CapitalKeys, LLC v. Democratic Republic of Congo

• Decision Date: 06 October 2017
• Docket Number: Civil Action No. 15–cv–2079 (KBJ)
• Court: U.S. District Court — District of Columbia
• Parties: CAPITALKEYS, LLC, Plaintiff, v. DEMOCRATIC REPUBLIC OF CONGO, et al., Defendants.

278 F.Supp.3d 265

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

Civil Action No. 15–cv–2079 (KBJ)

United States District Court, District of Columbia.

Signed October 6, 2017

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Robert Hantman, Hantman & Associates, New York, NY, W. Todd Miller, Baker & Miller PLLC, Washington, DC, for Plaintiff.

MEMORANDUM OPINION ADOPTING IN PART THE REPORT & RECOMMENDATION OF THE MAGISTRATE JUDGE

KETANJI BROWN JACKSON, United States District Judge

I. BACKGROUND

On April 18, 2013, Plaintiff CapitalKeys, LLC ("CapitalKeys"), a public affairs firm based in Washington D.C., entered into a contract with the Democratic Republic of Congo and the Central Bank of the Democratic Republic of Congo ("Congo" and "Central Bank" respectively; collectively, "Defendants"). (See Decl. of Adam Falkoff ("Falkoff Decl."), ECF No. 24–29, ¶ 1.) Pursuant to the contract, CapitalKeys was to provide Defendants with "government relations and strategic communications services" (Retainer Agreement, Ex. A to Falkoff Decl., ECF No. 24–30, at 3) for a period of five years that began on November 18, 2013, and ended on November 17, 2018 (see id. at 5; Falkoff Decl. ¶ 6).¹ Under the contract's terms, Defendants were to pay the entire contract price of $16,602,000 upon signing. (See Falkoff Decl. ¶ 7; Retainer Agreement at 5.)

According to CapitalKeys, Defendants made an initial "good faith payment" of $600,000 in March of 2013, before the Agreement was signed (Falkoff Decl. ¶ 3), but failed to pay the balance of the contract price—$16,002,000—on the date that the contract was executed (see id. ¶ 9). Nevertheless, CapitalKeys allegedly began providing services to Defendants under the contract, purportedly based upon Defendants' repeated assurances that payment was forthcoming. (See, e.g. , id. ¶¶ 10, 14–18, 34.) Eventually, CapitalKeys lost patience with Defendants' promises, and on December 1, 2015, CapitalKeys filed the instant lawsuit, asserting common law claims for breach of contract (see Corrected Compl., ECF No. 11–1, ¶¶ 42–49), unjust enrichment (see id. ¶¶ 50–58), "lost business opportunities" (id. ¶¶ 59–64), and "account stated" (id. ¶¶ 65–71).

Defendants have thus far not participated in this lawsuit in any respect. They

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were served with the complaint early in 2016, on the 11^th and 12^th of February, respectively (see Cert. of Mailing, ECF No. 15; Returns of Service, ECF Nos. 18, 19), and CapitalKeys asserts that since it filed this action, Defendants have expressly acknowledged the pendency of this suit in the context of offering renewed assurances that payment is forthcoming (see Falkoff Decl. ¶¶ 33–34; Decl. of W. Todd Miller ("Miller Decl."), ECF No. 24–2, ¶¶ 7–8). On April 14, 2016, the Clerk of this Court declared both Congo and the Central Bank to be in default due to their failure to appear (see Clerk's Entry of Default, ECF Nos. 22 (Congo) & 23 (Central Bank)), and approximately two weeks later, CapitalKeys filed a motion for default judgment in the amount of $21,618,000, consisting of $16,602,000 for damages under the contract and $5,016,000 for lost business opportunities, plus prejudgment interest at a rate of 6% per annum (totaling over $2,000,000) and $827.60 for costs (see Pl.'s Mot. for Default J., ECF No. 24, at 25–27; Falkoff Decl. ¶ 49; Miller Decl. ¶ 10; MJ Hrg. Tr. at 20.)

On June 14, 2016, this Court referred CapitalKeys's motion for default judgment to a Magistrate Judge for a report and recommendation. The assigned Magistrate Judge, Alan Kay, held a hearing on the motion on October 7, 2016, at which time Defendants failed to appear. (See Min. Order of June 4, 2016; MJ Hr'g Tr., ECF No. 26.) Defendants have neither requested that the Court set aside the Clerk's entry of default nor responded to CapitalKeys's motion for default judgment. This Court held a status conference in this matter on April 6, 2017, during which Defendants were absent.

II. THE REPORT & RECOMMENDATION AND CAPITALKEYS'S OBJECTION

Before this Court at present is the comprehensive Report and Recommendation that Magistrate Judge Kay has filed regarding CapitalKeys's motion for default judgment. (See R. & R., ECF No. 27.)² The Report and Recommendation reflects Magistrate Judge Kay's opinion that this Court should issue a default judgment in favor of CapitalKeys and award damages in part. (See id. at 278–79, 293–94.) Specifically, Magistrate Judge Kay finds (1) that Defendants have waived their immunity under the Foreign Sovereign Immunities Act, such that the Court has subject matter jurisdiction over this lawsuit (see id. at 282–83); (2) that Defendants were properly served under 28 U.S.C. § 1608, and thus this Court has personal jurisdiction over them (see id. at 283–84); and (3) that the choice-of-law provision in the parties' contract, which provides that District of Columbia law governs the contract and disputes thereunder, is enforceable with respect to liability and damages (id. at 283–84). The Report and Recommendation further opines that CapitalKeys has established that Defendants are liable for breach of contract, based on Defendants' failure to make any payment on the contract beyond their initial $600,000 payment. (Id. at 285–87.)

With respect to damages, Magistrate Judge Kay recommends awarding CapitalKeys $16,002,000 in "liquidated damages" (the contract price of $16,602,000 less the $600,000 initial payment) (see id. at 287–88), $881,207.45 in prejudgment interest, running from the date that CapitalKeys filed this lawsuit and measured as of the

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date that the Report and Recommendation was filed (see id. at 291–93 & n.8), and $827.60 in costs (see id. at 293–94). Magistrate Judge Kay further recommends denying CapitalKeys's request for $5,016,000 in damages for lost business opportunities, plus interest, on the grounds that CapitalKeys has not presented sufficient evidence to support its claims on this front. (Id. at 287–91, 292–93.)

The Report and Recommendation also cautions that any party "fail[ing] to file timely objections to the findings and recommendations set forth in this report may waive their right of appeal from an order of the District Court adopting such findings and recommendation." (Id. at 293 (citing Thomas v. Arn , 474 U.S. 140, 154, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985) ).) Under this Court's local rules, any party who objects to a Report and Recommendation must file a written objection with the Clerk of the Court within 14 days of the party's receipt of the Report and Recommendation, and any such written objection must specify the portions of the findings and recommendations to which each objection is made and the basis for each such objection. See LCvR 73.2(b).

On December 5, 2016, CapitalKeys filed an objection that is limited to Magistrate Judge Kay's recommendation that the Court should award prejudgment interest beginning on the date that CapitalKeys filed suit, rather than on the date that the $16,002,000 payment was due. (See Objs. to the Magistrate Judge's Proposed Findings & Recommendations ("Pl.'s Obj."), ECF No. 28, at 1; R & R at 291–92 (recommending that interest be calculated thusly because CapitalKeys unduly delayed filing its suit).) CapitalKeys argues that, contrary to Magistrate Judge Kay's determination that the Court has discretion on this issue, D.C. law mandates that the interest on a liquidated debt such as the one at issue in this case must run " ‘from the time when [the debt] was due and payable ... until paid.’ " (Id. at 2 (quoting D.C. Code. § 15–108 ) (emphasis omitted).) This Court issued an order for supplemental briefing on various questions related to the damages calculation and the duty to mitigate damages (see Order, ECF No. 29), and CapitalKeys submitted its supplemental brief on March 21, 2017 (see Suppl. Br. in Resp. to the Court's Order of Feb. 28, 2017 ("Suppl. Br."), ECF No. 30).

III. DISCUSSION

A court may only enter a default judgment against a foreign sovereign if "the claimant establishes his claim or right to relief by evidence satisfactory to the court." 28 U.S.C. § 1608(e). "A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge."Id. § 636(b)(1)(C). This Court has reviewed Magistrate Judge Kay's Report and Recommendation, and with the exception of his recommendation regarding an award of liquidated damages and related prejudgment interest, the Court agrees with Magistrate Judge Kay's careful and thorough analysis and conclusions regarding CapitalKeys's motion for default judgment. In particular, the Court agrees with the Magistrate Judge that this Court has both subject matter jurisdiction over this case and personal jurisdiction over Defendants (see R. & R. at 282–84); that D.C. law governs questions regarding liability and damages for breach of the parties' contract (see id. at 283–84); that Defendants in fact breached the parties' contract (see id. at 285–87); that CapitalKeys has not established that it is entitled to damages or interest for lost business opportunities (see id. at 287–91, 292–93); and that CapitalKeys is entitled to recover $827.60 in...