Armenian Assembly of America, Inc. v. Cafesjian
924 F. Supp. 2d 204
D.D.C.2013Background
- After a twelve-day bench trial in November 2010, the court held Waters and Cafesjian entitled to indemnification from AGM & M for defense costs in Armenian Assembly I.
- Defendants sought $2,875,058.23 in fees; Magistrate Judge Kay was tasked with resolving the fee request.
- Magistrate Judge Kay issued an R&R on April 24, 2012 recommending $1,461,658.54, with AGM & M objections—not meriting relief according to the court.
- The court adopted the R&R as modified, deducting $13,684.38, yielding an award of $1,447,974.15 to be paid by AGM & M.
- Local Civil Rule 72.2 governs objections to magistrate recommendations, with de novo review standards and respect for clear errors or law.
- AGM & M posits that indemnification would constitute self-dealing under Treasury regulations due to private-foundation status; the court addresses these contentions and related fee-structure issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does AGM & M's private foundation status preclude indemnification? | AGM & M contends indemnification would be self-dealing under 4941(d) and 53.4941(d)-2(f)(3). | Waters and Cafesjian are entitled to indemnification under the bylaws despite foundation status. | No; indemnification authorized by bylaws and regulatory exception applies. |
| Were the fees ‘necessarily incurred’ by the Defendants? | AGM & M argues fees were not necessarily incurred since litigation sprang from Cafesjian’s initial suit. | Defendants reasonably incurred fees to oppose AGM & M’s counterclaim for breach of fiduciary duty. | Yes; fees were necessarily incurred to defend against the counterclaim. |
| Should blended entries be indemnified at a reduced rate (50%)? | AGM & M objects to indemnification of blended entries and the 50% rate. | Magistrate Judge Kay’s 50% rate appropriately balances attribution and overall complexity. | Yes; 50% indemnification for blended entries is adopted. |
| Is the Laffey Matrix appropriate for setting hourly rates? | AGM & M argues Laffey rates should cap reasonable hourly rates. | Laffey matrix not applicable; indemnification bylaws permit higher rates, and the firm bills above Laffey. | No; Laffey Matrix is not applicable here. |
| Is the Minnesota action affecting Waters’ indemnification in this case? | Waters seeks indemnification from CFF in Minnesota; AGM & M argues offset. | Minnesota action concerns different payor and is immaterial to this indemnification. | No; Minnesota proceeding does not affect this indemnification. |
Key Cases Cited
- Armenian Assembly of Am., Inc. v. Cafesjian, 772 F. Supp. 2d 20 (D.D.C. 2011) (initial indemnification ruling and context for by-laws and self-dealing analysis)
- Armenian Assembly of Am., Inc. v. Cafesjian, 772 F. Supp. 2d 129 (D.D.C. 2011) (Armenian Assembly II; discusses 4941(d) self-dealing and indemnification under regulations)
- American Society for the Prevention of Cruelty to Animals v. Feld Entertainment, 659 F.3d 13 (D.C. Cir. 2011) (defining standard for clearly erroneous or contrary to law review)
- Anderson v. City of Bessemer City, 470 U.S. 564 (1985) (clear error standard and deference to magistrate rulings)
- Covington v. District of Columbia, 57 F.3d 1101 (D.C. Cir. 1995) (reasonableness standards in fee-shifting contexts)
- Dickens v. Friendship-Edison P.C.S., 724 F. Supp. 2d 113 (D.D.C. 2010) (fee-shifting context; not controlling where indemnification bylaws apply)