BAZARIAN INTERNATIONAL FINANCIAL ASSOCIATES, LLC v. DESARROLLOA AEROHOTELCO, C.A.
MEMORANDUM OPINION regarding the defendants' 25 Motion to Dismiss. Signed by Judge Beryl A. Howell on February 7, 2016. (lcbah1)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
FINANCIAL ASSOCIATES, L.L.C.,
Civil Action No. 13-1981 (BAH)
Judge Beryl A. Howell
DESARROLLOS AEROHOTELCO, C.A.,
WALTER LUCIANO STIPA, an individual,
DESARROLLOS NEWCO 22, C.A.,
CORPORATION CURACAO HOLDING,
N.V., DESARROLLOS HOTELCO
CORPORATION ARUBA HOLDING, N.V.,
CORPORATION DHC ARUBA, N.V. AND
CORPORATION ARUBA HOLDING
The plaintiff, Bazarian International Financial Associates, LLC (“plaintiff” or “BI”), filed
this lawsuit against six foreign affiliated corporate defendants and Walter Stipa Sprecase, a
Venezuelan citizen associated with all of the defendant companies. First Amended Complaint
(“FAC”) ¶¶ 3–9, ECF No. 13. 1 The plaintiff asserts two claims for breach of contract and
quantum meruit stemming from the defendants’ alleged breach of an Investment Banking
Agreement between the plaintiff and Aerohotelco, pursuant to which the plaintiff assisted
The defendant companies are Desarrollos Aerohotelco, C.A. (“Aerohotelco”), a Venezuelan corporation;
Desarrollos Newco 22, C.A. (“Newco”), a Venezuelan corporation; Desarrollos Hotelco Corporation Curacao
Holding, N.V. (“Curacao Holding”), a Curacaoan corporation; Desarrollos Hotelco Corporation Aruba Holding,
N.V. (“Aruba Holding”), an Aruban corporation; Desarrollos Hotelco Corporation DHC Aruba, N.V. (“DHC”), an
Aruban corporation; and Desarrollos Hotelco Corporation Aruba Holding Caracas, S.A. (“Caracas Holding”), a
Venezuelan corporation. FAC ¶¶ 3–9.
Aerohotelco with the leasing of a tract of land and the financing for the development of a luxury
hotel in Aruba. Id. ¶ 13. The plaintiff alleges that the defendants have failed to pay the plaintiff
monies owed for its services under the Investment Banking Agreement. Id. ¶ 52. Pending
before the Court is the defendants’ Motion to Dismiss Plaintiff’s First Amended Complaint for
lack of personal jurisdiction, improper service and failure to state a claim, under Federal Rules of
Civil Procedure 12(b)(2), (5), and (6). See Defs.’ Mot. Dismiss (“Defs.’ Mot.”), ECF No. 25.
For the reasons set forth below, the defendants’ motion is granted in part and denied in part.
The factual allegations underlying this dispute have been generally summarized in this
Court’s Memorandum Opinion dismissing the plaintiff’s prior lawsuit against Aerohotelco for a
declaratory judgment that the plaintiff has the “right to certain investment banking fees under the
parties’ contract.” Bazarian Int’l. Fin. Assocs., L.L.C. v. Desarrollos Aerohotelco, C.A., 793 F.
Supp. 2d 124, 125–27 (D.C. 2011) (BAH). The facts pertinent to resolving the instant motion
are briefly summarized below.
Investment Banking Agreement
On February 5, 2007, Aerohotelco and the plaintiff executed an Investment Banking
Agreement, pursuant to which the plaintiff agreed to assist Aerohotelco “with bidding for an
option from the Government of Aruba to lease land in Palm Beach, Aruba (“the Palm Beach
Option”), for the purpose of establishing and developing a luxury hotel resort (“the Project”).”
FAC ¶ 13. The plaintiff also agreed to “act as Aerohotelco’s exclusive advisor and investment
banker . . . to raise financing for the Project.” Id. ¶ 14. The Agreement provided for payment to
the plaintiff of a “Debt Fee” “‘if the financing for the Project is concluded within thirty-six (36)
months following the termination of this Agreement from sources introduced to the Project by
[the plaintiff].’” Id. ¶ 16 (quoting FAC, Ex. A (“Investment Banking Agreement”) ¶ 3, ECF No.
13-1) (alteration in the original). The Agreement specified, in a forum selection clause, that
“District of Columbia courts will have jurisdiction over the Parties to adjudicate any and all
rights of the Parties under this Agreement.” Investment Banking Agreement ¶ 5.
Shortly after consummation of the Investment Banking Agreement, the plaintiff
introduced the then-owner and president of Aerohotelco, defendant Stipa, to AIB Bank “to
discuss financing for the Project.” FAC ¶¶ 18–19. The meetings culminated, on March 26,
2007, with AIB Bank sending to Aerohotelco and the plaintiff an “Indicative Term Sheet,” id. ¶
21, which “provides an indication of the basic terms and conditions based on which the bank is
prepared to entertain a financing proposal,” id., Ex. B (“Indicative Term Sheet”) at 4, ECF No.
13-2. AIB Bank expressly stated that while Aerohotelco “may use [the Indicative Term Sheet]
as part of [its] proposal to the Government of Aruba” for the Palm Beach Option, it “does not
constitute any legally binding or enforceable obligation on the part of the bank to provide any
financing.” Id. With the AIB Bank’s Indicative Term Sheet in hand, Aerohotelco thereafter won
the Palm Beach Option to develop the Project in or around June 2008. FAC ¶ 24. The plaintiff
alleges, however, that even though Aerohotelco won the option to lease the land, a related
defendant company, DHC, actually leased the land from the Aruban government. Id.
In June 2009, twenty-eight months after the execution of the Investment Banking
Agreement, Aerohotelco notified the plaintiff that “it would not pay the Debt Fee for financing
coming from AIB Bank” because “[the plaintiff] had no role in facilitating its relationship with
AIB Bank[.]” Id. ¶ 28.
On September 17, 2009, the plaintiff brought an action in this Court against Aerohotelco
seeking a declaratory judgment that the plaintiff was entitled to the Debt Fee “upon the
settlement of binding loan or guarantee commitments for the Project from AIB Bank.” Bazarian,
793 F. Supp. 2d at 127; FAC ¶ 29. The anticipated financing agreement (“Facility Agreement”)
between AIB Bank and “Aerohotelco or one of the other corporate Defendants controlled by
Stipa” was entered on October 26, 2009, FAC ¶ 30, but, at the time of the prior action, the terms
remained “‘subject to  numerous contingencies and conditions,’” and “‘there ha[d] not been
any draws made by the borrowers pending a final closing,’” Bazarian, 793 F. Supp. 2d at 130
(quoting Decl. of Pedro Vera ¶¶ 8–10). On June 22, 2011, the action was dismissed due to lack
of subject matter jurisdiction because the settlement of a binding loan commitment was not yet
likely and, consequently, “the facts . . . do not present an actual controversy within the meaning
of the Declaratory Judgment Act and Article III of the U.S. Constitution.” Id. at 131.
Efforts to Serve Instant Lawsuit
On December 16, 2013, the plaintiff refiled the instant lawsuit against Aerohotelco, see
generally Compl., ECF No. 1, but because the plaintiff experienced difficulty serving
Aerohotelco in Venezuela, the complaint was never served, see generally Pl.’s Mot. Leave to
Effect Alternative Service (“Pl.’s Mot. Alt. Service”) at 4–6, ECF No. 16; Response to Order to
Show Cause at 2–3, ECF No. 10; Status Report, ECF No. 11; Second Status Report, ECF No. 12.
Over a year later, on February 10, 2015, still unable to serve the original complaint, the plaintiff
filed the First Amended Complaint, the operative complaint for this motion, adding six
additional defendants: Stipa, Newco, Curacao Holding, Aruba Holding, DHC (collectively the
“Project Developers”), and Caracas Holding, a Venezuelan “holding company that holds some or
all of the equity interest in DHC.” FAC ¶¶ 3–9. The plaintiff alleges that according to
representations made in a Share Sale Agreement and Shareholders Agreement (“Share Sale
Agreement”) with another Venezuelan citizen, Newco, Curacao Holding, Aruba Holding, DHC,
and Stipa became developers of the Project, id. ¶ 34, which was completed in November, 2013,
id. ¶ 41. Additionally, the plaintiff alleges that circumstances have now changed. Specifically,
“[u]pon information and belief, since January 26, 2011, Aerohotelco and/or Stipa, Newco,
[Curacao Holding], Aruba Holding, DHC, and/or Caracas Holding . . . have drawn funds from
AIB Bank to develop the Project.” Id. ¶ 33
On April 21, 2015, the plaintiff moved for leave to effect alternative service on the
defendants pursuant to Fed. R. Civ. P. 4(f)(3) and 4(h)(2). Pl.’s Mot. Alt. Service at 1. As
support, the plaintiff alleged that “[it] has thus far been stymied in its efforts” to serve the
original complaint on Aerohotelco in Venezuela in accordance with the procedures set forth in
the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents (the “Hague
Convention”). Id. The plaintiff explained that, as required by the Hague Convention, a copy of
the original complaint and summons translated into Spanish was “provided  to the State
Department’s contracted international process server, Process Forwarding International, for
forwarding to the Venezuelan Central Authority,” but no response had been received for eight
months. Id. at 4. The United States Embassy in Venezuela had advised the plaintiff that it was
unable to obtain any additional information regarding the status of the Venezuelan Central
Authority’s efforts to serve Aerohotelco. Id.
The plaintiff, in attempting to serve the First Amended Complaint on the defendants,
alleged that “despite extensive efforts involving searches of international business databases and
inquiries of the Aruban government, counsel for [the plaintiff] has been unable to identify
addresses . . . for Stipa, Newco, or Caracas Holding in either Venezuela or Aruba, or to confirm
addresses for the remaining defendants.” Id. at 6. 2 Faced with these difficulties, the plaintiff
moved for leave to serve the defendants by registered mail and e-mail to the defendants’ U.S.
counsel, who was located in Florida, and was “currently representing them in the Receiver Case
in Connecticut, and thus are presumably in regular contact with Defendants.” 3 Id. at 9–10. This
same U.S. Counsel had represented Aerohotelco in the first lawsuit brought by the plaintiff in
2009. Id. at 4.
On April 21, 2015, the plaintiff’s Motion for Leave to Effect Alternative Service on the
Defendants was granted, in light of the “unsuccessful attempts already made to serve the
defendants” and “the fact that service on a party’s attorney is ‘not prohibited by international
agreement.’” Minute Order Granting the Plaintiff’s Motion for Leave to Effect Alternative
Service on Defendants, dated Apr. 21, 2015 (citing Fed. R. Civ. P. 4(f)(3); Freedom Watch, Inc.
v. OPEC, 766 F.3d 74, 83 (D.C. Cir. 2014) and Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d
1007, 1016 (9th Cir. 2002)). The defendants’ motion to dismiss the plaintiff’s First Amended
Complaint is now ripe for resolution.
The difficulties confronted by the plaintiff in effecting service on the defendants lends support to the
plaintiff’s suspicion that these defendants have cloaked their whereabouts to dodge service. Even now, the
defendants are not entirely forthcoming with their addresses. Only three of the defendants provided addresses for
themselves, and two of them provided the identical address. See Defs.’ Mem., Ex. C (“Vera Decl.”) ¶ 5, ECF No.
25-3; id., Ex. E (“McKenzie Decl.”) ¶ 3, ECF No. 25-5.
On June 25, 2014, the Project Developers were named as defendants along with Romeo Mikael Mouawad
Mawad, the individual with whom the Project Developers entered into the Share Sale Agreement, and Mouawad’s
relatives, in a receivership action in the United States District Court for the District of Connecticut. The complaint
in that action alleges that the Project Developers received fraudulent transfers of $15 million, without providing any
consideration in return, from two entities that were used to perpetrate a Ponzi scheme by a person who, as a result of
an investigation by the Securities and Exchange Commission, has already pleaded guilty to criminal charges.
Compl. ¶¶ 37–38, 46, Carney v. Stipa Sprecase, No. 3:14-cv-00925-SRU (D. Conn. June 25, 2014) (“Receivership
Compl.”), ECF No. 1. On November 30, 2015, after the parties reached a settlement agreement, the plaintiffs
voluntarily dismissed the case pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i). Notice of Voluntary Dismissal With
Prejudice, id. (D. Conn. Nov. 30, 2015), ECF No. 92; Receiver’s Seventh Consent Motion for Order Extending
Briefing Schedule on Miguel Mouawad’s Motion to Dismiss ¶ 13, id. (D. Conn. Oct. 29, 2015), ECF No. 90.
Federal Rule of Civil Procedure 12(b)(2)
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(2), the
plaintiff bears the burden of “establishing a factual basis for the [Court’s] exercise of personal
jurisdiction over the defendant.” Crane v. N.Y. Zoological Soc’y, 894 F.2d 454, 456 (D.C. Cir.
1990) (citing Reuber v. United States, 750 F.2d 1039, 1052 (D.C. Cir. 1984), overruled on other
grounds by Kauffman v. Anglo-Am. Sch. of Sofia, 28 F.3d 1223, 1226 (D.C. Cir. 1994)); Williams
v. Romarm, S.A., 756 F.3d 777, 785 (D.C. Cir. 2014). The plaintiff need only make a prima facie
showing that the court has personal jurisdiction. Mwani v. bin Laden, 417 F.3d 1, 6 (D.C. Cir.
2005) (“a court ordinarily demands only a prima facie showing of jurisdiction by the plaintiffs”);
5B Charles Alan Wright & Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE § 1351 (3d ed.
2014). Similar to a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure
to state a claim, “the uncontroverted allegations of the complaint must be taken as true, and the
court will draw all reasonable inferences in plaintiff’s favor.” William W. Schwarzer et al.,
FEDERAL CIVIL PROCEDURE BEFORE TRIAL § 3:412 (2013); see Walden v. Fiore, 134 S. Ct. 1115,
1119 n.2 (2014) (accepting jurisdictional allegations in complaint as true at motion to dismiss
stage). At the same time, however, a plaintiff must provide sufficient factual allegations, apart
from mere conclusory assertions, to support the exercise of personal jurisdiction over the
defendant. See Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 524
(D.C. Cir. 2001) (noting the “general rule that a plaintiff must make a prima facie showing of the
pertinent jurisdictional facts” (internal quotation marks and alterations omitted)); First Chi. Int’l
v. United Exch. Co., 836 F.2d 1375, 1378 (D.C. Cir. 1988) (“Conclusory statements . . . do not
constitute the prima facie showing necessary to carry the burden of establishing personal
jurisdiction.” (internal quotation marks and citation omitted)); Naartex Consulting Corp. v. Watt,
722 F.2d 779, 787 (D.C. Cir. 1983) (same); Atlantigas Corp. v. Nisource, Inc., 290 F. Supp. 2d
34, 42 (D.D.C. 2003) (stating plaintiff “cannot rely on conclusory allegations” to establish
Unlike a motion to dismiss under Rule 12(b)(6), the court “may consider materials
outside the pleadings in deciding whether to grant a motion to dismiss for lack of jurisdiction.”
Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005); see also Mwani,
417 F.3d at 7 (holding that plaintiffs “may rest their [jurisdictional] argument on their pleadings,
bolstered by such affidavits and other written materials as they can otherwise obtain”). Any
“factual discrepancies appearing in the record must be resolved in favor of the plaintiff,”
however. Crane, 894 F.2d at 456 (citing Reuber, 750 F.2d at 1052).
Federal Rule of Civil Procedure 12(b)(6)
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the
“complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that
is plausible on its face.” Wood v. Moss, 134 S. Ct. 2056, 2067 (2014) (quoting Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009)). A claim is facially plausible when the plaintiff pleads factual content
that is more than “‘merely consistent with’ a defendant’s liability,” but “allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S.
at 678 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007)); see also Rudder v.
Williams, 666 F.3d 790, 794 (D.C. Cir. 2012). Although “detailed factual allegations” are not
required to withstand a Rule 12(b)(6) motion, a complaint must offer “more than labels and
conclusions” or “formulaic recitation of the elements of a cause of action” to provide “grounds”
of “‘entitle[ment] to relief,’” Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41,
47 (1957)) (alteration in original), and “nudge[ ] [the] claims across the line from conceivable to
plausible,” id. at 570. Thus, “a complaint [does not] suffice if it tenders ‘naked assertion[s]’
devoid of ‘further factual enhancement.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at
557) (second alteration in the original). In considering a motion to dismiss for failure to plead a
claim on which relief can be granted, the court must consider the complaint in its entirety,
accepting all factual allegations in the complaint as true, even if doubtful in fact. Twombly at
555; Harris v. D.C. Water and Sewer Auth., 791 F.3d 65, 68 (D.C. Cir. 2015) (in considering
Rule 12(b)(6) motion, the “court must accept as true all of the allegations contained in a
complaint” and “to draw the reasonable inference” therefrom “that the defendant is liable for the
misconduct alleged,” but that tenet “is inapplicable to legal conclusions,” and “threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements, do not
suffice” (internal quotations and citations omitted)).
Defendants Aerohotelco and the Project Developers 4 moved to dismiss the plaintiff’s
First Amended Complaint, contending that (1) personal jurisdiction over the Project Developers
is lacking because they were not parties to the Investment Banking Agreement providing, in a
forum selection clause, that proper venue is in District of Columbia; (2) the defendants were not
properly served under Federal Rule of Civil Procedure 4(f)(3); and (3) the plaintiff fails to state a
claim as to all defendants. Each of these arguments will be reviewed seriatim below.
Defendant Caracas Holding did not join in the defendants’ motion to dismiss, see Defs.’ Mot. at 1, and an
entry of default was entered on July 14, 2015 as to this defendant, Clerk’s Entry of Default as to Desarrollos Hotelco
Corporation Aruba Holding Caracas, S.A., dated July 14, 2015, ECF No. 28.
The plaintiff contends that personal jurisdiction may be exercised over all of the
defendants based on a forum selection clause in the Investment Banking Agreement. As noted
supra in Part I.A, this clause states, in full, that “The Parties hereby agree that District of
Columbia courts will have jurisdiction over the Parties to adjudicate any and all rights of the
Parties under this Agreement.” Investment Banking Agreement ¶ 5. Although, the Investment
Banking Agreement was executed by the plaintiff and Aerohotelco, this Agreement also
expressly states that it “binds Aerohotelco’s ‘successor companies or any related entities which
intend to invest in and/or develop’ the Aruban resort hotel project at issue,” a scope that the
plaintiff contends including the Project Developers. FAC ¶ 11 (quoting the Investment Banking
When this Court’s subject matter jurisdiction is based on the diversity of the parties’
citizenship, as in this case, personal jurisdiction over each defendants may be exercised
“coextensive with that of a District of Columbia Court.” Helmer v. Doletskaya, 393 F.3d 201,
205 (D.C. Cir. 2004) (citing Crane v. Carr, 814 F.2d 758, 762 (D.C. Cir. 1987)). The D.C.
Court of Appeals “has recognized the modern trend toward enforcing forum-selection clauses,
noting that ‘such clauses are [now] prima facie valid and [will] be enforced unless enforcement
is shown by the resisting party to be unreasonable under the circumstances.’” Yazdani v. Access
ATM, 941 A.2d 429, 431 (D.C. 2008) (quoting Forrest v. Verizon Commc’ns, Inc., 805 A.2d
1008, 1010 (D.C. 2002)) (internal quotation marks omitted, alterations in the original).
The defendants do not argue that enforcement of the forum selection clause would be
unreasonable and further, concede that personal jurisdiction may be exercised over defendant
Aerohotelco since it is a party to, and executed, the Investment Banking Agreement. Defs.’
Mem. Supp. Mot. Dismiss (“Defs.’ Mem.”) at 24 n.13, ECF No 25. The defendants dispute
whether the five remaining defendants, four allegedly affiliated corporations and Stipa, are
subject to the personal jurisdiction of this Court. They contend that “none of the [Project
Developers] are ‘successor companies’ or ‘related entities,’” and that the forum selection clause
may only be enforced against Aerohotelco. Id. at 23. This threshold dispute boils down to the
sufficiency of the plaintiff’s allegations regarding whether the five remaining defendants are
such successor or related entities to Aerohotelco. 5
The plaintiff has plausibly alleged that the Project Developers are at least related entities
to Aerohotelco intended to develop the Project, FAC ¶ 33, and therefore fall within the scope of
the Investment Banking Agreement’s forum selection clause. One man, defendant Stipa, is a key
link among all of these defendant corporate entities. Defendant Stipa was the owner and
president of Aerohotelco when it entered into the Investment Banking Agreement with the
plaintiff. See Investment Banking Agreement at 5 (Signature Page). He also allegedly “‘directly
or indirectly fully owned’” the corporate Project Developers, FAC ¶ 34 (quoting the Share Sale
Agreement), with the authority to execute on their behalf a contract between the Project
Developers and a third-party individual, id. ¶ 37.
In addition to sharing defendant Stipa as an owner and authorized agent, the Project
Developers appear to have succeeded Aerohotelco’s work in developing the Project. For
The defendants make two additional arguments that are unavailing. First, the defendants argued that the
Project Developers are not subject to personal jurisdiction because they are foreign citizens or entities, who “do not
transact any business in the District of Columbia, own any real or personal property in the District of Columbia,
have any offices, officers or agents present in the District of Columbia, or supply any services to any person or
entity within the District of Columbia.” Defs.’ Mem. at 25. Second, the defendants argue that the plaintiff has not
sufficiently alleged that any of the Project Developers can be considered “alter egos” of Aerohotelco, permitting
piercing of the corporate veil. Id. at 28–29. Neither argument addresses the plaintiff’s averred basis of personal
jurisdiction, namely, the forum selection clause, which is dispositive here. Furthermore, the defendants’ contention
that the plaintiff has not adequately alleged that the Project Developers are “alter egos” of Aerohotelco is addressed
in more depth infra in Part III.C.1.
example, the plaintiff avers that while Aerohotelco was awarded the Palm Beach Option to lease
land in Aruba, the option was actually exercised by DHC, one of the Project Developers, id. ¶ 24,
and the Project Developers, rather than Aerohotelco, were identified as the “‘Developers’ of the
hotel resort,” id. ¶ 34. The plaintiff explains that Aerohotelco’s strange disappearing act was
“customary,” in order to facilitate the doing of business in Aruba: Aerohotelco is incorporated in
Venezuela and the Project Developers are incorporated in Aruba, where the Project is located, or
Curacao, a neighbor island country also part of the Kingdom of the Netherlands. In short, the
plaintiff alleges that the Project Developers were incorporated as a means of succeeding
Aerohotelco in the development of the Project.
The defendants attempt to counter the plaintiff’s factual allegations establishing a prima
facie case of personal jurisdiction by relying on the declarations submitted by each of the Project
Developers. Defs.’ Mem. at 26–27 (quoting declarations of defendant Stipa and the corporate
representatives of DHC, Aruba Holding, Curacao Holding, and Newco). These declarations
make nearly identical statements denying that they are successor companies to, or related entities
of, Aerohotelco. Compare Defs.’ Mem., Ex. C (“Vera Decl.”) ¶ 10, ECF No. 25-3 with Defs.’
Mem., Ex. D (“Stipa Decl.”) ¶ 9, ECF No. 25-4 with Defs.’ Mem., Ex. E (“McKenzie Decl.”) ¶
9, ECF No. 25-5. These declarations, apart from being conclusory, actually show the deep
interconnections of management personnel among the defendant corporate entities and thereby
undermine the defendants’ efforts to defeat personal jurisdiction. For example, the Managing
Director of both DHC and Aruba Holding declared that these defendants “do not share and/or
have any common directors and/or shareholders and have no common business interests or
holdings” with Aerohotelco. Vera Decl. ¶ 10. Yet, the Managing Director for both DHC and
Aruba Holding, however, is the same person, who, in 2011, submitted to the Court, in the earlier
Bazarian action, a declaration testifying that he was, at that time at least, “an officer and
attorney-in-fact for [Aerohotelco] and, in that capacity, [he was] familiar with the business
affairs of [Aerohotelco].” Def.’s Mot. Dismiss, Ex. B ¶ 3, Bazarian, 793 F. Supp. 2d 124 (No.
Similarly, defendant Stipa, who now serves as the President of Newco, submitted a
declaration stating that “Newco and Aerohotelco are separate and distinct corporate entities
which do not share or have any common directors and/or shareholders and have no common
business interests or holdings,” despite defendant Stipa’s undisputed ownership of Aerohotelco
at the time the Investment Banking Agreement was signed. Stipa Decl. ¶ 9.
Lastly, the Managing Director of Curacao Holding declared that Curacao Holding and
Aerohotelco “are separate and distinct corporate entities which do not share or have any common
directors and/or shareholders and have no common business interests or holdings.” McKenzie
Decl. ¶ 9. Curacao Holding and Aerohotelco, however, do share one shareholder: defendant
Stipa. Both Newco, run by Stipa, and defendant Stipa, personally, own equity stakes in Curacao
Holding. See Pl.’s Opp’n Defs.’ Mot. Dismiss (“Pl.’s Opp’n”), Ex. 1 (“Share Sale Agreement”)
at 16, ECF No. 30-1 (“Whereas Stipa and Newco . . . wish to sell part of their shares in [Curacao
Holding] to THE COMPANY.”). Furthermore, defendant Stipa represented Curacao Holding,
along with the rest of the corporate Project Developers, “as evidenced by the power of attorney
granted to him,” in the Shareholder Sale Agreement entered into by all of the Project Developers
with another Venezuelan individual. Id. at 15. In other words, defendant Stipa represented
himself and Newco, as its chairman, in addition to the three other corporate entities in this Share
The reappearance of defendant Stipa and Mr. Vera, who was the attorney-in-fact for
Aerohotelco in 2011, at the helm of DHC, Aruba Holding, Newco and Curacao Holding, all of
which developed the Project that Aerohotelco originally contracted with the plaintiff to assist in
obtaining both the land and the financing, is entirely consistent with the plaintiff’s allegation that
these Project Developers are related entities to Aerohotelco that were incorporated to succeed
Aerohotelco’s interest in developing the Project. The similarity in the names of all of the
corporate defendants—all of which start with the word Desarrollos, and nearly all of which
incorporate the word Hotelco—and their involvement in the same type of work—development of
the luxury hotel on the same tract of land in Aruba—further corroborate that they are related to
Therefore, this Court finds that the plaintiff has alleged sufficient facts for the exercise of
personal jurisdiction over the Project Developers, as related entities to Aerohotelco in the
development of the Aruba project, based on the forum selection clause and other terms of the
Investment Banking Agreement. 6
The forum selection clause applies only to the “rights of the Parties under this Agreement,” Investment
Banking Agreement § 5, but the Court may nonetheless exercise personal jurisdiction over the defendants as to both
of the plaintiff’s breach of contract and quantum meruit claims. See FAC Count I & II. Quantum meruit only
provides relief if no contract governs, which would fall outside the “rights of the Parties under [the Investment
Banking] Agreement.” Investment Banking Agreement ¶ 5; see Rosenthal v. Sonneschein Nath & Rosenthal, LLP,
985 A.2d 443, 458 n.14 (D.C. 2009) (holding that the plaintiff may not recover under quantum meruit, a “noncontractual equitable doctrine,” where the plaintiff executed an agreement that governed the action at issue).
Pendant personal jurisdiction may be exercised over a defendant, however, “with respect to any of his claim that
arose out of the same core of operative facts as those claims which clearly [fall] within the scope of” the Court’s
personal jurisdiction. Oetiker v. Jurid Werke, GmbH, 556 F.2d 1, 4 (D.C. Cir. 1977). Here, the plaintiff’s breach of
contract claim shares a common nucleus of operative facts with its quantum meruit claim, since both claims arise out
of the plaintiff’s efforts, and alleged success, in obtaining financing from AIB Bank for Aerohotelco and its
successor companies for the development of the Project in Palm Beach, Aruba. For this reason, the exercise of
pendant personal jurisdiction over the plaintiff’s quantum meruit case serves the interests of “‘judicial economy,
convenience and fairness to litigants’” so that the facts need only be litigated once. Id. at 5 (quoting United Mine
Workers v. Gibbs, 383 U.S. 715, 726 (1966)). Consequently, the Court may exercise personal jurisdiction over the
defendants as to both of the plaintiff’s claims.
Accordingly, the defendants’ motion to dismiss on the basis of lack of personal
jurisdiction is denied.
Sufficiency of Service on Defendants
Even if the plaintiff has established a prima facie case of personal jurisdiction, the law is
well settled that “[a] federal court may assert personal jurisdiction over a defendant only if ‘the
procedural requirements of effective service of process are satisfied.’” Freedom Watch, 766
F.3d at 78 (quoting Mann v. Castiel, 681 F. 3d 368, 372 (D.C. Cir. 2012) (internal citations
omitted)). “Service of process, under longstanding tradition in our system of justice, is
fundamental to any procedural imposition on a named defendant.” Murphy Bros., Inc. v.
Michetti Pipe Stringing, Inc., 526 U.S. 344, 350 (1999). This is because service is necessary, but
not sufficient, to allow a court to exercise personal jurisdiction over a defendant. See Mwani,
417 F.3d at 8 (noting that “service of process does not alone establish personal jurisdiction”).
Indeed, “[b]efore a court may exercise personal jurisdiction over a defendant, there must be more
than notice to the defendant . . . there also must be authorization for service of summons on the
defendant and a constitutionally sufficient relationship between the defendant and the forum.”
Id. (internal quotation marks and citations omitted; alteration in original).
When sufficiency of service is challenged, the plaintiff bears the burden of demonstrating
that service has been effected properly. See Mann, 681 F.3d at 372 (noting that, under Federal
Rule of Civil Procedure 4, “the plaintiff has the burden to demonstrate that the procedure
employed to deliver the papers satisfies the requirements” of proper service) (internal quotation
marks omitted); 4A Charles Alan Wright & Arthur R. Miller, FEDERAL PRACTICE AND
PROCEDURE § 1083 (3d ed. 2014) (“[T]he party on whose behalf service of process is made has
the burden of establishing its validity . . . to do so, she must demonstrate that the procedure
employed to deliver the papers satisfied the requirements of the relevant portions of Rule 4 and
any other applicable provision of law.”). Insufficient service of process on a defendant
“warrant[s] the court’s dismissing [the plaintiff’s claims] without prejudice” under Federal Rule
of Civil Procedure 12(b)(5). Simpkins v. District of Columbia Gov’t, 108 F.3d 366, 369 (D.C.
The plaintiff in this case, prior to serving the defendants, moved for leave to effect
alternative service on the defendants. See Pl.’s Mot. Alt. Service. “[T]he decision whether to
allow alternative methods of serving process under Rule 4(f)(3) is committed to the sound
discretion of the district court.” Freedom Watch, 766 F.3d at 81 (citation omitted). In light of
the plaintiff’s previous failed attempt to serve Aerohotelco in accordance with the Hague
Convention, its failed efforts to “identify or confirm addresses for several of the Defendants,”
and its representation that the defendants have retained U.S. counsel to represent them in a
separate case in Connecticut, “and thus are presumably in regular contact with Defendants,” Pl.’s
Mot. Alt. Serv. at 9, the Court granted the plaintiff’s motion and, pursuant to Rule 4(f)(3),
allowed the plaintiff to serve the foreign defendants via email and registered mail to the
defendants’ “‘retained litigation counsel’ in the unrelated U.S. District Court for the District of
Connecticut matter.” Minute Order, Granting the Plaintiff’s Motion for Leave to Effect
Alternative Service on Defendants, dated April 21, 2015. The defendants, who were served in
accordance with the Court order, have moved to dismiss the complaint for improper service
under Rule 4(f)(3), Defs.’ Mem. at 11, which essentially amounts to reconsideration of the
Court’s order granting the plaintiff leave to effect alternate service.
In challenging the propriety of service in accordance with this Court’s order, the
defendants argue that: (1) “Rule 4(f)(3) may not be used as a means of serving a party within a
judicial district of the United States,” Defs.’ Mem. at 11 (emphasis in the original); (2) the
“[p]laintiff did not . . . demonstrate a minimum threshold effort to serve Defendants via Rule
4(f)(1) and the Hague Convention,” id. at 16; and (3) “[t]he manner of service was not permitted
under the Hague and not designed to minimize offense to Aruba, Curacao and Venezuela,” id. at
19. None of these arguments has merit.
Federal Rule of Civil Procedure 4(f)(3)
Under Rule 4(f) and (h), unless otherwise provided in federal law, an individual “may”
and a corporation “must” “be served at a place not within any judicial district or the United
States” by enumerated means, including broadly “by other means not prohibited by international
agreements, as the court orders.” Fed. R. Civ. P. 4(f)(3); see also Fed. R. Civ. P. 4(h)(2) (“[A] . .
. . foreign corporation . . . must be served . . . at a place not within any judicial district of the
United States, in any manner prescribed by Rule 4(f) for serving an individual, except personal
delivery under f(2)(C)(i).”). The defendants construe the prefatory language of Rules 4(f) and
(h) referring to when “an individual or business is to be ‘served at a place not within any judicial
district of the United States,’” as barring the plaintiff from effecting service through the
defendants’ counsel because he is in the United States. Defs.’ Mem. at 12–13 (quoting Fed. R.
Civ. P. 4(f) and 4(h)(2)) (emphasis in the original).
The defendants mainly rely on the non-binding opinion in Freedom Watch, Inc. v.
Organization of the Petroleum Exporting Countries (OPEC), 107 F. Supp. 3d 134, 137–39
(D.D.C. June 4, 2015), in which another Judge on this Court declined to authorize alternate
service on a foreign defendant under Rule 4(f)(3) via its United States counsel because Rule 4(f)
“provides no authorization for service occurring within the United States,” and because the
defendant in that case entered into an international agreement accepting service only through
certain “diplomatic channels.” Id. at 139.
As a preliminary matter, unlike in OPEC, no international agreement applicable to this
case expressly prohibits service via the defendants’ U.S. counsel through email and postal mail.
Second, the reasoning in OPEC assumes, without explanation, that “service” is complete when
the foreign defendant’s United States counsel physically receives the summons. This holding
was not mandated by the D.C. Circuit’s opinion prior to remand. To the contrary, the D.C.
Circuit suggested, without deciding, that “service on a foreign entity through its counsel in the
United States” may be permissible under Rule 4(f)(3) because “the attorney functions as a
mechanism to transmit the service to its intended recipient abroad.” Freedom Watch, 766 F.3d at
84 (remanding back to the district court to consider, in the first instance, whether to exercise its
discretion under Rule 4(f)(3) to authorize alternate service) (emphasis added). Thus, the D.C.
Circuit viewed service on the domestic counsel as a means to “transmit the service,” which
service would be completed abroad upon transmittal to the intended party subject to the suit.
This Court disagrees with the defendants’ cramped interpretation of Rule 4(f) and instead
holds that permitting service of a foreign individual or corporation through retained United
States counsel does not run afoul of the rule’s application to individuals and corporations,
located in foreign countries, where service will be completed. As another court concluded,
“court orders generally crafted under Rule 4(f)(3) require transmission of service papers to a
foreign defendant via a domestic conduit like a law firm or agent—ultimately, the foreign
individual is served and thereby provided notice outside a United States judicial district, in
accordance with Rule 4’s plain language.” In re Cathode Ray Tube (CRT) Antitrust Litig., 27 F.
Supp. 3d 1002, 1009–1010 (N.D. Cal. 2014). Consequently, that court rejected the defendant’s
interpretation of Rule 4(f) that an order permitting service in Washington D.C., was “facially
deficient because Rule 4(f) empowers courts to authorize service of process ‘at a place not within
any judicial district of the United States.’” Id (quoting Fed. R. Civ. P. 4(f)).
Indeed, the D.C. Circuit observed approvingly that “[a] number of courts . . . have
sanctioned service on United States counsel as an alternative means of service under Rule 4(f)(3)
without requiring any specific authorization by the defendant for the recipient to accept service
on its behalf.” Freedom Watch, 766 F.3d at 83 (citing U.S. Commodity Futures Trading
Comm’n v. Aliaga, 272 F.R.D. 617, 619–20 (S.D. Fla. 2011); In re Potash Antitrust Litig., 667 F.
Supp. 2d 907, 931–32 (N.D. Ill. 2009); LG Elecs., Inc. v. ASKO Appliances, Inc., No. 08-828
(JAP), 2009 WL 1811098, at * 4 (D. Del. June 23, 2009); RSM Prod. Corp. v. Fridman, No. 06
CIV. 11512 (DLC), 2007 WL 2295907, at *1-6 (S.D.N.Y. Aug. 10, 2007); Brookshire Bros. v.
Chiquita Brands Int’l, No. 05-CIV-21962, 2007 WL 1577771, at *2 (S.D. Fla. May 31, 2007));
see also Rio Props., 284 F.3d at 1016–17 (“expressly agree[ing] with the district court's handling
of this case and its use of Rule 4(f)(3) to ensure the smooth functioning of our courts of law”
where service authorized on foreign entity by regular mail to its U.S. counsel and its
international courier, and by email to its Internet address); Richmond Techs., Inc. v. Aumtech
Bus. Solutions, 2011 U.S. Dist. LEXIS 71269, 44–46 (N.D. Cal. July 1, 2011) (authorizing
service upon a foreign defendant's United States-based counsel under Rule 4(f), noting this “is a
common form of service ordered under Rule 4(f)(3)”); Knit With v. Knitting Fever, Inc., Nos.
08-4221, 08-4775, 2010 WL 4977944, at *4 (E.D. Pa. Dec. 7, 2010) (“Repeatedly, courts around
the country have found that service upon a foreign defendant through counsel is appropriate to
prevent further delays in litigation.”); Tracfone Wireless, Inc. v. AU Optronics Corp. (In re TFTLCD (Flat Panel) Antitrust Litig.), 270 F.R.D. 535, 538 (N.D. Cal. 2010) (granting plaintiff’s
motion to serve foreign defendant through its U.S. counsel); Ehrenfeld v. Salim a Bin Mahfouz,
No. 04 Civ. 9641, 2005 WL 696769, at *3 (S.D.N.Y. Mar. 23, 2005) (authorizing service on
foreign defendant's United States counsel where counsel was “in communication with Defendant
in relation to the pending legal proceedings in the United States . . . and will know how to locate
Defendant”); FMAC Loan Receivables v. Dagra, 228 F.R.D. 531, 534 (E.D. Va. 2005)
(authorizing service on foreign defendant's United States lawyer where defendant had been “in
constant communications with his attorney”).
Ultimately, Rule 4(f) is concerned with providing a method of service that is reasonably
calculated to “‘notif[y] a defendant of the commencement of an action against him.’” Freedom
Watch, 766 F.3d at 78 (quoting Mann v. Castiel, 681 F.3d 368, 372 (D.C. Cir. 2012)). The
defendants’ argument focuses on an arcane notion of where service is physically made by the
plaintiff and obscures this guiding principle. The defendants are not being haled, unexpectedly,
into a foreign court. These defendants are sophisticated and worldly, doing business in one part
of the world, while negotiating with a business partner in another, and, most significantly,
choosing a forum selection clause outside their native countries. The District of Columbia is the
defendants’ deliberately negotiated chosen venue to litigate claims arising from the Investment
The defendants have also availed themselves of the U.S. legal system. Specifically, in a
parallel civil action to the receivership action described supra in note 3, the Securities and
Exchange Commission filed suit against the perpetrator of the Ponzi scheme and the corporate
entities he allegedly controlled to recover fraudulently obtained funds. Complaint ¶¶ 1, 6, SEC v.
Illarramendi, No. 03:11-cv-00078-JBA (hereinafter “Illarramendi”) (D. Conn. Jan. 14, 2011),
ECF No 1. The Project Developers, not named as defendants, entered special appearances,
through the same U.S. counsel used to effect service in the instant case, in order to seek
dissolution of an order requiring the placement into escrow of the $15 million the Project
Developers received, without consideration, from the investigated entities in an allegedly
fraudulent transfer. See Mem. Supp. Mot. Dissolve Ex Parte Order Freezing Assets, Transferring
Assets to Bank Within Court’s Jurisdiction, and Granting Limited Discovery (“Project
Developers’ Mem. Supp. Mot. Dissolve Ex Parte Order Freezing Assets”) at 2–3, id. (D. Conn.
Apr. 4, 2014), ECF No. 865-1; see also Compl. ¶¶ 37–38, 46, Carney v. Stipa Sprecase, No.
3:14-cv-00925-SRU (D. Conn. June 25, 2014), ECF No. 1. In these circumstances, the plaintiff,
an American corporation, will not be deprived of the opportunity to vindicate its rights under the
agreement entered with the defendants in the venue to which all the parties agreed.
Accordingly, the Court’s Minute Order, dated April 21, 2015, permitting the plaintiff to
serve the foreign defendants through their U.S. counsel was authorized under Rule 4(f)(3), and
service in accordance with that order properly effected service on the defendants.
Efforts to Effect Service Under Federal Rule of Civil Procedure 4(f)(1)
and the Hague Convention
The defendants next argue that they were improperly served because the plaintiff failed to
first demonstrate “a minimum threshold effort to serve Defendants via Rule 4(f)(1) and the
Hague Convention,” before invoking Rule 4(f)(3). Defs.’ Mem. at 16–17. The defendants’
reliance on non-binding district court cases from outside this Circuit is unavailing. The Ninth
Circuit, in Rio Properties, 284 F.3d at 1015, persuasively reasoned that “court-directed service
under Rule 4(f)(3) is as favored as service available under Rule 4(f)(1) or Rule 4(f)(2).” This
conclusion is based on the plain text of Rule 4(f). The Rio Properties Court explained that “Rule
4(f)(3) is one of three separately numbered subsections in Rule 4(f), and each subsection is
separated from the one previous merely by the simple conjunction ‘or.’ . . . Moreover, no
language in rules 4(f)(1) or 4(f)(2) indicates their primacy, and certainly rule 4(f)(3) includes no
qualifiers or limitations which indicate its availability only after attempting service of process by
other means.” Id.
Other courts, including this one, that have considered this issue have concurred with the
Ninth Circuit. See Angio Dynamics, Inc. v. Biolitec, AG, 780 F.3d 420, 429 (1st Cir. 2015) (“By
its plain terms, Rule 4(f)(3) does not require exhaustion of all possible methods of service before
a court may authorize service by ‘other means,’ such as service through counsel and by email.”);
Enovative Techs., LLC v. Leor, 622 Fed. App’x. 212, 214 (4th Cir. 2015) (“Rule 4(f)(3) does not
denote any hierarchy or preference for one method of service over another.” (citing Rio Props.,
284 F.3d at 1015)); U.S. ex rel. Barko v. Halliburton Co., 952 F. Supp. 2d 108, 116 (D.D.C.
2013) (holding Rule 4(f)(3) “is ‘neither a last resort nor one of extraordinary means,’ but is
‘merely one means among several which enables service of process on an international
defendants’” (citing Rio Props., 284 F.3d at 1015)).
Thus, contrary to the premise of the defendants’ argument, the plaintiff is not required to
first demonstrate “a minimum threshold effort to serve Defendants via . . . the Hague
Convention.” Defs.’ Mem. at 16.
Even if the plaintiff were obliged to attempt service under the Hague Convention, this
burden would have been satisfied in this case. The plaintiff attempted to comply with the Hague
Convention to serve the original complaint on Aerohotelco. Pl.’s Mot. Alt. Serv. at 4. The
plaintiff translated the complaint and summons “into Spanish and then provided them to the State
Department’s contracted international process server . . . for forwarding to the Venezuelan
Central Authority.” Id. This effort was unsuccessful, however, because the address the plaintiff
had for Aerohotelco was no longer valid, and the plaintiff had no other address. Pl.’s Opp’n at
18. Despite the plaintiff’s “thorough investigation utilizing all of the tools available . . . to check
public records,” including contacting the Aruban Department of Economic Affairs, Commerce,
and Industry, it was unable to obtain valid addresses for any of the defendants named in the
plaintiff’s first amended complaint. Id. at 18–19. Consequently, the plaintiff sought an
alternative method to serve the defendants with the First Amended Complaint, as Rule 4(f)
Service Effected in Accordance with the Hague Convention
Lastly, the defendants argue that service through their U.S. Counsel, who was sent the
summons and First Amended Complaint via email and postal mail, was improper because “the
manner of service was not permitted under the Hague [Convention] and not designed to
minimize offense to Aruba, Curacao, and Venezuela.” Defs.’ Mem. at 19. According to the
defendants, this alternative service is improper because (1) “Venezuela, which, in this case, is the
country of residence for three of the Defendants, specifically objects to ‘the transmission of
documents through postal channels,” as laid out in Article 10 of the Hague Convention; and (2)
“the local laws of Curacao and Aruba do not permit defendants to be served via email, or
registered mail, on their counsel.’” Id. at 20. These arguments are unavailing.
First, as the plaintiff correctly points out, the defendants were properly served because
“‘service by email is not prohibited by the Hague Convention . . . . Email service has been
approved even where, as here, the country objects to Article 10 of the Hague Convention.””
Pl.’s Opp’n at 22 (quoting Lexmark Int’l, Inc. v. Ink Techs. Printer Supplies, LLC, 295 F.R.D.
259, 261–62 (S.D. Ohio 2013) (collecting cases)). In other words, a country’s objection to
Article 10 does not constitute an express rejection of service by email. See AMTO, LLC v.
Bedford Asset Mgmt., LLC, No. 14-cv-9913, 2015 WL 3457452, at * 7 (S.D.N.Y. June 1, 2015)
(“the Court concludes that, as a general matter, service via email for a defendant residing in
Russia may qualify as an alternative means of service under Rule 4(f)(3),” even though Russia
has objected to Article 10 of the Hague Convention because that is not tantamount to a rejection
of service by electronic mail (collecting cases)); WhosHere, Inc. v. Orun, No. 1:13-cv-00526AJT, 2014 WL 670817, at *3 (E.D. Va. Feb. 20, 2014) (permitting service by email on a
defendant in Turkey, which objected to Article 10, because email is not a method of service
explicitly listed in Article 10); FTC v. PCCare247 Inc., No. 12-cv-7189, 2013 WL 841037, at *4
(S.D.N.Y. Mar. 7, 2013) (granting service by email and Facebook on a defendant in India, even
though India has objected to Article 10 because “[s]ervice by email and Facebook are not among
the means listed in Article 10”); Henry F. Teichmann, Inc. v. Caspian Flat Glass OJSC, 2:13-cv458, 2013 WL 1644808, at *1 (W.D. Pa. Apr. 16, 2013) (allowing service of a foreign defendant
by email even though the foreign country has objected to Article 10). The reasoning in these
cases is persuasive, and this Court similarly concludes that electronic service, used here to
transmit the summons and the First Amended Complaint to the defendants’ U.S. counsel, does
not violate the terms of the Hague Convention.
Second, the defendants argue that even if the alternate service is not prohibited by the
Hague Convention, it would not “minimize offense” to the law of Aruba and Curacao, the
countries of residence for three of the defendants, because these two countries do not expressly
permit service by postal mail or email. Defs.’ Mem. at 20–21. At the outset, the D.C. Circuit
recently reiterated that as long as not prohibited by an international agreement, “the district court
retains discretion under Rule 4(f)(3) to authorize service even if the alternative means would
contravene foreign law.” Freedom Watch, 766 F.3d at 84 (citing Rio Props., 284 F.3d at 1014).
The district court need only make “‘an earnest effort . . . to devise a method of communication
that is consistent with due process and minimizes offense to foreign law.’” Id. (quoting Fed. R.
Civ. P. 4 Notes of Advisory Comm. On Rules—1993 Amendments) (emphasis in the original).
In reaching this conclusion, the Circuit compared the 1993 Advisory Committee Notes for Rule
4(f)(2), which state that “[s]ervice by methods that would violate foreign law is not generally
authorized,” with the Notes for Rule 4(f)(3), which more permissibly state that only “an earnest
effort should be made to devise a method of communication that is consistent with due process
and minimizes offense to foreign law.” Id. (citation omitted) (emphasis in the original). The
Circuit opined that “even if service cannot be effectuated . . . through United States counsel
without violating Austrian law, the district court could still authorize such service if it would
‘minimize’ offense to Austrian law.” Id. In short, compliance with foreign laws is not
absolutely necessary under the Rule 4(f)(3).
Despite this binding clarification of the applicable law from the D.C. Circuit, the
defendants cite to authorities from outside this Circuit, to argue that “authorizing Rule 4(f)(3)
service in a manner other than what is prescribed by the foreign state’s law ‘would constitute a
substantial affront’ to foreign law.” Defs.’ Mem. at 21 (citing Prewitt Enters., Inc. v. Org. of
Petroleum Exporting Countries, 353 F.3d 916, 927–28 (11th Cir. 2011) and four district court
cases). As support, the defendants submitted a letter from an attorney in Aruba summarizing the
requirements for service in Aruba and Curacao. Based upon this letter, Aruba and Curacao
apparently do not explicitly forbid service via postal mail or email, but rather do not prescribe
these methods as acceptable modes of service. In such circumstances, other courts to address
this issue have not hesitated to approve alternative service as presenting only a minimal offense
to the foreign country’s laws. See Marks v. Alfa Grp., 615 F. Supp. 2d 375, 379 (E.D. Pa. 2009)
(“[T]he law of the principality does not expressly prohibit service by registered mail. As a result,
an order pursuant to Rule 4(f)(3) approving service by registered mail will not offend foreign
law.”); Export-Import Bank of U.S. v. Asia Pulp & Paper Co., 03Civ.8554(LTS)(JCF), 2005 WL
1123755, at *5 (S.D.N.Y. May 11, 2005) (approving service via DHL international courier
“[e]ven if it is technically in violation of Indonesian service requirements,” because “any offense
to that country’s sovereignty is minimal”). Likewise, here, this Court finds that, absent an
express prohibition, permitting alternate service via postal mail or email, when such service is
calculated to notify the foreign defendants in a timely manner, would “minimize offense” to
Aruban and Curacaoan law, even though such service does not technically comport with the
specific terms of Aruban and Curacaoan law.
Accordingly, the defendants’ motion to dismiss based on improper service is denied.
Having concluded that personal jurisdiction may be exercised over the defendants and
that they were properly served pursuant to Rule 4(f)(3), the Court now turns to the defendants’
motion to dismiss the First Amended Complaint for failure to state a claim.
Failure to State a Claim
As noted supra, the plaintiff asserts two claims against all the defendants: breach of
contract and, in the alternative, quantum meruit arising from the defendants’ refusal to pay the
plaintiff the “Debt Fee,” after the plaintiff assisted the defendants in obtaining financing for the
Project from AIB Bank. FAC ¶¶ 44–52; 57–59. The defendants’ arguments to dismiss, under
Federal Rule of Civil Procedure 12(b)(6), are addressed below as to each claim.
Breach of Contract
“To prevail on a claim of breach of contract, a party must establish (1) a valid contract
between the parties; (2) an obligation or duty arising out of the contract; (3) a breach of that duty;
and (4) damages caused by breach.” Francis v. Rehman, 110 A.3d 615, 620 (D.C. 2015)
(quoting Tsintolas Realty Co. v. Mendez, 984 A.2d 181, 187 (D.C. 2009) (emphasis in the
original)). The plaintiff alleges that the Investment Banking Agreement is a valid contract,
pursuant to which the “[d]efendants retained BI as their exclusive advisor and investment banker
. . . to raise financing for the Project.” FAC ¶ 43. Specifically, the plaintiff alleges that the
Investment Banking Agreement obligates the defendants to pay the plaintiff, as a Debt Fee, “a
percentage of the financing committed to the Project as a result, directly or indirectly, of BI’s
efforts,” id. ¶ 44, “if the financing for the Project is concluded within thirty-six (36) months
following the termination of this Agreement from sources introduced to the Project by BI,” id. ¶
45. The plaintiff alleges that “BI . . . satisfied all of its material duties under the Agreement,” id.
¶ 48, by introducing the defendants to AIB Bank, which resulted in an “Indicative Term Sheet”
in March 2007 and, subsequently in 2009, the Facility Agreement, which amounted to “a
definitive and enforceable financing agreement for the Project,” id. ¶¶ 21, 30, 49. Nonetheless,
the defendants refused to pay the plaintiff the agreed upon Debt Fee. Id. ¶¶ 28, 52.
The defendants raise two grounds for dismissal of the breach of contract claim. First, the
defendants argue that Section 2.B of the Investment Banking Agreement requires the plaintiff to
secure binding financial commitments by April 2, 2007, eight weeks after the execution date of
the Investment Banking Agreement in order to be entitled to the Debt Fee—a requirement that
the defendants contend the plaintiff failed to meet. Defs.’ Mem. at 31 (quoting Investment
Banking Agreement § 2.B). The plaintiff concedes that it did not secure a binding loan
commitment on behalf of the defendants until 2009. After the plaintiff introduced the defendants
to AIB Bank, AIB Bank sent, on March 26, 2007, an “Indicative Term Sheet,” which was “only
for discussion purposes and does not constitute any legally binding or enforceable obligation on
the part of the bank to provide any financing.” Indicative Term Sheet at 3; FAC ¶¶ 18–21.
Negotiations continued for another two years until 2009, when AIB Bank entered into a Facility
Agreement, with “Aerohotelco or one of the other corporate Defendants.” FAC ¶ 30.
Nonetheless, the plaintiff contend that it has fulfilled its obligation under Section 2.B, and the
other sections, of the Investment Banking Agreement, entitling it to the Debt Fee because
Section 2.B requires only the plaintiff to obtain “financial commitments” that is “something less
than fully ‘binding’—such as a detailed proposal that could be submitted in support of
Aerohotelco’s bid,” and the Indicative Term Sheet satisfies that obligation. Pl.’s Opp’n at 37.
This dispute turns on a question of interpretation of Section 2.B, cited by both parties.
“‘The proper interpretation of a contract, including whether a contract is ambiguous, is a legal
question[.]” Abdelrhman v. Ackerman, 76 A.3d 883, 887 (D.C. 2013) (citing Tillery v. District
of Columbia Contract Appeals Bd., 912 A.2d 1169, 1176 (D.C. 2006)). Under D.C. law, “‘the
written language embodying the terms of an agreement will govern the rights and liabilities of
the parties [regardless] of the intent of the parties at the time they entered in the contract, unless
the written language is not susceptible of a clear and definite undertaking.’” Id. at 888 (quoting
Dyer v. Bilaal, 983 A.2d 349, 354–55 (D.C. 2009)). The task of interpreting the terms of a
contract starts with the “plain meaning of the language on the face of a fully integrated contract.”
Id. (citing Tillery, 912 A.2d at 1176). A contract is not ambiguous if “‘the court can determine
its meaning without any other guide than a knowledge of the simple facts on which, from the
nature of language in general, its meaning depends.’” Sahrapour v. LesRon, LLC, 119 A.3d 704,
708 (D.C. 2015) (quoting Joyner v. Estate of Johnson, 36 A.3d 851, 856 (D.C. 2012)). On the
other hand, “[a] contract . . . is ambiguous if ‘it is, or the provisions in controversy are,
reasonably or fairly susceptible of different constructions or interpretations, or of two or more
different meanings . . . .” Id. (quoting Joyner, 36 A.3d at 856). If the terms of the contract are
ambiguous “‘[e]xtrinsic or parol evidence which tends to contradict, vary, add to, or subtract
from the terms of a written contract” may be considered. Abdelrhman, 76 A.3d at 888 (quoting
Segal Wholesale v. United Drug Serv., 933 A.2d 780, 783 (D.C. 2007)). “[C]onsideration of
such extrinsic evidence is for the fact finder[.]” District of Columbia v. District of Columbia
Pub. Serv. Com’n, 963 A.2d 1144, 1156 (D.C. 2009).
The Investment Banking Agreement is not so clear as the defendants would suggest. The
entire Agreement consists of four pages, divided in seven paragraphs, some of which are further
divided into “sections.” Paragraph 2 of the Agreement outlines the plaintiff’s various duties
along with the “remuneration and reimbursement” owed to the plaintiff. Section 2.B, which
provides the basis for the defendants’ argument that the plaintiff was obligated to “secure
binding ‘financial commitments’” within eight weeks to be entitled to the Debt Fee, provides in
Bazarian International proposes to receive the financial commitments within eight
weeks from date of this Agreement with cooperation of the Company. For its
time and effort in advising the company during the RFP process as well as in
seeking and arranging the financing for the Project, Bazarian International will
receive a monthly retainer . . . . If Bazarian International is successful in arranging
financial commitments, the Company, at its sole discretion, may continue the
retainer and secure Bazarian International’s services until loan closing and/or
Investment Banking Agreement § 2.B. This section does not indicate any promise or guarantee
by plaintiff “to receive the financial commitments within eight weeks,” but much less firm
language of only “proposes” to do so. In any event, the Debt Fee, which the defendants link to
the plaintiff’s ability to secure “financial commitments within eight weeks” of the Agreement, is
not mentioned at all in this section. Id. Instead, Section 2.B refers to the plaintiff’s entitlement
to a “monthly retainer,” which is not at issue in this lawsuit.
The Debt Fee is discussed in Section 2.C as the remuneration the plaintiff is entitled to
receive “[u]pon settlement of binding loan and/or guarantee commitments for the Project
obtained directly or indirectly by Bazarian International.” Id. § 2.C. This paragraph puts no time
constraint on the plaintiff’s entitlement to the Debt Fee. Instead, the following section of the
Agreement clarifies that “[t]he investment banking fee(s) described in [Section] 2.C above are
due and will become payable only upon the earlier of the first draw-down of funds and/or first
infusion of equity capital.” Id. § 2.D. Moreover, if the defendants decided “not to proceed with
the project or draw down the financing referred to herefor in Section 2.C after a fully executed
commitment has been extended to the Project, Bazarian International will receive from the
company a ‘drop-dead’ fee of .5%.” Id. § 2.E. Finally, in Paragraph 3, the Agreement expressly
states that the plaintiff “will be entitled to the investment banking fees provided in [Section] 2.C.
if the financing for the Project is concluded within thirty-six (36) months following the
termination of this Agreement from sources introduced to the Project by Bazarian International.”
Id. ¶ 3.
This more comprehensive review of the Investment Banking Agreement reveals the
ambiguity in the reference to “financial commitments” in Section 2.B. While the defendants
urge that the words “financial commitments” should be interpreted to mean final and binding
obligations, this construction simply cannot be squared with the other provisions in the
Agreement for two reasons.
First, Section 2.C provides that “[u]pon settlement of binding loan and/or guarantee
commitments for the Project obtained directly or indirectly by Bazarian International, Bazarian
International will be entitled to receive investment banking fees,” Investment Banking
Agreement § 2.C, which distinguishes the “binding” nature of the loan commitments triggering
the Debt Fee from the non-binding nature of the “financial commitments” that the plaintiff only
“proposes to receive” in Section 2.B. Second, Paragraph 3 provides for a full thirty-six months
to “conclude” the financing, and, thus, clearly contemplates that the “financial commitments” the
plaintiff “propose[d]” to obtain within the first eight weeks would be preliminary and not
“conclude[d]” within that timeframe, contrary to the defendants’ purported construction. In
short, the plain text of the contract highlights the ambiguity of the term “financial commitments.”
Therefore, the term “financial commitments” is “reasonably or fairly susceptible of different
constructions or interpretations,” Sahrapour, 119 A.3d at 708, including the plaintiff’s
interpretation that the “financial commitments” the plaintiff “proposes to receive . . . eight weeks
from the date of the Agreement” is satisfied by the Indicative Term Sheet from AIB Bank,
which, though not fully binding, was “a detailed proposal that could be submitted in support of
Aerohotelco’s bid” to win the Palm Beach Option from the Aruba government, Pl.’s Opp’n at 37.
The plaintiff’s interpretation appears particularly reasonable in light of the context for the
Investment Banking Agreement. Aerohotelco sought the plaintiff’s assistance in obtaining an
option from the Government of Aruba “to obtain a leasehold interest” in a piece of land
Aerohotelco wanted to develop into a luxury hotel. Investment Banking Agreement § 1.B; FAC
¶ 13. Aerohoteco were required to submit a bid to the government by March 30, 2007, which is
exactly eight weeks after the date of the Agreement. Pl.’s Opp’n at 37. Aerohotelco would not
know whether it won the bid until much later. 7 FAC ¶ 24. The Agreement’s inclusion of the
eight week deadline, falling on the same date that Aerohotelco’s bid was due, for the plaintiff to
find “financial commitments” is unlikely to be coincidental. In this context, “financial
commitments” can reasonably be interpreted to indicate, as the plaintiff suggests, “a detailed
The plaintiff alleges that Aerohotelco won the leasehold interest “[i]n or about June 2008,” more than a
year after the submission of the bid. FAC ¶ 24.
proposal that could be submitted in support of Aerohotelco’s bid,” Pl.’s Opp’n at 37, and not a
fully binding loan document, since a lender is unlikely to enter into any binding financial
commitments for a project that has not yet materialized. Consequently, the contract language
does not expressly preclude the plaintiff’s claim for breach of contract.
Second, the defendants argue that, even if the plaintiff were entitled to the Debt Fee, the
breach of contract claim may be asserted only against Aerohotelco because the other defendants
were not party to the Agreement and had no obligation to pay the Debt Fee to the plaintiff.
Defs.’ Mem. at 37. As support, the defendants cite Section 2.C of the Agreement, which
addresses the payment of the Debt Fee, and provides that the plaintiff “will be entitled to receive
investment banking fees from the Company,” which is defined as Aerohotelco. Investment
Banking Agreement § 2.C; Defs.’ Mem. at 37. The plaintiff did not address this contention in its
opposition, and, thus, appears to have conceded the issue. See generally Pl.’s Opp’n at 39–41;
Defs.’ Reply at 24. This interpretation limiting the obligation to pay the Debt Fee to only
Aerohotelco is consistent with D.C. law, which gives greater weight to “‘specific terms and exact
terms’” than to general language, such as that in the preamble. Abdelhrman, 76 A.3d at 891
(quoting Washington Auto. Co. v. 1828 L St. Assocs., 90 A.2d 869, 880 (D.C. 2006) (internal
Notwithstanding the absence of a contractual obligation, the plaintiff alleges that
Aerohotelco’s duty to pay the plaintiff the Debt Fee may be imputed to the Project Developers
because they are “alter egos” of Aerohotelco. 8 FAC ¶ 34. “Courts apply the ‘alter ego’ theory to
‘cast aside the corporate shield.’” Estate of Raleigh v. Mitchell, 947 A.2d 464, 470 (D.C. 2008)
The plaintiff also alleges, in the alternative, that the other co-defendants are “successors in interest” to
Aerohotelco, and are subject to successor liability. This alternate ground for liability need not be addressed since
the plaintiff has sufficiently alleged that the co-defendants are alter egos of Aerohotelco.
(quoting 1 WILLIAM MEADE FLETCHER, ET AL., FLETCHER CYCLOPEDIA OF THE LAW OF
CORPORATIONS § 41.35 (perm. ed., rev. 2006)). In order to “pierce the corporate veil,” and hold
the Project Developers liable as the alter egos of Aerohotelco, the plaintiff must demonstrate
“‘(1) unity of ownership and interest, and (2) use of the corporate form to perpetrate fraud or
wrong, or other considerations of justice and equity justify it.’” Id. (quoting Bingham v.
Goldberg, Marchesano, Kohlman, Inc., 637 A.2d 81, 93 (D.C. 1994)). “Although no single
factor controls, courts generally inquire, inter alia, whether corporate formalities have been
observed; whether there has been commingling of corporate and shareholder funds, staff and
property; whether a single shareholder dominates the corporation; whether the corporation is
adequately capitalized; and, especially, whether the corporate form has been used to effectuate a
fraud.” Lawlor v. District of Columbia, 758 A.2d 964, 975 (D.C. 2000); see also Meshel v. Ohev
Sholom Talmud Torah, 869 A.2d 343, 355 (D.C. 2005). Ultimately, “‘the [alter ego] doctrine
can be invoked only where equity requires the action to assist a third party.’” Estate of Raleigh,
947 A.2d at 471 (quoting McCarthy v. Azure, 22 F.3d 351, 362–63 (1st Cir. 1994) (internal
quotations omitted)) (alteration in the original).
Here, the plaintiff plausibly alleges a multitude of the factors courts consider when
deciding whether to pierce the corporate veil, such as shared ownership, a single dominating
shareholder, and use of the corporate form for fraud. These factual allegations, which must be
assumed to be true, along with the reasonable inferences that can be drawn from them, have
“nudged . . . from conceivable to plausible” the plaintiff’s assertion that the Project Developers
are alter egos of Aerohotelco. 9 Twombly, 550 U.S. at 555.
At trial, the plaintiff would have to prove, by a preponderance of evidence, that the Project Developers are
alter egos of Aerohotelco, and not merely plausibly allege that fact, which is the standard by which a motion to
dismiss for failure to state a claim is evaluated.
The plaintiff sufficiently alleges that Aerohotelco shares a unity of ownership and interest
with the Project Developers. FAC ¶¶ 3–8. As discussed supra in Part III.A, the former owner
and senior management of Aerohotelco now own and manage the other corporate defendants.
Defendant Stipa, former owner and president of Aerohotelco, is now president and chairman of
Newco. Stipa Decl. ¶ 5; Share Sale Agreement at 15. In addition, defendant Stipa is also at least
a part-owner in Curacao Holding. Share Sale Agreement at 16 (“Whereas Stipa and Newco 22 . .
. wish to sell part of their shares in Hotelco Curacao . . . .”). The Managing Director of the two
remaining corporate defendants, DHC and Aruba Holding, is the former attorney-in-fact for
Aerohotelco. Vera Decl. ¶ 3. Moreover, the Project Developers, who are controlled by former
Aerohotelco officers, not only continue to engage in the development of the luxury hotel in
Aruba, the Project first espoused by Aerohotelco, they also deliberately chose to intermingle
their financial liabilities by becoming joint guarantors of obligations assumed under the Share
Sale Agreement, which provides additional financing for the Project. Share Sale Agreement §
2.7 (“In order to guarantee fulfillment of the obligations under this Agreement . . . Stipa on his
own behalf, as well as his capacity as representative of [Curacao Holding], [Aruba Holding] and
[DHC], all become joint guarantors and main payers of the obligations assumed by Newco  . . .
More significantly, defendant Stipa emerges as the dominating force behind all of the
corporate defendants. “‘Under the alter ego theory, the court may ignore the existence of the
corporate form whenever an individual so dominates an organization as in reality to negate its
separate personality.’” United States ex rel. Miller v. Bill Harbert Int’l Constr., Inc., 608 F.3d
871, 897 (D.C. Cir. 2010) (quoting Founding Church of Scientology of Wash., D.C., Inc. v.
Webster, 802 F.2d 1448, 1452 (D.C. Cir. 1986)). Defendant Stipa represented Aerohotelco in
the Investment Banking Agreement at issue. Investment Banking Agreement ¶ 1. Defendant
Stipa also served as the authorized representative for all of the Project Developers in the Share
Sale Agreement, in which he expressly acknowledged that all of the Project Developers were
either “directly or indirectly fully owned or related to [him],” Share Sale Agreement at 15, and,
tellingly, entered the same address for all of the Project Developers, including defendant Stipa in
his personal capacity, id. at 22. 10
Lastly, the plaintiff draws the reasonable inference from Aerohotelco’s transfer to the
Project Developers of valuable assets in an alleged effort to avoid paying the plaintiff the Debt
Fee. Pl.’s Opp’n at 40. The defendants do not dispute that even though Aerohotelco was
awarded the Palm Beach Option to lease the land, the lease was actually executed by DHC,
evidencing a transfer of the Palm Beach Option, FAC ¶ 24, and, further, that the other Project
Developers subsequently joined as developers of the Project, to the exclusion of Aerohotelco, id.
¶ 34, from which the plaintiff draws the reasonable inference that they lack “any independent
business purpose other than that contemplated for Aerohotelco,” Pl.’s Opp’n at 41 n.19. The
defendants also do not dispute the plaintiff’s allegation, based upon information contained in the
affidavits submitted by the managing directors of the corporate defendants, that the Project
Developers were incorporated shortly after Aerohotelco first informed the plaintiff that it would
not pay the Debt Fee. Pl.’s Opp’n at 40; FAC ¶ 28. Moreover, the defendants do not refute the
plaintiff’s allegation that defendant Stipa apparently created complex ownership relationships
between the corporate defendants, suggesting an effort to hide ownership, see Share Sale
Notably, defendant Stipa entered a special appearance in Illarramendi to move the court to dissolve an
order requiring transfer of allegedly fraudulently obtained assets, even though the order was directed to the corporate
Project Developers only and not to defendant Stipa personally. Project Developers’ Mem. Supp. Mot. Dissolve Ex
Parte Order Freezing Assets at 1 n.1. Defendant Stipa’s financial interests are evidently intimately intertwined with
those of the corporate Project Developers.
Agreement at 16 (“Whereas Newco  will sell 70% of its equity stake in [Curacao Holding] to
[Caracas Holding], a Venezuelan company to be fully owned by Stipa . . . .”). All of the above
described allegations, taken together, nudge the plaintiff’s claim from conceivable to plausible
that all of the defendants are but alter egos for each other. 11
Accordingly, the plaintiff’s breach of contract claim survives the defendants’ motion to
The defendants move to dismiss the plaintiff’s quantum meruit claim against all
defendants because “‘a party cannot recover on a claim of unjust enrichment for activities that
are covered by an express contract between the parties.’” Defs.’ Mem. at 38 (quoting
CapitalKeys, LLC v. Cyber, Inc., 875 F. Supp. 2d 59, 65 (D.D.C. 2012)). The Court agrees.
“The District of Columbia recognizes unjust enrichment as a species of quasi contract
that imposes ‘in the absence of an actual contract,’ ‘a duty . . . upon one party to requite another
in order to avoid the former’s unjust enrichment[,] . . . to permit recovery by contractual remedy
in cases where, in fact, there is no contract.” Vila v. Inter-Am. Inv., Corp., 570 F.3d 274, 279–80
(D.C. Cir. 2009) (quoting 4934, Inc. v. D.C. Dep’t of Empt. Servs., 605 A.2d 50, 55 (D.C.
1992)). Here, the parties do not dispute that the Investment Banking Agreement is a valid
contract entered into by the plaintiff, Aerohotelco, “and/or its successor companies or any related
entities which intend to invest in and/or develop the Project,” Investment Banking Agreement
(Preamble), which the plaintiff alleges includes the other co-defendants, Pl.’s Opp’n at 26–28;
The plaintiff also alleges that “[t]here is  a strong suggestion that, at least at one point, the nonAerohotelco Defendants were under-capitalized.” Pl.’s Opp’n at 41 n.19. While this allegation would be relevant,
see generally Anderson v. Abbott, 321 U.S. 349 (1944), this allegation cannot be considered because it does not
appear in the plaintiff’s first amended complaint, see McGinnis v. District of Columbia, 65 F. Supp. 3d 203, 211 n.1
(D.D.C. 2014) (“‘[I]t is axiomatic that a complaint may not be amended by the briefs in opposition to a motion to
dismiss.’” (quoting Arbitraje Casa de Cambio, S.A. de C.V. v. U.S. Postal Serv., 297 F. Supp. 2d 165, 170 (D.D.C.
see also supra Part II.A (finding personal jurisdiction over all defendants because the forum
selection clause in the Investment Banking Agreement binds all defendants as “successor
companies or . . . related entities which intend to invest in and/or develop the project”). The
Court’s finding that the Investment Banking Agreement requires only Aerohotelco to pay the
Debt Fee does not negate the binding force of the preamble as covering the remaining successors
or related defendants. Consequently, the plaintiff’s quantum meruit claim is foreclosed by the
Investment Banking Agreement, which expressly covers the plaintiff’s activities that form the
core of its quantum meruit claim.
Accordingly, the defendants’ motion to dismiss Count II is granted.
For the reasons stated above, the defendants’ motion to dismiss is granted in part and
denied in part. The defendants’ motion to dismiss based on lack of personal jurisdiction,
improper service and failure to state a claim as to Count I is denied. The defendants’ motion to
dismiss Count II for failure to state a claim is granted.
An Order consistent with this Memorandum Opinion will issue contemporaneously.
DATE: February 7, 2016
Digitally signed by Hon. Beryl A. Howell
DN: cn=Hon. Beryl A. Howell, o=U.S. District
Court for the District of Columbia,
ou=United States District Court Judge,
Date: 2016.02.07 12:28:34 -05'00'
BERYL A. HOWELL
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?