First American Corp. v. Al-Nahyan, Civ.A. No. 93-1309(JHG).

• Decision Date: 13 August 1998
• Docket Number: Civ.A. No. 93-1309(JHG).,Civ.A. No. 95-0877(JHG).
• Court: U.S. District Court — District of Columbia
• Parties: FIRST AMERICAN CORP., et al., Plaintiffs, v. Sheikh Zayed Bin Sultan AL-NAHYAN, et al., Defendants. Clark M. CLIFFORD and Robert A. Altman, Plaintiffs, v. FIRST AMERICAN CORP. and First American Bankshares, Inc., Defendants.

17 F.Supp.2d 10

FIRST AMERICAN CORP., et al., Plaintiffs, v. Sheikh Zayed Bin Sultan AL-NAHYAN, et al., Defendants.

Clark M. CLIFFORD and Robert A. Altman, Plaintiffs, v. FIRST AMERICAN CORP. and First American Bankshares, Inc., Defendants.

Civ.A. No. 93-1309(JHG).

Civ.A. No. 95-0877(JHG).

United States District Court, District of Columbia.

August 13, 1998.

COPYRIGHT MATERIAL OMITTED

Stephen J. Brogan, Mary Ellen Powers, David E. Miller, Michael P. Gurdak, Peter J. Wang, Jones, Day, Reavis & Pogue, Washington, DC, for First American Corp. and First American Bankshares, Inc.

William H. Jeffress, Jr., Timothy J. Preso, David S. Cohen, James R. Heavner, Jr., Miller, Cassidy, Larroca & Lewin, L.L.P., Washington, D.C., for Clifford and Altman.

John T. Szymkowicz, Szymkowicz & Assoc., Washington, D.C., for H.E. Al-Shorafa.

OPINION AND ORDER

JOYCE HENS GREEN, District Judge.

These related cases arise out of allegations that the Bank of Credit and Commerce International ("BCCI")¹, illegally and secretly sought to acquire ownership and maintain control of First American Corporation ("FAC") and First American Bankshares ("FAB"), collectively known as First American. Two cases are consolidated here for trial and final judgment.

The identities of the parties and the nature of the claims are set forth in greater detail below, but by way of introduction, the following facts situate this dispute: In First American Corp. v. Sheik Zayed Bin Sultan Al-Nahyan, Civil No. 93-1309 [hereafter Zayed], First American sued 30 defendants, alleging a complex course of conduct, and series of transactions, in violation of federal and state law. See First American Corp. v Al-Nahyan, 948 F.Supp. 1107, 1112-15 (D.D.C.1996) (explaining allegations in fuller detail); see also First American, 175 F.R.D. 411 (D.D.C.1997). The four active defendants remaining in this case are Clark M. Clifford ("Clifford"), Robert A. Altman ("Altman"), His Excellency Ali Mohammad Al-Shorafa ("H.E.Al-Shorafa"), and Abdul Raouf Khalil ("Khalil").

In the companion case, Clifford v. First American Corp., Civil Action No. 95-0877 [hereafter Clifford], Clifford and Altman are the plaintiffs who have sued FAC and FAB for indemnification under Virginia's law of corporations for the costs of defending against federal and state criminal prosecutions brought against them. See Clifford v. First American Corp., 1996 WL 707022 *1-2 (D.D.C. Nov.26, 1996) (describing allegations); see also generally First American Corp. v. Al-Nahyan, 2 F.Supp.2d 58, (D.D.C. 1998) (describing the New York prosecution). First American has asserted a series of counterclaims roughly tracking its allegations in Zayed and a counterclaim related to fees First American paid to its law firm, which subsequently came to represent Clifford and Altman in their personal capacities.

Presently pending before the Court are a total of five dispositive, or partially dispositive, motions: (1) Clifford's and Altman's Motion for Summary Judgment in Civil Action No. 93-1309 [Zayed]; (2) First American's Motion for Partial Summary Judgment on Claims of Breach of Fiduciary Duty; (3) First American's Motion for Summary Judgment on Clifford's and Altman's Indemnification Claims in Civil Action No. 95-0877 [Clifford]; (4) Clifford's and Altman's Motion for Summary Judgment on First American's Counterclaims in Clifford; and (5) H.E. Al-Shorafa's Motion for Summary Judgment in Civil Action No. 93-1309 [Zayed]. Enormous effort has gone into, and enormous resources have been consumed by, these motions. See First American, 180 F.R.D. 166, 167 (D.D.C.1998).

Clifford's and Altman's memoranda of law, as well as First American's, are well argued, and each has a surface appeal. But, upon closer examination of the current state of the record, including the Court's prior rulings on some of the identical arguments advanced here, it is not clear why these motions were filed. Perhaps either or both parties hoped that lightning might strike and the Court would actually grant summary judgment notwithstanding the numerous, long-standing, genuine disputes of material fact that divide them. More likely each side viewed its motion as an opportunity to take "legal discovery;" that is, to size up the other's legal position and get a preview of its key exhibits in support thereof. Possibly, these motions were designed to bridge an information gap that prevents the parties from resolving this matter short of trial. Whatever the motivations, judgment as a matter of law is not appropriate on any of the issues at this time, with one possible exception. For the reasons that follow, all five motions will be denied, and the trial in this matter shall commence as scheduled on October 5, 1998.

I. BACKGROUND

A. The Parties

The plaintiffs in Zayed are FAC and FAB. Separated by a series of corporate layers, ultimately FAC and FAB were in the banking business. At the top-most layer was Credit and Commerce American Holdings, N.V. ("CCAH"), a Netherlands Antilles corporation. CCAH was privately held, having at most 14 shareholders of record at any one time. First American alleges that these record shareholders were in fact, nominees (i.e. shills) for BCCI. Clifford, Altman and Khalil contest this allegation. CCAH had no employees and operated through a registered agent. The sole asset of CCAH was stock in its wholly-owned subsidiary, Credit and Commerce American Investment, B.V. ("CCAI"), a Netherlands corporation. Like CCAH, CCAI had no employees. In the early 1980s, CCAI came to wholly own FAC.

FAC, formerly known as Financial General Bankshares Holding Company ("FGBHC"), is a Virginia corporation with its principal place of business in Washington, D.C. At all times relevant to the Complaint, FAC was a privately-held bank holding company, see 12 U.S.C. § 1841 et seq. FAC is the parent corporation of its wholly-owned subsidiary FAB, formerly known as Financial General Bankshares, Inc. ("FGB"). At all times relevant to the complaint, FAB was a Virginia corporation and a registered bank holding company with its principal place of business in Washington, D.C. FAB owned several regional banking companies, which in turn owned subsidiary banks in the states of Florida, Georgia, Maryland, New York, Tennessee and Virginia.

Currently, neither CCAH, CCAI, FAC nor FAB are ongoing concerns. The corporations have been substantially wound up by the court-appointed Trustee, Harry W. Albright, Jr., who, on behalf of the United States, exercises "all rights, titles, powers, and privileges of a shareholder of FAC, including, to the extent permitted by applicable law of the state of incorporation, the right to exercise exclusively any and all voting rights and other rights or benefits attached to, derived from, or otherwise attributable to the FAC shares." See United States v. BCCI Holdings (Luxembourg), S.A., 980 F.Supp. 496, 499 (D.D.C.1997) [this is the criminal case against BCCI, which will be referred to hereafter as "BCCI Holdings"] (quoting from the Court's Order of June 23, 1992). FAC filed the Zayed Complaint "on its own behalf and on behalf of and with the full support of its sole shareholder, the Court-appointed Trustee...." Compl. at 1.

Clark M. Clifford — a defendant in Zayed and plaintiff and counterclaim defendant in Clifford — entered the banking business after a long and distinguished career in public service, having held high government office during critical and contentious periods of American history. Relevant to these cases are the positions he held in all four corporations. Starting from the top, he was a Managing Director of both CCAH and CCAI. He served as the Chairman of FAC Board of Directors from 1981 to 1991 and concurrently as Chairman of the FAB Board of Directors from 1982 to 1991. During this time, he also was a named partner in the law firm of Clifford & Warnke ("C & W"), which served as counsel to BCCI, CCAH, and General Counsel to FAC and FAB.

Robert A. Altman had largely parallel roles. He also was a Managing Director of CCAH and CCAI. At FAC, he served as both a Director and President from 1981 to 1991. From 1982 to 1991, he too was a member of the FAB Board of Directors. Also a lawyer, Altman was Clifford's partner in C & W during all times relevant herein.

His Excellency Ali Mohammad Al-Shorafa is the former Grand Chamberlain (Director) of the President's Court, and Director of Presidential Affairs for, the United Arab Emirates. H.E. Al-Shorafa was a record shareholder of CCAH beginning in 1982.

Abdul Raouf Khalil is closely linked to Sheikh Kamala Ibrahim Adham ("Sheikh Kamala"). Sheik Kamala is a Saudi Arabian businessman and former head of security for the Kingdom of Saudi Arabia; Khalil was previously Minister of Communications and Deputy Chief of Saudi Intelligence, and the former Executive Administrator to Sheik Kamala. Khalil is currently a business associate of Sheikh Kamala. Khalil also became a record shareholder of CCAH in 1982.

B. The Story(ies)

In certain respects, the events underlying these cases stretch back more than 20 years. On February 17, 1978, FAB's predecessor, FGB, sought a preliminary injunction against BCCI, among other defendants, to block what it claimed was an unlawful, hostile takeover. As is the case here, FGB also sued its lawyer, claiming that he had a conflict of interest. In a thorough opinion, Judge Gasch set forth the history of the litigation and the timing of the settlements by all defendants except the lawyer. See Financial General Bankshares, Inc. v. Metzger, 523 F.Supp. 744, 746-47 (D.D.C.1981), vacated on jurisdictional grounds, 680 F.2d 768 (D.C.Cir.1982).

It was that litigation that began Clifford's and Altman's involvement with BCCI and the corporations they would later head. In re: BCCI, No. 91-001-1FD1 (Fed.Res.Bd.), Deposition of Clark M. Clifford, June 20, 1991, at 35-36 (FAB/FAC 3874). First American asserts, and Clifford and Altman deny, that from the beginning...