Galeana Telecomms. Invs., Inc. v. Amerifone Corp.

• Decision Date: 10 August 2016
• Docket Number: Case No. 15-cv-14095
• Citation: 202 F.Supp.3d 711
• Parties: GALEANA TELECOMMUNICATIONS INVESTMENTS, INC., Plaintiff, v. AMERIFONE CORP., et al., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

202 F.Supp.3d 711

GALEANA TELECOMMUNICATIONS INVESTMENTS, INC., Plaintiff,

v.AMERIFONE CORP., et al., Defendants.

Case No. 15-cv-14095

United States District Court, E.D. Michigan, Southern Division.

Signed August 10, 2016

William W. Swor, Detroit, MI, Galen Joseph Criscione, Criscione, Ravala & Tabatchouk LLP, New York, NY, for Plaintiff.

Jason R. Hirsch, Jeffrey M. Thomson, Mayer Morganroth, Morganroth & Morganroth, PLLC, Birmingham, MI, Jamal J. Hamood, Jamal Hamood, Attonery at Law, Rochester, MI, Brian D. Einhorn, Kari Melkonian, Trent B. Collier, Collins, Einhorn, Farrell & Ulanoff, PC, Southfield, MI, for Defendants.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS AMERIFONE CORP. AND ISSAM BEYDOUN'S MOTION TO DISMISS (Dkt. 30) AND GRANTING IN PART AND DENYING IN PART DEFENDANT HAROLD OSEFF'S MOTION TO DISMISS (Dkt. 31)

MARK A. GOLDSMITH, United States District Judge

This case involves an agreement between Plaintiff Galeana Telecommunications Investments, Inc. and Defendant Amerifone Corporation, under which Amerifone would purchase one of Galeana's subsidiary telecommunication companies if Galeana was able to secure a 3G spectrum license to provide cellular services in the Kingdom of Jordan. Acquiring the license required Amerifone to submit a bid for the license to the Jordanian Telecommunications Regulatory Commission ("TRC"). That bid was ultimately rejected and Galeana brought the present action alleging breach of contract and various claims of fraud.

Defendants Amerifone and Issam Beydoun filed a motion to dismiss the second amended complaint (Dkt. 30), as did Defendant Harold Oseff (Dkt. 31). For the reasons discussed below, the Court grants in part and denies in part both motions.

I. BACKGROUND¹

Galeana is in the business of owning and investing in companies operating in the international telecommunications industry. 2d Am. Compl. ¶¶ 4, 14 (Dkt. 28). One of these companies was MetroBeam Wireless Telecommunications Co. LLC (operating under the brand name of Kulacom Jordan), which offered non-cellular telecommunications services to individuals and corporations in the Kingdom of Jordan. Id. ¶¶ 15-16.

In early 2012, Amerifone approached Metrobeam to pursue a 3G spectrum license and provide cellular services in Jordan. Id. ¶¶ 17-18. After Galeana met with and lobbied several ministers and top officials, the TRC opened a bidding process for a new carrier to apply for a 3G license and provide cellular services. Id. ¶¶ 19-22. The TRC also opened a bidding process for a 4G license. Id. ¶ 22.

Following its successful lobbying efforts, Galeana was approached by several potential investors, including Amerifone, which sought to fund the bidding process and/or purchase MetroBeam. Id. ¶¶ 23-24. To that end, Amerifone's attorney, Oseff, emailed Galeana on April 24, 2012, and submitted a Letter of Intent to purchase MetroBeam for $30 Million on the condition that the Kingdom of Jordan granted MetroBeam the 3G spectrum license. Id. ¶ 24.

Over the next couple of months, Amerifone persuaded Galeana that it "had the financial and technical ability to consummate a purchase of" MetroBeam. Id. ¶ 25. Galeana held meetings once every two to three months with Beydoun (who is a corporate officer, director, and shareholder of Amerifone) and/or one of Beydoun's representatives. Id. ¶¶ 9, 26.

During a meeting between Galeana, Beydoun, and Oseff at Oseff's office in late 2012, Defendant Dhafir Dalaly appeared and was introduced as Beydoun's friend. Id. ¶ 27. According to Amerifone and Beydoun, Dalaly was the owner and operator of the financial institution Defendant First International Exchange Group, Inc. ("FIEG"), as well as an officer and director of Atlantic Bank, Inc. Id. ¶ 28. Dalaly informed Galeana that "FIEG and Atlantic Bank, Inc., were multinational financial institutions that would financially support any deal between [Galeana] and Amerifone[.]" Id. ¶ 31.

At some point, Atef Tal, the Minister of Telecom and Governor of the Central Bank of Jordan, contacted Galeana regarding his inability to find information about Atlantic Bank, but Amerifone vouched for Atlantic Bank's "legitimacy and financial solvency[.]" Id. ¶ 33. According to Galeana, it has since discovered that neither FIEG nor Atlantic Bank was a bank authorized to do business in the United States. Id. ¶ 32. Rather, FIEG was a non-banking corporation registered in Michigan; Atlantic Bank was "not a registered entity of any sort[.]" Id. ; see also id. ¶ 88.

While the parties continued to negotiate the purchase price of MetroBeam throughout the remainder of 2012, Defendants reassured Galeana "of their willingness and ability to consummate [the] transaction," id. ¶ 34, with the following:

• Documentation that a similar transaction had been completed in the past. Id. ¶ 35.

• Documentation of Dalaly's business operations in the region dating back to 1979. Id.

• In a June 26, 2012 email, Oseff, on behalf of Amerifone, claimed that "it had numerous investors in Jordan, Lebanon and Qatar as well as an investor from the United States willing to" invest up to $100 Million. Id. ¶¶ 36, 63, 89. However, Defendants claimed that the names of the investors could not be shared with Galeana until after the bid was completed because of prior confidentiality and non-disclosure agreements. Id. ¶ 64. According to Galeana, the American investor "never had any intention to invest anything into [the] deal." Id. ¶ 36.

• Defendants stated "that there was a sizeable amount of funds coming from a settlement with the Republic of Lebanon to which one of [Beydoun's] companies was a party to." Id. ¶¶ 36, 65, 89, 104. Galeana refers to this suit as "the Lebanon Lawsuit." Id. ¶ 36. According to Galeana, the Lebanon Lawsuit was dismissed on appeal and certiorari was denied in 2008. Id. ¶¶ 36, 66, 90, 105.

• Dalaly and Oseff provided Galeana with a letter dated August 25, 2012, which stated that "they had established a line of credit for Amerifone" for more than $21 Million for the acquisition of MetroBeam. Id. ¶ 37.

• Oseff forwarded Galeana an agreement between Amerifone and FIEG, in which "FIEG would provide all necessary evidence of financial ability to complete the contemplated transaction." Id. ¶ 38; see also Contract, Ex. B to 2d Am. Compl., at 17-20 (cm/ecf pages) (Dkt. 28–1).

On December 6, 2012, the Kingdom of Jordan officially announced that it would be releasing a bid tender for the 3G and 4G frequencies, after which Galeana and Amerifone began negotiating and drafting a Stock Purchase Agreement. 2d Am. Compl. ¶ 39. On January 8, 2013, the parties entered into a Stock Purchase Agreement (the "Agreement"), whereby Amerifone would purchase 100 percent of the shares of MetroBeam "on the condition that [Galeana] is able to secure the newly announced 3G and 4G operating licenses through the bid process, which process Amerifone would fully fund as per the Agreement." Id. ¶¶ 41, 42; see generally Agreement, Ex. C to 2d Am. Compl., at 22-30 (cm/ecf pages) (Dkt. 28–1).

On February 15, 2013, Oseff sent an email on behalf of Amerifone to Galeana, in which Oseff stated that "funding for the bid had been substantially delayed and as a result, Amerifone requested [Galeana] to pay all expenses in connection with obtaining the bid documents and post any required bid bond." 2d Am. Compl. ¶ 43. A little over four months later, on June 24, 2013, the TRC formally and publicly announced the bid submission process and requirements. Id. ¶ 44.

Based on Oseff's information, Galeana claims that it considered looking at other investors, but that "Amerifone subsequently went to great lengths to continue [to] reassure [Galeana] of its ability and intent to consummate this transaction, largely based around numerous interested investors and financial backing by Dalaly, FIEG and Atlantic Bank." Id. ¶ 45. Galeana further alleges that, once Amerifone learned about other potential investors, Amerifone started to pressure Galeana "to continue to execute the deal." Id. The parties then negotiated and amended the Agreement on September 3, 2013 (the "Amendment"), requiring that "Amerifone solely prepare and submit the bid to the TRC and follow all rules and regulations set forth by the TRC[.]" 2d Am. Compl. ¶¶ 45-46; see generally Amendment, Ex. D to 2d Am. Compl., at 32-33 (Dkt. 28–1). The Amendment also required Amerifone to pay all applicable license fees and to make a partial payment of $10 Million to Galeana "as an initial deposit upon the acceptance of the bid by the TRC." 2d Am. Compl. ¶ 47.

On October 1, 2013, Amerifone submitted a "bank guarantee" for approximately $21,685,000 from Atlantic Bank, which, according to the TRC, was not in a form acceptable to any Jordanian Bank. Id. ¶ 48; see generally Guarantee, Ex. E to 2d Am. Compl., at 35-36 (cm/ecf pages) (Dkt. 28–1). According to Galeana, the bank guarantee was "in clear violation of the TRC requirements," as well as the Agreement and the Amendment. 2d Am. Compl. ¶ 48.

The TRC then notified Amerifone on December 6, 2013 that the "bank guarantee was unacceptable and requested that Amerifone prepare and submit a bid bond from a Jordanian Bank or, in the alternative, a letter of credit in a form acceptable to a Jordanian bank who would then post a bond as per the rules of the bid, allowing them to cure it within 45 days."Id. ¶ 49. However, Amerifone did not cure the bid, make any attempt to cure the bid, or forward a new bid to the TRC. Id. ¶ 50. On February 24, 2014, the TRC officially rejected Amerifone's bid. Id. ¶ 51.

Galeana filed this action on November 20, 2015, asserting a breach of contract claim against Amerifone and various misrepresentation claims against Amerifone, FIEG, Beydoun, Oseff, and Dalaly. Amerifone, Beydoun, and Oseff then filed their motions to dismiss.

II. STANDARD OF DECISION

In evaluating a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), "[c]ourts must construe the complaint in the light most favorable to plaintiff,...