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

September 12, 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: United States District Judge Colleen Kollar-kotelly

MEMORANDUM OPINION

The above-captioned consolidated actions involve a series of claims and counterclaims relating to the parties' attempts to create a museum and memorial in Washington, D.C. devoted to the Armenian Genocide.*fn1 Following a twelve-day bench trial in November 2010, the Court issued a Memorandum Opinion setting forth its findings of fact and conclusions of law on January 26, 2011. See [193]*fn2 Mem. Op. (Jan. 26, 2011). The Court found that none of the parties' substantive claims were meritorious and dismissed all of the claims save one, holding that Defendants Gerard L. Cafesjian ("Cafesjian") and John J. Waters ("Waters") were entitled to indemnification from the Armenian Genocide Museum and Memorial, Inc. ("AGM&M") for legal expenses incurred in defending claims asserted against them in their capacities as former officers of AGM&M. The Court also upheld the validity of a reversion clause in a Grant

Agreement executed between Defendants Cafesjian and the Cafesjian Family Foundation, Inc. ("CFF") and Plaintiff Armenian Assembly of America, Inc. (the "Assembly"), ruling that CFF and Cafesjian may exercise their rights under that clause effective December 31, 2010. On May 9, 2011, the Court held that the Grant Agreement did not impose any obligation on CFF to reimburse AGM&M for the excess value of the properties over the amount of funds originally donated to acquire them. See [241] Mem. Op. (May 9, 2011). The Court entered final judgment pursuant to Federal Rule of Civil Procedure 54(b) on all of the parties' claims and counterclaims except for Defendants' counterclaim for indemnification of attorneys' fees and costs, which the Court referred to a magistrate judge for a report and recommendation.*fn3 The Court also held in abeyance Defendants' motion for attorneys' fees based on Plaintiffs' untimely production of documents on the eve of trial.

Presently pending before the Court is Defendants' [250] Motion to Enforce Judgment and for Amended Findings and Judgment. Defendants ask the Court to amend its findings or alter its judgment to clarify that the leasehold interest given to the Assembly by AGM&M is extinguished by virtue of CFF's exercise of its reversion rights under the Grant Agreement. For the reasons explained below, the Court declines to amend its findings or enforce the judgment as requested by Defendants. The Court also shall deny Defendants' motion for attorneys' fees based on Plaintiffs' late production of documents before trial.

I. BACKGROUND

A. Factual and Procedural Background

The Court set out its factual findings thoroughly in its prior memorandum opinions issued on January 26 and May 9, 2011, which have been published at 772 F. Supp. 2d 20 and 772 F. Supp. 2d 129, respectively. Relatively few facts from those opinions are relevant to Defendants' Motion to Enforce Judgment and for Amended Findings and Judgment, and they are summarized below.

In the late 1990s, Cafesjian and several individuals involved with the Assembly joined forces in an effort to create a museum devoted to memorializing the Armenian Genocide. In 2000, the Assembly purchased a prominent building in downtown Washington, D.C. (the "Bank Building") for the purpose of housing the genocide museum. This Bank Building was purchased using money donated by Cafesjian (through CFF and another organization affiliated with Cafesjian) and another philanthropist, Anoush Mathevosian. Once the Bank Building was acquired by the Assembly, 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"). The first three of the Adjacent Properties were acquired by TomKat in 2000. The final adjacent property, 1334-46 G Street, NW, also known as the "Families U.S.A." building, was acquired by TomKat from a third-party seller in a purchase agreement on September 22, 2003. Several of the Adjacent Properties were taken subject to leases.

Cafesjian ultimately decided to donate the Adjacent Properties to the Assembly for purposes of expanding the footprint of the genocide museum project. Cafesjian and the others involved with the museum project agreed that a new entity, the Armenian Genocide Museum and Memorial, Inc. ("AGM&M"), should be created to develop and manage the museum. 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. The Articles of Incorporation and the By-Laws for AGM&M were ratified and adopted, respectively, pursuant to a Unanimous Written Consent agreement that was executed on October 30, 2003. Cafesjian agreed to channel his donations to AGM&M through the Assembly, so it was decided that Cafesjian would enter into a grant agreement with the Assembly (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 Grant Agreement and Transfer Agreement were signed on November 1, 2003 during an Assembly gala in Palm Desert, California.

The Grant Agreement is an eleven-page document that set forth the terms and conditions of the grants made by Cafesjian and CFF to the Assembly for the museum project and obligated the Assembly to comply with those terms and conditions. Pursuant to the Grant Agreement, Cafesjian and 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.*fn4 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.

For purposes of this litigation, the most critical feature of the Grant Agreement is the "reversion clause." Under § 3.1(A) 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,*fn5

subject to plans for the AGM&M approved by the Board of Trustees of the American Genocide Museum & Memorial, Inc. (the 'Plans') . . . ." The next paragraph, § 3.1(B), 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, ...


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