Armenian Genocide Museum and Memorial Inc v. Cafesjian Family Foundation Inc ( 2009 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
ARMENIAN GENOCIDE MUSEUM AND
MEMORIAL, INC.,
Plaintiff,
Civil Action No. 07-1259 (CKK)
v.
THE CAFESJIAN FAMILY
FOUNDATION, INC., et al.,
Defendants.
MEMORANDUM OPINION
(April 15, 2009)
This case, filed by The Armenian Genocide Museum & Memorial, Inc. (“AGM&M”), has
its origins in a dispute related to the construction of an Armenian museum and memorial in
Washington, D.C. On February 5, 2009, the Court granted-in-part and denied-in-part a Motion to
Dismiss Counts I, III, and IV of the Second Amended Complaint filed by three of the four named
Defendants in this case. Currently pending before the Court is a Motion to Dismiss filed by the
fourth named Defendant, John Waters, Sr., relating to Count II of the Second Amended
Complaint. After a searching review of the parties’ submissions, all relevant case law, statutory
authority, and the entire record of the case as a whole, the Court shall DENY Defendant’s [62]
Motion to Dismiss, for the reasons set forth below.
I. BACKGROUND
The following facts are drawn from AGM&M’s Second Amended Complaint and are not
based on any findings of fact made by the Court.
Beginning in the 1990s, a non-party advocacy group called the Armenian Assembly of
America (the “Assembly”) began investigating the construction of a permanent museum and
memorial in Washington, D.C., dedicated to the victims and survivors of the Armenian
Genocide. See Second Am. Compl. ¶¶ 8, 9. In 1999, the Assembly located a possible site for the
museum and memorial at the National Bank of Washington Building at 14th and G Streets in
Washington, D.C. Id. ¶ 10. In order to fund the purchase of this site, the Assembly sought
donations and pledges from various sources, including from Gerard L. Cafesjian (“Cafesjian”),
the President and Director of The Cafesjian Family Foundation, Inc. (“CFF”).
On November 1, 2003, the Assembly executed a Grant Agreement with CFF and
Cafesjian that, among other provisions, set forth the terms and conditions of two donations made
by Cafesjian to purchase the Bank of Washington Building and four adjacent properties. Id. ¶ 13.
Pursuant to the Grant Agreement, CFF and the Assembly were required to, and did, create
Plaintiff AGM&M as a non-profit corporation, to which the Assembly was required to transfer
all of the “right, title, and interest” in assets and pledges contributed to the Assembly for the
museum and memorial project. Id. John Waters, Sr. “represented AGM&M in connection with
the acquisition of the [properties adjacent to the Bank of Washington Building] by AGM&M.”
Id. ¶ 31. See also id. ¶ 50 (“Waters Sr. represented AGM&M in connection with the acquisition
of the properties by AGM&M”).
AGM&M is governed, managed, and controlled by a Board of Trustees, as set forth in its
Articles of Incorporation and By-Laws. Id. ¶¶ 23-25. On October 23, 2006, without the
direction and consent of the Board of Trustees, John Waters, Jr. (an officer of both CFF and
AGM&M) “executed, purportedly as an authorized officer of both [AGM&M] and CFF, a
Memorandum of Agreement [“MOA”] Reserving Rights . . . purportedly between [AGM&M]
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and CFF.” Id. ¶ 30. Because the Board of Trustees did not authorize Waters, Jr. to execute and
record the MOA on behalf of AGM&M, “Waters, Jr. did not have the authority to execute the
[MOA] on behalf of [AGM&M] or to file and record the [MOA] with the Recorder of Deeds on
behalf of [AGM&M].” Id. ¶ 33. Once the other Trustees learned of the MOA, they demanded
that Defendants have it rescinded and removed from the District of Columbia’s land records,
which Defendants refused to do.1 Id. ¶ 34.
Prior to executing and filing the MOA, Waters, Sr. “consulted with” and “assisted”
Waters, Jr. Id. ¶¶ 31, 51. In addition,
Waters Sr. was aware that the execution and recording of the [MOA] would harm
AGM&M, but nevertheless assisted Waters Jr. with the filing of the [MOA],
failed to advise any independent members of the Board of Trustees of AGM&M
of either the execution or the recording of the [MOA], and failed to take
reasonable steps to protect AGM&M’s interests with respect to the Properties.
Id. ¶ 51.
AGM&M initiated this suit on July 16, 2007. Count II of the Second Amended
Complaint alleges that Waters, Sr. breached his fiduciary duties to AGM&M. Id. ¶¶ 49-52.
AGM&M also alleges that it suffered damages arising from Waters, Sr.’s acts, including fees and
costs associated with “the delay in the development of the museum, and damages related to
additional difficulty in securing insurance and financing related to” the properties. Id. ¶ 52.
Waters, Sr. filed the instant Motion to Dismiss for lack of personal jurisdiction pursuant
to Federal Rule of Civil Procedure 12(b)(2), and for failure to state a claim upon which relief can
be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). AGM&M filed an Opposition
1
Waters, Jr. eventually recorded a release of the MOA on July 16, 2008. Second Am.
Compl. ¶ 36.
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and Waters, Sr. has filed a Reply. Defendant’s Motion to Dismiss is therefore fully briefed and
ripe for decision.
II. LEGAL STANDARD
A. Federal Rule of Civil Procedure 12(b)(2)
A plaintiff bears the burden of establishing a factual basis for asserting personal
jurisdiction over a defendant. See Crane v. N.Y. Zoological Soc’y, 894 F.2d 454, 456 (D.C. Cir.
1990). Accordingly, a plaintiff must allege specific acts connecting the defendant with the
forum. See Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 524 (D.C.
Cir. 2001). In contrast to a Motion to Dismiss brought under Federal Rule of Civil Procedure
12(b)(6), the court need not treat all of a plaintiffs’ allegations as true when determining whether
personal jurisdiction exists over a defendant. Instead, the Court “may receive and weigh
affidavits and any other relevant matter to assist it in determining the jurisdictional facts.”
United States v. Phillip Morris, Inc., 116 F. Supp. 2d 116, 120 n.4 (D.D.C. 2000) (citation
omitted). Nevertheless, the Court must resolve any factual discrepancies with regard to the
existence of personal jurisdiction in favor of the plaintiff. See Crane, 894 F.2d at 456.
B. Federal Rule of Civil Procedure 12(b)(6)
Plaintiffs must file a complaint that contains “‘a short and plain statement of the claim
showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what
the . . . claim is and the grounds upon which it rests.’” Bell Atl. Corp. v. Twombly, 550 U.S. 550U.S. 544, 127 S. Ct. 1955, 1964 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). In
evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, the court must construe
the complaint in a light most favorable to the plaintiff and must accept as true all reasonable
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factual inferences drawn from well-pleaded factual allegations. In re United Mine Workers of
Am. Employee Benefit Plans Litig., 854 F. Supp. 914, 915 (D.D.C. 1994). While the court must
construe the Complaint in the plaintiff’s favor, it “need not accept inferences drawn by the
plaintiff[] if such inferences are unsupported by the facts set out in the complaint.” Kowal v.
MCI Commc’ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Moreover, the court is not bound to
accept the legal conclusions of the non-moving party. See Taylor v. FDIC, 132 F.3d 753, 762
(D.C. Cir. 1997). The court is limited to considering facts alleged in the complaint, any
documents attached to or incorporated in the complaint, matters of which the court may take
judicial notice, and matters of public record. See E.E.O.C. v. St. Francis Xavier Parochial Sch.,
117 F.3d 621, 624 (D.C. Cir. 1997); Marshall County Health Care Auth. v. Shalala, 988 F.2d
1221, 1226 n.6 (D.C. Cir. 1993).
III. DISCUSSION
A. Motion to Dismiss for Lack of Personal Jurisdiction
AGM&M predicates personal jurisdiction over Waters, Sr. based on the District of
Columbia long-arm statute that permits the exercise of personal jurisdiction over a person who
has transacted business in the District of Columbia, provided that the claim for relief arises from
the same conduct:
(a) A District of Columbia court may exercise personal jurisdiction over a person,
who acts directly or by an agent, as to a claim for relief arising from the person’s
(1) transacting any business in the District of Columbia[.]
***
(b) When jurisdiction over a person is based solely upon this section, only a claim
for relief arising from acts enumerated in this section may be asserted against him.
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D.C. Code § 13-423.2This provision has been given an “expansive interpretation,” such that its reach is
“coextensive with the due process clause” of the United States Constitution. Helmer v.
Doletskaya, 393 F.3d 201, 205 (D.C. Cir. 2004) (internal quotation marks omitted).
Accordingly, Section 13-423(a)(1) grants personal jurisdiction over persons who have engaged in
“any transaction of business in the District of Columbia that can be reached jurisdictionally
without offending the due process clause.” Mouzavires v. Baxter, 434 A.2d 988, 993 (D.C.
1981) (en banc)). As a result of this interpretation, “the statutory and constitutional jurisdictional
questions, which are usually distinct, merge into a single inquiry . . . .” United States v. Ferrara,
54 F.3d 825, 828 (D.C. Cir. 1995).
There are no “mechanical tests” or “talismanic formulas” used by courts to determine
whether the assertion of personal jurisdiction is appropriate in a particular case. Shoppers Food
Warehouse v. Moreno, 746 A.2d 320, 329 (D.C. 2000). Nevertheless, courts must examine
whether “the quality and nature of the nonresident defendant’s contacts with the District . . . are
voluntary and deliberate or only random, fortuitous, tenuous and accidental,” whether the
defendant “has purposefully availed itself of the benefits and protections of the district in
engaging in a business activity in the forum jurisdiction,” and whether “it is fair and reasonable
to expect it to anticipate being sued in that jurisdiction.” Id.Because Section 13-423(a)(1) confers specific jurisdiction against a defendant, there must
2
Although AGM&M also asserts that personal jurisdiction exists under D.C. Code § 13-
423(a)(3) (“causing tortious injury in the District of Columbia by an act or omission in the
District of Columbia”), the Court does not reach that argument because it finds that personal
jurisdiction exists under section 13-423(a)(1).
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be a “nexus between the plaintiff’s claim and the defendant’s business activities in the forum
jurisdiction.” Id. at 332. This is not a particularly high threshold; the requirement is met when
the claim has “a discernible relationship to the business transacted in the District.” Trerotola v.
Cotter, 601 A.2d 60, 64 (D.C. 1991) (internal punctuation and citations omitted). A plaintiff
only fails to satisfy this “discernable relationship” inquiry when his claim is “‘unrelated to the
acts forming the basis for personal jurisdiction.’” Id. (quoting Willis v. Willis, 655 F.2d 1333,
1336 (1981)).
In this case, Defendant’s Motion to Dismiss argues that “[AGM&M] has not asserted any
facts on which this Court’s exercise of personal jurisdiction over Waters, Sr. would be
appropriate . . . .” Def.’s Mot. at 8 (emphasis in original). The Court concludes otherwise.
AGM&M alleges that Waters, Sr. represented it in connection with the acquisition of four
properties in Washington, D.C. Second Am. Compl. ¶¶ 31, 50. AGM&M also alleges that
Waters, Sr. breached his continuing fiduciary obligations to AGM&M when he subsequently
assisted Waters Jr. with the filing of the MOA with the District of Columbia Recorder of Deeds
concerning the same properties. Id. ¶ 51. Cf. [66] Mem. Op. at 9 (Feb. 5, 2009) (holding that
AGM&M “ha[d] a cognizable legal claim that Cafesjian and Waters, Jr. were not acting in the
best interests of AGM&M by recording the MOA . . .”). The Court has little difficulty
concluding that an attorney who represents a client in connection with the acquisition of real
property in the District of Columbia can reasonably be expected to face a breach of fiduciary duty
claim in the District of Columbia where the claim involves the same properties that were the
focus of the representation.
Defendant offers a rather opaque and qualified description of his relationship with
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AGM&M, asserting that he did not “undertake any legal representation of the Plaintiff, including
but not limited to the subject matter of the above entitled action, in the District of Columbia nor
did [he] perform any service in the District of Columbia relating to the Plaintiff, including but
not limited to legal services relating to the above entitled action.” Def.’s Mot., Ex. 1 ¶ 7
(Affidavit of J. Waters, Sr.). Waters Sr.’s statement is belied by multiple letters signed by
Waters, Sr. in connection with the acquisition of the Washington D.C. properties – including one
that he expressly signed as counsel for AGM&M, see Pl.’s Opp’n, Ex. 1 A-C (Letters from
Waters, Sr. to Landmark Title Corporation), and is contradicted by AGM&M’s allegations that
Waters, Sr. represented it in connection with the acquisition of the properties. See Second Am.
Compl. ¶¶ 31, 50. The Court must resolve this and other factual discrepancies with regard to the
existence of personal jurisdiction in favor of AGM&M. See Crane, 894 F.2d at 456.
None of the other arguments raised by Defendant suggests a different conclusion. For
example, Defendant lists various facts demonstrating that Waters, Sr. has substantially more
contacts with Minnesota than with the District of Columbia. See Def.’s Reply at 2-3. These
facts are largely irrelevant because the assertion of jurisdiction over a defendant pursuant to
section 423(a)(1) does not require that the District of Columbia have the most contacts vis a vis
another forum, or require enough contacts to predicate general rather than specific jurisdiction.
To the contrary, personal jurisdiction may be found under Section 13-423(a)(1) “even if the
defendant has not been physically present in the District,” Holder, 779 A.2d at 772, and even if
his contacts took place through a telephone or other electronic device. See, e.g., FC Invest. Grp.
v. Lichtenstein, 441 F. Supp. 2d 3, 9 (D.D.C. 2006) (“[t]ransactions by telephone and facsimile
alone can, depending on the circumstances, be an adequate basis for personal jurisdiction”)
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(citing Gorman v. Ameritrade Holding Corp., 293 F.3d 506, 511 n.4 (D.C. Cir. 2002)).
Ultimately, the key inquiry is whether Waters, Sr.’s contacts with the District of Columbia were
“directed” toward the District and whether they had “foreseeable effects” here, such that Waters,
Sr. could reasonably be expected to litigate a matter arising out of his contacts with this
jurisdiction. Id. The Court concludes that this threshold has been met here.
Defendant also argues that “District of Columbia courts cannot assert personal
jurisdiction over individual corporate officers or directors . . . when the individuals are alleged to
have acted in their respective capacities as agents, officers, or employees of a company that has
contacts with the District of Columbia.” Def.’s Mot. at 6. The relevance of this argument is not
entirely clear because AGM&M has not alleged that Waters, Sr. was acting as its corporate
employee or that he was acting in any official corporate capacity when he represented or
breached his fiduciary obligations to it. See Pl.’s Opp’n at 9. In Reply, Defendant does nothing
more than describe a series of cases where the defendants lacked the type of contacts present in
this litigation and then invite the Court to draw the conclusion that personal jurisdiction is
lacking in this case. See Def.’s Reply at 11. The Court is unpersuaded for the reasons described
above. Accordingly, the Court shall deny Defendant’s Motion to Dismiss Count II of the Second
Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(2).
B. Motion to Dismiss for Failure to State a Claim
The elements of a legally cognizable breach of fiduciary duty claim are well-established.
AGM&M must allege facts sufficient to show (1) the existence of a fiduciary relationship; (2) a
breach of the duties associated with the fiduciary relationship; and (3) injuries that were
proximately caused by the breach of the fiduciary duties. See Paul v. Judicial Watch, Inc., 543 F.
9Supp. 2d 1, 5-6 (D.D.C. 2008). The Court has already determined that AGM&M has alleged
sufficient facts to state a legally cognizable breach of fiduciary duty claim in connection with the
filing of the MOA with the District of Columbia Recorder of Deeds against Cafesjian and
Waters, Jr. See [66] Mem. Op. at 9 (Feb. 5, 2009). A similar analysis applies as to Waters, Sr.
First, AGM&M argues that Waters, Sr. had fiduciary obligations arising from his former
attorney-client relationship with AGM&M. See Pl.’s Opp’n at 8. Second, AGM&M argues that
Waters, Sr. breached his fiduciary obligations by taking subsequent actions that “undercut” the
“purpose of that representation.” Id. at 8. See also id. at 13 (citing D.C. Rule. Prof. Conduct 1.9)
(“[a] lawyer who has formerly represented a client in a matter shall not thereafter represent
another person in the same or a substantially related matter in which that person’s interests are
materially adverse to the interests of the former client unless the former client gives informed
consent”)). Third, AGM&M argues that Waters, Sr.’s breach caused AGM&M to incur damages
in the form of various fees and costs. Id. at 16.
Although Defendant argues that “Plaintiff’s [sic] have admitted in their Opposition [that]
Waters, Sr. did not represent Plaintiff,” Def.’s Reply at 16, that argument is obviously
contradicted by the reality of AGM&M’s allegations in the Second Amended Complaint and the
arguments in its Opposition (some of which are set forth above). While Defendant seeks to
present his own interpretation of the events surrounding the relationship between Waters, Sr. and
AGM&M, the Court must “construe the complaint in the light most favorable to [AGM&M] and
accept the complaint’s allegations as true.” Mawalla v. Hoffman, 569 F. Supp. 2d 253, 256
(D.D.C. 2008) (citing Aktieselskabet AF 21 November 2001 v. Fame Jeans Inc., 525 F.3d 8, 16-
17 (D.C. Cir. 2008)). Finally, the D.C. Circuit recently clarified in Tooley v. Napolitano that
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elimination of a plaintiff’s claims on a motion to dismiss is disfavored where any interpretation
of the plaintiff’s allegations could suggest a cognizable legal claim. 556 F.3d 836, 838-840
(D.C. Cir. 2009). In that case, the D.C. Circuit acknowledged that the plaintiff had advanced
“thin” claims, expressed “concerns over the ultimate plausibility of [his] claims,” and explained
that the “temporal link” concerning one of his claims “appear[ed] stretched nearly to the breaking
point.” Id. The Court nevertheless held that the plaintiff’s complaint could not be dismissed
pursuant to the “federal rules’ notoriously loose pleading criteria.” Id. at 840. See also id. at 843
(Sentelle, C.J., dissenting) (describing the plaintiff’s claims as “fanciful, paranoid, or irrational
. . . based on nothing more than [his] internal belief structure”). Accordingly, the Court shall
deny Defendant’s Motion to Dismiss Count II of the Second Amended Complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6).
IV. CONCLUSION
For the reasons set forth above, the Court shall DENY Defendant’s [62] Motion to
Dismiss. An appropriate Order accompanies in this Memorandum Opinion.
Date: April 15, 2009
/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge
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