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THE GOVERNMENT OF RWANDA v. RWANDA WORKING GROUP

August 27, 2002

THE GOVERNMENT OF RWANDA, PLAINTIFF,
V.
RWANDA WORKING GROUP ET AL., DEFENDANTS.



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

       
FINDINGS OF FACT AND CONCLUSIONS OF LAW 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

I. INTRODUCTION

The controversies in this case are distilled from events involving political upheaval and its aftermath. The court must now resolve issues of contract law and the fiduciary duties of legal counsel in the environment of international affairs. Despite the dramatic circumstances that give context to the dispute before the court, the question presented is straightforward: with what expectations and under what strictures does counsel perform on behalf of a client?

This case comes before the court following a two-day bench trial. The current Government of Rwanda ("the plaintiff" or "the Republic") filed its complaint on July 7, 1997 against the Rwanda Working Group ("RWG"), an association allegedly hired to perform lobbying services by the government that ruled Rwanda from April to July 1994 ("the interim government"), Robert W. Johnson II ("defendant Johnson" or "Mr. Johnson" or "the defendant"), an attorney for the predecessor government and an alleged member of the RWG, and Aloys Uwimana ("Mr. Uwimana" or "Ambassador Uwimana"), the predecessor government's ambassador to the United States.

The plaintiff's claims of conversion and breach of fiduciary duty against defendant Johnson and the RWG seek the return of $83,000 (the sum of $28,000 paid by the interim government to Mr. Johnson and/or the RWG under one contract and $55,000 paid to Mr. Johnson and/or the RWG under a second contract) plus punitive damages. Compl. ¶¶ 56-65. At an earlier stage of the litigation, defendant Johnson filed a motion to dismiss for lack of subject-matter jurisdiction under Federal Rules of Civil Procedure 12(b)(1) and 12(h), and the plaintiff filed a motion for partial summary judgment. Defendant Johnson moved to dismiss the complaint as to himself on the ground that the plaintiff's claims failed to satisfy the $75,000 diversity jurisdiction requirement of Title 28 U.S.C. § 1332(a).*fn1 In turn, the plaintiff moved for partial summary judgment against Mr. Uwimana and defendant Johnson.

On May 20, 2002, the parties began a two-day bench trial before this court. Having now considered the testimony and evidence presented at trial, the arguments and submissions of counsel, and the relevant law, the court rules for the plaintiff on the issue of conversion and on the issue of breach of fiduciary duty. In addition, the court rules for the plaintiff on the issue of punitive damages.

II. BACKGROUND

A. Undisputed Facts

In 1994, massive upheaval engulfed the country of Rwanda. On April 6, 1994, when Rwandan president Juvenal Habyarimana died in a plane crash after 21 years in power, simmering political unrest erupted into civil war. Def.'s Opp'n to Pl.'s Mot. for Partial Summ. J., Ex. 6 (citing 1995 DEP'T ST. COUNTRY REPORTS ON HUMAN RIGHTS PRACTICES FOR 1994, Rwanda Section). Ethnic tension between the Hutu (85 percent of the population) and the Tutsi (14 percent of the population) escalated when Hutu extremists massacred hundreds of thousands of people, most of whom were Tutsi. Id. The Rwandan Patriotic Front ("RPF"), the current government, which is comprised largely of Tutsi's, halted the killings with a military offensive that overtook the self-proclaimed Hutu leadership in July 1994. Id. The ascension of the Rwandan Patriotic Front led to a massive flight of Hutu civilians out of Rwanda for fear of Tutsi reprisal. Id.

The plaintiff in this action is the Republic, or the Government of Rwanda, which succeeded what became generally known as the "Interim Government." Joint Pretrial Statement ("Joint PTS") at 1. The Republic brought this action against defendant Johnson, the RWG, and defendant Mr. Uwimana, the former ambassador to the interim government, alleging conversion and breach of fiduciary duty based on two separate contracts. Id. The parties stipulated to the following facts: (1) the plaintiff, the Republic, is the current legitimate Government of Rwanda; (2) Mr. Uwimana was given until July 22, 1994 to return his diplomatic credentials to the U.S. Department of State; and (3) Mr. Uwimana turned in his diplomatic credentials/letter of credence to the United States Department of State on July 22, 1994. Id. at 26. In addition, the parties stipulated during the trial to the fact that Mr. Uwimana was the Ambassador of Rwanda until about 5:00 p.m. on July 22 when he turned in his credentials.*fn2 Tr. at 212.

Finally, both the Republic and Mr. Johnson agree that "Johnson came into possession of $83,000 of the Republic's funds, pursuant to the July 8 [Memorandum of Understanding ("MOU")] and the July 22 Letter Agreement." Joint PTS at 4. Under the first contract, the July 8, 1994 MOU, Mr. Johnson, on behalf of the RWG, received $28,000 from the Republic for services. Id. at 20. Two weeks later, under the second contract, the so-called "July 22 Letter Agreement," Mr. Uwimana agreed to transfer $55,000 to Mr. Johnson. Id. at 21.

B. The Plaintiff's Claims

First, the plaintiff claims that the services it contracted for under the July 8 MOU never took place. Joint PTS at 1. In addition, the plaintiff alleges that the RWG consisted of the Washington World Group, Inc., represented by lobbyist Edward van Kloberg, III, the Foreign Policy Group, Inc., represented by lobbyist Timothy Towell, and Mr. Johnson. Id. at 1-2. "The Republic has settled its claims vis-à-vis van Kloberg and Towell for the sum of $26,200. Thus, the Republic seeks only to recover from Johnson the sum of $1,800," i.e., the remaining portion of the $28,000 under the July 8 MOU. Id. at 2.

Second, under the July 22 Letter Agreement, defendant Johnson, acting as counsel to Rwanda, received $55,000 for legal services he was to perform on behalf of the Rwandan Embassy and its diplomats and staff. Id. at 2. The plaintiff claims that defendant Johnson knew that the $55,000 was transferred to him for ultra vires purposes: to assist in the defection of Mr. Uwimana, his two subordinates at the Embassy, Boniface Karani and Jean-Baptiste Rwakazina, and their families. Id. at 2. The Republic alleges that despite having this knowledge, defendant Johnson "nevertheless accepted the funds and expended them to his client's detriment." Id. Moreover, the plaintiff asserts that Mr. Johnson continued to convert the Republic's funds even after it became clear that Mr. Uwimana's subordinates were no longer in need of defection services, and that Mr. Johnson refused to return the $55,000 despite repeated requests from the Republic to do so. Id. Consequently, the plaintiff seeks to recover the full $55,000 from Mr. Johnson. Id.

In sum, then, the Republic claims that Mr. Johnson converted these monies by using them for his own benefit against the interests of the Republic and by refusing to return the funds to the Republic, and that, in converting these funds, Mr. Johnson breached his fiduciary duties of good faith and loyalty to the Republic. Joint PTS at 4. The plaintiff also seeks interest that would have accumulated on the $83,000 since the date of the alleged conversion (i.e., the date of transfer) and costs, as well as punitive damages. Id. at 3.

C. The Defendant's Defenses

In terms of the July 8 MOU, defendant Johnson denies that he was a "member" of the RWG and contends that the RWG was the name of a project undertaken by the Washington World Group, Inc. Joint PTS at 2. Next, defendant Johnson contends that, at the time of the July 22 Letter Agreement, Mr. Uwimana was the recognized Ambassador from Rwanda to the United States and thus possessed full plenipotentiary powers and the authority to bind his government in contract. Id. Accordingly, Mr. Johnson maintains that the tasks contained in the July 22 Letter Agreement — which included securing immigration counsel on behalf of Mr. Uwimana, his legation, and their dependents to seek territorial asylum in the United States — continued to be a prudent and reasonable mission in light of Mr. Uwimana's diplomatic responsibilities to his legation, "coupled with the chaotic and dangerous situation on the ground in Rwanda at that time." Id. at 2-3. Mr. Johnson denies that he converted any of the funds "for his own benefit," and that, at all times, Mr. Johnson acted according to the directives, desires and wishes of the Government of Rwanda, "through the apparent and or actual authority of the latter's ambassador to United States, Uwimana." Id. at 5.

III. FINDINGS OF FACT

A. Mr. Johnson Was a Member of the RWG

1. Defendant Robert W. Johnson, II is an individual whose principal place of business is at 1275 Pennsylvania Avenue, N.W., Washington, D.C. Tr. at 18. In 1994, Mr. Johnson was a member of the District of Columbia, Alabama, and Virginia bars and was subject to their rules of professional conduct. Tr. at 18.

2. As of July 22, 1994, Mr. Johnson served as an attorney to the Government of Rwanda. Tr. at 12, 141, 167.

3. Despite Mr. Johnson's protestations to the contrary, Mr. Johnson was a member of the RWG, and not merely its lawyer. Tr. at 73, 94. Indeed, Mr. Johnson admits that he did not "act as counsel to the Rwanda Working Group." Tr. at 21.

4. In his pretrial motions and briefs, and at trial, Mr. Johnson consistently denied that he was a member of the RWG. Tr. at 21. At trial, however, both Mr. van Kloberg and Mr. Towell, the other two undisputed members of the RWG, testified without any hesitation that Mr. Johnson was a member of the RWG. Tr. at 74, 94. Mr. Johnson's attorney did nothing to cast doubt on the testimony of Mr. van Kloberg or Mr. Towell, and offered no evidence to substantiate the defendant's vague allegations that these two witnesses were or are biased against Mr. Johnson. Indeed, Mr. Towell referred to Mr. Johnson during his testimony as "a friend of mine." Tr. at 94. The record is devoid of any evidence that Mr. van Kloberg or Mr. Towell harbor or harbored a scintilla of prejudice or ill will against Mr. Johnson.

5. The court finds Mr. van Kloberg's and Mr. Towell's testimony credible and rejects Mr. Johnson's contention that he was not a member of the RWG. Indeed, the court's disbelief of Mr. Johnson's testimony on this important topic presages other assessments of his credibility.

B. The July 8, 1994 MOU

6. On behalf of Rwanda, Ambassador Uwimana entered into a July 8, 1994 MOU with the RWG to provide lobbying services. Tr. at 112; Exs. 2, 28.*fn3 Mr. Johnson stated in a letter to the United States government that he had signed the July 8 MOU "on behalf of the Rwanda Working Group." Ex. 28.

7. Mr. Johnson insists that he served as counsel to the Washington World Group, that the RWG was a Washington World Group "project," and that the July 8 MOU was the Washington World Group's contract with Rwanda. Tr. at 20, 21, 29.

8. These assertions have no support in the record. Mr. van Kloberg, the principal of the Washington World Group, testified that he never saw the July 8 MOU in July 1994 or until after this litigation commenced. Tr. at 73. In addition, Mr. van Kloberg testified that Mr. Johnson did not serve as the Washington World Group's lawyer on the Rwanda project, but rather was the "lead member" of the RWG. Tr. at 74. In this capacity, Mr. van Kloberg explained that Mr. Johnson would "prepar[e] the documents, [and] negotiat[e] with Ambassador Mr. Uwimana" while serving as "lead member" of the RWG. Tr. at 74. Moreover, Mr. Johnson's July 19, 1994 letter to Joseph E. Clarkson, chief of the Foreign Agent's Registration Act*fn4 registration unit, states that he signed the July 8 MOU "on behalf of the Rwanda Working Group." Ex. 28. The letter says nothing about the Washington World Group. Ex. 28. Once again, these facts call into question Mr. Johnson's truthfulness.

9. Ambassador Uwimana paid Mr. Johnson $28,000 directly with a Rwandan Embassy check issued to the "Robert W. Johnson II Trust Fund" on July 13, 1994. Ex. 22A. Mr. Johnson deposited the check into his trust account that same day. Ex. 22B. On July 13, 1994, Mr. Johnson also sent a receipt in the form of a letter to the Rwandan Embassy, which states in its entirety that "We are in receipt of a check for $28,000 for `the Rwanda Working Group' for lobbying services." Ex. 13.

10. When asked whether the RWG ever performed any of the services listed in the July 8 MOU for the Embassy of Rwanda, Mr. van Kloberg stated that "[e]vents superseded us." Tr. at 72. He added that the RWG members "worked individually making calls, seeing what was going on in various areas that were germane to us as individuals. . . ." Tr. at 72. Mr. van Kloberg's response demonstrates that because of the civil war engulfing Rwanda, he, and by implication, the co-members of the RWG could not perform the lobbying services contemplated in the July 8 MOU since events in Rwanda had superseded the RWG members. Based on his testimony, the court concludes that Mr. van Kloberg did not perform any of the lobbying or other services contemplated by the July 8 MOU.

11. In addition, Mr. Towell testified unequivocally that he never performed any lobbying services on behalf of Rwanda. Tr. at 97. Specifically, he never attempted to convince the U.S. Department of State to modify its hard-line on Rwanda, he never contacted the White House to modify its position on Rwanda, he never contacted anybody in Congress to modify Congress's position on Rwanda, and he never undertook any activities that would prevent the Department of State from seeking to freeze the Embassy's accounts. Tr. at 97. Based on his testimony, the court concludes that Mr. Towell did not perform any of the lobbying or other services contemplated by the July 8 MOU.

12. Mr. Johnson himself testified that to "the best of my knowledge, there were no lobbying services performed" under the July 8 MOU. Tr. at 26. Mr. Johnson stated that his work pursuant to the July 8 MOU involved "administration of the contract," disbursement of the $28,000, and one conversation with a Riggs Bank employee "regarding whether there was a hold place[d] by the State Department on any funds by Rwanda." Tr. at 23. Mr. Johnson explained that the conversation with the bank employee was his effort to ascertain that any check issued by the Rwandan Embassy pursuant to the contract would be "a good check as opposed to a bad check." Tr. at 23-24.

13. Although Mr. Johnson testified that he was familiar with the Foreign Agent's Registration Act ("FARA"), he never registered with the U.S. Department of Justice as a foreign agent nor did he register as a lobbyist under any other authority of law to lobby on behalf of Rwanda. Tr. at 19, 40. Indeed, exhibit 29 demonstrates that Mr. Johnson received a response to his July 19, 1994 letter from Mr. Clarkson, the FARA official, informing Mr. Johnson that the government required him to register as a lobbyist. Ex. 29.

14. Although all three RWG members admitted that no lobbying work was done, Ambassador Uwimana was under the clear impression that the RWG members had performed the work requested in the July 8 MOU. Tr. at 110-11.

15. In addition, Mr. Johnson wrote a letter dated July 21, 1994 to Ambassador Uwimana stating that the entire $28,000 "has been disbursed or obligated for work performed thus far on various projects. . . ." Ex. 1. Mr. Johnson added that "Mr. van Kloberg and Ambassador Towell have maintained continuous liaison with State Department officials to provide accurate information and to persuade the State Department to modify the White House's hard line with respect to the closure of the Embassy and the expulsion of the diplomatic staff." Ex. 1.

16. As noted previously, both Mr. van Kloberg and Mr. Towell testified that they never did any such work. Based on Mr. van Kloberg's and Mr. Towell's testimony that no such work ever occurred, the court deems Mr. Johnson's statements in his July 21, 1994 letter to Ambassador Uwimana to be blatant misrepresentations.

17. In sum, the only work Mr. Johnson performed pursuant to the July 8 MOU was to administer the contract, disburse the $28,000, and make sure that the checks disbursing the $28,000 would not bounce. Based on the record and all the witnesses' testimony about the July 8 MOU, the court concludes that the three RWG members did not perform the lobbying services contemplated by the July 8 MOU.

C. The July 22, 1994 Letter Agreement

18. On July 15, 1994, the Department of State issued a Note Verbale stating that "the Department of State has decided to require for the present the cessation of operations of the diplomatic mission [of the Rwandan Embassy], other than activities relating to the closure of the mission, effective July 22, 1994. . . ." Ex. 27. In addition, the Department of State's Note Verbale ordered that "Ambassador Uwimana will be required to depart the United States no later than July 22, 1994." Ex. 27.

19. The Note Verbale directed that Mr. Karani could remain in the United States to oversee the closing of the Embassy, the departure of all other Embassy personnel, and the disposition of all property. Ex. 27. In addition, the Department of State ordered all remaining members of the mission and their family members, including Mrs. Uwimana and the Ambassador's children, to leave the United States no later than August 14, 1994. Ex. 27.

20. Mr. Johnson testified that he almost certainly knew that the Note Verbale had been issued either that same day or the next day, July 16, 1994, but in any event, he definitely knew of its issuance by July 21, 1994. Tr. at 33.

21. Accordingly, Mr. Johnson knew of the Note Verbale when he sent the July 21, 1994 letter to Ambassador Uwimana proposing a set of "ongoing/new projects" for a $55,000 fee. Ex. 1.

22. On the afternoon of July 22, 1994, Mr. Uwimana, in his official capacity on behalf of Rwanda, agreed to the terms of Mr. Johnson's July 21, 1994 letter, which would serve as the blueprint for the July 22 Letter Agreement. Ex. 1. Mr. Uwimana also engaged Mr. Johnson to perform legal services on behalf of the Republic. Ex. 1.

24. Under the July 22 Letter Agreement, Mr. Johnson was paid $55,000 with Rwanda funds. Ex. 23.

25. On July 22, 1994, Ambassador Uwimana approved a $55,000 check on an Embassy account to the "Robert W. Johnson II Trust Fund." Ex. 23A. The check was signed by Mr. Rwakazina, the First Secretary of the Rwandan legation, and Mr. Karani, the Embassy's Counselor. Ex. 23A; Tr. at 55. The payor's name on the check reads "L'Ambassade De La Republique Rwandaise," thus clearly indicating that the monies being used to pay Mr. Johnson belonged to the Rwandan government and not to Mr. Uwimana or any other individual. Ex. 23A.

26. On July 22, 1994, Mr. Johnson signed a receipt for "lobbying services." Ex. 14. He deposited the check into his trust fund that same day. Tr. at 56.

27. In the July 22 Letter Agreement, Mr. Johnson explicitly represented that he would provide asylum and other immigration services for Mr. Uwimana and his family to stay in the United States, and would provide the same services for Mr. Karani and Mr. Rwakazina, the two other Rwandans in the Embassy. Ex. 1; Tr. at 56-57.

28. Under the July 22 Letter Agreement, Mr. Johnson told Mr. Uwimana that he would have to use $30,000 out of the $55,000 to pay two immigration attorneys ...


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