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Wye Oak Technology, Inc. v. Republic of Iraq

United States District Court, District of Columbia

August 27, 2019

WYE OAK TECHNOLOGY, INC., Plaintiff,
v.
REPUBLIC OF IRAQ et al., Defendants.

          MEMORANDUM OPINION

          ROYCE C. LAMBERTH, UNITED STATES DISTRICT JUDGE

         I. Legal Standard ............................................................................................................................. 2

         II. Factual Background .................................................................................................................... 3

         A. The Initial Effort to Rebuild Iraqi Armed Forces Following the U.S.-led Invasion in 20033

         B. Iraq Contemplates Stopping Some Scrap Exports ............................................................... 6

         C. Wye Oak and MoD Execute the BSA .................................................................................. 7

         D. Wye Oak Begins Performance ........................................................................................... 11

         E. Wye Oak and Zayna Sign a Limited Power of Attorney ................................................... 13

         F. Wye Oak Presents Three Invoices to MoD ........................................................................ 15

         G. October 19, 2004 Meeting ................................................................................................. 16

         1. MoD Approved Wye Oak's Three Invoices ....................................................................... 16

         2. Wye Oak and MoD Effectuated the First Amendment to the BSA ..................................... 17

         H. MoD and GIG Sign the Contract of Financial Agreement ................................................ 21

         I. MoD Paid Zayna Instead of Wye Oak ............................................................................... 24

         J. Wye Oak Continued to Perform until Nonpayment Became a Serious Impediment ............ 25

         1. Wye Oak Performed Work in Iraq ..................................................................................... 25

         2. Wye Oak Performed Work in the United States ................................................................ 27

         3. Nonpayment Eventually Became a Significant Impediment to Wye Oak's Work .............. 28

         K. December 5, 2004 Meeting ................................................................................................ 29

         L. Wye Oak Goes Back to Work, But Dale Stoffel is Murdered ........................................... 31

         M. Wye Oak Produced Armored Vehicles in Time for the January 2005 Elections, But Eventually Ceased to Perform Work in Iraq Because It was Never Paid ................................. 33

         N. Iraq Prohibits Scrap Sales .................................................................................................. 35

         III. Legal Discussion ..................................................................................................................... 35

         A. MoD is Not Separate from the Republic of Iraq ................................................................ 35

         B. The Court has Subject Matter Jurisdiction and Personal Jurisdiction Over Defendants ... 39

         1. The BSA was a “Commercial Activity” Under the FSIA .................................................. 40

         2. This Action is Based Upon an Act Performed in the U.S. in Connection with a Commercial Activity of Iraq Elsewhere ....................... 41

         3. The Court has Personal Jurisdiction over Iraq and MoD ................................................. 44

         C. Defendants Breached the BSA ........................................................................................... 45

         1. Wye Oak's Three Invoices Were Submitted Under the BSA .............................................. 45

         2. Wye Oak was never paid for its three invoices .................................................................. 50

         3. Wye Oak Performed Under the BSA .................................................................................. 51

         4. MoD Materially Breached the Contract with Wye Oak .................................................... 52

         D. The Court Rejects Defendants' Affirmative Defenses ......................................................... 52

         1. The Court Rejects the Defense Wye Oak was Not Properly Licensed ............................... 53

         2. The Court Rejects the Defense Wye Oak was Not Owed Any Compensation Under the BSA Because Wye Oak Did Not Conclude Any Sales Contracts ........................................... 55

         3. The Court Rejects the Defense Wye Oak Waived any Breach ........................................... 55

         IV. Damages ................................................................................................................................. 56

         A. Dr. Gale's Expert Damages Report ...................................................................................... 59

         1. The Court Finds Defendants Breached the BSA on October 28, 2004 ............................. 60

         2. Gale Did Not Err in Not Taking Into Account Subsequent Events .................................... 61

         a. Dale Stoffel's Murder .................................................................................................... 62

         b. Wye Oak's Withdrawal of American Personnel ............................................................ 63

         c. The Scrap Ban ................................................................................................................ 63

         B. Damages for the Three Invoices ........................................................................................... 67

         C. Lost Profits ........................................................................................................................... 70

         1. Defendants' Overall Objections to Plaintiffs' Lost Profits Calculations .......................... 70

         2. Lost Profits from Construction .......................................................................................... 75

         3. Lost Profits from Refurbishing Military Equipment .......................................................... 78

         4. Lost Profits from Scrap Sales ............................................................................................ 88

         5. Lost Profits From the Sale of Surplus Military Equipment ............................................... 93

         D. Terminal Value ..................................................................................................................... 94

         E. Discounted Future Income .................................................................................................... 95

         1. Risk-Free Rate ................................................................................................................... 97

         2. Equity Risk Premium ......................................................................................................... 97

         3. Firm Size Premium ............................................................................................................ 98

         4. Industry Risk Premium ...................................................................................................... 99

         5. Defendants' Objections that Gale Did Not Include a Company-Specific Risk Premium and Did Not Apply a Higher Discount Rate to Damages in Option Years ................................ 100

         6. Discount rate ................................................................................................................... 100

         F. Prejudgment Interest ........................................................................................................... 101

         G. Enhanced Damages ............................................................................................................ 102

         H. Costs, Including Reasonable Attorney's Fees and Expenses ............................................. 104

         V. Conclusion ............................................................................................................................. 105

         Fifteen years ago, Wye Oak Technology, an American company, entered into the Broker Services Agreement (BSA) with the Iraqi Ministry of Defense (MoD) to play a key role in re-equipping the Iraqi military. Iraq urgently needed to rebuild its armed forces as the Coalition Provisional Authority (CPA) transferred sovereignty back to the Iraqi people and the interim Iraqi government prepared to hold its first parliamentary elections since the fall of Saddam Hussein. The BSA was set to be the central component of the Iraqi Military Equipment Recovery Project (IMERP).

         Under the BSA, Wye Oak was responsible for developing an inventory and assessing what military equipment was salvageable and what was scrap, providing military refurbishment services, arranging for scrap sales, and arranging for the sale of military equipment. Wye Oak began performing as soon as the BSA was effectuated. By October 2004, Wye Oak submitted three pro forma invoices to MoD for work in relation to the IMERP.

         But MoD never paid these invoices to Wye Oak. Instead, MoD paid a third-party, Raymond Zayna, the money owed to Wye Oak under the BSA. Nonetheless, Wye Oak continued to perform under the contract while desperately trying to extract the funds it was owed. And briefly, Wye Oak thought it succeeded. After months of performing vital activities as part of the IMERP despite not being paid, all issues seemed to be solved after a December 5, 2004 meeting. However, this was not the case.

         A few days later, Wye Oak's president Dale Stoffel and his colleague Joe Wemple were brutally murdered on their way to arrange for funding to finally be released. Nonetheless, Wye Oak still did not immediately abandon the IMERP even after Dale Stoffel's tragic death. Instead, Wye Oak exceeded the goal of producing a mechanized brigade of operational armored vehicles for Iraq's January 2005 parliamentary election. Yet Wye Oak was never paid for the vital work it performed under the BSA.

         Now, more than fifteen years after Wye Oak entered into the BSA, and more than a decade after Wye Oak first filed suit, the Court finds MoD breached the BSA. And because MoD is an integral component of the national government itself, the Republic of Iraq is also liable for the breach.

         Ultimately, the Court will award Wye Oak damages for its three invoices, lost profits from construction, lost profits from refurbishing military equipment, and lost profits from scrap sales. Also, the Court will award Wye Oak prejudgment interest and costs, including reasonable attorney's fees and expenses.

         I. Legal Standard

         Wye Oak bears the burden of proving its breach of contract claim by a preponderance of the evidence. The preponderance of the evidence standard “simply requires the trier of fact to believe that the existence of a fact is more probable than its nonexistence before [he] may find in favor of the party who has the burden to persuade the [judge] of the fact's existence.” Concrete Pipe & Prods., Inc. v. Constr. Laborers Pension Tr., 508 U.S. 602, 622 (1993) (internal quotation marks omitted). In a bench trial, the Court is the trier of fact and rules on the law. Wye Oak will only succeed in its suit if it demonstrates it is more likely than not that the MoD materially breached the BSA.

         The BSA provides it “shall be exclusively construed and interpreted pursuant to the laws of the Republic of Iraq.” Pl.'s Ex. 5 ¶ 21. Thus, under this choice-of-law clause, Iraqi law controls for the purposes of interpreting the contract.

         Under Iraqi law, the rules of evidence and procedure of the venue where the dispute is pending control. Mallat Dep. 2/14/19, 33:17-34:4. Thus, the Federal Rules of Evidence apply to any evidentiary issues in this matter.

         Finally, under the Federal Rules of Evidence, “[i]n determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination must be treated as a ruling on a question of law.” Fed.R.Evid. 44.1.

         II. Factual Background

         A. The Initial Effort to Rebuild Iraqi Armed Forces Following the U.S.-led Invasion in 2003

         In March 2003, U.S. forces invaded Iraq and swiftly toppled Saddam Hussein's dictatorial regime. The U.S.-led Coalition forces set up the CPA to govern Iraq as a transitional government. On June 28, 2004, the CPA transferred sovereignty to the Iraqi people and an interim Iraqi government. This interim government held office until parliamentary elections occurred in January 2005.

         As part of Iraq's rebuilding efforts, Iraq needed to rebuild its own armed forces. This was especially vital as a growing insurgency began to take hold following the U.S.-led invasion and occupation.

         Secretary of Defense Donald Rumsfeld requested that then-Lieutenant General David Petraeus lead the Multi-National Security Transition Command-Iraq (MNSTC-I) to help rebuild the Iraqi armed forces and police. MNSTC-I's mission was to oversee and support the reconstruction of Iraq's Ministry of Defense and Ministry of Interior. MNSTC-I developed the IMERP to re-equip the Iraqi military. The IMERP's goal was to salvage the military equipment that could be refurbished and the scrap military equipment that was scattered across Iraq after the fall of Saddam Hussein's regime.

         Under Saddam Hussein, Iraq had an extremely large military with extensive stocks of military equipment. Expert Report of John M. Gale app. C, 11, 43-47, Pl.'s Ex. 101. A significant amount of this equipment consisted of Soviet weaponry. Tr. 12/18/18 PM 65:7-9; Tr. 12/19/18 PM 85:8-13. Destroyed and abandoned equipment littered the country following the U.S.-led invasion. See Tr. 12/17/18 PM 28:25-29:25; Tr. 12/19/18 AM 13:7-14, 33:6-34:2; Tr. 12/20/18 PM 37:8-19; Petraeus Dep. 14:18-15:20; Pl.'s Ex. 63. The IMERP intended to determine what equipment was recoverable and what could be scrapped, hoping to immediately repair salvageable equipment so that a portion of the Iraqi armed forces could be rebuilt as quickly as possible. IMERP's immediate focus was to prepare at least one armored mechanized brigade to be on the streets in time for the new Iraqi government's parliamentary election in January 2005. See Tr. 12/17/18 PM 35:21-37:5; Tr. 12/19/18 AM 25:9-26:14; Joe Kane, Iraqi Mech Brigade Moves Toward Initial Ops, The Advisor, Oct. 9, 2004, Pl.'s Ex. 16, at 1, 8. This was a critical component of the Coalition and Iraq's goal to withdraw American troops and have Iraqi security forces take on greater responsibility. Petraeus Dep. 20:19-21:2, 28:19-30:3.

         The Coalition and MNSTC-I leaders viewed Wye Oak and its president, Dale Stoffel, as capable of executing the IMPERP effort. Wye Oak, and Dale Stoffel in particular, had extensive familiarity with Soviet military equipment and had government contacts throughout the world. See Tr. 12/18/18 PM 65:7-9; Pl.'s Ex. 1; Pl.'s Ex 5 ¶ 2. Further, Wye Oak possessed the necessary arms and weapons licenses to perform the planned work. Pl.'s Ex. 1; Pl.'s Ex. 51. And Wye Oak had a strong relationship with CLI Corporation, an American based construction firm that had experience working in Iraq, as Dale Stoffel was a part owner of CLI. Pl.'s Ex. 51.

         On June 25, 2004, Wye Oak officially presented MoD its proposal to carry out the IMERP. Pl.'s Ex. 1. Wye Oak offered its services to “assess [MoD's] discarded and/or damaged military equipment to identify military salvageable equipment and scrap, account and inventory, value and identify purchasers for such military equipment and scrap, to maximize and to assist you in carrying out the Iraqi Military Equipment Recovery Project. In such role, Wye Oak would act as the exclusive broker for such transactions for the [sic] Iraq's Ministry of Defense for a minimum of ten percent commission on each such transaction.” Id. Following this letter, on July 4, 2004, Iraq's Minister of Defense, Hazim al-Shalan, requested access to the military equipment depositories at the Taji military base so MoD personnel and Dale Stoffel could inspect and assess the equipment as part of the beginning phase of the IMERP. Pl.'s Ex. 2. Petraeus responded on July 20, 2004 with his full support for the MoD's expeditious initiation of the IMERP, and granted al-Shalan's request. Pl.'s Ex. 3.

         Wye Oak and MoD began drafting the BSA. Nicholas Beadle, a United Kingdom government official and senior Coalition advisor to the Iraqi MoD, Iraqi Minister of Defense Hazim al-Shalan, and Iraqi MoD Secretary General Bruska Shaways, recalled his conversations with Shaways in July 2004 regarding the draft contract. Beadle made sure Shaways understood the MoD was agreeing to pay Wye Oak up front based on pro forma invoices-besides commissions-without having seen the completed work and would only have an opportunity to reconcile the payments at a later time. Tr. 12/20/18 PM 37:20-38:16, 53:11-54:3; Tr. 12/21/18 AM 36:16-38:20. On August 16, 2004, the MoD and Wye Oak officially entered into a contract, the BSA, to carry out the IMERP.

         B. Iraq Contemplates Stopping Some Scrap Exports

         While Wye Oak and MoD were negotiating the BSA, Iraq was also in the process of cracking down on scrap smuggling. On June 19, the General Secretary of Iraq's Council of Ministers informed the Ministries of Industry, Trade, and Finance that the Prime Minister directed the formation of a committee of representatives from these ministries to study scrap exports and provide a recommendation on the topic. Defs.' Ex. 56.

         Following this directive, the Ministry of Trade wrote the Council of Ministers to inform the Council of its views on exporting scrap. Defs.' Ex. 55. The Ministry of Trade stated the decision to export scrap was implemented in accordance with CPA Order 54 on the Trade Liberalization Policy of 2004 issued on February 26, 2004. Id. According to the Ministry of Trade, CPA Order 54 in part sought to stop scrap smuggling and institute a legal regime to govern scrap exports. Id. CPA Order 54 prohibited the export of “metals of all kinds, including scrap, ” in quantities in excess of personal use without a license from the Ministry of Trade. Defs.' Ex. 54. However, the Basra Governate apparently interfered with authorized scrap exports. Id. This led the Ministry of Trade to request the Basra Governate be directed not to interfere with the export of scrap done in accordance with previously granted licenses. Id.

         The committee formed pursuant to the Prime Minister's direction ultimately recommended stopping scrap exports but allowing those who already had export licenses to continue their export efforts because those licensees only accounted for a small portion of existing scrap. Defs.' Ex. 57. But the committee also urged the Ministry of Interior and General Commission of Customs to institute strict procedures to prevent scrap smuggling. Id.

         On July 17, 2004, the General Secretary of the Cabinet issued a letter to the Ministry of Interior regarding the prohibition of exporting scrap with copies to the Office of the Prime Minister, Ministry of Industry and Minerals, Ministry of Trade, and National Intelligence Service. Defs.' Ex. 53. Specifically, the letter stated the Prime Minister agreed to the Ministry of Industry and Minerals' proposal to stop exporting scrap, with the exception that some materials of a military nature could still be exported upon the Prime Minister and his economic committee's approval. Id. Unfortunately, this Court was never provided with the Ministry of Industry and Minerals' proposal referenced in this letter, which makes it impossible to fully comprehend the exact terms of the prohibition on exporting scrap the Prime Minister approved.

         This deliberation on scrap exports and decision by the Prime Minister was never communicated to Wye Oak at any time during the BSA negotiations or after Wye Oak and the MoD signed the BSA. And Beadle testified he understood all orders prohibiting scrap sales to only apply to private sales, not the MoD. Tr. 12/21/18 AM 7:25-8:10. Further, Neal testified General Bashar, an MoD official working on the effort to recover vehicles, informed him the scrap ban was intended to stop individuals from illegally taking scrap and did not affect Wye Oak. Tr. 12/19/18 AM at 29:22-31:16; Tr. 12/19/18 PM 4:9-18.[1]

         C. Wye Oak and MoD Execute the BSA

         Wye Oak and MoD entered into the BSA to carry out the IMERP on August 16, 2004. The BSA was signed by Dale Stoffel on behalf of Wye Oak and countersigned by Iraqi MoD Secretary General Bruska Shaways. Pl.'s Ex. 5. Secretary General Shaways had the “full signatory authority” of MoD regarding all matters related to Wye Oak's work recovering and selling scrap military equipment. Pl.'s Ex. 6. Under the BSA, MoD was required to “work exclusively with [Wye Oak] regarding furnishing of Military Refurbishment Services, Scrap Sales and the sale of Refurbished Military Equipment with respect to all Military Equipment.” Pl.'s Ex. 5. The BSA appointed Wye Oak as the sole and exclusive broker for:

(i) the accounting, inventory, and assessment of discarded and/or damaged Military Equipment in connection with the Iraqi Military Equipment Recovery Project to identify which Military Equipment is salvageable and suitable for Military Refurbishment Services and which Military Equipment is scrap;
(ii) the arranging of any Scrap Sales of any Military Equipment that is not suitable for Military Refurbishment Services;
(iii) the provision of Military Refurbishment Services with respect to all of the various military bases, offices and properties owned by, or under the control of, the Ministry and/or the Republic of Iraq, wherever such bases, offices and property maybe [sic] located and all the related military equipment located thereon or otherwise owned by the Ministry and/or the Republic of Iraq; and
(iv) the arranging for the sale of Military Equipment and/or Refurbished Military Equipment to Customers during the term of this Agreement or for Scrap Sales of any such Military Equipment that is not suitable for Military Refurbishment Services, which arranging shall include the valuation of any such Military Equipment, whether original, refurbished or scrap, and the identification of prospective Customers for such sales.

Pl.'s Ex. 5 ¶ 2. MoD agreed “not to conduct any Military Refurbishment Services or arrange for the use, sale or lease of any Refurbished Military Equipment provided for under [the BSA] nor engage in any scrap sales, except pursuant to an engagement with [Wye Oak] under [the BSA].” Id. The BSA stated Wye Oak would begin performing services at five military facilities: “Taji Military Base/Camp Cooke, Camp Normandy, Camp Ashraft, Camp Anaconda, and the Coalition facilities at the Hilla Military Facility.” Id.

         The BSA provided specific definitions for the terms military equipment, military refurbishment services, refurbished military equipment, customers, and scrap sales. Military equipment was defined as “any equipment that is used by or in the provision of military [sic], including, without limitation, any and all vehicles, aircrafts, guns, missiles, armored personnel carriers, heavy armor/tanks, military radar equipment, ballistic missiles, rocket launchers, artillery, artillery scrap, small arms, small arms scrap or any parts or components thereof.” Id. ¶ 1. The contract defined military refurbishment services as “any services sold, performed for, or provided with respect to any Refurbished Military Equipment that is either retained by the Ministry or sold or otherwise provided to Customers by the Ministry, including, but not limited to, the inspection of the Military Equipment prior to performing any Military Refurbishment Services to make a value assessment and a refurbishing assessment for such Military Equipment.” Id. The BSA provided that “Refurbished Military Equipment shall mean any Military Equipment that has been refurbished by, or under the direction of, the Broker pursuant to this Agreement, and sold or provided to customers by the Ministry.” Id. Customers were defined as “purchasers of the ‘Military Refurbishment Services' and/or ‘Refurbished Military Equipment' and ‘or Scrap sales' including, but not limited to, Iraqi Ministry of Defense, commercial establishments and governmental and semi-governmental entities in the military sector.” Id. And scrap sales were defined as “sales to any third party of any Military Equipment or other items which may not be defined as scrap but contemplated by the nature of this Agreement (e.g., brass, gun barrels, etc.) that the Broker or Iraqi Ministry of Defense determines is not suitable for Military Refurbishment Services in accordance with the terms of this Agreement.” Id.

         Further, Wye Oak was required to use “all reasonable commercial efforts to perform the Military Refurbishment Services and in the development of markets and sales prospects for Military Equipment, including Refurbished Military Equipment and Scrap Sales.” Id. ¶ 3. Wye Oak was not under any obligation to expend any money in performing these services or activities, except money that was advanced by the MoD to cover “certain expenses associated with the performance of the Military Refurbishment Services, the sales of any Military Equipment, Refurbished Military Equipment or any Scrap Sales.” Id. ¶ 3. In addition, MoD was required to “fully inform [Wye Oak] at all times of all matters reasonably required to enable [Wye Oak] to carry-out its duties as set forth [in the BSA].” Id. ¶ 4.

         As compensation, MoD was required to pay Wye Oak “a commission of [a] minimum of ten percent (10%) based on the Contract Value set out in each Sales Contract entered into by the Ministry, pursuant to this Agreement.” Id. ¶ 5. With respect to Refurbished Military Equipment, the MoD was required to pay Wye Oak 10% of such equipment's refurbishment cost. Id. The commissions were to be paid “pursuant to proforma invoices submitted by [Wye Oak] and then reconciled by final invoice. Upon providing such proforma invoice, Ministry will make full payment on such invoice immediately upon presentation. All payments to be made to [Wye Oak] under this Agreement shall be made in United States Dollars in the form and manner as directed by [Wye Oak].” Id. Also, the BSA provided significant protections for Wye Oak. Wye Oak was entitled to receive and retain all commissions for sales contracts for military refurbishment services, refurbished military equipment, or scrap MoD cancelled or terminated, regardless of the cause. Id.

         The BSA was set to last for one year. This one-year term was to renew automatically for two subsequent, consecutive one-year periods unless either Wye Oak or the MoD gave the other party written notice it would not renew at least sixty days prior to the end of any term. If termination notice was provided, the BSA was set to terminate at the end of the then-current term. Id. ¶ 6.

         This Agreement was not assignable by either party. Id. ¶ 8. Any purported assignment of the BSA without written consent from both parties was void and without effect. Id. A failure by one of the parties to assert any right in the BSA or upon a breach of the BSA would not constitute a waiver of such rights. Id. ¶ 12. And a written waiver of any right was not deemed to extend to any subsequent breach. Id. The BSA was not to be amended or supplemented except in writing, signed by both parties. Id. ¶ 13. The BSA constituted the entire agreement between Wye Oak and the MoD. Id. ¶ 14.

         In addition, the BSA contained an indemnification clause. Each party was to “indemnify, defend and hold harmless the other party from and against any and all liabilities, demands, claims, lawsuits, damages, judgments, costs (including reasonable attorney's fees and expenses) including but not limited to injury to persons (including death), loss or damage to, or destruction of property arising out of that party's breach of this Agreement or that party's negligent or willful actions while performing hereunder.” Id. ¶ 15.

         Finally, the English version of the Agreement governed and the BSA was required to be construed and interpreted pursuant to Iraqi law. Id. ¶¶ 18, 21.

         D. Wye Oak Begins Performance

         Wye Oak more likely than not began performing activities related to the BSA around the same time as the contract was signed. In the days preceding the BSA, Wye Oak identified 70, 000 tons of brass artillery casings it believed could be sold as scrap. Wye Oak began trying to broker a sale of these scrap brass shell casings and had some communications with at least one potential customer after the BSA was signed. See Defs.' Ex. 91 (email from Coskun Akdeniz to Dale Stoffel on August 18, 2004, regarding a potential customer for the scrap brass casings).[2] Unfortunately, these shell casings were stolen from the Iraqi military base where they were stored before Wye Oak could broker any sales contract. See Pl.'s Ex. 24 (email from Dale Stoffel to Nick Beadle, William Felix, and Colonel David Styles with the subject line “missing brass” and attached pictures of the brass); Pl.'s Ex. 26 (email from Colonel David Styles to Dale Stoffel, Nick Beadle, and William Felix regarding the stolen brass); Tr. 12/18/18 AM 81:16-84:21 (David Stoffel testifying the potential sale of the 70, 000 tons of brass shell casings was never completed). While Wye Oak claims MoD and Iraq were at fault for this theft, the evidence presented to the Court is insufficient to establish this point.

         Nonetheless, Wye Oak continued to move ahead. Wye Oak worked with its sister company CLI, and Wye Oak and CLI hired Iraqi laborers. Tr. 12/18/18 PM 64:17-64:19; Felix Dep. 20:15- 23:1, 80:22-81:3. On September 6, 2004, Secretary General Shaways wrote to Multi-National Forces-Iraq Commanding General George Casey to inform him that “Wye Oak has begun the initial assessment of equipment and is preparing to assemble the necessary personnel to inventory, assess and remove Iraqi military equipment or scrap for sale or use by the Iraqi Ministry of Defense.” Pl.'s Ex. 10. Shaways then requested access to Iraqi military bases under the U.S. military and Coalition forces' control because military equipment and scrap were located on those bases. Id.

         On September 17, Dale Stoffel reached out to a Ukrainian company to invite specific employees and affiliates to Iraq to assist Wye Oak in assessing, recovering, and refurbishing military equipment for the IMERP. Pl.'s Ex. 11. Wye Oak offered to provide transportation from Ukraine to Iraq and to arrange visas for these individuals. Id. Several witnesses testified Dale Stoffel brought in a team from Ukraine to assist with the work. See, e.g., Tr. 12/19/18 AM 42:1- 9; Felix Dep. 102:24-104:06. While Dale Stoffel and individuals from CLI, Iraqi laborers, and workers from Ukraine got started on identifying, assessing, and refurbishing military equipment in Iraq, David Stoffel worked on the IMERP from the United States. David Stoffel oversaw all information technology services for Wye Oak. Tr. 12/18/18 AM 31:7-32:1, 43:22-25, 44:11-20, 48:25-49:5.

         By September 29, 2004, Wye Oak provided MNSTC-I project officer Colonel David Styles an initial survey of equipment that had been reviewed thus far at Camp Normandy. Pl.'s Ex. 14. This survey consisted of 745 units of military equipment, including various tanks, armored personnel carriers, artillery, rocket launchers, anti-aircraft guns, and vehicles. Id. Even the equipment marked “operational” still likely required at least some maintenance before it could be put back into operation. Tr. 12/19/18 AM 12:14-20.

         The Iraqi government announced in October 2004 it would be standing up a mechanized brigade of about 3, 000 soldiers by early 2005. Pl.'s Ex. 16 at1. Iraqi Brigadier General Mahmoud Bashar, the official selected to lead the new brigade, proudly proclaimed most of the tanks and personnel carriers would come from Iraq. Id. These statements were reported in The Advisor, an authorized publication of MNSTC-I. This publication was authenticated as a self-authenticating official publication and newspaper under Federal Rules of Evidence 902(5) and 902(6). The Iraqi government and General Bashar's declarations were admitted into evidence as admissions by a party-opponent-and therefore non-hearsay-under Federal Rule of Evidence 801(d)(2). Nicholas Beadle testified Wye Oak was the one performing the work to refurbish the vehicles discussed in The Advisor's October 2004 issue that the Iraqi government and General Bashar boasted about. Tr. 12/20/18 PM 57:5-21. Beadle declared, “Wye Oak were the only show in town. They were the only ones who were performing refurbishment work of this sort.” Tr. 12/20/18 PM 57:5-21.

         E. Wye Oak and Zayna Sign a Limited Power of Attorney

         On September 28, 2004, Wye Oak granted Raymond Zayna, a Lebanese businessman in charge of the General Investment Group, s.a.l. (GIG), a limited power of attorney to arrange financing and bank guarantees on behalf of Wye Oak for its contract with MoD. Pl.'s Ex. 13. Wye Oak made clear Zayna's authority under this agreement was circumscribed. Wye Oak specified “GIG will provide financial services with respect to the IMERP Contract when and as requested by Wye Oak.” Id. (emphasis added). The parties drastically differ on how Raymond Zayna came to be involved with Wye Oak and MoD.

         Wye Oak insists Zayna was inserted by MoD, while defendants claim Wye Oak and Zayna had a business relationship dating back to summer 2004. Neither side offers definitive evidence on this point. Wye Oak bases its contention on several witnesses' personal observation giving the impression that Dale Stoffel and Raymond Zayna did not have any form of relationship. See, e.g., Tr. 12/17/18 PM 24:6-21 (Clements stated he did not believe any relationship existed between Stoffel and Zayna based on his observations of their interactions during meetings); Tr. 12/17/18 PM 25:21-26:7 (Clements recalled a December 5, 20004 meeting in which discussions focused on the fact Zayna was holding funds on behalf of MoD and needed MoD's authorization to release those funds to Wye Oak); Tr. 12/20/18 76:24-77:24 (Beadle saw Zayna in the MoD without Stoffel or anyone from Wye Oak on occasions). On the other hand, defendants point to an email from Dale Stoffel in November 2004 indicating GIG paid for Ukrainian expert's travel to Iraq to help assess and repair military equipment (likely as a result of Dale Stoffel's September 17, 2004 invitation) to indicate Dale and Zayna had a preexisting relationship. Pl.'s Ex. 31, 2 (“$112, 150.00 from Invoice #MUQ002 due to GIG for completed work for the transportation of Ukrainian Experts to assess the repair/overhaul work.”). But David Stoffel did not recall ever hearing about Zayna until September or October 2004. Tr. 12/18/18 AM 57:13-18. And William Felix repeatedly stated he associated Zayna with MoD. Felix Dep. 141:7-16. It is unlikely David Stoffel and William Felix, two important players among a small group of people that made up Wye Oak and CLI, would either not have heard of Zayna or viewed him as an interloper to Wye Oak's arrangement with MoD if Wye Oak was indeed the party who inserted Zayna into this deal in the first place. This leads the Court to believe it is more likely than not that Zayna was inserted at the behest of the MoD.

         This conclusion is even more likely given that Ziad Cattan, the Deputy Secretary General of the MoD, was convicted for his role, along with Bruska Shaways and Sawsan Jasim, in concluding a financial agreement with GIG, Zayna's company, that violated Iraqi law and intentionally caused harm. See 34/CR3/2011, ECF No. 430; 34/CR3/2011, ECF No. 438-1. This conviction indicates these MoD officials conspired with Zayna to steal millions of dollars. The Court is left with the distinct inference from this Iraqi Integrity Commission case that Zayna had a relationship with these MoD officials and was more likely than not inserted by these officials into the arrangement between Wye Oak and MoD.

         F. Wye Oak Presents Three Invoices to MoD

         In October 2004, Wye Oak submitted three pro forma invoices to MoD for work in relation to the IMERP. On October 11, 2004, Wye Oak submitted two pro forma invoices for construction at the Muqdadiya Armored Depot (Invoice #MUQ001) and Taji Facility (Invoice #TAJI001). Pl.'s Ex. 18. These invoices covered the initial construction costs for armored vehicle repair facilities, costs of purchasing tools and moving spare parts, the initial hiring and training of workers, and a 10% mobilization fee for construction efforts at Taji. Id. Further, these invoices included a 15% overhead cost and 10% profit. Id. Invoice #MUQ001 was for $2, 302, 300 and Invoice #TAJI001 was for $5, 945, 500. Id. On October 18, 2004, Wye Oak submitted a third invoice, Invoice #MUQ002, for vehicle recovery efforts at Muqdadiya. Id. at 3. This invoice covered travel, lodging, and food for technical experts, materials to wash and paint vehicles, costs for skilled and unskilled labor, and costs for the initial repair of 246 armored vehicles at both Muqdadiya and Taji. Id. This invoice also included a 15% overhead cost and 10% profit. Id. It was for $16, 466, 897.15. Id. In sum, these three invoices totaled $24, 714, 697.15.

         G. October 19, 2004 Meeting

         On October 19, 2004, a meeting was convened at MoD headquarters to ensure the IMERP was progressing. The meeting consisted of Shaways, Beadle, Marr, Dale Stoffel, Zayna, Styles, Ziad al-Cattan, and Jasim. Tr. 12/20/18 AM 13:21-14:19; Pl.'s Ex. 20, 6.

         Marr arrived at the MoD at about the same time as Dale Stoffel, and they waited together for about an hour while Zayna met with the senior MoD officials in Shaways office. Tr. 12/20/18 AM 13:21-14:19. Beadle arrived shortly before Marr, Stoffel, and him entered Shaways office. Id. And they were later joined by Colonel Styles. Id.

         1. MoD Approved Wye Oak's Three Invoices

         During the meeting, the parties discussed Wye Oak's three invoices and how they would be financed. Tr. 12/20/18 PM 64:3-16. Ultimately, Marr testified that Shaways declared MoD accepted the invoices. Tr. 12/20/18 AM 16:13-20. And Beadle further testified Shaways agreed to pay the invoices to Dale Stoffel. Tr. 12/20/18 PM 65:23-66:4. This testimony regarding Shaways' ratification of the invoices and agreement to pay Dale Stoffel was admissible as non-hearsay admissions by a party-opponent. Shaways was authorized to make such decisions for MoD regarding all matters related to Wye Oak's work under the BSA. See Pl.'s Ex. 6 (letter from Shaways asserting he had full signatory authority on all matters with respect to the BSA, as designated by the Iraqi Minister of Defense); Fed.R.Evid. 801(d)(2)(C). Further, Shaways was an MoD employee speaking on a matter-work related to the IMERP-within the scope of his relationship with MoD while he was employed by MoD. Fed.R.Evid. 801(d)(2)(D). The Court therefore concludes it is more likely than not MoD approved Wye Oak's three invoices and agreed to pay this money to Wye Oak's president, Dale Stoffel.

         2. Wye Oak and MoD Effectuated the First Amendment to the BSA

         In addition to discussing and approving the three Wye Oak invoices, the parties at the October 19 meeting took up an amendment to the BSA. Tr. 12/20/18 AM 18:5-18:20; Tr. 12/20/18 PM 63:7-17. The amendment, termed the “First Amendment, ” was presented to the Court as Wye Oak's business record, but lacked any signature from either Shaways or Dale Stoffel. Tr. 12/18/18 AM 26:4-35:25; Pl.'s Ex. 19; Pl.'s Ex. 19.1.

         Defendants took issue with the unsigned amendment as initially presented to the Court because defendants wanted to also admit the document's metadata in addition to the document itself. Tr. 12/18/18 PM 3:5-4:12. Wye Oak had no objection to the admission of the document's metadata. Tr. 12/18/18 PM 3:21-4:6. Metadata is data that describes and gives information about other data. Here, the file's metadata describes the file's creation date, time saved, and who created, edited, and saved the file. Pl.'s Ex. 19.1. The metadata showed William Felix last saved the Microsoft Word document. Id. Indeed, David Stoffel testified this document was found on the computer he had purchased for Felix. Tr. 12/18/18 PM 93:6-7. Further, the metadata showed the document was created on October 25, 2004 at 3:26 a.m. and also last saved on October 25, 2004 at 3:26 a.m., with a total editing time of 6 minutes. Pl.'s Ex. 19.1. However, Marr and Beadle both testified the First Amendment was brought up, and signed, during the October 19, 2004 meeting. This raises a question as to whether the document presented to the Court was indeed the pertinent document discussed at the October 19 meeting or whether it was created in the first instance on October 25, after the meeting.

         Metadata can be misleading. For example, “if a Microsoft Word document is created on one machine, and transferred to and saved to a second machine without being altered, the copy on the second machine (erroneously) will show the date the document was saved to the second machine as the date created.” The Sedona Principles, Third Edition: Best Practices, Recommendations & Principles for Addressing Electronic Document Production, 19 Sedona Conf. J. 1, 171 (2018). “There is . . . the real danger that information recorded by the computer as application metadata may be inaccurate.” Id. at 211. This is a significant note of caution regarding the utility of metadata in determining a document's true creation date.

         Ultimately, the Court finds it is more likely than not that the First Amendment presented to the Court during trial, Pl.'s Ex. 19, was a copy of the document discussed during the October 19 meeting. Marr and Beadle both testified during the trial this amendment was discussed by the parties at the meeting. Tr. 12/20/18 AM 18:5-6 (“I saw a document, the document looked like [Pl.'s Ex. 19].”); Tr. 12/20/18 PM 63:7 (“Well, they discussed this amendment, first of all.”). The Court found Marr and Beadle to both be extremely credible witnesses, who participated in the October 19 meeting. Their testimony, which corroborates one another, when weighed against the inherent potential misimpressions metadata can produce, leads the Court to conclude the preponderance of the evidence establishes this document was the same document the parties dealt with at the October 19, 2004 meeting.

         The Court must next decide whether this First Amendment was actually signed by Shaways and Dale Stoffel. Both Marr and Beadle testified they personally saw Shaways and Dale Stoffel sign the document. Referring to the First Amendment, Marr asserted “I saw Bruska Shaways sign it and Dale Stoffel sign it.” Tr. 12/20/18 AM 18:9-10. Beadle also responded in the affirmative when he was specifically asked by Wye Oak's counsel whether he saw Bruska Shaways sign the First Amendment and whether he saw Dale Stoffel sign the First Amendment. Tr. 12/20/18 PM 63:12-17. While defendants contend these statements are hearsay that cannot be admitted to establish the First Amendment was signed and effectuated as a valid amendment to the BSA, the testimony about Shaways and Stoffel's signatures is admissible.

         First, signatures are written assertions and nonverbal conduct intended as assertions, which makes them statements under Federal Rule of Evidence 801(a). Shaways signature is certainly not hearsay, as it constitutes an admission by a party-opponent under Rule 801(d)(2). Shaways was authorized to make decisions for the MoD regarding all matters related to Wye Oak's work under the BSA. See Pl.'s Ex. 6 (letter from Shaways asserting he had full signatory authority on all matters with respect to the BSA, as designated by the Iraqi Minister of Defense). So Shaways was authorized to amend the BSA. Accordingly, his signature was a statement made by an individual authorized to make a statement on the subject that is now being offered against the defendants. See Fed. R. Evid. 801(d)(2)(C). Shaways was also an MoD employee making a statement on a matter- the BSA-within the scope of his relationship with MoD while that relationship existed. See Fed. R. Evid. 801(d)(2)(C).

         Further, Shaways and Stoffel's signatures constitute verbal acts where the legal effects of the statements flow just by virtue of the fact they were made. In other words, the significance of these signatures lies solely in the fact they were made. Testimony about the fact the signatures occurred was not offered to prove the truth of anything asserted. Accordingly, these signatures are not hearsay. See Fed. R. Evid. 801(c) adv. comm. note (“If the significance of an offered statement lies solely in the fact that it was made, no issue is raised as to the truth of anything asserted, and the statement is not hearsay.”); Mueller v. Abdnor, 972 F.2d 931, 937 (8th Cir. 1992) (finding communications relevant to making a contract, such as conversations and letters, are not hearsay because such “verbal acts” are not assertions and are not offered to prove the truth of the matter); 2 McCormick on Evidence § 249 (7th ed. 2016) (“[P]roof of oral utterances by the parties in a contract suit constituting the offer and acceptance which brought the contract into being are not evidence of assertions offered testimonially but rather verbal conduct to which the law attaches duties and liabilities.”); see also Preferred Properties, Inc. v. Indian River Estates, Inc., 276 F.3d 790, 799 n.5 (6th Cir. 2002); Stuart v. UNUM Life Ins. Co. of Am., 217 F.3d 1145, 1154 (9th Cir. 2000). The credible testimony from Marr and Beadle regarding Shaways and Stoffel signing the First Amendment sufficiently demonstrates it is more likely than not both parties signed the First Amendment and therefore validly amended the BSA.[3]

         This amendment attempted to clarify the BSA. The First Amendment altered the definition of “military refurbishment services” to read:

any services sold, performed for, or provided with respect to any Refurbished Military Equipment that is either retained by the Ministry or sold or otherwise provided to Customers by the Ministry, including, but not limited to, the inspection of the Military Equipment prior to performing any Military Refurbishment Services to make a value assessment and a refurbishing assessment for such Military Equipment, including but not limited to, construction of facilities, bases, billeting, service/repair depots, repair factories/facilities.

Pl.'s Ex. 19; Pl.'s Ex. 19.1. Wye Oak's role as the sole and exclusive broker for providing military refurbishment services was altered such that Wye Oak was now appointed for:

the provision of Military Refurbishment Services with respect to all of the various military bases, offices and properties owned by, or under the control of, the Ministry and/or the Republic of Iraq, wherever such bases, offices and property maybe [sic] located and all the related military equipment located thereon or otherwise owned by the Ministry and/or the Republic of Iraq, including but not limited to, construction of facilities, bases, billeting, service/repair depots, repair factories/facilities.

Pl.'s Ex. 19; Pl.'s Ex. 19.1. And one of the compensation terms in the BSA was altered such that:

The Ministry shall pay [Wye Oak] a commission of minimum of ten percent (10%) based on the Contract Value set out in each Sales Contract entered into by the Ministry, pursuant to this Agreement. With respect to Refurbished Military Equipment and Military Refurbishment Services, the Ministry will pay [Wye Oak] ten percent ...

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