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The Armenian Assembly of America, Inc. et al v. Gerard L. Cafesjian et al

January 26, 2011

THE ARMENIAN ASSEMBLY OF AMERICA, INC. ET AL., PLAINTIFFS/COUNTER-DEFENDANTS,
v.
GERARD L. CAFESJIAN ET AL., DEFENDANTS/COUNTER-PLAINTIFFS.



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

MEMORANDUM OPINION

"Who, after all, speaks today of the annihilation of the Armenians?"

These chilling words are said to have been spoken by Adolf Hitler in 1939 in reference to the largely successful efforts by the Ottoman Turkish government to eliminate the Armenian population living on its historic homeland during the World War I era, known today as the Armenian Genocide.*fn1 Beginning around the year 2000, a group of dedicated individuals agreed to organize their efforts to build a museum in Washington, D.C. devoted to the understanding and memorialization of the Armenian Genocide. Unfortunately, that end goal was about all they could agree on, and after seven years of internal debate and struggles over the size and scope of the project, relations between the parties broke down completely, resulting in litigation that led to the three above-captioned cases. The parties to these actions are The Armenian Assembly of America, Inc. (the "Assembly"), Armenian Genocide Museum & Memorial, Inc. ("AGM&M"), Gerard L. Cafesjian ("Cafesjian"), John J. Waters Jr. ("Waters"), and The Cafesjian Family Foundation, Inc. ("CFF"). On March 9, 2010, this Court issued a series of rulings granting-in-part and denying-in-part the parties' various motions for summary judgment. See Armenian Genocide Museum & Mem'l, Inc. v. Cafesjian Family Found., Inc., 691 F. Supp. 2d 132 (D.D.C. 2010); Armenian Assembly of Am., Inc. v. Cafesjian, 692 F. Supp. 2d 20 (D.D.C. 2010); Waters v. Armenian Genocide Museum & Mem'l, Inc., 692 F. Supp. 2d 57 (D.D.C. 2010).*fn2 The parties subsequently agreed to consolidate these cases for a single trial by the court without a jury. See Joint Stip. to Non-jury Trial, ECF No. [102]; Stip. of Consolidation, ECF No. [108].*fn3

Based on the parties' proposals during pretrial hearings, the Court ordered the parties to file consolidated complaints and answers with specific factual allegations supporting their remaining claims and counterclaims in the three cases. The Assembly and AGM&M (collectively, "Plaintiffs") filed their Consolidated Complaint (hereinafter, "Complaint"), which alleges that Cafesjian and Waters each breached their fiduciary duties to AGM&M (Count One) and to the Assembly (Count Two), that Cafesjian breached his duty of good faith and fair dealing to the Assembly (Count Three), and that Cafesjian and Waters each misappropriated trade secrets of the Assembly (Count Four). See generally Consol. Compl. (hereinafter, "Compl."), ECF No. [109]. Cafesjian, Waters, and CFF (collectively, "Defendants") filed their Streamlined Answer and Counterclaims, which asserts claims for breach of contract against the Assembly (Count I) and AGM&M (Count II), breach of implied covenant of good faith and fair dealing against the Assembly (Count III) and AGM&M (Count IV), third-party beneficiary against AGM&M (Count V), unjust enrichment against the Assembly and AGM&M (Count VI), and indemnification against AGM&M (Count VII). See Streamlined Countercls. (hereinafter, "Countercls."), ECF No. [104]; Answer to Consol. Compl., ECF No. [141]. Before trial, the parties also filed proposed conclusions of law. See Defs.' Proposed Conclusions of Law, ECF No. [144] (hereinafter, "Defs.' Concls."); Pls.' Proposed Conclusions of Law, ECF No. [145] (hereinafter, "Pls.' Concls.").

A bench trial commenced on November 9, 2010. Plaintiffs called thirteen witnesses and introduced deposition testimony from five additional witnesses. Defendants called eight witnesses and introduced deposition testimony from one additional witness. To avoid having witnesses testify twice (once during Plaintiffs' case and once during Defendants' case), the parties agreed that Defendants could cross-examine Plaintiffs' witnesses beyond the scope of direct examination. At the close of Plaintiffs' case-in-chief, Defendants orally moved for judgment on partial findings under Federal Rule of Civil Procedure 52(c). Plaintiffs also moved orally for judgment on partial findings at the close of Defendants' case-in-chief. After hearing brief argument, the Court took those motions under advisement.*fn4 Plaintiffs did not present any evidence in rebuttal to Defendants' case. The trial concluded with closing arguments on the twelfth trial day, November 29, 2010. There were 453 exhibits admitted into evidence, 282 marked as Plaintiffs' exhibits ("PX-") and 171 marked as Defendants' Exhibits ("DX-"). See Amended Exhibits Entered During Trial: Nov. 9-24, 2010.*fn5 At the request of the Court, the parties did not file proposed findings of fact or revised conclusions of law after trial. However, Defendants did file a [190] Notice of Untruthful Testimony of Plaintiffs' Witnesses summarizing what they perceived to be inconsistencies in the testimony presented by Plaintiffs, to which Plaintiffs filed a [191] Response. The Court has placed no special weight on these filings and has made its own conclusions with respect to the credibility of the witnesses.

This memorandum opinion contains the Court's findings of fact and conclusions of law. In making the findings enumerated below, the Court has relied on the testimony of the witnesses, the exhibits admitted into evidence, and the record as a whole. The Court has not relied on any exhibits that were not admitted into evidence or testimony that was stricken from the record at trial. In addition, the Court has considered only the legal arguments made by the parties on the record during the course of the trial, in the pleadings, or in the proposed conclusions of law.

I. INTRODUCTION

A. Preliminary Observations

Before the Court proceeds with a recitation of the facts, a few preliminary comments are in order. The factual record in this case is voluminous, and the Court has reviewed every exhibit admitted and reviewed the transcripts of each witness's testimony. The key events relevant to this dispute occurred over a period of approximately eight years leading up to the filing of the first lawsuit and continued while the parties were in litigation. Although the parties strongly disagree about what motivated them to take certain actions, the facts of what actually occurred are largely undisputed. However, because context is critical to understanding the relationships between the parties and the reasons for their actions (or their inaction), the Court has endeavored to make its findings of fact as specific and detailed as possible.

Several key witnesses were unable to recall specific details from the meetings and events that gave rise to the claims in these lawsuits. In some cases, the witnesses were unable to remember any details from such meetings or events. To a certain extent, these witnesses' lack of memory is unsurprising. After all, the events took place between four and ten years ago, and the Court is also mindful of the fact that several of these witnesses are octogenarian. However, in many instances, lack of memory appeared to be driven more by convenience than cognition. Some witnesses were unable to recall their attendance at critical meetings even when presented with written records of the actions they took. Some witnesses could recall in detail events that were favorable to them (or unfavorable to their opponents) but were hazy about similar events that were unfavorable to them (or favorable to their opponents). Additionally, most of the witnesses who testified at trial are biased in some manner, either because they have a financial stake in the outcome of the trial or because their reputation has been called into question by the allegations raised in this litigation. The Court considers all of this as a factor in assessing the credibility of the witnesses.

Because of concerns about the reliability of some of the witnesses' testimony, the Court relies heavily on the admitted exhibits to document what transpired at the time. With the exception of a few exhibits that were admitted only for a limited purpose, the parties have largely waived objections as to the authenticity of or hearsay contained in the vast array of emails, letters, meeting notes, minutes, and other records admitted during the trial.*fn6 Although there are some minor inconsistencies and a few major ones in the documentary evidence submitted, the Court finds that the exhibits are generally the best evidence of what occurred because most of them were created at the same time as the events they describe or shortly thereafter. Therefore, in the face of a conflict between the exhibits and witness testimony, the Court has sided more often with the story told by the exhibits. With a few exceptions, however, the inconsistencies are not great, and more often the testimony corroborates the other evidence in the record.

One witness whose testimony is not reflected in the factual narrative below is that of Defendants' expert in corporate governance, Robert Krasne. Plaintiffs objected to Mr. Krasne's testimony before trial, and the Court deferred ruling on Plaintiffs' motion in limine until trial. Following voir dire of Mr. Krasne, the Court ruled that he was qualified to testify as an expert on issues of corporate governance. See 11/19 PM Tr. at 4. However, the Court noted that as the finder of fact, it would determine how much weight to give his testimony. After hearing his testimony in light of the record as a whole, the Court finds that Mr. Krasne's testimony does not aid the Court in understanding the evidence or in determining any fact in issue. Accordingly, the Court has given no weight to Mr. Krasne's testimony and has not relied on it in any manner.

Having set forth those preliminary issues, the Court shall now relate in narrative form the story underlying the claims in this litigation. The Court shall begin by describing the parties and the other key individuals who play major roles in the drama that unfolded at trial. The Court shall then lay out the factual background in a predominantly chronological fashion, grouping together incidents relating to particular claims. Then, the Court shall review in detail each of the claims and counterclaims asserted based on the facts credited by the Court. After setting forth the Court's legal conclusions, the Court shall address the issue of remedies.

B. Cast of Characters

the Parties and Key Individuals Below is an introductory description of all the major players in the story; these individuals and organizations appear continuously throughout the period of events relevant to this litigation. The evidence cited below is credited by the Court as undisputed and/or uncontroverted.

The Armenian Assembly of America (the "Assembly") was formed in 1972 as a charity for the purpose of undertaking educational, cultural and advocacy efforts in support of human rights and genocide prevention of concern to the Armenian American community, and it remains so to this day. Stip. Facts*fn7 ¶ 1. The Assembly is a District of Columbia non-profit corporation classified by the Internal Revenue Service as tax-exempt pursuant to § 501(c)(3) of the Internal Revenue Code. Id.

Hirair Hovnanian ("Hovnanian") is one of the founders of the Assembly and has served as the Chairman of the Assembly's Board of Trustees since the mid-1970s. See 11/9 AM Tr. at 53-55. Hovnanian began working as a builder and property developer in 1958 and continues to operate his successful business in New Jersey, California, and Florida. Id. at 51-52. Hovnanian now lives in New Jersey and focuses mostly on commercial property development. Id. Hovnanian has devoted much of his time and resources to Armenian causes, raising money for the people of Armenia and building four factories there to manufacture building supplies. Id. at 56-57. Hovnanian has contributed approximately $50 million to the Assembly over the past 35 years. Id. at 57-58. Hovnanian's investments in Armenia are strictly charitable in nature, and he has refused on principle to take any profits from his activities in Armenia. Id. at 58-59. His grandfather's entire family perished during the Armenian Genocide, except for his father, and Hovnanian has a deep personal connection to that aspect of Armenian history. Id. at 60.

Robert Aram Kaloosdian ("Kaloosdian") is another one of the founders of the Assembly. 11/10 AM Tr. at 133. He is now eighty years old and semi-retired from the practice of law, living in Massachusetts. Id. at 132-33. He has held a variety of leadership positions within the Assembly and is currently a member of the Assembly's Board of Trustees. Id. at 133-34. Kaloosdian serves as Chairman of the Board of Governors for the Armenian National Institute ("ANI"), which was established in 1997 as an entity dedicated to the study, research, and affirmation of the Armenian Genocide. Id. at 135; Stip. Facts ¶¶ 15-16. ANI was initially formed as a subsidiary of the Assembly and is classified by the IRS as a tax-exempt entity under § 501(c)(3) of the Internal Revenue Code. Stip. Facts ¶ 2.

Dr. Rouben Adalian ("Adalian") is the director of the Armenian National Institute. 11/15 PM Tr. at 86. He has a doctorate in history from the University of California, Los Angeles, specializing in the history of Armenia, the Middle East, and the Caucasus. Id. at 87. Through his position at ANI, Dr. Adalian has extensively researched the Armenian Genocide and worked to document its history. 11/15 PM Tr. at 90.

Anoush Mathevosian ("Mathevosian") is an Armenian American philanthropist who has devoted much of her time and money to the Assembly. She currently resides in New York. Stip. Facts ¶ 10. Her grandfather was killed in the genocide, and her father was deported to Persia, where Mathevosian was born. Mathevosian Dep. Tr. at 8-9. Her family's suffering in the genocide left Mathevosian with a deep emotional scar. Id. at 9. Beginning in 2003, Mathevosian suffered a series of health problems, including a collapsed lung, a heart attack, and a stroke. Mathevosian Dep. Tr. at 69.

The Armenian Genocide Museum & Memorial, Inc. ("AGM&M") was formed in October 2003 as a non-profit corporation in the District of Columbia. Stip. Facts ¶ 3. AGM&M was established for the purpose of constructing, owning, operating, and maintaining a permanent museum and memorial devoted to the victims and survivors of the Armenian Genocide. Id. AGM&M is classified by the IRS as tax-exempt under § 501(c)(3) of the Internal Revenue Code. Id. ¶ 4. The initial members of the Board of Trustees for AGM&M were Hovnanian, Kaloosdian, Mathevosian, and Gerard L. Cafesjian.

Gerard L. ("Gerry") Cafesjian was born in 1925 in Brooklyn, New York to immigrants from Armenia and Constantinople. See DX-305.*fn8 Cafesjian's father came to America after the rest of his family was killed in the genocide. Id. After serving in the Navy in World War II, Cafesjian received a degree in economics from Hunter College and a law degree from St. John's University. Id. In 1952, Cafesjian began a 44-year career with West Publishing and was very successful. Id. In 1996, West Publishing was acquired by the Thompson Corporation, and Cafesjian sold his shares in the company and retired. Id. Cafesjian received between $250-300 million for his stock in West, and he turned his attention to philanthropic pursuits. Cafesjian Dep. Tr. at 23. One of Cafesjian's areas of interest is art-he had created an art program while working at West and he is a collector of contemporary art, particularly glass sculpture. See DX-305. He founded the Gerard L. Cafesjian Pavilion at the Scottsdale Museum of Contemporary Art, which houses some of his collection. Id.

Cafesjian also became interested in Armenian causes upon retiring from West. Cafesjian and his family donated $30 million to establish The Cafesjian Family Foundation, Inc. ("CFF") in 1996. 11/15 PM Tr. at 14; DX-305. Cafesjian is the founder and president of CFF, and CFF is a non-profit corporation organized under Florida law. Stip. Facts ¶¶ 6-7. CFF was founded to help Armenians around the world, particularly those located in Armenia, and its primary focus is economic development. DX-305. CFF invests in a number of programs in Armenia through various subsidiaries. CFF's projects include the development of solar and wind energy in Armenia with the aim of establishing energy independence for the country, building a professional and independent media, fostering the development of high-tech industry, and developing real estate. Id. As of 2002, CFF employed over 400 people in Armenia. Id. CFF is funded almost entirely by the Cafesjian family, with contributions made as needed for charitable or tax planning purposes. 11/15 PM Tr. at 14. Between 2003 and 2006, CFF's general account balance was typically less than $1 million. 11/15 PM Tr. at 13-14.

Cafesjian's various enterprises are coordinated through GLC Enterprises, Inc. ("GLC"), which has been described as a "family office" based in Minnesota. 11/15 AM Tr. at 22. Both CFF and GLC are governed by the same individuals. Cafesjian Dep. Tr. at 24. From 1996 to 2000, Cafesjian controlled between five and twenty companies, and Cafesjian later had as many as thirty-five companies. 11/15 AM Tr. at 20-21. Nearly all of these companies (except for CFF and an entity called the Cafesjian Museum Corporation) were for-profit entities, many doing business in Armenia. Id. at 21-30. Although operated as for-profit entities, Cafesjian does not earn any profits from these businesses. 11/18 PM Tr. at 16; 11/19 AM Tr. at 64. Rather, Cafesjian reinvests the profits in the businesses to foster job creation and sustainable economic development in Armenia. 11/18 PM Tr. at 16; 11/19 AM Tr. at 64. CFF has invested approximately $50 million in various enterprises in Armenia. In addition, Cafesjian has invested approximately $43 million to develop the Cafesjian Center for the Arts in Armenia's capital city of Yerevan. 11/18 PM Tr. at 15.

Cafesjian has devoted most of his time since retirement to CFF, but he does not involve himself in the "nitty-gritty" details of day-to-day management. 11/19 AM Tr. at 66, 68. Instead, he relies on his right-hand man, John Waters Jr. ("Waters"). John Waters attended Georgetown University and got an MBA from the University of Minnesota. 11/15 AM Tr. at 8-9. Waters met Cafesjian while working at West Publishing. Id. A few months after Cafesjian left West, he hired Waters to do some consulting work for him. Id. at 15. Although not of Armenian descent, Waters became aware of Armenian issues in college through a friend who took him to a genocide recognition rally at the White House; the experience resonated with Waters because his father had served as a linguist officer in Turkey, and Waters was born in Istanbul. Id. at 16.

Waters became an employee of GLC in late 1996. 11/15 AM Tr. at 19. Ultimately, Waters became Vice President of both GLC and CFF. Id. at 20. In those roles, it was Waters's job to take any action as directed by Cafesjian, and Waters became involved in every Cafesjian enterprise between 1996 and his departure from the Cafesjian organization in March 2009. Id. at 20-21; 11/24 AM Tr. at 23. Waters was responsible for acting on Cafesjian's behalf in managing, operating, and implementing each of Cafesjian's personal investments. 11/15 AM Tr. at 30. Cafesjian described Waters's job as being his "personal assistant, something bordering on, but not quite, alter ego, pretty much what I wanted him to do." Cafesjian Dep. Tr. at 106. Waters's duties required him to travel to Armenia between 50 and 60 times over the course of his employment with Cafesjian. 11/15 AM Tr. at 32. Waters testified that he believed at all times that he owed his highest duty of loyalty to Cafesjian. 11/24 AM Tr. at 70.

Ross Vartian ("Vartian") has worked in support of Armenian causes for nearly his entire career. After being discharged from the Army after service in Vietnam, Vartian earned a degree from Michigan State University and accepted a job as the founding principal for an ethnic day school in Detroit. 11/19 PM Tr. at 70. After five years in that position, the Assembly hired him in 1979 for the number-two position in their Washington, D.C. office. Id. at 71. Shortly thereafter, Vartian was elevated to the position of Executive Director. Id. He continued to work for the Assembly until 2005. Vartian is now retired, lives in Michigan, and serves on the board of directors for CFF. Id. at 70.

Van Krikorian ("Krikorian") is the Chairman, CEO, and General Counsel of Global Gold Corporation. 11/17 AM Tr. at 141. He attended college at George Washington University and earned his law degree from Georgetown. Id. Krikorian first became involved with the Assembly in 1977 as a college intern, and he has been involved ever since. Id. at 141-42. He has served on the Assembly's Board of Directors*fn9 since at least 1993, and he served as Chairman from 1998 to 2002, after which he remained on the executive committee. Id. at 142. Krikorian is also a life trustee of the Assembly. Id.

II. FACTUAL BACKGROUND

A. Initial Interest in an Armenian Genocide Museum

The Armenian Genocide is widely recognized as the first genocide of the 20th century. Stip. Facts ¶ 13. Of the estimated 2.1 million Armenians living in the Ottoman Empire on the eve of World War I, approximately 1.5 million were killed, and hundreds of thousands more were deported. Id.; 11/15 PM Tr. at 88-89. During this period the Armenian people were subjected to deportation, expropriation, forced conversion, abduction, torture, massacre, and starvation. Stip. Facts ¶ 13. This historical tragedy is the single most resonant occurrence in modern Armenian culture. Id. ¶ 14. Armenians worldwide seek to ensure that the Armenian Genocide experience will never be forgotten. Id. Beginning in the 1990s, the Assembly decided that a museum would be a mark of respect that could both pay homage to the victims and survivors of the genocide and educate Americans about what happened to the Armenian population before, during, and after World War I. Id.

On or about April 1, 1996, Hirair Hovnanian made a pledge of about $1.6 million to establish the Armenian National Institute for the study, research, and affirmation of the Armenian Genocide. Stip. Facts ¶ 15; 11/9 AM Tr. at 60. ANI began its operations on or about April 1, 1997. Stip. Facts ¶ 16. Dr. Rouben Adalian was hired to be the director of ANI. Dr. Adalian explained that "affirmance" of the genocide is an important goal of the Armenian community because the Turkish government, among others, has denied that there was a genocide. 11/15 PM Tr. at 89-90.

Inspired by Hovnanian's pledge, Anoush Mathevosian decided in 1996 to pledge $3 million to be used for the purpose of constructing a permanent museum in Washington, D.C. dedicated to the victims and survivors of the Armenian Genocide. Stip. Facts ¶ 17; 11/9 AM Tr. at 60-61. In 1996, the Assembly began to explore properties in Washington, D.C. that would be suitable for a museum. Stip. Facts ¶ 18. The search was focused on double-townhouse-type properties with roughly 10,000 square feet. 11/19 PM Tr. at 72.

Around this same time, Cafesjian was independently planning to build a memorial to the Armenian Genocide. 11/19 PM Tr. at 72. When Cafesjian heard about the creation of ANI, he had Waters contact Rouben Adalian to find out more about the project. Stip. Facts ¶ 20. Cafesjian and Waters met with Adalian in New York on April 30, 1997, and Adalian informed them of the plans to build a museum. Stip. Facts ¶ 21; PX-4. Cafesjian expressed an interest in potentially associating his planned memorial with the museum project. Stip. Facts ¶ 21; 11/19 PM Tr. at 72; PX-4. Because he had not been involved in the Assembly, Cafesjian invited Hovnanian, Kaloosdian, and Adalian to meet with him and Waters at Cafesjian's home in Minnesota, where they discussed the Assembly's advocacy efforts and the museum project. Stip. Facts ¶ 23; 11/10 AM Tr. at 142-45; 11/15 AM Tr. at 38-39;PX-8. Cafesjian officially joined the Assembly as a trustee in August 1998, and Waters was designated as an Associate Trustee based on Cafesjian's gift of $25,000 on his behalf. See PX-262; Stip. Facts ¶ 25. At that point in time, Cafesjian and Waters continued to search separately for a location for a memorial. See PX-13; Stip. Facts ¶ 24. In April 1999, Cafesjian pledged $1,050,000 to the Assembly and was designated a life trustee. See DX-192.

B. The Acquisition of the National Bank of Washington Building

In or about late 1999, the Assembly identified the National Bank of Washington, located at 619 14th Street, NW, Washington, D.C., as a possible site for the museum. Stip. Facts ¶ 26. Although it was much larger than the properties they had been looking at to date, everyone involved in the search was impressed by the National Bank of Washington building (the "Bank Building"). 11/19 PM Tr. at 72-73; 11/22 AM Tr. at 72-73. The Bank Building has a prime location-just blocks from the White House-and its exterior and part of the interior have been designated as historic landmarks in the D.C. Inventory of Historic Sites and the National Register of Historic Places. Stip. Facts ¶ 26. The property on which the Bank Building is located also includes a vacant back lot which would allow for the construction of an annex.

In or about January 2000, Tom Kevorkian, then-Chief Operating Officer for the Assembly, sent a package of documents to Cafesjian and Waters regarding the Bank Building and other potential sites for the project. Stip. Facts ¶ 27. Cafesjian was very interested in the Bank Building, and he dispatched Waters to do due diligence on the property. See PX-38; 11/19 PM Tr. at 73. Because there was another buyer who had likely submitted an offer, they had to act expeditiously to secure the property. 11/15 AM Tr. at 45-46. Waters worked with Tom Kevorkian to arrange the purchase. Id. at 46-47. Cafesjian agreed to donate $3.5 million to the Assembly to create a consolidated location at which the genocide museum, the genocide memorial, and offices for ANI could be located. Stip. Facts ¶ 28; DX-12. Anoush Mathevosian agreed to increase her pledge to $3.5 million to acquire the property. Stip. Facts ¶ 28; PX-16.

The Assembly closed on the Bank Building on February 16, 2000, purchasing the building for $7.25 million. Stip. Facts ¶ 29. The funds for the purchase were comprised of a $3.5 million pledge from Mathevosian, a $2.5 million grant from CFF, and a $1 million grant from Cafesjian's Vanguard Charitable Endowment Program - Cafesjian Family Foundation Charitable Trust. Id. ¶ 30. Because Mathevosian could not access funds in sufficient time to wire them to the Assembly prior to the closing, CFF provided the Assembly with a $4 million interest-free bridge loan to cover Mathevosian's pledge and to complete the transaction. Id. ¶ 31. On March 8, 2000, after the Assembly had received Mathevosian's pledged donation, the Assembly repaid CFF $3.5 million by wire transfer. Id. On March 17, 2000, the Assembly executed a promissory note produced by and for the benefit of CFF for the remaining $500,000. Stip. Facts ¶ 32; PX-115. The note was interest-free and payable in full on May 16, 2000. Stip. Facts ¶ 32; PX-115. The note also contained a Minnesota choice-of-law provision. See PX-115.

The parties agreed that as a condition of Cafesjian's donation of funds for the purchase of the Bank Building, the Assembly was required to include a memorial named after Cafesjian as part of the project. Stip. Facts ¶ 33; DX-12. On March 30, 2000, the Assembly sent Cafesjian a letter confirming his donations and its obligation to build a memorial. Stip. Facts ¶ 34; PX-111. The letter noted that Cafesjian's proposed design for the memorial had not been finalized but that his concept consisted of "a walk-in, contemplative, chapel-like space, with interior walls of native Armenian stone and a glass sculpture by Stanislav Libensky as the focal point." PX-111. The memorial was expected to take up approximately 1200 square feet of floor space and 40,000 cubic feet of overall volume. Id. The Assembly agreed to cooperate with the design firm or artist chosen by CFF to complete the memorial. Id. The anticipated completion date for the project was March 2002, and CFF agreed to make contributions to the Assembly to finance the memorial. Id.

The Assembly's letter also confirmed that the Assembly would form a planning and development committee for the project. PX-111. The planning committee was to be responsible for establishing the vision for the project; for preparing and adopting a site redevelopment plan to address the design, development, renovation, potential expansion, and initial utilization of the property; and for adopting and executing a contribution and endowment program to fund the completion of the project and the operation of the property, the museum, and the memorial. Id. The committee was to be comprised of one representative from CFF, Anoush Mathevosian (or her designated representative), the Chairmen of the Assembly's Board of Trustees and Board of Directors and ANI's Board of Governors, and any person who agreed to donate $1 million or more to the project. Id. The letter explained that decisions of the committee, "in accordance with the Assembly's and ANI's history, shall be by consensus." Id.

Because of the size of the Bank Building (34,000 sq. ft) and the property on which it sits, it was contemplated that the Assembly and ANI would move out of their existing offices when their lease expired in March 2002 and occupy space on the new site. See PX-111; 11/22 PM Tr. at 87. Accordingly, it was agreed that the development of suitable office space on the property would be a priority. PX-111. Ross Vartian, then-Executive Director for the Assembly, testified at trial that in retrospect, they were naive to think that the museum, the memorial, and offices for the Assembly and ANI could all be housed within the Bank Building. 11/22 AM Tr. at 114.

After the closing, on February 28, 2000, Anoush Mathevosian wrote a letter to the Assembly restating the purpose of her pledge, which she dedicated to her parents. See PX-110.

The letter stated that the purpose of her gift was to foster the development of an Armenian Genocide museum with educational exhibits, and Mathevosian expressed her desire that the Bank Building be used solely for the Assembly, ANI, the museum, and the memorial. Id. She wrote:

To be certain that future generations remain true to the intent of our donations, it should be clear that no changes will be made to the purpose and usage of the Museum; that no mortgages are taken against the property and that the Museum's perpetuation is not jeopardized as such or encumbered in any way; and that there will be no subsequent changes to the name of the museum.

Id. At her deposition, Mathevosian explained that she wanted to ensure that they paid for the property in full so that it would not be mortgaged or sold in the future. Mathevosian Dep. Tr. at 14-15. Mathevosian asked that these understandings be incorporated into the permanent records of the organization. PX-110. However, there is no evidence that Mathevosian's expressed desires were ever formally incorporated by the Assembly into a binding obligation. Mathevosian testified that Hovnanian agreed to her conditions, but she did not recall whether he had done so orally or in writing. Mathevosian Dep. Tr. at 16-17. John Waters testified that he did not see Mathevosian's letter until several years later, in late 2003. 11/15 AM Tr. at 49.

C. Acquisition of the Properties Adjacent to the Bank Building

Once the Bank Building was acquired by the Assembly, Cafesjian began to acquire property adjacent to the Bank Building. John Waters testified that it was typical for Cafesjian to look at adjacent properties when acquiring real estate. 11/22 PM Tr. at 92. Cafesjian considered several possibilities with respect to these properties, initially planning to use them to build a contemporary art museum called the Cafesjian Contemporary Art Museum. Id.; 11/19 PM Tr. at 95; Cafesjian Dep. Tr. at 151. Cafesjian thought that an art museum co-located with the genocide museum would draw more visitors. Cafesjian Dep. Tr. at 151; 11/19 PM Tr. at 95-96. Ultimately, that plan was abandoned when Cafesjian decided to build a contemporary art museum in Yerevan, Armenia. 11/22 PM Tr. at 92-93. At that point, Cafesjian decided to donate the properties to the Assembly for the purpose of expanding the footprint of the museum project. Id.

Ultimately, Cafesjian acquired four parcels adjacent to the Bank Building: (1) 1342 G Street, NW; (2) 1340 G Street, NW; (3) 1338 G Street, NW; and (4) 1334-36 G Street, NW (collectively, the "Adjacent Properties"). Each of the properties was acquired in an arms-length transaction by one of Cafesjian's entities, TomKat Limited Partnership ("TomKat"). 11/23 AM Tr. at 35; Stip. Facts ¶ 36. TomKat executed an agreement to purchase 1338 G Street for $1.2 million on March 10, 2000 and closed on May 15, 2000. Stip. Facts ¶ 37. TomKat purchased 1342 G Street for $1.2 million on March 16, 2000 and closed on September 30, 2000. Id. ¶ 38. On October 24, 2000, TomKat entered into an Installment Purchase and Sale Agreement to purchase 1340 G Street for a total of $3 million. Id. ¶ 39. Under the installment agreement, payments of $150,000 are due each year for a period of ten years, with a final balloon payment of $1.5 million due in March 2011. Id.; 11/19 AM Tr. at 55. The property was owned by the Ana Sherman Revocable Trust, and the deed is being held in escrow until the final payment is made. 11/23 AM Tr. at 41-42; DX-624N. The final adjacent property, 1334-46 G Street, NW, also known as the "Families U.S.A." building, was acquired later by TomKat, which purchased the building from a third-party seller for $6.5 million in September 2003. Several of the Adjacent Properties were taken subject to leases.

D. Initial Efforts to Develop the Museum - Museum Planning Committee

As opposed to the previous sections, where the facts were largely undisputed and/or uncontroverted, the findings made below increasingly reflect the Court's credibility determinations and weighing of conflicting evidence in the record.

The Armenian American community was euphoric about the acquisition of the Bank Building. 11/19 PM Tr. at 73. However, the real work in creating an Armenian Genocide museum and memorial lay ahead. A planning committee was formed to develop the museum project.*fn10 The planning committee was a somewhat fluid body; there were about a dozen different individuals who became involved to varying degrees in the planning of the museum. See 11/15 AM Tr. at 57. The committee included both Assembly leadership and staff, including Hirair Hovnanian, Anoush Mathevosian, Gerry Cafesjian, Robert Kaloosdian, Van Krikorian, John Waters, Rouben Adalian, Tom Kevorkian, and Ross Vartian. 11/19 PM Tr. at 74-75. Ultimately, any decision made by the planning committee had to be approved by the Assembly. 11/15 AM Tr. at 57. The planning committee was chaired by Hirair Hovnanian. Id.; 11/18 PM Tr. at 45; 11/19 PM Tr. at 74; DX-14. The planning committee largely operated by consensus, and there were rarely any formal votes taken. 11/22 PM Tr. at 98-99. According to John Waters, any decision that was approved by Hovnanian was adopted on behalf of the Assembly, whereas decisions he did not agree with did not move forward. Id. at 99. At trial, Hovnanian testified incredibly that he did not recall being chair of the planning committee or having any involvement in the early development of the museum, apart from attendance at a few occasional meetings for which he did not prepare. 11/9 AM Tr. at 112-15. In fact, Hovnanian testified that prior to November 2003, he "had nothing to do with this project. Absolutely zero." Id. at 125. The Court finds this testimony not credible in light of the extensive evidence in the record of Hovnanian's involvement during this period.

The planning committee held its first meetings in March and April of 2000. See DX-13; DX-14; DX-15; DX-16. During those meetings, the committee discussed potential uses of the property, budgetary issues, and a six-month work plan. DX-13; 11/19 PM Tr. at 75. At a meeting on April 12, 2000, the committee approved three proposals drafted by Van Krikorian:

(1) a use plan for the Bank Building whereby the first floor would be commercial/mixed use, the second and third floors would house the museum with an archway to the memorial, and the fourth floor would be used as offices for the Assembly and ANI; (2) a fundraising campaign to raise $40 million for building and endowment; and (3) creation of a Project Manager staff position to manage the project. 11/19 PM Tr. at 75-76; DX-15; DX-16.

The planning committee met again on May 4, 2000. See DX-17. John Waters and Tom Kevorkian gave a presentation at this meeting providing an overview of the project, including a discussion of the budget, space limitations, needs of the various stakeholders, and a proposed timeline. See PX-347; 11/15 AM Tr. at 59-63. The plans at this time called for the museum to be ready for move-in by March 2002 and open to the public by April 2002. See PX-347. Waters also reported on the status of the negotiations over the first three adjacent properties. See DX-17; PX-347. Hirair Hovnanian raised the issue of fundraising and suggested the creation of a Founders Circle with the goal of locating up to four individuals who could bequest $10 million to the project. DX-17.*fn11 The committee also agreed that vision statements should be created for ANI, the Assembly, and the museum project, which had been designated as the Armenian Genocide Museum and Memorial. Id. John Waters and Tom Kevorkian were tasked with conducting the search for a project manager and were expected to recommend candidates for final interviews by the end of May 2000. Id. They began this process, but it was not completed by month's end. 11/15 AM Tr. at 68.

On July 13, 2000, Kevorkian and Waters wrote a confidential memorandum to the planning committee entitled "Immediate Decisions." See DX-19. "[W]e are concerned with the pace of our deliberations," they wrote. Id. "Specific actions are required throughout the next 45 days to ensure we continue in a coordinated fashion." Id. They asked the committee to complete the vision statements discussed during the May meeting, approve a draft job description for the Project Coordinator staff position, hear presentations from project management firms, and form a capital campaign subcommittee. Id. In light of the anticipated costs of hiring professionals, the outstanding promissory note of $500,000 to CFF, and an account balance of $155,000, Kevorkian and Waters wrote that "our cash position becomes paramount." Id. They proposed that the committee hold a two-day meeting during August to discuss these issues. Id.*fn12

Without dedicated staff to shepherd the project along, the pace of the project remained deliberate. By the end of 2000, the Assembly had agreed to employ a full-time staffer. Ross Vartian, the Assembly's long-serving Executive Director, volunteered for the position, and on January 3, 2001, he became the Director of Planning for the museum project. Stip. Facts ¶ 41; 11/19 PM Tr. at 79. Vartian believed that his working relationships with the key stakeholders could help the planning committee build consensus. Id. at 79-80. In his new position, Vartian began consulting widely within the Armenian community of professionals and within the community of museum experts in Washington to acquire as much information as possible about the museum planning process. Id. at 80. On January 10, 2001, Vartian drafted a memorandum outlining an agenda and a set of goals for the museum project to achieve in the first quarter of 2001. See PX-344. This document was sent to Hirair Hovnanian's daughter Edele, who was chairing an advisory committee of professionals consulting on the museum project.*fn13 See id. Vartian noted that there was not yet any consensus from the planning committee on how to proceed with the selection of professional consultants and contractors. Id. Vartian also indicated that there had been a discussion by the planning committee about potentially hiring a "name" architect to draw attention to the project, but Cafesjian had expressed concerns about the added costs and other potential negatives such as the loss of creative control over the project. Id.*fn14

Vartian indicated that this issue needed to be resolved as soon as possible in order to stay on the project timeline, which at this point called for the museum to be opened in April 2004. Id. Vartian's memorandum also indicated that there were estimated expenses for 2001 of at least $225,000 (excluding any further obligations), yet there were no unobligated funds to cover pre-construction operating costs, and the Assembly's promissory note to CFF was still outstanding. Id.

After a few months of consulting with experts and other professionals who gave him free advice, Ross Vartian prepared an executive summary to be presented to the museum advisory committee on March 3, 2001. See DX-22. Vartian had drafted a preliminary mission statement for the museum project and assembled various cost estimates for the building. Id. At this point, it was assumed that the Bank Building would be co-developed with the three adjacent properties acquired by Cafesjian. See id. Vartian proposed an "aggressive" timeline with a museum opening date in April 2004. Id. The advisory committee did not believe that an April 2004 opening was feasible. See PX-125.

Vartian revised the timeline to reflect an April 2006 opening and forwarded a summary of his materials to the planning committee in advance of their combined meeting with the ANI Board of Governors in Boca Raton, Florida on March 16, 2001. See PX-125. Vartian indicated in his summary that he believed the project would require at least $32 million to prepare for the opening and an additional $40 million endowment to fund operations. Id. Based on the advice he had received from other experts and consultants, Vartian believed that it would be easier to use the earnings on an endowment to fund operating costs than to rely directly on donations. 11/19 PM Tr. at 85-86. At the planning committee meeting, Vartian's presentation was cut short when Hirair Hovnanian saw the cost estimates. Id. at 88-89. Hovnanian thought these figures were far too high and believed that the upper limit for the project should be closer to $15 million. Id.; 11/23 AM Tr. at 47-48. According to Waters, Hovnanian criticized Vartian and his daughter Edele for the budget, and Edele left the meeting upset, ending the discussion. 11/23 AM Tr. at 47-48. There was also discussion at this meeting about the process of choosing an architect to design the new buildings to be attached to the Bank Building. 11/19 PM Tr. at 86-87. Hirair Hovnanian had been told by one large charitable foundation that it might be willing to make a significant donation to the project if a "name" architect like Frank Gehry could be attracted to the project. See PX-125. The planning committee, including Ross Vartian, was in favor of this idea because the planning committee members believed that the project would be more marketable. 11/19 PM Tr. at 86-87. The committee also discussed the issue of how to allocate space in the Bank Building and the new construction on the Adjacent Properties among the museum, memorial, art museum, and offices for ANI and the Assembly. See DX-25. However, the committee did not reach any agreements about the allocation of space. 11/19 PM Tr. at 89-90.

The following week, Ross Vartian wrote a memorandum to Edele Hovnanian. "By any measure," he wrote, "the ANI Board of Governors/AGMM Planning Committee meeting was a disappointment." DX-26. Vartian said he had not anticipated some of the negative reactions to the information he had prepared. Id. Vartian was disappointed because the committee's inability to reach agreement on major issues meant that progress would be delayed. 11/19 PM Tr. at 90. Vartian indicated that the project needed a feasibility study conducted to determine the options for developing the space available. DX-26. Vartian was also concerned about the lack of agreement over the role ANI should play in developing the museum. Id.

Following the meeting, Vartian worked on a proposal to seek expert opinion on space utilization options, refine the budget for 2001, and propose a scope of work to define an exhibit storyline. See DX-28. Vartian spoke with John Waters about allocating space in the Adjacent Properties, but Waters indicated that Cafesjian's plans for them were too tentative at that point to make any definitive decisions. DX-26. In early April, Ross Vartian, Rouben Adalian, and John Waters met with four firms that were invited to submit proposals for a space utilization/feasibility study: (1) Martinez & Johnson, an architecture firm that had prior familiarity with the Bank Building, (2) Leo Daly, another architecture firm, (3) Gallagher & Associates, an exhibit design firm, and (4) Concord Partners, a property development firm. See DX-28. In a memorandum to the planning committee dated April 9, 2001, Vartian wrote that during the next four months, he expected to, inter alia: (1) have a space utilization/feasibility study on the best development option for the properties acquired by the Assembly and Cafesjian; (2) obtain approvals for the scope of work for ANI; and (3) obtain approvals for the initial major donor campaign and the first round of community outreach. See DX-28.

On or about May 22, 2001, Edele Hovnanian resigned all of her positions with the Assembly, including her role as Assembly Treasurer and chair of the advisory committee. "I don't know if this letter will shock you or not," she wrote, "but I have been thinking about something for a very long time and now feel strongly that it is the right time to announce it." DX-29. Addressing the aging leadership of the Assembly, she wrote, "I believe the Assembly no longer is the progressive, forward thinking, dynamic organization is [sic] was for so long and that it is being held together by the talent and dedication of you all and that its future, without you, is destined toward a slow demise." Id. She criticized the Assembly for failing to transition the organization to the leadership of a new generation and indicated that the Assembly would have to change before she could return. Id. She added that "[a]s far as the museum [is concerned], I think this brief experience really just highlighted the internal problems we have and at this point see no value I can add in ensuring this project is successful." Id. Edele Hovnanian ultimately did become active again in the Assembly, but the record does not reflect precisely when this occurred, and she did not have an active role in museum affairs going forward.*fn15 11/19 PM Tr. at 92. Ross Vartian was disappointed by Edele Hovnanian's resignation, as was John Waters. Id. at 91; 11/23 AM Tr. at 49. Vartian agreed with her assessment of the Assembly and the museum project. 11/19 PM Tr. at 92. From this point forward, Waters became more heavily involved in the planning committee. 11/22 AM Tr. at 82.

On June 25, 2001, Ross Vartian sent a memorandum to the planning committee entitled "Action Items." See DX-30A. The memorandum outlined nine issues that needed review and action by the committee, including decisions about the structure of the project, the space utilization/feasibility study, the scope of ANI's work, the revised budget, the hiring of professionals, and fundraising. Id. Vartian described this memorandum as "an example of rethinking the project, working on what was doable and presenting it to the members of the Museum Planning Committee." 11/19 PM Tr. at 93. Vartian proposed streamlining the structure by eliminating the advisory committee and bringing the key decision-makers under one group so that decisions could be made more expeditiously. Id. at 94; DX-30A.

A few days later, Vartian emailed Robert Kaloosdian about dedicating part of the museum to other 20th century genocides and genocide prevention in the 21st century. See DX-31. Vartian thought this would be a "public relations bonanza," and he cited it as a reason to push for "the maximum physical footprint as we consider development options." Id. Vartian forwarded this email to Waters, writing, "I am trying to use every opportunity to enlarge the vision of the AGMM." Id.

The next planning committee discussion occurred in the context of a meeting of the Consultative Group, a high-level body within the Assembly, on June 27, 2001. See DX-32 at 1.*fn16

Hovnanian, Kaloosdian, and Krikorian were in attendance, along with several other Assembly members; staff did not participate. Id. Cafesjian and Waters participated in the discussion by phone because they were not members of the Consultative Group and thus not privy to the rest of the discussions about Assembly business. Id.; 11/15 AM Tr. at 74-76. This was the source of some tension between Cafesjian and Hovnanian because Cafesjian wanted to become more active in the Assembly's affairs but was not yet part of the leadership, and Hovnanian made a comment during the meeting that Cafesjian should have attended in person. 11/15 AM Tr. at 74-76; DX-32 at 3.

During the meeting, they discussed the space allocation issues between the Adjacent Properties and the Bank Building, such as a joint entrance between what at that point was to be the Cafesjian art museum and the Bank Building. DX-32 at 2-4. Cafesjian thought that a joint entrance was critical to the success of both and that they should be viewed as a single project with two separate users with common interests. Id. at 3. Waters indicated that Cafesjian had already initiated a competition for architects for the Cafesjian art museum. Id. Hovnanian felt that uncertainty about the Cafesjian art museum plans was holding up progress on the genocide museum, saying "without a footprint from G[erry] Cafesjian, we are stymied on how to proceed." Id. Waters said that Cafesjian's vision for the project had grown and that he was concerned about making the genocide museum as relevant as possible. Id. at 3. This statement may have caused some tension; the minutes indicate that Cafesjian and Waters were "trying to avoid an 'us' versus 'them' mentality." Id. at 3-4. Hovnanian indicated that they could not move forward until they knew how the common entrance was to be utilized and said that the "ball is in Cafesjian's court." Id. at 4. After Cafesjian and Waters hung up the phone, the others continued their discussion. See id. One of the attendees, Carolyn Mugar, questioned the idea of a "joint project" and noted that there was no relationship between the Cafesjian art museum and the genocide museum. Id. The group agreed that it should be considered a cooperative project, not a joint project. Id. Hovnanian commented that he "want[ed Cafesjian] to be close." Id. The group also agreed that a development plan was needed, but there was no agreement on whether to proceed with a development plan before hiring architects and designers. Id.

Shortly after this meeting, Cafesjian decided that he would build his art museum in the Armenian capital of Yerevan rather than on the Adjacent Properties. Cafesjian and Waters discussed the issue and agreed to donate the Adjacent Properties to be used for the genocide museum project. 11/23 AM Tr. at 53-54. Waters discussed this decision informally with Ross Vartian, but no official proposal was made to the Assembly until October 15, 2001, when Cafesjian wrote a letter to Hovnanian outlining the terms of a proposed grant of the three properties that had been acquired. Id. at 54; PX-327. This letter was the first in a series of draft grant agreements that would ultimately be exchanged between Cafesjian and the Assembly. The letter proposed that Cafesjian and/or CFF donate $5.8 million to the Assembly to purchase the properties from TomKat. See PX-327 at 2-3. The proposed grant agreement would require the Assembly to use the properties solely as part of the genocide museum project, subject to plans approved by the Assembly's planning committee. Id. at 3. The letter also proposed that if the Assembly failed to develop the property according to those plans, CFF would be entitled to a return of either the grant funds or the properties. Id. The letter also proposed a number of conditions on the grant, including relief from several other financial pledges made by CFF, as well as the reissuance of the $500,000 promissory note to CFF that had been executed on March 17, 2000. Id. at 3-4. Following the draft grant agreement language, Cafesjian wrote:

We need to keep this entire project moving forward. Our efforts to date have been less than adequate. Every time I think about the time value of money invested in this project, the incomprehensible daily waste of the money saddens me. We simply cannot afford to keep throwing it away. I think we should move immediately to retain the services of the various consultants recommended by John [Waters] and Ross [Vartian]. The professionals at Concord Partners, Martinez & Johnson, etc., have the expertise that should be able to help us move this project forward.

Id. at 5. Cafesjian also recommended hiring someone with museum experience to serve as director for the museum project. Id. at 5-6. He noted that Ross Vartian had worked hard, but everyone's lack of experience in museum planning had hindered the Assembly's ability to make progress. Id. Cafesjian explained at trial that he was frustrated with the lack of progress that had been made and that he wanted to see the genocide museum built during his lifetime. 11/18 PM Tr. at 48.

Cafesjian's proposal was generally well received at the Assembly, although the Assembly never responded in writing to Cafesjian's letter. See 11/19 PM Tr. at 99; PX-19 at 4. Ross Vartian testified that he was delighted that the genocide museum would be getting three additional properties to expand and fulfill a greater vision. 11/19 PM Tr. at 99. However, there was no meaningful progress throughout the rest of 2001. In a memorandum to Robert Kaloosdian and Rouben Adalian dated December 18, 2001, Ross Vartian wrote that "[i]n essence, 2001 has been lost time which must be more than made up in 2002." DX-34 at 1. Vartian felt that the lack of progress could be attributed to six different factors: (1) ambiguity over the footprint for the museum site and the entities that would occupy it; (2) lack of agreement by the planning committee on budget, footprint, and how to proceed; (3) changes in leadership on the planning committee, with Edele Hovnanian's resignation and Kaloosdian's increased involvement; (4) lack of finances; (5) failure to implement a community outreach campaign; and (6) Vartian's increasing Assembly responsibilities taking up more time. Id. at 1-3.

On January 8, 2002, a few select members of the Assembly's Board of Trustees met in Miami to discuss several issues of concern to Cafesjian. See PX-308. One of those issues was the Turkish Armenian Reconciliation Commission ("TARC"), an effort at reconciling contentious issues of dispute between Turkey and Armenia such as the Armenian Genocide and other contemporary issues. See id.; 11/19 PM Tr. at 101. TARC was controversial within the Armenian community, and the Assembly supported it notwithstanding objections from a number of its members. Hovnanian and Krikorian were the strongest supporters of TARC, whereas Cafesjian was highly critical of it. 11/19 PM Tr. at 101; 11/18 PM Tr. at 49-50. During the meeting, Hovnanian expressed regrets on behalf of the Assembly that Cafesjian did not have an opportunity to express his objections before the Assembly supported it. 11/18 PM Tr. at 50; PX-308 at 1.

The museum project was also discussed extensively at the meeting. Cafesjian expressed his concerns regarding the progress over the past two years. See PX-308 at 2. Cafesjian also discussed his belief that the museum should be a "signature building" in Washington, D.C. and indicated that he thought the funding requirements could increase substantially to between $50 and $100 million. Id. Cafesjian explained at trial that he thought the Bank Building alone, as a repository for books and pictures, lacked the "emotional factor" that would be critical to attract public interest. 11/18 PM Tr. at 52. After some discussion, the Assembly Board agreed to proceed with a proposal put forward by Waters and Vartian to commission Concord Partners to conduct a space utilization/feasibility study. See PX-308 at 2. There were also serious discussions about how best to structure the management and operation of the museum. Ross Vartian and John Waters were tasked with analyzing the options for a formal structure and bylaws for the project. See DX-39. On February 28, 2002, Vartian and Waters drafted a confidential memorandum to Cafesjian and Hovnanian discussing three possible options: (1) formalizing the museum as a subsidiary of the Assembly; (2) making the museum a component of ANI; and (3) establishing the museum as an independent entity. See DX-39. They recommended that the museum continue to be a subsidiary of the Assembly until the opening of the museum, after which they believed it should be spun off as an independent entity. Id.

Following the meeting in Miami, Ross Vartian contacted Concord Partners to solicit a revised proposal for the space utilization/feasibility study. See PX-17 at 1. Much had changed since Concord Partners submitted its proposal back in April 2001, and Vartian wanted to ensure that the project team, which included architects Martinez & Johnson and exhibit design firm Gallagher & Associates, was adequately prepared. As a property developer, Concord Partners had the expertise necessary to coordinate the development of the properties. See 11/22 PM Tr. at 17-18. Martinez & Johnson was an architecture firm which had created a design for the Bank Building in 1998 for a client that was interested in using the property for its headquarters. 11/12 PM Tr. 58-59. Gallagher & Associates was a museum planning and design firm with a long list of illustrious clients such as the Smithsonian Institution and the National Archives. 11/12 PM Tr. at 7-8. On February 4, 2002, Vartian sent Concord Partners a project description explaining that the project consisted of the Bank Building and the three adjacent properties donated by Cafesjian; Vartian also noted that Cafesjian was considering the acquisition of a fourth adjacent property at 1334-36 G Street. See PX-17 at 2. Vartian further explained that they planned to clear the adjacent properties after the leases had expired and build a new structure with up to 80,000 square feet of space. Id. at 2. It was anticipated that the memorial would be housed within the new construction and occupy between 1000 and 1500 square feet. Id. at 3. The Concord team prepared and submitted a feasibility study proposal in late February 2002. Stip. Facts ¶ 46.

On March 16, 2002, the Assembly Board of Trustees held its annual meeting in Boca Raton, Florida. Hovnanian began the meeting by acknowledging that the past six or seven months had been a very difficult time for the Assembly due to controversy over the TARC issue, among other things. See DX-40 at 1. After a discussion of other Assembly business, Robert Kaloosdian and Rouben Adalian gave a report on the status of ANI. See id. at 3-4. Edele Hovnanian, who by this point had returned to the Assembly as Treasurer, reported that the Assembly was depleting its cash reserves and the principal in its endowment. Id. at 4. After lunch, Ross Vartian gave a report on the progress of the museum project. Id. at 5; DX-41. Vartian told the crowd that "all of the museum experts advise that it takes 5 to 7 years to create a museum from scratch" and that "the clock is ticking." DX-41 at 6. Vartian announced for the first time to those not on the museum planning committee that Cafesjian had agreed to donate the Adjacent Properties for the museum project. See id. at 3-4. He also announced that the Assembly, together with ANI and CFF, intended to create an independent entity to oversee the museum project "as soon as it is prudent and responsible to do so." Id. at 4. The primary reason for creating an independent entity was community buy-in, to ensure that donors from all Armenian advocacy organizations would be willing to contribute and not see the museum as an Assembly-focused project. 11/22 AM Tr. at 19. In light of the controversy surrounding the TARC issue, there were concerns that the Assembly could not raise the funds on its own to cover the cost of the museum. 11/15 AM Tr. at 104-05. In addition, the museum planning committee began to realize that the museum project would overwhelm the Assembly in size and scope and detract from the Assembly's core mission. Id. Waters testified that one other concern animating the need for an independent entity was the museum planning committee's inability to make binding decisions and get funding and authorization from the Assembly. 11/15 AM Tr. at 89-90.

In addition to the establishment of an independent entity, several other agreements were reached during the discussions in Boca Raton. It was agreed that CFF would donate the Adjacent Properties to the museum, with conditions, and the Assembly would donate the Bank Building and adjacent vacant lot, with conditions. See PX-19 at 2. It was further agreed that CFF and the Assembly would combine their conditions with prior gifting commitments, which the newly-formed independent entity would be obliged to honor. Id. CFF and the Assembly agreed to jointly design and approve the governing documents for the new entity, and that CFF, the Assembly, and ANI would each be represented on all levels of governance for the new entity. Id. Following the meeting, Ross Vartian outlined these agreements, along with a list of unresolved issues that remained outstanding. See id. Among the unresolved issues were the status of ANI, the budget for 2002, and selection of an experienced museum director. Id. at 3-4.

It was also agreed during the Boca Raton meeting that the museum planning committee would not proceed with the space utilization/feasibility study as planned. See PX-19 at 3. Instead, the parties agreed to hire Concord Partners to select an architect and exhibit design firm through a request for qualifications (RFQ) process. Id.*fn17 There were tradeoffs involved with this decision: a feasibility study could give greater definition for the project and help with budget and fundraising planning, but selecting an architect first would allow the planning to be tailored to the chosen architect. 11/22 AM Tr. at 20. Concord Partners told Ross Vartian that the RFQ process-including solicitation of candidates, requesting proposals from finalists, and final selection-would take approximately four months, with an additional six months needed thereafter to conduct a site study. See PX-352.

The museum planning committee held its next meeting in Naples, Florida on May 2, 2002. See DX-49. The meeting focused primarily on analyzing the consequences of the decisions made at the Assembly's meeting in March. It was agreed that the Armenian Genocide Museum & Memorial would be incorporated as a 501(c)(3) organization as soon as it was possible to do so responsibly and sustainably. See id. at 2. It was further agreed that the Assembly offices would not be housed within any portion of the museum complex. Id. at 3. This decision was made in part to keep the museum independent from any advocacy organization and in part because it was thought that there would not be adequate space in the complex for the Assembly. 11/22 AM Tr. at 22-23. To ensure that the Assembly would get sufficient credit for launching the museum (and to combat the perception that the Assembly was abandoning the project), Cafesjian and Hovnanian agreed to channel their contributions through the Assembly. Id. at 23-24; DX-49 at 3. The committee agreed to hire a museum director by August 1, 2002 to replace Ross Vartian, who was planning to retire and return to Michigan. DX-49 at 3. However, no director was hired, at least in part for budgetary reasons. 11/22 AM Tr. at 24-25. In fact, the museum project was having significant cash flow problems, and Cafesjian agreed after the Naples meeting to advance funds necessary to complete the work that was scheduled for 2002. DX-49 at 4. Ross Vartian testified that this was a constant problem because the museum project was asset-rich but cash-poor. 11/22 AM Tr. at 25.

Progress was being made, but the pace was deliberate. Robert Kaloosdian warned Ross Vartian that he should not take major action until the parties had reached a "comprehensive agreement," which Vartian understood to mean formalization of the gifting conditions for the Assembly and CFF, agreement on the status of ANI, and a set of by-laws and articles of incorporation for the new entity. See DX-56. The new entity would ultimately become the Armenian Genocide Museum & Memorial, Inc. ("AGM&M").*fn18

The museum planning committee met again in New York on August 22, 2002. See DX-58. It was agreed that AGM&M should be overseen by a committee of major donors who agree to make a minimum contribution (somewhere between $1 and $15 million), each of whom would have a veto over "major decisions." See id. at 1; 11/22 PM Tr. at 97-98. CFF also provided a revised draft grant agreement letter, which was discussed at length during the meeting. See DX-58 at 1; 11/18 AM Tr. at 29; Krikorian Dep. Tr. at 114. Like the previous draft grant agreement sent in October 2001, it contained a reversion clause stating that if the three adjacent properties were not developed in accordance with a plan approved by the AGM&M (with the necessary approval of CFF), CFF would be entitled to a return of either the adjacent properties or the funds used to purchase them. See DX-59 at 4. There was some discussion at the meeting that such an open-ended reversion clause would not be appropriate. See 11/22 PM Tr. at 99. The committee also discussed the architect selection process and the status of ANI in relation to AGM&M. DX-58 at 1-2.

John Waters and Ross Vartian proceeded to work with Concord Partners on the RFQ process. Jeffrey Arnold, co-owner of Concord Partners, testified that he worked primarily with Waters and Vartian during this period. See 11/22 PM Tr. at 18. Kaloosdian was concerned that decisions about the RFQ process were being made without total agreement from the planning committee. See PX-27. On October 8, 2002, Cafesjian, Waters, Adalian, and several professionals held a conference call with Concord Partners to discuss the RFQ and make decisions about the architect selection process. See PX-29. Based on Concord Partners's recommendations, they decided to send the RFQ to top-tier architects identified by Concord and all interested Armenian architects. Id. They also revised the RFQ documents to better reflect the mission statement for the museum and agreed to forward them to the full museum planning committee for approval. Id.

Around this same time, several members of the museum planning committee began to meet with Gallagher & Associates to discuss exhibit design and content. Although there is some evidence in the record that the Assembly planned to select an exhibit design firm through an RFQ process, it appears that Gallagher & Associates was chosen fairly early in the process without competition from other firms. Patrick Gallagher, the principal of Gallagher & Associates, worked primarily with Rouben Adalian in developing plans for the content of the museum. 11/12 PM Tr. at 10. Gallagher & Associates was tasked with creating a conceptual master plan for the museum that identified a storyline and described the functional requirements for the museum, such as office and storage space, archives, libraries, etc. Id. at 11. The purpose of this work was to create a plan that could be used to engage an architect to design the building for the museum. Id. A brainstorming meeting was held on October 28, 2002, with representatives from Concord Partners, Gallagher & Associates, and several members of the planning committee, including Kaloosdian, Adalian, Vartian, and Waters. See PX-31 at 20-26.*fn19

On October 19, 2002, the Assembly held its annual gala meeting for its members in Philadelphia. See DX-305. The Assembly honored Cafesjian for his donations to the Assembly, his multi-million-dollar investments in Armenia through CFF, and his generosity toward the museum project. See id. Speaking at the meeting, Hovnanian called Cafesjian a "trusted colleague" and a "dear friend" who believes that "time is a precious commodity that cannot be wasted." Id. Cafesjian did not appear in person to receive the honors but instead prepared a biographical video narrated by Waters that described Cafesjian's Armenian advocacy efforts and expressed his appreciation to the Assembly. See id.

A week later, on October 25, 2002, the museum planning committee convened a meeting in New York. See DX-67; 11/10 PM Tr. at 4. Attendees included Hovnanian, Kaloosdian,

Adalian, Krikorian, Vartian, Waters, Carolyn Mugar, and Peter Vosbikian, a life trustee who also served as Chairman of the Assembly's Board of Directors in 2002 and 2003. See DX-67 at 1. The meeting began with an extensive discussion of finances for the project. Id. Hovnanian expressed his concern that they would be unable to raise enough money to fund a project with a $100 million budget, and he raised the possibility of phasing in the project, with later expansion tied to better economic circumstances. Id. Hovnanian also reaffirmed his pledge of $5 million to the project but expressed disappointment that his recent $200,000 donation had been spent on architect selection efforts and other expenses. Id. Others also expressed concerns about the operating deficit. Id. Vartian, who by this time had relocated to Michigan but continued to work on the project, did not share Hovnanian's concerns about fundraising. 11/22 AM Tr. at 27. Waters told the committee that Cafesjian was optimistic that the funds could be raised from the community and that, if necessary, Cafesjian was prepared to donate $50-75 million to ensure that the project was completed.*fn20 DX-67 at 1; DX-68 at 2. The rest of the committee was elated to hear this news; Kaloosdian testified that "it was like a message from heaven." 11/10 PM Tr. at 7. Based on this reaction, Waters feared that he had overpromised and that the rest of the members of the committee would assume they were relieved of any further obligations to bring funds into the project. 11/15 AM Tr. at 95. According to one draft summary of the meeting, "[a]ll felt that G. Cafesjian's commitment, characterized as a 'safety net,' alleviated the fiscal concerns." DX-67 at 2. Everyone agreed that the safety net should be kept confidential so as not to deter fundraising. Id. During a break in the meeting, Waters telephoned Cafesjian to convey his fear, and Cafesjian instructed Waters to clarify that he was not making any firm commitment or guarantee. 11/15 AM Tr. at 100. Waters then told the committee that Cafesjian was confident that the community could raise the full amount of funds required to support the project and that if there were shortfalls, Cafesjian was prepared to donate additional funds. Id. at 101-02; DX-67 at 3.

During the meeting, Waters commented on the slow pace of the project. See DX-67 at 2. Kaloosdian called for a "comprehensive understanding" on all major aspects of the initiative before launching any significant element. Id.; 11/15 AM Tr. at 30-31. Vartian testified that he believed Kaloosdian's emphasis on consensus decision-making prolonged the planning process. 11/22 AM Tr. at 30-31. The museum planning committee ultimately reached a series of agreements during the meeting. It was agreed that the Board of Trustees for AGM&M should consist of $5 million donors, making an exception for Anoush Mathevosian based on her founding efforts, with decisions made by consensus. DX-67 at 2-3; DX-68 at 1. It was further agreed that a single professional museum director be appointed and empowered to drive the project forward. DX-67 at 2; DX-68 at 1. The committee also approved the RFQ. DX-67 at 2; DX-68 at 1. There was still no agreement about the future status of ANI. DX-67 at 2-3.

Concord Partners sent the RFQ to a group of selected architects on November 15, 2002. See PX-31 at 28-35; PX-25; PX-26. The timeline called for responses to be submitted to Concord Partners by December 13, 2003, a short list of architects to be chosen to interview in late January 2003, a design competition to be held among the finalists with presentations in mid-April 2003, and final selection to be made by May 2003. See PX-31 at 31. It was anticipated that as many as five firms would participate in the design competition, with each firm receiving $30,000 compensation for their design. Id. The RFQ described the project as consisting of the Bank Building and a new building on the Adjacent Properties*fn21 of approximately 60,000 square feet, with a total estimated project cost of $76 million. Id. at 30.Concord received between thirty and thirty-five responses to the RFQ. 11/22 PM Tr. at 23. Among the responses received was an unsolicited proposal from a young Armenian American architect named Edgar Papazian. See PX-215. After the responses were received, the RFQ process "died on the vine." 11/23 AM Tr. at 56; 11/22 PM Tr. at 24-25. Waters testified that this was due to a lack of finances and a lack of agreement by the committee on how to select an architect. 11/23 AM Tr. at 56. In an internal memorandum dated May 6, 2004, Concord Partners attributed the delay in selecting an architect to several factors, including the acquisition of the Adjacent Properties, the lack of a single decision-maker to shepherd the process, and indecision about whether to recruit a "name" architect. See PX-35 at 4.

On January 16, 2003, Assembly Treasurer Gail O'Reilly sent a memorandum to the executive committee of the Assembly Board of Trustees regarding operational spending for the museum project. See DX-75. Her memorandum indicated that the Assembly had received a total of $7,239,835.49 in unrestricted donations for the museum, plus the $500,000 loan from Cafesjian, and there was an additional $519,966 in restricted funds. Id. at 1. As of November 2002, the Assembly had spent $7,918,865.12, exhausting the unrestricted funds, the entirety of the loan from Cafesjian, and $179,030.03 of the restricted funds. Id. The memorandum does not indicate the nature of the restrictions on the funds, but it states that "[i]n the past the assumption has been made that the purposes for which these restricted funds have been donated, as well as the loan, will be fulfilled with future operating receipts." Id. O'Reilly wrote, "What I need from the EC [Executive Committee] of the BOT [Board of Trustees] is a 'yes' vote to continue to spend down the restricted funds to '0' or a 'no' vote to stop the practice immediately." Id.*fn22 The record does not reflect what action was taken with respect to this request.

On January 21, 2003, Peter Vosbikian sent a memorandum to Cafesjian, Hovnanian, and Carolyn Mugar entitled "Time for Action." See DX-77. "I believe the Armenian Assembly of America has reached a point of crisis," he wrote. Id. at 1. "I further believe that the downward spiral that we are faced with began March of 2000 when we announced our AGM&M initiative. Although the news of this great new project was exhilarating, it resulted in certain decisions that have negatively impacted our organization." Id. Vosbikian felt that Ross Vartian's departure from the position of Executive Director to become the planning director for the museum project had left the Assembly as a "rudderless ship." Id. Vosbikian proposed bringing Vartian back as Executive Director for the Assembly with the understanding that he would mentor and train his replacement. Id. He also stated his belief that the failure to bring the museum to market, combined with the TARC fiasco, had damaged the Assembly's position as a leading advocacy organization. Id. He urged the Assembly to act quickly to spin off AGM&M and ANI. Id. at 2. Ultimately, Vartian reached an agreement with Vosbikian that he would come back to the Executive Director position for two years, with one year devoted to getting the Assembly back on track, and the second year focusing on mentoring the Assembly's future Executive Director. 11/22 AM Tr. at 33-35.

On January 22, 2003, CFF sent a revised draft grant letter to the Assembly for review. See DX-78. As with the previous drafts, the letter contained a reversion clause, but this time it contained a triggering date: if the three donated adjacent properties were not developed according to plans approved by AGM&M by December 31, 2008, then those properties (or the cash used to acquire them) would revert to CFF. See id. at 2. The letter also provided that a new $500,000 promissory note would be issued to CFF by the Assembly to replace the previous one, and that the obligation may be transferred to AGM&M. Id. at 3. The letter proposed that decisions of the AGM&M Board of Trustees be decided by an 80% affirmative vote. Id. at 5. This draft letter was discussed at a meeting in Delray, Florida, where Hovnanian, Vartian, Kaloosdian, and Adalian were present. 11/22 PM Tr. at 106-07. Hovnanian suggested a series of changes to the agreement, including making the transfer of the promissory note to AGM&M mandatory. See DX-80 at 1. He also suggested changing the 80% vote requirement to a unanimity requirement. Id. at 2.

In February 2003, Gallagher & Associates completed its Draft Museum Program. See PX-31. This document contained an outline of themes for the exhibits and described the basic requirements for the museum's operations. The program called for approximately 25,000 square feet of exhibit space, with a total of 89,000 square feet for the museum, including underground parking. Id.; 11/12 PM Tr. at 13, 41, 48. Rouben Adalian helped prepare the Draft Museum Program. See 11/15 PM Tr. at 94. Adalian presented the program to the ANI Board of Governors at a meeting on February 27, 2003. See PX-31 at 39; 11/16 AM Tr. at 39. When Hovnanian saw the program, he became upset that he was not consulted about it. 11/16 AM Tr. at 35, 39-41. Hovnanian also criticized ANI's performance and the pace with which it had accomplished its objectives. 11/16 AM Tr. at 42-43; DX-623N at 6. Gallagher & Associates did not perform any further work for the project after the Draft Museum Program was completed. 11/12 PM Tr. at 24.

The Assembly Board of Trustees held another annual meeting in Boca Raton on March 1, 2003. See DX-82.By the time of this meeting, everyone agreed that AGM&M should be launched as an independent entity with a budget of around $100 million and a new building constructed on the three adjacent properties to be donated by Cafesjian. See id. at 1-2. Hovnanian announced this decision to the attendees at the meeting, approximately a hundred people. See id.; 11/24 AM Tr. at 37. The reaction to this announcement was uniformly positive, and Vartian felt that this was a significant milestone after years of intense deliberations. 11/22 AM Tr. at 37, 94. Vartian delivered a report in his renewed role of Executive Director. See DX-82 at 4. Kaloosdian and Adalian each gave reports on the work that had been performed by ANI, and it was announced that ANI would be transferred to the control of AGM&M. Id. at 5-6. Ultimately, it was agreed that ANI would retain its status as an independent 501(c)(3) organization, but that it would become a subsidiary of the new museum entity. 11/22 AM Tr. at 21. John Waters, who was now the primary staff person working on the museum project, delivered a report on the status of the museum. DX-82 at 9. Waters briefly described the history of the project and expressed his appreciation for the hard work of those involved, saying, "I am happy at how well this project is moving along and moving forward." Id. Those words were mostly tactful; the truth was that Waters and Cafesjian were dismayed at the sluggishness with which the project had evolved over the previous three years. 11/15 AM Tr. at 52-53; 11/19 AM Tr. at 82.At this point, however, it was clear that the project was entering a new phase. While the details still had to be finalized, everyone was optimistic that the creation of AGM&M would finally enable the project to become a reality.

E. Final Negotiation of the Grant Agreements and the Creation of AGM&M

It took seven months following the March 2003 meeting to finalize the agreements and governing documents that would create AGM&M. One reason for the delay was the acquisition of the fourth adjacent property, the Families U.S.A. building. Through TomKat, Cafesjian entered into a purchase agreement to buy the property for $6.5 million on September 22, 2003. DX-502N; Stip. Facts ¶ 52. The closing date was scheduled for October 30, 2003. DX-502N.

The draft grant agreement from Cafesjian continued to be discussed and negotiated. Because Cafesjian had agreed to channel his donations to AGM&M through the Assembly, it was decided that Cafesjian would enter a grant agreement with the Assembly (hereinafter, the "Grant Agreement"), and the Assembly would transfer all of the museum-related assets and obligations to AGM&M in a separate agreement, to be known as the "Transfer Agreement." The law firm of Caplin & Drysdale was hired to draft the Transfer Agreement as well as the organic documents for AGM&M, including the Articles of Incorporation, the By-Laws, and a Unanimous Written Consent agreement signed by all of the initial trustees of AGM&M. 11/23 AM Tr. at 12-13.

The record shows that the language in the Grant Agreement was reviewed by most of the major figures involved in AGM&M during the months leading up to its execution on November 1, 2003. On October 13, 2003, Waters emailed an updated draft of the Grant Agreement, which included the donation of the Families U.S.A. building, to Hovnanian, Vartian, Kaloosdian, and Vosbikian. See PX-330. The revised draft also included a new trigger date of December 31, 2010 for the reversion clause; it was felt that seven years was a reasonable timeline for the completion of the project. See id. at 3; 11/22 PM Tr. at 119. Because the Families U.S.A. building transaction was scheduled to close on October 30, Waters urged everyone to act quickly so that title to the building could be transferred directly to AGM&M, eliminating the need to transfer the property from TomKat to AGM&M and saving hundreds of thousands of dollars in transfer and recordation fees. Id. at 1; 11/22 PM Tr. at 117-18. On October 28, 2003, a conference call was held with, inter alia, Hovnanian, Cafesjian, Vosbikian, Kaloosdian, Waters, and Vartian to discuss the four key documents: the Grant Agreement, the Articles of Incorporation for AGM&M, the AGM&M By-Laws, and the Unanimous Written Consent agreement. See DX-94. During this meeting, Kaloosdian suggested that the language in the reversion clause in the Grant Agreement be clarified so as to avoid ambiguity about when the right of reversion might be triggered. Id. at 1-2. The final language of these documents was approved shortly after this conference call.

Kaloosdian testified, rather incredibly, that he did not recall being involved in any of these discussions relating to the Grant Agreement and that he was unaware of the document until years later. See 11/12 AM Tr. at 11-14, 21. Hovnanian also remarkably testified that he was not aware of the reversion clause in the Grant Agreement until years later and that he trusted Cafesjian so much that he did not read the agreements that were being made at the time. See 11/9 AM Tr. at 99. Similarly, Peter Vosbikian testified that he did not recall being involved in the conference call discussing the Grant Agreement and that he signed the agreement on behalf of the Assembly without reading it. 11/15 PM Tr. at 79-80. It appears to the Court that these individuals' convenient lack of memory is an attempt (conscious or otherwise) to minimize their involvement in an agreement that turned out badly for the Assembly. It also appears, however, that despite their involvement in the process, these individuals did not take the time to fully understand the terms and conditions of the agreements.

The Articles of Incorporation for AGM&M were signed on October 29, 2003, and AGM&M officially became incorporated as a nonprofit corporation in the District of Columbia. See PX-121; Stip. Facts ¶ 53. The Articles of Incorporation and the By-Laws for AGM&M were ratified and adopted, respectively, pursuant to the Unanimous Written Consent agreement, which was executed on October 30, 2003. Stip. Facts ¶ 54. The Grant Agreement and Transfer Agreement were signed on November 1, 2003 during an Assembly gala in Palm Desert, California. 11/22 PM Tr. at 124. Because the content of these documents is critically important to disputed issues in this litigation, the Court shall review each of these documents in some detail.

1. The Grant Agreement

The Grant Agreement was signed by Cafesjian on behalf of himself and CFF and by Hovnanian and Vosbikian on behalf of the Assembly. See DX-2 (hereinafter, "Grant Agreement").*fn23 The eleven-page document sets forth the terms and conditions of the grants made by Cafesjian and CFF to the Assembly for the museum project and obligates the Assembly to comply with those terms and conditions.

Pursuant to the Grant Agreement, Cafesjian and/or CFF (jointly defined as the "Grantor") agreed to donate $10.3 million for the purchase of the Adjacent Properties from TomKat and any related transaction costs. Stip. Facts ¶ 60; 11/23 AM Tr. at 32. In addition, Cafesjian and/or CFF agreed to make the annual $150,000 payments under the installment agreement for 1340 G Street and the final balloon payment of $1.5 million due in March 2011. See Grant Agreement §§ 2(D)-(E). The amounts paid under the Grant Agreement were calculated based on the purchase price paid by TomKat for the Adjacent Properties, plus the holding costs paid by TomKat pending transfer minus any rents earned during this period, plus the legal costs associated with the transfer. 11/23 AM Tr. at 35-36.

For purposes of this litigation, the most critical feature of the Grant Agreement is the reversion clause. Under § 3.1 of the Grant Agreement, the "Grant Property"-defined as the Bank Building and the Adjacent Properties-"may only be used as part of the AGM&M,*fn24

subject to plans for the AGM&M approved by the Board of Trustees of the American Genocide Museum & Memorial, Inc. (the 'Plans') . . . ." Grant Agreement § 3.1(A). The next section reads as follows:

If the Grant Property is not developed prior to December 31, 2010 in accordance with the Plans, or if the Grant Property is not developed in substantial compliance with the Plans including with respect to the deadlines for completion of the construction, renovation, installation and other phases detailed in the Plans, then:

(i) in the event any portion of the Grants has not been funded, this Agreement terminates;

(ii) to the degree any portion of the Grants has been funded, at the Grantor's sole discretion, the Assembly shall return to the Grantor the Grant funds or transfer to the Grantor the Grant Property.

Id. § 3.1(B). Cafesjian testified that the purpose of the reversion clause was to provide an incentive to complete the museum expeditiously, so that it might be built before Cafesjian died. 11/19 AM Tr. at 10-11; 11/15 AM Tr. at 113. Waters testified that the reversion clause was most likely his idea; he explained that CFF often inserted reversion clauses into its grant agreements. 11/15 AM Tr. at 113; 11/22 PM Tr. at 88-89.

The Grant Agreement also obligates the Assembly to make available a space, not less than 1200 square feet or 40,000 cubic feet, for a memorial to be named the "Gerard L. Cafesjian Memorial" or another name approved by CFF. Grant Agreement § 3.2. It provides that the Assembly shall "cooperate with the design firms, artists and others selected by [CFF] to design and ensure the successful completion of the Memorial" and "permit [CFF] to participate in all material decisions regarding the Memorial." Id. Moreover, the Grant Agreement obligates the Assembly to operate and maintain the Memorial in perpetuity and be solely responsible for the costs of maintaining it. Id. The Grant Agreement also provides that neither CFF nor Cafesjian have any obligation to provide additional funding to the Assembly or to AGM&M. Id. § 3.8.

The Grant Agreement also contains a breach clause:

(A) If the Assembly fails to use the Grants solely for the purposes set out in this Agreement or if the Assembly fails to satisfy any of the conditions of this Agreement, Grantor is released from any remaining obligation under this Agreement to provide funds or property to the Assembly.

(B) If the Assembly uses any portion of the Grants either for a purpose other than those set out in this Agreement or for a purpose other than those described in Section 501(c)(3) of the [Internal Revenue] Code, as amended, the Assembly shall repay the portion of the Grants so spent to Grantor, plus interest.

(C) The remedies set out in this Section 3.9 are in addition to any other remedies that may be available to the Grantor at law or equity.

Grant Agreement § 3.9.

The Grant Agreement also contains conditions relating to the creation of AGM&M. It requires that AGM&M be created as a nonprofit entity; that it be governed by a Board of Trustees appointed by individuals and organizations that contribute at least $5 million to the museum project; that each such donor be entitled to receive at least one vote for each $5 million contributed; that Anoush Mathevosian be ensured at least one vote on the Board of Trustees; that the Assembly accept only one vote; that decisions of the Board of Trustees require an 80% vote to carry; and that the initial Board of Trustees consist of Anoush Mathevosian, Hirair Hovnanian, Robert Kaloosdian, and Gerard Cafesjian. See Grant Agreement § 5.2. The Grant Agreement also required the Assembly to enter into a Transfer Agreement with AGM&M to transfer all of its interest in all cash, pledges, property, and other assets being held by the Assembly for the museum project. Id. § 5.3(A). The Transfer Agreement would obligate AGM&M to honor all existing donor requirements at the time of transfer and to assume all obligations in the Grant Agreement relating to the Memorial. Id. § 5.3(B)-(C).

The Grant Agreement also required that the Assembly issue a new promissory note to replace the previous promissory note issued in March 2000 to CFF for $500,000. Grant Agreement § 5.4(A). The new note was to be interest free and mature on December 31, 2005.

Id. § 5.4(B). Along with the other museum-related obligations, the Assembly was required to transfer the promissory note to AGM&M. Id. § 5.4(C). The Grant Agreement also provided that the Assembly would assign its right to appoint the Trustees of the Armenian National Institute to AGM&M. Id. § 5.5.

2. The Transfer Agreement

The Transfer Agreement was executed on November 1, 2003 by the Assembly and the newly-incorporated AGM&M. See PX-114 (hereinafter, the "Transfer Agreement"). The agreement is signed by Hovnanian and Vosbikian on behalf of the Assembly and Waters on behalf of AGM&M. See id. at 8. The Transfer Agreement requires the Assembly to contribute to AGM&M "all of its rights, title and interest in and to all cash, pledges, real property, tangible property, intangible property, and other assets contributed to the [Assembly] and/or held by the [Assembly] for the development, renovation, and construction of the AGM&M." Id. § 1.1. The approximate aggregate value of the grant was listed as $27.8 million, including $7.25 million in property, over $19 million in pledges, and approximately $670,000 in cash and other assets. Id. § 1.1(C).

Pursuant to § 1.2 of the Transfer Agreement, "AGM&M, Inc. must honor all of the [Assembly]'s donor requirements existing at time of transfer, or in the alternative, obtain donor consent to the transfer and any modification of donor terms." Transfer Agreement § 1.2(A). The agreement also explicitly requires AGM&M to comply with the obligation to construct a memorial as set out in the Grant Agreement. Id. § 1.2(B). The Transfer Agreement also requires the Assembly to transfer the promissory note (either the original or the replacement note, if issued) to AGM&M. Id. § 1.2(D). The agreement also requires AGM&M to use the funds and property transferred "solely to develop, construct and operate" the Armenian Genocide Museum & Memorial. Id. § 1.3.

The Transfer Agreement also contains provisions relating to the governance of AGM&M that are substantively identical to those contained in the Grant Agreement. The agreement also contains an arbitration clause. See Transfer Agreement § 5.3. However, none of the parties is presently seeking to enforce that arbitration clause.

3. The AGM&M Articles of Incorporation

The Articles of Incorporation for AGM&M were executed on October 29, 2003. See PX-121. The Articles provide that AGM&M is a nonprofit corporation organized for charitable purposes within the meaning of § 501(c)(3) of the Internal Revenue Code. Id., Art. IV(A). The purpose of the corporation is defined as, inter alia, "to own, operate, and maintain a permanent museum and memorial to the victims and survivors of the Armenian Genocide." Id. The Articles provide that AGM&M has no members and that the board of directors for the corporation shall be referred to as the Board of Trustees. See id., Arts. V-VI. The manner of election or appointment to the Board of Trustees is to be set forth in the By-Laws of the corporation. Id., Art. VI. The Board of Trustees must have at least three trustees at all times, and the initial trustees are defined to be Gerard L. Cafesjian, Hirair Hovnanian, Anoush Mathevosian, and Robert Kaloosdian. Id., Art. IX.

The Articles provide that in the event of dissolution or final liquidation of the corporation, none of the property of the corporation shall be distributed to or divided among any trustees or officers or inure to the benefit of any individual. Id., Art. VII(C)(1).

4. The AGM&M By-Laws

The By-Laws of AGM&M provide that the corporation shall conduct its programs and activities under the name of the Armenian Genocide Museum and Memorial. See PX-122 (hereinafter, "By-Laws") § 1.2. Under the By-Laws, the term of office of each of the initial trustees (i.e., Cafesjian, Mathevosian, Hovnanian, and Kaloosdian) "shall be perpetual." By- Laws § 2.4. Each donor that elected an initial trustee (CFF, Mathevosian, Hovnanian, and the Assembly) is entitled to appoint a successor trustee in the event that the initial trustee is unable to serve for any reason. Id. Additional trustees may be elected to the Board of Trustees by making a contribution of $5 million to AGM&M, provided that the Board of Trustees has accepted the contribution by an 80% affirmative vote and the donor has appointed a successor. Id. § 2.5. Each donor (including initial donors) is entitled to one vote on the Board of Trustees for each $5 million contributed. Id. §§ 2.4-2.5.

The By-Laws provide that "[u]nless otherwise provided herein or in the Articles of Incorporation, all questions shall be decided by an 80 percent affirmative vote of the Trustees present at a meeting where a quorum is present." By-Laws § 2.7. A quorum is defined as persons representing one-half of the aggregate eligible votes. Id. § 2.6. "Any action required or permitted to be taken at any meeting of the Trustees may be taken without a meeting if all Trustees then in office consent to the action in writing and the written consents are filed with the records of meetings of Trustees." Id. § 2.8. The By-Laws call for at least annual meetings of the Board of Trustees, and notice of each meeting must be delivered to each trustee at least five days prior to the meeting. Id. §§ 2.12, 2.14. The By-Laws provide that the Board of Trustees shall elect from among its members a Chairman, a President, one or more Vice Chairmen, a Treasurer, and a Secretary. Id. § 2.15.

The By-Laws provide that a trustee may be removed without cause by the unanimous affirmative vote of the trustees present at a meeting where a quorum is present, not counting the vote or votes of the trustee whose removal is voted upon. By-Laws § 2.17. The By-Laws also provide that Robert's Rules of Order shall govern in matters of parliamentary procedure not otherwise prescribed by law, the Articles of Incorporation, or the By-Laws. Id. § 3.1. The ByLaws may be amended by a unanimous affirmative vote of the trustees present at a meeting where a quorum is present. Id. § 3.2.

The By-Laws also include an indemnification clause providing that AGM&M shall indemnify any current or former trustee or officer of the corporation against any and all expenses and liabilities incurred in connection with any claims brought against him or her as a result of his or her position with AGM&M, unless he or she is determined to be liable to the corporation for damages as a result of negligence or breach of a duty. See By-Laws § 4.1.

5. The Unanimous Written Consent Agreement

On October 30, 2003, each of the four initial trustees of AGM&M signed a document titled Unanimous Written Consent in Lieu of the Organization Meeting of the Board of Trustees of AGM&M. See DX-1 (hereinafter, "UWC"). By unanimous written consent, the Board of Trustees adopted a series of resolutions. First, the actions of the incorporators were ratified and the By-Laws were approved. See UWC at 1. Second, the initial donors (and their appointed trustees) were recognized to be CFF (Cafesjian), Hirair Hovnanian (himself), Anoush Mathevosian (herself), and the Assembly (Kaloosdian). Id. at 1-2. Cafesjian was appointed Chairman and President, Hovnanian was appointed Vice Chairman, and John Waters was appointed Secretary and Treasurer.*fn25 Id. at 2.

Through the Unanimous Written Consent agreement, the AGM&M Board of Trustees authorized the officers to pay all of the organizational expenses of the corporation. See UWC at 2. The actions of the Chairman (Cafesjian) and the Secretary/Treasurer (Waters) in negotiating the purchase of the Adjacent Properties were ratified and approved, and the Secretary/Treasurer was authorized "to enter into and execute any and all documents necessary to effect the purchase" of the Adjacent Properties and "to take such other action as deemed necessary or desired to effect such transactions." Id. at 3. The AGM&M Board also approved and ratified the negotiation of grant agreements with donors and the Assembly, and the Secretary/Treasurer was authorized to negotiate further grant agreements with donors. Id. The Board also accepted from the Assembly control over the Armenian National Institute. Id.

6. The Hovnanian Grant Agreement

A separate grant agreement was created to memorialize Hirair Hovnanian's $5 million pledge. See DX-4. Hovnanian's grant agreement provides that he shall grant the Assembly $5 million, which shall be used solely to support the development, renovation, and construction of the museum project. See DX-4 §§ 1.1, 1.2. According to Waters, Hovnanian asked that a reversion clause be included in his grant agreement. 11/23 AM Tr. at 7. The reversion clause in Hovnanian's grant agreement provides that if the museum is not developed prior to December 31, 2010 in accordance with plans approved by the AGM&M Board of Trustees, Hovnanian is entitled to a return of the grant funds. DX-4 § 2.1. Hovnanian does not recall signing this agreement, but he confirmed at trial that it bears his signature. 11/9 PM Tr. at 89.

F. The Transfer of Assets to AGM&M

The transfer of control over the museum project from the Assembly to AGM&M was a gradual process that took several months. 11/23 AM Tr. at 20-21. In the weeks following the execution of the Grant and Transfer Agreements and the organic documents creating AGM&M, Cafesjian and CFF transferred $10.3 million to the Assembly to cover the purchase of the Adjacent Properties. See DX-196, DX-197, DX-198. During November and December, AGM&M engaged in a series of transactions in which it acquired title to all of the Adjacent Properties from TomKat, except for the Families U.S.A. building, with respect to which AGM&M obtained TomKat's rights under the Installment Purchase and Sale Agreement. Stip. Facts ¶¶ 64-70.*fn26

The funds being held by the Assembly for AGM&M consisted largely of pledges and contributions memorialized in grant letters, some restricted for specific uses, which were kept in the Assembly's endowment account. 11/23 AM Tr. at 20. As of November 1, 2003, the estimated amount of funds being held in the Assembly's endowment for AGM&M was approximately $860,000. Id. at 21. Waters explained that it took several months of reconciling the books with the Assembly to determine which of these funds could be immediately spent on operations and which funds needed to be held for future use. Id. at 20-21. During this reconciliation process, the Assembly continued to fund operations for AGM&M, drawing down some of these funds. Id. at 21-23. Sometime in 2004, it was agreed that the Assembly was holding $565,000 for AGM&M and $411,000 for ANI in its endowment account. Id. However, the Assembly did not formally transfer these funds out of its endowment account into the control of AGM&M. Id. at 23.

Another issue that was unresolved during the initial transfer period was the reissuance and transfer of the promissory note. 11/22 PM Tr. at 133. There is no record that the promissory note was reissued or transferred to AGM&M, and Waters testified that to the best of his knowledge, the Assembly never reissued the note. See id. However, at some point, the parties operated under the assumption that the note was transferred. AGM&M's tax return for 2003 reflects a $500,000 interest-free loan from Cafesjian as an obligation of the corporation. See PX-380 at 3, 15. However, CFF's 2004 tax return shows that the obligation transferred from the Assembly to AGM&M at some point during 2004. See PX-360 at 25; 11/15 PM Tr. at 51-52. Based on the fact there is no evidence of any reissued note in the record, the Court finds that the Assembly did not reissue the promissory note as required by the Grant Agreement.

Throughout the trial there were questions about whether Cafesjian ever agreed to forgive the promissory note. Cafesjian and Waters both denied that the note was ever forgiven. See 11/18 PM Tr. at 45; 11/19 AM Tr. at 35-36; 11/22 PM Tr. at 134. Waters testified that there may have been discussions about using the note to offset a grant obligation, but no setoff was ever agreed upon. 11/22 PM Tr. at 134-35. The only evidence in the record suggesting that the note might have been forgiven was testimony from Hovnanian that Cafesjian and Waters told him at various Assembly meetings that the note had been forgiven. See 11/9 AM Tr. at 68; 11/10 AM Tr. at 65-66. However, Hovnanian was unable to remember any details about the circumstances under which these statements were allegedly made, and the Court does not find this testimony to be credible. Kaloosdian testified that he never heard Cafesjian say he would forgive the note but that he had heard Hovnanian say during discussions prior to November 1, 2003 that he expected Cafesjian to forgive the note. 11/12 AM Tr. at 122-25. Based on this record, the Court finds that Cafesjian never forgave the promissory note.

G. Cafesjian and Waters's Early Efforts to Manage AGM&M

Upon the creation of AGM&M in November 2003, the organization was largely run by John Waters as Secretary/Treasurer. Although Cafesjian was formally the Chairman and President of the new entity, he preferred not to be involved in the "nitty-gritty" details of management and delegated those tasks to Waters, his trusted confidant. See Cafesjian Dep. Tr. at 241-42.*fn27 Hovnanian, despite accepting the role of Vice Chairman, had said that he did not want to be closely involved in the decision-making process. See 11/9 AM Tr. at 69, 83, 88. And Anoush Mathevosian's involvement was seriously limited by health issues-between 2003 and 2005, she suffered a stroke, a heart attack, and a collapsed lung. Mathevosian Dep. Tr. at 69; 11/22 AM Tr. at 80. With no employees on staff or professionals hired to move the project forward, it fell to Waters to move the project forward. Waters enlisted Rouben Adalian to assist with museum preparation and made it clear to him that ANI would be servicing AGM&M until the museum opens. See DX-621N. Cafesjian bought Adalian a library of books for research purposes. 11/16 AM Tr. at 29. An email from Adalian to Kaloosdian in December 2003 described the transition in the following manner:

In any case what is shaping as AGMM is likely to be a highly decentralized process managed by the principal founder . . . . Right now the AGMM complex involves a series of properties, a development firm under contract in Washington steering the architect selection process [Concord Partners], probably a new museum design firm, an architectural consulting firm in New York, the Cafesjian Family Foundation out of Minnesota, and John is hiring staff and bringing in people as he goes, all of its [sic] under the CFF or the GLC umbrella. ANI is just one piece of this growing network that is working on AGMM, and an architect has not even been selected.

DX-621N. As the transition from the Assembly was completed, the administrative affairs of AGM&M were handled through Cafesjian's offices in Minnesota. 11/19 AM Tr. at 113. During the first several months of 2004, Waters was focused on the transition of assets from the Assembly to AGM&M. 11/23 AM Tr. at 63. In addition, he worked on collecting resumes and identifying candidates for the position of executive director. Id. at 63-64.

The AGM&M Board of Trustees held its first meeting on June 9, 2004, following a meeting of the Assembly Board of Trustees. See DX-102. There are no minutes of this meeting in the record, nor are there official minutes from any of the meetings held while Waters was Secretary/Treasurer. See 11/24 AM Tr. at 34-35.*fn28 As with the planning committee, the AGM&M Board of Trustees operated by consensus with few formal votes ever taken. Id. In fact, there is no firm record of any votes being taken during the time that Cafesjian and Waters were officers (through September 2006), although the AGM&M Board clearly did make some decisions by consensus. Waters testified that votes were taken on financial/budget issues during each meeting, see 11/23 PM Tr. at 46-47,but others testified that no votes were ever taken. 11/9 PM Tr. at 103; 11/16 AM Tr. at 66. The Court finds that even if no formal votes were taken, the Board of Trustees did authorize Waters to pay the operating expenses for AGM&M.

During the June 2004 meeting, the first item on the agenda was a review of the formation documents. See DX-102. There was a discussion about how the By-Laws might be amended, but otherwise no one raised any concerns about the documents. 11/23 AM Tr. at 8. There was also a discussion of the appointment of successor trustees. See DX-102 at 1. Following this meeting, Anoush Mathevosian designated Rouben Adalian as her successor. See DX-104. Waters also gave a status report as to the finances, during which he discussed the reconciliation with the Assembly over the amounts in the endowment account owed to AGM&M and ANI. 11/23 AM Tr. at 64. Next, there was a discussion about hiring an executive director. Waters had placed an advertisement and identified four candidates, each of whose resumes were presented to the AGM&M Board for review before the meeting. Id. at 65. One of these candidates was a woman named Deborah Devedjian. 11/15 AM Tr. at 132-33. The Board decided that Waters and Kaloosdian should contact each of these candidates for an interview. 11/23 AM Tr. at 65. However, after Kaloosdian and Waters discussed the issue, they decided they should not proceed with hiring an executive director because they did not have funds in the budget to do that. Id.*fn29

The last issue discussed at the June 2004 meeting was selection of an architect. The Board discussed how they should proceed with selecting an architect, whether they should continue the RFQ process or conduct a competition for architects. 11/23 AM Tr. at 63. However, no agreement was reached. The Board also heard a presentation from the architect Edgar Papazian.

1. Edgar Papazian

Edgar Papazian was selected by Cafesjian from among the architects who responded to the RFQ because Papazian's conceptual vision and preliminary sketches demonstrated a strong emotional attachment to the project. See Cafesjian Dep. Tr. at 232, 262. As a young, unproven architect, Papazian's initial proposal invoked the spirit of Maya Lin, the young architect whose controversial yet striking design for the Vietnam Veterans Memorial on the National Mall was an inspiration to Cafesjian. Papazian Dep. Tr. at 21-22; 11/18 PM Tr. at 56-57. Waters had flagged the proposal because it had more emotion than the other responses and was the only submission that actually included a discussion of the conception for the project along with some sketches. 11/23 AM Tr. at 58. Although the RFQ process had been formally halted, Cafesjian privately encouraged Papazian to develop his ideas further so that they could be more carefully considered by the AGM&M Board. Cafesjian and Waters met with Papazian in 2003 and discussed his ideas with another architect, David Hotson, who was also impressed with Papazian's designs. Papazian Dep. Tr. at 25; Cafesjian Dep. Tr. at 263; 11/19 AM Tr. at 13. Papazian later met with Rouben Adalian and toured the museum site. Papazian Dep. Tr. at 26.

In March 2004, Papazian wrote to Cafesjian renewing his interest in the project and describing a plan for further design work that could be performed if underwritten. See PX-218. Cafesjian agreed to support Papazian as he continued to work on the project, using his own funds. On April 19, 2004, Waters arranged for Papazian to meet with Concord Partners, David Hotson, Adalian, and a few other individuals to discuss specific details for the project such as zoning and historic preservation requirements and demolition/construction issues. See PX-226. Papazian's recollection of this meeting was that his proposal would not conflict with the zoning regulations governing the Bank Building and the Adjacent Properties (together, the "Properties"). Papazian Dep. Tr. at 30-33.

Papazian's grand vision for the project was to construct a "husk" within the new building, a void space that would represent the cultural annihilation of the Armenian Genocide and act as a memorial to the victims. Papazian Dep. Tr. at 23-24. Subsequent sketches showed the husk as the dominant architectural feature of the building, extending from the new construction on the Adjacent Properties over the Bank Building and clearly visible from the street. See PX-248 at 36-45. According to Cafesjian, Rouben Adalian loved the design and embraced its symbolism. 11/18 PM Tr. at 48.

Papazian gave a "very preliminary" presentation to the AGM&M Board of Trustees at its June 2004 meeting, consisting of a few sketches and basic themes. 11/15 PM Tr. at 21-22; Papazian Dep. Tr. at 34. The reaction to the presentation was mixed. Hovnanian did not like Papazian's design and was somewhat dismissive of the proposal. 11/19 AM Tr. at 13. Kaloosdian was impressed by Papazian's design but was skeptical that it would appeal to "Joe Six-Pack," the average man on the street. Papazian Dep. Tr. at 35; 11/19 AM Tr. at 13-14; 11/10 PM Tr. at 26-29. Cafesjian told the other trustees that Papazian could be hired cheaply and that Cafesjian had already spent about $5000 to support him. 11/10 PM Tr. at 25; 11/12 AM Tr. at 53.

Shortly after this meeting, Papazian emailed Waters with his reflections on the comments that the museum design should be accessible to the general public. See PX-235. "I think that above and beyond immersive Disney exhibits, this museum needs to be an emotive, powerful building, making a grave statement at an urban scale." Id. In the following months, Cafesjian supported Papazian's further development of his ideas. Cafesjian told Papazian not to be intimidated by the criticism and to defend his vision for the project. 11/19 AM Tr. at 15. In late 2004, Cafesjian sent Papazian to Armenia with David Hotson to become better acquainted with Armenian architecture and history. See Papazian Dep. Tr. at 37-38; PX-240. Cafesjian ultimately spent approximately $100,000 of his own funds to support Papazian's development of plans for the museum. 11/23 AM Tr. at 68-69.

After refining his designs to address some of the concerns raised at the July 2004 meeting, Papazian delivered a more extensive presentation at the second AGM&M Board of Trustees meeting, held on February 10, 2005. See PX-247. He came to the meeting with schematics of his updated design, and some of the materials had "Cafesjian Family Foundation" written in small print at the bottom because CFF had paid for his work. 11/19 AM Tr. at 15-16; 11/23 AM Tr. at 74-75; Papazian Dep. Tr. at 47. Hovnanian became extremely upset when he saw this, saying that if it was a Cafesjian project, then perhaps Cafesjian ought to pay for the entire thing. 11/19 AM Tr. at 16.*fn30 Cafesjian asked Hovnanian what design he preferred, but Hovnanian just repeated his persistent refrain: he did not want to be involved in the details. Id. at

17. Hovnanian was critical of Papazian's presentation and interrupted it several times. Papazian Dep. Tr. at 40-42.

After the meeting, Cafesjian asked Papazian to revise his designs to address Hovnanian's criticisms. Papazian Dep. Tr. at 43. Papazian complied, reigning in the more exuberant aspects of his design and creating a more restrained model in the hopes that it would be more palatable to the AGM&M Board. Id. at 43-44. It was Papazian's understanding that Cafesjian supported his vision for the museum but that they had to galvanize the support of the Board in order to make it a reality. Id. at 54. Papazian believed that he had been selected as the architect for the museum and that there would not be competition from anyone else. Id. at 54-55. Papazian created a spiral-bound booklet with his refined proposals, which was presented at the next AGM&M Board meeting in July 2005. See PX-248; 11/12 AM Tr. at 52-54. However, the Board did not agree to move forward with Papazian at this time. See DX-125. After this, Papazian began to work on other projects. See PX-254.

2. Deborah Devedjian

John Waters first met Deborah Devedjian at an Assembly outreach event in Philadelphia in 2002. 11/15 AM Tr. at 131. She attended the Assembly's 2002 gala in Philadelphia and was reintroduced to Hovnanian.*fn31 Id. at 131-32. Kaloosdian described Devedjian as "a very brilliant woman" who was articulate and had a background in business consulting. See 11/10 PM Tr. at 29-32. When Waters posted the advertisement to hire an executive director for AGM&M, he asked Devedjian if she was interested in submitting her resume. 11/15 AM Tr. at 132. After the AGM&M Board failed to move forward with hiring a candidate after the July 2004 meeting, Waters contacted Devedjian separately to see if she would be interested in presenting a business plan to the Board. Id. at 133. Waters then invited her to give a presentation at the February 2005 Board meeting. Id.

Devedjian made a good impression at the meeting, and the AGM&M Board agreed to hire her for a four-month trial period to prepare a preliminary business plan. 11/10 PM Tr. at 29-32; 11/16 AM Tr. at 81-82; 11/23 AM Tr. at 73-74; PX-340. Over the next four months, Devedjian conducted a series of focus groups and written surveys, interviewed over a hundred experts on various issues, and visited dozens of museums and galleries. See DX-115 at 3.

The product of Devedjian's diligence was a forty-four page business plan, which she presented to the AGM&M Board of Trustees at its third meeting on July 26, 2005. See DX-115. Devedjian believed the project should be marketed as "The Bank of Moral Courage & Armenian Memorial," tying the historic Bank Building to the overall theme of the museum as a tribute to the survivors of the first genocide of the twentieth century. See id. Devedjian believed that the museum should focus on educating the public about the horrors of genocide and incorporate information about contemporary atrocities such as the Rwandan genocide and ethnic cleansing in Bosnia. See id. at 14. Rather than make the Bank a "collections museum," Devedjian proposed an "experiential center." Id. at 15. The overall cost for the museum was estimated at $215 million, including a $50 million endowment. Id. at 29. Devedjian's plan called for a competition to be held among five internationally-renowned architects, with each architect offered $50,000 for submission of a proposal. Id. at 26-27.

The "Bank of Moral Courage" plan met with strong disapproval. Cafesjian thought the concept "was so much of a gimmick that [he was] ashamed to have any association with it." 11/19 AM Tr. at 123. The only part of the plan that appealed to the AGM&M Board was the educational component. 11/23 AM Tr. at 80-81. The trustees were particularly shocked at the $215 million cost estimate, which they thought was far too high. 11/10 PM Tr. at 34; 11/15 AM Tr. 134-35. After some discussion, Devedjian revised the budget and reduced it to $185 million, but that figure was still perceived as excessive by the Board. 11/10 PM Tr. at 34; 11/15 AM Tr. at 134-35. There was no vote taken on Devedjian's plan or continuing her engagement into a second phase. See 11/23 AM Tr. at 84.

According to Devedjian, she continued to work on the project for the next few months, developing a six-month work plan and traveling to Armenia to conduct research and interviews. See PX-342. It is unclear whether anyone at AGM&M authorized this work. Hovnanian testified that he and Cafesjian took Devedjian to Armenia to meet with Armenian architects, but it is unclear when this occurred. 11/9 AM Tr. at 87. Waters believed that the AGM&M Board had decided after the July 2005 meeting that Devedjian should not be kept on the project. 11/23 AM Tr. at 84. AGM&M paid Devedjian a $50,000 retainer and made two additional payments of $50,000 each for her services. See PX-340. Devedjian did not work under a written contract, and ultimately there was a dispute over how much money AGM&M had agreed to pay her.*fn32

Devedjian believed that she had been engaged at a rate of $50,000 per month for an initial four-month engagement and two months of follow-up work. See PX-342. Including expenses, Devedjian believed she was owed a total of $342,380.66. Id. Waters believed that AGM&M had agreed to pay Devedjian only $120,000 plus expenses for her initial four-month engagement and never authorized additional work. ...


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