Dynacorp Ltd. v. Aramtel Ltd.

Citation56 A.3d 631,208 Md.App. 403
Decision Date28 November 2012
Docket NumberSept. Term, 2011.,No. 1077,1077
PartiesDYNACORP LTD., et al. v. ARAMTEL LTD., et al.
CourtCourt of Special Appeals of Maryland

208 Md.App. 403
56 A.3d 631

DYNACORP LTD., et al.
v.
ARAMTEL LTD., et al.

No. 1077, Sept. Term, 2011.

Court of Special Appeals of Maryland.

Nov. 28, 2012.


[56 A.3d 637]


David P. Callet (David S. Panzer, Precious M. Gittens, Greenberg Traurig, LLP, on the brief), Washington, D.C., for Appellant.

Steven E. Tiller (Albert J. Mezzanotte, Hanna Subar, Whiteford, Taylor & Preston, LLP, on the brief), Baltimore, MD, for Appellee.


Panel: HOTTEN, WATTS and CHARLES E. MOYLAN, JR., (Retired, Specially Assigned) JJ.

WATTS, J.

[208 Md.App. 413]Appellants, Dynacorp Limited (“Dynacorp”), Moutiny Limited (“Moutiny”), and Faisal Fadul, appeal a judgment by the Circuit Court for Howard County against them in favor of appellees, Aramtel Limited (“Aramtel”), Jay Salkini, and Tecore Wireless Systems Middle East and Africa FZ–LLC (“TWS”), as to counterclaims alleging one direct claim of fraudulent inducement and seven derivative claims-for breach of contract, fraud, constructive fraud, negligent misrepresentation, breach of fiduciary duty, conversion, and usurpation of [208 Md.App. 414]corporate opportunity and corporate waste-as a result of a failed joint venture to provide a wireless telecommunications network in Iraq. Appellants raise four issues, which we rephrase and reorder as follows: 1

[56 A.3d 638]

I. Whether the circuit court erred in entering judgment in favor of appellees as to the direct claim for fraudulent inducement?

II. Whether the circuit court erred in finding that appellees had standing to bring derivative claims on Moutiny's behalf against appellants?

III. Whether the circuit court erred in exercising personal jurisdiction over Dynacorp and Fadul as to the seven derivative claims?

IV. Whether the circuit court erred in entering judgment in favor of appellees as to the seven derivative claims?

For the reasons set forth below, we answer the first three questions in the negative. We answer the fourth question in the affirmative. We, therefore, affirm the judgment of the circuit court as to Count I, fraudulent inducement, and affirm the award of $45,089,392.81, plus interest. We vacate the judgments of the circuit court as to Count II through Count VIII, the derivative claims.

[208 Md.App. 415]FACTUAL AND PROCEDURAL BACKGROUND

Because our resolution of question I involves the legal sufficiency of the evidence, we must set forth the lengthy and detailed facts of the case. The facts set forth below are summarized from testimony and exhibits introduced at trial, and the pleadings and motions filed in the case.

In 2003, after the United States invaded Iraq, much of Iraq's infrastructure, including Iraq's wireless telecommunications network, was damaged, destroyed, or obsolete. Fadul—who had been born and educated in Iraq, but immigrated to the United States in 1981—saw an opportunity to make money and “help Iraqis” by providing telecommunications. As a result, Fadul traveled to Iraq to set up a telecommunications company and work with the Ministry of Communications of Iraq (the “MOC”) to operate a wireless local loop (“WLL”) network.2 In 2004, with the help of Niran Al–Hadethy, an Iraqi attorney, Fadul organized and incorporated an Iraqi company whose English name was “VitalTel” and whose Arabic name was “Al Khat Al Hayawi.” 3 For at least two years, Fadul and his staff engaged in discussions with the Minister of Telecommunications of the MOC to establish a contract between VitalTel and the Iraqi Telecommunications and Post Company (the “ITPC”) 4 for the license necessary to provide telecommunications in Iraq through a WLL network.

(1) The VitalTel License

On November 27, 2005, VitalTel and the ITPC entered into a WLL Operations and

[56 A.3d 639]

Management Agreement (the “License”),[208 Md.App. 416]which permitted VitalTel to provide wireless telephone services in ten provinces in Iraq 5 for eight years with the option to renew the license for an additional eight years. Under the License, VitalTel agreed to “make investments, provide and install equipment, set up, operate and maintain the access network and provide Services in Iraq based on a WLL[ ] system [.]” VitalTel expended $2,600,000 to obtain the License, and valued the License at $75,000,000. According to Fadul, at the time VitalTel obtained the License, VitalTel lacked the funds to build the required network. As a result, Fadul began to search for investors to finance the project.

(2) The Joint Venture

Salkini is: (1) the CEO and owner of Tecore, Inc. (“Tecore”), a telecommunications company headquartered in Columbia, Maryland, (2) the managing director and owner of TWS, a company based in Dubai, United Arab Emirates, responsible for telecommunications projects in the Middle East and Africa,6 and (3) the director of Aramtel, a United Arab Emirates holding company that is owned by Salkini's brother and invests in telecommunications operations. In 2005, Salkini began negotiations with Fadul to invest in VitalTel. On December 14, 2005, Fadul sent Salkini an e-mail, attaching a document concerning VitalTel titled the “Eight Year Financial Plan” (the “Plan”). The Plan contained no restrictions or disclaimers, and projected large profits for VitalTel over the course of eight years. On December 22, 2005, Fadul sent Salkini an e-mail, attaching a document titled “Business Plan and Fiscal Infusion Analysis” (the “business model”). The business model stated that “VitalTel [was] positioned to become [t]he Verizon of Iraq[,]” and projected a net profit in excess of $1,000,000,000 by VitalTel's fifth year.

[208 Md.App. 417]On or around January 30, 2006, Fadul sent Salkini a document, titled the “VitelTel Summary Proposal” (the “Proposal”), that outlined a business plan for VitalTel. The Proposal contained a disclaimer on the cover, stating: “This document is not meant to be relied upon by investors.” The Proposal touted that “VitalTel [was] positioned to become [t]he Verizon of Iraq by installing and operating a national wireless telephone and data network in Iraq” and projected profits of over $1,000,000,000 by VitalTel's eighth year.

On February 1, 2006, Fadul sent Salkini an e-mail, stating: “Attached please find VitalTel's article of [in]corporation [from] Iraq[,]” and attached a document titled “[V]it[a]l[T]el [C]ontract.” 7 The document's first page displayed the name “VitalTel” in English and VitalTel's logo and telephone number, but was otherwise in Arabic. An English translation of the document attached to Fadul's February 1, 2006, e-mail states that: (1) Fadul is the sole owner and founder of “Al–Khat Al–Hayawi,” (2) the name of the company is “ ‘Al–Khat Al–Hayawi’ (VitalTel),” 8 and (3) the company is headquartered in Baghdad, Iraq.

[56 A.3d 640]

(a) March 2006 Moutiny Operating Agreement (“March Operating Agreement”) and Creation of Moutiny

On March 16, 2006, Aramtel and VitalTel entered into an agreement titled the “Moutiny Limited Operating Agreement” (the “March Operating Agreement”), in which the parties agreed to authorize the formation of a company known as Moutiny,9 incorporated in the United Arab Emirates. Fadul was to serve as Moutiny's managing member and chief executive officer. Salkini signed the March Operating Agreement on behalf of Aramtel, as director, and Fadul signed the [208 Md.App. 418]agreement on behalf of VitalTel, as chief executive officer. Fadul signed the March Operating Agreement for VitalTel and TeckTel 10 for the purpose of binding VitalTel and TeckTel. Salkini signed the March Operating Agreement for TWS for the purpose of binding TWS. The March Operating Agreement identified Moutiny's purposes, in pertinent part, as follows:

(i) to provide [WLL] and other telecommunication services in the Republic of Iraq and elsewhere;

(ii) to acquire, develop, exploit, sublicense, and otherwise deal in licenses, permits, and all manner of rights to provide wireless telecommunications services[.]

The March Operating Agreement contained the following language in Section 1.8:

Enforceability of the terms of this Agreement under the laws of any Jurisdiction and the transfer of any Equipment Funds or Operating Funds (as set forth in Section 3.8(ii)) is subject to the approval of this Agreement and TWS as equipment supplier by the Republic of Iraq Ministry of Communications.

As part of the March Operating Agreement, Aramtel agreed to contribute $500,000 in cash and VitalTel agreed to contribute the License, which was valued by the parties at $500,000 and described as “that certain WLL O & M Agreement by and between [ITPC] and VitelTel, dated November 27, 2005.” Aramtel agreed to lend Moutiny up to $25,000,000 to purchase telecommunications equipment from TWS and an additional $5,000,000 for operating expenses. Both Aramtel and VitalTel were to own 50% of Moutiny. Section 14.5 of the March Operating Agreement provided: “Irrespective of the place of execution or performance, this Agreement shall be governed by and construed in accordance with the laws of the United [208 Md.App. 419]Arab Emirates, exclusive of any conflicts of laws principles.” On March 16, 2006, the same day on which the March Operating Agreement was signed, TWS and Moutiny entered into a “Wireless System Supply Purchase Agreement” (the “March Purchase Agreement”), in which TWS agreed to sell Moutiny the equipment necessary to set up the “system.”

According to Fadul, in March 2006, the ITPC declined to approve the transfer of the License from VitalTel to Moutiny and to agree to the use of TWS equipment, and the March Operating Agreement lapsed as anticipated by Section 1.8 of the March Operating Agreement. Nonetheless, Fadul and Salkini continued discussions about reaching a new agreement. On

[56 A.3d 641]

April 7, 2006, Fadul and Salkini met at Fadul's office in Virginia to discuss “getting the deal back on track[.]” At that meeting, the parties discussed the terms of a potential new operating agreement for Moutiny.

(b) April 2006 Operating Agreement (“April Operating Agreement”)

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