DocketNumber: Civil Action No.: 16–0596 (RC)
Citation Numbers: 298 F. Supp. 3d 157
Judges: Contreras
Filed Date: 2/26/2018
Status: Precedential
Modified Date: 7/25/2022
I. INTRODUCTION
This case concerns the unfortunate and rather haphazard business dealings of several individuals seeking to jointly establish and operate a restaurant in the District of Columbia. Plaintiff Neway Alemayehu originally brought this action alleging that Belay Abere, Bekalu Bayabile, and Iyossias *161Tilahun worked together to defraud him out of a $460,000 investment. See generally Compl., ECF No. 1. Mr. Abere denied the allegations, claiming that the contemplated business arrangement never came to fruition and that, in fact, it was Mr. Alemayehu who had acted wrongfully by breaching certain duties he owed to Mr. Abere as his agent and employee. This case now comes before the Court on Mr. Abere's partial motion to dismiss and Mr. Alemayehu's motion to dismiss or, in the alternative, summary judgment. See Def.'s Mot. Dismiss ("Def.'s Mot.") at 1, ECF No. 25, Pl.'s Mot. Dismiss Alt. Summ. J. ("Pl.'s Mot.") at 1, ECF No. 26. For the reasons stated below, the Court denies both motions.
II. FACTUAL BACKGROUND
In the spring of 2015, Mr. Alemayehu and Mr. Abere met to discuss a possible investment in a restaurant called the Amsterdam Café and Lounge, located in Washington, D.C. Compl. ¶ 7; Countercl. ¶ 9, ECF No. 4. Through their discussions, the parties ultimately came to an agreement. Although some of the details of the agreement are in dispute, the basic premise was that, in exchange for an initial investment, Mr. Alemayehu would receive an 80% ownership stake in a newly formed corporate entity, which would then be responsible for operating the restaurant. See Compl. ¶ 7; Countercl. ¶¶ 9-11, 16. For their part, Mr. Abere and Mr. Bayabile would each own five percent and fifteen percent of the business, respectively. See Compl. ¶ 7; Countercl. ¶ 10. The agreement also contemplated that Mr. Abere would assign a commercial lease to the newly formed entity and that an existing liquor license would also be transferred to the business. Compl. ¶ 7; Countercl. ¶¶ 9, 12. The parties dispute, however, whether these transfers were Mr. Abere's affirmative obligations or whether, instead, they were express conditions on the contract.
Nevertheless, Mr. Alemayehu claims that these promises and the prospect of owning 80% of the restaurant venture induced him to invest substantial sums of money into the business. Indeed, in addition to making an initial investment of approximately $80,000, see Compl. ¶ 32, Mr. Alemayehu claims that he also contributed funds to pay: back rents owed to the landlord, along with taxes and insurance, legal fees associated with the attempt to transfer the lease and liquor license, substantial construction and renovation work on the restaurant, the purchase and installation of new kitchen equipment, security and fire alarm systems, restaurant furnishings, a liquor and wine inventory, and a computerized cash register system. Compl. ¶¶ 8-9; see also Countercl. ¶ 17. In total, Mr. Alemayehu claims that he invested more than $460,000 in the restaurant. Compl. ¶ 32.
Unfortunately, the business arrangement did not unfold as the parties had intended. Indeed, despite their efforts to persuade the landlord of the building in which the restaurant was located, she ultimately refused to permit any assignment of the commercial lease from the current leaseholder, Mr. Abere individually, to the newly formed business entity. Compl. ¶ 10; Countercl. ¶ 20. Rather, she required that Mr. Abere-and only Mr. Abere-be responsible for the lease. See Compl. ¶ 10; Countercl. ¶ 20. Mr. Alemayehu alleges that, at some point, Mr. Abere represented to him that the only way the landlord would permit the assignment was if she were presented with an operating agreement showing that Mr. Abere was the only owner of the corporate entity. Compl. ¶ 11. Thus, Mr. Alemayehu allegedly agreed to be removed from the corporate documents, albeit temporarily, until the assignment could be accomplished. Compl. ¶ 11. But apparently the landlord was unwilling to *162assign the lease even to an entity solely owned by Mr. Abere. Compl. ¶ 12; Countercl. ¶ 20. Given the circumstances, Mr. Alemayehu and Mr. Abere believed that the only realistic way forward was to keep the lease, liquor license, and business license in the name of Mr. Abere in his personal capacity. See Compl. ¶ 12; Countercl. ¶ 21.
However, the parties dispute what exactly their future intentions were. Mr. Alemayehu claims that this Abere-centered operation was a temporary arrangement and that they had agreed that the corporate entity would manage the business until they could find a way to convince the landlord to substitute the corporate entity for Mr. Abere on the lease. See Compl. ¶ 12. Moreover, Mr. Alemayehu argues that, as an 80% owner, he was to act as the restaurant's executive manager, have daily access to financial records, participate in major business decisions, and would receive a power of attorney from Mr. Abere. See Compl. ¶ 12. Mr. Abere, on the other hand, claims that they modified their earlier agreement. See Countercl. ¶ 22. Specifically, he claims that they agreed that Mr. Abere would form, own, and operate the restaurant, but that he would employ Mr. Alemayehu as the restaurant's manager and compensate him with 80% of the business's profits in consideration for his initial investment. See Countercl. ¶ 22.
Regardless, in October 2015, the restaurant opened for business and Mr. Alemayehu assumed the role of executive manager while Mr. Abere was traveling outside of the United States. See Compl. ¶ 13; Countercl. ¶¶ 23, 26. But no management agreement or power of attorney was ever executed, either before Mr. Abere left or after he returned. Compl. ¶¶ 13, 15. And, in fact, it appears that Mr. Alemayehu's time as executive manager was rather short lived. Mr. Alemayehu alleges that when Mr. Abere returned a month or two later, Mr. Abere suggested that he take over the management and operation of the business given his "superior liability protection and experience," but that this change would only last for "a few months." Compl. ¶ 14. Alemayehu relented, believing this course of action "to be beneficial ... as long as [the] management was performed in an inclusive, collaborative way." Compl. ¶ 14. But subsequently, according to Mr. Alemayehu, Mr. Abere took several actions meant to undermine his authority as executive manager and never restored Mr. Alemayehu to that position. Compl. ¶ 18 (Mr. Abere "has continued, up through the filing of this lawsuit, to strengthen his control of the business, its operation and planning, all designed to totally remove [Mr. Alemayehu] from any involvement or managerial oversight responsibilities for the restaurant enterprise."). Furthermore, Mr. Alemayehu claims that, even though he is entitled to 80% of the profits, he has received no profit distributions, Compl. ¶ 41, and Mr. Abere "has tried to make it appear that he is the legitimate sole owner of the business." Compl. ¶ 19. All of this seems to have culminated when, on March 4, 2016, Mr. Alemayehu disassociated himself from the venture. See Letter from Mr. Alemayehu to Mr. Abere, ECF No. 28-6. That same month, he brought this suit seeking what he believes is due to him.
Mr. Abere, however, has a somewhat different take. According to Mr. Abere, upon his return, he discovered that Mr. Alemayehu had abused his position of trust and failed to faithfully and fully perform his duties as manager. Countercl. ¶ 27. Specifically, he claims that Mr. Alemayehu failed or refused to pay certain taxes, salaries of employees, and invoices submitted by vendors and third parties. Countercl. ¶ 27. In addition, Mr. Abere learned that, while the business had generated approximately *163$110,422.81 in gross receipts, that money went unaccounted for. Countercl. ¶ 28. Mr. Alemayehu allegedly admitted that he took approximately $13,000 from the business to pay a personal debt, but could not account for the remaining balance. Countercl. ¶ 28. Furthermore, Mr. Abere learned that, before the opening of the restaurant, Mr. Alemayehu had signed a purported Settlement Agreement and Mutual General Release (the "Settlement Agreement") on Mr. Abere's behalf, but without his knowledge or consent. Countercl. ¶ 30. The Settlement Agreement purports to release potential claims that Mr. Abere had against Mr. Abere's former sub-tenant, Wilson Concepts, LLC ("Wilson Concepts"), and its proprietor, Garnell Wilson, for, among other things, previous unpaid rent. Countercl. ¶ 30. According to Mr. Abere, it was for all of these reasons that he ultimately decided to remove Mr. Alemayehu as the manager of the restaurant. Countercl. ¶ 32.
In March 2016, Mr. Alemayehu filed a complaint initiating this lawsuit. See generally Compl. Mr. Alemayehu asserts six claims against Mr. Abere, including claims for unjust enrichment, promissory estoppel, and quantum meruit. See Compl. ¶¶ 26-32, 37-41. Mr. Abere, in turn, filed a counterclaim against Mr. Alemayehu. See generally Countercl. He asserts, among other things, claims for breach of fiduciary duty, breach of contract, quasi-contract/breach of agency contract, and unjust enrichment. See Countercl. ¶¶ 36-52. Both Mr. Abere and Mr. Alemayehu have since filed answers to the claims against them.
On May 8, 2017, Mr. Abere filed a partial motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Def.'s Mot. That same day, Mr. Alemayehu also filed a motion to dismiss, or in the alternative, for summary judgment. See Pl.'s Mot. Both motions have been fully briefed and are now ripe for decision. The Court therefore addresses each motion in turn.
III. MR. ABERE'S MOTION
Before turning to the merits of Mr. Abere's motion, the Court must first clear up a technical procedural issue. Mr. Abere styles his motion as a motion dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See generally Def.'s Mot. Under the Federal Rules, such motions are only available to parties before they have filed a responsive pleading. See Fed. R. Civ. P. 12(b) ("A motion ... must be made before pleading if a responsive pleading is allowed."). Because Mr. Abere has already filed an answer in this case, he is not entitled to relief under Rule 12(b)(6). See id. However, under the circumstances, the proper course of action is to construe the motion to dismiss as a motion for judgment on the pleadings under Rule 12(c) because the standard under both rules is essentially same. See Bloom v. McHugh ,
Accordingly, Mr. Abere's motion will be granted only if the Complaint fails to plead "enough facts to state a claim for relief that is plausible on its face." Bell Atl. Corp v. Twombly ,
Here, Mr. Abere seeks to dismiss Mr. Alemayehu's claims for promissory estoppel, quantum meruit, and constructive trust. See generally Def.'s Mot. Only the first two claims, however, are worthy of any significant discussion. As the Court noted in a prior opinion, constructive trust is not an independent cause of action, but a remedy. Thus, the Court "construe[s] the request for a constructive trust as a request for injunctive relief," but "takes no position on whether this remedy would be appropriate in this case." Alemayehu , 199 F.Supp.3d at 87. As for Mr. Alemayehu's claims for promissory estoppel and quantum meruit, the Court finds that Mr. Alemayehu has alleged facts sufficient to state a plausible entitlement to relief. Accordingly, the Court denies Mr. Abere's motion.
A. Promissory Estoppel (Count III)
The Court first addresses Mr. Abere's argument that the complaint fails to allege sufficient facts to state a claim for promissory estoppel. "To factually allege promissory estoppel, a plaintiff must establish (1) the existence of a promise, (2) that the promise reasonably induced reliance on it, and (3) that the promisee relied on the promise to his detriment." Osseiran v. Int'l Fin. Corp. ,
Although this Court previously held that Mr. Alemayehu's Complaint did not allege any sufficiently definite promise from Mr. Tilahun, the Court finds no such impediment with respect to his claim against Mr. *165Abere.
Furthermore, Mr. Alemayehu's Complaint also adequately alleges that Mr. Alemayehu reasonably relied upon Mr. Abere's promises to his detriment. According to the Complaint, Mr. Abere's promises not only induced Mr. Alemayehu to make an initial investment in the enterprise, they also convinced him to continue investing in the business on the belief that *166he would ultimately be entitled to 80% of the restaurant's net profits once it became profitable. See Compl. at 1-2, ¶¶ 7, 9. Among other things, Mr. Alemayehu paid for rent, "legal fees to get the lease and liquor license transferred to the LLC," renovations, new HVAC and water heater systems, new kitchen equipment, security and fire alarm systems, and restaurant furniture. See Compl. ¶ 9. In total, Mr. Alemayehu allegedly invested approximately $460,000 in the Amsterdam Café. See Compl. ¶ 32. But Mr. Abere never transferred the business over to the corporate entity and Mr. Alemayehu never received any profit distributions. Compl. ¶¶ 19, 41. Mr. Alemayehu asserts that "he never would have made the initial investment of $85,000 and he certainly wouldn't have continued to fund the restaurant enterprise in an amount exceeding $460,000" if he had known that Mr. Abere never intended to make him an 80% owner and manager of the business. Compl. ¶ 32. Accordingly, Mr. Alemayehu's Complaint, taken as a whole, alleges sufficient facts to establish a claim of promissory estoppel.
B. Quantum Meruit (Count V)
The Court next considers Mr. Alemayehu's quantum meruit claim. Under D.C. law, to state a claim for quantum meruit, a plaintiff must allege: (1) "valuable services rendered by the plaintiff;" (2) "for the person from whom recovery is sought;" (3) "which services were accepted and enjoyed by that person;" and (4) "under circumstances which reasonably notified the person that the plaintiff, in performing such services, expected to be paid." Providence Hosp. v. Dorsey ,
First, Mr. Alemayehu plainly alleges that he rendered valuable services.
However, Mr. Abere might very well have been the beneficiary of Mr. Alemayehu's *167other services. All of Mr. Alemayehu's other alleged services appear to be related to establishing the restaurant as a viable business. For example, he alleges that he "manage[ed] the [restaurant's] renovation projects, market[ed] and promot[ed] the business after it started operating, and manag[ed] the business for the first several months of its operation." Compl. ¶ 39. Thus, the question of who enjoyed the benefits of Mr. Alemayehu's labor necessarily turns on the question of who owned the enterprise. Of course, if Mr. Abere ran the restaurant as a sole proprietor, as he claims, see Countercl. at 1, then any and all services performed for the restaurant necessarily accrued to his personal benefit. Indeed, D.C. law "makes no legal distinction between the identity of a sole proprietorship and its owner." Kopff v. Roth ,
But there are also circumstances under which Mr. Alemayehu would not be entitled to recover for services rendered to the business. Indeed, as described above, if the corporate entity were deemed to be running the business, then the benefits accrued to it, not Mr. Abere and, thus, Mr. Alemayehu would have no viable quantum meruit claim against him. Similarly, if Mr. Alemayehu were deemed to be a de facto partner of the business, then his services accrued, at least in part, to his own benefit. See
Although that theory may run counter to some of Mr. Alemayehu's other claims, it is well established that a plaintiff is allowed to plead in the alternative. See McNamara v. Picken ,
*168See McNamara ,
If Mr. Abere does in fact own the business and Mr. Alemayehu does not, then Mr. Alemayehu may very well have a claim for quantum meruit. Under the circumstances alleged in the pleadings, it would seem reasonable to expect Mr. Abere to have known that Mr. Alemayehu anticipated compensation in one form or another for his work. Indeed, Mr. Abere himself claims that Mr. Alemayehu was "employ[ed] as the manager of Amsterdam Café." Countercl. ¶ 24; see also Compl. ¶ 20 (alleging that Mr. Tilahun informed employees that Mr. Alemayehu "works for Defendants Abere and Bayabile"). And there is no reason to believe that Mr. Alemayehu was conferring a benefit on the business gratuitously or officiously. Therefore, if Mr. Alemayehu did not have an interest in the restaurant enterprise, he has at least alleged sufficient facts to demonstrate that he has a plausible right to relief on his claim for quantum meruit. Based on the foregoing, the Court concludes that Mr. Abere is not entitled to judgment on the pleadings with respect to Mr. Alemayehu's quantum meruit claim.
IV. MR. ALEMAYEHU'S MOTION
The Court now turns to Mr. Alemayehu's motion. Like Mr. Abere, Mr. Alemayehu erroneously styles his motion as a motion to dismiss under Rule 12(b)(6) despite the fact that responsive pleadings have already been filed. However, unlike Mr. Abere, Mr. Alemayehu has alternatively moved for summary judgment and has attached materials outside of the pleadings. Because both parties rely on these materials, and both parties have had the opportunity to respond and have already taken discovery, the Court will treat Mr. Alemayehu's motion as a motion for summary judgment rather than a motion for judgment on the pleadings. See Langley ,
Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A "material" fact is one capable of affecting the substantive outcome of the litigation. See Anderson v. Liberty Lobby, Inc. ,
The principal purpose of summary judgment is to streamline litigation by disposing *169of factually unsupported claims or defenses and determining whether there is a genuine need for trial. See Celotex Corp. v. Catrett ,
Mr. Alemayehu seeks summary judgment on each of Mr. Abere's five counterclaims. For the reasons stated below, the Court denies Mr. Alemayehu's motion.
A. Breach of Contract (Count II)
The Court first considers Mr. Abere's breach of contract claim and finds that summary judgment is unwarranted. To establish a claim for breach of contract, a plaintiff must establish (1) a valid contract between the parties, (2) an obligation or duty arising out of the contract, and (3) a breach of that duty. See Tsintolas Realty Co. v. Mendez ,
Here, Mr. Abere claims that he and Mr. Alemayehu entered into a rather odd employment agreement whereby Mr. Abere would continue to own and operate the Amsterdam Café, but, if Mr. Alemayehu paid $100,000, Mr. Abere would make him the manager of the restaurant and compensate him with 80% of the business's net profits. See Countercl. ¶ 22. Mr. Abere claims that Mr. Alemayehu violated this agreement when he failed to pay the full consideration amount of $100,000, as he asserts was required under the contract. See Countercl. ¶¶ 22, 41-44. In addition, Mr. Abere suggests that Mr. Alemayehu breached the duty of good faith and fair dealing implicit in the agreement when he failed to pay taxes, invoices, and employee salaries and failed to account for approximately $110,422.81 in gross receipts while he was serving as manager of the restaurant. See Countercl. ¶¶ 28, 41-44.
In his motion, Mr. Alemayehu argues that he did not breach the contract by failing to pay the requisite consideration because the parties had, in fact, agreed to lower the price of the initial investment amount to $80,000, which Mr. Alemayehu paid. See Pl.'s Mot. at 12. But, this is not supported by the record currently before the Court. There is no dispute that Mr. Alemayehu paid a total of $80,000-$50,000 directly to Mr. Abere and approximately $30,000 to Mr. Abere's landlord. See Abere Dep. at 61:22-62:4, ECF No. 28-10 ("From our agreement, I was supposed to receive [$]100,000, and from the [$]100,000 I receive[d] [$]50[,000] for me and [$]30[,000]-about [$]30[,000]-something to the landlord."). But there is no evidence in the record demonstrating any agreement between the parties to lower the contract price from $100,000 to *170$80,000. Although Mr. Alemayehu cites a deposition transcript that he urges supports his argument, he fails to provide the Court with that transcript. Pl.'s Mot. at 12. Mr. Alemayehu also points to a share purchase agreement between the parties, which states that "Mr. Neway [Alemayehu] and Mr. Bekalu [Bayabile] will make a share purchase payment of $100,000 to Mr. Belay [Abere]." Pl.'s Reply at 6-7, ECF No. 29. Mr. Alemayehu argues that this language demonstrates that the payment of $100,000 was to be borne by Mr. Alemayehu and Mr. Bayabile together-not Mr. Alemayehu alone. Pl.'s Reply at 7. While that may be true, it does not demonstrate how much each person was to pay. Thus, on its face, this document does not demonstrate that Mr. Alemayehu was obligated to pay only $80,000. Mr. Alemayehu also points to a purported operating agreement, which states that Mr. Alemayehu's contribution would be $80,000 and Mr. Bayabile's investment would be $20,000. Pl.'s Reply at 7. But this agreement is not signed by Mr. Abere, and he cannot be deemed to be bound by its terms without some evidence of his assent. Therefore, Mr. Alemayehu has not demonstrated that he was only required to pay $80,000 under the contract with Mr. Abere and thus he fails to meet even his initial burden of showing an absence of a genuine material fact.
Mr. Alemayehu next argues that he is entitled to summary judgment because, regardless of whether he breached any contractual duties owed to Mr. Abere, Mr. Abere cannot make a showing of damages. The basis of Mr. Alemayehu's argument is not that the alleged breaches did not injure the business .
First and foremost, it is important to recognize that, even if Mr. Alemayehu was right-that Mr. Abere did not share the injuries suffered by the business-this would not preclude Mr. Abere's breach of contract claim. "[T]he settled rule in the District is that '[e]ven where monetary damages cannot be proved, a plaintiff who can establish a breach of contract is entitled to an award of nominal damages.' " Alston ,
But Mr. Alemayehu's argument is also wrong for another reason. Answering the question of whether Mr. Abere made capital contributions to the business does not resolve the issue of whether Mr. Abere was personally injured by Mr. Alemayehu's actions. Indeed, whether Mr. Abere was injured turns instead on the ownership structure of the business. If Mr. Abere is the sole proprietor, as he contends, any injury to the business is also an injury felt by him because the identity of a sole proprietorship is "the same as that of its owner." Pritchett v. Stillwell ,
B. Unjust Enrichment (Count IV)
The Court next considers Mr. Abere's unjust enrichment claim. Unjust enrichment is "an obligation which the law creates, in the absence of any agreement, when and because the acts of the parties or others have placed in the possession of one person money, or its equivalent, under such circumstances that in equity and good conscience he ought not to retain it ... [d]uty, and not a promise or agreement or intention of the person sought to be charged, defines it." Jordan Keys & Jessamy, LLP v. St. Paul Fire & Marine Ins. Co. ,
Mr. Alemayehu again argues that he is entitled to judgment because Mr. Abere did not contribute funds to the business venture and because the business was not yet profitable such that Mr. Abere might have claim to a undistributed profits. See Pl.'s Mot. at 12-13; Pl.'s Reply at 8-9. In essence, Mr. Alemayehu argues that Mr. Abere cannot claim to have conferred a benefit on Mr. Alemayehu when the alleged monies actually came from the business. But, once again, one of the central disputes in this case is over who owns the business. If Mr. Abere owns the business as a sole proprietorship, as he claims, then any money taken from the coffers of the restaurant is money taken out of Mr. Abere's pockets. Because the ownership issue is disputed, Mr. Alemayehu cannot obtain summary judgment merely by arguing that he took money from the business, not Mr. Abere himself.
C. Breach of Fiduciary Duty (Count I) and Breach of Agency Contract (Count III)
Finally, the Court addresses Mr. Abere's breach of fiduciary duty and breach of agency contract claims. Mr. Abere claims Mr. Alemayehu owed him fiduciary duties as an employee of the restaurant or duties based on some agency contract.
Mr. Alemayehu argues that he is entitled to summary judgment on these claims because Mr. Abere cannot make a showing that he suffered any harm.
Unfortunately, this argument raises a complication. Specifically, this argument calls into question not only the rights of Mr. Abere, but also Wilson Concepts *173and Mr. Wilson, who are not currently parties to this lawsuit. Although no one has moved to join Wilson Concepts and Mr. Wilson and neither have sought to intervene, courts have an "independent duty to raise a Rule 19(a) issue sua sponte ." Cook v. FDA ,
In this case, there is good reason to believe that Wilson Concepts and Mr. Wilson may be required parties. Although " Rule 19 precedent is admittedly scant," Nanko Shipping, USA ,
*174However, questions of joinder under Rule 19"can be complex, and determinations are case specific." Republic of Philippines ,
V. CONCLUSION
For the foregoing reasons, Mr. Abere's Motion to Dismiss (ECF No. 25) is DENIED , and Mr. Alemayehu's Motion to Dismiss or, in the Alternative, for Summary Judgment (ECF No. 26) is DENIED . An order consistent with this Memorandum Opinion is separately and contemporaneously issued.
On August 3, 2016, this Court granted Defendant Tilahun's Motion to Dismiss the claims against him for promissory estoppel and quantum meruit. See Alemayehu v. Abere ,
In fact, in the prior opinion, this Court observed that, while it was somewhat "unclear which of the Defendants Mr. Alemayehu refers to in the portions of his complaint alleging promissory estoppel, ... [the] allegations appear to refer to Mr. Abere." Alemayehu ,
Although Mr. Alemayehu also seems to premise his quantum meruit claim on his $460,000 investment in the business, the law is clear that quantum meruit claims must be based on the provision of services, rather than other things of value. See, e.g., Restatement (Third) of Restitution and Unjust Enrichment § 31 (2011) ("A plaintiff who seeks a recovery 'in quantum meruit' usually asserts that the defendant is obligated to pay a reasonable price for specified services rendered ."). That said, Mr. Alemayehu indisputably invested approximately $80,000 and renovated the business with his own funds. Ultimately, Mr. Abere ended up with the business and Mr. Alemayehu was left with nothing. Mr. Abere's claims that this is somehow appropriate makes very little sense. At the very least, Mr. Alemayehu has a plausible, if not compelling, unjust enrichment claim.
It is logical to presume at this state of the litigation that if, as alleged, Mr. Alemayehu diverted business funds to pay a personal debt and failed to pay the business's legitimate expenses, the business would have been injured by those actions and inactions.
This Court has struggled somewhat to understand what precise legal theory Mr. Abere means to assert under Count III of his Counterclaim, but for purposes of this decision, the Court assumes he means to assert a claim for breach of either an express or implied-in-fact contract. In his Counterclaim, Mr. Abere labels the claim as one for "Quasi-Contract/Breach of Agency Contract." This is rather confusing. As the D.C. Court of Appeals has explained, " 'Breach of quasi-contract' is really a euphemism for a claim of unjust enrichment; a quasi-contract is not an agreement one can 'break.' " News World Commc'ns, Inc. v. Thompsen ,
For the fiduciary duty claim, Mr. Abere also alleges that while Mr. Alemayehu was acting as the restaurant's manager, he failed to pay various expenses, including taxes, employee salaries, and vendor invoices and was unable to account for over $110,422.81 in gross receipts for the business. Mr. Alemayehu again rehashes the argument that Mr. Abere did not contribute any funds to the business and, therefore, he cannot have suffered any damages. Again, this argument fails for the same reasons described supra . But the fact that Mr. Abere alleges that Mr. Alemayehu was his employee, rather than a business partner, yet was responsible for paying all of the business's expenses and was only paid as a percentage of profits, raises a host of questions. But, ultimately, a jury will determine what is reasonable.
Although it is true that a claim for breach of fiduciary duties requires a showing of injury, see Dorsey v. American Express Co. ,
Mr. Alemayehu denies that he lacked authority to sign the document on Mr. Abere's behalf.
If a necessary party cannot be joined-for instance, if joinder would destroy diversity and deprive the court of subject-matter jurisdiction-the court must examine the factors enumerated in Rule 19(b) to "determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed." "The factors for the court to consider include: (1) the extent to which a judgment rendered in the person's absence might prejudice that person or the existing parties; (2) the extent to which any prejudice could be lessened or avoided by: (A) protective provisions in the judgment; (B) shaping the relief; or (C) other measures; (3) whether a judgment rendered in the person's absence would be adequate; and (4) whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder." Fed. R. Civ. P. 19(b).
The record is silent as to the position of Wilson Concepts or Mr. Wilson as to the viability of the release. Presumably, it is possible that they agree with Mr. Alemayehu given that they subsequently entered into a contract concerning the liquor license; but it did not address the settlement of Mr. Abere's purported back-rent claim.