Zoroastrian Ctr. & Darb-E-Mehr of Metro. Wash. v. Rustam Guiv Found. of N.Y., 14–1841.

Decision Date04 May 2016
Docket NumberNo. 14–1841.,14–1841.
Citation822 F.3d 739
PartiesZOROASTRIAN CENTER AND DARB–E–MEHR OF METROPOLITAN WASHINGTON, D.C., Plaintiff–Appellant, v. RUSTAM GUIV FOUNDATION OF NEW YORK; Mehraban Shahrvini, Trustee; Daryoush Jahanian, a/k/a Dariush Jahanian, Trustee, Defendants–Appellees, and Soroosh Sorooshian; Bruce Nadjmi; Khosro Mehrfar, Appellees, and Esfandiar Anoushiravani, Trustee; Keikhosro Mobed, Trustee; Rostam Ghaibi, Trustee; Jamshid Varza, Trustee; Rostam Sarfeh, Trustee, Defendants.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED: Robert Lee Vaughn, Jr., O'Connor & Vaughn LLC, Reston, Virginia, for Appellant. Billy Bernard Ruhling, II, Troutman Sanders LLP, Tysons Corner, Virginia, for Appellees. ON BRIEF: Massie P. Cooper, Troutman Sanders LLP, Richmond, Virginia, for Appellees.

Before WILKINSON, AGEE, and KEENAN, Circuit Judges.

Affirmed in part, vacated in part, and remanded by published opinion. Judge AGEE

wrote the opinion, in which Judge WILKINSON and Judge KEENAN joined.

AGEE

, Circuit Judge:

The Zoroastrian Center and Darb–E–Mehr of Metropolitan Washington, D.C. (The Center) is a nonprofit entity dedicated to the advancement and practice of Zoroastrianism, an ancient Persian religion. Rustam Guiv Foundation (Rustam Guiv) is a charitable trust with a similar mission.1 As part of a joint effort to construct a Zoroastrian worship center, the parties signed a ninety-nine-year lease on a parcel of property owned by Rustam Guiv in the Vienna area of Fairfax County, Virginia. What followed was a tumultuous relationship that culminated in Rustam Guiv terminating the lease. The Center responded with this litigation seeking, among other things, a declaratory judgment to reinstate the lease. Rustam Guiv removed the case to federal court, where the district court ultimately granted summary judgment to Rustam Guiv and awarded attorneys' fees. On appeal, The Center raises several claims of error, including the threshold question of whether federal subject matter jurisdiction existed.

We agree with the district court that The Center's case cannot go forward. Rustam Guiv presented sufficient evidence to show complete diversity between the parties, thereby establishing subject matter jurisdiction in federal court. Likewise, the undisputed material facts show that The Center breached the lease, so we affirm the district court's decision to dismiss the complaint in its entirety and enter judgment for Rustam Guiv.

The district court's attorneys' fee award, however, presents another matter. Under Virginia law governing contractual fee-shifting provisions, the prevailing party is entitled to recover attorneys' fees for work performed only on its successful claims. See Ulloa v. QSP, Inc., 271 Va. 72, 82, 624 S.E.2d 43 (2006)

. The district court correctly identified Rustam Guiv as the prevailing party but made no effort to narrow the fee award to its successful claims. Thus, we vacate the district court's fee award and remand for further proceedings as to that issue.

I.
A.

Rustam Guiv owns a seven-acre parcel of property in Vienna, Virginia. In 1991, Rustam Guiv leased this land to The Center for ninety-nine years at a nominal rent of one dollar a year. In return, The Center was to construct “a place of worship for all Zoroastrians of the world”; “a facility for the advancement of the Zoroastrian religion”; and “a dwelling suitable for residence of a Mobed (priest).” J.A. 41.2 The Center would bear all costs of improving the property to meet these requirements.3 The lease did not include a firm deadline for this construction, but did provide that “time is of the essence.” J.A. 50.

The Center contends it invested “thousands of dollars” in planning and designing a worship facility, which included obtaining permits and density exemptions from the Fairfax County government. Despite these alleged efforts, however, The Center did not begin actual construction for many years. And, by 2008, The Center still had not completed a single structure.

Frustrated with the state of progress, Rustam Guiv threatened to rescind the lease. The parties then executed a lease amendment dated January 1, 2009, designed to “re-energize [The Center's] efforts.” J.A. 261. Together, the original lease and amendment governed the parties' lessor-lessee relationship.

Several clauses from the lease amendment are pertinent here. First, The Center agreed to “undertake such construction [of a religious center] no later than November 1, 2009 and complete the project by March 13, 2011. J.A. 55. Although Rustam Guiv was allowed to extend this completion deadline, in no event could construction go past March 15, 2013. The amendment further permitted Rustam Guiv to terminate the lease if “substantial” activity had not been undertaken by either date. J.A. 55–56. As these provisions make clear, the lease amendment was designed to speed the pace of construction by instituting hard deadlines.

For financial reasons not entirely clear from the record, The Center missed the start deadline for construction. This set in motion a series of meetings that culminated with Rustam Guiv notifying The Center that it was pursuing a partnership with another charitable foundation for a Zoroastrian temple in Maryland. Dr. Daryoush Jahanian, who can best be described as RGF's lead trustee, followed up with an email explaining that this alternate site would be sufficient to service the regional Washington Zoroastrian community, and consequently, The Center should “stop signing any contract[s] and ... not write any check[s] as much as possible.” J.A. 869. The Center “temporarily stopped the progress” on this recommendation from Dr. Jahanian, but soon decided “to stay on course” and continue its efforts at construction. J.A. 473.

In sum, by the end of April 2010, the original lease had been amended to include particular construction deadlines, the first of which had been missed. Rustam Guiv had chosen to focus its efforts on an alternative site and requested The Center to stop construction. The Center briefly ceased its operations, but within a few weeks, elected to continue with its plans.

B.

The parties remained at a virtual standstill for over a year without significant dialogue. The Center alleges that it could not “obtain bonds that were required by Fairfax County or “pull any permits” without Rustam Guiv's consent, and thus its construction activities stalled. Opening Br. 11. Rustam Guiv, in turn, was pursuing the Maryland site.

In March 2011, Rustam Guiv contacted The Center for an in-person meeting about taking possession of the Vienna property. During the subsequent conference, however, the parties agreed to continue construction on the Vienna building as reflected in a one-page, hand-written Memorandum of Understanding (“MOU”) that included the following provisions:

1—[Rustam Guiv] will be in full cooperation with [The Center] in facilitating the required paperwork.
2—[The Center] will provide to [Rustam Guiv] an accounting book to list the names [and] amounts of all donations and all expenses. [The Center] will also continue to provide quarterly financial report[s] [and] account summar[ies] of all donations and expenses.
3—[The Center] will provide an accomplishment plan with milestones [and] deadlines, mutually agreed by the two parties.
....
6—Items 2, 3 and 5 above will be provided on or before 5/15/2011 and must be approved by [Rustam Guiv].

J.A. 495–96.

As required by the MOU, The Center delivered an initial report on May 15, 2011. That report, however, failed to include a full accounting, list of donor activity, or accomplishment milestones. For reasons unknown, Rustam Guiv did not object to these deficiencies, and the parties again went silent.

On April 20, 2013—approximately two years after the MOU was drafted, four years after the lease amendment, and over twenty years after the original lease was signed—Rustam Guiv sent The Center a formal notice terminating the lease. As grounds, Rustam Guiv cited The Center's failure to complete construction of a worship center by March 15, 2013, the final deadline in the lease amendment. The Center responded with this litigation seeking, among other relief, a declaratory judgment that the lease remained in effect.

C.

The Center filed its initial complaint in the Fairfax County Circuit Court, naming Rustam Guiv and its trustees, individually, as defendants. Rustam Guiv timely removed the case to the Eastern District of Virginia based on diversity of citizenship. Opposed to proceeding in federal court, The Center sought remand on grounds that Rustam Guiv had failed to show the complete diversity necessary to establish federal jurisdiction.

In its order, the district court noted that neither the Supreme Court nor the Fourth Circuit had addressed the precise issue of how to determine the citizenship of a defendant-trust for purposes of diversity jurisdiction. Faced with a lack of binding precedent, the court adopted the Third Circuit's test: the citizenship of a trust is determined by looking at the citizenship of both the trustees and beneficiaries. See Emerald Inv'rs Tr. v. Gaunt Parsippany Partners, 492 F.3d 192, 205 (3d Cir.2007)

. Having settled on this framework, the district court reserved judgment “until the parties [had] presented [further] evidence of [Rustam Guiv's] citizenship ... and additional evidence related to the trust's beneficiaries.” J.A. 166.

Rustam Guiv then submitted an affidavit from Dr. Jahanian and residence information for the current trustees. These documents affirmed that none of its current trustees or beneficiaries were Virginia residents. Based on this evidence, and over The Center's objection, the district court denied The Center's motion to remand.

D.

The Center filed an amended complaint requesting a declaratory judgment that the original lease remains in full force and effect (Count I); an order restraining Rustam Guiv from interfering with its rights under the lease (Counts II and III); and a...

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