859 F.2d 1302 (7th Cir. 1988), 87-2645, Weidner Communications, Inc. v. H.R.H. Prince Bandar Al Faisal
|Citation:||859 F.2d 1302|
|Party Name:||WEIDNER COMMUNICATIONS, INC., A Utah corporation, Plaintiff-Appellant, v. H.R.H. PRINCE BANDAR AL FAISAL, H.H. Princess Basma Bint Majid Bin Abdul Aziz, H.R.H. Prince Saud Abdullah Al Faisal, Ali Fissa Belkairous, the Saudi Group, an entity formed under the laws of Saudi Arabia, and Saudi Computer Aided Translation, Ltd., an entity formed under the|
|Case Date:||October 21, 1988|
|Court:||United States Courts of Appeals, Court of Appeals for the Seventh Circuit|
Argued April 7, 1988.
Rehearing Denied Dec. 30, 1988.
Harry P. Lamberson, Chapman & Cutler, Chicago, Ill., for plaintiff-appellant.
William E. Kelly, Pope Ballard Shepard & Fowe, Chicago, Ill., for defendants-appellees.
Before BAUER, Chief Judge, and COFFEY and MANION, Circuit Judges.
COFFEY, Circuit Judge.
The plaintiff-appellant Weidner Communications, Inc., a Utah corporation with its principal place of business in Northbrook, Illinois (hereinafter WCC), 1 filed a complaint alleging breach of contract, RICO violations, common law fraud, restitution, tortious interference with contractual relations, breach of fiduciary duty, and conversion. The named defendants include three members of the royal family of Saudi Arabia (Prince Bandar, his wife, Princess Basma and Prince Saud); an Algerian national, Ali Fissa Belkairous; The Saudi Group, a venture capital entity; and Saudi Computer Aided Translation, Ltd., a company formed in Saudi Arabia as a joint venture of the Saudi Group and WCC to market computerized English to Arabic translation services in the Middle East. The district court dismissed the case, finding that Sec. 5 of the "Clarification Agreement" conferred exclusive jurisdiction on Saudi Arabian courts.
Plaintiff appeals the district court's decision, we reverse and remand.
On about February 22, 1985, the Saudi Group and WCC entered into a Joint Venture Agreement that largely embodied the terms of a prior letter of intent between the parties. The Joint Venture Agreement stated that WCC would develop and provide a computer system to the Saudi Group to translate English into Arabic and provided for the formation of a company known as Saudi Computer Aided Translation, Ltd. (hereinafter SCAT). WCC was to receive monetary payment in two installments and was to become a 43 percent owner of SCAT, eventually sharing in the profits of what was expected to be a very profitable English to Arabic computer aided translation enterprise. The first installment of $100,000 was paid to WCC upon execution of the Joint Venture Agreement. The remaining installment of $2,400,000 was to be paid upon the delivery and installation of the system and SCAT's certificate of acceptable operation of the same.
In reliance on the Joint Venture Agreement, WCC incurred significant expenses and obviously devoted substantial effort developing the computer system and installing it in Saudi Arabia for SCAT. The district court determined that "WCC had complied with the terms of the Joint Venture ..." Agreement by September 5, 1985. The complaint alleges that about a week after WCC had completed its obligations under the Joint Venture Agreement (on about September 12, 1985):
"Defendant Prince Bandar invited Garrett [president of WCC] to his palatial home for a meeting, ostensibly to show his gratitude to Garrett and WCC for the successful development, delivery and installation of the Product [the computer translation system]. Previous to this meeting, Prince Bandar had requested his employees to take Garrett to the town square in Riyadh, Saudi Arabia, where punishment was publicly inflicted upon criminals. At the meeting, Prince Bandar, acting on his own behalf and on behalf of the Saudi Defendants, initially discussed with Garrett [the recent] beheading of three persons ... and then threatened and intimidated Garrett, at which point Prince Bandar initiated a negotiation with Garrett in which he insisted that WCC agree to accept a drastic reduction in the monies and compensation to which it was entitled under the agreement. 2"
WCC asserts that the purpose of this action was to intimidate and force Garrett (as president of WCC) into accepting less consideration than called for in the Joint Venture Agreement. The complaint also alleges:
"Garrett, perceiving the obvious threat posed to his own personal safety and well-being and realizing that it would be useless to further demand the immediate payment of the compensation to which WCC was entitled or the return of the Product (and the source code and components) left Prince Bandar's palatial home and immediately took a plane back to the United States. Garrett has refused to return to Saudi Arabia because of the present and real danger for his personal safety and well-being."
The district court stated "[k]nowing that WCC incurred substantial expenses for the services it performed to date, [the] defendants
offered to pay the remainder due under the joint venture agreement if WCC would perform additional services not required under the Joint Venture Agreement...." 671 F.Supp. 531, 534. This offer resulted in the execution of a written "Clarification Agreement" on October 15, 1985, and it recites that $100,000 was paid to WCC on October 30, 1984, and an additional $700,000 was being paid to WCC upon the execution of the Clarification Agreement. The Clarification Agreement required WCC to perform certain services and provide additional equipment, including word processing equipment and the interfacing of that equipment with the system, not set forth in the Joint Venture Agreement and provided that the balance of defendants' payments to WCC would be secured by an irrevocable letter of credit. The defendants' payment under the Clarification Agreement was to be made in two installments. The first installment was to be paid to WCC upon their certification to the European American Bank (the holder of the letter of credit) that it had completed the work required by the Clarification Agreement. The second installment was to be paid to WCC upon SCAT's certification of the satisfactory operation of the computer system. The Clarification Agreement (Sec. 3) states that SCAT's final certification was to be tendered "[u]pon submission by Tom Cassell or the then acting President of the Company [SCAT] to the issuing bank of a statement certifying that delivery and installation to the Company of the interface ... is operating satisfactorily." Tom Cassell was employed by WCC in 1984 to assist in the planning and operation of SCAT and was the general manager of SCAT until he resigned in May 1986. WCC trained Cassell in the operation of the computer system.
On February 4, 1986, Prince Saud wrote Garrett (WCC president) that SCAT received a $430,000 capital contribution from the defendants on WCC's behalf, for WCC's 43 percent equity share in that corporation. No stock certificates were conveyed to WCC and WCC alleges no stock certificates were ever issued. After the representation that the capital contribution had been made, WCC installed the equipment according to the specifications of the agreement and although certain problems were experienced with the interface (through no fault of WCC), the system was up and fully operative as of the first week of March 1986. Cassell's affidavit affirms that the system and the interface "fulfilled everything they were supposed to do under the Joint Venture Agreement and the October, 1985 Agreement, and both performed satisfactorily." Moreover, a memorandum from Garrett to Cassell dated March 10, 1986 (attached to Garrett's affidavit and made a part thereof), states that it was Garrett's understanding that the system was working "very well" and, further,
"as per the Agreement dated October 15, 1985 and the Letter of Credit dated November 4, 1985, please write me a confirmation letter ... Either you, as Acting President or HRH Prince Saud, as President, should sign the letter...."
Prince Saud, in reply to further communication from WCC referred WCC to his New York representative and, finally, on April 16, 1986, Prince Saud telexed a message that SCAT would not sign the confirmation until Ali Fissa Belkairous, an Algerian national trained by WCC to use the system and employed by SCAT, returned to Saudi Arabia and confirmed the satisfactory operation of the interface called for in the Clarification Agreement.
SCAT, for reasons unknown, never delivered the certification of the computer system's satisfactory performance to the bank. Thereafter, WCC petitioned the...
To continue readingFREE SIGN UP