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Embassy of Federal Republic of Nigeria v. Ugwuonye

United States District Court, District Circuit

May 22, 2013

EMBASSY OF THE FEDERAL REPUBLIC OF NIGERIA, Plaintiff,
v.
EPHRAIM EMEKA UGWUONYE, et al., Defendants.

MEMORANDUM OPINION ENTERING DEFAULT JUDGMENT AGAINST ECU ASSOCIATES, P.C.

BARBARA J. ROTHSTEIN, United States District Judge

This matter is before the Court on a motion for default judgment brought by Plaintiff, the Embassy of the Federal Republic of Nigeria (hereinafter “the Embassy”). See Mot. for Default Judgment as to ECU Associates, P.C. (Dkt. #129). On April 23, 2013, this Court granted a motion for an entry of default against Defendant ECU Associates, P.C. (hereinafter “ECU Associates”) for failure to defend in this action. See Order Granting Cross-Mot. for Entry of Default (Dkt. #125).[1] The Embassy has now filed its motion for default judgment setting forth its requested damages. Having reviewed the documents filed in support of the Embassy’s motion, the Court GRANTS it in part and DENIES it in part, and enters default judgment against ECU Associates.

I. BACKGROUND

This lawsuit concerns claims by the Embassy against ECU Associates for breach of contract, breach of the implied covenant of good faith, breach of fiduciary duty, conversion, and unjust enrichment.[2] Am. Compl. (Dkt. #33) ¶¶ 52-110. ECU Associates, a Maryland professional corporation, along Defendant Ugwuonye, [3] acted as legal counsel for the Embassy in several real estate transactions, including the sale of a property belonging to the Embassy that was located at 2201 M Street N.W. in Washington, DC (hereinafter “the property”). Am. Compl. (Dkt. #33) ¶¶ 6, 12; Answer (Dkt. #44) ¶¶ 6, 12. The Embassy agreed to pay ECU Associates and Defendant Ugwuonye the equivalent of 3.5% of the sale price of the property as complete payment for their legal services in connection with the sale of the property. Am. Compl. ¶ 13; Answer ¶ 13. ECU Associates admitted that the Embassy paid it in full for those services. Answer ¶ 15.

When ECU Associates failed to file the necessary paperwork exempting a foreign sovereign from property taxes, the Internal Revenue Service (“IRS”) withheld property taxes in the amount of $1.55 million upon the sale of the property. Am. Compl. ¶ 17. The Embassy retained ECU Associates and Defendant Ugwuonye to file the necessary paperwork with the IRS and obtain a refund of the $1.55 million tax lien, and to deliver the tax refund to the Embassy. Am. Compl. ¶ 18; Answer ¶ 18. In November 2007, Defendant Ugwuonye received the $1.55 million refund from the IRS, and deposited the funds into an account in the name of ECU Associates. Am. Compl. ¶ 19; Answer ¶ 19.

The Embassy claims that, in December 2007, Ugwuonye withdrew $550, 000 in funds without explanation. Id. ¶ 19. The Embassy further asserts that Ugwuonye has continued to withdraw funds from the accounts periodically, and that, as of May 2008, the account balance was $195.65. Id. ¶¶ 22-23. ECU Associates has not returned the Embassy’s $1.55 million tax refund. Am. Compl. ¶ 40; Answer ¶ 40.

On November 9, 2010, the Embassy filed its Complaint in this action. See Dkt. #1. The Complaint was served upon Defendant Ugwuonye in his personal capacity (Dkt. #2) and as a “partner” [sic] in ECU Associates, P.C. (Dkt. #5). On January 6, 2011, Donald M. Temple filed a Notice of Appearance (Dkt. #12) on behalf of “Emeka Ephraim Ugwuonye, et al.” The following day, Attorney Temple filed an Errata (Dkt. #14) clarifying that he was representing Ugwuonye, “ECU Law Group, and ECU Associates, P.C.”[4] On January 31, 2011, Defendants Ugwuonye, ECU Associates, and ECU Law Group filed a motion to dismiss (Dkt. #18). Judge Henry Kennedy, who presided over this case originally, denied that motion as moot on July 15, 2011, in light of the Amended Complaint filed by the Embassy. Minute Order of Jul. 15, 2011. On August 29, 2011, Defendants filed a motion for leave to file an Answer and Counterclaim out of time (Dkt. #40) in response to the Embassy’s Amended Complaint; that motion was granted on October 6, 2011. Minute Order of Oct. 6, 2011. The Answer and Counterclaim were filed on that date and designated as being “By Defendants Ephraim Emeka Ugwuonye and ECU Associates, P.C.” Answer at 1.

On October 8, 2011, Donald M. Temple filed a motion to withdraw as attorney, which was granted by this Court on April 19, 2012. See Consent Motion to Withdraw as Attorney (Dkt. #45); Minute Order of Apr. 19, 2012.[5] Since that time, Defendant Ugwuonye has appeared pro se. ECU Associates, P.C. has not filed any documents since the Answer and Counterclaim filed on October 6, 2011.

On June 25, 2012, counsel for the Plaintiff, counsel for Defendant Bruce Fein, and Defendant Ugwuonye (pro se) appeared before this Court for a Status Hearing. See Tr. 2:7-12 (Dkt. #94). Defendant Ugwuonye stated that he was appearing “for the ECU entities as well, ” but indicated that his law firm, ECU Associates, had closed. Tr. 2:12-24. The Court granted Defendant Ugwuonye leave to file a motion to dismiss ECU Associates and ECU Law Group, and permitted the Embassy to file a cross-motion for default judgment in response. See Order of June 26, 2012 (Dkt. #70).

In his motion to dismiss, Ugwuonye argued that ECU Associates, P.C. lacked the capacity to sue or be sued, because the corporation had forfeited its charter. See Defendants’ Mot. to Dismiss or in the Alternative, Mot. for Summary Judgment (Dkt. #76) at 1. The Embassy argued that ECU Associates was in default for failing to appear or otherwise defend itself. See Plaintiff’s Cross-Mot. for Default Judgment (Dkt. #77) at 3-4. This Court held that, under Maryland law, a corporation can be sued in its own name even after the charter was forfeited when “necessary and proper to liquidate the corporation and wind up its affairs.” Mem. Op. of Nov. 2, 2012 at 6 (quoting Md. Code Ann., Corps. & Ass’ns § 3-515(c)(3)-(4)). The Court also informed Defendants that, while Defendant Ugwuonye can appear pro se in his personal capacity, he cannot do so as the director-trustee of ECU Associates. Id. at 7. Therefore, the Court deferred ruling on the Embassy’s motion for default against ECU Associates to provide Ugwuonye, as director-trustee, the opportunity to seek out counsel for ECU Associates. Id. at 12.

Defendant Ugwuonye entered an appearance as counsel for ECU Associates on December 10, 2012. See Notice of Appearance (Dkt. #108). The Embassy filed a motion to disqualify Ugwuonye as counsel for ECU Associates on January 9, 2013. See Plaintiff’s Mot. to Disqualify Defendant Ugwuonye as Counsel for Defendant ECU Associates, P.C. (Dkt. #110). The Court granted leave to Ugwuonye to file an opposition to the motion out-of-time. See Minute Order of Feb. 13, 2013. Nonetheless, Ugwuonye failed to file an opposition, and the Court granted the Embassy’s motion, noting that it raised very strong arguments as to whether Ugwuonye was qualified to represent ECU Associates under the District of Columbia Rules of Professional Responsibility. Order Granting Motion to Disqualify Counsel (Dkt. #115) at 1-2.

The Court ordered Ugwuonye to retain counsel for ECU Associates within two weeks, or the Court would enter default against it. Id. at 2. No counsel appeared for ECU Associates, and on April 23, 2013, this Court granted the Embassy’s motion for default against ECU Associates. See Order Granting Cross-Mot. for Entry of Default at 4. As the original motion for default judgment did not include sufficient supporting documentation for the Court to calculate appropriate damages, the Court ordered the Embassy to file a renewed motion for default judgment. Id. On May 7, 2013, the Embassy filed its motion. See Mot. for Default Judgment as to ECU Associates, P.C. No opposition to the motion has been filed, despite the Embassy serving the motion on both ECU Associates, P.C. and Defendant Ugwuonye. See id., Certificate of Service (Dkt. #129-3).

II. LEGAL STANDARD

Obtaining a default judgment under Federal Rule of Civil Procedure 55 is a two-step process. First, a plaintiff must request that the Clerk of the Court enter a default against the party who has “failed to plead or otherwise defend” against an action. Fed.R.Civ.P. 55(a). Once default has ...


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