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

February 20, 2013

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

In the mid to late 1990s, several individuals set about to construct a museum in Washington, D.C., dedicated to the Armenian Genocide.*fn1 Over a decade later, no such museum exists. The parties, through the three consolidated actions pending before the Court, have spent as much if not more time litigating who is to blame for the museum's failure as they spent attempting to make the museum a reality. Just shy of one year after the Court entered final judgment, Plaintiffs the Armenian Assembly of America, Inc. ("the Assembly") and the Armenian Genocide Museum & Memorial, Inc. ("AGM&M"), filed their second motion for a new trial. Pls.' Mot. for New Trial ("Pls.' Mot."), ECF No. [275].*fn2 In short, the Plaintiffs argue that Defendant John J. Waters, Jr., perjured himself during the bench trial by failing to disclose that Defendant Gerard Cafesjian agreed to pay Waters a significant "bonus" if Cafesjian was successful in this litigation and further agreed to reimburse Waters for expenses incurred in connection with the litigation. For the reasons stated below, the Court finds the Plaintiffs had a full and fair opportunity to present their case during the bench trial, therefore there no grounds on which to vacate the entry of final judgment.*fn3

Accordingly, the Plaintiffs' [275] Motion for New Trial is DENIED.

I. BACKGROUND

The Court set forth its findings of fact and conclusions of law resolving the parties' claims in its January 26, 2011, Memorandum Opinion. Armenian Assembly of Am., Inc. v. Cafesjian ("Armenian Assembly I"), 772 F. Supp. 2d 20 (D.D.C. 2011); see also Armenian Assembly of Am., Inc. v. Cafesjian ("Armenian Assembly II"), 772 F. Supp. 2d 29 (D.D.C. 2011). The Court incorporates the factual discussion set forth in that opinion by reference herein, and presumes familiarity with the background of this case as well as the Court's findings. The Court briefly sets forth the procedural history of the case following the January 2011 Memorandum Opinion, as well as the new factual allegations on which the Plaintiffs' present motion is based.

Following a bench trial, on January 26, 2011, the Court entered a Memorandum Opinion and Order resolving all of the parties' claims, save certain discrete remedial issues. See generally Armenian Assembly I; 1/26/11 Order, ECF No. [192]. After further briefing, on May 9, 2011, the Court resolved the outstanding remedial issues and the parties' post-trial motions, and referred Defendants Waters and Cafesjian's motion for attorney's fees to Magistrate Judge Alan Kay for resolution.*fn4 See generally Armenian Assembly II; 5/9/11 Order, ECF No. [240].

On April 30, 2012, the Plaintiffs filed their present motion. The basis for their motion is the pro se, unverified complaint filed by Defendant Waters against Defendant Cafesjian, G.L.C. Enterprises, and the Cafesjian Family Foundation in the United States District Court for the District of Minnesota on March 13, 2012. Pls.' Ex. A (Minn. Compl.); accord Waters v. The Cafesjian Family Found., Inc., No. 12-648 (D. Minn. filed Mar. 13, 2012). In relevant part, Waters alleges that Cafesjian owes Waters (1) approximately $4,305,000 is deferred base compensation, deferred incentive compensation, and accrued, unused vacation, holiday, and sick leave, Minn. Compl. ¶ 85; (2) approximately $400,000 to $800,000 as a "special bonus" for Waters' work in securing a positive outcome in connection with this litigation, id.; and (3) indemnification of costs and expenses related to this litigation, totaling approximately $511,000, id. at ¶ 98.

In response to Waters' Complaint, Cafesjian filed a counterclaim against Waters alleging, among other things, that Waters embezzled several million dollars from Cafesjian since 1998. See generally Waters v. The Cafesjian Family Found., Inc., No. 12-648, Answer & Counterclaim (D. Minn. filed April 9, 2012). Waters denied the allegations in the counterclaim, asserting that Cafesjian knew of and authorized the withdrawal of all funds at issue. See generally Waters v. The Cafesjian Family Found., Inc., No. 12-648, Answer to Counterclaim (D. Minn. filed Apr. 30, 2012).As of the date of this opinion, the parties to the Minnesota action were still engaged in discovery, and the court has yet to rule on Cafesjian's motion for summary judgment. See Waters v. The Cafesjian Family Found., Inc., No. 12-648, Defs.' Mot. for Summ. J. (D. Minn. filed Oct. 19, 2012).

II. LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 62.1(a), if a timely motion is made for relief before the District Court that the Court lacks authority to grant because of a pending (or docketed) appeal, the Court may "(1) defer considering the motion; (2) deny the motion; or (3) state either that it would grant the motion if the court of appeals remands for that purpose or that the motion raises a substantial issue." The Plaintiffs filed notices of appeal on May 25, 2011. Assembly's Notice of Appeal, ECF No. [244]; AGM&M's Notice of Appeal, ECF No. [245]. The parties' consolidated appeals have been held in abeyance pending the Court's resolution of this motion. 5/25/12 Order, ECF No. [282].

The Plaintiffs seek relief under Federal Rule of Civil Procedure 60(b), which provides that the Court "may relieve a party . . . from a final judgment, order, or proceeding" for one of six reasons. In their initial motion, the Plaintiffs argue that relief is warranted because of (a) surprise, Fed. R. Civ. P. 60(b)(1); (b) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b), Fed. R. Civ. P. 60(b)(2); (c) fraud, misrepresentation, or misconduct by an opposing party, Fed. R. Civ. P. 60(b)(3); and (d) any other reason that justifies relief, Fed. R. Civ. P. 60(b)(6). The Defendants argue that the Plaintiffs' motion, which seeks relief on the grounds of purported perjury by Waters, should be considered only under Rule 60(b)(3), which the Plaintiffs fail to dispute in their Reply. Therefore, the Court shall evaluate the Plaintiffs' motion only under the rubric of Rule 60(b)(3). See Hopkins v. Women's Div., Gen. Bd. of Global Ministries, 284 F. Supp. 2d 15, 25 (D.D.C. 2003).

Rule 60(b)(3) permits a court to relieve a party from a final judgment because of "fraud," "misrepresentation," or "other misconduct" of an adverse party. "[O]ther misconduct" includes an adverse party's failure to disclose or produce materials requested during discovery. Summers

v. Howard Univ., 374 F.3d 1188, 1993 (D.C. Cir. 2004). It is "well-settled" that a party seeking relief under Rule 60(b)(3) must prove any purported fraud or misconduct by "clear and convincing evidence." Shepherd v. Am. Broad. Co., 62 F.3d 1469, 1477 (D.C. Cir. 1995); accord Martin v. Howard Univ., 275 F. App'x 2, 5 (D.C. Cir. 2008). Additionally,

Misconduct alone, however, is not sufficient to justify the setting aside of a final judgment. Under Rule 60(b), a court must balance the interest in justice with the interest in protecting the finality of judgments. That balance is effectuated in part by the requirement that the victim of misconduct (or of fraud or misrepresentation) demonstrate actual prejudice. This is often worded as a requirement that the movant show that the misconduct foreclosed full and fair preparation or presentation of its case.

Summers, 374 F.3d at 1993 (citations omitted).*fn5

III. DISCUSSION

The Plaintiffs seek relief from the final judgment in this case on four grounds arising out of the allegations in the Minnesota Complaint: (1) alleged perjury by Waters at trial; (2) the Court's reliance on Waters' trial testimony as credible without knowledge of the purported compensation arrangement between Waters and Cafesjian; (3) the Defendants' breach of fiduciary duty to AGM&M based on the "special bonus" from Cafesjian; and (4) Defendant Cafesjian's destruction of documents in April 2009. As explained in detail below, none of these contentions support disturbing the finality of the judgment in this matter. The Plaintiffs fail to show by clear and convincing evidence that Waters committed perjury or otherwise committed fraud or misconduct by not disclosing the compensation purportedly owed and/or promised by Cafesjian. The Court did not rely on Waters' credibility in rejecting the Plaintiffs' claims at trial, meaning the Plaintiffs cannot show actual prejudice from any alleged perjury or other misconduct by Waters. The Plaintiffs fail to show by clear and convincing evidence that Cafesjian actually promised Waters the litigation bonus, and in any case the existence of the agreement would not alter the legal conclusion that the Defendants did not breach any duty by filing the initial suit in this litigation. Finally, the Plaintiffs fail to show by clear and convincing evidence that the Defendants destroyed documents relevant to this litigation or otherwise engaged in discovery misconduct sufficient to set aside the final judgment under Rule 60(b)(3).

A. Alleged Perjury by Defendant Waters

First, the Plaintiffs contend Waters committed perjury by failing to disclose the compensation at issue in the Minnesota Complaint when asked at trial. The initial issue with this contention is that no final judgment has been entered in the Minnesota case. The Plaintiffs' claim of perjury relies entirely on the allegations in Waters' unverified Complaint. The Cafesjian Defendants contend that the Minnesota Complaint is an attempt by Waters to establish a defense to the claims by the Cafesjian Defendants that Waters embezzled funds from Cafesjian, allegations that the Cafesjian Defendants indicate are currently under investigation by the FBI. Cafesjian Defs.' Opp'n at 16-17. The Plaintiffs argue in their Reply that Waters offered a plausible explanation for the conduct underlying the embezzlement allegation in his Answer to the Minnesota Defendants' counterclaim. Pls.' Mot. at 6-8. Regardless of what explanation of Waters' actions sounds more plausible, the Court has-with limited exceptions noted below- nothing more than the Minnesota parties' competing allegations from which to evaluate the Plaintiffs' allegations of fraud, misrepresentation, and misconduct. See Pls.' Reply at 6 ("It is clear that Cafesjian and Waters have markedly differing accounts of the financial dealings between them."). Faced with dueling pleadings from the Minnesota litigation, the Court cannot find by clear and convincing evidence that (1) Cafesjian in fact promised a litigation bonus to Waters or otherwise owes Waters compensation as set forth in the Minnesota Complaint; or (2) that Waters believed he was entitled to the relief sought, and thus should have disclosed it during the litigation in this case. For this reason alone, the Court will deny the Plaintiffs' motion. Nevertheless, the Court shall address each of the Plaintiffs' grounds for relief.

The Plaintiffs' motion does not identify any specific false statements made by Waters, choosing instead to generally assert that Waters testified at trial that "he was not being paid by Cafesjian to appear at trial or to participate in the litigation," while the Minnesota Complaint sets forth "another version" of Waters' compensation agreement with Cafesjian. Pls.' Mot. at 16, 17. The Court shall examine the relevant portions of Waters' trial testimony (as identified by the parties) compared to the relevant compensation claims in the Minnesota litigation. For context, the relevant portion of the Plaintiffs' cross-examination of Waters regarding his compensation is as follows:

Q: Now, are you being paid to be here today?

A: No.

Q: Have you been paid by Mr. Cafesjian since you departed his employ?

A: I guess --- yes, would be the short answer.

Q: How much have you been paid?

A: My compensation is generally in the form of reimbursement of minor expenses. Q: So whatever travel expense and accommodations?

A: Some.

Q: But not all?

A: No, most of them I pay on my own?

Q: And you receive no other compensation from him?

A: No. **** Q: And so that we're clear, you have an arrangement with Mr. Cafesjian, do you not, that he will indemnify you for any losses sustained as a result of this litigation, correct?

A: Not to the best of my knowledge.

Q: You don't have an indemnity agreement with Mr. Cafesjian?

A: No.

Q: And there's no promise from the Cafesjian interests that you will be indemnified for any damages that may be assessed against you in this case?

A: No.

Q: What about ...


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