Bazarian Int'l Financial Associates v. Aerohotelco

• Decision Date: 22 June 2011
• Docket Number: Civil Action No. 09–1764 (BAH).
• Citation: 793 F.Supp.2d 124
• Court: U.S. District Court — District of Columbia
• Parties: BAZARIAN INTERNATIONAL FINANCIAL ASSOCIATES, L.L.C., Plaintiff,v.DESARROLLOS AEROHOTELCO, C.A., Defendant.

793 F.Supp.2d 124

BAZARIAN INTERNATIONAL FINANCIAL ASSOCIATES, L.L.C., Plaintiff,

v.DESARROLLOS AEROHOTELCO, C.A., Defendant.

Civil Action No. 09–1764 (BAH).

United States District Court, District of Columbia.

June 22, 2011.

Christopher Kip Schwartz, C. Dennis Southard, IV, Thompson Hine LLP, Washington, DC, for Plaintiff.Eduardo F. Rodriguez, Juancarlos Sanchez, Wilfredo A. Rodriguez, Avila Rodriguez Hernandez Mena & Ferri LLP, Coral Gables, FL, Stephen Howard Marcus, Washington, DC, for Defendant.

MEMORANDUM OPINION

BERYL A. HOWELL, District Judge.

The parties to this case are two companies that have collaborated as business partners in the development of a proposed luxury resort on the island of Aruba. The plaintiff, a Florida company, alleges that it has helped to procure a lease for the resort property and has attempted to secure financing for the planned resort. The defendant, a Venezuelan company, is directly developing the resort. The parties have a contract that spells out their respective rights and duties in connection with the resort project. The plaintiff brought this lawsuit seeking a declaratory judgment regarding its right to certain investment banking fees under the parties' contract. The defendant has moved to dismiss the lawsuit on the grounds that, among other things, the request for declaratory judgment is premature. For the reasons explained below, the Court grants the motion to dismiss and dismisses the Complaint without prejudice.¹

I. BACKGROUND

Plaintiff Bazarian International Financial Associates, L.L.C. (“BI”) is a Florida company in the business of providing investment banking services. Compl. ¶ 1. In 2003, the Government of Aruba granted BI the option to lease land on Palm Beach, Aruba, in order to establish and develop a luxury resort (the “Palm Beach Option”). Id. ¶ 7. BI approached Ritz Carlton Hotels to manage this contemplated resort. Id. ¶ 8. While BI and Ritz Carlton were negotiating the possible sale of the Palm Beach Option, Ritz Carlton introduced BI to the defendant Desarrollos Aerohotelco, C.A., a Venezuelan company in the business of developing and owning hotels. Id. ¶¶ 2, 9.

After several successful renewals of the option, BI and Ritz Carlton were unable to consummate sale of the Palm Beach Option. Id. ¶ 10. The option expired by its own terms at the end of 2006. Id. The Government of Aruba re-opened bids for the Palm Beach Option and the defendant retained BI to assist with its efforts to obtain the Palm Beach Option and to arrange for funding for the resort development project. Id. ¶¶ 11–12. BI and the defendant entered into an agreement on February 5, 2007, to memorialize their duties and obligations (the “Agreement”). Id. ¶ 12.

The Agreement called for the defendant to pay BI $70,000 upon execution of the Agreement, which the defendant paid. Id. ¶¶ 14, 21. The Agreement also called for the defendant to pay BI $70,000 upon award of the Palm Beach Option. Id. ¶ 15. In early 2008, the Government of Aruba did award the option to the defendant, and the defendant accordingly paid BI the second $70,000 fee. Id. ¶ 26.

In addition to specifying that BI would help the defendant acquire the Palm Beach Option, the Agreement also called for BI to “perform exclusive investment banking services” in connection with the development of a luxury hotel and resort on the Palm Beach Option land (the “Project”). Id. ¶ 13. Specifically, BI was to “conduct negotiations ... to secure, on a best efforts basis, financing for the Project.” Compl. Ex. A, ¶ 1.D. In exchange for these services, the defendant agreed to pay BI a percentage-based investment-banking fee. Id. ¶ 2.C. According to the Complaint, BI is entitled to this fee under the Agreement upon settlement of binding loan or guarantee commitments for the Project obtained directly or indirectly by BI. Compl. ¶ 16. Payment of the fee becomes due “upon the earlier of the first draw-down of funds and/or first infusion of equity capital, provided that financing has been committed to the project as a result of the efforts of BI.” Id. ¶ 18. The Agreement further entitles BI to this fee “if the financing for the Project is concluded within thirty-six (36) months following the termination of this Agreement from sources introduced to the Project by [BI].” Compl. Ex. A, ¶ 3. Finally, the Agreement also provides that it is to “become part of the relevant loan documents, management agreements, joint-venture agreements, guaranty agreements, bridge loan facilities and Memorandum of Association for [the] Project amongst and between the equity shareholders and lenders.” Id.

In or about December 2006 and January 2007, BI allegedly introduced the defendant to key executives and decision-makers at two banks—AIB Bank and Scotiabank—to begin the process of obtaining financing for the Project. Compl. ¶¶ 23–24. BI also claims that it worked with the defendant to coordinate the financing process with these two banks. Id. ¶ 25.

Ultimately, the defendant chose not to proceed with Scotiabank but continued to pursue financing from AIB Bank. Id. ¶ 26. BI claims that it obtained an Indicative Term Sheet from AIB Bank for the defendant as of March 26, 2007 setting forth a total facility amount of $170 million. Id.

At some point thereafter, however, the relationship between BI and the defendant apparently soured. In around June 2009, the defendant allegedly informed BI in writing that it did not intend to pay the investment banking fees specified in the Agreement for Project financing from AIB Bank. Id. ¶ 28. BI claims that the defendant asserted that BI had no role in facilitating its relationship with AIB Bank. Id.

On September 17, 2009, BI brought this action seeking declaratory judgment as to whether it is entitled to the investment banking fees called for under the Agreement upon the settlement of binding loan or guarantee commitments for the Project from AIB Bank. Id. ¶ 33.

At the time of filing the Complaint on September 17, 2009, BI believed that AIB Bank would provide total project financing to the defendant, and anticipated the financing deal closing within sixty days of filing the Complaint. Id. ¶ 27. In October 2009, about a month after the filing of the instant Complaint, AIB Bank and various other lenders apparently did issue a financing commitment for the Project (the “AIB Financing Commitment”), although it appears that this loan commitment remains subject to various contingencies and the loan has never settled, closed, or been drawn upon. Def.'s Mot. Dismiss Pl.'s Compl. & Incorporated Mem. (“Def.'s Mem.”) at 4. The defendant denies that BI had any involvement in obtaining the AIB Financing Commitment. Ex. A to Def.'s Mem., Declaration of Pedro Vera dated January 26, 2011 (“Vera Decl.”) ¶ 9.

On January 19, 2011, the defendant filed a motion to dismiss for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted.² Def.'s Mem. at 1. This motion is currently before the Court.

II. STANDARD OF REVIEW UNDER RULE 12(b)(1)

A court must dismiss a case when it lacks subject matter jurisdiction. McManus v. District of Columbia, 530 F.Supp.2d 46, 62 (D.D.C.2007). “Plaintiff bears the burden of proving subject matter jurisdiction by a preponderance of the evidence.” Am. Farm Bureau v. U.S. EPA, 121 F.Supp.2d 84, 90 (D.D.C.2000); accord Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). It is well established that, in deciding a motion to dismiss for lack of subject matter jurisdiction, a court must construe the allegations in the Complaint liberally but “need not accept factual inferences drawn by plaintiffs if those inferences are not supported by facts alleged in the complaint, nor must the Court accept plaintiffs' legal conclusions.” Speelman v. United States, 461 F.Supp.2d 71, 73 (D.D.C.2006); see also Hohri v. United States, 782 F.2d 227, 241 (D.C.Cir.1986), vacated on other grounds, 482 U.S. 64, 107 S.Ct. 2246, 96 L.Ed.2d 51 (1987). The Court must be assured that it is acting within the scope of its jurisdictional authority and therefore must give the plaintiff's factual allegations closer scrutiny when resolving a Rule 12(b)(1) motion than would be required for a Rule 12(b)(6) motion for failure to state a claim. See Macharia v. United States, 334 F.3d 61, 64, 69 (D.C.Cir.2003); Westberg v. FDIC, 759 F.Supp.2d 38, 41 (D.D.C.2011); Dubois v. Wash. Mut. Bank, 2010 WL 3463368, at *2, 2010 U.S. Dist. LEXIS 91855, at *5–6 (D.D.C. Sept. 2, 2010); Hoffman v. District of Columbia, 643 F.Supp.2d 132, 135–136 (D.D.C.2009); Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F.Supp.2d 9, 13–14 (D.D.C.2001). In evaluating subject matter jurisdiction, the Court, when necessary, may look outside the Complaint to “undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.” Herbert v. Nat'l Acad. of Sci., 974 F.2d 192, 197 (D.C.Cir.1992) (citing Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.1981)); see also Alliance for Democracy v. FEC, 362 F.Supp.2d 138, 142 (D.D.C.2005).

III. DISCUSSION

In this case, BI seeks a declaratory judgment regarding its legal entitlements under the Agreement. The parties have briefed several substantive legal disputes about the proper construction of the Agreement's provisions. Before addressing any substantive issues of contractual interpretation, however, the Court must address the threshold questions of whether it has subject matter jurisdiction to entertain BI's claim and whether a declaratory judgment is appropriate in this case. As explained below, the Court finds that it lacks subject matter jurisdiction and that judicial intervention in this case is unwarranted at this time.

A. Declaratory Judgment is Not Appropriate Because BI Has Not Alleged a Justiciable Controversy

The Declaratory Judgment Act provides that “[i]n a case of actual...