Iraq Middle Mkt. Dev. Found. v. Harmoosh

175 F.Supp.3d 567

Iraq Middle Market Development Foundation, Plaintiff,

v.Mohammad Ali Mohammad Harmoosh, et al., Defendants.

Civil Case No. GLR-15-1124

United States District Court, D. Maryland.

Signed March 30, 2016

Haig Vahan Kalbian, D. Michelle Douglas, Kalbian Hagerty LLP, Washington, DC, for Plaintiff.

Rachel A. Shapiro, Rosalyn Tang, Miles and Stockbridge PC, Rockville, MD, Daniel Poretz, King Campbell Poretz and Thomas PLLC, Alexandria, VA, for Defendants.

MEMORANDUM OPINION

George L. Russell, III, United States District Judge

THIS MATTER is before the Court on Defendants', Mohammad Ali Mohammad Harmoosh and Jawad Alharmoosh, Motion to Compel Arbitration and Dismiss or Stay Action. (ECF No. 10). This case involves Plaintiff's, Iraq Middle Market Development Foundation (“IMMDF”), attempt to enforce a foreign-money judgment obtained in Iraq against Harmoosh. IMMDF seeks to record its Iraqi judgment (Count I) and alleges Harmoosh fraudulently conveyed his ownership interests in a dissolved corporation and two parcels of real property to his son, AlHarmoosh, in an effort to avoid collection of this debt (Count II). (ECF No. 1). Defendants seek to dismiss IMMDF's action.

The Motion is ripe for disposition. Having reviewed the Motion and supporting documents, the Court finds no hearing necessary pursuant to Local Rule 105.6 (D.Md. 2014). For the reasons stated below, the Court will grant the Motion.

I. BACKGROUND¹

On November 10, 2006, IMMDF and Harmoosh's company, Al-Harmoosh for General Trade, Travel, and Tourism (“AGTTT”), located in Iraq, entered into a Medium Term Loan Agreement (“Loan Agreement”). Pursuant to the terms of the Loan Agreement, IMMDF provided AGTTT with $2,000,000 to expand its business. Harmoosh, an Iraqi and American citizen, signed the Loan Agreement in his capacity as Managing Partner of AGTTT and a personal guaranty in his individual capacity in the form of a promissory note. AGTTT then allegedly failed to make payments on the loan in accordance with the terms of the Loan Agreement. In 2008, AGTTT went out of business.

On July 30, 2010, in an effort to collect the unpaid balance on the loan, IMMDF brought suit in this Court to enforce the promissory note. Iraq Middle Mkt. Dev. Found. v. Al Harmoosh, 769 F.Supp.2d 838 (D.Md.2011). Harmoosh moved to dismiss the case for lack of subject-matter jurisdiction, arguing that the arbitration provision in the Loan Agreement barred IMMDF from pursuing litigation. Id. at 840. On January 20, 2011, the Court found that the promissory note was part of the Loan Agreement, which contains an arbitration provision encompassing all disputes and claims between the parties that may “arise out of or in connection with the [Loan] Agreement or a breach ... thereof.” Id. at 842. As a result, the Court concluded that it lacked subject-matter jurisdiction to hear IMMDF's claims and dismissed the case with prejudice. Id. at 842–43.

Seeking another venue to enforce the promissory note, in or around February 2014, IMMDF brought suit against Harmoosh in the Court of First Instance for Commercial Disputes in Baghdad, Iraq. During the Iraqi proceedings, Harmoosh was represented by an Iraqi attorney, Wael Jasim Kadhim Al-Waeli. On April 9, 2014, the Iraqi trial court entered judgment against Harmoosh in the amount of $2,000,000 plus attorney's fees. Harmoosh unsuccessfully appealed the judgment to the Baghdad/Al-Rasafa Federal Court of Appeals, which affirmed the trial court judgment on or about August 3, 2014. Harmoosh then appealed the judgment to the Iraqi Federal Court of Cassation, which also affirmed the trial court's decision on September 22, 2014. Harmoosh exhausted his appeals in the Iraqi judicial system. IMMDF now seeks to collect on the judgment it received against Harmoosh in Iraq.

On April 20, 2015, IMMDF brought suit against Defendants, seeking to record its Iraqi judgment and alleging fraudulent conveyance. (ECF No. 1). On May 14, 2015, Defendants filed a Motion to Compel Arbitration and Dismiss or Stay Action. (ECF No. 10). On June 22, 2015, IMMDF filed an Opposition to the Motion. (ECF No. 13). On August 3, 2015, Defendants filed a Reply to IMMDF's Opposition. (ECF No. 16). On August 6, 2015, IMMDF filed a Surreply.² (ECF No. 17-2).

II. DISCUSSION

A. Standard of Review

The Court notes that although Defendants title their Motion as a “Motion to Compel Arbitration,” Defendants do not seek to compel Count I. Rather, they present several arguments against recognition of IMMDF's Iraqi judgment. The Court will, therefore, construe the Motion as both a motion to compel arbitration and to dismiss for failure to state a claim.

A court may treat a motion to compel arbitration as either a motion to dismiss or a summary judgment motion. PC Constr. Co. v. City of Salisbury, 871 F.Supp.2d 475, 477 (D.Md.2012) (quoting Shaffer v. ACS Gov't Servs., Inc., 321 F.Supp.2d 682, 683–84 (D.Md.2004) ). “Whether the motion should be treated as a motion to dismiss or a motion for summary judgment turns on whether the court must consider documents outside the pleadings.” Id.

To survive a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss, a complaint must set forth “a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). “When 'matters outside the pleading are presented to and not excluded by the court, the [12(b)(6) ] motion shall be treated as one for summary judgment and disposed of as provided in Rule 56.”' Laughlin v. Metro. Wash. Airports Auth., 149 F.3d 253, 260–61 (4th Cir.1998) (quoting Fed.R.Civ.P. 12(d) ).

Under Rule 56(a), the Court must grant summary judgment if the moving party demonstrates that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. In reviewing a motion for summary judgment, the Court views the facts in a light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 158–59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) ).

Once a motion for summary judgment is properly made and supported, the opposing party has the burden of showing that a genuine dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson, 477 U.S. at 247–48, 106 S.Ct. 2505.

A material fact is one that might affect the outcome of a party's case. Id. at 248, 106 S.Ct. 2505 ; JKC Holding Co. v. Wash. Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir.2001). The materiality is determined by the substantive law, and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505 ; Hooven – Lewis v. Caldera, 249 F.3d 259, 265 (4th Cir.2001).

A genuine issue concerning a material fact arises when the evidence is sufficient to allow a reasonable jury to return a verdict in the nonmoving party's favor. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. Rule 56(e) requires the nonmoving party to go beyond the pleadings and by its own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Here, because the Court must consider matters outside of the pleadings, the Motion will be construed as one for summary judgment.

B. Analysis

1. Recognition of a Foreign Judgment

Maryland's Uniform Foreign Money Judgments Recognition Act (“Recognition Act”) governs whether the Court should recognize a foreign judgment. Md.Code Ann., Cts. & Jud.Proc. §§ 10-701 et seq. (West 2015); Guinness PLC v. Ward, 955 F.2d 875, 883 (4th Cir.1992) ; see also Wolff v. Wolff, 40 Md.App. 168, 389 A.2d 413, 415 (Md.Ct.Spec.App.1978), aff'd, 285 Md. 185, 401 A.2d 479 (1979). A judgment that is not entitled to recognition will not be enforced. See Wolff, 389 A.2d at 415 n.3 (“Enforcement, however, necessarily comprehends recognition.”).

Maryland's Recognition Act “applies to a foreign judgment that is final, conclusive, and enforceable where rendered even though an appeal is pending or it is subject to appeal,” Cts. & Jud. Proc. § 10-702, and provides grounds for nonrecognition of a foreign judgment, id.§ 10-704. Section 10-704 of Maryland's Recognition Act provides four mandatory grounds for nonrecognition of a foreign judgment:

(1) The judgment was rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law;

(2) The foreign court did not have personal jurisdiction over the defendant;

(3) The foreign court did not have jurisdiction over the subject matter; or

(4) The judgment was obtained by fraud.

Id.§ 10-704(a)(1)-(4).

The section also provides five discretionary grounds for nonrecognition of a foreign judgment:

(1) The defendant in the proceedings in the foreign court did not receive notice of the proceedings in sufficient time to enable him to defend;

(2) The cause of action on which the judgment is based is repugnant to the public policy of the State;

(3) The judgment conflicts with another final and conclusive judgment;

(4) The proceeding in the foreign court was contrary to an agreement between the parties under which the dispute was to be settled out of court; or

(5) In the case of jurisdiction based only on personal service, the foreign court was a seriously inconvenient forum for the trial of the action.

Id.§ 10-704(b)(1)–(5...