ARMENIAN GENOCIDE MUSEUM v. Cafesjian Fam. Found.

691 F. Supp.2d 132

ARMENIAN GENOCIDE MUSEUM AND MEMORIAL, INC., Plaintiff, v. The CAFESJIAN FAMILY FOUNDATION, INC., et al., Defendants.

Civil Action No. 07-1259 (CKK).

United States District Court, District of Columbia.

March 9, 2010.

David Taylor Case, K & L Gates LLP, Washington, DC, Arnold R. Rosenfeld, Naoka E. Carey, Kirkpatrick & Lockhart Preston Gates Ellis LLP, Jennifer J. Nagle, K & L Gates LLP, Boston, MA, for Plaintiff.

Thomas F. Cullen, John B. Williams, Nancy L. Berardinelli—Krantz, William G. Laxton, Jr., Jones Day, Washington, DC, Kathleen Howard Meredith, Stephan Y. Brennan, Iliff & Meredith, P.C., Pasadena, MD, for Defendants.

MEMORANDUM OPINION

COLLEEN KOLLAR-KOTELLY, District Judge.

This case arises out of a very bitter and very unfortunate dispute between Plaintiff The Armenian Genocide Museum & Memorial, Inc. ("AGM & M") and Defendants The Cafesjian Family Foundation, Inc. ("CFF"), John J. Waters Jr. ("Waters Jr."), John J. Waters Sr. ("Waters Sr."), and Gerard L. Cafesjian ("Cafesjian") (collectively, "Defendants"), relating to the construction of an Armenian genocide museum and memorial in Washington, D.C. Although the parties have reportedly expended significant time attempting to resolve their disputes, they continue to press forward with any and all grievances against each other in this and two other cases currently pending before this Court. In the above-captioned case, AGM & M has asserted claims for breach of fiduciary duty against Waters Jr., Waters Sr., and Cafesjian for their involvement in the filing of a Memorandum of Agreement that recorded a reversionary interest held by Cafesjian and CFF in certain properties owned by AGM & M, as well as the filing of a lis pendens. Plaintiff also seeks declaratory and injunctive relief relating to CFF and Cafesjian's reversionary interest, which exists pursuant to a series of agreements between AGM & M, CFF, Cafesjian, and the Armenian Assembly of America. CFF and Waters Jr. have filed a counterclaim asserting that the filing of this lawsuit was an ultra vires act by AGM &M.

Currently pending before the Court in this action are a series of motions for summary judgment. AGM & M has filed a104 Motion for Partial Summary Judgment regarding its claims for breach of fiduciary duty against Waters Jr. and Cafesjian (Count I of the Second Amended Complaint) and against Waters Sr. (Count II), as well as the sole Counterclaim. Waters Sr. has filed a105 Motion for Summary Judgment regarding the sole claim against him for breach of fiduciary duty (Count II). Waters Jr., Cafesjian, and CFF (collectively, the "Cafesjian Defendants") have filed a107 Motion for Summary Judgment as to all counts. The parties have each filed oppositions and replies regarding these motions, and they are now ripe for adjudication. Also pending before the Court is a111 Motion to Compel the Production of Documents, filed by AGM & M and other parties in the related actions, which were consolidated for purposes of discovery only.¹ The Court shall address that motion in a separate opinion.

For the reasons explained below, the Court shall DENY the parties' motions for summary judgment with respect to: (1) Count I of the Second Amended Complaint for breach of fiduciary duty against Waters Jr. and Cafesjian; (2) Count III of the Second Amended Complaint for declaratory relief regarding the enforceability of the reversion clause in the Grant Agreement; (3) Count IV of the Second Amended Complaint seeking quiet title and removal of the lis pendens; and (4) the Counterclaim for relief based on an alleged ultra vires act. The Court shall GRANT Waters Sr.'s motion for summary judgment regarding Count II of the Second Amended Complaint.

I. BACKGROUND

The following facts are drawn from the summary judgment record assembled by the parties and the parties' statements of material facts that are not in dispute.²

A. The Armenian Assembly of America and the Origins of the AGM & M

The Armenian Assembly of America (the "Assembly") is an Armenian-American advocacy group that is incorporated in the District of Columbia as a non-profit corporation. Pl.'s Stmt. ¶ 5. In the mid-1990s, the Assembly received a pledge from Anoush Mathevosian, an Armenian-American philanthropist, for the purpose of constructing a permanent museum to the victims and survivors of the Armenian genocide.³ Pl.'s Stmt. ¶ 6. Ms. Mathevosian's pledge was initially for $3.0 million but was subsequently raised to $3.5 million. Defs.' Resp. Stmt. ¶ 6.⁴ Encouraged by Ms. Mathevosian's generosity, the Assembly began exploring possible sites for the museum in Washington, D.C., and solicited donations from the Armenian-American community for the purpose of establishing and constructing the museum. Pl.'s Stmt. ¶ 7. In 2000, the Assembly identified a possible site for the museum at the National Bank of Washington building (the "Bank Building") at 14th and G Streets, N.W. (619 14th Street, N.W.), Washington, D.C., located just a few blocks away from the White House. Pl.'s Stmt. ¶ 8.

At some point in the late 1990s, Cafesjian became involved with the Assembly's efforts to create an Armenian genocide museum.⁵ With the help of donations from Cafesjian (through CFF), the Assembly purchased the Bank Building in early 2000. Pl.'s Stmt. ¶ 8. As part of the Bank Building transaction, which involved both grants and loans from CFF, the Assembly executed a promissory note to CFF for $500,000.⁶See Cafesjian Defs.' Br., Ex. 71 (3/23/00 Letter from Assembly to Cafesjian) at 1; Pl.'s Br., Ex. 4 (R. Kaloosdian Aff.) ¶ 9. According to Robert Kaloosdian, a founding member and long-time officer and Trustee of the Assembly, the Assembly eventually came to understand that this note would be forgiven. See Pl.'s Br., Ex. 4 (R. Kaloosdian Aff.) ¶ 9. Defendants, however, dispute this. See Defs.' Br., Ex. 1 (Waters Jr. Aff.) ¶ 86. CFF and the Assembly also agreed to include a memorial named after Cafesjian as part of the museum project. See Defs.' Br., Ex. 71.

Subsequent to the purchase of the Bank Building, Cafesjian, through an affiliated entity called The TomKat Limited Partnership ("TomKat LP"), acquired several lots adjacent to the Bank Building. Pl.'s Stmt. ¶ 9. Cafesjian ultimately decided to donate these lots to the museum project.⁷ Cafesjian wanted the museum project to be run by an independent entity, and the Assembly eventually decided to create one. Pl.'s Stmt. ¶ 10; Cafesjian Defs.' Resp. Stmt. ¶ 10.⁸ In October 2003, the Armenian Genocide Museum & Memorial, Inc. ("AGM & M") was incorporated as a District of Columbia nonprofit corporation. Pl.'s Stmt. ¶ 11. AGM & M was established for the purpose of constructing, owning, operating, and maintaining a permanent museum and memorial to the victims and survivors of the Armenian genocide. Pl.'s Stmt. ¶ 2.

The Articles of Incorporation and By-Laws of AGM & M were ratified and adopted, respectively, pursuant to a Unanimous Written Consent of the Initial Trustees of AGM & M executed on October 30, 2003. Pl.'s Stmt. ¶ 14. The parties agree that these three documents—the Articles, the By-Laws, and the Unanimous Written Consent—govern the operation of and organization of AGM & M. Pl.'s Stmt. ¶ 15. Pursuant to the By-Laws and Articles, AGM & M has no members. Pl.'s Stmt. ¶ 16. The Articles provide that AGM & M's "affairs shall be managed and controlled by the Board of Trustees." Pl.'s Stmt. ¶ 17. The Board of Trustees serves as the Board of Directors for purposes of the D.C. Non-Profit Corporations Act. Pl.'s Stmt. ¶ 19.

Under the Articles of Incorporation, there were four initial Trustees: Cafesjian, Hirair Hovnanian, Anoush Mathevosian, and Robert Kaloosdian. See Pl.'s Br., Ex. 1 (Articles of Incorporation of AGM & M) (hereinafter, "Articles"). Each initial Trustee was designated as a representative of one of the four major initial donors to AGM & M: CFF (designating Cafesjian), Hirair Hovnanian (designating himself), Anoush Mathevosian (designating herself), and the Assembly (designating Kaloosdian). See Pl.'s Br., Ex. 7 (Unanimous Written Consent) (hereinafter, "UWC") at 1-2. Pursuant to the By-Laws, the terms of these initial Trustees is perpetual, and each initial donor may appoint successor Trustees in the event that the initial Trustees are no longer able to serve. See Pl.'s Br., Ex. 6 (By-Laws) § 2.4. A donor may elect one Trustee for every $5 million contributed to AGM & M (or elect a single Trustee to control as many votes as the donor has contributed in multiples of $5 million). Id. § 2.5. Unless otherwise provided in the By-Laws or the Articles, all questions are to be decided by an 80% vote of the Trustees at a meeting where a quorum is present. Id. § 2.7. Persons representing one-half of the aggregate eligible votes constitute a quorum at a duly-called meeting of the Board of Trustees. Id. § 2.6. The By-Laws also establish notice requirements that must be followed to properly convene a Board meeting: Trustees much each be given personal notice of the time and place of the meeting at least five, and no more than thirty, days in advance. Pl.'s Stmt. ¶ 21.

As of October 31, 2003, Cafesjian became the Chairman and President of AGM & M and Waters Jr. became the Secretary and Treasurer of AGM & M. Pl.'s Stmt. ¶¶ 23-24. Hirair Hovnanian became Vice Chairman of AGM & M. See UWC at 2.

B. The Grant Agreement & Transfer Agreement

On November 1, 2003, the Assembly executed a Grant Agreement with CFF and Cafesjian.⁹ Pl.'s Stmt. ¶ 25; see Pl.'s Br., Ex. 11 (Grant Agreement). The Grant Agreement is signed by Hirair Hovnanian and Peter Voskibian on behalf of the Assembly and by Cafesjian on behalf of himself and CFF. See Grant Agreement at 11. The Grant Agreement memorialized CFF/Cafesjian's $3.5 million donation to the Assembly in 2000 for the purchase of the Bank Building (the "First Grant"). It states that the Assembly shall use the First Grant funds solely to purchase the Bank...