Vinewood Capital, LLC v. Dar Al-Maal Al-Islami Trust

Case: 12-11103 Document: 00512400345 Page: 1 Date Filed: 10/08/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 8, 2013
No. 12-11103 Lyle W. Cayce
Clerk
VINEWOOD CAPITAL, LLC,
Plaintiff- Appellant,
v.
DAR AL-MAAL AL-ISLAMI TRUST; ZIAD RAWASHDEH; KHALID
ABDULLA-JANAHI,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 4:06-cv-00316
Before DAVIS, JONES, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Plaintiff Vinewood Capital, LLC, (Vinewood), appeals from a dismissal on
summary judgment of its claims against defendants of breach of contract,
negligent misrepresentation, promissory estoppel, and fraud. We affirm.
I.
Vinewood filed this suit against the defendants to enforce an alleged oral
contract to invest $100 million in real estate projects promoted by Vinewood.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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Defendant Dar Al-Maal Al-Islami Trust (DMI) is an Islamic financial institution
based in Geneva, Switzerland that operates banks and investment vehicles
conforming with Islamic law. Defendant Ziad Rawashdeh was DMI’s Chief
Operating Officer and defendant Khalid Abdullah-Janahi was its CEO. DMI
was represented during the relevant periods by attorney James McGuire.
The principals of Vinewood, James Conrad, Laird Fairchild and Wendel
Pardue, were previously employed by Overland Capital Group, Inc. (Overland).
Overland had a business relationship with DMI, whereby Overland located real
estate investment opportunities for investment by DMI affiliates. After DMI
purchased property, Overland managed it for DMI’s affiliates. Before working
at Overland, Conrad had previously been associated with Fairfield Residential
LLC (Fairfield). DMI had invested in several Fairfield projects. Vinewood’s
counsel is Geoffrey Harper.
In March 2004, Overland terminated the employment of Conrad, Fairchild
and Pardue. According to Conrad, they were terminated for raising questions
about whether Overland was complying with federal tax law. In April 2004,
Fairchild and Pardue filed a wrongful termination action against Overland and
a DMI affiliate in Texas State Court (2004 Texas Action). On June 19, 2004,
Conrad traveled to Geneva, Switzerland for a meeting with Rawashdeh and
Abdulla-Janahi to settle the 2004 Texas Action.1 Plaintiff relies heavily on oral
promises defendants made at that meeting to support their claim.
The parties agree that a preliminary agreement was reached in Geneva
to settle the 2004 Texas Action. The settlement would include (i) a settlement
payment to Conrad, Fairchild and Pardue and mutual releases from liability;
1
According to Vinewood, DMI desired to settle the dispute between Overland and
Conrad, Fairchild and Pardue because their firings left no one at Overland who knew the
status of DMI’s investments or who had the experience to manage the existing real estate
portfolio.
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and (ii) an agreement that an affiliate of DMI would loan a new company (which
was later formed as Vinewood) $2.5 million in start-up capital. According to
Conrad, Rawashdeh and Abdulla-Janahi also agreed that DMI would start a new
business relationship with Vinewood in which DMI committed to fund $100
million in real estate investments in the coming year. Under the oral
agreement, Vinewood’s fees related to those projects would be the same as those
being paid to Overland. If necessary, Vinewood would take over asset
management of new projects and properties then being managed by Overland,
also under the same fee arrangement as those earned by Overland. According
to the defendants, DMI agreed only to consider future investment projects that
Vinewood might present to them.
After the June meeting, the parties and their attorneys began to exchange
correspondence and draft agreements to document the agreements reached in
Geneva. The writings consistently included references to the items agreed to as
part of the settlement of the Texas Action – a settlement payment and mutual
releases, and a loan to Vinewood. In contrast, the language in the
correspondence and draft agreements (both from plaintiff to defendants and from
defendants to plaintiff) used to describe DMI’s obligation to invest in Vinewood
real estate projects was inconsistent with Conrad’s version of the alleged oral
agreement perfected in Geneva.
On June 25, 2004 (less than one week after the Geneva meeting),
Vinewood’s counsel, Harper, sent a letter to McGuire, counsel for DMI, following
up on the meeting with a “proposal (with accompanying support) of how to
resolve all of the issues between our clients.” That “Proposed Business Plan”
describes the business arrangement between Vinewood and DMI as follows:
“DMI and its related entities would have a right of first refusal on all proposed
real estate transactions. Vinewood would request an exclusive right to represent
DMI related entities on investments in US real estate.” It also contains a
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disclaimer regarding the profit projections which references a potential
investor’s decision whether to invest. Two earlier versions of the “Proposed
Business Plan” were circulated by Pardue to Harper, Conrad and other parties
on June 24, 2004. There was no mention of a commitment to fund real estate
investments in any of these drafts. McGuire responded on August 16, 2004, in
an email, which states that DMI will enter an “Agreement to consider (only) all
deals brought to it by Conrad.” None of the correspondence or preliminary drafts
of agreements the plaintiff sent the defendants’ representatives refer, even
obliquely, to a commitment by the defendants to invest in a specified amount of
real estate projects to be generated by the plaintiff. The same is true of the
correspondence from defendants’ representatives to plaintiff.
The agreements that were signed by both parties also belie any oral
commitment by the defendants to invest in real estate projects generated by the
plaintiff. The first instrument executed by the parties was a memorandum of
understanding related to a future Financing Agreement which was signed on
September 3, 2004 (the Financing MOU). The Financing MOU confirmed the
agreement by DMI to make the $2.5 million start up loan to Vinewood.2 It also
had provisions about a future business relationship with the plaintiff. But
rather than committing DMI to invest in projects brought to it by the plaintiff,
the instrument secured to DMI the first right of refusal on all real estate
investments Vinewood presented to it. Relatedly, DMI also agreed to consider
in good faith all potential transactions Vinewood brought to it. Finally, and
completely inconsistent with a commitment, the instrument stated that DMI
would “have no obligation whatsoever to participate or become involved in such
transactions.” Rather “[DMI] (or a related company) shall have complete and
2
The Financing MOU was actually executed on behalf of Nexus, a DMI affiliate. All
parties agree that the agreement was on behalf of DMI and this opinion shall treat DMI or the
defendants as parties to that agreement.
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unfettered discretion to accept or reject any transactions or opportunities
brought to it by Vinewood.” This instrument also provided that “any and all
prior agreements, contracts and understandings between and among the parties
to the Financing Agreement shall be fully and completely terminated and of no
effect.” The parties also executed a memorandum of understanding related to
the settlement agreement between the parties (the Settlement MOU).
The final settlement agreement was executed on October 7, 2004 (the
Settlement Agreement). This agreement, like the memoranda of understanding,
was signed several months after the parties met in Geneva, where the oral
commitment was allegedly made. The central purpose of the Settlement
Agreement was to resolve the wrongful termination suit against Overland.
Paragraph 4 of the instrument provides that plaintiffs (referring to Conrad,
Pardue and Fairchild) fully release defendants (including Overland, Rawashdeh
and a DMI affiliate) from all earlier contracts, agreements and promises. This
express release for claims based on earlier promises undermines plaintiff’s
contention that defendants were committed to invest in specified amounts of real
estate promoted by them.3
The final financing agreement was entered into on October 14, 2004,
between Vinewood and August Investment Fund I Ltd (another DMI affiliate)
in a document entitled Special Purpose Mudaraba Agreement.4 The purpose of
this agreement was to reduce to writing the defendants’ agreement to provide
$2.5 million in start up money for plaintiff’s new business, Vinewood. No
reference is made to any commitment by defendants to invest in properties
brought to it by plaintiff. This agreement also contains a merger clause that
3
This instrument also includes a merger clause which provides in Paragraph 6 that the
Settlement Agreement “supercedes all previous oral and written negotiations, agreement, commitments,
and writings in connection therewith.”
4
A Mudaraba Agreement is an Islamic financing transaction whereby one party
entrusts funds to another party for use in business. It functions like a line of credit.
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states that the written agreement contains the entire agreement between the
parties and supercedes all prior agreements and understandings.
Vinewood argues that in reliance on promises from defendants, it
established itself as a corporate entity, set up the business and began gathering
information on projects for DMI. Defendants and Vinewood met again in London
in December 2004. Representatives from Fairfield also attended the meeting.
Vinewood states that at this meeting DMI looked at a list of projects they
presented and agreed to finance them. Defendants state that the purpose of the
meeting was to discuss Vinewood taking over management of already existing
Overland projects that had been developed by Fairfield. Conrad wrote to
Abdulla-Janahi after the London meeting and attached a list of projects
Vinewood claimed defendants approved. However, Conrad states in the letter
“If for some reason Shamil Bank/DMI does not want to provide all of the
requested funding it will not be a problem. In fact, all Fairfield needs at this
stage is just an indication of funding and not a commitment.” Conrad requested
from Shamil Bank/DMI its funding amounts for Fairfield’s 2005 equity needs
and again stated, “Each investment subject to being analyzed and approved on
its own merits.”
Vinewood alleges that after the December meeting DMI took their
property proposals directly to Overland, cutting them out, while at the same
time repeatedly assuring them that funding would be provided for the agreed
upon projects. Plaintiff argues that when it discovered what was happening, it
filed this suit claiming breach of contract, negligent misrepresentation, fraud
and promissory estoppel. The defendants filed a motion for summary judgment
on all claims, which the district court granted.
The district court concluded that Vinewood’s sole source of proof of the
alleged oral contract to fund $100 million in real estate projects was Conrad’s
testimony, by deposition and a declaration filed with Vinewood’s opposition to
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the motion for summary judgment. The court found that Conrad’s declaration
was inconsistent with his prior deposition testimony and therefore of
questionable value.5 The district court also relied on the absence of
contemporaneous documentary evidence of the $100 million commitment and the
fact that the documentary evidence actually belied the existence of such an
agreement.
Vinewood’s other claims, which rest on the same allegations as the breach
of contract claims, were similarly dismissed for lack of an issue of fact. This
appeal followed.
II.
This court reviews the grant of summary judgment de novo. Threadgill
v. Prudential Sec. Group, Inc., 145 F.3d 286, 292 (5th Cir. 1998). The motion
should only be granted if there is no genuine issue as to any material fact. Fed.
R. Civ. P. 56(c). Evidence must be viewed in the light most favorable to the
nonmoving party. Envtl. Conservation Org. v. City of Dallas, 529 F.3d 519, 524
(5th Cir. 2008). However, conclusory allegations are insufficient to defeat a
motion for summary judgment without probative evidence to support the claim.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). Similarly, a party’s
uncorroborated self-serving testimony cannot prevent summary judgment,
5
Some of the inconsistencies involve whether Conrad knew the purpose of the Geneva
meeting before he attended and whether settlement was discussed. Conrad’s declaration also
added information that was not disclosed in his deposition, i.e., that during the Geneva
meeting Janahi and Rawashdeh apologized for previous events and asked if the parties could
move beyond that incident and that a key issue for Vinewood at the London meeting was the
need for the deals to be tax compliant. Regarding the oral contract, Conrad’s declaration
states that DMI agreed that it would fund $100 million into Fairfield residential investments.
In his deposition, Conrad testified that DMI agreed that it would fund no less than $100
million of the Fairfield 2005 investments. Fairfield’s declaration stated that DMI agreed to
fund up to $100 million in business. The district court concluded that “While these
discrepancies are subtle, when combined with the above-described contradictions in Conrad’s
testimony, they so convolute Vinewood’s position that they preclude the creation of a dispute
of fact concerning this essential term of the alleged oral contract.”
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particularly if the overwhelming documentary evidence supports the opposite
scenario. Vais Arms, Inc. v. Vais, 383 F.3d 287, 294 (5th Cir. 2004).
The district court properly applied these rules when assessing the
summary judgment evidence in this case. The only evidence offered by
Vinewood in support of the alleged oral contract between Vinewood and DMI for
DMI to invest $100 million in real estate is Conrad’s deposition testimony and
affidavit. In contrast, as outlined above, the record is replete with documentary
evidence, much of it produced by principals of Vinewood, that proposes a
business relationship with defendants with no mention of the alleged oral
agreement. In fact, correspondence sent by the plaintiff immediately after the
Geneva meeting describes an agreement giving DMI full discretion to accept or
reject any particular project generated by plaintiff. The Financing MOU echoes
those terms describing DMI’s right of first refusal on all real estate investments
Vinewood presents, specifically stating that DMI would “have no obligation
whatsoever to participate or become involved in such transactions.” Neither the
Settlement Agreement nor the Special Purpose Mudaraba Agreement contain
any provision obligating DMI to participate in any real estate investments
offered by Vinewood. In addition, even if we assume that an oral agreement was
formed in Geneva, the release language in the Settlement Agreement and the
merger clauses in the Settlement Agreement and the Mudaraba Agreement
would negate that agreement. Months later, after the parties met in London in
December 2004, Conrad continued to describe DMI’s obligation to fund proposed
projects as optional. In short, no document supports Conrad’s testimony that
DMI committed to fund $100 million in Vinewood-generated real estate
investments.
As the district court concluded, Conrad’s self-serving testimony is belied
by the parties’ contemporaneous written communications and written
agreements and is therefore insufficient to create an issue of fact. Id.
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Accordingly, we agree that plaintiff’s summary judgment evidence failed to
create a triable issue of fact tending to show that defendants committed to fund
real estate projects generated by plaintiff.
III.
The district court also dismissed the Vinewood’s claims of negligent
misrepresentation, promissory estoppel, and fraud against the defendants.
First, the district court found that Conrad’s testimony concerning the
representations made by Abdulla-Janahi and Rawashdeh was inconsistent with
the weight of the documentary evidence and thus did not create an issue of fact.
Based on the same analysis above in relation to the contract claim, we agree.
In addition, to the extent the negligent misrepresentation claim was based
on assurances of the defendants’ willingness to provide future funding, those
representations are promises to perform future acts which are not actionable
statements of existing fact. Clardy Mfg. Co. v. Marine Midland Bus. Loans, 88
F.3d 347, 357 (5th Cir. 1996) (The “false information” element contemplates a
misstatement of an existing fact.)
IV.
Based on the foregoing analysis, we agree with the district court that
Vinewood’s claims fail as a matter of law and affirm the grant of summary
judgment and dismissal of all claims. AFFIRMED.
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