISTRICT COURT DOCUMENT SOUTHERN DISTRICT OF NEW YORK ELECTRONICALLY FILED -------------------------------------------------------X DOC #: _________________ : DATE FILED: M__a_r_c_h_ _2_9_, _2_0_1_8_ DISTRICT ATTORNEY OF NEW YORK : COUNTY, : : Plaintiff, : 14 Civ. 890 (KPF) : v. : OPINION AND ORDER : THE REPUBLIC OF THE PHILIPPINES, : et al., : : Defendants. : : ------------------------------------------------------ X KATHERINE POLK FAILLA, District Judge: The parties to this interpleader all claim ownership over certain property purchased with funds that Ferdinand and Imelda Marcos allegedly misappropriated during Mr. Marcos’s presidency of the Philippines (the “Interpleader Property”). The property at issue includes approximately $15 million in cash and seized funds from several bank accounts; Claude Monet’s L’Église et La Seine à Vétheuil and Alfred Sisley’s Langland Bay (and other paintings); and sundry personal items (including jewelry, carpets, pens, boxes, and a jade and wooden screen). The District Attorney for New York County (“District Attorney” or “DANY”) seized the contested assets during its criminal investigation and prosecution of Vilma Bautista, a confidante and personal secretary of Imelda Marcos. The DANY, an innocent stakeholder with no claim of ownership to the Interpleader Property, transferred the property to this Court so that the rightful owner or owners could be determined. Among the Case 1:14-cv-00890-KPF Document 429 Filed 03/29/18 Page 2 of 93 claimants are: the Republic of the Philippines (“Republic”); a class of human rights victims led by Jose Duran, who are judgment creditors against Imelda Marcos (“Class Plaintiffs”); Vilma Bautista, who in addition to serving as Imelda Marcos’s personal aide during the relevant time period also worked for the Philippine government from 1966 until 1986, including as a Foreign Service Officer for the Philippine Mission to the United Nations; and the Golden Budha Corporation along with the Estate of Roger Roxas (together, “Roxas”). Pending before the Court are seven motions, comprising five cross- motions for summary judgment, one motion to dismiss, and one motion for imposition of attorneys’ retaining and charging liens. The motions are: • Class Plaintiffs’ motion for partial summary judgment against the Republic (Dkt. #193); • Class Plaintiffs’ motion for summary judgment against Roxas (Dkt. #369); • Bautista’s motion for summary judgment against Class Plaintiffs and the Republic (Dkt. #201); • Bautista’s motion for summary judgment against Roxas (Dkt. #377); • Roxas’s motion for summary judgment against Class Plaintiffs and Bautista (Dkt. #383); • The Republic’s motion to dismiss or, in the alternative, to stay the case (Dkt. #411); and • Simon & Partners LLP’s (“S&P’s”) motion to authorize imposition of attorneys’ retaining and charging liens (Dkt. #357). 2 Case 1:14-cv-00890-KPF Document 429 Filed 03/29/18 Page 3 of 93 The Court addresses each motion in turn. For the reasons set forth below, the Court denies each motion except S&P’s motion to authorize imposition of attorneys’ liens. BACKGROUND1 A. Factual Background This interpleader action is the latest in what is now a long series of proceedings — spanning decades and pursued in numerous jurisdictions2 — in which claimants have sought ownership over assets that Ferdinand Marcos and Imelda Marcos allegedly misappropriated during Mr. Marcos’s tenure as President of the Philippines. A full recitation of the history of the disputes between Mr. and Mrs. Marcos, on one side, and the claimants, on the other, would fill volumes. Rather than engage in such an exhaustive factual 1 The facts in this Opinion are drawn from the District Attorney’s complaint (“Complaint” or “Compl.” (Dkt. #2)); the affidavits and declarations submitted in connection with this litigation; and the parties’ Rule 56.1 statements (cited using the convention “[Party] 56.1” or “[Party] Opp. [Counter-Party] 56.1”), other than the Republic’s Rule 56.1 statement, which was stricken by the Court (see Dkt. #343). For ease of reference, throughout this Opinion, the Court refers to the briefs submitted in support of, or in opposition to, the pending motions using the conventions “[Party] [SJ or MTD] Br. [Counter-Party],” “[Party] [SJ or MTD] Opp. [Counter-Party],” and “[Party] [SJ or MTD] Reply [Counter-Party]”; to Robert Swift’s declaration in support of Class Plaintiffs’ partial motion for summary judgment as “Swift Decl.” (Dkt. #196); to Robert Swift’s declaration in opposition to Bautista’s motion for summary judgment as “Swift Decl. Opp.” (Dkt. #311); to Daniel Cathcart’s declaration in support of Roxas’ motion for summary judgment against Class Plaintiffs and Bautista as “Cathcart Decl.” (Dkt. #384); and to Daniel J. Brown’s declaration in opposition to the Republic’s motion to dismiss as “Brown Decl.” (Dkt. #414). 2 Relevant cases include: Rep. of Philippines v. Pimentel, 553 U.S. 851 (2008); Golden Budha Corp. v. Canadian Land Co. of Am., N.V., 931 F.2d 196 (2d Cir. 1991); Rep. of Philippines v. Marcos, 806 F.2d 344 (2d Cir. 1986); Merrill Lynch, Pierce, Fenner and Smith, Inc. v. ENC Corp., 464 F.3d 885 (9th Cir. 2006); In re Estate of Ferdinand Marcos Human Rights Litig., 94 F.3d 539 (9th Cir. 1996); Rep. of Philippines v. Marcos, 862 F.2d 1355 (9th Cir. 1988); N.Y. Land Co. v. Rep. of Philippines, 634 F. Supp. 279 (S.D.N.Y. 1986); and Rep. of Philippines v. Marcos, G.R. No. 152154 (S.C., July 15, 2003) (Phil.). This list is not exhaustive, however, and does not include many cases in which claimants to the Interpleader Property have been involved. 3 Case 1:14-cv-00890-KPF Document 429 Filed 03/29/18 Page 4 of 93 recitation, the Court instead focuses on the facts that pertain directly to the pending motions. 1. Ferdinand Marcos’s Presidency, and the Presidential Commission on Good Government Ferdinand Marcos served as President of the Philippines from 1965 until 1986. (Class Plaintiffs 56.1 ¶ 2). He was elected to two terms in office, in 1965 and 1969. Rather than leaving office at the end of his second term, as required under the Philippine Constitution, Mr. Marcos instead imposed martial law in September 1972. He “confiscated businesses[,] particularly those of his adversaries[,] and ordered mass arrest and detention which, in many instances, resulted in the torture of political opponents, critics, independent publishers[,] and journalists[.]” (Swift Decl., Ex. 15). In February 1986, a popular uprising removed Mr. Marcos from office, and he and Mrs. Marcos fled to Hawaii. (Class Plaintiffs 56.1 ¶ 3). On February 25, 1986, Corazon Aquino was sworn in as the new President of the Philippines. (Id. at ¶ 4). Shortly after her inauguration, President Aquino enacted Executive Order No. 1, which, inter alia, created the Presidential Commission on Good Government (“PCGG”). (Id. at ¶ 5). The PCGG was charged with recovering assets that Mr. Marcos, Mrs. Marcos, and their family had misappropriated during the Marcos presidency. To date, the PCGG has collected over 8 million pages of documents relating to Mr. and Mrs. Marcos’s assets. (Id. at ¶ 22). In 1986, the PCGG established an office in New York City to track down assets that Mr. and Mrs. Marcos had acquired. (Class Plaintiffs 56.1 ¶ 23). It 4 Case 1:14-cv-00890-KPF Document 429 Filed 03/29/18 Page 5 of 93 identified artwork that had been removed from properties in New York City, including a townhouse at 13-15 East 66th Street, which was owned by the Republic but had been used as a residence by Mr. and Mrs. Marcos. (Id. at ¶¶ 7-8). Artwork had similarly been removed from an apartment in the Olympic Tower at 641 Fifth Avenue that Mr. and Mrs. Marcos had used as a private residence. (Id. at ¶ 9). The PCGG inventoried the paintings that had been displayed at the New York properties. (Class Plaintiffs 56.1 ¶ 24). Using bills, invoices, and labels placed on the walls where the paintings had been hung, the PCGG created a list of specific works of art that had gone missing. (Id. at ¶¶ 25, 28). The PCGG then took several steps to try to locate the missing artwork. It served subpoenas duces tecum on art galleries and auction houses in New York and elsewhere, including Marlborough Gallery. (Id. at ¶ 26). It launched a campaign, called “Where’s the Art?”, aimed at increasing public awareness of the PCGG’s efforts to recover the artwork and ratcheting up the pressure on Mr. and Mrs. Marcos to return whatever artwork they possessed. On June 23, 1986, the PCGG issued a press release in which it “ask[ed] artists, school children, media specialists, the general public and the press to cheerfully join the campaign by writing to Mrs. Marcos on Where’s the Art? postcards[.]” (Swift Decl., Ex. 13). That press release included a list of missing paintings; the list made specific reference to Monet’s L’Église et La Seine à Vétheuil and Sisley’s Langland Bay, but made no mention of Monet’s Le Bassin aux Nymphéas. (Id.). 5 Case 1:14-cv-00890-KPF Document 429 Filed 03/29/18 Page 6 of 93 2. Interpleader Property The DANY seized most of the Interpleader Property from Bautista and from bank accounts holding funds in Bautista’s or her sisters’ names on July 18 and July 19, 2011. (Compl. ¶ 19). The seized property included: (i) 10 paintings, a Serafian Isfahan rug, and $251,142 in cash from Bautista’s Manhattan residence; (ii) 114 items of jewelry and $2,386 in cash from the residence of Bautista’s sisters; (iii) 42 paintings and a rug from Bautista’s Long Island residence; and (iv) approximately $13,654,349.32 from bank accounts in Bautista’s name and $1,270,000 from an account jointly controlled by Bautista and one of her sisters. (Id. at ¶¶ 19-20). The DANY also froze six life insurance or annuity accounts in Bautista’s name. (Id. at ¶ 20). And on July 28, 2011, Hoffinger, Stern & Ross LLP, Bautista’s former attorneys, surrendered two additional paintings in connection with the criminal action. (Id. at ¶ 21). a. The 1975 Acquisition of Monet’s L’Église et La Seine à Vétheuil and Sisley’s Langland Bay On August 12, 1975, Marlborough Gallery in London sold six paintings on consignment — for a total of $450,000, of which $200,000 was paid at the time of sale — to Fe Gimenez, personal secretary and confidante of Imelda Marcos, on Mrs. Marcos’s behalf. (Swift Decl., Ex. 2). The paintings included Monet’s L’Église et La Seine à Vétheuil, which sold for $138,000, and Sisley’s Langland Bay, which sold for $82,000. The Sales Report lists Mrs. Gimenez’s address as “Study Room, Malacanang Palace, Manila, Philippines.” (Swift Decl., Ex. 2). The delivery instructions state: “All taken except Moore[,] which should be delivered to the Philippines[’] London Embassy.” (Id.). The 6 Case 1:14-cv-00890-KPF Document 429 Filed 03/29/18 Page 7 of 93 Consignment Note, on Marlborough Gallery’s letterhead and dated November 26, 1975 (when the paintings were dispatched), is addressed to “Madame Marcos, Malacanang Palace, Manila, Philippines.” (Id.). b. The 1977 Acquisition of Monet’s Le Bassin aux Nymphéas On March 31, 1977, Mrs. Marcos purchased nine paintings from Marlborough Gallery for a total of $2.9 million. (Swift Decl., Ex. 3). The most expensive was Monet’s Le Bassin aux Nymphéas (the “Water Lily” painting), which sold for $791,800. (Id.). The money used to purchase the paintings came from a Swiss bank account held in the name of Trinidad Foundation, a foundation created in 1970. (Id., Ex. 5; Republic Opp. Class Plaintiffs 56.1 ¶ 17). Mrs. Marcos was the primary beneficiary of the Trinidad Foundation. (Id.). In 1986, after Mr. Marcos was removed from office, the Swiss government froze several of the Trinidad Foundation’s bank accounts. It did so based on the Republic’s claim that all of the money in the accounts had been misappropriated by Mr. and Mrs. Marcos, and that the Republic was the rightful owner. (Class Plaintiffs 56.1 ¶ 31). In August 1991, the Swiss government provided documentation of transactions that had been processed through the Trinidad Foundation’s bank accounts, including specific references to the March 29, 1977 payment of $2.9 million to the London bank account of Marlborough Fine Arts. (Id. at ¶¶ 32-33). 7 Case 1:14-cv-00890-KPF Document 429 Filed 03/29/18 Page 8 of 93 c. The Display and Subsequent Removal of the Paintings During the Marcos presidency, artwork purchased on behalf of Mrs. Marcos was displayed at the townhouse at 13-15 East 66th Street in New York City. (Class Plaintiffs 56.1 ¶¶ 7-8). The Republic owned that property, which served as the Philippine Consulate in New York, though it was also used by Mr. and Mrs. Marcos as a private residence. (Id.). Mrs. Marcos also displayed some of the artwork at a second residence in New York, an apartment in the Olympic Tower. (Id. at ¶ 9). Bautista took possession of the paintings, though the timing of her appropriation of the paintings is a point of speculation and of some contention. Class Plaintiffs assert that, “[i]n late 1985 or early 1986, the three paintings were removed and hidden by Bautista[.]” (Class Plaintiffs 56.1 ¶ 20). The Republic, by contrast, is unwilling to provide even a general timeframe for Bautista’s appropriation of the paintings. It states merely that “[t]he time period when the[ ] [paintings] were taken is yet unclear.” (Republic Opp. Class Plaintiffs 56.1 ¶ 20). What is undisputed is that, when officials from the PCGG searched for the paintings after Mr. Marcos was swept from power in 1986, it did not find them in either the townhouse or the Olympic Tower apartment. d. Bautista’s Sale of the Water Lily Painting, and Her Subsequent Prosecution i. Sale of the Water Lily Painting On September 14, 2010, Bautista sold the Water Lily painting to a London gallery for $32 million. (Class Plaintiffs 56.1 ¶ 34). In connection with that sale, Bautista provided the purchaser with a Certificate of Authority, 8 Case 1:14-cv-00890-KPF Document 429 Filed 03/29/18 Page 9 of 93 signed by Mrs. Marcos and dated June 21, 1991, stating that Bautista was “[Mrs. Marcos’s] authorized representative to offer and negotiate, on [Mrs. Marcos’s] behalf, the sale and/or disposition of [Monet’s Water Lily painting.]” (Swift Decl., Ex. 11). It further indicated that Bautista was “authorized to sign, on [Mrs. Marcos’s] behalf, the corresponding deeds of transfer of ownership of [the] painting[ ]” and “to receive and/or sign receipts for the proceeds of the sale of [the] painting[ ].” (Id.). In a letter issued to the purchaser of the Water Lily painting, Bautista explained that, during one of Mrs. Marcos’s visits to New York in 1991, “a number of original copies of a pro forma Certificate of Authority [were] prepared and notarized … and each one was signed by Mrs. Marcos.” (Swift Decl., Ex. 12). For each, “the central section where the description of the asset to be sold … was left blank for later completion.” (Id.). In February 2010, Bautista “used one of the signed and notarized Certificates of Authority and typed in the appropriate section therein the description for the painting now being sold.” (Id.). She went on to note that “Mrs. Marcos believes that all her correspondence as well as other communications are always subject to constant monitoring and surveillance by the government (both Philippine and U.S.),” and thus that “confidentiality should always be preserved and maintained for all sensitive matters such as the sale of the [p]ainting in question.” (Id.). Bautista further stated that she had “received instructions from [Mrs. Marcos] to sell the [p]ainting, and [Mrs. Marcos] [wa]s aware of the sale.” (Swift 9 Case 1:14-cv-00890-KPF Document 429 Filed 03/29/18 Page 10 of 93 Decl., Ex. 12). She was “acting as [Mrs. Marcos’s] agent with authority to sell the [p]ainting of which [Bautista] ha[d] physical possession[.]” (Id.). The painting “ha[d] been in [Bautista’s] possession for a good number of years and ha[d] been kept in different locations in New York.” (Id.). Bautista did not “have any documentary record of when the [p]ainting was purchased by Mrs. Marcos, but to the best of [Bautista’s] recollection … it was bought together with other paintings in London during the late 70s or early 80s.” (Id.). Bautista closed by stating: “In entering into the Agreement and at the Closing, I shall continue to act as [Mrs. Marcos’s] authorized agent and representative.” (Id.). ii. Bautista’s Criminal Prosecution In 2011, the DANY launched an investigation into the sale of the Water Lily painting, which investigation culminated in Bautista’s indictment on October 8, 2012. (Bautista 56.1 ¶ 22). Bautista was “charged with having illegally conspired to possess and sell valuable works of art acquired by Marcos during her husband’s presidency, keep the proceeds for herself, and hide those proceeds from New York State tax authorities and others.” (Compl. ¶ 16). She and her co-conspirators “attempted to sell the paintings covertly using a variety of illicit means.” (Id. at ¶ 17). After selling the Water Lily painting, Bautista received $32 million dollars, “paid her accomplices ‘commissions,’ and kept the rest of the money herself.” (Id.). And in April 2011, Bautista filed a 2010 tax return that did not mention the sale or any income derived therefrom. (Id.). 10