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EAW Group, Inc. v. Republic of the Gambia

November 20, 2006

EAW GROUP, INC., PLAINTIFF,
v.
THE REPUBLIC OF THE GAMBIA, DEFENDANT,
v.
JOHN E. AYCOTH, COUNTER DEFENDANT



The opinion of the court was delivered by: Gladys Kessler United States District Judge

Memorandum Opinion

Plaintiff, EAW Group, Inc. ("EAW"), filed this breach of contract action against Defendant, the Republic of the Gambia ("the Gambia"), an independent sovereign state. EAW's claims arise from the Gambia's alleged failure to compensate EAW for services rendered under their contract and from the Gambia's allegedly improper attempt to terminate that contract.

The Gambia brought a counterclaim against EAW and its President, John E. Aycoth ("Aycoth"). The Gambia alleges that EAW and Aycoth fraudulently misrepresented facts about EAW's corporate status, fraudulently induced the Gambia to enter the contract, and breached the contract by failing to provide the agreed upon services.

The Court held a four-day bench trial which commenced on September 25, 2006 and concluded on September 28, 2006. Upon consideration of the entire record, for the reasons discussed below, the Court grants judgment in favor of EAW on its unjust enrichment claim in the amount of $41,666.67, plus interest accruing from September 30, 2002. The Court grants judgment in favor of the Gambia on all other claims by EAW, and grants judgment in favor of EAW and Aycoth on all claims asserted by the Gambia.

I. Findings of Fact

A. The First Agreement

The Gambia is the smallest country on the African continental mainland and is very poor. During the administration of President William Jefferson Clinton, our State Department criticized it for its poor human rights record. After Gambian President Yahya A.J.J. Jammeh came to power through a coup in 1994, the Clinton administration imposed economic and political sanctions on the Gambia. In an effort to improve its image, visibility, and economic prospects, the Gambia sought help from lobbyists and consultants.

On May 15, 2000, the Gambia entered into a contract with EAW, a lobbying and consulting firm wholly owned by Aycoth. President Jammeh initiated contact with Aycoth because he was dissatisfied with lobbying services which were then being provided by Edward von Kloberg III. President Jammeh learned of Aycoth through London banker Paul Morgan, who knew that Aycoth had successfully represented Taiwan, Nigeria, and the Congo, among other African countries.

President Jammeh asked Aycoth to replace von Kloberg. Aycoth negotiated the terms of the contract directly with President Jammeh by phone and sent him a draft copy of a proposed agreement via fax. President Jammeh reviewed the draft and copied the agreement onto official state letterhead. Aycoth traveled to the Gambia in late May of 2000 to sign the final agreement, meet Gambian officials, and begin work.

Under the terms of the contract, EAW agreed to provide a coordinated public relations program, a government affairs program, and a trade and economic development program. The contract was for one year, and the Gambia was to pay EAW $500,000 as compensation. The $500,000 included EAW's normal expenses, which Aycoth estimated to be 20 percent or $100,000. He also testified that expenses were usually included in the total contract price. The agreement contained a choice-of-law provision stating that District of Columbia law governed its interpretation and the parties' performance. The contract was scheduled to expire in May of 2001 and did not contain any provisions addressing early termination. EAW performed under the agreement, and the Gambia paid in full.*fn1

Aycoth never received any notice that his performance had been deficient or unsatisfactory. Although Aycoth did receive a letter (via fax) dated June 13, 2001 informing him that his contract would not be renewed, the letter thanked him for rendering "valuable service." Moreover, as discussed below, the Gambia ultimately entered into a second agreement with Aycoth on almost identical terms as the first one. The first agreement is not the subject of the instant dispute.

B. The Second Agreement

On September 1, 2001, the Gambia entered into a second agreement with EAW. Once again, Aycoth negotiated the terms directly with President Jammeh, with whom he had developed a close working relationship. EAW again agreed to provide a coordinated public relations program, a government affairs program, and a trade and economic development program. The second agreement was to be in force for two years, and the Gambia was to pay EAW $1 million as compensation ($500,000 for each year).

The $1 Million Fee again included EAW's Normal Expenses which Aycoth Estimated to Total $200,000 of the $1 Million Fee

The second agreement required the Gambia to make two payments of $500,000. The first payment was due on execution, and the second was due on February 15, 2002. The second agreement contained the same choice-of-law provision as the first stating that District of Columbia law governed interpretation and performance under the contract. The contract was scheduled to expire in September of 2003 and did not contain any provisions addressing early termination.

The contract contained no benchmarks by which to measure EAW's performance. The second agreement, like the first, did not define the terms "coordinated public affairs program," "government affairs program," and "economic development program."

The Gambia paid EAW $500,000 on execution of the contract, as agreed, but failed to make the second payment on February 15, 2002 or anytime thereafter. Aycoth continued to perform under the agreement until September 30, 2002 despite the Gambia's failure to timely make the second payment. By letter dated September 23, 2002, Ms. Julia D. Joiner, Secretary General of the Gambia, terminated the second agreement on behalf of the Gambia as of September 30, 2002. Aycoth informed the Gambia that the second agreement did not contain an early termination clause.

1. Public Affairs and Government Relations Activities Conducted on Behalf of the Gambia under the Second Agreement

Aycoth provided various public affairs and government relations services to the Gambia during the time period covered by the second agreement. In February of 2002, he organized a celebration of Gambian independence for Gambian officials and embassy personnel at the Willard Inter-Continental in Washington, D.C. The invitation list included members of Congress, Congressional staffers, representatives from non-governmental organizations ("NGOs"), corporate executives, and others.

In April of 2002, at Aycoth's request, Congressman Edward Royce and Congressman Donald Payne-very influential members of the Congressional Subcommittee on Africa, Global Human Rights, and International Operations-signed a letter to President George W. Bush lauding President Jammeh's achievements and suggesting a meeting between the two Presidents. Aycoth worked with the Representatives' staffers to obtain the letter and reviewed early drafts. The meeting did not come about because of President Bush's busy schedule.

In May of 2002, Aycoth arranged for senior Gambian officials*fn2 to meet with representatives from UNICEF and the Bill & Melinda Gates Foundation, in New York City, during a Special Session of the United Nations General Assembly on Children. Aycoth also arranged for President Jammeh to visit Ground Zero in New York City and to meet with Congressman Gregory Meeks and Congressman Donald Payne during his visit. At the last minute, President Jammeh canceled all such meetings as well as telephone interviews that Aycoth had scheduled with several journalists.*fn3

Aycoth also arranged meetings between Ambassador John P. Bojang and representatives from the National Geographic Channel, hoping they would lead to favorable stories about the Gambia and thereby encourage tourism. Additionally, Aycoth used the internet to collect news stories and government filings regarding the ...


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