RICHARD W. ROBERTS, District Judge.
Plaintiff Salah Osseiran brought a claim for breach of a confidentiality agreement against the International Finance Corporation ("IFC"), alleging that IFC disclosed to an unauthorized party that Osseiran was negotiating to buy certain bank shares from IFC.
Having observed and listened to the witnesses and assessed their credibility, and having considered all the evidence and the parties' post-trial submissions, I make the following findings of fact and conclusions of law.
1. Salah Osseiran is an international entrepreneur based in Lebanon. Since 1988, he has specialized in acquiring distressed companies and turning them into profitable ones. Osseiran Test., 5/2 a.m. Tr. 47:16-21, 48:3-20; Def.'s Ex. 69, Stipulation No. 1.
2. The Middle East Capital Group ("MECG") is a banking and financial institution in Lebanon. It was founded in 1996. Osseiran has been a minority shareholder of MECG since its founding and later joined its board of directors. Osseiran Test., 5/2 a.m. Tr. 51:7-52:21.
3. IFC is an international organization and is the private sector arm of the World Bank. Def.'s Ex. 70, Stipulation No. 2.
4. As of 2005, IFC owned approximately 10.8% of the shares of MECG and Barclays Bank owned approximately 16% of the shares of MECG. Def.'s Ex. 71, Stipulation No. 3;
5. MECG as a business was consistently losing money through 2005. Many shareholders wanted to divest themselves of MECG shares. IFC and Barclays told shareholders on the MECG board that they wanted to sell their shares. Van Bilsen Test., 5/1 a.m. Tr. 92:6-11, 94:9-16, 95:1-6; Pl.'s Ex. 2 at 232-33 ("IFC is still seeking an exit from this investment, as its role is complete, and the financial prospect [sic] look poor."); Pl.'s Ex. 3 at 443 ("[IFC has] not made it a secret that IFC can sell at the right price, . . . as [IFC's] role as a development bank is deemed to be over here."); Pl.'s Ex. 35 at 1885 ("IFC confirmed its intention to exit from its investment[.]"); Def.'s Ex. 64, Osseiran Dep. 8/20/09 at 117:12-18 (5/6 a.m Tr. 4:2)
6. Finding buyers had been difficult. IFC had received inquiries in the past from prospective buyers, but none had turned out to be serious. Van Bilsen Test., 5/1 a.m. Tr. 95:12-23; Pl.'s Ex. 35 at 1886;
7. Osseiran wanted to gain control of MECG, become the sole shareholder, stop the losses, turn MECG around, make it profitable, and ultimately sell his shares at a nice profit. Osseiran Test., 5/2 a.m. Tr. 55:8-57:14;
8. In September 2005, Osseiran called Jan van Bilsen, the IFC portfolio manager for the Middle East stationed in Dubai. Osseiran said that he wanted to buy the MECG shares that IFC and Barclays owned. Van Bilsen Test., 5/1 a.m. Tr. 95:24-96:9; Pl.'s Ex. 134, van Bilsen Dep. 9/2/09 at 21:10-14 (5/3 a.m. Tr. 36:3-6); Osseiran Test., 5/2 a.m. Tr. 57:15-25.
9. Van Bilsen asked Osseiran questions about Osseiran's intentions for buying IFC's and Barclays' MECG shares. Van Bilsen wanted to gauge whether Osseiran's interest in a potential sale was serious or was fake as earlier inquiries from others had been. Van Bilsen Test., 5/1 a.m. Tr. 96:10-24; Osseiran Test., 5/2 a.m. Tr. 58:1-9; van Bilsen Test., 5/3 a.m. Tr. 123:8-23.
10. Osseiran said he wanted to change the direction of MECG. Osseiran insisted that he and the negotiators for IFC and Barclays keep confidential the negotiations over his purchase until the sale closed. Osseiran Test., 5/2 a.m. Tr. 60:1-11, 68:15-25; Def.'s Ex. 64, Osseiran Dep. 8/20/09 at 122:13-21 (5/6 a.m Tr. 4:2). He also insisted that the negotiations not be disclosed to IFC's representative on the MECG board of directors, Daoud Khairallah.
11. Van Bilsen responded that he agreed to Osseiran's confidentiality request. Van Bilsen Test., 5/1 a.m. Tr. 97:8-98:23, 103:17-104:3 ("So, to answer your question, it came up, he asked me to keep it confidential, so I said yes."); Pl.'s Ex. 134, van Bilsen Dep. 9/2/09 at 23:21-26:6 (5/3 a.m. Tr. 38:5-39:19) ("Q. Did you understand that you had a, an agreement with Mr. Osseiran to keep the negotiations confidential? A. Yes, but as I said, in the context that we . . . always keep business confidential."); Osseiran Test., 5/2 a.m. Tr. 58:10-59:7; Def.'s Ex. 64, Osseiran Dep. 8/20/09 at 122:22-123:5 (5/6 a.m Tr. 4:2);
12. After the phone call, van Bilsen sent an e-mail to Walid Cherif, an IFC colleague, relating the conversation, stating that "Osseiran stressed confidentiality and I told him we will treat it accordingly" and reiterating to Cherif to "[k]eep it confidential."
13. On October 3, 2005, Osseiran sent an e-mail to van Bilsen offering to purchase all of IFC's MECG shares. Van Bilsen Test., 5/1 a.m. Tr. 114:19-21; Osseiran Test., 5/2 a.m. Tr. 61:6-18; Def.'s Ex. 64, Osseiran Dep. 8/20/09 at 125:3-12 (5/6 a.m Tr. 4:2); Pl.'s Ex. 4.
14. On October 19, 2005, van Bilsen discussed with Khairallah IFC's negotiations to sell the MECG shares to Osseiran. Van Bilsen confirmed
15. On November 11, 2005, van Bilsen told Khairallah that IFC was seriously considering Osseiran's offer, and that although IFC had been keeping its options open regarding its MECG shares, it was inclined to accept Osseiran's offer. Khairallah had not been aware of the extent of the negotiations or IFC's intention to proceed to sell to Osseiran. Van Bilsen Test., 5/1 p.m. Tr. 21:21-22:5; Pl.'s Exs. 37, 40;
16. The parties agreed on the terms of the purchase and Osseiran sent an e-mail to van Bilsen on November 18, 2005 purporting to "confirm" the purchase agreement. Pl.'s Ex. 43 at 118; Osseiran Test., 5/2 a.m. Tr. 64:21-65:1. Van Bilsen responded the same day asking Osseiran to "confirm" that Osseiran "accept[ed] that [IFC's] acceptance is subject to documentation — meaning separate sales agreements," along with additional bank guarantees. Van Bilsen's e-mail also asked for confirmation of Osseiran's understanding that the "sales agreements come into force and affect [sic]" only after execution of the agreements and receipt of the guarantees. Pl.'s Ex. 43 at 116;
17. In a November 19, 2005 response to van Bilsen, Osseiran expressly accepted these conditions. Pl.'s Ex. 43 at 119; Osseiran Test., 5/2 a.m. Tr. 67:7-15.
18. Van Bilsen informed Khairallah that IFC was accepting Osseiran's offer. Khairallah then resigned from the MECG board on November 23, 2005 via email to Chairman of the MECG Board Khalid Al Turki and MECG CEO Walid Musallam. Pl.'s Exs. 48, 51; Def.'s Ex. 11; van Bilsen Test., 5/1 p.m. 41:25-43:6; Khairallah Test., 5/2 p.m. Tr. 73:14-74:5, 75:1-4; Khairallah Test., 5/3 p.m. Tr. 43:14-44:7.
19. On the same day, Al Turki and Musallam asked Osseiran whether Osseiran had bought MECG shares from IFC and Barclays and he responded that "there is no agreement." Osseiran Test., 5/2 a.m. Tr. 72:3-18.
20. At a December 5, 2005 MECG board meeting, Al Turki asked Osseiran again about whether he had bought MECG shares from IFC and Barclays, and Osseiran confirmed the impending sale. Osseiran Test., 5/2 a.m. Tr. 82:12-21;
21. IFC officials informed Osseiran via a telephone call on December 19, 2005 that IFC had decided to suspend its sale of IFC shares to Osseiran. Osseiran Test., 5/2 a.m. Tr. 88:14-20; van Bilsen Test., 5/1 p.m. Tr. 86:18-87:1; Pl.'s Ex. 87.
22. Thereafter, Osseiran entered agreements to purchase MECG shares from other shareholders. Osseiran Test. 5/2 a.m. Tr. 94:4-99:20; Def.'s Ex. 72, Stipulation No. 4;
23. Osseiran and IFC never finalized or executed a sales agreement and IFC never sent Osseiran a signed stock transfer form, which was necessary to complete a sale of IFC's MECG shares. Van Bilsen Test., 5/1 p.m. Tr. 77:15-25; Pl.'s Exs. 78-79; van Bilsen Test., 5/2 a.m. Tr. 28:12-29:2.
24. The parties never received the bank guarantees necessary to complete the sale. Van Bilsen Test., 5/1 p.m. Tr. 79:4-80:2; Pl.'s Ex. 81; van Bilsen Test., 5/2 a.m. Tr. 29:3-24; Pl.'s Ex. 134, van Bilsen Dep. 9/2/09 at 46:15-49:12, 50:20-51:5 (5/3 a.m. Tr. 49:3-50:23, 51:16-21); van Bilsen Test., 5/3 a.m. Tr. 120:13-121:3.
25. Osseiran eventually sold the other MECG shares he purchased at a higher price than he paid to obtain them. Osseiran Test., 5/2 a.m. Tr. 120:1-9.
26. Osseiran's amended complaint alleges that IFC breached a confidentiality agreement with Osseiran by divulging Osseiran's potential share purchase to an unauthorized party. Am. Compl. ¶¶ 47-48. "To prevail on a claim of breach of contract, a party must establish (1) a valid contract between the parties; (2) an obligation or duty arising out of the contract; (3) a breach of that duty; and (4) damages caused by [that] breach."
27. To establish an enforceable agreement under District of Columbia law, the parties both must (1) agree on all material terms and (2) intend to be bound.
28. In addition, "an express contract requires an offer and an acceptance, and must be supported by consideration."
29. "`[W]here a plaintiff proves a breach of a contractual duty he is entitled to damages; however, when he offers no proof of actual damages or the proof is vague and speculative, he is entitled to no more than nominal damages.'"
30. Osseiran demonstrated by a preponderance of the evidence that a valid contract existed. The parties agreed on the material terms and their actions reflected an intent to be bound. It is not disputed that Osseiran offered to negotiate to purchase IFC's MECG stock as long as van Bilsen agreed to keep the negotiations confidential, and that van Bilsen agreed in a telephone conversation on September 5, 2005.
31. The parties' statements and actions after that phone call reflected their understanding that the agreement prohibited divulging to individuals who were not included in the negotiations that negotiations over IFC's MECG shares were underway. In particular, van Bilsen's September 5 email to Cherif emphasizing confidentiality for the negotiations with Osseiran is strong evidence that van Bilsen understood Osseiran's expectations and intended to be bound by the confidentiality agreement.
32. Contrary to the defendant's argument, there was consideration exchanged between the parties for this agreement. District of Columbia courts "`will not inquire into the adequacy of' consideration, even where it is `arguably slight,' as long as it is `legally sufficient.'"
33. Here, the parties exchanged promises of confidentiality and agreed to engage in potentially mutually beneficial negotiations that neither was legally obligated to undertake. Although IFC wanted a buyer for its MECG shares, it was not required to negotiate with Osseiran, especially if it had not been satisfied that he was a serious suitor. It did, though, agree to negotiate. Osseiran wanted IFC's shares but was not required to make any offer to buy them. He did agree, though, to negotiate for a purchase in exchange for the promise of confidentiality. Because the exchange of promises here was adequately bargained for, the confidentiality agreement was supported by consideration.
34. Thus, the preponderance of the evidence showed that a valid contract existed to maintain confidentiality during negotiations over selling IFC's MECG shares to Osseiran. The terms were clear, the parties intended to be bound, and they exchanged consideration.
35. The preponderance of the evidence showed that the parties agreed not to disclose to individuals who were not involved with the negotiations, including Khairallah, that the negotiations were occurring. Van Bilsen's communications with IFC employees during the negotiations reflected that Khairallah should not be informed about the negotiations with Osseiran.
36. It was also more likely than not that the parties had an obligation to not disclose the sale negotiations to third parties until the sale closed. Osseiran's testimony reflected his understanding that confidentiality should be maintained until the sale was completed.
37. Osseiran proved by a preponderance of the evidence that IFC breached the confidentiality agreement when van Bilsen confirmed to Khairallah on October 19, 2005 that IFC was negotiating with Osseiran.
38. Whether van Bilsen or Khairallah raised the issue of the negotiations first, van Bilsen was under an existing obligation to maintain in confidence that the negotiations were underway. Either by raising it first or by confirming the existence of negotiations to Khairallah, van Bilsen breached the confidentiality agreement by disclosing to a third party who was not involved in the negotiations that IFC was negotiating with Osseiran. Van Bilsen violated the agreement again when he disclosed to Khairallah on November 11, 2005 more information about the ongoing negotiations, namely, that IFC was seriously considering Osseiran's offer.
39. IFC maintained in its closing argument that Osseiran had to prove that IFC was the first to disclose the negotiations. Def.'s Closing Arg., 5/6 p.m. 9:2-5. But IFC offered no authority for the proposition that the duty to maintain confidentiality expires when a party to the agreement hears partial contents of the confidence disclosed to him or her from a third party.
40. Osseiran did not sufficiently prove his other breach of the confidentiality agreement theories. Osseiran claimed that Khairallah breached the confidentiality agreement in November 2005 by disclosing the negotiations to Al Turki and Musallam.
41. Osseiran also claimed that Khairallah gave a copy of IFC's internal sales memo to Al Turki or Musallam.
42. Osseiran further claimed that someone at IFC gave a copy of the internal sales memo to Al Turki or Musallam. Pl.'s Closing Arg., 5/6 a.m. Tr. 17:23-18:3. However, Osseiran did not carry his burden to prove that assertion. Osseiran did not provide any direct evidence that Al Turki or Musallam saw a copy of the internal sales memo and Osseiran did not call them as witnesses.
43. Osseiran asserted multiple theories for damages. These theories ranged from Osseiran losing likely discounts for buying the remaining shares after he had secured a majority interest, to Osseiran losing the opportunity to gain control of MECG, revive the failing business, and sell his MECG shares for a much larger profit.
44. One hurdle Osseiran did not overcome is that both he
45. Nonetheless, it is undisputed that the sale that was the aim of the negotiations required bank guarantees and the parties never received the bank guarantees required to close the sale.
46. Osseiran failed to carry his burden of proof that IFC's breach of the confidentiality agreement caused damages. However, Osseiran's proof that IFC committed a breach entitles him to nominal damages of one dollar.
Osseiran showed by a preponderance of the evidence that IFC breached the confidentiality agreement. Osseiran failed to carry his burden of proving that IFC's breach of the confidentiality agreement caused any damages. Thus, judgment in the amount of $1 will be entered for Osseiran. A final judgment accompanies this Memorandum Opinion.
Van Bilsen testified that Osseiran did not say he wanted to achieve 51% ownership or sole control of MECG or that he wanted to buy anyone else's shares, and that Osseiran said only that he wanted to buy the MECG shares from IFC and Barclays and would convince the other shareholders to go along with a new direction for MECG. Van Bilsen Test., 5/3 a.m. Tr. 124:8-13; van Bilsen Test., 5/3 p.m. Tr. 18:20-19:13; Pl.'s Ex. 134, van Bilsen Dep. 9/2/09 at 22:5-12 (5/3 a.m. Tr. 36:19-24);
I credit Osseiran as the more reliable historian concerning the September 5, 2005 telephone conversation. First, in observing and listening to Osseiran during his testimony, I developed the same impression of Osseiran as van Bilsen said he had during the negotiations, namely, that Osseiran was professional, businesslike, and genuine and that he stuck to his word. Van Bilsen Test., 5/1 p.m. Tr. 36:16-37:13 (citing Pl.'s Ex. 45 at 757). I did not view him as the incredible fabricator that IFC argued that he is. Further, it makes far more sense that Osseiran would have sought to gain control in order to change the direction of the company than to merely gain a larger minority interest and try to persuade the remaining majority to go along with his change in direction for the company. Van Bilsen's explanation that he would have included Osseiran's control goal in his internal memo to his superior if Osseiran had stated such a goal because it would have affected other shareholders, van Bilsen Test., 5/3 a.m. Tr. 124:14-125:5, is far less persuasive proof that Osseiran did not mention control than Osseiran's natural inclination to mention his control goal is compelling proof that he did mention the goal. Even IFC's internal memorandum corroborates Osseiran's claim that he told that to van Bilsen. Walid Cherif, van Bilsen's IFC colleague, drafted a memorandum which stated:
Pl.'s Ex. 22 at 438 (emphasis original). It is unlikely that this declaration of Osseiran's intent was invented rather than having been stated by Osseiran. This is especially so since van Bilsen clarified in his testimony that this language in Cherif's draft memorandum that van Bilsen deleted in a re-draft was incorrect only in that Osseiran's purchase of MECG shares from IFC and Barclay's would not have gained him control, not that Osseiran was not seeking control. Van Bilsen Test., 5/2 a.m. Tr. 42:17-44:14. It makes less sense for Osseiran to have sought less than 50% of the shares of a failing company losing money every day and have no other aspiration than to hope that the other shareholders would go along with his plans. It also does not make sense for him to have had this plan and hid it or not mentioned it to van Bilsen. Moreover, it is far more likely that an investor intent upon gaining control of a company would have been more attentive and would recall with great accuracy details of his own opening bid valued at approximately $1 million than would a manager of approximately 85 projects in 20 countries with a total portfolio of "around a billion dollars" with business ranging from less than a million to "40, 50, 60 million" dollars in a division holding around 1,300 portfolios who viewed the MECG investment as comparatively "small". Van Bilsen Test., 5/3 a.m. Tr. 113:1-23; Khambata Test., 5/1 a.m. Tr. 69:8-11.
The circumstances leading to the court's disposition in
