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Osseiran v. International Finance Corp.

United States District Court, District Circuit

June 24, 2013

SALAH N. OSSEIRAN, Plaintiff,
v.
INTERNATIONAL FINANCE CORPORATION, Defendant.

MEMORANDUM OPINION

RICHARD W. ROBERTS, District Judge.

Plaintiff Salah Osseiran brought a claim for breach of a confidentiality agreement against the International Finance Corporation ("IFC"), alleging that IFC disclosed to an unauthorized party that Osseiran was negotiating to buy certain bank shares from IFC.[1] The parties presented evidence consisting of the live and deposition testimony of five witnesses along with exhibits during a bench trial conducted from May 1, 2013 to May 6, 2013. Osseiran proved that IFC breached the agreement, but did not show by a preponderance of the evidence that IFC's disclosure caused him damages. Therefore, judgment will be entered for Osseiran but he will be awarded only nominal damages in the amount of $1.

Having observed and listened to the witnesses and assessed their credibility, and having considered all the evidence and the parties' post-trial submissions, I make the following findings of fact and conclusions of law.

FINDINGS OF FACT

1. Salah Osseiran is an international entrepreneur based in Lebanon. Since 1988, he has specialized in acquiring distressed companies and turning them into profitable ones. Osseiran Test., 5/2 a.m. Tr. 47:16-21, 48:3-20; Def.'s Ex. 69, Stipulation No. 1.

2. The Middle East Capital Group ("MECG") is a banking and financial institution in Lebanon. It was founded in 1996. Osseiran has been a minority shareholder of MECG since its founding and later joined its board of directors. Osseiran Test., 5/2 a.m. Tr. 51:7-52:21.

3. IFC is an international organization and is the private sector arm of the World Bank. Def.'s Ex. 70, Stipulation No. 2.

4. As of 2005, IFC owned approximately 10.8% of the shares of MECG and Barclays Bank owned approximately 16% of the shares of MECG. Def.'s Ex. 71, Stipulation No. 3; see Pl.'s Ex. 22 at 438; Pl.'s Ex. 35 at 1884; see also Osseiran Test., 5/2 a.m. Tr. 56:8-12. Osseiran owned approximately 1.5% of the shares. Am. Compl. ΒΆ 16; see Pl.'s Ex. 22 at 438.

5. MECG as a business was consistently losing money through 2005. Many shareholders wanted to divest themselves of MECG shares. IFC and Barclays told shareholders on the MECG board that they wanted to sell their shares. Van Bilsen Test., 5/1 a.m. Tr. 92:6-11, 94:9-16, 95:1-6; Pl.'s Ex. 2 at 232-33 ("IFC is still seeking an exit from this investment, as its role is complete, and the financial prospect [sic] look poor."); Pl.'s Ex. 3 at 443 ("[IFC has] not made it a secret that IFC can sell at the right price, ... as [IFC's] role as a development bank is deemed to be over here."); Pl.'s Ex. 35 at 1885 ("IFC confirmed its intention to exit from its investment[.]"); Def.'s Ex. 64, Osseiran Dep. 8/20/09 at 117:12-18 (5/6 a.m Tr. 4:2)[2]; see Khambata Test., 5/1 a.m. Tr. 36:7-12.

6. Finding buyers had been difficult. IFC had received inquiries in the past from prospective buyers, but none had turned out to be serious. Van Bilsen Test., 5/1 a.m. Tr. 95:12-23; Pl.'s Ex. 35 at 1886; see Pl.'s Ex. 134, van Bilsen Dep. 9/2/09 at 105:18-106:11 (5/3 a.m. Tr. 57:5-17); Osseiran Test., 5/2 a.m. Tr. 58:1-9.

7. Osseiran wanted to gain control of MECG, become the sole shareholder, stop the losses, turn MECG around, make it profitable, and ultimately sell his shares at a nice profit. Osseiran Test., 5/2 a.m. Tr. 55:8-57:14; see Pl.'s Ex. 134, van Bilsen Dep. 9/2/09 at 21:10-22:12 (5/3 a.m. Tr. 36:3-24).

8. In September 2005, Osseiran called Jan van Bilsen, the IFC portfolio manager for the Middle East stationed in Dubai. Osseiran said that he wanted to buy the MECG shares that IFC and Barclays owned. Van Bilsen Test., 5/1 a.m. Tr. 95:24-96:9; Pl.'s Ex. 134, van Bilsen Dep. 9/2/09 at 21:10-14 (5/3 a.m. Tr. 36:3-6); Osseiran Test., 5/2 a.m. Tr. 57:15-25.

9. Van Bilsen asked Osseiran questions about Osseiran's intentions for buying IFC's and Barclays' MECG shares. Van Bilsen wanted to gauge whether Osseiran's interest in a potential sale was serious or was fake as earlier inquiries from others had been. Van Bilsen Test., 5/1 a.m. Tr. 96:10-24; Osseiran Test., 5/2 a.m. Tr. 58:1-9; van Bilsen Test., 5/3 a.m. Tr. 123:8-23.

10. Osseiran said he wanted to change the direction of MECG. Osseiran insisted that he and the negotiators for IFC and Barclays keep confidential the negotiations over his purchase until the sale closed. Osseiran Test., 5/2 a.m. Tr. 60:1-11, 68:15-25; Def.'s Ex. 64, Osseiran Dep. 8/20/09 at 122:13-21 (5/6 a.m Tr. 4:2). He also insisted that the negotiations not be disclosed to IFC's representative on the MECG board of directors, Daoud Khairallah. See van Bilsen Test., 5/1 a.m. Tr. 104:15-105:3; Osseiran Test., 5/2 a.m. Tr. 59:22-60:7, 71:7-12; see also van Bilsen Test., 5/1 a.m. Tr. 101:4-104:10; Pl.'s Ex. 5 ("The reason why I have not cc-ed all is because Osseiran has stressed confidentiality to me even within our organisations."); Pl.'s Ex. 11 at 1586 (Osseiran's "written and serious offer" was conditional to "IFC maintaining confidentiality - even vis-a-vis Daoud" and "[i]n line with the confidentiality, we had initially not advised Daoud on our negotiations with Osseiran[.]").

11. Van Bilsen responded that he agreed to Osseiran's confidentiality request. Van Bilsen Test., 5/1 a.m. Tr. 97:8-98:23, 103:17-104:3 ("So, to answer your question, it came up, he asked me to keep it confidential, so I said yes."); Pl.'s Ex. 134, van Bilsen Dep. 9/2/09 at 23:21-26:6 (5/3 a.m. Tr. 38:5-39:19) ("Q. Did you understand that you had a, an agreement with Mr. Osseiran to keep the negotiations confidential? A. Yes, but as I said, in the context that we... always keep business confidential."); Osseiran Test., 5/2 a.m. Tr. 58:10-59:7; Def.'s Ex. 64, Osseiran Dep. 8/20/09 at 122:22-123:5 (5/6 a.m Tr. 4:2); see Pl.'s Ex. 134, van Bilsen Dep. 9/2/09 at 154:10-17 (5/3 a.m. Tr. 68:13-17); Pl.'s Ex. 5.[3]

12. After the phone call, van Bilsen sent an e-mail to Walid Cherif, an IFC colleague, relating the conversation, stating that "Osseiran stressed confidentiality and I told him we will treat it accordingly" and reiterating to Cherif to "[k]eep it ...


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