CapitalKeys, LLC v. Democratic Republic of Congo

• Decision Date: 03 June 2021
• Docket Number: No. 15-cv-2079 (KBJ),15-cv-2079 (KBJ)
• Parties: CAPITALKEYS, LLC, Plaintiff, v. DEMOCRATIC REPUBLIC OF CONGO, et al., Defendants.
• Court: U.S. District Court — District of Columbia

CAPITALKEYS, LLC, Plaintiff, v. DEMOCRATIC REPUBLIC OF CONGO, et al., Defendants.

No. 15-cv-2079 (KBJ)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

June 3, 2021

MEMORANDUM OPINION

Plaintiff CapitalKeys, LLC ("CapitalKeys"), a Washington, D.C.-based lobbying firm, alleges that it executed a contract in which the firm agreed to provide five years of unspecified "government relations and strategic communications services" to the Democratic Republic of the Congo ("the Congo") and the Central Bank of the Democratic Republic of the Congo ("the Central Bank," and, collectively, "Defendants") in exchange for $16.6 million. (Compl., ECF No. 4, ¶¶ 15-16.) The terms of the six-page retainer agreement—which the outgoing Governor of the Central Bank allegedly executed on April 18, 2013, while in CapitalKeys's D.C. offices—required the Central Bank to pay the entire five-year service contract price to CapitalKeys upfront and upon the contract's signing. (See id. ¶¶ 14-17.)¹ CapitalKeys maintains that the total fee was not paid when the agreement was signed, however, suchthat Defendants breached the agreement from the outset. (See id. ¶ 18.) Yet, CapitalKeys allegedly commenced working for the benefit of the Congo and the Central Bank pursuant to the contract nonetheless, in light of the Congo's oral promise to pay, and for the next five years the firm purportedly "counsel[ed] Congolese officials on . . . how to work with" international organizations and "assist[ed] the Central Bank in modernizing their internal infrastructure[,]" among other things, without any payment from Defendants at all. (Id. ¶¶ 19, 22, 27, 39.) In the complaint that CapitalKeys filed in this Court two years into the five-year service contract period, the firm maintains that Defendants now owe more than $16.2 million, representing the unpaid portion of the contract price plus interest. (See id. ¶¶ 49, 58; see also Pl.'s Mot. to Modify Default J., ECF No. 50, at 1.)²

Before this Court at present is a motion that the only defendant to have entered an appearance in this legal action after a prior default—the Central Bank—has filed, seeking dismissal of CapitalKeys's complaint under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (See Def.'s Mot. to Dismiss ("Def.'s Mot."), ECF No. 63.) The Central Bank asserts that the outgoing Governor was not actually authorized to enter into any service contract on behalf of the Central Bank, much less one that required the Central Bank to pay CapitalKeys millions of dollars (see id. at 11, 17; see also Mot. to Dismiss Hr'g Tr., ECF No. 75, at 31:8-18), and that, in any event, CapitalKeys did not actually perform any services pursuant to that alleged agreement or otherwise (see Def.'s Mot. at 12, 17). Moreover, as a threshold matter, the Central Bank's motion contends that the Central Bank has sovereign immunity from suit as an agency of theCongo, and that, as a result, this Court lacks subject-matter jurisdiction over CapitalKeys's claims against the Central Bank under the Foreign Sovereign Immunities Act ("FSIA"). (See id. at 14.)

For the reasons explained fully below, this Court agrees that the Central Bank has sovereign immunity, because neither of the identified statutory exceptions to foreign sovereign immunity applies with respect to CapitalKeys's claims against the Central Bank. Moreover, and for that same reason, the Court likewise concludes that it lacks subject-matter jurisdiction over CapitalKeys's claims against the Congo itself. Therefore, the Central Bank's motion to dismiss CapitalKeys's complaint must be GRANTED, and CapitalKeys's complaint will be DISMISSED in its entirety. A separate Order consistent with this Memorandum Opinion will follow.

I. BACKGROUND

A. Factual Background³

CapitalKeys is a lobbying and public affairs company based in the District of Columbia. (See Compl. ¶ 5.) According to CapitalKeys's complaint, in February of 2013, "[a]fter six (6) months of protracted negotiations, . . . the Central Bank, acting as an agent for the Congo, entered into an oral agreement to retain the services of CapitalKeys[,]" and the following month, "in March of 2013, the Congo made a good faith payment of $600,000 as consideration" for that agreement. (Id. ¶¶ 12-13; see also Ex. B to Compl., ECF No. 4-3, at 2.) Then, on April 18, 2013, CapitalKeys allegedly executed a written service contract with the Central Bank and the Congo aimed atimproving the Congo's image abroad and bolstering the Congo's economy over a five-year period. (See Compl. ¶¶ 14-17.)

Under the "Retainer Agreement" (which was filed as an exhibit to CapitalKeys's complaint and is attached to this Memorandum Opinion as Appendix A), CapitalKeys agrees to provide the Central Bank with "government relations and strategic communications services" (App. A at A-2), and to do so over a five-year timeframe, starting in November of 2013, and extending through November of 2018 (id. at A-4). CapitalKeys specifically promises to "[a]ssist [the] Central Bank in strategies to reduce inflation and stabilize the currency" (id. at A-2); to "[a]dvise [the] Central Bank on the creation of a new stock market for a stronger economy" (id.); and to "[a]ssist the Central Bank to modernize its internal infrastructure" (id. at A-3). The agreement also provides that CapitalKeys will help "[s]trengthen the Central Bank's relations, creditability, and integrity with financial institutions, global asset managers, private equity, NGO's, and decision makers"; will "[w]ork with the media to redefine the image of the Central Bank and present this redefined good image around the globe"; and will "[c]reate an 'echo chamber' with specific emphasis on agencies such as the World Bank and IMF to raise issues critical to the Central Bank." (Id. at A-2-A-3.) Furthermore, "at no additional cost[,]" CapitalKeys promises to introduce the Central Bank's Governor to "high level persons in certain foreign governments[,]" thereby purportedly assisting the Central Bank with "[g]eneral [r]elationship [b]uilding[,]" and the firm also commits to "supplying strategy resulting from many years of domestic and international advising." (Id. at A-3-A-4.)⁴

With respect to the fee payments that are due in exchange for CapitalKeys's myriad services, the Retainer Agreement states:

4. Fee Amount, Expenses and Payment Schedule. Client agrees to pay [CapitalKeys] $276,700 per month for professional services (the "Retainer Fees") for a total of $3,320,400 per year which is $16,602,000 for 5 years payable in one payment of $16,602,000 due upon signing.

(Id. at A-4.) Under the terms of the agreement, this day-one lump-sum payment was to be sent to CapitalKeys "by bank wire" and directed to a delineated Wells Fargo Bank account. (Id.) And the agreement specifically anticipates the consequences if such payment is not made timely and in the indicated fashion. Indeed, immediately after the payment provision quoted above, the contract states that "[f]ailure by Client to pay subsequent professional service and expense fees, if required by this agreement and according to the schedule outlined above, will result in suspension of work[.]" (Id.) And the agreement later suggests that CapitalKeys would take legal action to enforce the contract terms if necessary, by specifying that "[t]his Agreement will be governed by the laws of the District of Columbia without regard to principles of conflicts of law and a court in said place shall be the exclusive location for any suit or proceeding relating to this Agreement." (Id. at A-6.)

It is significant for present purposes that the Retainer Agreement just described and attached hereto appears to have been signed by only two individuals: the President of CapitalKeys, Adam Falkoff, and Jean-Claude Masangu Mulongo, who was theoutgoing Governor of the Central Bank. (See Compl. ¶ 17; App. A at A-1, A-6.)⁵ In the complaint, CapitalKeys alleges that, while it was Governor Masangu who executed the agreement on behalf of the Central Bank, "all parties understood that the Central Bank was acting as the agent and alter ego of Congo and that Congo would be bound by the agreement." (Compl. ¶ 14.) The complaint also maintains that, rather than tendering the "the remaining agreed upon payment of $16,002,000" (representing the contract price minus the previous $600,000 good-faith payment) at the time of signing, Governor Masangu signed the agreement with an accompanying oral promise "that payment would be made shortly." (Id. ¶ 18.)

CapitalKeys alleges that, rather than cancelling the agreement pursuant to the express terms of the contract as a result of Defendants' failure to pay, the firm accepted the Congo's oral promise that payment would be forthcoming and "commenced providing their services to" the Central Bank and the Congo. (Id. ¶ 19.) Moreover, according to CapitalKeys, unidentified Congo representatives repeatedly made additional promises to pay in the years that followed (see, e.g., id. ¶¶ 23, 25-26, 31, 33-34, 38), but neither the Congo nor the Central Bank paid any of the remainder of the contract price (see id. ¶ 38). Nevertheless, CapitalKeys allegedly continued to fulfill its end of the bargain, by rendering the agreed-upon aid to the Central Bank and the Congononetheless, in reliance on what CapitalKeys describes as the Congo's repeated (and presumably oral) promises to pay. (See, e.g., id. ¶¶ 24, 27, 39.)⁶

CapitalKeys's complaint also includes various allegations regarding the services that CapitalKeys purportedly provided to the Central Bank and the Congo pursuant to the Retainer Agreement between 2013 and 2018 (i.e., during the lengthy period of Defendants' alleged non-compliance). For instance, the complaint states that "[o]ne month after the parties signed the Retainer Agreement, the International Monetary Fund ('IMF') canceled all cash disbursements to Congo, claiming that Congo failed to publish sufficient detail on the sale of a state-owned...