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Elemary v. Holzmann

February 6, 2008


The opinion of the court was delivered by: Royce C. Lamberth, United States District Judge


This opinion addresses two Motions to Dismiss that raise several common issues. Defendants Billy Harbert, Jr. ("Billy Harbert") and B.L. Harbert International, LLC ("HILLC") moved to dismiss all claims against them for lack of personal jurisdiction, improper venue, and/or failure to state a claim. The Court has considered defendants' motion [13], plaintiff's opposition thereto [17], defendants' reply [21], and the applicable law. For the reasons set forth below, the motion is hereby GRANTED, and all claims against these defendants are DISMISSED.

Defendants Bill L. Harbert, Sr. ("Bill L. Harbert") and Harbert International Establishment, Inc. ("HIE") moved separately to dismiss certain claims against them for lack of personal jurisdiction, improper venue, and/or failure to state a claim. The Court has considered defendants' motion [14], plaintiff's opposition thereto [18], defendants' reply [22], and the applicable law. For the reasons set forth below, the motion is hereby GRANTED in part and DENIED in part. Plaintiff's claim for violation of 18 U.S.C. section 1964 ("civil RICO") against Bill L. Harbert stands. Her claims against HIE and her termination in violation of public policy and fraud claims against Bill L. Harbert are DISMISSED.


In the late 1970s, the United States Agency for International Development ("USAID") made funds available to the Egyptian government to complete a wastewater project. (Compl. 9.) The Egyptian government awarded contracts for the project on what were ostensibly sealed, competitive bids. See Miller v. Holzmann, No. 95-cv-1231-RCL, 2007 U.S. Dist. LEXIS 16105, at *15-17 (D.D.C. Mar. 6, 2007). In reality, the pre-qualified bidders ("the Contractors") conspired to manipulate the bidding process by agreeing in advance which company would win each bid. Id. at *16-17. The unsuccessful bidders would receive lucrative subcontracts or guarantees of success in bidding for future contracts, and the winning bids incorporated these "costs." Id. at *17. As a result, USAID overpaid the winning bidders and compensated the losers. Id. When uncovered, this bid-rigging scheme prompted criminal charges against numerous individual and corporate defendants as well as a qui tam action under the False Claims Act ("FCA"), 31 U.S.C. §§ 3729-3732. (Compl. 6.)

Defendant Bill L. Harbert, an Alabama construction magnate, participated in the bid-rigging scheme. (See Compl. 11.) He also devised a phantom equipment-lending transaction through which he laundered the scheme's profits. (Id. at 40.) In the criminal case, the Contractors pleaded guilty and paid a $54 million fine, which Bill L. Harbert began paying in February 2002, in part from personal funds. (Id. at 6.) Bill L. Harbert was also named in the qui tam action, but this Court dismissed all claims against Bill L. Harbert on statute of limitations grounds. (Order [854] in 95-cv-1231-RCL (May 4, 2007).)

Bill L. Harbert's son, defendant Billy Harbert, in association with defendant HILLC, also works in the construction industry. (Compl. 11.) Neither Billy Harbert nor HILLC was criminally charged or named as a defendant in the qui tam action.

During the wastewater project bidding process in the 1980s, plaintiff Dr. Hoda Elemary ("Elemary"), then an Egyptian citizen, served as the Contractors' liaison with the Egyptian government. (Id. at 10.) Her influence with then-Prime Minister Dr. Atef Sedky, her uncle, proved crucial to the Contractors' success in securing the contract. (Id.) She contends that when she acted on the Contractors' behalf, defendants Bill L. Harbert, HIE, Billy Harbert, and HILLC either intended to engage in bid-rigging or were aware that others harbored such intentions. (Id. at 30.) Elemary claims they concealed these intentions from her to induce her to assist them. (Id. at 32.) Had she been aware of their plan, she would not have aided them. (Id.)

Elemary next represented Bill L. Harbert before the Saudi Royal Board of Grievances in Saudi Arabia, from 1990 or 1991 to 1997 or 1998. (Incorp. Sched. ii, vi.) In April 2001 or 2002, he hired her to negotiate with the Department of Justice ("DOJ") concerning the criminal and civil cases then pending against him. (Compl. 27, 32.) At that time, she claims he and Billy Harbert concealed "the extent of their culpability in the bid-rigging, scheme," and she was deceived about their involvement for some undefined period. (Id. at 14, 31.) Again, she asserts she would not have worked for Bill L. Harbert had she been aware of his culpability. (Id. at 32.)

On September 21, 2004, Elemary and Bill L. Harbert signed an agreement relating to Elemary's role as a negotiator, or "exclusive case manager," in the qui tam action ("the September 21 Agreement"). (Compl. Ex. G at 4.) It defines her compensation for these duties: in addition to a monthly "fee," she was "unconditionally guaranteed to receive five percent (5%) . . . of any funds she save[d] Mr. Harbert from ultimately paying the government in a settlement" -- essentially, five percent of the difference between the government's then-current demand of $56 million and any ultimate settlement amount. (Id.)

In March 2005, Elemary alleges she obtained a written offer from DOJ to settle the qui tam action for $15 million. (Compl. 23.) She asserts the "offer was acceptable to [Bill L. Harbert], but [Billy Harbert], acting in his personal capacity and on behalf of HILLC, caused it to be rejected." (Id.) Billy Harbert "declined to obey his father's wishes" and "insisted he could a do a better job than [Elemary] in negotiating a lower [settlement] figure." (Id. at 7.) Elemary claims Billy Harbert feared his father would disinherit him in favor of her and thus acted "out of sheer malice towards [her]." (Id. at 8, 23.) She further claims he threatened her career and life repeatedly between 1997 and 2006 and actively sought "to destroy [her] financially and physically" and in her career and reputation. (Id. at 9, 36.)

At some point before November 2004, Elemary acquired banking records implicating the Contractors in the bid-rigging scheme. (Id. at 12, 28.) Thereafter, she alleges that Bill L. Harbert, Billy Harbert, HILLC, and HIE attempted to coerce her to conceal these documents from DOJ or to resign her negotiating position, and that they later threatened her life. (Id.) When she persistently refused to withhold evidence from the government, Bill L. Harbert "terminated [her] employment" on April 5, 2005. (Id. at 28.) Nine days later, Elemary suffered a broken shoulder when a stranger assaulted her outside her California residence. (Id. at 38.) She claims Bill L. Harbert and/or Billy Harbert -- in both his personal capacity and as HILLC's agent -- dispatched this "hired Myrmidon" to dissuade her from filing the present action or from providing the incriminating records to DOJ and/or to reclaim those records. (Id. at 13-14, 37.)

Elemary filed the present action on April 10, 2007. Her complaint names seven defendants and lists seven causes of action: (1) tortious interference with prospective economic advantage ("TIPEA") against Billy Harbert and HILLC; (2) breach of contract against Bill L. Harbert; (3) quantum meruit against Bill L. Harbert; (4) termination in violation of public policy against Bill L. Harbert; (5) fraud against Sabbia Aktiengesellschaft, Philipp Holzmann, A.G.,*fn1 Bill L. Harbert, HIE, Billy Harbert, and HILLC; (6) civil RICO against Billy Harbert; and (7) civil RICO against Bill L. Harbert.

On June 27, 2007, Billy Harbert, Jr. and HILLC, and Bill L. Harbert and HIE, filed separate motions to dismiss some or all of the various claims arrayed against them. These motions raise common legal issues -- in particular, personal jurisdiction and the adequacy of Elemary's statement of her claims.*fn2 Accordingly, the Court addresses them here together.


I. Personal Jurisdiction

A. Applicable Law

A plaintiff must establish the court's jurisdiction over each defendant through specific allegations in his complaint. Kopff v. Battaglia, 425 F. Supp. 2d 76, 80-81 (D.D.C. 2006) (Bates, J.). He may neither "rely on conclusory allegations" nor "aggregate factual allegations concerning multiple defendants in order to demonstrate personal jurisdiction over any individual defendant." Id. at 81 (citing GTE New Media Servs., Inc. v. Ameritech Corp., 21 F. Supp. 2d 27, 36 (D.D.C. 1998), and Rush v. Savchuk, 444 U.S. 320, 331-32 (1980)). In resolving a challenge to personal jurisdiction, "the Court may assume [] the [plaintiff's] claims are meritorious," but it need not give credence to factual allegations that are directly contradicted by affidavit. Id.

"In a diversity case," such as this one, "the federal district court's jurisdiction over a defendant is coextensive with that of a District of Columbia court." Helmer v. Doletskaya, 393 F.3d 201, 205 (D.C. Cir. 2004). Thus, jurisdiction must satisfy both the District of Columbia long-arm statute and due process. United States v. Ferrara, 54 F.3d 825, 828 (D.C. Cir. 1995).

1. The District of Columbia Long-Arm Statute

The District of Columbia long-arm statute provides that "[a] District of Columbia court may exercise jurisdiction over a person, who acts directly or by an agent, as to a claim arising" from the defendant's (3) causing tortious injury in the District of Columbia by an act in the District of Columbia; [or] (4) causing tortious injury in the District of Columbia by an act outside the District of Columbia if he regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed, or services rendered, in the District of Columbia . . . .

D.C. Code § 13-423(a) (2007).*fn3 The latter provision, subsection (a)(4), provides for narrower jurisdiction than does the Due Process Clause: "[t]he drafters of this provision apparently intended that [it] would not occupy all of the constitutionally available space" and thus required a "plus factor" -- the regular solicitation, persistent conduct, or substantial revenue mandated in its final clause. Crane v. Carr, 814 F.2d 758, 762 (D.C. Cir. 1987).

Both subsections (a)(3) and (a)(4) require tortious injury in the District of Columbia. Generally, "emotional or reputational injury occurs where the plaintiff lives or works . . . [but] District of Columbia law does not establish where economic injury occurs." Helmer, 393 F.3d at 208. The Court of Appeals confronted this open question in Helmer, where a District domiciliary who lived and worked in Russia sued his former girlfriend, a Russian citizen, for fraud. Id. at 204. He alleged she had "fraudulently induced him to entrust her with the purchase of [an] apartment [in Moscow] and to lend her financial support by concealing material facts about her personal background." Id. Helmer contended he had suffered economic injury in the District because "'economic harm is suffered at the claimant's home, meaning domicile.'" Id. at 208. After reviewing precedents from other jurisdictions, the Court of Appeals focused, instead, on "the original events that caused the alleged injury to Helmer" -- Doletskaya's use of Helmer's credit cards, Helmer's payment of her charges on them, and the apartment purchase. Id. at 209. Because these events all occurred outside the District of Columbia, the court concluded Helmer had not demonstrated Doletskaya's fraud had caused him injury here. Id.

In addition to tortious injury, both subsections (a)(3) and (a)(4) require an "act." D.C. Code Ann. § 13-423(a) (2007). "The 'act,' of course, is the act of the alleged tortfeasor" -- for example, "uttering defamatory statements." Margoles v. Johnson, 483 F.2d 1212, 1218 (D.C. Cir. 1973). "[T]hat other third party acts were necessary to consummate the tort, or that the injury itself took place in the District," is not dispositive. Id.

Finally, the long-arm statute also provides that "[w]hen 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." D.C. Code § 13-423(b) (2007). This "requirement of a nexus between the plaintiff's claim and the defendant's business activities in the forum jurisdiction" parallels the demands of due process. Shoppers Food Warehouse v. Moreno, 746 A.2d 320, 332 (D.C. 2000).

2. The Due Process Clause

Due process circumscribes courts' power over defendants, limiting their reach to those persons who have meaningful "contacts, ties, or relations" with the state in which the court sits. Int'l Shoe Co. v. Washington, 326 U.S. 310, 319 (1945). This "minimum contacts" requirement assures a court's exercise of power will comport with "our traditional conception of fair play and substantial justice," id. at 320, such that a defendant will have "fair warning that a particular activity may subject [him] to the jurisdiction of a foreign sovereign," Shaffer v. Heitner, 433 U.S. 186, 218 (1977) (Stevens, J., concurring in the judgment).

A federal court's jurisdiction over a person, may be either general -- "adjudicatory authority to entertain a suit against a defendant without regard to the claim's relationship vel non to the defendant's forum-linked activity" -- or specific -- authority "to entertain controversies based on acts of a defendant that touch and concern the forum." Steinberg v. Int'l Criminal Police Org., 672 F.2d 927, 928 (D.C. Cir. 1981). In the latter case, the "'fair warning' requirement is satisfied if the defendant has 'purposefully directed' his activities at residents of the forum, and the litigation results from alleged injuries that 'arise out of or relate to' those activities." Burger King v. Rudzewicz, 471 U.S. 462, 472 (1985) (internal citations omitted).

B. Analysis

Billy Harbert and HILLC contest this Court's jurisdiction as to all claims against them. Billy Harbert is an Alabama citizen, and HILLC is a Delaware limited liability company with its principal place of business in Alabama. (Compl. 1-2.) Billy Harbert claims his sole connection with the District of Columbia arises from annual visits to meet with State Department officials, in his capacity as HILLC's president, concerning overseas construction contracts. (Billy Harbert Decl. 1.)*fn4 He avers that HILLC has never operated in the District nor been authorized to do business here. (Id. at 2.)

HIE challenges the Court's jurisdiction as to the sole claim levied against it, for fraud. According to Elemary's complaint, HIE is a Liechtenstein corporation having its principal place of business in the Swiss Confederation.*fn5 (Compl. 2.) HIE claims it is a "shelf" corporation, one created simply to preserve a corporate name, that has never conducted any business whatsoever, either in the District or elsewhere. (Mem. Supp. Bill L. Harbert and HIE Mot. to Dismiss 6.)

1. Plaintiff's TIPEA Claim: Billy Harbert & HILLC

a. Jurisdictional Allegations

Elemary alleges that by obstructing the settlement she had negotiated with DOJ on his father's behalf, Billy Harbert intentionally and knowingly deprived her of the benefit she expected to receive under the September 21 Agreement. (Compl. 6-7, 22-23.) She asserts this agreement was "negotiated into [its] final form[] and executed in Washington, D.C." (Id. at 21.)

Her complaint describes more specifically how Billy Harbert accomplished the alleged interference: "acting in his personal capacity and on behalf of HILLC, [he] caused [the settlement] to be rejected" and then "negotiated through counsel for several months . . . with the Department of Justice." (Id. at 7, 23.) DOJ, managed both the criminal action and the government's intervention in the qui tam action and maintains its headquarters in the District of Columbia.

Elemary also identifies her consequent damages. In her opposition to Billy Harbert and HILLC's motion, Elemary asserts she suffered injury to her reputation: "Plaintiff did suffer injuries in this district, as the actions alleged in the Complaint harmed Plaintiff's standing in the U.S. Senate, one of her major theatres [sic] of operation." (Mem. Opp. Billy Harbert and HILLC Mot. to Dismiss 13.) This allegation also appears, if less explicitly, in her complaint.*fn6 (See, e.g., Compl. 13 ("Defendants' damages inflicted on Plaintiff arose through . . . completely and intentionally discrediting Plaintiff in the presence of [various U.S. government officials] who had earlier supported Plaintiff's activities").) Although the purported connection between this injury and the alleged tortious interference is likewise inexplicit, injury to reputation is a cognizable element of damages on a TIPEA claim. Restatement (Second) of Torts § 774A (1979). Further, though she is a California citizen, Elemary alleges she has worked in the District of Columbia and has lived there six months out of every year for the past thirty years. (Compl. 19 (listing her part-time residence in the District as a fact "on jurisdiction and venue").)

b. Analysis

Construed liberally, Elemary's complaint establishes that this Court has jurisdiction over Billy Harbert and HILLC as to her TIPEA claim.

Because her complaint alleges both tortious acts and tortious injury in the District of Columbia, she has satisfied long-arm statute subsection (a)(3). D.C. Code § 13-423(a)(3) (2007). Under that provision, the relevant conduct is that "of the alleged tortfeasor," Margoles, 483 F.2d at 1218, who may act "directly or through an agent." D.C. Code § 13-423(a) (2007). Here, Elemary alleges that Billy Harbert -- in part via an agent -- obstructed a proposed agreement between his father and a federal agency by communicating and negotiating directly with that agency. These interactions concerned a lawsuit then pending in the District of Columbia. Elemary does not specify by what means Billy Harbert caused the agreement's rejection nor where the negotiations occurred. Cf. Moncrief v. Lexington Herald-Leader Co., 807 F.2d 217, 219, 221 (D.C. Cir. 1986) (where libelous statements were printed in Maryland and mailed from there into the District of Columbia, the tortious "act" occurred in Maryland); Margoles, 483 F.2d at 1218 (where defamatory statements were made in Michigan but transmitted via telephone to a District of Columbia listener, the utterance in Michigan was the relevant tortious "act").

Nonetheless, given that DOJ headquarters are in the District of Columbia, and that the negotiations concerned a lawsuit pending here, the Court may reasonably infer that some part of the ...

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