Armenian Assembly of America v. Gerard Cafesjian
411 U.S. App. D.C. 74
| D.C. Cir. | 2014Background
- In the late 1990s–2000s, Armenian cultural organizations (the Assembly) and donor Gerard Cafesjian (through Cafesjian Family Foundation, CFF) agreed to create the Armenian Genocide Museum & Memorial (AGM&M) and transferred the Bank Building and adjacent properties to AGM&M via a Grant Agreement that included a reversion clause if the project was not substantially developed by Dec. 31, 2010.
- Cafesjian/CFF funded acquisition of the Bank Building (in part) and the Adjacent Properties; the Grant Agreement defined "Grants" and "Grant Property" as the amounts and properties funded by Cafesjian/CFF.
- AGM&M development stalled amid board disputes, fundraising shortfalls, and litigation between Cafesjian/CFF and the Assembly/AGM&M; Cafesjian resigned (2006) and later recorded a lis pendens and initiated litigation asserting reversion rights.
- Multiple suits were filed and consolidated; after a bench trial the District Court: rejected most claims for breach of fiduciary duty, held the reversion clause enforceable (transferring the Grant Property to CFF), awarded Cafesjian and Waters indemnification under AGM&M bylaws, and upheld the Assembly’s lease of one adjacent building.
- On appeal the D.C. Circuit affirmed: it found insufficient proof of injury for fiduciary-duty claims, held the Grant Agreement’s reversion clause unambiguous and enforceable as written, affirmed indemnification and the reasonableness of the fee award, denied post-trial recusal/Rule 60 relief, and upheld the Families USA lease.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of fiduciary duty (AGM&M/Assembly v. Cafesjian & Waters) | Cafesjian/Waters sabotaged fundraising and development, causing project failure and injury to AGM&M | Defendants denied causation; attributed delay to lack of funding and litigation by both sides | Affirmed District Court: plaintiffs failed to prove proximate injury; fiduciary claims not established |
| Enforceability and scope of Grant Agreement reversion clause | Plaintiffs: clause should be tolled or unenforceable under prevention doctrine; if enforced, reversion should be proportional to Cafesjian/CFF contribution | Defendants: clause is valid; Grants/Grant Property definitions permit full transfer when Grants were funded | Affirmed: clause unambiguous; prevention not shown; because Grants (as defined) were fully funded, CFF could take Grant Property in full |
| Indemnification of Cafesjian and Waters under AGM&M bylaws | Plaintiffs: indemnification improper because Cafesjian initiated litigation; award excessive | Defendants: bylaws mandate indemnification for expenses reasonably incurred; award reasonable | Affirmed: bylaws cover indemnification regardless of who filed first; District Court reasonably determined fees and applied appropriate reductions for mixed tasks |
| Post-trial motions (recusal and Rule 60(b)) | Plaintiffs: judge’s past shared donation/interest and later Waters litigation/indictment warranted new trial or recusal | Defendants: alleged facts not disqualifying; newly surfaced claims did not prejudice trial record | Affirmed: no reasonable basis for recusal; Rule 60 relief denied—no showing of actual prejudice and District Court did not rely on contested testimony |
| Validity/continuation of Assembly lease (Families USA building) | Appellants: lease exceeded permitted "part of" museum uses and was unauthorized/ultra vires | Appellees: lease raised funds for museum, was within authority and properly approved | Affirmed: lease fell within permissible uses and was approved by delegated committee; equitable challenges forfeited or not shown |
Key Cases Cited
- Gov’t of Rwanda v. Johnson, 409 F.3d 368 (D.C. Cir.) (standard of review: legal de novo, factual clear error)
- Willens v. 2720 Wis. Ave. Coop. Ass’n, 844 A.2d 1126 (D.C. 2004) (nonprofit directors owe fiduciary duties)
- Friends of Tilden Park v. District of Columbia, 806 A.2d 1201 (D.C. 2002) (fiduciary duties of nonprofit officers/directors)
- Pietrangelo v. Wilmer Cutler Pickering Hale & Dorr LLP, 68 A.3d 697 (D.C. 2013) (plaintiff must prove breach and proximate injury for fiduciary claims)
- In re Estate of Drake, 4 A.3d 450 (D.C. 2010) (prevention doctrine: one cannot benefit from causing nonperformance)
- Aronoff v. Lenkin Co., 618 A.2d 669 (D.C. 1992) (prevention can negate condition precedent)
- Segar v. Mukasey, 508 F.3d 16 (D.C. Cir.) (de novo review of contract ambiguity)
- F.D.I.C. v. Bender, 127 F.3d 58 (D.C. Cir. 1997) (trial court discretion on proof required to determine reasonableness of fee awards)
- Hensley v. Eckerhart, 461 U.S. 424 (1983) (court may reduce fees to account for limited success and mixed claims)