Al-Abood v. El-Shamari

• Decision Date: 06 April 2000
• Docket Number: PLAINTIFF-APPELLE,EL-SHAMAR,INDIVIDUALLY,99-1940,D,PLAINTIFF-APPELLAN,AL-ABOO,AL-HIWAIZ,V,DEFENDANTS-APPELLANTS,DEFENDANTS-APPELLEES,No. 99-1939,99-1939
• Citation: 217 F.3d 225
• Parties: (4th Cir. 2000) KAWTHERAND ON BEHALF OF HER MINOR SON, MAHMOUDNIMAT MOHAMMED TAYEB ELSHAMARI, A/K/A NAIMET MOHAMED; HISHAM ABDUL MALIK/B/A MIDCORP ASSOCIATES, KAWTHERAND ON BEHALF OF HER MINOR SON, MAHMOUDNIMAT MOHAMMED TAYEB ELSHAMARI, A/K/A NAIMET MOHAMED; HISHAM ABDUL MALIK/B/A MIDCORP ASSOCIATES, . Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 225

217 F.3d 225 (4th Cir. 2000)

KAWTHER AL-ABOOD, INDIVIDUALLY AND ON BEHALF OF HER MINOR SON, MAHMOUD AL-ABOOD, PLAINTIFF-APPELLANT,

V.

NIMAT MOHAMMED TAYEB ELSHAMARI, A/K/A NAIMET MOHAMED AL-HIWAIZ; HISHAM ABDUL MALIK EL-SHAMARI, D/B/A MIDCORP ASSOCIATES, DEFENDANTS-APPELLEES.

KAWTHER AL-ABOOD, INDIVIDUALLY AND ON BEHALF OF HER MINOR SON, MAHMOUD AL-ABOOD, PLAINTIFF-APPELLEE,

V.

NIMAT MOHAMMED TAYEB ELSHAMARI, A/K/A NAIMET MOHAMED AL-HIWAIZ; HISHAM ABDUL MALIK EL-SHAMARI, D/B/A MIDCORP ASSOCIATES, DEFENDANTS-APPELLANTS.

No. 99-1939, 99-1940.

UNITED STATES COURT OF APPEALS, FOR THE FOURTH CIRCUIT.

Argued: April 6, 2000.

June 30, 2000.

Appeals from the United States District Court for the Eastern District of Virginia, at Alexandria.

Gerald Bruce Lee, District Judge. (CA-98-896-A)

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Argued: Bradford Allan Berenson, Sidley & Austin, Washington, D.C., for Appellant. John G. Kester, Williams & Connolly, Washington, D.C., for Appellees. On Brief: Jacqueline Gerson Cooper, Edward R. McNicholas, Luisa Caro, Sidley & Austin, Washington, D.C., for Appellant. Dane H. Butswinkas, Julie C. Hilden, Adam L. Perlman, Williams & Connolly, Washington, D.C., for Appellees.

Before Wilkins and Michael, Circuit Judges, and Patrick Michael Duffy, United States District Judge for the District of South Carolina, sitting by designation.

Affirmed in part and vacated and remanded in part by published opinion. Judge Wilkins wrote the opinion, in which Judge Michael and Judge Duffy joined.

OPINION

Wilkins, Circuit Judge

In Kawther Al-Abood's action against former family friends Nimat Mohammed Tayeb El-Shamari (Nimat) and her son Hisham Abdul Malik El-Shamari (collectively, "the El-Shamaris"), the jury returned verdicts in favor of Al-Abood on claims of fraud, breach of fiduciary duty, and conversion, and awarded damages in excess of $2.5 million. The district court granted judgment as a matter of law to the ElShamaris on four claims made by Al-Abood pursuant to the Racketeer Influenced and Corrupt Organizations Act (RICO). See 18 U.S.C.A. § 1962 (West 1984 & Supp. 2000). Both parties appeal. For the reasons that follow, we affirm the jury verdicts as well as various actions of the district court, but vacate and remand portions of the damage award.

I.

The facts, viewed in the light most favorable to the verdict, are as follows. See State Auto. Mut. Ins. Co. v. Mitchell, 179 F.3d 590, 591 (8th Cir. 1999). Al-Abood is an Iraqi national who resides in Monaco. The El-Shamaris are also originally from Iraq but have become naturalized United States citizens; they reside in Virginia and do business as Midcorp Associates.

Al-Abood's late husband was a wealthy man named Shaker. He lent money to Nimat and invested in her business ventures. After Shaker's death in 1986, Nimat sought out Al-Abood's friendship, and over time the two became very close friends. Al-Abood, lacking in financial sophistication, came to trust Nimat, who has training and experience in money matters, and to rely on her for financial advice. For example, Al-Abood would sign documents that Nimat advised her to sign without independently reviewing them. The El-Shamaris abused Al-Abood's trust and carried out three discrete schemes to defraud her of significant sums of money. As a means of carrying out these schemes, Nimat obtained and misused powers of attorney.

The first scheme involved real estate fraud. The El-Shamaris induced Al-Abood to give them money to be invested in various real estate ventures. However, no real estate investments were ever made. Instead, the money was taken by the El-Shamaris for their own use. The El-Shamaris falsely represented to Al-Abood that profits from the real estate ventures were being deposited in a bank account for the benefit of Al-Abood's minor son.

A second fraudulent scheme, carried out solely by Nimat, concerned a charitable trust created by Shaker to benefit Iraqi students.¹ Nimat persuaded Al-Abood that Nimat had found a student worthy of receiving funds from the charitable trust--a scientist named Dr. Hanaa Zainal who is actually employed by the U.S. Department of Agriculture and is a distant relative of Al-Abood. Al-Abood proposed Dr. Zainal as a candidate to the trust committee; based at least in part upon Al-Abood's recommendation, the committee agreed to send $2,000 per month to Zainal. Dr. Zainal never had any idea, until this suit was instituted, that she was a beneficiary of the trust. Nimat had told Dr. Zainal that Nimat needed to hide money from her spendthrift children, and persuaded Dr. Zainal to set up a bank account in her own name but over which Nimat had control (and which Dr. Zainal ignored). Nimat forged Dr. Zainal's signature on the required trust paperwork and took for herself, for several years, the monthly stipend that the trust deposited in the Zainal bank account.

The third fraudulent scheme involved a brokerage account. The ElShamaris persuaded Al-Abood to create and invest in the account so that Hisham El-Shamari could gain experience managing such a fund. The El-Shamaris looted the account and hid their misdeed from AlAbood by first telling her that the account had not yielded significant profits and later persuading her to transfer the money from the account to Midcorp Associates because an investment in the ElShamaris' company would be more profitable.

Al-Abood filed this action in June 1998, alleging, inter alia, fraud, breach of fiduciary duty, and RICO violations. The El-Shamaris attempted to counterclaim based on their own version of the facts, but the counterclaims were dismissed as untimely.² At the close of the evidence, the district court granted the El-Shamaris' motion for judgment as a matter of law on the RICO claims. The remaining claims went to a jury, which found for Al-Abood on several counts and awarded several million dollars in damages.

In their counterclaims and at trial, the El-Shamaris forwarded a very different version of the history of the relationship between the families than did Al-Abood. They asserted that during a period of Iraqi currency restrictions in 1987, while they were still in Iraq, they entrusted Al-Abood with approximately $2.5 million dollars to hold on their behalf. The El-Shamaris claimed that Al-Abood told them in the summer of 1993 that she had spent the money but that she promised to pay it back. They further contended that Al-Abood's lawsuit was an effort to avoid repaying the El-Shamaris.

The El-Shamaris filed suit against Al-Abood in Monaco in January 1998, asserting their claim of a looted trust. Through the Monacan and French courts, they attached certain of Al-Abood's property. However, the merits of the Monaco suit have not been adjudicated.

We conclude that the district court should be affirmed except with regard to two issues concerning the award of damages. We will first discuss the several allegations of error pressed by the El-Shamaris, and will then address Al-Abood's argument that the district court erred in granting judgment as a matter of law on the RICO claims.

II.

A.

The El-Shamaris contend that the district court lacked jurisdiction in this case on account of the Princess Lida doctrine. See Princess Lida of Thurn & Taxis v. Thompson, 305 U.S. 456, 465-66 (1939) [hereinafter Princess Lida]. They alternatively argue that the district court abused its discretion in declining to defer to the proceedings previously instituted in Monaco. See Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817-20 (1976) [hereinafter Colorado River]. We affirm the district court in both respects.

According to the Princess Lida doctrine, a federal court may not exercise jurisdiction when granting the relief sought would require the court to control a particular property or res over which another court already has jurisdiction. See Princess Lida, 305 U.S. at 465-67; Dailey v. National Hockey League, 987 F.2d 172, 175-76 (3d Cir. 1993). In order for the Princess Lida doctrine to apply, the two courts must be exercising jurisdiction over the same res. See Dailey, 987 F.2d at 175-76. Therefore, the doctrine applies only to in rem or quasi in rem cases. See Donovan v. City of Dallas, 377 U.S. 408, 412 (1964); see also, e.g., Southwestern Bank & Trust Co. v. Metcalf State Bank, 525 F.2d 140, 142-43 (10th Cir. 1975) (holding that Princess Lida doctrine did not apply in in personam action that did not in any way depend upon possession or control of the res over which the state court was exercising jurisdiction).

The El-Shamaris characterize this doctrine as one of subject matter jurisdiction. But see Carvel v. Thomas & Agnes Carvel Found., 188 F.3d 83, 86 (2d Cir. 1999) (holding that the Princess Lida doctrine is one of abstention, not of subject matter jurisdiction); Crawford v. Courtney, 451 F.2d 489, 492 (4th Cir. 1971) (characterizing the doctrine as relating to abstention). They therefore urge us to apply a de novo standard of review to this issue. See Anita's New Mex. Style Mexican Food, Inc. v. Anita's Mexican Foods Corp., 201 F.3d 314, 316 (4th Cir. 2000). Assuming without deciding that the El-Shamaris' characterization is correct and that de novo review is appropriate, we agree with the district court that the Princess Lida doctrine does not apply.

The El-Shamaris argue that the Princess Lida doctrine should operate to deprive the United States courts of jurisdiction because this case involves the same res as that over which the Monacan court is presently exercising jurisdiction--the alleged $2.5 million trust. They assert that this case involves the administration of that trust essentially because their defense in this suit matches their claims in Monaco and Al-Abood's claims here are similar to her defenses in Monaco. The El-Shamaris further contend that the Princess Lida doctrine may apply to cases that are not...