Embassy of the Fed. Republic of Nigeria v. Ugwuonye, Civil Action No. 10–cv–1929 (BJR).

901 F.Supp.2d 92

EMBASSY OF the FEDERAL REPUBLIC OF NIGERIA, Plaintiff,

v.Ephraim Emeka UGWUONYE, et al., Defendants.

Civil Action No. 10–cv–1929 (BJR).

United States District Court, District of Columbia.

Nov. 2, 2012.

Thomas Michael Guiffre, Patton Boggs LLP, Washington, DC, for Plaintiff.

Ephraim Chukwuemeka Ugwuonye, ECU Associates, P.C., Silver Spring, MD, Harvey B. Cohen, John E. Prominski, Jr., Miles & Stockbridge, PC, McLean, VA, for Defendants.

MEMORANDUM OPINION ON MOTION FOR SUMMARY JUDGMENT, MOTION FOR LEAVE TO FILE, MOTION TO STRIKE, AND MOTION FOR DEFAULT JUDGMENT

BARBARA J. ROTHSTEIN, District Judge.

This matter is before the Court on a motion for summary judgment ¹ by Defendant Ephraim Emeka Ugwuonye. See Dkt. # 76 (hereinafter “Def.'s Mot.”). Defendant Ugwuonye moves the Court to hold that two other Defendants in this action, ECU Associates, P.C.² and ECU Law Group, ³ lack the capacity to be sued pursuant to Federal Rule of Civil Procedure 17(b). Plaintiff, the Embassy of the Federal Republic of Nigeria (“the Embassy”), cross-moves for a default judgment against the same two Defendants, alleging that they are capable of being sued and have failed to defend in this action. See Dkt. # 77 (hereinafter “Pltf.'s Mot.”). ⁴ Ugwuonye's motion for summary judgment is denied, while the Court will deny in part and defer ruling in part on the Embassy's motion for default judgment.

I. BACKGROUND

This is a lawsuit concerning money allegedly owed to the Embassy by Defendant Ugwuonye. Ugwuonye acted as legal counsel for the Embassy in several real estate transactions and, in November 2007, obtained a property tax refund from the Internal Revenue Service (“IRS”) for the Embassy in the amount of $1.55 million. The Embassy alleges that Ugwuonye never delivered the funds. Am. Compl. (Dkt. # 33) ¶ 1. In addition to Defendant Ugwuonye, the Embassy names as Defendants Bruce Fein, ECU Law Group, and ECU Associates, P.C. Id. ¶¶ 4–6. The Embassy alleges that Defendants Ugwuonye and Fein were partners in ECU Law Group, an alleged law partnership, and ECU Associates, P.C., a Maryland professional corporation. Id. ¶¶ 5–7.

On November 9, 2010, the Embassy filed its first Complaint in this action. See Dkt. # 1. The Complaint was served upon Defendant Ugwuonye in his personal capacity (Dkt. # 2), as a partner in ECU Law Group (Dkt. # 4), and as a “partner” [ sic ] in ECU Associates, P.C. (Dkt. # 5). On January 6, 2011, Donald M. Temple filed a Notice of Appearance (Dkt. # 12) on behalf of “Emeka Ephraim Ugwuonye, et al.” The following day, Attorney Temple filed an Errata (Dkt. # 14) clarifying that he was representing Ugwuonye, “ECU Law Group, and ECU Associates, P.C.” On January 31, 2011, Defendants Ugwuonye, ECU Associates, and ECU Law Group filed a motion to dismiss (Dkt. # 18). Judge Kennedy denied that motion as moot on July 15, 2011, in light of the Amended Complaint filed by the Embassy. Minute Order of July 15, 2011. On August 29, 2011, Defendants filed a motion for leave to file an Answer and Counterclaim out of time (Dkt. # 40) in response to the Embassy's Amended Complaint; that motion was granted on October 6, 2011. Minute Order of Oct. 6, 2011. The Answer and Counterclaim were designated as being “By Defendants Ephraim Emeka Ugwuonye and ECU Associates, P.C.” Answer (Dkt. # 44) at 1. ECU Law Group was not listed as a Defendant or Counter–Plaintiff on the Answer and Counterclaim.

On October 8, 2011, Donald M. Temple filed a consent motion to withdraw as attorney. See Dkt. # 45.⁵ Since that time, Defendant Ugwuonye has appeared pro se. ECU Law Group has not filed any documents in this case since the January 31, 2011 motion to dismiss; ECU Associates, P.C. has not filed any documents since the Answer and Counterclaim filed on October 6, 2011. This case was reassigned to the undersigned judge on April 3, 2012.

On June 25, 2012, counsel for the Plaintiff, counsel for Defendant Bruce Fein, and Defendant Ugwuonye ( pro se ) appeared before this Court for a Status Hearing. See Tr. 2:7–12 (Dkt. # 94). Defendant Ugwuonye stated that he was appearing “for the ECU entities as well,” but indicated that his law firm, ECU Associates, had closed, and that ECU Law Group was “not really an entity at all.” Tr. 2:12–24. Both Defendant Ugwuonye and counsel for Defendant Fein denied that Ugwuonye and Fein were ever in any kind of partnership with one another. Tr. 8:17–9:6. The Court granted Defendant Ugwuonye leave to file a motion to dismiss ECU Associates and ECU Law Group, and indicated that the Embassy could file a cross-motion for default judgment in response. See Order of June 26, 2012 (Dkt. # 70). Those motions are the subject of this Memorandum Opinion.

II. LEGAL STANDARDA. Motion for Summary Judgment under Rule 56

Under Rule 56, summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” SeeFed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The mere existence of a factual dispute will not preclude summary judgment. Only factual disputes that may determine the outcome of a suit may effectively preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). To be a genuine fact, the assertion must be supported by sufficiently admissible evidence and cannot be based on conclusory allegations, denials or opinions. Crenshaw v. Georgetown University, 23 F.Supp.2d 11 (D.D.C.1998).

B. Motion for Default Judgment under Rule 55

Obtaining a default judgment under Federal Rule of Civil Procedure 55 is a two-step process. First, a plaintiff should request that the Clerk of the Court enter a default against the party who has “failed to plead or otherwise defend” against an action. Fed.R.Civ.P. 55(a).⁶ Once default has been entered, the plaintiff may move for default judgment. Fed.R.Civ.P. 55(b).⁷

While default establishes the defaulting party's liability for the well-pleaded allegations of the complaint, it does not establish liability for the amount of damage claimed by the plaintiff. Flynn v. Old World Plaster, LLC, 741 F.Supp.2d 268, 269–70 (D.D.C.2010). The court will make an independent determination of the sum to be awarded. Id.

“Because courts strongly favor resolution of disputes on their merits ... modern courts do not favor default judgments.” Id. (internal citations omitted). However, when a party is essentially unresponsive and brings the adversary process to a halt, “the diligent party must be protected lest he be faced with interminable delay and continued uncertainty as to his rights.” Id.

III. DISCUSSIONA. Defendant Ugwuonye's motion for summary judgment will be denied

Defendant Ugwuonye urges this Court to grant summary judgment and dismiss Defendants ECU Associates and ECU Law Group because these Defendants lack the capacity to sue or be sued under Federal Rule of Civil Procedure 17(b). Rule 17(b) provides: “Capacity to sue or be sued is determined as follows: (1) for an individual who is not acting in a representative capacity, by the law of the individual's domicile; (2) for a corporation, by the law under which it was organized; and (3) for all other parties, by the law of the state where the court is located.” Fed.R.Civ.P. 17(b). In light of the subsequent analysis, Ugwuonye's motion will be denied.

1. Defendant ECU Associates, P.C. has the capacity to be sued, and will not be dismissed as a party to this action

ECU Associates, P.C. is a Maryland professional corporation. Am. Compl. ¶ 6; Answer ¶ 6. Defendant Ugwuonye argues that Defendant ECU Associates, P.C. should be dismissed because ECU Associates forfeited its corporate charter in the State of Maryland on or before January 11, 2010, and failed to file a report on personal property pursuant to Md.Code Ann., Tax–Prop. § 11–101. Ugwuonye contends that, under Maryland law, a corporation that has forfeited its charter cannot be sued. Def.'s Mot. at 2–3.

As ECU Associates, P.C. was organized under Maryland law, Maryland law determines its capacity to sue or be sued. Fed.R.Civ.P. 17(b)(2). Under Maryland corporate law, a corporation that has forfeited its charter for failure to file a property report lacks any capacity to sue or be sued. Md.Code Ann., Corps. & Ass'ns § 3–503(d) (“[T]he powers conferred by law on the corporations are inoperative, null, and void as of the date of the proclamation”). When the charter has been forfeited, however, “the directors of the corporation become the trustees of its assets for purposes of liquidation.” Md.Code Ann., Corps. & Ass'ns § 3–515(a). The director-trustees are empowered to wind up the affairs of the corporation, including “discharge of existing debts and obligations of the corporation.” Md.Code Ann., Corps. & Ass'ns § 3–515(b)(1). The director-trustees have the specific powers to “sue or be sued in their own names as trustees or in the name of the corporation ” as is “necessary and proper to liquidate the corporation and wind up its affairs.” Md.Code Ann., Corps. & Ass'ns § 3–515(c)(3)–(4) (emphasis added); Dual Inc. v. Lockheed Martin Corp., 383 Md. 151, 857 A.2d 1095, 1102 (2004). There must be a rational relationship between the lawsuit and the winding up process. See Patten v. Bd. of Liquor License Comm'rs, 107 Md.App. 224, 667 A.2d 940, 945 (Md.1995). Cf. Mintec Corp. v. Miton, 392 B.R. 180 (D.Md.2008) (holding that an action may be brought in the name of a corporation whose charter has been forfeited if it is part of a good faith liquidation or winding up of the affairs of the corporation).

The Embassy filed documentation from the State of Maryland Department of Assessments and Taxation indicating that the corporate charter for ECU Associates was revived as of ...