United States District Court, District of Columbia
DENYING DEFENDANT ABERE'S MOTION TO DISMISS;
DENYING PLAINTIFF ALEMAYEHU'S MOTION TO DISMISS OR, IN
THE ALTERNATIVE, MOTION FOR SUMMARY JUDGMENT
RUDOLPH CONTRERAS UNITED STATES DISTRICT JUDGE.
case concerns the unfortunate and rather haphazard business
dealings of several individuals seeking to jointly establish
and operate a restaurant in the District of Columbia.
Plaintiff Neway Alemayehu originally brought this action
alleging that Belay Abere, Bekalu Bayabile, and Iyossias
Tilahun worked together to defraud him out of a $460, 000
investment. See generally Compl., ECF No. 1. Mr.
Abere denied the allegations, claiming that the contemplated
business arrangement never came to fruition and that, in
fact, it was Mr. Alemayehu who had acted wrongfully by
breaching certain duties he owed to Mr. Abere as his agent
and employee. This case now comes before the Court on Mr.
Abere's partial motion to dismiss and Mr. Alemayehu's
motion to dismiss or, in the alternative, summary judgment.
See Def.'s Mot. Dismiss (“Def.'s
Mot.”) at 1, ECF No. 25, Pl.'s Mot. Dismiss Alt.
Summ. J. (“Pl.'s Mot.”) at 1, ECF No. 26. For
the reasons stated below, the Court denies both motions.
spring of 2015, Mr. Alemayehu and Mr. Abere met to discuss a
possible investment in a restaurant called the Amsterdam
Café and Lounge, located in Washington, D.C. Compl.
¶ 7; Countercl. ¶ 9, ECF No. 4. Through their
discussions, the parties ultimately came to an agreement.
Although some of the details of the agreement are in dispute,
the basic premise was that, in exchange for an initial
investment, Mr. Alemayehu would receive an 80% ownership
stake in a newly formed corporate entity, which would then be
responsible for operating the restaurant. See Compl.
¶ 7; Countercl. ¶¶ 9-11, 16. For their part,
Mr. Abere and Mr. Bayabile would each own five percent and
fifteen percent of the business, respectively. See
Compl. ¶ 7; Countercl. ¶ 10. The agreement also
contemplated that Mr. Abere would assign a commercial lease
to the newly formed entity and that an existing liquor
license would also be transferred to the business. Compl.
¶ 7; Countercl. ¶¶ 9, 12. The parties dispute,
however, whether these transfers were Mr. Abere's
affirmative obligations or whether, instead, they were
express conditions on the contract.
Mr. Alemayehu claims that these promises and the prospect of
owning 80% of the restaurant venture induced him to invest
substantial sums of money into the business. Indeed, in
addition to making an initial investment of approximately
$80, 000, see Compl. ¶ 32, Mr. Alemayehu claims
that he also contributed funds to pay: back rents owed to the
landlord, along with taxes and insurance, legal fees
associated with the attempt to transfer the lease and liquor
license, substantial construction and renovation work on the
restaurant, the purchase and installation of new kitchen
equipment, security and fire alarm systems, restaurant
furnishings, a liquor and wine inventory, and a computerized
cash register system. Compl. ¶¶ 8-9; see
also Countercl. ¶ 17. In total, Mr. Alemayehu
claims that he invested more than $460, 000 in the
restaurant. Compl. ¶ 32.
the business arrangement did not unfold as the parties had
intended. Indeed, despite their efforts to persuade the
landlord of the building in which the restaurant was located,
she ultimately refused to permit any assignment of the
commercial lease from the current leaseholder, Mr. Abere
individually, to the newly formed business entity. Compl.
¶ 10; Countercl. ¶ 20. Rather, she required that
Mr. Abere-and only Mr. Abere-be responsible for the lease.
See Compl. ¶ 10; Countercl. ¶ 20. Mr.
Alemayehu alleges that, at some point, Mr. Abere represented
to him that the only way the landlord would permit the
assignment was if she were presented with an operating
agreement showing that Mr. Abere was the only owner of the
corporate entity. Compl. ¶ 11. Thus, Mr. Alemayehu
allegedly agreed to be removed from the corporate documents,
albeit temporarily, until the assignment could be
accomplished. Compl. ¶ 11. But apparently the landlord
was unwilling to assign the lease even to an entity solely
owned by Mr. Abere. Compl. ¶ 12; Countercl. ¶ 20.
Given the circumstances, Mr. Alemayehu and Mr. Abere believed
that the only realistic way forward was to keep the lease,
liquor license, and business license in the name of Mr. Abere
in his personal capacity. See Compl. ¶ 12;
Countercl. ¶ 21.
the parties dispute what exactly their future intentions
were. Mr. Alemayehu claims that this Abere-centered operation
was a temporary arrangement and that they had agreed that the
corporate entity would manage the business until they could
find a way to convince the landlord to substitute the
corporate entity for Mr. Abere on the lease. See
Compl. ¶ 12. Moreover, Mr. Alemayehu argues that, as an
80% owner, he was to act as the restaurant's executive
manager, have daily access to financial records, participate
in major business decisions, and would receive a power of
attorney from Mr. Abere. See Compl. ¶ 12. Mr.
Abere, on the other hand, claims that they modified their
earlier agreement. See Countercl. ¶ 22.
Specifically, he claims that they agreed that Mr. Abere would
form, own, and operate the restaurant, but that he would
employ Mr. Alemayehu as the restaurant's manager and
compensate him with 80% of the business's profits in
consideration for his initial investment. See
Countercl. ¶ 22.
in October 2015, the restaurant opened for business and Mr.
Alemayehu assumed the role of executive manager while Mr.
Abere was traveling outside of the United States.
See Compl. ¶ 13; Countercl. ¶¶ 23,
26. But no management agreement or power of attorney was ever
executed, either before Mr. Abere left or after he returned.
Compl. ¶¶ 13, 15. And, in fact, it appears that Mr.
Alemayehu's time as executive manager was rather short
lived. Mr. Alemayehu alleges that when Mr. Abere returned a
month or two later, Mr. Abere suggested that he take over the
management and operation of the business given his
“superior liability protection and experience, ”
but that this change would only last for “a few
months.” Compl. ¶ 14. Alemayehu relented,
believing this course of action “to be beneficial . . .
as long as [the] management was performed in an inclusive,
collaborative way.” Compl. ¶ 14. But subsequently,
according to Mr. Alemayehu, Mr. Abere took several actions
meant to undermine his authority as executive manager and
never restored Mr. Alemayehu to that position. Compl. ¶
18 (Mr. Abere “has continued, up through the filing of
this lawsuit, to strengthen his control of the business, its
operation and planning, all designed to totally remove [Mr.
Alemayehu] from any involvement or managerial oversight
responsibilities for the restaurant enterprise.”).
Furthermore, Mr. Alemayehu claims that, even though he is
entitled to 80% of the profits, he has received no profit
distributions, Compl. ¶ 41, and Mr. Abere “has
tried to make it appear that he is the legitimate sole owner
of the business.” Compl. ¶ 19. All of this seems
to have culminated when, on March 4, 2016, Mr. Alemayehu
disassociated himself from the venture. See Letter
from Mr. Alemayehu to Mr. Abere, ECF No. 28-6. That same
month, he brought this suit seeking what he believes is due
Abere, however, has a somewhat different take. According to
Mr. Abere, upon his return, he discovered that Mr. Alemayehu
had abused his position of trust and failed to faithfully and
fully perform his duties as manager. Countercl. ¶ 27.
Specifically, he claims that Mr. Alemayehu failed or refused
to pay certain taxes, salaries of employees, and invoices
submitted by vendors and third parties. Countercl. ¶ 27.
In addition, Mr. Abere learned that, while the business had
generated approximately $110, 422.81 in gross receipts, that
money went unaccounted for. Countercl. ¶ 28. Mr.
Alemayehu allegedly admitted that he took approximately $13,
000 from the business to pay a personal debt, but could not
account for the remaining balance. Countercl. ¶ 28.
Furthermore, Mr. Abere learned that, before the opening of
the restaurant, Mr. Alemayehu had signed a purported
Settlement Agreement and Mutual General Release (the
“Settlement Agreement”) on Mr. Abere's
behalf, but without his knowledge or consent. Countercl.
¶ 30. The Settlement Agreement purports to release
potential claims that Mr. Abere had against Mr. Abere's
former sub-tenant, Wilson Concepts, LLC (“Wilson
Concepts”), and its proprietor, Garnell Wilson, for,
among other things, previous unpaid rent. Countercl. ¶
30. According to Mr. Abere, it was for all of these reasons
that he ultimately decided to remove Mr. Alemayehu as the
manager of the restaurant. Countercl. ¶ 32.
March 2016, Mr. Alemayehu filed a complaint initiating this
lawsuit. See generally Compl. Mr. Alemayehu asserts
six claims against Mr. Abere, including claims for unjust
enrichment, promissory estoppel, and quantum meruit.
See Compl. ¶¶ 26-32, 37-41. Mr. Abere, in
turn, filed a counterclaim against Mr. Alemayehu. See
generally Countercl. He asserts, among other things,
claims for breach of fiduciary duty, breach of contract,
quasi-contract/breach of agency contract, and unjust
enrichment. See Countercl. ¶¶ 36-52. Both
Mr. Abere and Mr. Alemayehu have since filed answers to the
claims against them.
8, 2017, Mr. Abere filed a partial motion to dismiss under
Rule 12(b)(6) of the Federal Rules of Civil Procedure.
See Def.'s Mot. That same day, Mr. Alemayehu
also filed a motion to dismiss, or in the alternative, for
summary judgment. See Pl.'s Mot. Both motions
have been fully briefed and are now ripe for decision. The
Court therefore addresses each motion in turn.
MR. ABERE'S MOTION
turning to the merits of Mr. Abere's motion, the Court
must first clear up a technical procedural issue. Mr. Abere
styles his motion as a motion dismiss under Rule 12(b)(6) of
the Federal Rules of Civil Procedure. See generally
Def.'s Mot. Under the Federal Rules, such motions are
only available to parties before they have filed a
responsive pleading. See Fed. R. Civ. P. 12(b)
(“A motion . . . must be made before pleading if a
responsive pleading is allowed.”). Because Mr. Abere
has already filed an answer in this case, he is not entitled
to relief under Rule 12(b)(6). See Id. However,
under the circumstances, the proper course of action is to
construe the motion to dismiss as a motion for judgment on
the pleadings under Rule 12(c) because the standard under
both rules is essentially same. See Bloom v. McHugh,
828 F.Supp.2d 43, 49 (D.D.C. 2011) (“Because, however,
the standards for a Rule 12(b)(6) motion and a Rule 12(c)
motion for judgment on the pleadings are identical, courts
routinely construe motions to dismiss that are filed after a
responsive pleading as motions for judgment on the pleadings,
and this Court will do likewise.”); Lockhart v.
Coastal Intern. Sec., Inc., 905 F.Supp.2d 105, 112
(“[W]hen not raised in a motion prior to filing a
pleading, the legal defense of failure to . . . state a
claim upon which relief can be granted may be made by a
motion under Rule 12(c).”) (internal citation omitted);
Langley v. Napolitano, 677 F.Supp.2d 261, 262-63
Mr. Abere's motion will be granted only if the Complaint
fails to plead “enough facts to state a claim for
relief that is plausible on its face.” Bell Atl.
Corp v. Twombly, 550 U.S. 554, 570 (2007). To state a
plausible claim, the complaint need not contain detailed
factual allegations, but it must recite facts sufficient to
at least “raise a right to relief above the speculative
level . . . on the assumption that all the allegations in the
complaint are true (even if doubtful in fact).”
Id. at 555. A “pleading that offers
‘labels and conclusions' or ‘a formulaic
recitation of the elements of a cause of action will not
do.'” Ashcroft v. Iqbal, 556 U.S. 662
(2009) (quoting Twombly, 550 U.S. at 555). In short,
a complaint must contain sufficient factual matter that,
accepted as true, would allow the Court “to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. at 678.
Mr. Abere seeks to dismiss Mr. Alemayehu's claims for
promissory estoppel, quantum meruit, and constructive trust.
See generally Def.'s Mot. Only the first two
claims, however, are worthy of any significant discussion. As
the Court noted in a prior opinion, constructive trust is not
an independent cause of action, but a remedy. Thus, the Court
“construe[s] the request for a constructive trust as a
request for injunctive relief, ” but “takes no
position on whether this remedy would be appropriate in this
case.” Alemayehu, 199 F.Supp.3d at 87. As for
Mr. Alemayehu's claims for promissory estoppel and
quantum meruit, the Court finds that Mr. Alemayehu has
alleged facts sufficient to state a plausible entitlement to
relief. Accordingly, the Court denies Mr. Abere's motion.
Promissory Estoppel (Count III)
Court first addresses Mr. Abere's argument that the
complaint fails to allege sufficient facts to state a claim
for promissory estoppel. “To factually allege
promissory estoppel, a plaintiff must establish (1) the
existence of a promise, (2) that the promise reasonably
induced reliance on it, and (3) that the promisee relied on
the promise to his detriment.” Osseiran v.
Int'l Fin. Corp., 498 F.Supp.2d 139, 147 (D.D.C.
2007), aff'd, 522 F.3d 836 (D.C. Cir. 2009)
(citing Daisley v. Riggs Bank, 372 F.Supp.2d 61, 71
(D.D.C. 2005)). Under the law, a plaintiff asserting a claim
for promissory estoppel must allege that he or she relied on
a promise that is sufficiently “definite” because
“reliance on an indefinite promise is not
reasonable.” In re U.S. Office Prods. Co. Sec.
Litig., 251 F.Supp.2d 58, 73 (D.D.C. 2003) (citations
omitted). While the promise must have “definite terms
on which the promisor would expect the promisee to rely,
” it “need not be as specific and definite as a
contract.” Id. (citing Bender v. Design
Store Corp., 404 A.2d 194, 196 (D.C. 1979)). Based on
this Court's prior opinion ...