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Waters v. Armenian Genocide Museum & Memorial

March 9, 2010


The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge


This is the third of three related cases pending before this Court that arises out of a very bitter and very unfortunate dispute between Plaintiffs John J. Waters Jr. ("Waters Jr."), Gerard L. Cafesjian ("Cafesjian"), The Cafesjian Family Foundation, Inc. ("CFF"), and the TomKat Limited Partnership ("TomKat") (collectively, "Plaintiffs") and Defendants Armenian Assembly of America, Inc. (the "Assembly") and Armenian Genocide Museum & Memorial, Inc. ("AGM&M") (collectively, "Defendants"), relating to the construction of an Armenian genocide museum and memorial in Washington, D.C. In the above-captioned case, Plaintiffs have asserted twelve separate claims for declaratory relief against Defendants. Currently pending before the Court is Defendants' [78] Motion for Partial Summary Judgment with respect to Count I of the Amended Complaint seeking a declaration that Cafesjian and Waters Jr. have not breached any fiduciary duty to AGM&M or the Assembly and with respect to Count VIII of the Amended Complaint seeking a declaration that CFF is entitled to remain an AGM&M Trustee controlling three votes. Briefing on this motion has been completed, and the motion is ripe for adjudication.

For the reasons explained below, the Court shall DENY Plaintiffs' partial motion for summary judgment.


The facts underlying the parties' disputes have been thoroughly laid out in this Court's opinions regarding summary judgment stage in the two related cases pending before this Court. See Armenian Genocide Museum & Memorial, Inc. v. The Cafesjian Family Foundation, No. 07-1259 (D.D.C. Mar. 9, 2010) ("Cafesjian I") (granting in part and denying in part the parties' cross-motions for summary judgment); Armenian Assembly of America, Inc. v. Cafesjian, No. 08-255 (D.D.C. Mar. 9, 2010) ("Cafesjian II") (same). In Cafesjian I, AGM&M brought a claim against Cafesjian and Waters Jr. for breach of fiduciary duty and also brought claims for declaratory relief and quiet title relating to certain interests held by Cafesjian and CFF in property owned by AGM&M. In Cafesjian II, AGM&M and the Assembly brought claims against Cafesjian and Waters for breach of fiduciary duty, breach of contract, misappropriation of trade secrets, and also brought various other claims for declaratory relief. The claims for declaratory relief brought by Plaintiffs in this action pertain to the same controversies being litigated in Cafesjian I and Cafesjian II. The Court shall not provide a full recitation of facts herein because Plaintiffs' motion for partial summary judgment raises only a few narrow issues that have already been considered and addressed in the two related cases. However, a brief summary of the relevant facts is recited below.

In the late 1990s, the Assembly, an Armenian-American advocacy group, began exploring possible sites to create a museum devoted to the Armenian genocide. With the help of donations from Cafesjian (through CFF), the Assembly purchased the National Bank of Washington building in Washington, D.C. (the "Bank Building"). Cafesjian subsequently purchased (through TomKat) several lots adjacent to the Bank Building and decided to donate these lots to the museum project, which was to be run by an independent entity, AGM&M. In October 2003, AGM&M was formally incorporated, and Cafesjian became one of four initial Trustees on the AGM&M Board of Trustees, each appointed by an initial donor. Pursuant to the AGM&M By-Laws, each initial donor may appoint one Trustee for every $5 million contributed to the corporation. See Defs.' Br., Ex. 6 (By-Laws) § 2.5. Unless otherwise provided in the By-Laws or the Articles of Incorporation, all Board actions must be decided by an 80% affirmative vote. Id. § 2.7. Cafesjian became the first Chairman and President of AGM&M, and Waters Jr. became the first Secretary/Treasurer.

On November 1, 2003, the Assembly executed a Grant Agreement with CFF and Cafesjian that memorialized their donations to the museum project and placed restrictions on the use of the donated funds. See Defs.' Br., Ex. 12 (Grant Agreement). The Grant Agreement memorialized an initial donation of $3.5 million to help acquire the Bank Building and a second donation of approximately $12.85 million to purchase the properties adjacent to the Bank Building that Cafesjian had acquired. The Grant Agreement provided that the donated funds could only be used as part of the Museum, subject to plans approved by the Board of Trustees. See Grant Agreement § 3.1. The Agreement also included a termination and reversion clause, stating that if the properties acquired with the donated funds were not developed prior to December 31, 2010 in substantial compliance the Board's plans, the properties would revert to Cafesjian and CFF. See id. § 3.1(B).

On the same day, the Assembly and AGM&M entered into a Transfer Agreement, under which the Assembly agreed to transfer all its assets for the museum project to AGM&M. See Defs.' Br., Ex. 13 (Transfer Agreement). As part of the Transfer Agreement, AGM&M agreed to honor all of the Assembly's donor requirements. See Transfer Agreement § 1.1. Following the execution of these agreements, AGM&M acquired the adjacent properties and began to plan for a museum. The parties heavily dispute what transpired from 2003 to 2006, when Cafesjian and Waters Jr. were managing officers of AGM&M. Defendants accuse Cafesjian and Waters Jr. of mismanagement, while Plaintiffs contend that disagreements on the Board prevented substantial progress on the development of the Museum. Cafesjian resigned as Chairman in September 2006 but remained as a Trustee.

In October 2006, Waters Jr. executed a Memorandum of Agreement Reserving Rights ("MOA") between AGM&M and CFF, which he signed on behalf of both parties. See Defs.' Br., Ex. 18 (MOA). The MOA described in general terms the reversionary interest held by CFF in the Bank Building and adjacent properties pursuant to the Grant and Transfer Agreements. Waters Jr. recorded the MOA with the District of Columbia Recorder of Deeds. Waters Jr. never informed the Board of Trustees about the MOA.

On April 26, 2007, Cafesjian and CFF filed a complaint against the Assembly in the United States District Court for the District of Minnesota seeking, inter alia, rescission of the Grant Agreement and restitution of all donations made. See Defs.' Br., Ex. 21 (Complaint). Cafesjian and CFF sought a declaration that the Assembly had breached the Grant Agreement and sought damages for the failure to reissue the promissory note or repay the $500,000 loan as required by the Grant Agreement. This case was ultimately dismissed by the court for failure to join a necessary party, AGM&M.

On May 2, 2007, Cafesjian resigned from the Board of Trustees and appointed Waters Jr. as CFF's designee on the Board. On May 7, 2007, the Board of Trustees convened a meeting and held a discussion regarding whether or not Cafesjian and CFF's conduct in filing the action against the Assembly in Minnesota, as well as Waters Jr.'s actions in executing and recording the MOA, had created a conflict of interest and breach of fiduciary duty which prohibited Waters Jr. and/or CFF from participating in the discussions or voting on proposals for going forward with the development of the museum. The details surrounding what occurred at this meeting are hotly disputed by the parties. However, it is clear that at some point during the meeting, Waters Jr. disconnected the phone, and the remaining Trustees proceeded with the meeting without him.

On September 28, 2007, CFF filed a derivative lawsuit in this District against AGM&M, the Assembly, and the other Trustees to enjoin AGM&M from developing the museum without participation by trustees from CFF. See Defs.' Br., Ex. 22 (Complaint).

On March 19, 2009, the AGM&M Board called a special meeting by telephone to consider the removal of Waters Jr. as the CFF Trustee and to remove any other CFF-designated successor Trustees as well as CFF's right to act as a Trustee or appoint Trustees. See Defs.' Stmt. ¶¶ 70, 72-73; Pls.' Resp. Stmt. ¶¶ 70, 72-73. Notice of this meeting was not provided to CFF. See Defs.' Stmt. ¶ 71. The Trustees present at the meeting discussed issues relating to conflicts of interest between CFF and the business of AGM&M. Ultimately, the Board of Trustees voted to ...

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