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Bazarian International Financial Associates, LLC v. Desarrolloa Aerohotelco, C.A.

United States District Court, District of Columbia

February 7, 2016

BAZARIAN INTERNATIONAL FINANCIAL ASSOCIATES, L.L.C., Plaintiff,
v.
DESARROLLOS AEROHOTELCO, C.A., WALTER LUCIANO STIPA, an individual, DESARROLLOS NEWCO 22, C.A., DESARROLLOS HOTELCO CORPORATION CURACAO HOLDING, N.V., DESARROLLOS HOTELCO CORPORATION ARUBA HOLDING, N.V., DESARROLLOS HOTELCO CORPORATION DHC ARUBA, N.V. AND DESARROLLOS HOTELCO CORPORATION ARUBA HOLDING CARACAS, S.A., Defendants.

MEMORANDUM OPINION

BERYL A. HOWELL United States District Judge.

The plaintiff, Bazarian International Financial Associates, LLC (“plaintiff” or “BI”), filed this lawsuit against six foreign affiliated corporate defendants and Walter Stipa Sprecase, a Venezuelan citizen associated with all of the defendant companies. First Amended Complaint (“FAC”) ¶¶ 3-9, ECF No. 13.[1] The plaintiff asserts two claims for breach of contract and quantum meruit stemming from the defendants’ alleged breach of an Investment Banking Agreement between the plaintiff and Aerohotelco, pursuant to which the plaintiff assisted Aerohotelco with the leasing of a tract of land and the financing for the development of a luxury hotel in Aruba. Id. ¶ 13. The plaintiff alleges that the defendants have failed to pay the plaintiff monies owed for its services under the Investment Banking Agreement. Id. ¶ 52. Pending before the Court is the defendants’ Motion to Dismiss Plaintiff’s First Amended Complaint for lack of personal jurisdiction, improper service and failure to state a claim, under Federal Rules of Civil Procedure 12(b)(2), (5), and (6). See Defs.’ Mot. Dismiss (“Defs.’ Mot.”), ECF No. 25. For the reasons set forth below, the defendants’ motion is granted in part and denied in part.

I. BACKGROUND

The factual allegations underlying this dispute have been generally summarized in this Court’s Memorandum Opinion dismissing the plaintiff’s prior lawsuit against Aerohotelco for a declaratory judgment that the plaintiff has the “right to certain investment banking fees under the parties’ contract.” Bazarian Int’l. Fin. Assocs., L.L.C. v. Desarrollos Aerohotelco, C.A., 793 F.Supp.2d 124, 125-27 (D.C. 2011) (BAH). The facts pertinent to resolving the instant motion are briefly summarized below.

A. Investment Banking Agreement

On February 5, 2007, Aerohotelco and the plaintiff executed an Investment Banking Agreement, pursuant to which the plaintiff agreed to assist Aerohotelco “with bidding for an option from the Government of Aruba to lease land in Palm Beach, Aruba (“the Palm Beach Option”), for the purpose of establishing and developing a luxury hotel resort (“the Project”).” FAC ¶ 13. The plaintiff also agreed to “act as Aerohotelco’s exclusive advisor and investment banker . . . to raise financing for the Project.” Id. ¶ 14. The Agreement provided for payment to the plaintiff of a “Debt Fee” “‘if the financing for the Project is concluded within thirty-six (36) months following the termination of this Agreement from sources introduced to the Project by [the plaintiff].’” Id. ¶ 16 (quoting FAC, Ex. A (“Investment Banking Agreement”) ¶ 3, ECF No. 13-1) (alteration in the original). The Agreement specified, in a forum selection clause, that “District of Columbia courts will have jurisdiction over the Parties to adjudicate any and all rights of the Parties under this Agreement.” Investment Banking Agreement ¶ 5.

Shortly after consummation of the Investment Banking Agreement, the plaintiff introduced the then-owner and president of Aerohotelco, defendant Stipa, to AIB Bank “to discuss financing for the Project.” FAC ¶¶ 18-19. The meetings culminated, on March 26, 2007, with AIB Bank sending to Aerohotelco and the plaintiff an “Indicative Term Sheet, ” id. ¶ 21, which “provides an indication of the basic terms and conditions based on which the bank is prepared to entertain a financing proposal, ” id., Ex. B (“Indicative Term Sheet”) at 4, ECF No. 13-2. AIB Bank expressly stated that while Aerohotelco “may use [the Indicative Term Sheet] as part of [its] proposal to the Government of Aruba” for the Palm Beach Option, it “does not constitute any legally binding or enforceable obligation on the part of the bank to provide any financing.” Id. With the AIB Bank’s Indicative Term Sheet in hand, Aerohotelco thereafter won the Palm Beach Option to develop the Project in or around June 2008. FAC ¶ 24. The plaintiff alleges, however, that even though Aerohotelco won the option to lease the land, a related defendant company, DHC, actually leased the land from the Aruban government. Id.

In June 2009, twenty-eight months after the execution of the Investment Banking Agreement, Aerohotelco notified the plaintiff that “it would not pay the Debt Fee for financing coming from AIB Bank” because “[the plaintiff] had no role in facilitating its relationship with AIB Bank[.]” Id. ¶ 28.

B. Prior Lawsuit

On September 17, 2009, the plaintiff brought an action in this Court against Aerohotelco seeking a declaratory judgment that the plaintiff was entitled to the Debt Fee “upon the settlement of binding loan or guarantee commitments for the Project from AIB Bank.” Bazarian, 793 F.Supp.2d at 127; FAC ¶ 29. The anticipated financing agreement (“Facility Agreement”) between AIB Bank and “Aerohotelco or one of the other corporate Defendants controlled by Stipa” was entered on October 26, 2009, FAC ¶ 30, but, at the time of the prior action, the terms remained “‘subject to [] numerous contingencies and conditions, ’” and “‘there ha[d] not been any draws made by the borrowers pending a final closing, ’” Bazarian, 793 F.Supp.2d at 130 (quoting Decl. of Pedro Vera ¶¶ 8-10). On June 22, 2011, the action was dismissed due to lack of subject matter jurisdiction because the settlement of a binding loan commitment was not yet likely and, consequently, “the facts . . . do not present an actual controversy within the meaning of the Declaratory Judgment Act and Article III of the U.S. Constitution.” Id. at 131.

C. Efforts to Serve Instant Lawsuit

On December 16, 2013, the plaintiff refiled the instant lawsuit against Aerohotelco, see generally Compl., ECF No. 1, but because the plaintiff experienced difficulty serving Aerohotelco in Venezuela, the complaint was never served, see generally Pl.’s Mot. Leave to Effect Alternative Service (“Pl.’s Mot. Alt. Service”) at 4-6, ECF No. 16; Response to Order to Show Cause at 2-3, ECF No. 10; Status Report, ECF No. 11; Second Status Report, ECF No. 12. Over a year later, on February 10, 2015, still unable to serve the original complaint, the plaintiff filed the First Amended Complaint, the operative complaint for this motion, adding six additional defendants: Stipa, Newco, Curacao Holding, Aruba Holding, DHC (collectively the “Project Developers”), and Caracas Holding, a Venezuelan “holding company that holds some or all of the equity interest in DHC.” FAC ¶¶ 3-9. The plaintiff alleges that according to representations made in a Share Sale Agreement and Shareholders Agreement (“Share Sale Agreement”) with another Venezuelan citizen, Newco, Curacao Holding, Aruba Holding, DHC, and Stipa became developers of the Project, id. ¶ 34, which was completed in November, 2013, id. ¶ 41. Additionally, the plaintiff alleges that circumstances have now changed. Specifically, “[u]pon information and belief, since January 26, 2011, Aerohotelco and/or Stipa, Newco, [Curacao Holding], Aruba Holding, DHC, and/or Caracas Holding . . . have drawn funds from AIB Bank to develop the Project.” Id. ¶ 33

On April 21, 2015, the plaintiff moved for leave to effect alternative service on the defendants pursuant to Fed.R.Civ.P. 4(f)(3) and 4(h)(2). Pl.’s Mot. Alt. Service at 1. As support, the plaintiff alleged that “[it] has thus far been stymied in its efforts” to serve the original complaint on Aerohotelco in Venezuela in accordance with the procedures set forth in the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents (the “Hague Convention”). Id. The plaintiff explained that, as required by the Hague Convention, a copy of the original complaint and summons translated into Spanish was “provided [] to the State Department’s contracted international process server, Process Forwarding International, for forwarding to the Venezuelan Central Authority, ” but no response had been received for eight months. Id. at 4. The United States Embassy in Venezuela had advised the plaintiff that it was unable to obtain any additional information regarding the status of the Venezuelan Central Authority’s efforts to serve Aerohotelco. Id.

The plaintiff, in attempting to serve the First Amended Complaint on the defendants, alleged that “despite extensive efforts involving searches of international business databases and inquiries of the Aruban government, counsel for [the plaintiff] has been unable to identify addresses . . . for Stipa, Newco, or Caracas Holding in either Venezuela or Aruba, or to confirm addresses for the remaining defendants.” Id. at 6.[2] Faced with these difficulties, the plaintiff moved for leave to serve the defendants by registered mail and e-mail to the defendants’ U.S. counsel, who was located in Florida, and was “currently representing them in the Receiver Case in Connecticut, and thus are presumably in regular contact with Defendants.”[3] Id. at 9-10. This same U.S. Counsel had represented Aerohotelco in the first lawsuit brought by the plaintiff in 2009. Id. at 4.

On April 21, 2015, the plaintiff’s Motion for Leave to Effect Alternative Service on the Defendants was granted, in light of the “unsuccessful attempts already made to serve the defendants” and “the fact that service on a party’s attorney is ‘not prohibited by international agreement.’” Minute Order Granting the Plaintiff’s Motion for Leave to Effect Alternative Service on Defendants, dated Apr. 21, 2015 (citing Fed.R.Civ.P. 4(f)(3); Freedom Watch, Inc. v. OPEC, 766 F.3d 74, 83 (D.C. Cir. 2014) and Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1016 (9th Cir. 2002)). The defendants’ motion to dismiss the plaintiff’s First Amended Complaint is now ripe for resolution.

II. LEGAL STANDARDS

A. Federal Rule of Civil Procedure 12(b)(2)

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of “establishing a factual basis for the [Court’s] exercise of personal jurisdiction over the defendant.” Crane v. N.Y. Zoological Soc’y, 894 F.2d 454, 456 (D.C. Cir. 1990) (citing Reuber v. United States, 750 F.2d 1039, 1052 (D.C. Cir. 1984), overruled on other grounds by Kauffman v. Anglo-Am. Sch. of Sofia, 28 F.3d 1223, 1226 (D.C. Cir. 1994)); Williams v. Romarm, S.A., 756 F.3d 777, 785 (D.C. Cir. 2014). The plaintiff need only make a prima facie showing that the court has personal jurisdiction. Mwani v. bin Laden, 417 F.3d 1, 6 (D.C. Cir. 2005) (“a court ordinarily demands only a prima facie showing of jurisdiction by the plaintiffs”); 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1351 (3d ed. 2014). Similar to a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, “the uncontroverted allegations of the complaint must be taken as true, and the court will draw all reasonable inferences in plaintiff’s favor.” William W. Schwarzer et al., Federal Civil Procedure Before Trial § 3:412 (2013); see Walden v. Fiore, 134 S.Ct. 1115, 1119 n.2 (2014) (accepting jurisdictional allegations in complaint as true at motion to dismiss stage). At the same time, however, a plaintiff must provide sufficient factual allegations, apart from mere conclusory assertions, to support the exercise of personal jurisdiction over the defendant. See Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001) (noting the “general rule that a plaintiff must make a prima facie showing of the pertinent jurisdictional facts” (internal quotation marks and alterations omitted)); First Chi. Int’l v. United Exch. Co., 836 F.2d 1375, 1378 (D.C. Cir. 1988) (“Conclusory statements . . . do not constitute the prima facie showing necessary to carry the burden of establishing personal jurisdiction.” (internal quotation marks and citation omitted)); Naartex Consulting Corp. v. Watt, 722 F.2d 779, 787 (D.C. Cir. 1983) (same); Atlantigas Corp. v. Nisource, Inc., 290 F.Supp.2d 34, 42 (D.D.C. 2003) (stating plaintiff “cannot rely on conclusory allegations” to establish personal jurisdiction).

Unlike a motion to dismiss under Rule 12(b)(6), the court “may consider materials outside the pleadings in deciding whether to grant a motion to dismiss for lack of jurisdiction.” Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005); see also Mwani, 417 F.3d at 7 (holding that plaintiffs “may rest their [jurisdictional] argument on their pleadings, bolstered by such affidavits and other written materials as they can otherwise obtain”). Any “factual discrepancies appearing in the record must be resolved in favor of the plaintiff, ” however. Crane, 894 F.2d at 456 (citing Reuber, 750 F.2d at 1052).

B. Federal Rule of Civil Procedure 12(b)(6)

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the “complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Wood v. Moss, 134 S.Ct. 2056, 2067 (2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A claim is facially plausible when the plaintiff pleads factual content that is more than “‘merely consistent with’ a defendant’s liability, ” but “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007)); see also Rudder v. Williams, 666 F.3d 790, 794 (D.C. Cir. 2012). Although “detailed factual allegations” are not required to withstand a Rule 12(b)(6) motion, a complaint must offer “more than labels and conclusions” or “formulaic recitation of the elements of a cause of action” to provide “grounds” of “‘entitle[ment] to relief, ’” Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)) (alteration in original), and “nudge[ ] [the] claims across the line from conceivable to plausible, ” id. at 570. Thus, “a complaint [does not] suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557) (second alteration in the original). In considering a motion to dismiss for failure to plead a claim on which relief can be granted, the court must consider the complaint in its entirety, accepting all factual allegations in the complaint as true, even if doubtful in fact. Twombly at 555; Harris v. D.C. Water and Sewer Auth., 791 F.3d 65, 68 (D.C. Cir. 2015) (in considering Rule 12(b)(6) motion, the “court must accept as true all of the allegations contained in a complaint” and “to draw the reasonable inference” therefrom “that the defendant is liable for the misconduct alleged, ” but that tenet “is inapplicable to legal conclusions, ” and “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice” (internal quotations and citations omitted)).

III. DISCUSSION

Defendants Aerohotelco and the Project Developers[4] moved to dismiss the plaintiff’s First Amended Complaint, contending that (1) personal jurisdiction over the Project Developers is lacking because they were not parties to the Investment Banking Agreement providing, in a forum selection clause, that proper venue is in District of Columbia; (2) the defendants were not properly served under Federal Rule of Civil Procedure 4(f)(3); and (3) the plaintiff fails to state a claim as to all defendants. Each of these arguments will be reviewed seriatim below.

A. Personal Jurisdiction

The plaintiff contends that personal jurisdiction may be exercised over all of the defendants based on a forum selection clause in the Investment Banking Agreement. As noted supra in Part I.A, this clause states, in full, that “The Parties hereby agree that District of Columbia courts will have jurisdiction over the Parties to adjudicate any and all rights of the Parties under this Agreement.” Investment Banking Agreement ¶ 5. Although, the Investment Banking Agreement was executed by the plaintiff and Aerohotelco, this Agreement also expressly states that it “binds Aerohotelco’s ‘successor companies or any related entities which intend to invest in and/or develop’ the Aruban resort hotel project at issue, ” a scope that the plaintiff contends including the Project Developers. FAC ¶ 11 (quoting the Investment Banking Agreement Preamble).

When this Court’s subject matter jurisdiction is based on the diversity of the parties’ citizenship, as in this case, personal jurisdiction over each defendants may be exercised “coextensive with that of a District of Columbia Court.” Helmer v. Doletskaya, 393 F.3d 201, 205 (D.C. Cir. 2004) (citing Crane v. Carr, 814 F.2d 758, 762 (D.C. Cir. 1987)). The D.C. Court of Appeals “has recognized the modern trend toward enforcing forum-selection clauses, noting that ‘such clauses are [now] prima facie valid and [will] be enforced unless enforcement is shown by the resisting party to be unreasonable under the circumstances.’” Yazdani v. Access ATM, ...


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