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Virtual Development and Defense, International, Inc. v. Republic of Moldova

February 5, 2001

VIRTUAL DEVELEOPMENT AND DEFENSE, INTERNATIONAL, INC., PLAINTIFF,
v.
THE REPUBLIC OF MOLDOVA DEFENDANT.



The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge

Document Nos.: 39, 44, 66, 68, 72, 74

MEMORANDUM OPINION

Granting in Part and Denying in Part the Defendant's Motion for Summary Judgment; Denying the Plaintiff's Motion for Reconsideration of the Magistrate Judge's Order Regarding the Motion to Compel Testimony; Reserving Judgment on the Plaintiff's Motion for Reconsideration of the Magistrate Judge's Order Regarding the Motion to Compel Production of the State Department Cable; Denying the Plaintiff's Motion to Strike the State Department's Opposition; Denying the Plaintiff's Motion for a Certificate of Appealability of the Magistrate Judge's Order Denying the Motions to Compel Testimony

I. INTRODUCTION

At the center of this dispute is a fleet of twenty-one high-performance, Soviet-designed MiG-29 fighter jets. The jets are the most advanced fighters produced by the former Soviet Union; fourteen of them--the model 29C MiG--are capable of launching nuclear weapons. The MiGs' journey from the former Soviet republic of Moldova, a small, landlocked nation tucked between Romania and Ukraine, to Wright-Patterson Air Force Base in Ohio, is a complex tale involving the diversion of sophisticated weaponry from rogue states. The present controversy involves one short (and more quotidian) chapter of this story: the efforts of a private consulting firm to obtain a commission from Moldova's sale of the MiGs to the United States.

Virtual Defense and Development International, Inc. ("VDDI"), a consulting firm in Bethesda, Maryland, has sued the Republic of Moldova ("Moldova") for breach of contract and quantum meruit relating to the sale of the MiGs. This matter is now before the court on defendant Moldova's motion for summary judgment, the plaintiff's motions for reconsideration of several discovery-related orders, the plaintiff's motion to strike the CIA's opposition to one of these motions for reconsideration, and the plaintiff's requests for certificates of appealability pursuant to 28 U.S.C. § 1292(b).

For the reasons stated herein, the court will grant in part and deny in part the defendant's motion for summary judgment. The court will also deny the plaintiff's motion to strike and the plaintiff's motions for reconsideration and for a certificate of appealability regarding the motion to compel testimony. Finally, the court will reserve ruling on the plaintiff's second motion for reconsideration and for a certificate of appealability until the court has had the opportunity to review the subject matter of the motion (a classified State Department cable).

II. BACKGROUND

A. Factual History

After the dissolution of the Soviet Union in 1991, Moldova emerged as a sovereign nation in severe economic turmoil. To bolster its economy, Moldova arranged to sell its fleet of MiG-29 fighters to Iran. The United States, alarmed that Iran might acquire such advanced weaponry, offered to purchase the bulk of Moldova's fleet, thereby preventing Iran's acquisition of the MiGs.

On November 4, 1997, the United States and Moldova announced the execution of the Cooperative Threat Reduction Agreement, which called for the United States to purchase twenty-one Moldovan MiGs. See Mot. for Summ. J. at 6. The final purchase price was $40 million in cash and $100 million in economic aid.

In early 1998, VDDI filed the instant suit, claiming that it had facilitated the sale of the MiGs to the United States, and was therefore entitled to a commission of $9 million. Moldova countered that a brokerage contract for the sale of the MiGs never existed between the parties in this suit, that VDDI did not perform any services for Moldova, and that Moldova did not receive any value from VDDI's activities relating to the sale of the MiGs. See Mot. for Summ. J. at 1-2. Both VDDI and Moldova have offered factual descriptions to support their contentions, and not surprisingly, their descriptions differ in many respects. Nevertheless, for the purposes of this motion, the court will accept the version of the plaintiff who, as the non-moving party, is entitled to have all factual disputes resolved in its favor.

According to the plaintiff, in May and June of 1997, Marty Miller, an international consultant residing in New York, met with Boris Birshtein, an economic advisor to the Moldovan President, *fn1 at the Plaza Hotel in New York. See Opp'n to Mot. to Dismiss, Affidavit of Marty Miller ("Miller Aff.") ¶ 4. At that meeting, Mr. Birshtein offered Mr. Miller "economic opportunities" in Moldova. See id. Thereafter, Mr. Miller invited VDDI's representatives to New York to discuss these economic opportunities, and in July 1997, Mr. Miller met with Michael Spak, VDDI's President, to discuss whether VDDI could help Moldova sell its MiG-29 aircraft. See id. ¶¶ 5, 7. Later that month, Mr. Birshtein invited Mr. Miller and Mr. Spak to a meeting in Toronto, Canada, so that, among other things, the Moldovans could evaluate VDDI's ability to handle the sale of the MiGs. See id. The meeting was held in Toronto on July 30, 1997. In attendance were Mr. Spak, Mr. Miller, and several Moldovan officials, including Moldova's Ambassador to the United States and the Moldovan Minister of National Security. See id. ¶ 9. According to Mr. Miller, the MiG-29s were "briefly discussed." *fn2 See id.

On August 7, 1997, the Moldovan government invited the plaintiff to visit Moldova to discuss the sale of the MiGs and the terms under which the plaintiff would broker the sale. See Compl. ¶ 5. The plaintiff accepted the invitation and alerted the Central Intelligence Agency, the Department of State, and the Federal Bureau of Investigation that one of its principals would be traveling to Moldova to facilitate the sale of the MiG-29 aircraft. See Opp'n to Mot. for Summ. J., Affidavit of Michael Spak dated Oct. 3, 2000 ("Spak Aff.") ¶ 4. In mid-September 1997, Mr. Spak flew to Moldova on Mr. Birshtein's private plane. See Opp'n to Mot. for Summ. J. at 4. Upon arriving in Moldova, he was given a military escort and a V.I.P. diplomatic visa. See Spak Aff. ¶ 6. Mr. Spak met with various Moldovan officials, including Valeriu Pasat, the Minister of Defense, and received "valuable information regarding the planes and the previous negotiations between the United States and Moldova." See id. ¶¶ 9-10.

On September 17, 1997, while still in Moldova, Mr. Spak entered into an "agreement"--parts of which were written and parts of which were oral--with the defendant. See Compl. ¶ 7. Mr. Spak explains that he gave the Moldovan government a written proposed contract, but that Moldova did not sign the contract because, he was told, the Prime Minister does not sign contracts. See Spak Aff. ¶ 11. Instead, the Prime Minister gave Mr. Spak a "letter of authorization to memorialize the agreement reached between VDDI and Moldova." *fn3 Id. ¶ 12. Among other things, the parties agreed that: (1) the plaintiff would represent Moldova in the worldwide sale of the MiG-29 aircraft; (2) the plaintiff would broker a sale of the MiGs primarily to the United States government; and (3) the defendant would pay the plaintiff a fee of 15 percent of the value of the sale, to be paid in U.S. currency. See Compl. ¶ 7.

After meeting with the Moldovan government, the plaintiff spoke with the U.S. Ambassador to Moldova, John Todd Stewart, at the American Embassy in Chisinau, Moldova. See Opp'n to Mot. for Summ. J. at 5. At this meeting, the plaintiff shared the information that the Moldovan government had given to the plaintiff regarding the MiG-29s. See id. The Ambassador then sent a cable to the U.S. Department of State, the CIA and the Pentagon, relaying this information. See id. at 5-6. Upon returning to the United States, the plaintiff met with Jackson Rich, the CIA's field officer assigned to Moldova, and various other U.S. government officials, including representatives of the State Department's Moldovan Affairs Office and the U.S. Government Political/Military Affairs Office. The purpose of the meetings was to advise the United States that it should make an offer to Moldova based on the framework provided by the plaintiff. See Compl. ¶ 10. In the following weeks, the plaintiff "continued to utilize its extensive contacts within the United States of America for the purpose of brokering a sale of the MiG-29 Aircraft." See id. ¶ 11. The plaintiff does not say precisely how it used these contacts to broker the sale.

The plaintiff further alleges that a "couple weeks" after the formation of "the agreement," the plaintiff "successfully brokered a sale of 21 of the MiG-29 Aircraft from the Defendant to the United States Government." See id. ¶ 12. In its complaint, the plaintiff estimates the sale price at $60 million, a price that includes cash and other non-military materials. *fn4 At some point after the sale, the plaintiff demanded payment from Moldova in the amount of $9 million (representing 15 percent of the estimated sale price), which Moldova refused to pay. According to Mr. Spak, Moldova refused to pay him because he "would not give the Moldovan government officials a 'kick-back.'" See Spak Aff. ¶ 17.

Moldova's characterization of the sale differs significantly from the plaintiff's. Moldova claims the sale of the MiGs was a pure government-to-government transaction involving only American and Moldovan government officials and no outside brokers. See Mot. for Summ. J. at 3-4. Indeed, Moldova casts Mr. Spak as a peripheral actor who appeared in Moldova at the behest of an unpaid economic advisor, well after the United States and Moldova had reached a final written agreement. See id. at 4. Thus, Moldova contends that since a contract never existed between the parties, VDDI cannot maintain a claim for breach of contract, and since VDDI never performed any services for Moldova, VDDI does not have a claim under quantum meruit. See id. at 7.

B. Procedural History

In August 1998, Moldova filed a motion to dismiss the complaint on the grounds that the court lacked jurisdiction under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1602 et seq., and that the act-of-state doctrine *fn5 required the court to abstain from hearing the case. By Order dated March 31, 1999, the court denied Moldova's motion to dismiss. Specifically, the court ruled that the commercial-activity exception to the FSIA provided the court with jurisdiction over Moldova for purposes of the suit, and that Moldova had not met its burden of showing that the act-of-state doctrine applied to this case. See Mem. Op. dated May 10, 1999.

In the months following the denial of the motion to dismiss, the parties became entangled in several discovery-related disputes. These disputes came to the court's attention through various (non-consent) motions to extend discovery deadlines and to compel testimony. On October 2, 2000, the court referred the case to U.S. Magistrate Judge Alan Kay for resolution of all discovery disputes. After hearing argument on these matters, Judge Kay denied the plaintiff's Motion to Compel Testimony of Ambassador John Todd Stewart and the plaintiff's Motion to Compel Testimony of Mr. A. Jackson Rich. See Mem. Order dated Oct. 24, 2000 (AK). With respect to the plaintiff's Motion to Compel Disclosure of Cable from Ambassador Stewart to the Department of State, Judge Kay conducted an in camera review of the unredacted cable, and shortly thereafter, denied the plaintiff's motion. See Mem. Order dated Oct. 25, 2000 (AK); Order dated Nov. 1, 2000 (AK). The plaintiff now moves for reconsideration of Judge Kay's rulings on these discovery issues. Before turning to the plaintiff's motion for reconsideration, however, the court will address the defendant's motion for summary judgment.

III. DISCUSSION OF MOTION FOR ...


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