Koshani v. Barton et al (TWP2)
Filing
213
MEMORANDUM OPINION in support of the following Order as to summary judgment. Signed by District Judge Thomas W. Phillips on 3/20/19. (ADA)
IN THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF TENNESSEE
KNOXVILLE DIVISION
SHAFIQULLAH KOSHANI,
)
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
ERIC WAYNE BARTON, and
VANQUISH WORLDWIDE, L.L.C.,
Defendants.
No. 3:17-CV-265
MEMORANDUM OPINION
This
civil
action
is
before
the
court
for
consideration
of
Plaintiff/Counter-Defendant’s (“Plaintiff”) motion for summary judgment. [Doc. 203].
Defendants/Counter-Plaintiffs (“Defendants”) have filed a response, and Plaintiff has
submitted a reply. [Docs. 206, 211]. Also before the Court is Plaintiff’s motion for an
extension of time to file a reply, which Defendants do not oppose [doc. 208], and
Defendants’ motion to strike the evidence submitted with Plaintiff’s reply brief [doc. 212].
For the reasons that follow, the motion for extension of time [doc. 208] is granted, to the
extent that the Court has considered Plaintiff’s reply brief, the motion to strike [doc. 212]
is denied as moot, as the Court has not relied on the evidence submitted with Plaintiff’s
reply brief in formulating this opinion, and the motion for summary judgment [doc. 203]
is granted in part and denied in part.
I.
Background
The plaintiff, Shafiqullah Koshani, a citizen and resident of Afghanistan, filed suit
against defendants Eric Barton, a citizen of the United States, and Vanquish Worldwide,
LLC, alleging that he and Mr. Barton established a joint venture in Afghanistan in 2010.
[Doc. 41 at 103]. Plaintiff maintains that the parties named their new business Vanquish
Worldwide (“Vanquish Afghanistan”) and pursued a contract with the United States Army,
which was soliciting bids for a project known as “National Afghan Trucking,” or “NAT,”
in Afghanistan. [Id. at 1, 4-5]. Plaintiff alleges that Mr. Barton submitted a proposal to
the United States in response to the NAT solicitation, but instead of submitting it in
Vanquish Afghanistan’s name, he submitted the proposal on behalf of a company with a
nearly identical name, Vanquish Worldwide, LLC (“Vanquish United States”)—a
company that he allegedly owned in Tennessee—and tabbed Vanquish Afghanistan as a
subcontractor that would render services under the contract. [Id. at 3, 7]. The United States
ultimately awarded the NAT contract to Vanquish United States. [Id. at 8]. Plaintiff
ultimately alleges that he was not paid profits from the NAT contract, and filed suit to
recover those lost profits. [Id. at 12].
Defendants respond with several counterclaims. [Doc. 75]. Defendants state that
they submitted a proposal for the NAT contract which listed Vanquish United States as the
prime contractor and Vanquish Afghanistan as the subcontractor, after their initial
subcontractor, United Sadat Transportation and Logistics Company (“USC”), partially
owned by Plaintiff’s brother Farid Koshani, backed out. [Id. at 24-25]. After receiving the
NAT contract, Vanquish United States allegedly hired Plaintiff’s brother Jawid Koshani to
2
serve as Operations Manager under the NAT contract, and Jawid signed a Confidentiality,
Non-Disclosure, and Non-Competition Agreement (“NDA”) with Vanquish United States.
[Id. at 25]. The NDA stated that, during his employment, and for one year after, Jawid
would not “[s]olict, divert, or appropriate, or attempt to solicit, divert or appropriate,
directly or by assisting others, any business from any of Vanquish’s customers . . . for
purposes of providing products or services that are competitive with those provided by
Vanquish[.]” [Id. at 26].
Defendants allege that, after the award of the NAT Contract, Plaintiff refused to
allow Vanquish Afghanistan to perform trucking missions, and suggested that Defendants
use USC as a subcontractor instead. [Id.]. After further discussion, Plaintiff ultimately
agreed to use Vanquish Afghanistan for NAT trucking missions, and signed several
agreements on the matter. [Id. at 26-27]. However, Defendants state that they later learned
that Plaintiff did not truly intend for Vanquish Afghanistan to perform any trucking
missions, and every mission was given to USC rather than Vanquish Afghanistan. [Id. at
27].
Defendants allege that at the end of the NAT contract base period, when the United
States Army began awarding the first option year, Plaintiff began “making plans to steal
the NAT Contract,” and recruited his brother Jawid to assist in this scheme. [Id.].
Defendants state that Plaintiff created a new Afghan sole proprietorship under a name
similar to Vanquish Worldwide that was 100% owned by Plaintiff, registered it with
Afghan authorities, and set up a new Afghan bank account for the sole proprietorship. [Id.
at 28]. Defendants allege that Plaintiff and Jawid made false statements to the U.S.
3
Government in an effort to convince officials to issue the NAT contract option year to the
sole proprietorship rather than Vanquish United States. [Id.]. Defendants state that
Plaintiff lied to government officials about his entitlement to the NAT contract option year,
as well as stating that Mr. Barton had forged signatures on contracts and lied to contracting
officials. [Id. at 29-30]. Defendants allege that Plaintiff’s efforts were successful when
the government suspended payments to Vanquish United States under the NAT contract,
and also suspended Vanquish United States from receiving any missions under the NAT
contract, beginning in October 2012. [Id. at 30].
In their counterclaims, Defendants allege claims for breach of contract, breach of
the covenant of good faith and fair dealing, breach of the duty not to misuse partnership
assets, tortious interference with contract, statutory inducement of a breach of contract, and
conspiracy. [Id. at 31-39]. Plaintiff now seeks summary judgment on these counterclaims.
II.
Standard of Review
Summary judgment is appropriate when the moving party shows that the record—
the admissions, affidavits, answers to interrogatories, declarations, depositions, or other
materials—is without a genuine issue of material fact and that the moving party is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56(a), (c); Celotex Corp. v. Catrett, 477
U.S. 317, 325 (1986). The moving party has the initial burden of identifying the basis for
summary judgment and the portions of the record that lack genuine issues of material fact.
Celotex, 477 U.S. at 323. The moving party discharges that burden by showing “an absence
of evidence to support the nonmoving party’s case,” at which point the non-moving party,
4
to withstand summary judgment, must identify facts in the record that create a genuine
issue of material fact. Id. at 324-25.
Not just any factual dispute will defeat a motion for summary judgment—the
requirement is “that there be no genuine issue of material fact.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original). A fact is “material” if it may
affect the outcome of the case under the applicable substantive law, and an issue is
“genuine” if the evidence is “such that a reasonable jury could return a verdict for the
nonmoving party.” Id. at 248. In short, the inquiry is whether the record contains evidence
that “presents a sufficient disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law.” Id. at 251-52. When ruling on
a motion for summary judgment, a court must view the facts and draw all reasonable
inferences in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S.
372, 378 (2007). “[T]he judge’s function is not himself to weigh the evidence and
determine the truth of the matter but to determine whether there is a genuine issue for trial.”
Anderson, 477 U.S. at 249.
III.
Analysis
A. Statute of Limitations
The parties have raised various arguments relating to whether Counterclaims 1, 4,
5, 6, and 7 are barred by applicable statutes of limitations, and whether various tolling
doctrines apply. This Court will first address whether these counterclaims were filed
outside the limitations period, and then address whether any tolling doctrines are
applicable.
5
1. Discovery Rule
In his motion for summary judgment, Plaintiff contends that Counterclaims 1 and
4-7 are barred by the applicable statutes of limitations. [Doc. 204 at 1-3]. Plaintiff states
that e-mails from September, October, and November of 2012 indicate that Defendants
were aware that Plaintiff was communicating with the contracting officer and claiming an
ownership in Vanquish United States or the NAT contract, and thus, the counterclaims are
untimely. [Id. at 3]. Defendants assert that the e-mails on which Plaintiff relies do not
show that Defendants were aware of their injury and that the Plaintiff was the person who
caused the injury, and they did not learn such information until 2015, when documentation
was produced as part of an Armed Services Board of Contract Appeals (“ASBCA”) appeal,
related to Vanquish United States’s suspension under the NAT contract. [Doc. 206 at 4-8].
Plaintiff replies that Defendants do not deny that they were on inquiry notice as to Count
1 in 2011. [Doc. 211 at 3-6].
Tennessee generally applies a six-year statute of limitations to contract actions.
Tenn. Code. Ann. § 28-3-109(a)(3); Benz-Elliot v. Barrett Enterprises, LP, 456 S.W.3d
140, 152 (Tenn. 2015). Tennessee also applies a three-year statute of limitations to tort
actions involving injuries to personal or real property. Tenn. Code. Ann. § 28-3-105. A
claim for interference with contract falls under this three-year limitations period. Tigg v.
Pirelli Tire Corp., 232 S.W.3d 28, 31, n.1 (Tenn. 2007). Suits for conspiracy, whether
arising incident to a contract or not, are actions in tort and are governed by the applicable
tort statute of limitations. Harvest Corp v. Ernst & Whinney, 610 S.W.2d 727, 729 (Tenn.
Ct. App. 1980). Because the alleged conspiracy relates to the interference with contract
6
claims, a three-year limitations period also applies to the conspiracy claim. The parties do
not contest that these are the applicable statutes of limitations for the counterclaims at issue.
Under the “discovery rule,” a statute of limitations begins to run from the time that
“a plaintiff discovers, or in the exercise of reasonable care and diligence, should have
discovered, his injury and the cause thereof.” City State Bank v. Dean Witter Reynolds,
Inc., 948 S.W.2d 729, 735 (Tenn. Ct. App. 1996) (citation omitted). Thus, in Tennessee,
“a cause of action accrues and the statute of limitations begins to run not only when the
plaintiff has actual knowledge of a claim, but also when the plaintiff has actual knowledge
of facts sufficient to put a reasonable person on notice that he [or she] has suffered an injury
as a result of wrongful conduct.” Redwing v. Catholic Bishop for Diocese of Memphis, 363
S.W.3d 436, 459 (Tenn. 2012) (internal quotation marks omitted); see also Pero’s Steak
and Spaghetti House v. Lee, 90 S.W.3d 614, 621 (Tenn. 2002). “The statute of limitations
is tolled only during the period when the plaintiff had no knowledge at all that the wrong
had occurred and, as a reasonable person, was not put on inquiry.” Wyatt v. A-Best, Co.,
Inc., 910 S.W.2d 851, 854 (Tenn. 1995) (internal quotation marks and alterations omitted).
Once a plaintiff gains information sufficient to alert a reasonable person of the need to
investigate the injury, the limitations period begins to run. Robinson v. Baptist Mem’l
Hosp., 464 S.W.3d 599, 608 (Tenn. Ct. App. 2014).
Tennessee courts have refined the discovery rule to include not only discovery of
the injury, but the discovery of the source of the injury. Redwing, 363 S.W.3d at 458.
However, the discovery rule does not delay the accrual of a cause of action and the
commencement of the statute of limitations until the plaintiff knows the full extent of the
7
damages or the specific type of legal claim he has. Id. at 459. “The discovery rule is not
intended to permit a plaintiff to delay filing suit until the discovery of all the facts that
affect the merits of his or her claim.” Id.
Although the question of whether a plaintiff exercised reasonable care and diligence
in discovering an injury or wrong is generally a question of fact for the jury, Wyatt, 910
S.W.2d at 854 (emphasis added), summary judgment is still appropriate if the evidence
indicates that there is no genuine issue of material fact as to whether a plaintiff knew of
facts sufficient to put a reasonable person on notice that he suffered an injury as a result of
wrongful conduct. Here, Plaintiff relies on several e-mails sent by Mr. Barton in late 2012
as evidence that Mr. Barton was aware of the basis for his counterclaims at that time. The
Court will address each of the challenged counterclaims in turn.
Counterclaim 1
In Counterclaim 1, Defendants allege that Mr. Koshani and Mr. Barton entered into
various agreements, which Defendants allege Mr. Koshani breached in refusing to use
Vanquish Afghanistan as the trucking subcontractor under the NAT contract. [Doc. 75 at
31]. Defendant Barton alleges that he suffered damages from this breach, namely, not
receiving his portion of the profits that Vanquish Afghanistan should have earned for
performing missions under the NAT contract. [Id.]. Defendants state that they were
awarded the NAT contract in August 2011. [Id. at 25]. Defendants further state that
“[s]hortly after award of the NAT contract, Barton traveled to Afghanistan. Upon his
arrival, Plaintiff refused to allow [Vanquish Afghanistan] to perform trucking missions[.]”
[Id. at 26]. Defendants allege that, thereafter, Mr. Barton and Mr. Koshani entered into a
8
Profit Sharing Agreement (“PSA”) and, later, a Partnership Agreement, which
incorporated an agreement as to the use of Vanquish Afghanistan as a trucking
subcontractor. [Id. at 26-27]. Defendants allege that only after the PSA and Partnership
Agreement were executed did Mr. Barton learn that Mr. Koshani did not truly intend for
Vanquish Afghanistan to perform any trucking missions, and instead, gave every trucking
mission to USC. [Id. at 27].
Plaintiff’s only argument that Count 1 is barred by the statute of limitations is that,
based on the language of the counterclaim, this alleged breach occurred “[s]hortly after
award of the NAT contract . . . which occurred in August 2011.” [Doc. 204 at 2]. However,
this is a mischaracterization of the allegations in the counter-complaint.
The
counter-complaint clearly states that, after Defendants first learned that Plaintiff would not
allow Vanquish Afghanistan to act as a trucking subcontractor, which was discovered
shortly after award of the NAT contract, Plaintiff and Defendants entered into several
agreements between themselves on the matter. The counterclaim for breach of contract
asserts that Plaintiff later breached these agreements, when he did not allow Vanquish
Afghanistan to complete any trucking missions. No time frame for the discovery of this
information is mentioned in the counter-complaint, nor is this addressed by any of the
parties in their briefings regarding this motion for summary judgment.
The Court acknowledges that there may be evidence in the record establishing that
Mr. Barton became aware of Mr. Koshani’s failure to provide trucking services under the
PSA or Partnership Agreement at some point beyond the applicable six-year limitations
period. However, because Plaintiff, as the moving party, bears the burden of proving that
9
there is no genuine issue of material fact at the summary judgment stage, see Celotex, 477
U.S. at 323, this Court will not search for evidence that the Plaintiff has not identified, even
if such would support dismissal of the counterclaim. Accordingly, because Plaintiff’s only
argument that Counterclaim 1 is barred by the statute of limitations is based on an
inaccurate summary of the counterclaim, the motion for summary judgment will be denied
on this ground.
Counterclaims 4, 5, and 7
In Counterclaims 4 and 5, Defendants allege Plaintiff interfered with the
Defendants’ NAT contract by providing “false information to the U.S. Government
regarding ownership of Defendant Vanquish, who was the proper party to the NAT
Contract, and the circumstances under which the NAT Contract award was made.” [Doc.
75 at 33-35]. In Claim 7, Defendants allege that Plaintiff conspired with his brother Jawid
to make these false statements to the government and interfere with the NAT contract. [Id.
at 36-37].
On September 17, 2012, Mr. Barton sent an e-mail to Mr. Koshani, copying Farid
Koshani and Jawid Koshani, titled “Update on KO Communications.” 1 [Doc. 205-1 at 21].
Mr. Barton stated: “I understand you have contacted the contracting officer and other
officials in Kabul.” He further stated “I have been informed that you are claiming to own
Vanquish Worldwide, LLC, the United States company,” and asked for confirmation of
such. [Id.].
1
“KO” is a military abbreviation for contract officer.
10
On October 6, 2012, Mr. Barton e-mailed Major Marian Feist, copying the
contracting officer Effie Fragogiannis. [Id. at 22]. Mr. Barton stated: “there is something
holding up our invoices.” Mr. Barton then provided an update of matters that had recently
occurred with Mr. Koshani. Mr. Barton stated that “Koshani has requested that I pay him
profits from the American business that I own” and “has claimed that he is entitled to
payments because his name is on the Afghan license.” Mr. Barton also stated that he was
aware that Mr. Koshani had “emailed your office that he is somehow in charge of my
business, owned and operated 100% by me since June of 2007.” [Id.].
On November 13, 2012, Mr. Barton e-mailed Ms. Fragogiannis, requesting a
conference call about the suspension, and noting that his company had no performance
issues “minus Shafiq’s ability to interfere with our contract.” [Id. at 60]. In another e-mail
that same day, which Mr. Barton sent to Ms. Fragogiannis, Mr. Barton stated that
Mr. Koshani “has interfered with our business and our employees.”
He stated that
Mr. Koshani’s “claims are false and without merit, but they continue to impact my prime
contract.” Mr. Barton stated that Mr. Koshani had started two other websites using
Vanquish United States’s logos, pictures, wording, etc. and had obtained numerous licenses
with the Vanquish corporate name in different variations. Mr. Barton also noted that
Mr. Koshani had “asked his brothers, both Farid and Jawid, to meet with me in Dubai and
demand I put bank accounts in overseas countries and that I sign an agreement listing him
as the owner of my business.” [Id.]. Mr. Barton stated that he felt he was being extorted,
and concluded that “[i]t is unbelievable that Shafiq has been able to interfere with my
business to the extent he has thus far.” [Id. at 60-61].
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The Court is convinced that by at least November of 2012, Mr. Barton was aware
of “facts sufficient to put a reasonable person on notice that he [or she] has suffered an
injury as a result of wrongful conduct,” as to Counterclaims 4, 5, and 7. See Redwing, 363
S.W.3d at 459. Indeed, Mr. Barton specifically alleged that Mr. Koshani was “interfer[ing]
with our contract,” when e-mailing U.S. military officials in November. [See Doc. 205-1
at 60]. As to Counterclaim 7, the conspiracy claim, it is also clear that by November 2012
Mr. Barton was aware that Mr. Koshani had involved his brother Jawid to some extent, as
Mr. Barton specifically states that Mr. Koshani had asked Jawid to meet Mr. Barton and
ask him to sign an agreement listing Mr. Koshani as an owner of Vanquish United States.
Defendants appear to contest whether these e-mails are sufficient to show that
Mr. Barton knew that Mr. Koshani’s actions were the cause of the government’s
suspension of Vanquish United States, however, the context of the October and November
e-mails make clear that Mr. Barton was contacting government officials, and providing
details about the conflict with Mr. Koshani, because he believed that such conflict was
relevant to Vanquish United States’ suspension. There is no other reasonable interpretation
of Mr. Barton’s language in the November e-mail, asserting that Mr. Koshani was
interfering with “our” contract, which clearly refers to the NAT contract between
Defendants and the United States government. Moreover, to the extent that the Defendants
assert that they did not learn of “the content of Mr. Koshani’s discussions with the
Government; Mr. Koshani’s false statements to the Government that Mr. Barton won
award of the NAT Contract by fraudulently using the AISA license of VW-A or otherwise;
or that Mr. Koshani had asked the Government officials to suspend NAT Contract
12
payments to Vanquish – US,” which were “facts that are critical to the viability of
Defendants’ claims,” [doc. 206 at 5, n.6], such information was not necessary for the
limitations period to begin running. As noted above, “the discovery rule is not intended to
permit a plaintiff to delay filing suit until the discovery of all the facts that affect the merits
of his or her claim.” See Redwing, 363 S.W.3d at 458.
Because Mr. Barton had information sufficient to alert a reasonable person of the
need to investigate the injury in November 2012, the limitations period began to run at that
point. See Robinson, 464 S.W.3d at 608. Thus, Defendants had three years from this time
to file these claims for interference with contract and conspiracy. However, Defendants
waited until August 2017 to raise their interference with contract claims, and July 2018 to
raise the conspiracy claim. Both of these dates are well after the three-year statute of
limitations expired. Accordingly, the Court finds that there is no genuine issue of material
fact as to whether Counterclaims 4, 5, and 7 are barred by the statute of limitations.
Counterclaim 6
In Counterclaim 6, Defendants allege that Jawid Koshani breached the the NDA
that he signed with Vanquish United States, by conspiring with Plaintiff to solicit, divert,
or appropriate the NAT contract. [Doc. 75 at 35-36]. Defendants assert that Plaintiff
intentionally induced Jawid’s breach of the NDA. [Id. at 36].
In arguing that Counterclaim 6 is barred by the applicable three-year statute of
limitations, Plaintiff lumps Counterclaim 6 with Counterclaims 4, 5, and 7. However, the
Court is not convinced that Mr. Barton’s knowledge, as exemplified by his September,
October, and November 2012 e-mails, was sufficient to establish that a reasonable person
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would have known of the injury alleged in Counterclaim 6, and thus, been on notice of the
need to investigate further. The Court notes that the November 2012 e-mail did indicate
that Mr. Barton was aware at that time that Plaintiff had asked both of his brothers,
including Jawid, to meet with Mr. Barton and ask him to sign an agreement to list
Mr. Koshani as an owner of Vanquish United States. However, it is not clear from the text
of the e-mails that Mr. Barton knew of conduct on behalf of Jawid that necessarily rose to
the level of a breach of the NDA. Moreover, the parties do not provide any further
argument as to this issue, and the Plaintiff bears the burden of proving that no genuine issue
of material fact exists at this stage. See Celotex, 477 U.S. at 323. Viewing the evidence in
the light most favorable to the non-moving party, the Court is unwilling to say that no
genuine issue of material fact exists as to whether Counterclaim 6 is barred by the
applicable statute of limitations. Thus, the motion for summary judgment will be denied
as to this claim.
2. Tolling
Because the Court has concluded that Counterclaims 4, 5, and 7 were filed outside
the applicable statute of limitations, the Court will next address whether any of the tolling
doctrines raised by Defendants apply to save these counterclaims from summary judgment.
Suspension Statute
In their response to the motion for summary judgment, Defendants contend that the
statutes of limitations were tolled until June 20, 2017, under Tenn. Code Ann. § 28-1-111,
because Plaintiff resided outside the state of Tennessee. [Doc. 206 at 2-3]. Plaintiff replies
14
that Tenn. Code Ann. § 28-1-111 does not apply when a valid method of serving process
on an out-of-state defendant is available, which was the case here. [Doc. 211 at 2-3].
Tennessee law provides that:
If at any time any cause of action shall accrue against any person who shall
be out of this state, the action may be commenced within the time limited
therefor, after such person shall have come into the state; and, after any cause
of action shall have accrued, if the person against whom it has accrued shall
be absent from or reside out of the state, the time of absence or residence out
of the state shall not be taken as any part of the time limited for the
commencement of the action.
Tenn. Code. Ann. § 28-1-111. The Tennessee Supreme Court has held that “when the
remedy of the suitor is complete and unaffected by the absence of the defendant, when his
non-residence does not affect the right to sue, [the statute] providing that ‘the time of his
absence or residence out of the state shall not be taken as any part of the time limited for
commencement of the action’ is without application.” Arrowood v. McMinn Cty., 121
S.W.2d 566, 567 (Tenn. 1938). That Court ultimately concluded that the exception made
in this statute does not apply unless the person’s absence from the state prevents service of
process. Id. at 568. The Arrowood rule was formulated to limit the application of the
suspension statute to situations where it was truly necessary. Lam v. Smith, 891 S.W.2d
207, 212 (Tenn. 1994). The rule “is intended to prevent a plaintiff from using the
suspension statute to toll indefinitely the limitations period while disregarding valid
available methods of serving a nonresident defendant” and “essentially punishes the
plaintiff for failing to take advantage of available methods of service.” Id. The question
in determining whether the suspension statute applies is whether the plaintiff has
unjustifiably failed to use an available method of service. Id.
15
Tennessee Rule of Civil Procedure 4A provides several options for service upon a
defendant in a foreign country. Tenn. R. Civ. P. 4A. Specifically, the rule allows for
service: (1) by any internationally agreed means reasonably calculated to give notice; (2) in
the manner prescribed by the law of the foreign country; (3) as directed by the foreign
authority in response to a letter rogatory or letter of request; (4) delivery to the individual
personally a copy of the summons and the complaint; (5) any form of mail requiring a
signed receipt, to be addressed and dispatched by the clerk of the court to the party served;
or (6) other means not prohibited by international agreement as may be directed by the
court. Id.
Here, the Tennessee suspension statute is plainly inapplicable. The Tennessee Rules
of Civil Procedure provide a plethora of ways that Defendants could have served a
complaint upon Plaintiff, even while Plaintiff was residing in a foreign country. Notably,
the rule allows service through delivery of a copy of the summons and complaint to the
individual personally. Given the scenario here, there is no clear reason why Defendants
could not have had Mr. Koshani personally served with a summons and complaint.
Moreover, there is no evidence that Defendants ever contacted the Afghanistan government
to inquire about serving Plaintiff in Afghanistan, nor did the Defendants ever file any
requests regarding such in this Court. Instead, Defendants merely waited until Plaintiff
had filed suit against them to formulate and file their counterclaims against Plaintiff. This
conduct is not protected by the Tennessee suspension statute. See Lam, 891 S.W.2d at 212.
Accordingly, the Court finds that Defendants’ claim that the statute of limitations was
tolled because Plaintiff was out-of-state is meritless.
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Equitable Tolling
Defendants briefly assert that the doctrine of equitable estoppel should toll the
running of the statute of limitations because Plaintiff misled them into failing to file their
action within the limitations period, based on his concealment of his communications with
the government. [Doc. 206 at 9, n.9]. Defendants specifically assert that Plaintiff’s failure
to copy Mr. Barton on his e-mails to government officials indicate that he was actively
concealing that information. [Id. at 8-9].
The doctrine of equitable estoppel tolls the running of the statute of limitations
where a defendant has “misled the plaintiff into failing to file his action within the statutory
period of limitations.” Fahrner v. SW Mfg. Inc., 48 S.W.3d 141, 145 (Tenn. 2001) (internal
quotation marks and alterations omitted).
Equitable estoppel requires “deception or
misconduct” by the defendant, Norton v. Everhart, 895 S.W.2d 317, 321 (Tenn. 1995), and
it “only applies when the defendant has taken steps to specifically prevent the plaintiff from
timely filing his complaint (as where he promised not to plead the statute of limitations).”
Fahrner, 48 S.W.3d at 146. Thus, when equitable estoppel has been raised, the Court must
determine whether the defendant engaged in conduct specifically designed to prevent the
plaintiff from suing in time. Id. at 145.
Defendants essentially rely on the allegations of wrongdoing in their counterclaims
as the basis for their assertion that equitable tolling should apply. But those allegations are
that Plaintiff secretly communicated with government officials, and did not inform
Mr. Barton of these communications. There is absolutely no evidence indicating that
Plaintiff did not inform Mr. Barton of these communications with a specific intent to
17
prevent Mr. Barton from timely filing a complaint based upon his actions. Defendants
position both stretches the doctrine of equitable estoppel too far, and assumes too much
from the available facts. Accordingly, the Court finds that equitable estoppel is not
applicable, and the applicable statutes of limitations were not tolled.
In sum, the evidence presented shows that there is no genuine issue of material fact
as to whether Counterclaims 4, 5, and 7 are barred by the applicable statute of limitations.
Thus, the motion for summary judgment will be granted as to Counterclaims 4, 5, and 7,
and those counterclaims will be dismissed. However, a genuine issue of material fact exists
as to whether Counterclaims 1 and 6 are barred by the applicable statutes of limitations,
and the motion for summary judgment will be denied as to those counterclaims on this
ground.
B. Proximate Cause
Plaintiff next argues that, as to Counterclaims 2-7, 2 there is no admissible evidence
that his communications and alleged false statements to the government were the proximate
cause of the government’s suspension of Vanquish United States. [Doc. 204 at 4]. Plaintiff
complains extensively that the Defendants sought a trial continuance to obtain discovery
from government officials on this issue, but never made any effort to obtain such discovery
after receiving the continuance. [Id. at 4-6]. Defendants respond that there is sufficient
evidence that Plaintiff was a cause of the suspension, and the law does not require a
2
Because the Court has already concluded that Counterclaims 4, 5, and 7 are barred by the
statute of limitations, the Court will not address the arguments as to these Counterclaims relating
to proximate cause and damages.
18
showing that he was the only cause. [Doc. 206 at 15-18]. Plaintiff replies that all of
Defendants’ evidence is hearsay, and therefore, cannot be considered on summary
judgment. [Doc. 211 at 7-8].
The entire argument on this issue is premised on Plaintiff’s assertion that, for each
of Counterclaims 2-7, Defendants “must prove (1) that Mr. Koshani’s actions were the
proximate cause of the Government’s October 2012 suspension of Vanquish[.]” [Doc. 204
at 4].
However, the Court is not convinced that such a showing is required as to
Counterclaims 3 or 6. Specifically, Counterclaim 3 is a claim for misuse of partnership
assets, in which Defendants allege that Plaintiff used partnership assets to acquire a license
for a sole proprietorship, which he allegedly then used to “try to steal the NAT Contract.”
[Doc. 75 at 33]. Additionally, as discussed above, Counterclaim 6 relates to an allegation
that Plaintiff induced his brother Jawid to breach the NDA between Jawid and Vanquish
United States by participating in the alleged scheme to steal the NAT contract. [Id. at
35-36]. That Plaintiff’s actions were the proximate cause of the government’s suspension
of Vanquish United States is not a required element for either Counterclaim 3 or 6.
Accordingly, the motion for summary judgment on this ground will be denied as to
Counterclaims 3 and 6.
Moreover, Counterclaim 2 alleges that Mr. Koshani breached the implied covenant
of good faith and fair dealing between himself and Mr. Barton through his actions in which
he attempted to “steal the NAT Contract.” [Doc. 75 at 32]. Notably, in Tennessee, a claim
“based on the implied covenant of good faith and fair dealing is not a stand alone claim;
rather, it is part of an overall breach of contract claim.” Cadence Bank, N.A. v. The Alpha
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Trust, 473 S.W.3d 756, 773 (Tenn. Ct. App. 2015) (internal quotation marks omitted).
Although neither party addresses this issue, the Court is disinclined to believe that a
showing that Mr. Koshani’s actions were the proximate cause of Vanquish United States’s
suspension is a required element for Counterclaim 2, which is in essence, subsumed by
Counterclaim 1. Accordingly, the motion for summary judgment on this ground will be
denied as to Counterclaim 2.
C. Recoverable Damages
Plaintiff next contends that, as to Counterclaims 2-7, Defendants have already
recovered their alleged damages. [Doc. 204 at 8-10]. Plaintiff states that, through an
appeal before the ASBCA, involving Vanquish United States’s suspension, a settlement
was reached and Defendants recovered the full amount of their claim against the
government. [Id. at 8]. Defendants respond that their ASBCA complaint alleged damages
of $31,004,528 plus interest and attorneys’ fees, and an additional claim of $6,296,836.77,
which they ultimately settled for $30 million, which was less than the total value of the
claims. [Doc. 206 at 19]. Plaintiff replies that Defendants’ own expert computed the
claimed damages as a subcomponent of the $30 million received from the government.
[Doc. 211 at 10-11].
As with the argument regarding proximate cause, the entire argument on damages
lumps together Counterclaims 2-7 as all claiming damages from Vanquish United States’
suspension. However, the Court is not convinced that Counterclaims 2, 3, or 6 are tied to
damages from Vanquish United States’ suspension.
The relevant damages for
Counterclaim 3 (misuse of partnership assets) would be the amount of partnership assets
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allegedly misused by Plaintiff to obtain a license for a sole proprietorship. Additionally,
the relevant damages for Counterclaim 6 (statutory liability for inducement of breach of
NDA) would potentially include any penalty for breach of the NDA. Finally, the damages
from Counterclaim 2 are tied to the damages from Counterclaim 1, as a claim for breach
of the implied covenant of good faith and fair dealing is not a stand-alone claim in
Tennessee. See Cadence Bank, 473 S.W.3d at 773. Thus, a genuine issue of material fact
exists as to whether Defendants sustained any damages relative to Counterclaims 2, 3 and
6, and the motion for summary judgment will be denied on this ground as to those claims.
D. Failure to State a Claim Under Afghanistan Law
Plaintiff contends that Counterclaims 4-7 fail because they do not state a claim under
the governing law, which is Afghan law. [Doc. 204 at 10-12]. Plaintiff states that, under
Tennessee law, the law of the state with the “most significant relationship” to the tort is the
applicable law. [Id. at 10-11]. Plaintiff asserts that Afghanistan has the most significant
relationship to the tort claims here, but Afghanistan does not recognize a claim for tortious
interference with contract. [Id.]. Defendants respond that Tennessee law is the applicable
law, because Mr. Barton mostly communicated with Plaintiff from Tennessee, Vanquish
United States was paid into a Tennessee bank account, and the injury alleged occurred in
Tennessee. [Doc. 206 at 20-22]. Plaintiff replies that the place of injury rule only applies
when each state has an almost equal relationship to the litigation, which is not the case
here. [Doc. 211 at 12].
Under Federal Rule of Civil Procedure 44.1, “[a] party who intends to raise an issue
about a foreign country’s law must give notice by a pleading or other writing. In
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determining foreign law, the court may consider any relevant material or source, including
testimony, whether or not submitted by a party or admissible under the Federal Rules of
Evidence.” Fed. R. Civ. P. 44.1. This Rule, which was adopted in 1966, fundamentally
altered the mode of determining foreign law in federal courts by specifying that a court’s
determination of foreign law must be treated as a question of law, rather than a finding of
fact, as had been the prior practice. Animal Science Prod. Inc. v. Hebel Welcome Pharm.
Co., 138 S. Ct. 1865, 1872-73 (2018).
Although the Sixth Circuit has not weighed in on the issue, several circuits have
held that the party seeking application of foreign law has the burden of proving the relevant
legal principles under that foreign law. See McGee v. Arkel Int’l, LLC, 671 F.3d 539, 546
(5th Cir. 2012) (referencing the plaintiff’s “burden of proving foreign law” and requiring
that litigants “present to the district court clear proof of the relevant legal principles”
(internal quotations and citations omitted)); Baker v. Booz Allen Hamilton, Inc., 358
F. App’x 476, 481 (4th Cir. 2009) (indicating that the “party claiming foreign law applies
carries both the burden of raising the issue that foreign law may apply . . . and the burden
of proving foreign law[.]”); Ferrostaal, Inc. v. M/V Sea Phoenix, 447 F.3d 212, 216 (3d
Cir. 2006) (explaining that, because Rule 44.1 does not impose a duty on courts to conduct
independent research into foreign law, the parties “carry the burden of proving” it); Mut.
Serv. Ins. Co. v. Frit Indus., Inc., 358 F.3d 1312, 1321 (11th Cir. 2004) (stating that the
district court is not required to conduct research into foreign law if the party urging its
application declines to do so); Esso Standard Oil S.A. v. S.S. Gasbras Sul, 387 F.2d 573,
581 (2d Cir. 1967) (holding that under the “new Rule 44.1” the plaintiff “still has the task
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of persuasion[.]”). On the other hand, the Ninth Circuit has held that imposing such a
burden on the parties is contrary to the language of Rule 44.1. See de Fontbrune v. Wofsy,
838 F.3d 992, 998 (9th Cir. 2016) (stating that “[i]mposing a burden of proof on the parties
is at odds with the mandate of Rule 44.1.”).
This Court finds the majority opinion, that the party seeking to apply foreign law
pursuant to Rule 44.1 bears the burden of proving such law, the correct view. While Rule
44.1 allows the Court to independently research the foreign law at issue, the plain language
of the Rule does not impose a duty on the Court to research foreign law where the parties
have provided little to no guidance to the Court, as is the case here. The only evidence of
the relevant legal principles under Afghanistan law that Plaintiff has submitted is a brief
excerpt of a translated copy of the Commercial Code of the Republic of Afghanistan,
produced by Stanford Law School’s Afghanistan Legal Education Project. [Doc. 204-1 at
15-22]. Such document alone, without any testimony or citation to provide context, is
insufficient. Accordingly, the Court finds that summary judgment is inappropriate for this
reason.
Moreover, Plaintiff relies on this two-page excerpt of the translated Afghanistan
Commercial Code as evidence that no claims for interference with contract or conspiracy
exist under Afghanistan law. However, Article 56 states “[a]ny deception and conspiracy
in commercial affairs shall be prohibited[.]” [Doc. 204-1 at 21]. Without any further
context, such provision would appear to support claims for interference with contract and
conspiracy. An actual conflict between Tennessee and Afghanistan law is a necessary
predicate to application of Tennessee’s conflict-of-law provisions.
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See Hataway v.
McKinley, 830 S.W.2d 53, 55 (Tenn. 1992) (conflict between Arkansas and Tennessee law
was a necessary predicate to deciding which state’s law should govern); Wayland v. Peters,
1997 WL 776338, at *1 (Tenn. Ct. App. Dec. 17, 1997) (“As a preliminary issue to deciding
which state law applies, it must be determined whether an actual conflict of law exists”).
The Court finds that, given the current record, it is not clear that any conflict exists between
Afghanistan and Tennessee law, and the Court will not dismiss any counterclaims on the
basis of Afghanistan law. Thus, summary judgment is denied on this alternative ground.
E. Failure to State a Claim Under Tenn. Code Ann. § 47-50-109
Finally, Plaintiff argues that Counterclaims 5 and 6 fail to state a claim under Tenn.
Code Ann. § 47-50-109, because the conduct on which the claims are based did not take
place in Tennessee. [Doc. 204 at 12-13]. Defendants respond that the legal doctrine on
which Plaintiff’s argument is based was overturned, and their counterclaim for statutory
inducement is viable. [Doc. 206 at 22-25]. Plaintiff replies that the legal doctrine on which
they rely has not been overturned, and was recognized by this Court as late as 2012. [Doc.
211 at 13-14].
Tennessee provides a statutory cause of action for inducement of breach of contract.
Tenn. Code Ann. § 47-50-109. In Telecomm., Eng’g Sales & Serv. Co., Inc. v. Southern
Tel. Supply Co., the Sixth Circuit held that, under the Tennessee doctrine of lex loci deliciti,
the alleged wrongs took place in Georgia, not Tennessee, and thus, the Defendant was not
liable under Tennessee statutory law. 518 F.2d 392, 394-96 (6th Cir. 1975). Specifically,
the Court held that, under the then-applicable statute relating to procurement of a breach
of contract, the place where the tort was committed was the state where the acts of
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persuasion, misrepresentation, or other means used to induce the breach took place. Id. at
395. However, in 1992, the Tennessee Supreme Court concluded that the doctrine of lex
loci delicti was outmoded, and adopted the “most significant relationship” approach of the
Restatement (Second) of Conflict of Laws (1971). Hataway, 830 S.W.2d at 57-59. This
Court has since applied the most significant relationship test when applying Tennessee
conflict of law rules. See O’Boyle v. Shulman, No. 3:09-cv-169, 2010 WL 1408444, at *4
(E.D. Tenn. Apr. 4, 2010); America’s Collectibles Network, Inc. v. MIG Broad. Grp., Inc.,
No. 3:06-cv-260, 2008 WL 833521, at *15 (E.D. Tenn. Mar. 27, 2008) (reversed in part on
other grounds).
Plaintiff relies on this Court’s opinion in Functional Pathways of Tenn., LLC v.
Wilson Senior Care, Inc., 866 F. Supp. 2d 918 (E.D. Tenn. 2012) to prove that the lex loci
deliciti doctrine recognized in Telecomm., Eng’g Sales & Serv. Co. remains valid.
However, in Functional Pathways, this Court merely noted that the parties had agreed that
the statutory claim for inducement of breach of contract was barred under Telecomm.,
Eng’g & Serv. Co. 866 F. Supp. at 929-30. “[I]ssues adverted to in a perfunctory manner,
unaccompanied by some effort at developed argumentation, are deemed waived. It is not
sufficient for a party to mention a possible argument in the most skeletal way, leaving the
court to . . . put flesh on its bones.” McPherson v. Kelsey, 125 F.3d 989, 995-96 (6th Cir.
1997) (citing Citizens Awareness Network, Inc. v. United States Nuclear Regulatory
Comm’n, 59 F.3d 284, 293-94 (1st Cir. 1995)). Because the parties in Functional Pathways
did not contest whether the statutory claim for inducement of breach of contract was barred
under Tennessee law, the parties waived any such argument. This Court’s statement in
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Functional Pathways is in no way a statement that the lex loci deliciti doctrine remains
binding law in Tennessee. Accordingly, Plaintiff’s reliance on Functional Pathways is
misplaced.
Because lex loci deliciti is no longer the applicable doctrine under Tennessee law,
Counts 5 and 6 are not barred by this doctrine, and summary judgment is denied on this
ground.
IV.
Conclusion
For the reasons stated herein, the Plaintiff’s motion for an extension of time to file
a reply [doc. 208] is GRANTED, in that the Court has considered Plaintiff’s reply brief.
Defendant’s motion to strike [doc. 212] is DENIED as moot, because this Court has not
relied on the complained-of evidence in this opinion. Plaintiff’s motion for summary
judgment [doc. 203] will be GRANTED in part and DENIED in part. Summary judgment
will be GRANTED as to Counterclaims 4, 5, and 7, and those claims will be dismissed.
Summary judgment will be DENIED as to the remaining claims. An order consistent with
this opinion will be entered.
s/ Thomas W. Phillips
SENIOR UNITED STATES DISTRICT JUDGE
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