BAZARIAN INTERNATIONAL FINANCIAL ASSOCIATES, L.L.C., Plаintiff, v. DESARROLLOS AEROHOTELCO, C.A., Walter Luciano Stipa, an individual, Desarrollos Newco 22, C.A., Desarrollos Hotelco Corporation Curacao Holding, N.V., Desarrollos Hotelco Corporation Aruba Holding, N.V., Desarrollos Hotelco Corporation DHC Aruba, N.V. and Desarrollos Hotelco Corporation Aruba Holding Caracas, S.A., Defendants.
Civil Action No. 13-1981 (BAH)
United States District Court, District of Columbia.
Signed 02/07/2016
BERYL A. HOWELL, United States District Judge
Charles Wheeler Chotvacs, Loss, Judge & Ward, LLP, Washington, DC, Marisol Vilasuso, Wilfredo A. Rodriguez, Avila Rodriguez Hernandez Mena & Ferri LLP, Coral Gables, FL, for Defendants.
Desarrollos Hotelco Corporation Aruba Holding Caracas, S.A. pro se.
MEMORANDUM OPINION
BERYL A. HOWELL, United States District Judge
The plaintiff, Bazarian International Financial Associates, LLC (“plaintiff” or
I. BACKGROUND
The factual allegations underlying this dispute have been generally summarized in this Court‘s Memorandum Opinion dismissing the plaintiff‘s prior lawsuit against Aerohotelco for a declaratory judgment that the plaintiff has the “right to certain investment banking fees under the parties’ contract.” Bazarian Int‘l. Fin. Assocs., L.L.C. v. Desarrollos Aerohotelco, C.A., 793 F.Supp.2d 124, 125-27 (D.D.C.2011) (BAH). The facts pertinent to resolving the instant motion are briefly summarized below.
A. Investment Banking Agreement
On February 5, 2007, Aerohotelco and the plaintiff executed an Investment Banking Agreement, pursuant to which the plaintiff agreed to assist Aerohotelco “with bidding for an option from the Government of Aruba to lease land in Palm Beach, Aruba (‘the Palm Beach Option‘), for the purpose of establishing and developing a luxury hotel resort (‘the Project‘).” FAC ¶ 13. The plaintiff also agreed to “act as Aerohotelco‘s exclusive advisor and investment banker . . . to raise financing for the Project.” Id. ¶ 14. The Agreement provided for payment to the plaintiff of a “Debt Fee” “‘if the financing for the Project is concluded within thirty-six (36) months following the termination of this Agreement from sources introduced to the Project by [the plaintiff].‘” Id. ¶ 16 (quoting FAC, Ex. A (“Investment Banking Agreement“) ¶ 3, ECF No. 13-1) (alteration in thе original). The Agreement specified, in a forum selection clause, that “District of Columbia courts will have jurisdiction over the Parties to adjudicate any and all rights of the Parties under this Agreement.” Investment Banking Agreement ¶ 5.
Shortly after consummation of the Investment Banking Agreement, the plaintiff introduced the then-owner and president of Aerohotelco, defendant Stipa, to AIB Bank “to discuss financing for the Project.” FAC ¶¶ 18-19. The meetings culminated, on March 26, 2007, with AIB Bank sending to Aerohotelco and the plaintiff an “Indicative Term Sheet,” id. ¶ 21, which
In June 2009, twenty-eight months after the execution of the Investment Banking Agreement, Aerohotelco notified the plaintiff that “it would not pay the Debt Fee for financing coming from AIB Bank” because “[the plaintiff] had no role in facilitating its relationship with AIB Bank[.]” Id. ¶ 28.
B. Prior Lawsuit
On September 17, 2009, the plaintiff brought an action in this Court against Aerohotelco seeking a declaratory judgment that the plaintiff was entitled to the Debt Fee “upon the settlement of binding loan or guarantee commitments for the Project from AIB Bank.” Bazarian, 793 F.Supp.2d at 127; FAC ¶ 29. The anticipated financing agreement (“Facility Agreement“) between AIB Bank and “Aerohotelco or one of the other corporate Defendants controlled by Stipa” was entered on October 26, 2009, FAC ¶ 30, but, at the time of the prior action, the terms remained “‘subject to [] numerous contingencies and conditions,‘” and “there ha[d] not been any draws made by the borrowers pending a final closing,” Bazarian, 793 F.Supp.2d at 130 (quoting Decl. of Pedro Vera ¶¶ 8-10). On June 22, 2011, the action was dismissed due to lack of subject matter jurisdiction because the settlement of a binding loan commitment was not yet likely and, consequently, “the facts . . . do not present an actual controversy within the meaning of the Declaratory Judgment Act and Article III of the U.S. Constitution.” Id. at 131.
C. Efforts to Serve Instant Lawsuit
On December 16, 2013, the plaintiff refiled the instant lawsuit against Aerohotelco, see generally Compl., ECF No. 1, but because the plaintiff experienced difficulty serving Aerohotelco in Venezuela, the complaint was never served, see generally Pl.‘s Mot. Leave to Effect Alternative Service (“Pl.‘s Mot. Alt. Service“) at 4-6, ECF No. 16; Response to Order to Show Cause at 2-3, ECF No. 10; Status Report, ECF No. 11; Second Status Report, ECF No. 12. Over a year later, on February 10, 2015, still unable to serve the original complaint, the plaintiff filed the First Amended Complaint, the operative complaint for this motion, adding six additional defendants: Stipa, Newco, Curacao Holding, Aruba Holding, DHC (collectively the “Project Developers“), and Caracas Holding, a Venezuelan “holding company that holds some or all of the equity interest in DHC.” FAC ¶¶ 3-9. The plaintiff alleges that according to representations made in a Share Sale Agreement and Shareholders Agreement (“Share Sale Agreement“) with another Venezuelan citizen, Newco, Curacao Holding, Aruba Holding, DHC, and Stipa became developers of the Project, id. ¶ 34, which was completed in November, 2013, id. ¶ 41. Additionally, the plaintiff alleges that circumstances have now changed. Specifically, “[u]pon information and belief, since January 26, 2011, Aerohotelco and/or Stipa, Newco, [Curacao Holding], Aruba Holding, DHC, and/or Caracas
On April 21, 2015, the plaintiff moved for leave to effect alternative service on the defendants pursuant to
The plaintiff, in attempting to serve the First Amended Complaint on the defendants, alleged that “despite extensive efforts involving searches of international business databases and inquiries of the Aruban government, counsel for [the plaintiff] has been unable to identify addresses . . . for Stipa, Newco, or Caracas Holding in either Venezuela or Aruba, or to confirm addresses for the remaining defendants.” Id. at 6.2 Faced with these difficulties, the plaintiff moved for leave to serve the defendants by registered mail and e-mail to the defendants’ U.S. counsel, who was located in Florida, and was “currently representing them in the Receiver Case in Connecticut, and thus are presumably in regular contact with Defendants.” Id. at 9-10.3 This same U.S. Counsel had represented Aerohotelco in the first lawsuit brought by the plaintiff in 2009. Id. at 4.
On April 21, 2015, the plaintiff‘s Motion for Leave to Effect Alternative Service on the Defendants was granted, in light of the “unsuccessful attempts already made to serve the defendants” and “the fact that service on a party‘s attorney is ‘not prohibited by international agreement.‘” Minute Order Granting the Plaintiff‘s Motion for Leave to Effect Alternative Service on De-
II. LEGAL STANDARDS
A. Federal Rule of Civil Procedure 12(b)(2)
To survive a motion to dismiss under
Unlike a motion to dismiss under
B. Federal Rule of Civil Procedure 12(b)(6)
To survive a motion to dismiss under
III. DISCUSSION
Defendants Aerohotelco and the Project Developers4 moved to dismiss the plaintiff‘s First Amended Complaint, contending that (1) personal jurisdiction over the Project Develoрers is lacking because they were not parties to the Investment Banking Agreement providing, in a forum selection clause, that proper venue is in District of Columbia; (2) the defendants were not properly served under
A. Personal Jurisdiction
The plaintiff contends that personal jurisdiction may be exercised over all of the defendants based on a forum selection clause in the Investment Banking Agreement. As noted supra in Part I.A, this clause states, in full, that “The Parties hereby agree that District of Columbia courts will have jurisdiction over the Parties to adjudicate any and all rights of the Parties under this Agreement.” Investment Banking Agreement ¶ 5. Although, the Investment Banking Agreement was executed by the plaintiff and Aerohotelco, this Agreement also expressly states that it “binds Aerohotelco‘s ‘successor companies or any related entities which intend to invest in and/or develop’ the Aruban resort
When this Court‘s subject matter jurisdiction is based on the diversity of the parties’ citizenship, as in this case, personal jurisdiction over each defendants may be exercised “coextensive with that of a District of Columbia Court.” Helmer v. Doletskaya, 393 F.3d 201, 205 (D.C.Cir. 2004) (citing Crane v. Carr, 814 F.2d 758, 762 (D.C.Cir.1987)). The D.C. Court of Appeals “has recognized the modern trend toward enforcing forum-selection clauses, noting that ‘such clauses are [now] prima facie valid and [will] be enforced unless enforcement is shown by the resisting party to be unreasonable under the circumstances.‘” Yazdani v. Access ATM, 941 A.2d 429, 431 (D.C.2008) (quoting Forrest v. Verizon Commc‘ns, Inc., 805 A.2d 1007, 1010 (D.C.2002)) (internal quotation marks omitted, alterations in the original).
The defendants do not argue that enforcement of the forum selection clause would be unreasonable and further, concede that personal jurisdiction may be exercised over defendant Aerohotelco since it is a party to, and executed, the Investment Banking Agreement. Defs.’ Mem. Supp. Mot. Dismiss (“Defs.’ Mem.“) at 24 n.13, ECF No 25. The defendants dispute whether the five remaining defendants, four allegedly affiliated corporations and Stipa, are subject to the personal jurisdic-5tion of this Court. They contend that “none of the [Project Developers] are ‘successor companies’ or ‘related entities,‘” and that the forum selection clause may only be enforced against Aerohotelco. Id. at 23. This threshold dispute boils down to the sufficiency of the plaintiff‘s allegations regarding whether the five remaining defendants are such successor or related entities to Aerohotelco.5
The plaintiff has plausibly alleged that the Project Developers are at least related entities to Aerohotelco intended tо develop the Project, FAC ¶ 33, and therefore fall within the scope of the Investment Banking Agreement‘s forum selection clause. One man, defendant Stipa, is a key link among all of these defendant corporate entities. Defendant Stipa was the owner and president of Aerohotelco when it entered into the Investment Banking Agreement with the plaintiff. See Investment Banking Agreement at 5 (Signature Page). He also allegedly “directly or indirectly fully owned” the corporate Project Developers, FAC ¶ 34 (quoting the Share Sale Agreement), with the authority to execute on their behalf a contract between the Project Developers and a third-party individual, id. ¶ 37.
In addition to sharing defendant Stipa as an owner and authorized agent, the Project Developers appear to have succeeded Aerohotelco‘s work in developing the Project. For example, the plaintiff avers that while Aerohotelco was awarded
The defendants attempt to counter the plaintiff‘s factual allegations establishing a prima facie case of personal jurisdiction by relying on the declarations submitted by each of the Project Developers. Defs.’ Mem. at 26-27 (quoting declarations of defendant Stipa and the corporate representatives of DHC, Aruba Holding, Curacao Holding, and Newco). These declarations make nearly identical statements denying that they are successor companies to, or related entities of, Aerohotelco. Compare Defs.’ Mem., Ex. C (“Vera Decl.“) ¶ 10, ECF No. 25-3 with Defs.’ Mem., Ex. D (“Stipa Decl.“) ¶ 9, ECF No. 25-4 with Defs.’ Mem., Ex. E (“McKenzie Decl.“) ¶ 9, ECF No. 25-5. These declarations, apart from being conclusory, actually show the deep interconnections of management personnel among the defendant corporate entities and thereby undermine the defendants’ efforts to defeat personal jurisdiction. For example, the Managing Director of both DHC and Aruba Holding declared that these defendants “do not share and/or have any common directors and/or shareholders and have no common business interests or holdings” with Aerohotelco. Vera Decl. ¶ 10. Yet, the Managing Director for both DHC and Aruba Holding, however, is the same person, who, in 2011, submitted to the Court, in the earlier Bazarian action, a declaration testifying that he was, at that time at least, “an officer and attorney-in-fact for [Aerohotelco] and, in that capacity, [he was] familiar with the business affairs of [Aerohotelco].” Def.‘s Mot. Dismiss, Ex. B ¶ 3, Bazarian, 793 F.Supp.2d 124).
Similarly, defendant Stipa, who now serves as the President of Newco, submitted a declaration stating that “Newco and Aerohotelco are separate and distinct corporate entities which do not share or have any common directors and/or shareholders and have no common business interests or holdings,” despite defendant Stipa‘s undisputed ownership of Aerohotelco at the time the Investment Banking Agreement was signed. Stipa Decl. ¶ 9.
Lastly, the Managing Director of Curacao Holding declared that Curacao Holding and Aerohotelco “are separate and distinct corporate entities which do not share or have any common directors and/or shareholders and have no common business interests or holdings.” McKenzie Decl. ¶ 9. Curacao Holding and Aerohotelco, however, do share one shareholder: defendant Stipa. Both Newco, run by Stipa, and defendant Stipa, personally, own equity stakes in Curacao Holding. See Pl.‘s Opp‘n Defs.’ Mot. Dismiss (“Pl.‘s Opp‘n“), Ex. 1 (“Share Sale Agreement“) at 16, ECF No. 30-1 (“Whereas Stipa and Newco wish to sell part of their shares in [Curacao Holding] to THE COMPANY.“). Furthermore, defendant Stipa represented Curacao Holding, along with the rest of the corporate Project Developers, “as evidenced by the power of attorney granted to him,” in the Shareholder Sale Agreement entered into by all of the Project Developers with another Venezuelan individual. Id. at 15. In other words, defendant
The reappearance of defendant Stipa and Mr. Vera, who was the attorney-in-fact for Aerohotelco in 2011, at the helm of DHC, Aruba Holding, Newco and Curacao Holding, all of which developed the Project that Aerohotelco originally contracted with the plaintiff to assist in obtaining both the land and the financing, is entirely consistent with the plaintiff‘s allegation that these Project Developers are related entities to Aerohotelco that were incorporated to succeed Aerohotelco‘s interest in developing the Project. The similarity in the names of all of the corporate defendants—all of which start with the word Desarrollos, and nearly all of which incorporate the word Hotelco—and their involvement in the same type of work—development of the luxury hotel on the same tract of land in Aruba—further corroborate that they are related to Aerohotelco.
Therefore, this Court finds that the plaintiff has alleged sufficient facts for the exercise of personal jurisdiction over the Project Developers, as related entities to Aerohotelco in the development of the Aruba project, based on the forum selection clause and other terms of the Investment Banking Agreement.6
Accordingly, the defendants’ motion to dismiss on the basis of lack of personal jurisdiction is denied.
B. Sufficiency of Service on Defendants
Even if the plaintiff has established a prima facie case of personal jurisdiction, the law is well settled that “[a] federal court may assert personal jurisdiction over a defendant only if ‘the procedural requirements of effective service of process are satisfied.‘” Freedom Watch, 766 F.3d at 78 (quoting Mann v. Castiel, 681 F.3d 368, 372 (D.C.Cir.2012) (internal citations omitted)). “Service of process, under longstanding tradition in our system of justice, is fundamental to any procedural imposition on a named defendant.” Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 350, 119 S.Ct. 1322, 143 L.Ed.2d 448 (1999). This is because service is necessary, but not sufficient, to allow а court
When sufficiency of service is challenged, the plaintiff bears the burden of demonstrating that service has been effected properly. See Mann, 681 F.3d at 372 (noting that, under
The plaintiff in this case, prior to serving the defendants, moved for leave to effect alternative service on the defendants. See Pl.‘s Mot. Alt. Service. “[T]he decision whether to allow alternative methods of serving process under
In challenging the propriety of service in accordance with this Court‘s order, the defendants argue that: (1) ”
1. Federal Rule of Civil Procedure 4(f)(3)
Under
The defendants mainly rely on the non-binding opinion in Freedom Watch, Inc. v. Organization of Petroleum Exporting Countries (OPEC), 107 F.Supp.3d 134, 137-39 (D.D.C.2015), in which another Judge on this Court declined to authorize alternate service on a foreign defendant under
As a preliminary matter, unlike in OPEC, no international agreement applicable to this case expressly prohibits service via the defendants’ U.S. counsel through email and postal mail. Second, the reasoning in OPEC assumes, without explanation, that “service” is complete when the foreign defendant‘s United States counsel physically receives the summons. This holding was not mandated by the D.C. Circuit‘s opinion prior to remand. To the contrary, the D.C. Circuit suggested, without deciding, that “service on a foreign entity through its counsel in the United States” may be permissible under
This Court disagrees with the defendants’ cramped interpretation of
Ultimately,
The defendants have also availed themselves of the U.S. legal system. Specifically, in a parallel civil action to the receivership action described supra in note 3, the Securities and Exchange Commission filed suit against the perpetrator of the Ponzi scheme and the corporate entities he allegedly controlled to recover fraudulently obtained funds. Complaint ¶¶ 1, 6, SEC v. Illarramendi, No. 03:11-cv-00078-JBA (hereinafter ”Illarramendi“) (D. Conn. Jan. 14, 2011), ECF No 1. The Project
Accordingly, the Court‘s Minute Order, dated April 21, 2015, permitting the plaintiff to serve the foreign defendants through their U.S. counsel was authоrized under
2. Efforts to Effect Service Under Federal Rule of Civil Procedure 4(f)(1) and the Hague Convention
The defendants next argue that they were improperly served because the plaintiff failed to first demonstrate “a minimum threshold effort to serve Defendants via
Other courts, including this one, that have considered this issue have concurred with the Ninth Circuit. See AngioDynamics, Inc. v. Biolitec, AG, 780 F.3d 420, 429 (1st Cir.2015) (“By its plain terms,
Thus, contrary to the premise of the defendants’ argument, the plaintiff is not required to first demonstrate “a minimum threshold effort to serve Defendants via . . . the Hague Convention.” Defs.’ Mem. at 16.
Even if the plaintiff were obliged to attempt service under the Hague Convention, this burden would have been satisfied in this case. The plaintiff attempted to comply with the Hague Convention to
3. Service Effected in Accordance with the Hague Convention
Lastly, the defendants argue that service through their U.S. Counsel, who was sent the summons and First Amended Complaint via email and postal mail, was improper because “the manner of service was not permitted under thе Hague [Convention] and not designed to minimize offense to Aruba, Curacao, and Venezuela.” Defs.’ Mem. at 19. According to the defendants, this alternative service is improper because (1) “Venezuela, which, in this case, is the country of residence for three of the Defendants, specifically objects to ‘the transmission of documents through postal channels,‘” as laid out in Article 10 of the Hague Convention; and (2) “the local laws of Curacao and Aruba do not permit defendants to be served via email, or registered mail, on their counsel.” Id. at 20. These arguments are unavailing.
First, as the plaintiff correctly points out, the defendants were properly served because “service by email is not prohibited by the Hague Convention . . . Email service has been approved even where, as here, the country objects to Article 10 of the Hague Convention.” Pl.‘s Opp‘n at 22 (quoting Lexmark Int‘l, Inc. v. Ink Techs. Printer Supplies, LLC, 295 F.R.D. 259, 261-62 (S.D.Ohio 2013) (collecting cases)). In other words, a country‘s objection to Article 10 does not constitute an express rejection of service by email. See AMTO, LLC v. Bedford Asset Mgmt., LLC, No. 14-cv-9913, 2015 WL 3457452, at * 7 (S.D.N.Y. June 1, 2015) (“the Court concludes that, as a general matter, service via email for a defendant residing in Russia may qualify as an alternative means of service under
Despite this binding clarification of the applicable law from the D.C. Circuit, the defendants cite to authorities from outside this Circuit, to argue that “authorizing
Accordingly, the defendants’ motion to dismiss based on improper service is denied.
* * *
Having concluded that personal jurisdiction may be exercised over the defendants
C. Failure to State a Claim
As noted supra, the plaintiff asserts two claims against all the defendants: breach of contract and, in the alternative, quantum meruit arising from the defendants’ refusal to pay the plaintiff the “Debt Fee,” after the plaintiff assisted the defendants in obtaining financing for the Project from AIB Bank. FAC ¶¶ 44-52; 57-59. The defendants’ arguments to dismiss, under
1. Breach of Contract
“To prevail on a claim of breach of contract, a party must establish (1) a valid contract between the parties; (2) an obligation or duty arising out of the contract; (3) a breach of that duty; and (4) damages caused by breach.” Francis v. Rehman, 110 A.3d 615, 620 (D.C.2015) (quoting Tsintolas Realty Co. v. Mendez, 984 A.2d 181, 187 (D.C.2009) (emphasis in the original)). The plaintiff alleges that the Investment Banking Agreement is a valid contract, pursuant to which the “[d]efendants retained BI as their exclusive advisor and investment banker . . . to raise financing for the Project.” FAC ¶ 43. Specifically, the plaintiff alleges that the Investment Banking Agreement obligates the defendants to pay the plaintiff, as a Debt Fee, “a percentage of the financing committed to the Project as a result, directly or indirectly, of BI‘s efforts,” id. ¶ 44, “if the financing for the Project is concluded within thirty-six (36) months following the termination of this Agreement from sources introduced to the Project by BI,” id. ¶ 45. The plaintiff alleges that “BI . . . satisfied all of its material duties under the Agreement,” id. ¶ 48, by introducing the defendants to AIB Bank, which resulted in an “Indicative Term Sheet” in March 2007 and, subsequently in 2009, the Facility Agreement, which amounted to “a definitive and enforceable financing agreement for the Project,” id. ¶¶ 21, 30, 49. Nonetheless, the defendants refused to pay the plaintiff the agreed upon Debt Fee. Id. ¶¶ 28, 52.
The defendants raise two grounds for dismissal of the breach of contract claim. First, the defendants argue that Section 2.B of the Investment Banking Agreement requires the plaintiff to secure binding financial commitments by April 2, 2007, eight weeks after the execution date of the Investment Banking Agreement in order to be entitled to the Debt Fee—a requirement that the defendants contend the plaintiff failed to meet. Defs.’ Mem. at 31 (quoting Investment Banking Agreement § 2.B). The plaintiff concedes that it did not secure a binding loan commitment on behalf of the defendants until 2009. After the plaintiff introduced the defendants to AIB Bank, AIB Bank sent, on March 26, 2007, an “Indicative Term Sheet,” which was “only for discussion purposes and does not constitute any legally binding or enforceable obligation on the part of the bank to provide any financing.” Indicative Term Sheet at 3; FAC ¶¶ 18-21. Negotiations continued for another two years until 2009, when AIB Bank entered into a Facility Agreement, with “Aerohotelco or one of the other corporate Defendants.” FAC ¶ 30. Nonetheless, the plaintiff contend that it has fulfilled its obligation under Section 2.B, and the other sections, of the Investment Banking Agreement, entitling it to the Debt Fee becausе Section 2.B requires only the plaintiff to obtain “financial commitments” that is “something less than fully ‘binding‘—such as a detailed proposal that could be submitted in support of Ae-
This dispute turns on a question of interpretation of Section 2.B, cited by both parties. “The proper interpretation of a contract, including whether a contract is ambiguous, is a legal question[.]” Abdelrhman v. Ackerman, 76 A.3d 883, 887 (D.C.2013) (citing Tillery v. District of Columbia Contract Appeals Bd., 912 A.2d 1169, 1176 (D.C.2006)). Under D.C. law, “the written language embodying the terms of an agreement will govern the rights and liabilities of the parties [regardless] of the intent of the parties at the time they entered in the contract, unless the written language is not susceptible of a clear and definite undertaking.” Id. at 888 (quoting Dyer v. Bilaal, 983 A.2d 349, 354-55 (D.C.2009)). The task of interpreting the terms of a contract starts with the “plain meaning of the language on the face of a fully integrated contract.” Id. (citing Tillery, 912 A.2d at 1176). A contract is not ambiguous if “the court can determine its meaning without any other guide than a knowledge of the simple facts on which, from the nature of language in general, its meaning depends.” Sahrapour v. LesRon, LLC, 119 A.3d 704, 708 (D.C.2015) (quoting Joyner v. Estate of Johnson, 36 A.3d 851, 856 (D.C.2012)). On the other hand, “[a] contract . . . is ambiguous if it is, or the provisions in controversy are, reasonably or fairly susceptible of different constructions or interpretations, or of two or more different meanings . . . .” Id. (quoting Joyner, 36 A.3d at 856). If the terms of the contract are ambiguous “[e]xtrinsic or parol evidence which tends to contradict, vary, аdd to, or subtract from the terms of a written contract” may be considered. Abdelrhman, 76 A.3d at 888 (quoting Segal Wholesale v. United Drug Serv., 933 A.2d 780, 783 (D.C.2007)). “[C]onsideration of such extrinsic evidence is for the fact finder[.]” District of Columbia v. District of Columbia Pub. Serv. Com‘n, 963 A.2d 1144, 1156 (D.C.2009).
The Investment Banking Agreement is not so clear as the defendants would suggest. The entire Agreement consists of four pages, divided in seven paragraphs, some of which are further divided into “sections.” Paragraph 2 of the Agreement outlines the plaintiff‘s various duties along with the “remuneration and reimbursement” owed to the plaintiff. Section 2.B, which provides the basis for the defendants’ argument that the plaintiff was obligated to “secure binding ‘financial commitments‘” within eight weeks to be entitled to the Debt Fee, provides in relevant part:
Bazarian International proposes to receive the financial commitments within eight weeks from date of this Agreement with cooperation of the Company. For its time and effort in advising the company during the RFP process as well as in seeking and arranging the financing for the Project, Bazarian International will receive a monthly retainer . . . If Bazarian International is successful in arranging financial commitments, the Company, at its sole discretion, may continue the retainer and secure Bazarian International‘s services until loan closing and/or disbursements. Investment Banking Agreement § 2.B.
This section does not indicate any promise or guarantee by plaintiff “to receive the financial commitments within eight weeks,” but much less firm language of only “proposes” to do so. In any event, the Debt Fee, which the defendants link to the plaintiff‘s ability to secure “financial commitments within eight weeks” of the Agreement, is not mentioned at all in this section. Id. Instead, Section 2.B refers to the plaintiff‘s entitlement to a “monthly retainer,” which is not at issue in this lawsuit.
The Debt Fee is discussed in Section 2.C as the remuneration the plaintiff is entitled
This more comprehensive review of the Investment Banking Agreement reveals the ambiguity in the reference to “financial commitments” in Section 2.B. While the defendants urge that the words “financial commitments” should be interpreted to mean final and binding obligations, this construction simply cannot be squared with the other provisions in the Agreement for two reasons.
First, Section 2.C provides that “[u]pon settlement of binding loan and/or guarantee commitments for the Project obtained directly or indirectly by Bazarian International, Bazarian International will be entitled to receive investment banking fees,” Investment Banking Agreement § 2.C, which distinguishes the “binding” nature of the loan commitments triggering the Debt Fee from the non-binding nature of the “financial commitments” that the plaintiff only “proposes to receive” in Section 2.B. Second, Paragraph 3 provides for a full thirty-six months to “conclude” the financing, and, thus, clearly contemplates that the “financial commitments” the plaintiff “propose[d]” to obtain within the first eight weeks would be preliminary and not “conclude[d]” within that timeframe, contrary to the defendants’ purported construction. In short, the plain text of the contract highlights the ambiguity of the term “financial commitments.” Therefore, the term “finаncial commitments” is “reasonably or fairly susceptible of different constructions or interpretations,” Sahrapour, 119 A.3d at 708, including the plaintiff‘s interpretation that the “financial commitments” the plaintiff “proposes to receive . . . eight weeks from the date of the Agreement” is satisfied by the Indicative Term Sheet from AIB Bank, which, though not fully binding, was “a detailed proposal that could be submitted in support of Aerohotelco‘s bid” to win the Palm Beach Option from the Aruba government, Pl.‘s Opp‘n at 37.
The plaintiff‘s interpretation appears particularly reasonable in light of the context for the Investment Banking Agreement. Aerohotelco sought the plaintiff‘s assistance in obtaining an option from the Government of Aruba “to obtain a leasehold interest” in a piece of land Aerohotelco wanted to develop into a luxury hotel. Investment Banking Agreement § 1.B; FAC ¶ 13. Aerohotelco were required to submit a bid to the government by March 30, 2007, which is exactly eight weeks after the date of the Agreement. Pl.‘s Opp‘n at 37. Aerohotelco would not know whether it won the bid until much later.7 FAC ¶ 24.
Second, the defendants argue that, even if the plaintiff were entitled to the Debt Fee, the breach of contract claim may be asserted only against Aerohotelco because the other defendants were not party to the Agreement and had no obligation to pay the Debt Fee to the plaintiff. Defs.’ Mem. at 37. As support, the defendants cite Section 2.C of the Agreement, which addresses the payment of the Debt Fee, and provides that the plaintiff “will be entitled to receive investment banking fees from the Company,” which is defined as Aerohotelco. Investment Banking Agreement § 2.C; Defs.’ Mem. at 37. The plaintiff did not address this contention in its opposition, and, thus, appears to have conceded the issue. See generally Pl.‘s Opp‘n at 39-41; Defs.’ Reply at 24. This interpretation limiting the obligation to pay the Debt Fee to only Aerohotelco is consistent with D.C. law, which gives greater weight to “‘specific terms and exact terms‘” than to general language, such as that in the preamble. Abdelrhman, 76 A.3d at 891 (quoting Washington Auto. Co. v. 1828 L St. Assocs., 906 A.2d 869, 880 (D.C.2006) (internal quotations omitted)).
Notwithstanding the аbsence of a contractual obligation, the plaintiff alleges that Aerohotelco‘s duty to pay the plaintiff the Debt Fee may be imputed to the Project Developers because they are “alter egos” of Aerohotelco.8 FAC ¶ 34. “Courts apply the ‘alter ego’ theory to ‘cast aside the corporate shield.‘” Estate of Raleigh v. Mitchell, 947 A.2d 464, 470 (D.C.2008) (quoting 1 WILLIAM MEADE FLETCHER, ET AL., FLETCHER CYCLOPEDIA OF THE LAW OF CORPORATIONS § 41.35 (perm. ed., rev. 2006)). In order to “pierce the corporate veil,” and hold the Project Developers liable as the alter egos of Aerohotelco, the plaintiff must demonstrate “(1) unity of ownership and interest, and (2) use of the corporate form to perpetrate fraud or wrong, or other considerations of justice and equity justify it.” Id. (quoting Bingham v. Goldberg, Marchesano, Kohlman, Inc., 637 A.2d 81, 93 (D.C.1994)). “Although no single factor controls, courts generally inquire, inter alia, whether corporate formalities have been observed; whether there has been commingling of corporate and shareholder funds, staff and property; whether a single shareholder dominates the corporation; whether the corporation is adequately capitalized; and, especially, whether the corporate form has been used to effectuate a fraud.” Lawlor v. District of Columbia, 758 A.2d 964, 975 (D.C.2000); see also Meshel v. Ohev Sholom Talmud Torah, 869 A.2d 343, 355 (D.C.2005). Ultimately, “the [alter ego] doctrine can be invoked only where equity requires the action to assist a third party.” Estate of Raleigh, 947 A.2d at 471 (quoting McCarthy v. Azure, 22 F.3d 351, 362-63 (1st Cir.1994) (internal quotations omitted)) (alteration in the original).
Here, the plaintiff plausibly alleges a multitude of the factors courts consider when deciding whether to pierce the corporate veil, such as shared ownership, a single dominating shareholder, and use of the corporate form for fraud. These factual allegations, which must be assumed to be true, along with the reasonable inferences that can be drawn from them, have “nudge[d] . . . from conceivable to plausible” the plaintiff‘s assertion that the Project Developers are alter egos of Aerohotelco.9 Twombly, 550 U.S. at 555.
The plaintiff sufficiently alleges that Aerohotelco shares a unity of ownership and interest with the Project Developers. FAC ¶¶ 3-8. As discussed supra in Part III.A, the former owner and senior management of Aerohotelco now own and manage the other corporate defendants. Defendant Stipa, former owner and president of Aerohotelco, is now president and chairman of Newco. Stipa Decl. ¶ 5; Share Sale Agreement at 15. In addition, defendant Stipa is also at least a part-owner in Curacao Holding. Share Sale Agreement at 16 (“Whereas Stipa and Newco 22 . . . wish to sell part of their shares in Hotelco Curacao . . . .“). The Managing Director of the two remaining corporate defendants, DHC and Aruba Holding, is the former attorney-in-fact for Aerohotelco. Vera Decl. ¶ 3. Moreover, the Project Developers, who are controlled by former Aerohotelco officers, not only continue to engage in the development of the luxury hotel in Aruba, the Project first espoused by Aerohotelco, they also deliberately chose to intermingle their financial liabilities by becoming joint guarantors of obligations assumed under the Share Sale Agreement, which provides additional financing for the Project. Share Sale Agreement § 2.7 (“In order to guarantee fulfillment of the obligations under this Agreement . . . Stipa on his own behalf, as well as his capacity as representative of [Curacao Holding], [Aruba Holding] and [DHC], all become joint guarantors and main payers of the obligations assumed by Newco [ ] . . . .“).
More significantly, defendant Stipa emerges as the dominating force behind all of the corporate defendants. “Under the alter ego theory, the court may ignore the existence of the corporate form whenever an individual so dominates an organization as in reality to negate its separate personality.” United States ex rel. Miller v. Bill Harbert Int‘l Constr., Inc., 608 F.3d 871, 897 (D.C.Cir.2010) (quoting Founding Church of Scientology of Wash., D.C., Inc. v. Webster, 802 F.2d 1448, 1452 (D.C.Cir.1986)). Defendant Stipa represented Aerohotelco in the Investment Banking Agreement at issue. Investment Banking Agreement ¶ 1. Defendant Stipa also served as the authorized representative for all of the Project Developers in the Share Sale Agreement, in which he expressly acknowledged that all of the Project Developers were either “directly or indirectly fully owned or related to [him],” Share Sale Agreement at 15, and, tellingly, entered the same address for all of the Project Developers, including defendant Stipa in his personal capacity, id. at 22.10
Accordingly, the plaintiff‘s breach of contract claim survives the defendants’ motion to dismiss.
2. Quantum Meruit
The defendants move to dismiss the plaintiff‘s quantum meruit claim against all defendants because “‘a party cannot recover on a claim of unjust enrichment for activities that are covered by an express contract between the parties.‘” Defs.’ Mem. at 38 (quoting CapitalKeys, LLC v. CIBER, Inc., 875 F.Supp.2d 59, 65 (D.D.C.2012)). The Court agrees.
“The District of Columbia recognizes unjust enrichment as a species of quasi contract that imposes ‘in the absence of an actual contract,’ ‘a duty . . . upon one party to requite another in order to avoid the former‘s unjust enrichment[,] . . . to permit recovery by contractual remedy in cases where, in fact, there is no contract.‘” Vila v. Inter-Am. Inv., Corp., 570 F.3d 274, 279-80 (D.C.Cir.2009) (quoting 4934, Inc. v. D.C. Dep‘t of Empt. Servs., 605 A.2d 50, 55 (D.C.1992)). Here, the parties do not dispute that the Investment Banking Agreement is a valid contract entered into by the plaintiff, Aerohotelco, “and/or its successor companies or any related entities which intend to invest in and/or develop the Project,” Investment Banking Agreement (Preamble), which the plaintiff alleges includes the other co-defendants, Pl.‘s Opp‘n at 26-28; see also supra Part III.A (finding personal jurisdiction over all defendants because the forum selection
Accordingly, the defendants’ motion to dismiss Count II is granted.
IV. Conclusion
For the reasons stated above, the defendants’ motion to dismiss is granted in part and denied in part. The defendants’ motion to dismiss based on lack of personal jurisdiction, improper service and failure to state a claim as to Count I is denied. The defendants’ motion to dismiss Count II for failure to state a claim is granted.
An Order consistent with this Memorandum Opinion will issue contemporaneously.
Clare HARRIGAN, Plaintiff,
v.
Jenny R. YANG, Chair of the United States Equal Employment Opportunity Commission, et al., Defendants.
Civil No. 15-cv-00511 (APM)
United States District Court, District of Columbia.
Signed 02/12/2016