993 F.2d 722 (10th Cir. 1993), 91-6317, TK-7 Corp. v. Estate of Barbouti

Docket Nº:91-6317, 91-6384.
Citation:993 F.2d 722
Party Name:TK-7 CORPORATION, Tal Technologies, and Moshe Tal, Plaintiffs-Appellants and Appellees, v. The ESTATE OF Ihsan BARBOUTI, Deceased, and Haidar Barbouti, Defendants-Appellees, and Appellants, and IBI, INC., Counter Plaintiff-Appellee, v. TK-7 CORPORATION, Tal Technologies, and Moshe Tal, Counter Defendant.
Case Date:May 07, 1993
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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993 F.2d 722 (10th Cir. 1993)

TK-7 CORPORATION, Tal Technologies, and Moshe Tal,

Plaintiffs-Appellants and Appellees,


The ESTATE OF Ihsan BARBOUTI, Deceased, and Haidar Barbouti,

Defendants-Appellees, and Appellants,


IBI, INC., Counter Plaintiff-Appellee,


TK-7 CORPORATION, Tal Technologies, and Moshe Tal, Counter Defendant.

Nos. 91-6317, 91-6384.

United States Court of Appeals, Tenth Circuit

May 7, 1993

John Michael Johnston (Jay D. Adkisson, with him on the brief), Claro & Johnston, Oklahoma City, OK, for plaintiffs-appellants, appellees TK-7 Corp., et al.

Arthur R. Angel (James A. Ikard, with him on the brief), Angel & Ikard, Oklahoma City, OK, for defendants-appellees, appellants The Estate of Ihsan Barbouti, et al.

Before LOGAN and SEYMOUR, Circuit Judges, and BROWN [*], District Judge.

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WESLEY E. BROWN, Senior District Judge.

The plaintiffs below brought this action for civil conspiracy. They alleged that the defendants conspired to take over the TK-7 Corporation, an Oklahoma-based company that developed petroleum fuel additives, for the purpose of illegally transporting shipments of chemicals to Libya. After hearing the plaintiffs' evidence, the district court directed a verdict in favor of the defendants. The court found that the elements of a conspiracy had not been shown by clear and convincing evidence and also found that there was insufficient evidence that plaintiffs had sustained damages as a result of the alleged conspiracy. Plaintiffs now appeal, contending that the evidence was sufficient to warrant the submission of the case to the jury. Having reviewed the record in its entirety, 1 we agree that the plaintiffs' evidence fails to show with reasonable certainty that they sustained the lost profit damages which they claimed. Accordingly, we affirm on that basis.

I. Standard of Review.

A grant of a directed verdict in a diversity action is subject to review de novo on appeal under the same standard that the trial court applied. Guilfoyle ex rel. Wild v. Missouri, Kan. & Tex. R.R., 812 F.2d 1290, 1292 (10th Cir.1987). Under that standard, a court may grant a directed verdict "only if the evidence points but one way and is susceptible to no reasonable inferences which may support the opposing party's position." O.E.R., Inc. v. Hickerson, 880 F.2d 1178, 1180 (10th Cir.1989). In determining whether a directed verdict was appropriate, we must construe the evidence and all inferences therefrom in the light most favorable to the non-moving party. Hickerson, supra. Keeping that standard in mind, the evidence in the light most favorable to the plaintiffs reveals the following:

II. Summary of Evidence of the Alleged Conspiracy.

Dr. Ihsan Barbouti was an Iraqi expatriate residing in London, England, in 1987. He held ownership interests in many corporations, several of which, including Ihsan Barbouti International ("IBI, Inc."), are named as defendants in this case. Dr. Barbouti's son, Haidar, is also named as a defendant. Dr. Barbouti died on July 2, 1990, and his estate was substituted as a defendant.

In the spring of 1987, Dr. Barbouti became interested in purchasing a company he had heard about, the TK-7 Corporation. TK-7 was a Nevada corporation doing business in Oklahoma City, Oklahoma. The company had been engaged in the development, manufacture, distribution and marketing of fuel additives since 1983. Plaintiff Moshe Tal was the president of TK-7. Through a third person, Dr. Barbouti arranged a meeting with Mr. Tal in April, 1987, in Oklahoma City.

In July of 1987, after several meetings between Dr. Barbouti and Mr. Tal, an agreement between IBI, Inc., Moshe Tal, and TK-7 was signed. The agreement set forth terms under which IBI was to purchase an interest in TK-7. 2 Mr. Tal was asked to come to Zurich, Switzerland, in September of 1987, in order to meet with Dr. Barbouti and a representative of IBI Engineering, one of Dr. Barbouti's corporations. During this meeting, Dr. Barbouti discussed the possibility of marketing TK-7 fuel additives internationally. He also proposed setting up a corporation to engage in international chemical trading. Dr. Barbouti stated that the chemical trading could be coordinated by IBI Engineering in Frankfurt, Germany. Dr. Barbouti

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asked Mr. Tal to obtain a vessel load of certain chemicals in the United States and to prepare them for shipment to Europe. Some of the chemicals requested by Dr. Barbouti were those used in the TK-7 formula; others were unfamiliar to Mr. Tal.

It was during this trip that Mr. Tal first became concerned about Dr. Barbouti's connections with Libya. Dr. Barbouti told Mr. Tal that he was late in arriving in Zurich because he had been delayed in Libya. After their meeting in Zurich, the two men flew to London. During the flight, Mr. Tal questioned Dr. Barbouti about his work in Libya. Dr. Barbouti, who was an architect, said that he was working on a large project in Libya under a contract with the Libyan Ministry of Atomic Energy. After Mr. Tal returned to Oklahoma City, he decided to investigate Dr. Barbouti's involvement with Libya. (At trial, the plaintiffs introduced a copy of an agency contract, which they obtained in discovery, between Dr. Barbouti and the Libyan Secretary of Atomic Energy.)

Sometime after the above-described meeting, Dr. Barbouti contacted Mr. Tal and asked whether he had obtained the shipment of chemicals they had talked about. Mr. Tal said that he was concerned about the possibility of an accident in shipping the chemicals and was checking into it. Dr. Barbouti became upset and told him that he didn't need to check into the matter. Dr. Barbouti gave Mr. Tal the name of Joseph Gedopt, a man with a company called Crosslink, whom Dr. Barbouti identified as an expert in the shipping of hazardous chemicals.

During October of 1987, Mr. Tal wrote several letters to IBI in which he requested that IBI make payment on certain obligations which Mr. Tal contended were covered by the parties' July agreement. In November of 1987, Mr. Tal and Dr. Barbouti had what proved to be a final meeting in New York City. During that meeting, Mr. Tal asked Dr. Barbouti if the government of Libya had any financial interest in the TK-7 projects. Dr. Barbouti told Mr. Tal that it did but that it was "none of your business." The amounts that IBI was to pay under the July, 1987 agreement were also discussed. At this point in time, IBI had forwarded approximately $700,000 to Mr. Tal to pay various obligations of TK-7. Mr. Tal contended that IBI was further obligated to pay other liabilities of TK-7 totaling approximately $1.1 million, including amounts for back salary owed to him. Dr. Barbouti refused to pay the amounts requested, contending they were personal items for which IBI was not responsible under the agreement. The meeting broke up when the two were unable to agree on these matters. Subsequent to this meeting, Dr. Barbouti refused to have any personal communication with Mr. Tal. Mr. Tal continued to have discussions with Haidar Barbouti and other IBI agents.

In their case in chief, the plaintiffs presented the testimony of two associates of Dr. Barbouti. The first of these, Mike Peress, was a senior vice president of Metropolitan Life Insurance Company in New York City and had been involved in several real estate investments with Dr. Barbouti. He was also associated with a New York company called RCR, in which Dr. Barbouti held an interest, and was involved in the proposed acquisition of TK-7. Peress testified that he heard Dr. Barbouti admit to being the architect and procurer of material for a plant in Libya that Dr. Barbouti classified as a pharmaceutical plant. Peress also stated that Dr. Barbouti mentioned that he could get Joseph Gedopt (the man whose name Dr. Barbouti referred to Moshe Tal in the event Tal had questions about shipping chemicals) to redirect, camouflage, or change manifests on any shipment Dr. Barbouti saw fit. The second associate of Dr. Barbouti's who testified was Bruce Munden, a pipeline consultant from Dallas, Texas, who worked on various projects for IBI companies. Munden testified that in the summer of 1988 Dr. Barbouti mentioned that he had a pharmaceutical plant in the Middle East that was developing a blood-pressure medication. Munden testified that in January of 1989 he heard information linking Dr. Barbouti to a pharmaceutical plant in Rabta, Libya; and that U.S. intelligence agents believed the plant to be a chemical weapons plant. Munden flew to London to question Dr. Barbouti about the matter. According to Munden, Dr. Barbouti stated that he had designed the plant at Rabta for Colonel Ghadafi. Barbouti further said that no one could

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prove that he had anything to do with chemical weapons but added that, if the U.S., the Soviet Union and Israel could have chemical weapons, there was no reason why Colonel Ghadafi could not have them either. Munden also testified that, in the course of conversations occurring after publicity had surfaced about the Rabta plant, he and other executives of IBI companies were told by Haidar Barbouti to search their files and to purge them of any documents relating to Libya.

The plaintiffs produced the testimony of an expert on chemicals, who testified that the list of chemicals that Dr. Barbouti asked Moshe Tal to obtain contained precursors for nerve gases and explosives. Plaintiffs also introduced a 1989 report to Congress by William Webster, the Director of the Central Intelligence Agency. In the report, Webster described a building complex near Rabta, Libya, as consisting of "a chemical agent production plant and a metal fabrication facility" which, when operational, would give Libya the largest chemical warfare agent production...

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