Government of Rwanda v. Johnson, 04-7044.

• Decision Date: 27 May 2005
• Docket Number: No. 04-7067.,No. 04-7044.,04-7044.,04-7067.
• Citation: 409 F.3d 368
• Parties: THE GOVERNMENT OF RWANDA, Appellee/Cross-Appellant v. Robert Winthrop JOHNSON II, Appellant/Cross-Appellee
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 368

409 F.3d 368

THE GOVERNMENT OF RWANDA, Appellee/Cross-Appellant v. Robert Winthrop JOHNSON II, Appellant/Cross-Appellee

No. 04-7044.

No. 04-7067.

United States Court of Appeals, District of Columbia Circuit.

Argued March 14, 2005.

Decided May 27, 2005.

Appeals from the United States District Court (USDC) for the District of Columbia (No. 97cv01550).

James R. Atwood argued the cause for appellant/cross-appellee Robert Winthrop Johnson II. With him on the briefs was Heidi C. Doerhoff.

David J. Farber argued the cause. With him on the briefs was Matthew D. Cutts. for appellee/cross-appellant The Government of Rwanda.

Before: EDWARDS, TATEL, and GARLAND, Circuit Judges.

TATEL, Circuit Judge.

As Rwanda's bloody civil war drew to a close, with rebel forces controlling Rwanda's capital and the retreating government accused of genocide, the embattled regime retained appellant, a Washington lawyer, to help improve its image and cast the rebels as terrorists. Roughly a week later, after the United States ordered Rwanda's embassy closed, appellant entered a second agreement, this time to provide (among other things) immigration help to Rwanda's ambassador and other embassy diplomats, who feared reprisals if they returned home. Pursuant to these agreements, Rwanda paid some $80,000 into appellant's client trust account, and after the war a new government formed by the victorious rebels sued to get the money back. Following a bench trial, the district court found appellant liable for conversion and breach of fiduciary duty, explaining that appellant had performed virtually no work under the first contract and treated the second as a personal account with Rwanda's former ambassador rather than an agreement with Rwanda itself. The court also awarded $10,000 in punitive damages. For the most part, we affirm.

I.

Some of the late twentieth century's most horrific events form the background of this litigation. On April 6, 1994, a surface-to-air missile from an as-yet unidentified source shot down an aircraft carrying Rwanda's president, Juvenal Habyarimana. Stepping into the power vacuum, extremists from Rwanda's majority Hutu ethnic group formed an interim government and unleashed genocidal violence that over the next 100 days claimed the lives of some 800,000 Rwandans, most of them ethnic Tutsis, a minority group historically dominant in Rwandan politics. As ill-equipped United Nations peacekeepers stood by, powerless to contain the bloodshed, a Tutsi rebel force called the Rwandan Patriotic Front ("RPF") canceled a 1993 ceasefire and resumed its offensive against the government.

While civil war and genocide raged, Rwanda's embassy in Washington entered into the two agreements at issue in this case. First, on July 8, 1994, four days after RPF forces captured Rwanda's capital Kigali, Rwanda's United States Ambassador Aloys Uwimana, a representative of the Hutu government, signed a "Memorandum of Understanding" with three Americans—appellant Robert W. Johnson II; Timothy Towell, a retired U.S. diplomat; and Edward van Kloberg III, a Washington lobbyist. Under this agreement, the three Americans, termed the "Rwanda Working Group" or "RWG," were to "assist the Government of Rwanda, through Ambassador Aloys Uwimana in Washington, to get its views clearly and dramatically presented to the international community." In particular, the RWG would "[e]ncourage the comprehension and support of American authorities of Rwanda's cause," aiming to "isolat[e]" the RPF and foster the perception that it constituted "a marginal group, perhaps even a minority, foreign-manipulated, terrorist group." The MOU, which called for payments totaling $70,000, required an initial deposit of $28,000. On July 13, Rwanda's embassy cut a check for that amount to the "Robert W. Johnson II Trust Fund."

But it was soon too late for lobbying. On July 15—just one week after Rwanda signed the MOU and two days after Rwanda's $28,000 payment—the United States issued a "Note Verbale" requiring, given "the uncertain and untenable situation which has existed in Rwanda since April 6, 1994," that the embassy terminate all "operations of the diplomatic mission, other than activities relating to the closure of the mission, effective July 22, 1994." Though one embassy official, Boniface Karani, was "permitted to remain in the United States for the present to oversee the closing of the Embassy," the note ordered Ambassador Uwimana to leave the country "no later than July 22, 1994." "All remaining members of the mission and their family members (other than any who may be citizens or legal permanent residents of the United States), including Mrs. Uwimana and children," were to "depart the United States no later than August 14, 1994."

The Note Verbale precipitated Johnson's second agreement with Rwanda. In a letter to Ambassador Uwimana, Johnson offered to help with the embassy's closure, providing in particular "continued oversight and assistance" regarding immigration requests by embassy employees hoping to remain in the United States instead of returning to the chaos in Rwanda. Johnson proposed:

[W]e will work with the State Department to ensure that their recommendations to the Immigration and Naturalization Service are favorable, and we will obtain testimony from experts that conditions in Rwanda are presently life-threatening. Also, we shall supervise and coordinate the activities of [two immigration attorneys] in the preparation of the asylum requests and the handling of the cases to ensure that the work is thorough and cost-effective.

Claiming that "[a]ll the $28,000.00 [paid under the MOU] has been disbursed or obligated," Johnson's letter requested $55,000 for the new work—$30,000 for the immigration attorneys and $25,000 for the RWG. On July 22, the day the embassy closed, Ambassador Uwimana signed Johnson's proposal and authorized a check for $55,000, again payable to Johnson's client trust fund.

The following month, Johnson learned that the United States had recognized the RPF as Rwanda's legitimate government. Soon afterwards, Karani, by then newly reappointed to the embassy, wrote "to confirm the termination" of the July 22 agreement and demand return of $17,475, the amount Karani calculated to be left in the account. Apparently referring to immigration work performed on Uwimana's behalf, Karani observed that "necessary steps have been taken for only one diplomat family," making Johnson's retention of the full $55,000 unnecessary. Nonetheless, Johnson refused to make any refund, insisting in two response letters that only Uwimana could direct his expenditures. Two months later, another embassy official demanded return of the entire $55,000. Again, Johnson refused.

Having thus failed to obtain a voluntary refund, Rwanda sued in the U.S. District Court for the District of Columbia, asserting D.C. law claims of conversion and breach of fiduciary duty against Johnson, Uwimana, and Johnson's two RWG colleagues. Uwimana declared bankruptcy, obtaining an automatic stay under 11 U.S.C. § 362, and Johnson's two partners settled, paying Rwanda $26,200 out of the $28,000 paid under the MOU. After denying Johnson's motion to dismiss and Rwanda's motion for summary judgment, see Gov't of Rwanda v. Rwanda Working Group, 150 F.Supp.2d 1 (D.D.C.2001), the district court held a two-day bench trial. Based on extensive factual findings, the district court concluded that "none of the lobbying or other work for Rwanda ever took place under the July 8 MOU" and that Johnson "used $55,000 from the July 22 Letter Agreement almost exclusively for Mr. Uwimana's asylum request and for other immigration services," undertakings the district judge believed were "against the interest of [Johnson's] client, the Government of Rwanda." See Gov't of Rwanda v. Rwanda Working Group, 227 F.Supp.2d 45, 63 (D.D.C.2002) ("RWG").

The district court held Johnson liable for conversion and fiduciary breach as to both the MOU and the July 22 agreement, imposing liability in the amount of $56,800—$1,800 as the balance from the MOU payment following the two RWG members' settlement, plus $55,000 based on the July 22 agreement. Id. at 72-73. In addition, finding that Johnson's "actions in this case were accompanied by gross recklessness and a willful disregard of the rights of his rightful client—the Government of Rwanda," the district court imposed $10,000 in punitive damages. Id. at 72. Finally, the court referred claims for prejudgment interest and attorney's fees to a magistrate judge, id. at 73, who awarded interest but not fees.

Johnson now appeals the district court's judgment in Rwanda's favor on the conversion and fiduciary breach counts as well as its award of punitive damages. Rwanda cross-appeals the denial of fees and calculation of prejudgment interest.

II.

We begin with Johnson's challenges to the conversion and fiduciary breach claims, reviewing the district court's factual findings for clear error and its legal conclusions de novo, see, e.g., Singletary v. District of Columbia, 351 F.3d 519, 523 (D.C.Cir.2003); see also Fed.R.Civ.P. 52(a) (indicating that following trial without a jury, "[f]indings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses"). In addition to disputing the legal sufficiency of the district court's findings, Johnson argues that notwithstanding Rwanda's later demand for the full $55,000, Karani's earlier letter ratified all but $17,475 of his expenditures pursuant to the July 22 agreement—a proposition Johnson says is conclusively established by In re Uwimana, 274 F.3d 806 (4th Cir.2001), a Fourth Circuit case involving former Ambassador Uwimana's personal bankruptcy. Because we agree with the district court that Johnson breached his fiduciary duties with respect to both...