subject of a conversion claim when the plaintiff has the right to a
specific identifiable fund of money. Curaflex Health Serv. v. Bruni,
877 F. Supp. 30, 32 (D.D.C. 1995).
In this case, the Republic paid Mr. Johnson $28,000 and $55,000 under
the July 8 MOU and the July 22 Letter Agreement respectively. The court
has found that none of the lobbying or other work for Rwanda ever took
place under the July 8 MOU. In addition, Mr. Johnson used $55,000 from the
July 22 Letter Agreement almost exclusively for Mr. Uwimana's asylum
request and for other immigration services. These monies were never used
in a way that would benefit the Government of Rwanda.
Once the Department of State issued the Note Verbale on July 15, 1994,
Mr. Johnson knew or should have known that Mr. Uwimana would lose his
powers to represent or to speak for the Government of Rwanda after the
close of business on July 22. Mr. Van Kloberg, a non-lawyer, testified
that he clearly understood that any work he performed for Mr. Uwimana
after July 22 would be for Mr. Uwimana in a personal capacity, rather
than for the Government of Rwanda. For Mr. Johnson not to understand this
principle demonstrates either that he has a remarkable capacity for
self-delusion or that he is not being truthful.
Mr. Johnson accepted the Republic's money for what he knew was Mr.
Uwimana's personal interest and against the interests of his client, the
Government of Rwanda. A person need not be an expert in international
relations to understand the common-sense notion that it is not in a
government's interest to have one of its ambassadors choose to seek
asylum in another country, whatever the merits of the asylum request
might be. Indeed, the court can understand why Mr. Uwimana, a Hutu, would
have been afraid to return to his country when the opposition RPF, led by
Tutsis, had come to power after a bloody civil war. But, as the
plaintiff's counsel noted in his closing argument, if Mr. Uwimana had used
his own money to pursue his asylum request, the plaintiff never would
have or could have brought this case.
Despite several requests for the return of the money, Mr. Johnson
continued to hold the Republic's funds and failed to give the Republic
any consideration for it, against the Republic's express directions.
Because the plaintiff has proven by a preponderance of the evidence that
Mr. Johnson engaged in an unlawful exercise of ownership, dominion, and
control of the monies of the Government of Rwanda, in denial or
repudiation of Rwanda's rights thereto, Mr. Johnson is liable for
conversion of both the $28,000 under the July 8 MOU and the $55,000 under
the July 22 Letter Agreement. Furash & Co., 130 F. Supp.2d at 58;
Flocco, 752 A.2d at 158; Shea, 123 A.2d at 361.
B. Mr. Johnson is Liable for Breach of Fiduciary Duty
An agent is a person who is authorized by a principal to act on her
behalf. Johnson v. Bechtel Assoc. Prof'l Corp., 717 F.2d 574, 579 (D.C.
Cir. 1983), reversed on other grounds, Washington Metro. Area Transit
Auth. v. Johnson, 467 U.S. 925 (1984). The agent-principal relationship
is characterized by two elements: (1) an indication by the principal that
the agent will act on her behalf and subject to her control, and (2) a
manifestation of the agent's consent to so act. Id.; Rose v. Silver,
394 A.2d 1368, 1371 (D.C. 1978); Restatement (Second) Agency §
1 (1958). An agent owes her principal a fiduciary duty and a duty of
loyalty. Furash & Co., 130 F. Supp.2d at 53; Multicom, Inc. v. Chesapeake
and Potomac Tel. Co., 1988 WL
118411, *4 (D.D.C. 1988); Aronoff v. Lenkin
Co., 618 A.2d 669, 687 (D.C. 1992). A fiduciary relationship exists when
one party "is under a duty to act for or give advice for the benefit of
another upon matters within the scope of the relation." Restatement
(Second) Torts § 874 cmt. a (1977). A fiduciary relationship is
"founded upon trust or confidence reposed by one person in the integrity
and fidelity of another. It is said that the relationship exists in all
cases in which influence has been acquired and betrayed." Church of
Scientology Int'l v. Eli Lilly & Co., 848 F. Supp. 1018, 1028 (D.D.C.
1994) (internal quotations omitted).
Like other agents, lawyers owe their clients a duty of loyalty and a
duty of care. Am. Corp. v. Al-Nahyan, 17 F. Supp.2d 10, 27 (D.D.C.
1998); BCCI Holdings v. Clifford, 964 F. Supp. 468, 481 (D.D.C. 1997).
Whether an attorney breached his fiduciary duty depends on whether he
"put himself or herself in a position by which he or she cannot give full
loyalty to which the client is entitled." Am. Corp., 17 F. Supp.2d at 17
(citing Avianca, Inc. v. Corriea, 705 F. Supp. 666, 679 (D.D.C. 1989)
(explaining that a corporate attorney's client is the corporate entity,
not the individual officers or directors)). The fiduciary duties owed by
an attorney to a client extend to all matters in which the attorney is
involved, not simply the ones in which he is expressly retained as legal
counsel and receives legal fees. Avianca, 705 F. Supp. at 680. In
addition, "[u]nless the clients consent after full disclosure, the duty
of undivided loyalty is breached where a lawyer represents clients with
conflicting interests." BCCI Holdings (Luxembourg), S.A., 964 F. Supp. at
481. Moreover, when the loyalty to the client is questioned, the burden
rests on the attorney to make a full, affirmative disclosure. Id. To
recover on a claim for breach of fiduciary duty, the plaintiff must prove
by a preponderance of the evidence that a fiduciary duty existed between
the parties, that the defendant violated that fiduciary obligation, and
that the plaintiff suffered damages as a proximate result of the
violation. Landise, 725 A.2d at 450; 3 Fed. Jury Prac. & Instr. §
123.02 (5th ed.).
By signing the July 8 and the July 22 contracts and accepting Rwandan
funds in exchange for "lobbying services" for the benefit of the
Government of Rwanda, Mr. Johnson was agreeing to act as the Government
of Rwanda's agent. Johnson, 707 F.2d at 579. Accordingly, as Rwanda's
agent and as an attorney, Johnson owed Rwanda a fiduciary duty and a duty
of loyalty. Am. Corp., 17 F. Supp.2d at 27.
In this case, Mr. Johnson plainly breached his fiduciary duty to his
client, the Government of Rwanda, under both the July 8 MOU and the July
22 Letter Agreement. Under the July 8 MOU, Mr. Johnson breached his
fiduciary duty and duty of loyalty to the Republic by failing to perform
any of the lobbying-related tasks outlined in the July 8 MOU. While Mr.
Johnson committed the same breach under the July 22 Letter Agreement, he
committed an even more egregious breach of his fiduciary duty when the
interests of his client, the Government of Rwanda, and Mr. Uwimana began
to diverge. After July 22, when the Department of State forced out Mr.
Uwimana as Ambassador, Mr. Johnson had an immediate duty to freeze and to
refrain from spending any of Rwanda's money until he inquired,
determined, and verified that there was no conflict of interest between
Mr. Uwimana and the Government of Rwanda. By failing to do so, Mr.
Johnson violated D.C. Rule of Professional Conduct 1.7, which states, in
(a) A lawyer shall not advance two or more adverse
positions in the same matter.
(b) . . . a lawyer shall not represent a client with
respect to a matter if: . . .
(3) Representation of another client will be or is
likely to be adversely affected by such
(4) The lawyer's professional judgment on behalf of
the client will be or reasonably may be adversely
affected by the lawyer's responsibilities to or
interests in a third party or the lawyer's own
financial, business, property, or personal interests.
D.C. Rule of Professional Conduct 1.7. A lawyer may only represent two
potentially adverse clients if "each potentially affected client provides
consent to such representation after full disclosure of the existence and
nature of the possible conflict and the possible adverse consequences of
such representation." D.C. Rule of Professional Conduct 1.7. Not only did
Mr. Johnson fail to attempt to contact his client — the Government
of Rwanda — in this matter, he also failed to disclose to his
client his potentially adverse position in helping Mr. Uwimana seek
asylum from the very government that Mr. Johnson was representing and
from which he was receiving funds. Mr. Johnson thus blatantly violated
D.C. Rule of Professional Conduct 1.7.
By agreeing to help Mr. Uwimana seek asylum and then by taking steps to
help him gain asylum, Mr. Johnson was acting against the interests of his
client. At this point, Mr. Johnson breached his fiduciary duty by putting
"himself . . . in a position by which he . . . cannot give full loyalty
to which the client is entitled." Am. Corp., 17 F. Supp.2d at 27;
Avianca, Inc., 705 F. Supp. at 679. The court determines that Mr. Johnson
could not possibly have given full loyalty to his client, the Government
of Rwanda, when he was actively attempting to win asylum for Mr.
Uwimana, a former official of the Government of Rwanda. BCCI Holdings,
964 F. Supp. at 481. As such, the Republic clearly suffered damages as a
proximate result of Mr. Johnson's breach of his fiduciary duty since the
Republic did not receive any benefit that it had requested under the July
22 Letter Agreement in return for its $55,000. 3 Fed. Jury Prac. &
Instr. § 123.02 (5th ed.).
Despite his protestations to the contrary, Mr. Johnson's words and
deeds make clear that he considered his client to be Uwimana, and not the
Government of Rwanda. Among other things, Mr. Johnson refused to return
money to his client despite his client's request, he insisted on taking
instruction only from Mr. Uwimana because that was a more convenient
approach for Mr. Johnson financially, and he publicly made clear in his
letter to the editor in The Washington Post that his allegiance was to
his new client, Mr. Uwimana, rather than to the Government of Rwanda. By
conducting himself in this manner, Mr. Johnson blatantly violated the
duty of loyalty he owed as an attorney to his true client, the Government
of Rwanda. Am. Corp., 17 F. Supp.2d at 27.
Moreover, Mr. Johnson cannot credibly contend that after July 22, the
funds belonged to Mr. Uwimana's interim government. "A change in a
government's leadership works no change in the national sovereignty or
its right." Republic of Liberia v. Bickford, 787 F. Supp. 397, 401
(S.D.N.Y. 1992); Lehigh Valley R. Co. v. State of Russia, 21 F.2d 396,
401 (2d Cir. 1927). The principal is similar to the one enunciated in
Avianca, whereby the court held that a corporate attorney's client is the
corporate entity, not the individual representative officers or
directors. Avianca, 705 F. Supp. at 679. Likewise, merely because the
leadership of Rwanda changed does not mean that Mr. Johnson
continued taking his marching orders from former officials of the
Government of Rwanda. Republic of Liberia, 787 F. Supp. at 401; Lehigh
Valley R. Co., 21 F.2d at 401.
If Mr. Johnson had wanted to serve as Mr. Uwimana's attorney after July
22, he should have, at minimum, immediately returned to the Government of
Rwanda the $55,000 paid to him under the July 22 Letter Agreement,
explained in writing to the Government of Rwanda that he would no longer
represent it, worked out an agreement with Mr. Uwimana for Mr. Uwimana
himself to pay Mr. Johnson's attorney's fees (or for Mr. Johnson to
perform these services pro bono), and taken any other steps required by
the D.C. Rules of Professional Conduct. Mr. Johnson, however, did none of
these things. As such, his actions and omissions constitute a blatant
breach of his fiduciary duty to his client. The plaintiff has easily
proven its case of a breach of fiduciary duty by a preponderance of the
evidence. Landise, 725 A.2d at 450.
In sum, the court concludes that the plaintiff has proven its case that
Mr. Johnson is liable for conversion and breach of fiduciary duty under
both the July 8 MOU and the July 22 Letter Agreement. Accordingly, the
court orders Mr. Johnson to pay the Government of Rwanda the remaining
unrecovered $1,800 pursuant to the July 8 MOU and the $55,000 pursuant to
the July 22 Letter Agreement.
C. Mr. Uwimana Did Not Have Apparent Authority to Use the
Republic's Funds for His Personal Asylum Request
In his defense, Mr. Johnson argues that Mr. Uwimana had apparent
authority as an agent of the Government of Rwanda and thus that Mr.
Uwimana could properly use Rwandan funds for his personal asylum
request. Def.'s Post-Trial Brief at 8. Stunningly, Mr. Johnson also
contends that he could reasonably continue to believe that Mr. Uwimana
retained this apparent authority even after Mr. Johnson received the
September 6, 1994 letter from Mr. Karani, written on Rwandan Embassy
stationery, demanding that Mr. Johnson return money to the Government of
Under District of Columbia law, a principal is bound by the acts of its
agent only when the agent acts with either actual or apparent authority.
Columbia Hosp. for Women Found., Inc. v. Bank of Tokyo-Mitsubishi, Ltd.,
15 F. Supp.2d 1, 7 (D.D.C. 1997). Actual authority can be manifested
either expressly or impliedly. Id. at n. 7. For example, a corporation
can give an agent actual authority expressly through its by-laws or by
making the grant of authority clear in a separate board action. Id. To be
implied, the authority must go hand in hand with other express, actual
authority. Id. Meanwhile, apparent authority for an agent to do an act
"is created as to a third person by written or spoken words or any other
conduct of the principal which, reasonably interpreted, causes the third
person to believe that the principal consents to have the act done on his
behalf by the person purporting to act for him." Restatement (Second) of
Agency § 27 (1958); see also Am. Bankers Ins. Co. v. United States,
596 A.2d 598, 602 (D.C. 1991). The D.C. Court of Appeals has explained
that "[t]his falls short of an overt, affirmative representation by a
principal." Ins. Mgt. of Washington, Inc. v. Eno & Howard Plumbing Corp.,
348 A.2d 310, 312 (D.C. 1975). Lastly, apparent authority exists "only to
the extent that it is reasonable for the third person dealing with the
agent to believe that the agent is authorized" and to "believe the agent
to be authorized." Id. Accordingly, District of Columbia law
an objective and subjective standard. Columbia Hosp. for Women Found.,
Inc., 15 F. Supp.2d at 8.
In this case, Mr. Johnson argues that he, as a third person, could
reasonably believe that Mr. Uwimana, an agent, had apparent authority to
bind the government of Rwanda, the principal, both by the July 22 Letter
Agreement and well after the close of business on July 22, 1994, the
point at which he ceased being the Rwandan Ambassador to the United States
and was forced by the U.S. Department of State to turn in his
credentials.*fn10 Def.'s Post-Trial Brief at 14-17. Before July 22,
1994, Mr. Uwimana may have had actual authority to contract on behalf of
Rwanda, but he never possessed the authority to use government money for
his own personal asylum request. In re Uwimana, 274 F.3d at 812 (holding
that, in light of the Vienna convention and basic principles of agency
law, "Uwimana plainly breached his duty to Rwanda" because he used funds
for his personal benefit without disclosing his acts to the Republic).
After July 22, 1994, Mr. Uwimana clearly did not possess actual
authority, either express or implied, to bind the Government of Rwanda.
Acknowledging how far-fetched such an argument would be, the defendant
seems to concede this point, focusing on the apparent-authority
argument. Def.'s Post-Trial Brief at 13. After all, at no time after July
22 did any official who was still recognized by the United States, such
as Mr. Karani, write a letter or make clear by some other action that
Mr. Uwimana still had the power to bind the Government of Rwanda.
Columbia Hosp. for Women Found., Inc., 15 F. Supp.2d at 7, n. 7. Mr.
Johnson fails to point to anything in the record that shows that Mr.
Uwimana acted with actual authority.
The question then becomes whether the Government of Rwanda "place[d] an
agent (Mr. Uwimana) in a position which cause[d] a third person (Mr.
Johnson) to reasonably believe that the principal (the government of
Rwanda) consented to the exercise of authority the agent (Mr. Uwimana)
purports to hold." Am. Bankers Ins. Co., 596 A.2d at 602. The answer is a
resounding no. The court wholeheartedly agrees with the Fourth Circuit's
conclusion that Mr. Uwimana used funds belonging to the Republic to seek
asylum for himself and his family "without disclosing his act to the
government of the state he represented or seeking its consent." In re
Uwimana, 274 F.3d at 812. Once again, while Mr. Uwimana may have had
actual authority to contract on Rwanda's behalf while he was Ambassador,
he certainly never had the authority to use the Republic's money to seek
asylum from the Republic itself. See id. Nothing in the record
demonstrates that a third person could reasonably believe that the
Republic would have consented either to the July 22 Letter Agreement, by
which Mr. Uwimana used the Republic's funds to pursue an objective
antithetical to the Republic's own objectives, or to Mr. Uwimana's
speaking on behalf of the Government of Rwanda after
July 22. Am. Bankers Ins. Co., 596 A.2d at 602.
To wit, the Department of State's Note Verbale underscored that it
would no longer recognize Mr. Uwimana as Ambassador after July 22, 1994
and ordered him to leave the country by that date. In addition, Mr.
Johnson never took any steps to determine the extent of Mr. Uwimana's
authority, relying instead on his own self-serving interpretation of
international law. Moreover, Mr. Johnson's own August 26 memorandum to
his file states: "[r]egarding Ambassador Uwimana, his diplomatic status
was revoked on July 22." In contrast, Mr. Johnson's August 26 memorandum
also says that "Mr. Karani retained his diplomatic status. . . ."
Finally, Mr. Johnson's repeated assertions both in contemporaneous
letters and at trial that even after he received Mr. Karani's September 6
letter (written on Embassy letterhead) demanding a return of funds, he
still could have reasonably believed that Mr. Uwimana had apparent
authority to speak for the Government of Rwanda is totally bogus. In
sum, the record in this case establishes clearly that no reasonable third
person could have believed that Mr. Uwimana had apparent authority to bind
the Government of Rwanda to the July 22 Letter Agreement or to speak for
and to bind the Republic after July 22, 1994.
D. The Republic Did Not Ratify Any of Mr. Uwimana's Decisions
The court rejects Mr. Johnson's argument that the Government of
Rwanda, through Mr. Karani, ratified Mr. Johnson's conversion under
either contract. Before turning to the issue of ratification, however,
the court addresses the effect of the Fourth Circuit's opinion in In re
Uwimana, a bankruptcy case involving the Government of Rwanda and Mr.
Uwimana. 274 F.3d 806. The Fourth Circuit concluded that through Mr.
Karani's September 6, 1994 letter to Mr. Johnson, Rwanda ratified all but
$17,475 of the $55,000. In re Uwimana, 274 F.3d at 812-13.
The first question that arises is whether the Fourth Circuit's decision
is res judicata in this case. The court concludes that it is not. Res
judicata bars a claim when there has been a final judgment on the merits
in a prior suit involving the same parties or their privies and the same
cause of action. I.A.M. Nat'l Pension Fund v. Indus. Gear Mfg. Co.,
723 F.2d 944, 946-47 (D.C. Cir. 1983). A nonparty may be considered in
privity with a party to the prior action if the nonparty's interests are
"adequately represented by a party to the original action." Am. Forest
Res. Council v. Shea, 172 F. Supp.2d 24, 31 (D.D.C. 2001) (internal
The Fourth Circuit case concerned a bankruptcy proceeding involving
Mr. Uwimana. In re Uwimana, 274 F.3d 806. Because Mr. Johnson was not a
party to that proceeding, the doctrine of res judicata does not apply.
I.A.M. Nat'l Pension Fund, 723 F.2d at 946-47. Mr. Johnson himself
acknowledges that he was not a party in that action. Def.'s Post-Trial
Brief at 13. Moreover, res judicata does not apply because the Fourth
Circuit case did not involve the same cause of action since the Republic
brought no claim for conversion and since Mr. Johnson's conduct was not
directly at issue. Id.; Uwimana, 274 F.3d 806. Mr. Johnson also could not
claim that he was in privity with Mr. Uwimana because Mr. Uwimana could
not have adequately represented Mr. Johnson's interests in the bankruptcy
proceedings. In that forum, the inquiry into Mr. Uwimana's behavior
focused on his "defalcation," or embezzlement of Rwanda's funds, but did
not examine the entirely separate question of Mr. Johnson's alleged
misappropriation of Rwanda's funds, his alleged conversion, or his
breach of fiduciary duty either as an agent or as a lawyer for
the Government of Rwanda. Am. Forest Res. Council, 172 F. Supp.2d at 31.
Accordingly, the Fourth Circuit's opinion is not res judicata for the
The court now turns to the issue of ratification. "Ratification is the
affirmance by a person of a prior act which did not bind him but which
was done or professedly done on his account, whereby the act . . . is
given effect as if originally authorized by him." Lewis v. Washington
Metro. Area Transit Auth., 463 A.2d 666, 672 n. 12 (D.C. 1983) (quoting
Restatement (Second) of Agency § 82 (1958)). "The crucial inquiry in
determining whether an act was subsequently ratified concerns the
intention of the party allegedly ratifying the act. Although the
intention to ratify can be inferred from the totality of the
circumstances in each case, the courts hesitate to find ratification
where the facts allegedly showing ratification can be easily explained on
other grounds." G & R Corp. v. Am. Sec. & Trust Co., 523 F.2d 1164, 1171
(D.C. Cir. 1975). The D.C. Circuit has instructed that "[t]he question of
ratification is one of fact." Kuwait Airways Corp. v. Am. Sec. Bank,
890 F.2d 456, 465 (D.C. Cir. 1989). As the D.C. Circuit explained, the
District of Columbia Court of Appeals has articulated "an even more
exacting standard for finding ratification: For an unauthorized act to be
ratified, the principal must have knowledge of the act that may ratify
the act impliedly, but the conduct which implies ratification must be
conduct which is `inconsistent with any other hypothesis.'" Id. (quoting
Lewis, 463 A.2d at 671-72).
The question in this case centers on whether Mr. Karani's September 6,
1994 letter to Mr. Johnson constitutes a partial ratification of the
$83,000 disbursed to Mr. Johnson through the two contracts. Ex. 41A. In
its findings of fact, this court concluded that Mr. Karani's letter did
not rise to the level of a ratification. Kuwait Airways Corp., 890 F.2d
at 465 ("The question of ratification is one of fact."). The court
focuses on Mr. Karani's contemporaneous intent and understanding of what
he was supposedly ratifying. G & R Corp., 523 F.2d at 1171. On this
point, Mr. Johnson's own testimony illustrates that Mr. Karani did not
understand the terms of the July 22 Letter Agreement:
Q: So if Uwimana had the authority to interpret the
contract, you would also agree that Karani did not
have authority to interpret the contract, is that
A: Charge Karani obviously had no understanding of
what the contract was about because he had, by his
September 6th letter he had asked for a return of
money that had been initially prepared as a budget
estimate for his asylum requests. He did not
understand that we had already done most of the legal
work for his asylum requests, for Ambassador Uwimana's
asylum requests and First Secretary Rwakazina's asylum
requests way in advance before he wanted the refund of
the money. So he obviously [was] operating under a
mistake of fact and of what the contract called for.
Q: I thought Karani was a key player in the formation
of the contract because he signed a check for
$55,000, isn't that right?
A: He signed the check.
Q: But he did not understand what the contract was
about when he signed the check on July 22nd?
A: He was the consular. He probably read the contract
but he was not privy to discussions about it, what was
intended by the contract. I do not know if Ambassador
Uwimana showed him the other memos about the
Tr. at 155-56 (emphasis added). Certainly, Mr. Karani could not have
ratified something that, even Mr. Johnson agreed, he did not understand.
In addition, by making it clear through his words and deeds that he did
not believe Mr. Karani had the actual authority to direct the
disbursement of the monies and that he would rely on Mr. Uwimana for
instructions, Mr. Johnson precludes himself from trying to argue that
Mr. Karani had the actual authority to ratify certain expenditures. As
the D.C. Circuit has explained in a principal-agent case involving the
doctrine of estoppel, a third party (in this case, Mr. Johnson) cannot
avail himself of estoppel if he actually knew that the agent (Mr. Karani)
purporting to represent the principal (the Government of Rwanda) lacked
actual authority. Williams v. Washington Metro. Area Transit Auth.,
721 F.2d 1412, 1416 n. 7 (D.C. Cir. 1983); Columbia Hosp. for Women
Found., 15 F. Supp.2d at 8. Mr. Johnson can hardly assert in one breath
that Mr. Uwimana — and not Mr. Karani — had the authority to
speak for the Government of Rwanda but then assert in the next breath that
Mr. Karani had the authority to ratify certain expenditures. Despite his
arguments now to the contrary, Mr. Johnson's contemporaneous actions and
his own testimony make quite clear that he did not believe Mr. Karani had
the authority to ratify any expenditures. He answered only to Mr.
Furthermore, principal-agent law dictates that even assuming Mr. Karani
could ratify the expenditures, he could only authorize actions that were
intended to benefit the Government of Rwanda. United States v. Brennan,
994 F.2d 918 (1st Cir. 1993) (holding that ratification by the bank's
board does not per se exonerate an officer from willful misapplication of
the bank's funds); United States v. Salinas, 654 F.2d 319, 328 (5th Cir.
1981) (explaining that a bank's board of directors cannot consent in
order to "vitiate a fraud on the bank"), overruled on other grounds,
United States v. Adamson, 700 F.2d 953, 965 (5th Cir. 1983); Simpson v.
United States, 229 F. 940, 945 (9th Cir. 1916) (stating that the doctrine
of ratification does not apply to an unlawful conversion because "[t]he
criminal act was complete when the certificate of deposit was issued
without authority from the directors, and with intent to injure and
defraud the association, and no act of the directors could change its
character."); United States v. Breese, 173 F. 402, 408-10 (W.D.N.C. 1909)
("The most formal vote of the board of directors could not authorize the
embezzlement, abstraction, or willful misapplication of the funds of the
bank."), aff'd 203 F. 824 (4th Cir. 1913). Because Mr. Johnson improperly
converted the Republic's monies, providing no benefit to the Republic,
Mr. Karani would not have even had the power to authorize an ultra vires
Finally, as noted in the findings of fact, even assuming arguendo that
Mr. Karani's September 6 letter constituted a partial ratification, it
would have only ratified $12,525. Mr. Karani's letter only mentions
$30,000, and not the other $25,000 that makes up the $55,000 July 22
Letter Agreement. Ex. 41A. Mr. Karani asked for a refund to the Embassy
of $17,475. Ex. 41A. Because the letter only mentions $30,000 and not the
other $25,000, even under a ratification theory, there could be no
ratification of the other $25,000 since the letter did not mention the
additional $25,000 or the total of
$55,000. The D.C. Court of Appeals has
instructed that courts should find ratification only when the conduct at
hand is "inconsistent with any other hypothesis." Lewis, 463 A.2d at
671-72. Because Mr. Karani's letter fails to mention any amounts of money
beyond $30,000, the court can hardly infer that Mr. Karani had
contemplated the entire $55,000. Accordingly, even assuming for the
moment that there was a partial ratification, Mr. Karani's letter would
only have ratified $12,525 out of the total $55,000 July 22 Letter
For the same reasons, the September 6 letter does not constitute a
ratification of the $28,000 from the July 8 MOU because the $28,000 is
not mentioned specifically in the September 6 letter. Id.; Ex. 41A.
Moreover, the Government of Rwanda would not have realized until a later
point that the lobbying services it paid for in the July 8 MOU never took
Thus, even assuming arguendo that Mr. Karani's September 6 letter
constituted a partial ratification, only $12,525 at most could have been
ratified out of the total $83,000. Having said that, for the reasons set
forth above, the court determines that Mr. Karani's letter did not
constitute a partial ratification.
E. Punitive Damages
Under District of Columbia law, a defendant may be liable for punitive
damages in a conversion action if the defendant's act is "accompanied
with fraud, ill will, recklessness, wantonness, oppressiveness, willful
disregard of the plaintiff's rights, or other circumstances tending to
aggravate the injury." Mason v. Rostad, 476 A.2d 662, 667 (D.C. 1984)
(internal citations omitted). The same punitive damages standard applies
to a breach of fiduciary duty. Hendry v. Pelland, 73 F.3d 397, 400 (D.C.
Cir. 1996); Wagman v. Lee, 457 A.2d 401, 405 (D.C. 1983); see also
Material Supply Int'l, Inc. v. Sunmatch Indus. Co., 146 F.3d 983, 993-94
(D.C. Cir. 1998) (affirming a jury award of punitive damages for breach
of fiduciary duty); Dalo v. Kivitz, 596 A.2d 35, 40, n. 15 (D.C. 1991). A
plaintiff must prove that the defendant's acts warrant the imposition of
punitive damages by a preponderance of the evidence. Dalo, 596 A.2d at
41. In Wagman, for example, the District of Columbia Court of Appeals
affirmed a punitive damages award against an attorney who, serving as an
escrow agent, used a client's $4,000 deposit to help another client
purchase a house in which the first client had lived and had substantially
made improvements. Wagman, 457 A.2d at 405. Because the attorney had used
one client's funds to benefit another, the court relied on long-standing
precedent in holding that the attorney's actions warranted the imposition
of punitive damages. Id. (quoting Brown v. Coates, 253 F.2d 36, 40 (D.C.
Cir. 1958)). In Brown, the D.C. Circuit explained that:
once it has been shown that one trained and
experienced holds himself out to the public as worthy
to be trusted for hire to perform services for
others, and those so invited do place their trust and
confidence, and that trust is intentionally and
consciously disregarded, and exploited for unwarranted
gain, community protection, as well as that of the
victim, warrants the imposition of punitive damages.
Brown, 253 F.2d at 40.
The Supreme Court has upheld an award of punitive damages that equaled
four times the amount of the compensatory damages. Pacific Mut. Life
Ins. Co. v. Haslip, 499 U.S. 1, 23-24 (1991); see also Material Supply
Int'l, Inc. v. Sunmatch Indus. Co., 146 F.3d 983, 994 (D.C. Cir. 1998).
On the other hand, the Court has struck down an
award of 500 times the
amount of the compensatory damages as constitutionally excessive. BMW of
North Am., Inc. v. Gore, 517 U.S. 559, 582 (1996); see also Material
Supply Int'l, Inc., 146 F.3d at 994.
In this case, the court has already ruled that the defendant has
committed an act of conversion and has breached his fiduciary duty to the
plaintiff. The question thus becomes whether Mr. Johnson's conduct rose to
the level of recklessness or demonstrated a willful disregard of the
Republic's rights. Mason, 476 A.2d at 667. The court decides that Mr.
Johnson's conduct warrants the imposition of punitive damages.
As the court's findings of fact make strikingly clear, Mr. Johnson's
actions in this case were accompanied by gross recklessness and a willful
disregard of the rights of his rightful client — the Government of
Rwanda. Id. Among other things, Mr. Johnson failed to produce the
services called for under the contracts, represented former Ambassador
Uwimana's interests in blatant conflict*fn12 with the interests of the
Government of Rwanda, and insisted that Mr. Uwimana still possessed the
power to bind the Government of Rwanda long after it became remarkably
obvious that Mr. Uwimana had no such power. The court determines that the
Government of Rwanda's "trust [was] intentionally and consciously
disregarded, and exploited for unwarranted gain," and accordingly,
"community protection, as well as that of the victim, warrants the
imposition of punitive damages." Brown, 253 F.2d at 40. Moreover, by
awarding punitive damages, the court seeks to deter this defendant and
other agents who may be similarly situated in the future from committing
the gross lapses in ethics like those that occurred in this case.
Accordingly, the court rules that the plaintiff has easily proven by a
preponderance of the evidence that defendant Johnson's acts warrant the
imposition of punitive damages. Dalo, 596 A.2d at 41. Mr. Johnson shall
pay $10,000 in punitive damages to the plaintiff.
F. The Court's Judgment
The court enters a final judgment that defendant Johnson must pay the
plaintiff $1,800 on the July 8 MOU and $55,000 on the July 22 Letter
Agreement. Defendant Johnson must also pay the plaintiff $10,000 in
punitive damages. The court refers the issue concerning the award of
attorneys' fees, expenses, and costs to Magistrate Judge Kay for a report
and recommendation. The court also refers the issue of whether the
imposition of prejudgment interest is warranted in this case to the
Magistrate Judge. The court directs the parties to file their briefs on
these issues by October 1, 2002. The court also requests that the
Magistrate Judge's report and recommendation be submitted by December 1,
For all these reasons, the court rules that defendant Johnson is liable
for conversion and breach of fiduciary duty for both the July 8 MOU and
the July 22 Letter Agreement. In addition, the court rules for the
plaintiff on the issue of punitive damages. An order directing the parties
in a fashion consistent with this Memorandum Opinion is separately and
contemporaneously issued this 21 day of August, 2002.
ORDER RULING FOR THE PLAINTIFF ON THE ISSUE OF CONVERSION;
RULING FOR THE PLAINTIFF ON THE ISSUE OF BREACH OF FIDUCIARY DUTY;
RULING FOR THE PLAINTIFF ON THE ISSUE OF PUNITIVE DAMAGES
For the reasons stated in this court's Memorandum Opinion separately and
contemporaneously issued this ___ day of August, 2002, it is
ORDERED that defendant Robert W. Johnson II shall pay the plaintiff the
balance of the $28,000 under the July 8, 1994 MOU ($1,800); and it is
FURTHER ORDERED that defendant Robert W. Johnson II shall pay the
$55,000 under the July 22, 1994 Letter Agreement; and it is
ORDERED that defendant Robert W. Johnson shall pay the plaintiff
$10,000 in punitive damages; and it is
FURTHER ORDERED that the issue concerning the award of attorneys'
fees, expenses, and costs is referred to Magistrate Judge Kay for a
report and recommendation. The court also refers the issue of whether the
imposition of prejudgment interest is warranted in this case to the
Magistrate Judge. The court directs the parties to file their briefs on
these issues by October 1, 2002. The court also requests that the
Magistrate Judge's report and recommendation be submitted by December 1,