Embassy of the Fed. Republic of Nigeria v. Ugwuonye

• Decision Date: 05 November 2012
• Docket Number: Civil Action No. 10–cv–1929 (BJR).
• Parties: EMBASSY OF the FEDERAL REPUBLIC OF NIGERIA, Plaintiff, v. Ephraim Emeka UGWUONYE, et al., Defendants.
• Court: U.S. District Court — District of Columbia

901 F.Supp.2d 136

EMBASSY OF the FEDERAL REPUBLIC OF NIGERIA, Plaintiff,

v.Ephraim Emeka UGWUONYE, et al., Defendants.

Civil Action No. 10–cv–1929 (BJR).

United States District Court, District of Columbia.

Nov. 5, 2012.

Thomas Michael Guiffre, Patton Boggs LLP, Washington, DC, for Plaintiff.

Ephraim Chukwuemeka Ugwuonye, ECU Associates, P.C., Silver Spring, MD, for Defendants.

MEMORANDUM OPINION GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS COUNTERCLAIM

BARBARA J. ROTHSTEIN, District Judge.

This matter is before the Court on a motion to dismiss by Plaintiff, the Embassy of the Federal Republic of Nigeria (“the Embassy”). See Dkt. # 43. The Embassy asks the Court to dismiss the Counterclaim filed by Defendants Ephraim Emeka Ugwuonye and ECU Associates, P.C. (“Defendants”). ¹ The Counterclaim alleges a breach of contract by the Embassy for nonpayment of past legal services. See generally Counterclaim (Dkt. # 44) at ¶ ¶ 1–79.² The Embassy argues that the Counterclaim must be dismissed for lack of subject matter jurisdiction. In the alternative, the Embassy argues that the Counterclaim be dismissed as time-barred by the relevant statute of limitations. The Embassy's motion is denied as to Defendant Ugwuonye, and granted as to Defendant ECU Associates, P.C.³

I. BACKGROUND

In is uncontested that Ugwuonye acted as legal counsel for the Embassy in several real estate transactions and that, in November 2007, he obtained a refund of property taxes from the Internal Revenue Service (“IRS”) for the Embassy in the amount of $1.55 million. The Embassy alleges that Ugwuonye never delivered these funds. Am. Compl. (Dkt. # 33) ¶ 1.

On August 25, 2011, Defendants filed their Answer and Counterclaim to the Embassy's Amended Complaint.⁴ Defendants' Counterclaim alleges that Ugwuonye acted as counsel to the Government of Nigeria and the Embassy from 2001 until the filing of this action by the Embassy. Counterclaim ¶ 19. Defendants contend that Ugwuonye was encouraged by the Government of Nigeria to build his practice in a way that would best suit the needs of the Embassy and the Government of Nigeria. Defendants allege that the Government of Nigeria and the Embassy promised to pay Defendants for any owed legal services, but have repeatedly failed to pay the fees in full, often falling over a year behind. Id. ¶ 26–27. Defendants relate a series of conversations between October 2006 and January 2008 with the Attorney General of Nigeria and other officials wherein Defendants were promised that payments were forthcoming. Id. ¶¶ 28–34, ¶ 44. Defendants also set out a number of specific instances where the Embassy failed to pay Defendants for specific assignments. Id. ¶¶ 34–42.

On September 28, 2011, the Embassy filed the instant motion to dismiss. On April 3, 2012, this case was reassigned to the undersigned judge. On April 19, 2012, the Court granted the Embassy's motion to dismiss the Counterclaim as conceded. Minute Order # 3 of April 19, 2012. On May 17, 2012, Defendant Ugwuonye filed a motion for reconsideration of the Court's dismissal of Defendants' Counterclaim. See Dkt. # 60. On June 25, 2012, the parties appeared before this Court. Following that status conference, the Court granted Ugwuonye's motion for reconsideration and allowed him to file an opposition to the Embassy's motion to dismiss the Counterclaim. Order of June 26, 2012 (Dkt. # 70).

II. LEGAL STANDARDA. Rule 12(b)(1)

The purpose of a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) is to test whether the court has jurisdiction to properly hear the case before it. Because federal courts are courts of limited jurisdiction, the court must have a statutory basis to exercise its jurisdiction. Nat'l Ass'n of Home Builders v. EPA, 731 F.Supp.2d 50, 53 (D.D.C.2010). To this end, statutes conferring subject-matter jurisdiction on federal courts are to be strictly construed. In re Any & all funds or other assets in Brown Bros. Harriman & Co. Account No. 8870792, 601 F.Supp.2d 252, 256 (D.D.C.2009). Moreover, the burden of establishing subject-matter jurisdiction is on the party asserting jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994).

B. Rule 12(b)(6)

Under Federal Rule of Civil Procedure 12(b)(6), a counter-defendant may file a motion to dismiss to test “the sufficiency of the allegations within the four corners of the complaint after taking those allegations as true.” In re Interbank Fund. Corp. Sec. Litig., 668 F.Supp.2d 44, 47–48 (D.D.C.2009) (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)); see alsoFed.R.Civ.P. 12(b)(6). Ambiguities must be resolved in favor of the counter-plaintiff, giving him the benefit of every reasonable inference drawn from the well-pleaded facts and allegations in the complaint. In re Interbank Fund. Corp. Sec. Litig., 668 F.Supp.2d at 47–48.

To survive a Rule 12(b)(6) motion, the complaint must plead sufficient facts that, taken as true, provide “plausible grounds” that discovery will reveal evidence to support the counter-plaintiff's allegations. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the [counter-]plaintiff pleads factual content that allows the court to draw the reasonable inference that the [counter-]defendant is liable for the alleged misconduct.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). Moreover, “[a] pleading that offers ‘labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do. Nor does the complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ ” Id. at 678, 129 S.Ct. 1937 (citation omitted).

“The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that defendant has acted unlawfully.” Id. (citation omitted). Although the court must construe the complaint in a light most favorable to the counter-plaintiff, the court is not required to accept factual inferences that are unsupported by facts or legal conclusions cast in the form of factual allegations. City of Harper Woods Emps' Ret. Sys. v. Olver, 589 F.3d 1292, 1298 (D.C.Cir.2009). The court's function is not to weigh potential evidence that the parties might present at a later stage, but to assess whether the pleading alone is legally sufficient to state a claim for which relief may be granted. Caribbean Broad. Sys., Ltd. v. Cable & Wireless PLC, 148 F.3d 1080, 1086 (D.C.Cir.1998). “Where a complaint pleads facts that are merely consistent with a [counter-]defendant's liability,it stops short of the line between possibility and plausibility of entitlement to relief.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (internal quotation marks and citation omitted).

III. DISCUSSIONA. The “commercial activity” exemption under the Foreign Sovereign Immunities Act is applicable to the Embassy's contracts with Defendants

Ugwuonye concedes that the Embassy is a “foreign state” as defined in the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1330, 1602 et seq., and, as such, the FSIA is the exclusive basis for jurisdiction over the Embassy.⁵ Opp. at 3, 5. Under the FSIA, a foreign state is presumed to be immune from the jurisdiction of the United States courts. TMR Energy Ltd. v. State Prop. Fund of Ukraine, 411 F.3d 296, 299 (D.C.Cir.2005). That presumption can be overcome only if the party asserting a claim against the foreign state can show that one of the exceptions to immunity provided in 28 U.S.C. §§ 1605– 1607 applies. Id.

Defendants assert two exceptions to immunity in their Counterclaim: 28 U.S.C. § 1605(a)(5) and 28 U.S.C. § 1605(a)(7). In his opposition to the Embassy's motion to dismiss, Ugwuonye argues that two other exceptions applied: 28 U.S.C. § 1605(a)(2) and 28 U.S.C. § 1607.

The Court first addresses the exceptions asserted in the Counterclaim. Section 1605(a)(5) pertains to claims “in which money damages are sought against a foreign state for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state.” 28 U.S.C. § 1605(a)(5). As the Counterclaim is for a breach of contract, an exception concerning tortious conduct is clearly inapplicable.

Section 1605(a)(7) was repealed in 2008 by the National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110–181, and replaced with 28 U.S.C. § 1605A. Belkin v. Islamic Republic of Iran, 667 F.Supp.2d 8, 18 (D.D.C.2009). Section 1605A, like the section it replaces, concerns a waiver of immunity for state sponsorship of or material support for acts of terrorism. 28 U.S.C. § 1605A(a). The exception applies only to those states that are designated as state sponsors of terrorism. 28 U.S.C. § 1605A(a)(2)(A)(i). Since Nigeria is not a designated state sponsor of terrorism,⁶ this exception is also inapplicable.

The Court turns to the two exceptions cited in Defendant Ugwuonye's opposition to the Embassy's motion to dismiss. Section 1605(a)(2) states that a foreign state shall not be immune from the jurisdiction of the United States courts if the legal action is “based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.” 28 U.S.C. § 1605(a)(2). “Commercial activity” is defined as “either a regular course of commercial conduct or a particular commercial transaction or act.” 28 U.S.C. § 1603(d). “The commercial character of an activity shall be determined by reference to the...