Capitalkeys, LLC v. Democratic Republic of Congo

Case 1:15-cv-02079-KBJ-RMM Document 27 Filed 11/21/16 Page 1 of 30

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

CAPITALKEYS, LLC

Plaintiff,

Case No. 15-02079 (KBJ-AK)

v.

DEMOCRATIC REPUBLIC OF

CONGO, et al.,

Defendants.

REPORT AND RECOMMENDATION

Plaintiff CapitalKeys, LLC (“Plaintiff” or “CapitalKeys”) seeks entry of Default

Judgment against the Democratic Republic of Congo (“Congo”) and the Central Bank of the

Democratic Republic of the Congo (“Central Bank”) (collectively, “Defendants”) in Plaintiff’s

Motion for Entry of Default Judgment Against All Defendants and Memorandum of Law in

Support thereof [24] (collectively, “Motion”). United States District Judge Ketanji B. Jackson

referred the Motion to the undersigned for a Report and Recommendation. (See June 14, 2016

Minute Order.) On September 16, 2016, the undersigned held an evidentiary hearing

(“Hearing”) on the matter. Upon consideration of the record, the pleadings, the testimony given

at the hearing, and for the reasons set forth below, the undersigned recommends that the Court

issue a Default Judgment in favor of Plaintiff against the defaulting Defendants and award

damages in part.

I. BACKGROUND

A. Contract Dispute

This case arises out of a contract dispute. Plaintiff is a public affairs firm based in

Washington, D.C. (Plaintiff’s Amended Complaint “Compl.” [11] ¶ 5; Declaration of Adam

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Falkoff “Falkoff Decl.” Ex. A [24-30] at 2.)1 Defendants, the Congo2 and the Central Bank,

spent six months negotiating with Plaintiff before entering into a verbal agreement in or around

February 2013 to retain Plaintiff’s government relations and strategic communication services.

(See Compl. ¶¶ 12, 16; Falkoff Decl. [24-29] ¶ 2.)

In March 2013, the Congo made “a good faith payment of $600,000 as consideration for

the Retainer Agreement.” (Falkoff Decl. ¶ 3, Falkoff Decl. Ex. B [24-31] at 2.) The following

month, authorized representatives of the Central Bank traveled to Plaintiff’s office in

Washington, D.C. to formally execute the parties’ agreement. (See Compl. ¶ 14; Falkoff Decl. ¶

4.) Specifically, Plaintiff and Defendants agreed to a five-year term during which Plaintiff

would provide its services to the Congo and the Central Bank in exchange for a one-time

payment of $16,002,000, due upon signing the Retainer Agreement. (See Falkoff Decl. ¶¶ 6–7,

Ex. A at 5.) This amount, plus the $600,000 that Defendants already paid, equaled the entire

sum that Defendants agreed to pay Plaintiff for its services. (Falkoff Decl. Ex. A at 5; Falkoff

Decl. Ex. B at 2.)

Acting as an agent for the Congo, the Governor of the Central Bank, Mr. Jean-Claude

Masangu Mulongo, signed the written agreement after he received authorization from the

President of the Congo. (See Compl. ¶ 17; Falkoff Decl. ¶¶ 2, 8; Falkoff Decl. Ex. A at 7.) The

Congo was therefore bound by the Retainer Agreement as well, and both Defendants were aware

of this fact. (Compl. ¶¶ 12, 17; Falkoff Decl. ¶¶ 2, 4–5, 8; Mot. 11.) Additionally, the parties

1

For purposes of this Report and Recommendation, the page numbers cited are the ECF page numbers found on the

top right corner of each page of the Motion, Declaration of Adam Falkoff, Declaration of W. Todd Miller, and

exhibits.

2

Throughout this Report and Recommendation, any mention of the Congo is in reference to the Democratic

Republic of the Congo, not the Republic of the Congo—both of which are countries in Africa.

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understood that the Congo would direct and control Plaintiff’s obligations under their agreement.

(Falkoff Decl. ¶ 4.)

Upon signing the contract, Defendants did not make the agreed-upon payment during

their visit to Washington, D.C. (Mot. 12; Falkoff Decl. ¶ 9.) Instead, they promised that

“payment would be made shortly.” (Compl. ¶ 18; Mot. 12; Falkoff Decl. ¶ 9.) Due to

Defendants’ promise of payment, Plaintiff began providing its services and also assisting

Defendants with “extra things . . . not in the contract,” such as recommending talking points to

the Governor of the Central Bank in order for the Government of the Congo to ultimately secure

a $225,000,000 disbursement from the International Monetary Fund. (Hearing Transcript

“Hearing Tr.” [26] 39:16–23, 40:1–17 (Sept. 16, 2016); see Compl. ¶¶ 19–22; Falkoff Decl. ¶¶

10–13.)

From June through August 2013, Defendants made weekly promises that payment was

imminent, but to no avail. (See Compl. ¶ 23; Falkoff Decl. ¶ 14.) During this time, Defendants

also sent a delegation to Plaintiff’s office in Washington, D.C. and provided additional

assurances that, upon the delegation’s return to the Congo, Plaintiff would receive the full

payment of $16,002,000. (See Compl. ¶ 25; Falkoff Decl. ¶ 16.) Defendants again failed to pay

and, instead, continued to assure Plaintiff that payment was forthcoming. (See Compl. ¶¶ 25–26;

Falkoff Decl. ¶¶ 16–17.)

Nevertheless, Plaintiff spent the following year providing its services to Defendants. (See

Falkoff Decl. ¶¶ 18–20; Mot. 12.) These services included “elevating the global image of the

Congo and assisting the Central Bank in modernizing their internal infrastructure.” (Compl. ¶ 27;

see Falkoff Decl. ¶ 18.) Despite having not received a single payment since the parties executed

the contract, Plaintiff continued performing its obligations under the agreement because

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Defendants repeatedly promised to make payment and “because [Plaintiff] could not withdraw

from these projects without consequence given the nature of Plaintiff’s work.” (Mot. 12; see

Falkoff Decl. ¶ 34.)

On or around April 2014, about a full year after payment became due, Plaintiff received a

letter, dated December 2013, from the President of the Congo. (See Falkoff Decl. ¶ 22; Mot. 13.)

In the letter, the President of the Congo thanked Plaintiff for its services and stated that, upon

receipt and confirmation of the letter, the Congo would send another delegation to Washington,

D.C. to make the full payment. (Id.) Plaintiff promptly contacted the Congo and confirmed

receipt of the letter, but Plaintiff did not receive any payment. (See Compl. ¶ 32; Falkoff Decl.,

Ex. C. [24-32] at 2; Mot. 13.)

The Congo subsequently promised full payment after receiving a “positive progress

report” from another visiting delegation. (Falkoff Decl. ¶¶ 24–25.) During the Washington, D.C.

visit, the delegates prepared a report “stating that operations were successful and thriving.”

(Falkoff Decl. ¶ 26.) The President of the Congo instructed the head delegate to return to the

Congo at the end of the week with the progress report. (Compl. ¶ 36; Falkoff Decl. ¶ 27; Mot.

13.) Instead, the delegate spent an additional week in the United States visiting his daughter,

which allegedly insulted the President of the Congo. (See Compl. ¶¶ 36–37; Falkoff Decl. ¶ 27;

Mot. 13.) As a result, the President of the Congo refused to review the delegation’s report or

make payment. (See Compl. ¶ 37; Falkoff Decl. ¶ 28; Mot. 13.)

Throughout 2014 and 2015, Defendants often promised they would pay the full amount

owed to Plaintiff under the Retainer Agreement, but they continued to fail in making their

payment. (See Falkoff Decl. ¶¶ 29–32; Mot. 13.) Still, Plaintiff continued providing services to

the Congo and the Central Bank with plans to “finish all pending projects as agreed upon.”

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(Compl. ¶ 39; Falkoff Decl. ¶ 34.) In doing so, Plaintiff depleted its own resources to cover

“substantial” costs, including salary, communication, and transportation expenses. (Compl. ¶ 40;

Falkoff Decl. ¶¶ 35–37.)

Moreover, Plaintiff asserts that its efforts to recover payment from Defendants precluded

it from accepting three additional contracts worth an estimated total of $5,016,000. (Mot. 24;

Falkoff Decl. ¶ 49.) In June and September of 2014, Plaintiff pre-negotiated two contracts for its

services, totaling $4,260,000. (See Falkoff Decl. ¶¶ 40–41.) The first contract was worth

$2,640,000, and the second contract was worth $1,620,000. (Id.) After reaching an agreement on

pricing and contract terms, however, Plaintiff “realized that, due to our efforts to seek the much

larger payment from the Congo, we would not have the time and resources to fully perform the

contract[s].” (Falkoff Decl. ¶ 40.) Plaintiff ultimately turned down the first two contracts. (See

Falkoff Decl. ¶ 44.)

In April 2015, Plaintiff scheduled a meeting in Arizona to finalize and sign a third pre-

negotiated contract, which was worth $756,000. (See Falkoff Decl. ¶ 47.) However, prior to the

meeting, Defendants contacted Adam Falkoff (“Mr. Falkoff”), President of CapitalKeys, to

inform him that another delegation was coming to Washington, D.C. to discuss payment and that

Mr. Falkoff “had to stay in Washington.” (Id.) After Mr. Falkoff explained that this would cost

him another business opportunity, Defendants assured Mr. Falkoff that the delegation would

arrive. (Id.) Mr. Falkoff therefore canceled his trip to Arizona. (Id.) Just before the delegation

was set to arrive, Defendants informed CapitalKeys that they would not be coming after all.

(Falkoff Decl. ¶ 48.) According to Plaintiff, by that time, “it was too late” for Mr. Falkoff to

travel to Arizona to sign the third contract. (Id.)

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In multiple attempts to collect payment over the years, Plaintiff sent nine invoices to

Defendants between May 2013 and August 2015. (See Compl. ¶ 66.) During that time,

Defendants did not challenge those bills and, instead, continued to make promises of payment

during their weekly conversations with Plaintiff. (Compl. ¶ 67; Falkoff Decl. ¶ 32.)

B. Legal Action

On December 23, 2015,3 Plaintiff filed this action against the Congo and the Central

Bank to recover the overdue payment from Defendants. (See ECF [4]; Compl. ¶¶ 42–71.)

Plaintiff alleges breach of contract, unjust enrichment in the alternative, account stated in the

alternative, and loss of business opportunities. (See Compl. ¶¶ 2, 42–71.) Specifically, Plaintiff

seeks $16,002,000 for damages under the contract, $5,016,000 for lost business opportunities, at

least $2,000,000 for prejudgment interest, and $827.60 for costs. (See Compl. ¶¶ 49, 58, 64; Mot.

22, 24–27; Falkoff Decl. ¶ 49.) That is, Plaintiff requests a Default Judgment in the amount of

$21,618,000, plus prejudgment interest and costs. (Mot. 1.)

In February 2016, the Clerk of this Court filed a Certificate of Mailing, certifying that

copies of the summonses, complaint, and notice of suit had been sent to Defendants, along with

French translations of each. (See Certificate of Mailing [15]; Declaration of W. Todd Miller

“Miller Decl.” [24-2] ¶¶ 5–6.) Shortly thereafter, Plaintiff filed returns of service for the Congo

and the Central Bank, along with proof of delivery showing that both packages were signed for.

(See Return of Service [18]; Return of Service [19]; Miller Decl. ¶ 6.)

Plaintiff indicates that based on its communication with Defendants, representatives of

each Defendant are aware of the lawsuit, and still have simply continued promising imminent

3

Plaintiff originally filed its complaint on December 1, 2015. (See ECF [1].) However, that filing was entered in

error. Plaintiff therefore filed a modified version of its complaint on December 23, 2015 and a summons was

subsequently issued. (See ECF [4].) Accordingly, the filing date of the complaint is December 23, 2015.

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payment without following through on their promises. (See Falkoff Decl. ¶¶ 33–34; Miller Decl.

¶¶ 7-8, Exs. U, V, W, X. [24-23]-[24-26]; Hearing Tr. 37:9–23.) Despite Defendants’ awareness

of the lawsuit, Defendants never entered an appearance in this case, so the Clerk of the Court

subsequently entered a default against Defendants on April 14, 2016 (See Clerk’s Entry of

Default [22]; Clerk’s Entry of Default [23].)

Plaintiff then filed the instant Motion for Default Judgment Against All Defendants. (See

Mot. 1.) In its Motion, Plaintiff contends that Defendants are liable for breach of contract, unjust

enrichment in the alternative, account stated in the alternative, and loss of business opportunities.

(See Mot. 7, 15–24.) Plaintiff also argues that an entry of default judgment in the amount

requested is supported by the evidence. (See Mot. 7.)

On September 16, 2016, the undersigned held an evidentiary hearing on Plaintiff’s

Motion (See July 26, 2016 Minute Order; Sept. 16, 2016 Minute Entry). During the hearing,

Plaintiff reiterated its request for damages in the amount of $21,618,000, plus prejudgment

interest and costs (See Hearing Tr. 4:3–7.) Plaintiff also introduced an exhibit of a December 1,

2015 invoice showing those amounts. (See Hearing Tr. 20:3–21.) In referring the Court to its

Motion, Plaintiff argued that its request for damages includes two elements: (1) the liquidated

damages amount of $16,002,000 and (2) the consequential or incidental damages, resulting in

lost business opportunities. (See Hearing Tr. 4:10–23.) Plaintiff noted that the liquidated

damages covered payment for subcontractors, travel, and communication. (See Hearing Tr.

12:19–25, 15:15–24.) Plaintiff also maintained that Defendants are aware of these claims. (See

Hearing Tr. 37:11–20.)

Mr. Falkoff then testified about Plaintiff’s services for Defendants, the reasons for

continuing to perform despite Defendants’ failure to pay, and the basis for Plaintiff’s lost

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business damages claim. He explained that Plaintiff’s services for Defendants were primarily to

help with “modernizing [the Central Bank’s] procedures and the way they did banking and

business which would in turn help the overall economy.” (Hearing Tr. 7:9–14.)

As for why Plaintiff continued to perform, Mr. Falkoff said Plaintiff relied on

Defendants’ promises of payment, articulating to the Court that what makes someone pay is the

ability to pay, reliance on the promise of payment, and the satisfaction of services. (See Hearing

Tr. 27:19–25.) He also explained that this was a services contract, not a goods contract, and that

Plaintiff could not just stop services and disrupt the Congo’s way of doing business. (See

Hearing Tr. 29:3–14.)

Regarding Plaintiff’s claim for lost business damages, Mr. Falkoff spoke about the three

pre-negotiated contracts. (See Hearing Tr. 21:20–25, 22:1–2.) He testified that Plaintiff turned

down those contracts because Plaintiff’s attempts to collect payment from Defendants was as if

Plaintiff took on another client. (See Hearing Tr. 25:15–18.) For the third contract in particular,

Mr. Falkoff did not believe anyone else would be as effective in meeting with the visiting

delegation because he had the closest relationship with Defendants. (See Hearing Tr. 23:1–21.)

Mr. Falkoff further explained that Plaintiff called Defendants about twice per week and

sometimes sent an invoice by mail, costing time and money. (See Hearing Tr. 38:4–12.) He also

explained Plaintiff’s interest in maintaining its good reputation and not “spread[ing] ourselves

too thin” by taking on too many clients while trying to collect payment from Defendants.

(Hearing Tr. 44:5–9.)

The hearing concluded with Plaintiff explaining that the $16,002,000 amount is owed to

Plaintiff regardless of the services or work Plaintiff performed; it is a liquidated amount that

parties agreed to pay upon signing the Retainer Agreement. (See Hearing Tr. 48:10–25.)

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II. JURISDICTION

A. Subject Matter Jurisdiction

The Foreign Sovereign Immunities Act (“FSIA” or “Act”) vests this Court with original

jurisdiction over actions against foreign states, so long as the foreign state is not entitled to

immunity under the Act’s relevant provisions. See 28 U.S.C. § 1330(a). A foreign state is

defined under the FSIA to include any political subdivision of the state, or an agency or

instrumentality of the state. See 28 U.S.C. § 1603(a). If the entity is an agency or instrumentality

of the state, the Plaintiff must demonstrate that the agency or instrumentality is a “separate legal”

entity from and an “organ” of the foreign state or, alternatively, that a foreign state or its political

subdivision holds a majority ownership interest. 28 U.S.C. § 1603(b). The Plaintiff must also

show that the agency or instrumentality of the state is neither a citizen of any state in the United

States nor originated under the laws of a third country. Id.

Although foreign states are, by default, immune from suit under 28 U.S.C. § 1604, the

FSIA provides several exceptions to immunity that, if met, subject the foreign state to suit. 28

U.S.C. §§ 1605, 1607. Plaintiff points to two such exceptions, arguing that Defendants fall

under either one. (See Mot. 9, 10 n.1.) Under the first exception, a foreign state is not immune

from this Court’s jurisdiction if it has waived immunity, either explicitly or by implication. See

28 U.S.C. § 1605(a)(1). Alternatively, a foreign state may be subject to suit if the activity upon

which the action is based is commercial in nature and occurs inside the United States. See 28

U.S.C. § 1605(a)(2).

Defendants in this action are both foreign states under the FSIA. Congo is itself a foreign

state, thus qualifying under 28 U.S.C. § 1603(a). (See Compl. ¶ 7.) The Central Bank may be

characterized as an agency or instrumentality of the Congo, as it is evidently a separate legal

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entity, but acts “as the agent and alter ego of Congo,” thus arguably qualifying as an organ of the

foreign state. (Compl. ¶ 14.)

Plaintiff asserts that Defendants have implicitly waived their immunity from suit in a

manner sufficient under Section 1605(a)(1). (See Mot. 9–10.) This Court has held that a choice

of law clause, in which the foreign state agrees that the contract will be governed by the law of a

particular country, is sufficient to establish an implicit waiver of immunity. See Marlowe v.

Argentine Naval Comm’n, 604 F. Supp. 703, 708–09 (D.D.C. 1985); Ghawanmeh v. Islamic

Saudi Academy, 672 F. Supp. 2d 3, 9 (D.D.C. 2009) (noting that “there can be no more obvious

and implicit waiver of sovereign immunity than the sovereign’s express intent to subject itself to

the jurisdiction of a foreign court as demonstrated by a choice of law clause within a contract.”).

Defendants in this suit signed a contract, stating that “[t]his Agreement will be governed

by the laws of the District of Columbia without regard to principles of conflicts of law and a

court in said place shall be the exclusive location for any suit or proceeding relating to this

Agreement.” (Falkoff Decl. Ex. A at 7.) Having consented to subject their contractual dealings

with Plaintiff to United States law, Defendants have implicitly waived their sovereign immunity

under 28 U.S.C. § 1605(a)(1).

Alternatively, immunity may be waived under the theory of commercial activity upon

which the action is based. See 28 U.S.C. § 1605(a)(2). A qualifying activity includes either a

“commercial activity carried on in the United States by the foreign state,” or “an act performed

in the United States in connection with a commercial activity of the foreign state.” Id. For

example, “[c]ontracts for services are generally considered commercial activities when entered

into in the United States.” Kettey v. Saudi Ministry of Educ., 53 F. Supp. 3d 40, 50 (D.D.C.

2014).

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Authorized representatives from the Congo traveled to Plaintiff’s office in Washington,

D.C. to “formalize the parties’ agreement in writing.” (Mot. 10 n.1; see also Compl. ¶ 14.) The

contract at issue here was both executed and performed within the United States and thus falls

within the first category of a qualifying commercial activity. (See Compl. ¶ 14–19.) As

Plaintiff’s claim is based upon this activity, immunity may alternatively be waived under 28

U.S.C. § 1605(a)(2).

B. Personal Jurisdiction

The FSIA also vests this Court with personal jurisdiction over a foreign state for any

claim over which this Court also has subject matter jurisdiction, provided that service was

properly made pursuant to 28 U.S.C. § 1608. See 28 U.S.C. § 1330(b).

Section 1608(a)(3), governing service upon the Congo, requires that the Clerk of the

Court send a copy of the summons, complaint, and notice to the head of the ministry of foreign

affairs, along with a translation of each into the foreign state’s official language. Plaintiff duly

submitted copies and translations of each required document to the Clerk of this Court in

February 2016. (See Certificate of Clerk [15]; Return of Service [18].) The Clerk sent these

documents to Raymond Tshibanda, the head of the Congo’s Ministry of Foreign Affairs, and

later received confirmation that the package had been signed for. (See Mot. 8.) Thus, service

upon Congo was compliant with the requirements under Section 1608(a)(3).

Section 1608(b)(3)(B), governing service upon the Central Bank, requires the same

documents and translations to be sent directly to the agency or instrumentality to be served.

Service was identically effectuated upon the Central Bank, whose representative also signed for

the package. (See Certificate of Clerk [15]; Return of Service [19].) Thus, service upon the

Central Bank was equally compliant with the requirements under Section 1608(b)(3)(B).

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Service upon both Defendants was proper under Section 1608, and therefore this Court

has personal jurisdiction over Defendants under Section 1330(b).

III. CHOICE OF LAW

Generally, an FSIA defendant “is subject under the FSIA to federal common law for

determining the amount of damages a plaintiff can recover.” Hill v. Republic of Iraq, 328 F.3d

680, 684 (D.C. Cir. 2003). However, the parties to this suit entered an agreement stipulating that

the contract “will be governed by the laws of the District of Columbia without regard to

principles of conflicts of law and a court in said place shall be the exclusive location for any suit

or proceeding relating to this Agreement. ” (Falkoff Decl. Ex. A at 7.)

Contractual choice of law provisions are enforceable as long as there is no compelling or

countervailing reason making enforcement unreasonable. Milanovich v. Costa Crociere, S.P.A.,

954 F.2d 763, 766–67 (D.C. Cir. 1992); cf. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1,

10–15 (1972) (addressing the enforceability of a forum-selection clause in a contract); see also

Restatement (Second) of Choice of Laws § 187 (1971). Choice of law provisions may be found

unreasonable if (1) fraud or overreaching induced their formation; (2) the plaintiff is then

deprived of his or her day in court; (3) the unfair nature of the chosen law may deprive the

plaintiff of a remedy; or (3) their enforcement would conflict with the forum state’s strong public

policy. Allen v. Lloyd’s of London, 94 F.3d 923, 928 (4th Cir. 1996); Cf. M/S Bremen, 407 U.S.

at 12; see also Restatement (Second) of Choice of Laws § 187 (1971).

These concerns are not at issue here. There have been no allegations of fraud or

overreaching, deprivation of rights under District of Columbia state law, or arguments for why

public policy dictates using federal common law. Moreover, Plaintiff regularly cites to District

of Columbia state statutes and common law in support of its argument. (See Mot. 15–27.)

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Accordingly, the law of the District of Columbia should be applied in determining Defendants’

liability and Plaintiff’s entitlement to damages.

However, in determining whether this Court may ultimately enter a default judgment, the

Federal Rules of Civil Procedure and the FSIA govern. Cf. Estate of Botvin ex rel. Ellis v.

Islamic Republic of Iran, 772 F. Supp. 2d 218, 227 (D.D.C. 2011) (applying the Federal Rules

and FSIA provisions to the Court’s legal standard for default judgment and standards of proof,

even though Israeli law governed both liability and damages); see also Reed v. Islamic Republic

of Iran, 439 F. Supp. 2d 53, 59–60, 65 (D.D.C. 2006) (applying the Federal Rules and FSIA

provisions to the Court’s legal standard for default judgment, even though Massachusetts state

law governed liability).

IV. LEGAL STANDARD

Under Federal Rule of Civil Procedure 55(a), the Clerk of the Court must enter a party’s

default “[w]hen a party against whom a judgment for affirmative relief is sought has failed to

plead or otherwise defend, and that failure is shown by affidavit or otherwise.” FED. R. CIV. P.

55(a). Pursuant to Rule 55(b), after the Clerk of the Court has entered a default, a court may,

upon the plaintiff’s application and notice to the defaulting party, enter a default judgment. FED.

R. CIV. P. 55(b)(2). “The determination of whether default judgment is appropriate is committed

to the discretion of the trial court.” Int’l Painters & Allied Trades Indus. Pension Fund v. Auxier

Drywall, LLC, 531 F. Supp. 2d 56, 57 (D.D.C. 2008) (citing Jackson v. Beech, 636 F.2d 831, 836

(D.C. Cir. 1980)). The standard for default judgment is satisfied where the defendant makes no

request to set aside the default and no suggestion that it has a meritorious defense. J.D. Holdings,

LLC v. BD Ventures, LLC, 766 F. Supp. 2d 109, 113 (D.D.C. 2011) (citing Int’l Painters &

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Allied Trades Indus. Pension Fund v. Auxier Drywall, LLC, 531 F. Supp. 2d 56, 57 (D.D.C.

2008).

Following the entry of default by the Clerk of the Court, the “defaulting defendant is

deemed to admit every well-pleaded allegation in the complaint.” Fanning v. Hotel Mgmt.

Advisors-Troy, LLC, 282 F.R.D. 280, 283 (D.D.C. 2012) (quoting Int’l Painters & Allied Trades

Indus. Pension Fund v. R.W. Amrine Drywall Co., 239 F. Supp. 2d 26, 30 (D.D.C. 2002)). While

a default is an admission of the facts cited in a complaint, it is “not an absolute confession by the

defendant of his liability and of the plaintiff’s right to recover.” Jackson v. Corr. Corp. of Am.,

564 F. Supp. 2d 22, 26–27 (D.D.C. 2008). Moreover, under the Foreign Sovereign Immunities

Act (“FSIA”), Plaintiff must “establish[] his claim or right to relief by evidence satisfactory to

the court” in order for the Court to enter judgment against a defaulting party. 28 U.S.C. §

1608(e). Thus, it remains for the Court to determine whether the unchallenged factual

allegations constitute a legitimate cause of action.

If liability is established, the court is still “required to make an independent determination

of the sum to be awarded unless the amount of damages is certain.” Robinson v. Ergo Solutions,

LLC, 4 F. Supp. 3d 171, 178 (D.D.C. 2014) (quoting Int’l Painters & Allied Trades Indus.

Pension Fund v. R.W. Amrine Drywall Co., 239 F. Supp. 2d 26, 30 (D.D.C. 2002)). Therefore,

an “FSIA default winner must prove damages in the same manner and to the same extent as any

other default winner.” Hill, 328 F.3d at 683–84 (internal citations omitted).

To this end, the Court may hold an evidentiary hearing to conduct an accounting,

determine the amount of damages, establish the truth of any allegation, or investigate any other

matter. FED. R. CIV. P. 55(b)(2). “[D]amages cannot be awarded on the basis of mere speculation

or guesswork . . .” Hill, 328 F.3d at 684 (internal citations omitted). The Court, however, “has

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considerable latitude in determining the amount of damages.” Boland v. Elite Terrazzo Flooring,

Inc., 763 F. Supp. 2d 64, 67 (D.D.C. 2011); see also Luna v. A.E. Eng’g Servs., LLC, 938 A.2d

744, 749 n.19 (D.C. 2007) (allowing the trial court considerable discretion in determining the

reasonableness of the requested damages).

V. ANALYSIS

A. Liability for Breach of Contract

In order to prove Defendants’ liability for breach of contract, Plaintiff 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 breach.” Francis v. Rehman, 110 A.3d 615, 620

(D.C. 2015) (quoting Tsintolas Realty Co. v. Mendez, 984 A.2d 181, 187 (D.C. 2009)). Under

this standard, Plaintiff’s allegations, taken as true, establish that Defendants breached their

contractual obligations.

First, Plaintiff must demonstrate “mutual assent of the parties to all the essential terms of

the contract.” Duffy v. Duffy, 881 A.2d 630, 633 (D.C. 2005). The contract in this case was

“accepted and agreed to” by Jean-Claude Masangu Mulongo, the Governor of the Central Bank.

(Falkoff Decl. Ex. A at 7; see Compl. ¶ 17.) For reasons set forth below, the undersigned is

persuaded that the Central Bank and the Congo assented to the agreement’s essential terms.

Plaintiff notes that under District of Columbia law, an agency relationship exists if there

is “evidence of the parties’ consent to establish a principal-agent relationship” and “evidence that

the activities of the agent are subject to the principal’s control.” Jackson v. Loews Washington

Cinemas, Inc., 944 A.2d 1088, 1097 (D.C. 2008) (quoting Henderson v. Charles E. Smith Mgmt.,

Inc., 567 A.2d 59, 62 (D.C. 1989)). As evidence of consent, the Central Bank executed the

contract under direct authorization from the President of Congo. (See Compl. ¶ 17, Falkoff Decl.

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¶ 8.) According to Plaintiff’s complaint, negotiation discussions prior to the contract’s execution

indicated that the Central Bank’s assent was dependent on the Congo’s authorization, that the

Congo would be equally bound by the agreement, and that all contract obligations would be

performed “under the control and at the direction of Congo.” (Compl. ¶ 14; Falkoff Decl. ¶ 4–5.)

As further evidence of a principal-agent relationship, Defendants’ conduct since the

parties came to an agreement has similarly reflected this understanding. The first and only

payment made by Defendants was ordered by the Office of the President of the Congo, and then

executed by wire transfer from the Central Bank. (See Compl. ¶ 13, Ex. B at 2; Falkoff Decl. ¶

3.) Thereafter, in June 2013, a delegate from the Congo visited Plaintiff’s office. (Compl. ¶ 25.)

Another delegate was sent by the President of the Congo in April 2014 and was thereafter

ordered to report directly to the President. (Compl. ¶ 33–37; Falkoff Decl. ¶ 27.) Indeed, most

assurances regarding payment came directly from the Congo and the President’s Office, rather

than from the Central Bank. (See Falkoff Decl. ¶ 17.) Moreover, the Congo, not the Central

Bank, sent letters thanking Plaintiff for its services, requested updates and progress reports, and

benefitted almost exclusively from Plaintiff’s performance. (See Compl. ¶¶ 31, 34; Falkoff Decl.

¶ 13, 19, 22–26, Ex. C; Mot. 18.)

In short, the undersigned believes both the Congo and the Central Bank consented to

establishing a principal-agent relationship and the Central Bank’s activities appear to be subject

to the Congo’s substantial control. As such, there is sufficient evidence in Plaintiff’s complaint

to establish a valid contract to which all parties assented.

Second, the parties’ Retainer Agreement, indeed, placed Defendants under an obligation

to compensate Plaintiff for its government relations and communication services in the

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remaining amount of $16,002,000, due upon the agreement’s execution. (See Compl. ¶ 16, Ex.

A.)

Third, except for the one-time payment of $600,000 made prior to the formalized

agreement, Defendants have failed to make any part of the remaining $16,002,000 payment since

signing the agreement on April 18, 2013. (See Compl. ¶¶ 13–14, 18, Ex. B.) This is despite

Plaintiff’s repeated attempts at collection and Defendants’ apparent knowledge of the

outstanding debt. (See Compl. ¶¶ 23, 26, 66.) As such, the undersigned concludes that

Defendants have been in breach of their obligation to pay $16,002,000 since April 18, 2013,

which is when the contract was executed and Defendants’ payment became due. (See Compl. ¶

14, Ex. A.)

Fourth, Plaintiff “has been deprived of the use of the money withheld” and has incurred

damages as a result of Defendants’ breach. Bragdon v. Twenty-Five Twelve Assocs. Ltd. P’ship,

856 A.2d 1165, 1171 (D.C. 2004) (quoting District of Columbia v. Pierce Assocs., Inc., 527 A.2d

306, 311 (D.C. 1987)). Pursuant to the contract, Plaintiff is owed liquidated damages, which is

the remaining $16,002,000 Defendants had to pay, regardless of the services Plaintiff provided.

(See Hearing Tr. 48:10–25.) Based on the unchallenged facts, the undersigned believes Plaintiff

has satisfied all four elements in establishing Defendants’ liability for breach of contract. 4

B. Damages

Finding Defendants liable for breach of contract, the undersigned turns to the question of

damages. In Plaintiff’s Motion for Default Judgment, Plaintiff requests compensatory damages,

prejudgment interest, and costs. (See Mot. 22–27.) Specifically, Plaintiff first seeks liquidated

damages and damages for lost business, making up its compensatory damages claim of

4

Finding the Defendants liable for breach of contract, the undersigned does not find it necessary to analyze

Plaintiff’s alternative claims of unjust enrichment and account stated.

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$21,618,000. (See Mot. 1, 7, 21.) Second, Plaintiff contends that the Court should award

prejudgment interest based on both its liquidated damages and lost business claims. (See Mot.

25–27.) Finally, regarding costs, Plaintiff requests $827.60 for the court filing fee and for its

service of process expenses. (Mot. 27; Miller Decl. ¶ 10.) Each of these damages claims will be

addressed in turn.

1. Compensatory Damages

To support its request for compensatory damages, Plaintiff submitted several exhibits,

including the parties’ Retainer Agreement and an invoice from Plaintiff to Defendants for the

initial $600,000 payment. (See Falkoff Decl. Ex. A, Ex. B.) Plaintiff also submitted a declaration

from Mr. Falkoff, describing, among other things, the many times Defendants have demonstrated

their awareness of both the debt and the lawsuit, as well as their intention to pay the full amount

owed to Plaintiff. (See Falkoff Decl. ¶¶ 9, 14, 17, 25, 30–32, 34.) Plaintiff divides its claim for

compensatory damages into two subcategories: (1) liquidated damages and (2) lost business

damages. For the reasons set forth below, the undersigned recommends awarding liquidated

damages and denying lost business damages.

a. Liquidated Damages

Having established a valid contract and Defendants’ breach thereof, Plaintiff is entitled to

the remaining amount owed. See Vector Realty Grp., Inc. v. 711 Fourteenth St., Inc., 659 A.2d

230, 234 n.8 (D.C. 1994). Plaintiff argues that the remaining $16,002,000 Defendants owe

Plaintiff is a liquidated debt. (See Mot 25–26.) A liquidated debt “is one which at the time it

arose . . . was an easily ascertainable sum certain.” Dist. Cablevision Ltd. P’ship v. Bassin, 828

A.2d 714, 731 (D.C. 2003) (internal quotation marks omitted) (quoting Dist. of Columbia v.

Pierce Assocs. Inc., 527 A.2d 306, 311 (D.C. 1987)).

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There can be little doubt that when Defendants breached their agreement with

CapitalKeys on April 18, 2013, they incurred an easily ascertainable debt of $16,002,000. (See

Falkoff Decl. Ex. A at 5.) In fact, the agreement, the invoice, and all the correspondence

between Plaintiff and Defendants reflect that same amount. (See Falkoff Decl. Ex. A, Ex. B.)

Moreover, the contract clearly states that the sum is “due upon signing.” (Falkoff Decl. Ex. A at

5.) Despite Plaintiff’s continued prompting and mailing of several invoices, Defendants have not

made any portion of this payment to date. (See Compl. ¶ 66; Falkoff Decl. ¶¶ 9, 14, 17, 25, 30–

32, 34, Ex. B.) Thus, this is an action to recover a liquidated debt, and there is sufficient

evidentiary basis for awarding the $16,002,000 Plaintiff demands under the agreement.

b. Damages for Loss of Business Opportunities

As for Plaintiff’s claim for loss of business opportunities, Plaintiff submitted the

declaration of Mr. Falkoff, detailing the three pre-negotiated contracts Plaintiff contends it was

unable to accept due to Defendants’ breach. (See Falkoff Decl. ¶¶ 39–50.) Plaintiff is careful to

note that the lost business damages did not arise because of its duties under the contract with

Defendants. (See Falkoff Decl. ¶ 39; Mot. 23–24.) Rather, Plaintiff claims its efforts to recover

payment from Defendants prevented it from ultimately accepting these three contracts. (See

Falkoff Decl. ¶¶ 39–41, 47–48.) Plaintiff maintains that because of “using extensive time and

resources in seeking the much larger amount due from Defendants,” Plaintiff had to forgo its

other business opportunities. (Mot. 23.) The undersigned, however, is not convinced.

Under District of Columbia law, “[t]he doctrine of avoidable consequences, also known

as the duty to mitigate damages, bars recovery for losses suffered by a non-breaching party . . .

that could have been avoided by reasonable effort and without risk of substantial loss or injury.”

Trs. of Univ. of Dist. of Columbia v. Vossoughi, 963 A.2d 1162, 1178 (D.C. 2009) (internal

quotation marks omitted) (quoting Edward M. Crough, Inc. v. Dep’t of Gen. Servs. of D.C., 572

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A.2d 457, 466 (D.C. 1990)). This doctrine “comes into play after a legal wrong has occurred, but

while some damages may still be averted, and bars recovery only for such damages.” Vossoughi,

963 A.2d at 1178 (emphasis in original). As such, “if some of these damages could reasonably

have been avoided by the plaintiff, then the doctrine of avoidable consequences prevents the

avoidable damages from being added to the amount of damages recoverable.” Foster v. George

Washington Univ. Med. Ctr., 738 A.2d 791, 795 n.6 (D.C. 1999) (quoting McCord v. Green, 362

A.2d 720, 725–26 (D.C. 1976)).

Plaintiff could have avoided these damages by performing on the three pre-negotiated

contracts. The first contract, in June 2014, was negotiated between CapitalKeys and the Congo

for services unrelated to the contract at issue in this action. (See Falkoff Decl. ¶ 40.) The

President of the Congo wanted Plaintiff to help with his re-election campaign. (Hearing Tr.

21:22–23.) The parties settled on a monthly price of $110,000 for a 24-month period and had

also agreed that the full amount of $2,640,000 would be due up front. (See Falkoff Decl. ¶ 40.)

The contract was ultimately not executed because, after these comprehensive negotiations,

Plaintiff “realized that, due to our efforts to seek the much larger payment from the Congo, we

would not have the time and resources to fully perform the contract.” (Id.)

The second contract, in September 2014, was negotiated between CapitalKeys and Sierra

Leone, with the parties agreeing to a payment of $1,620,000, also due up front. (See Falkoff

Decl. ¶ 41.) In exchange for the payment, Plaintiff would help with an event in London that

would ultimately help drive investment into Sierra Leone. (Hearing Tr. 21:23–25, 22:1–2.) Just

as with the first contract, CapitalKeys turned down this 36-month contract after negotiations had

concluded, again citing the “immense efforts” it was expending on seeking payment from

Defendants. (See Falkoff Decl. ¶¶ 41, 43–44.)

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The third contract was negotiated in April 2015 between CapitalKeys and a mining

company in Arizona. (See Falkoff Decl. ¶¶ 47–48.) As before, the parties settled on a seemingly

comprehensive set of terms and agreed to a one time up-front payment of $756,000 for services

rendered over an 18-month period. (See Falkoff Decl. ¶ 47.) Mr. Falkoff scheduled a meeting in

Arizona to finalize the agreement, but he later cancelled this meeting because he was informed

that a delegation from the Congo would be coming to see Plaintiff at the same time. (Id.) On the

day before the delegation was set to arrive, however, the Congo informed Mr. Falkoff that the

delegation would not be coming. (See Falkoff Decl. ¶ 48.) According to Mr. Falkoff, “it was too

late to meet with the mining company,” and Plaintiff was thus ultimately unable to accept this

contract. (Id.)

After reviewing evidence relating to these three contracts, the undersigned concludes

there is insufficient evidentiary basis for awarding the $5,016,000 Plaintiff demands for loss of

business opportunities.

First, Plaintiff has not provided the Court with copies of the three pre-negotiated

contracts or any other documents illustrating Plaintiff’s lost business damages involving the three

contracts. Instead, during the evidentiary hearing, Plaintiff pointed the Court to the declaration

given by Mr. Falkoff as evidence of the three contracts. (See Hearing Tr. 42:24–25, 43:1–15.)

Without more evidence, such as copies of the contracts or any other proof of the negotiations

behind the set prices and duration of the work, the Court would be taking part in “mere

speculation or guesswork” without having even a reasonable estimate of data. Havilah Real

Prop. Servs., LLC v. VLK, LLC, 108 A.3d 334, 352 (D.C. 2015).

Second, even if Defendants had provided more evidence of the three pre-negotiated

contracts, the undersigned believes Plaintiff’s lost business opportunities were reasonably

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avoidable since Plaintiff could have ceased its performance immediately after Defendants failed

to pay Plaintiff upon signing the Retainer Agreement on April 18, 2013. However, Plaintiff

argues that this was a services contract and not a goods contract, so it could not just stop its

performance and disrupt Defendants’ way of doing business. (See Hearing Tr. 11:11–22.) The

undersigned does not believe the distinction between a goods contract and a services contract

plays any importance here. In fact, the parties’ agreement contains a provision, stating that

“[f]ailure by Client to pay subsequent professional service and expense fees, if required by this

agreement and according to the schedule outlined above, will result in suspension of work by CK

for Client.” (Falkoff Decl. Ex. A at 5.)

Moreover, at the time of the first contract in June 2014, about fourteen months had

elapsed since Defendants’ failure to pay in April 2013, arguably amounting to a material or even

total breach of the agreement on Defendants’ part. (See Falkoff Decl. ¶¶ 1, 40); see also, e.g.,

3511 13th St., LLC v. Lewis, 993 A.2d 590, 592 (D.C. 2010); Siegel v. Banker, 486 A.2d 1163,

1165 (D.C. 1984) (“[T]he failure by one of the parties to perform his part of the obligation within

the time prescribed discharges the other from all liability under the contract.”). During these

fourteen months, Defendants repeatedly assured Plaintiff that payment was forthcoming and

repeatedly failed to follow through with these promises. (See Falkoff Decl. ¶¶ 9, 14, 16–17, 22–

32, 34.) Yet, according to the contract, it was when Defendants failed to make the initial

payment that Plaintiff should have ceased its performance.

Even if Defendants’ immediate failure to pay in April 2013 had not alarmed Plaintiff, and

even if their repeated empty promises over the course of the following year had not given

Plaintiff pause, Defendants’ multiple self-imposed conditions on Defendants’ existing

performance obligation—such as the need for a positive progress report— should have indicated

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that payment was neither imminent nor certain. See generally Sisco v. GSA Nat’l Capital Fed.

Credit Union, 689 A.2d 52, 57 n.5 (D.C. 1997) (citing the fundamental principle that a “promise

to perform pre-existing duties [is] not sufficient consideration to alter obligation”). Instead, by

its own admission, Plaintiff continued “putting faith in the continued promises and reassurances

of representatives of the Congo that payment was imminent.” (Falkoff Decl. ¶ 51.)

Third, Plaintiff’s claim that it did not have time to perform on any other contracts while it

was attempting to collect payment from Defendants lacks support. Plaintiff contends that the

amount of time and resources it spent prevented Plaintiff from performing other work because it

was as if Plaintiff had taken on another client in trying to get Defendants to make payment. (See

Falkoff Decl. ¶¶ 36–46; Hearing Tr. 25:14–24.) However, Plaintiff’s accounts regarding its

efforts are inconsistent. Plaintiff said “[i]t was a daily effort to communicate with [Defendants]

and figure out what was going on over there as to why there was a delay in our payment.”

(Hearing Tr. 25:22–24) (emphasis added). Contrary to that, Mr. Falkoff stated that “[Plaintiff]

speak[s] with them probably twice a week,” costing about $50 a week to call over there and take

on this “continuous separate project.” (Hearing Tr. 38: 4–12.) If Plaintiff has to send an invoice,

it would do that as well.5 (Id.)

Yet, Plaintiff found the time to pre-negotiate each of the three contracts, and even

formalized their payment structure. (See Falkoff Decl. ¶ 39–41, 47.) All three of the negotiations

for these contracts occurred during the same time period Plaintiff was attempting to collect its

overdue payment from Defendants. (See Falkoff Decl. ¶¶ 39–49.) Therefore, the undersigned is

not convinced that Plaintiff was not able to perform on these contracts.

5

Plaintiff did not send an invoice every week but, rather, sent a total of nine invoices between May 12, 2013 and

August 5, 2015. (Compl. ¶ 66.) Similar to the telephone calls, sending invoices to Defendants was also not a daily

effort.

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Fourth, regarding the third pre-negotiated contract, it is possible Plaintiff had other

options besides cancelling Mr. Falkoff’s meeting in Arizona and waiting in Washington, D.C. for

the delegation to arrive.6 After Defendants assured Plaintiff that a delegation would arrive, Mr.

Falkoff admittedly “canceled [his] trip to Tucson because receiving the overdue payment . . . was

more important to [their] business than a much smaller contract.” (Falkoff Decl. ¶ 47.) Mr.

Falkoff claims that, once the delegation informed Plaintiff that they were no longer coming, it

was “too late” to go to Arizona and meet with the mining company. (Falkoff Decl. ¶ 48.) Mr.

Falkoff contends that, as a result, Plaintiff lost the contract. (Mot. 14.)

However, Plaintiff’s suggestion that not showing up to the meeting resulted in the

complete dissolution of the pre-negotiated contract is troublesome. After all, Plaintiff and the

mining company participated in negotiations and subsequently decided on a comprehensive set

of terms whereby Plaintiff would assist the mining company with governmental affairs over an

18-month period in exchange for an up-front payment of $756,000. (Falkoff Decl. ¶ 47.)

Following their oral agreement, Mr. Falkoff scheduled a trip to Tucson, Arizona to meet with the

mining company’s chief executive officer and sign the contract. (Id.) That is, all that was left to

do in order to finalize the contract, worth almost three quarters of a million dollars, was to find

the time to go to Arizona and sign the agreement.

Despite Defendants alerting Plaintiff the day before their scheduled arrival that they were

no longer visiting, it is hard to believe Plaintiff had no other option for executing the contract

with the mining company when everything but the signing of the contract was already finished.

6

Plaintiff did not sufficiently explain why Mr. Falkoff could not delegate authority for another person to attend the

meeting in Arizona or, alternatively, for another person to meet with the visiting delegation. (Hearing Tr. 15:2–25,

16:1–23, 17:4–19, 22:3–25, 23:1–21, 24:3–25, 25:1–10; see also Falkoff Decl. ¶¶ 47–48.) Instead, Mr. Falkoff

stated that he decided to take a “calculated risk” in staying in Washington, D.C. to meet with the delegation, but he

did not answer the Court’s question of why someone else could not go to Arizona to finalize the other contract.

(Hearing Tr. 22:23–25, 23:1–21.)

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It is also not clear to the undersigned why Plaintiff could not authorize another person to travel to

Arizona to sign the agreement or why, alternatively, Mr. Falkoff could not find another day or

another flight in order to both welcome the delegation and go to Arizona. Given the importance

Plaintiff places on its reputation, it is difficult to understand why Plaintiff knowingly, and

admittedly, jeopardized its pre-negotiated contract with the mining company when it could have

made efforts to meet with the visiting delegation and with the mining company. (See Hearing Tr.

24:10–19.) Regardless of its reasoning, Plaintiff cannot then allege Defendants are responsible

for Plaintiff’s inaction with the third contract.

The undersigned believes it was unreasonable for Plaintiff to continue efforts to collect

payment and accrue damages at the expense of accepting existing pre-negotiated contracts.

Moreover, the undersigned is not convinced that Plaintiff’s efforts to secure payment were so

taxing that they prevented Plaintiff from performing contracts that Mr. Falkoff is “confident” it

would have otherwise been able to perform. (Falkoff Decl. ¶ 42.) Plaintiff has not sufficiently

proven that, were it not occupied with placing phone calls and sending invoices to Defendants, it

surely would have had the time required to perform under these contracts. (See Falkoff Decl. ¶

37.) The alleged lost business from the three contracts was thus not only reasonably avoidable,

but the very existence of the loss is uncertain. As this Court may not award damages “based on

mere speculation or guesswork,” the undersigned does not recommend awarding Plaintiff

damages for loss of business opportunities. Havilah Real Prop. Servs., LLC at 108 A.3d 352.

2. Prejudgment Interest

Prejudgment interest is “an element of complete compensation to a creditor for the loss of

use of money that a debtor wrongfully withholds.” Dist. Cablevision Ltd. P’ship v. Bassin, 828

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A.2d 714, 732 (D.C. 2003) (internal quotation marks omitted) (quoting Riggs Nat’l Bank of

Washington, D.C. v. Dist. of Columbia, 581 A.2d 1229, 1253 (D.C. 1990)).

Under D.C. Code § 15–108, Plaintiff is entitled to recover prejudgment interest in an

action to recover a liquidated debt,7 if interest is payable by contract, law, or usage. See Bassin,

828 A.2d at 731. However, district courts have wide discretion in terms of awarding

prejudgment interest. See Burke v. Groover, Christie & Merritt, P.C., 26 A.3d 292, 304–05

(D.C. 2011); see also Fed. Mktg. Co. v. Virginia Impression Products Co., Inc., 823 A.2d 513,

531–33 (D.C. 2003); Riggs, 581 A.2d at 1256; House of Wines, Inc. v. Sumter, 510 A.2d 492,

499 (D.C. 1986). Here, Plaintiff seeks prejudgment interest for its liquidated damages, as well as

for its damages relating to loss of business opportunities.

a. Prejudgment Interest on Liquidated Damages

Plaintiff argues that prejudgment interest should be awarded based on custom and usage.

(See Mot. 25.) Both this Court and District of Columbia courts have noted that in breach of

contract cases, “it is indeed customary to pay interest on funds that are withheld and not paid

when due.” Bragdon, 856 A.2d at 1172 (citations omitted); see also Bassin, 828 A.2d at 731.

Plaintiff also contends that “Defendants are culpable in the delay as they have

consistently insisted that they would be paying . . . in full on many, many occasions.” (Mot. 26.)

However, the undersigned does not believe this is entirely accurate. While it is indeed

customary to award prejudgment interest when a party withholds funds, it is surely not

customary for Plaintiff to delay litigation for almost two years after the other party breaches the

contract, as is what happened in this case. (See Hearing Tr. 37: 22–25.) Plaintiff explains that it

7

Although D.C. Code 15–109 also applies here, being that it is a breach of contract claim, the undersigned does not

address that Section after already recommending that Plaintiff’s compensatory damages claim be categorized as a

liquidated debt. Accordingly, the undersigned refers to D.C. Code 15–108 since that Section particularly addresses

interest on a liquidated debt.

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took “a lot of heartfelt searching . . . and hesitation . . . before Mr. Falkoff decided to resort to the

U.S. courts.” (Hearing Tr. 31: 22–24.) Moreover, Plaintiff claimed the decision to delay

litigation was one that Mr. Falkoff made “as a business person.” (Hearing Tr. 35:11–21.) It is

clear to the undersigned that, while the D.C. Code supports the award of prejudgment interest on

liquidated debt, this situation where Plaintiff causes unwarranted delay contradicts the intent of

the statute.

Therefore, the undersigned believes Plaintiff should receive prejudgment interest, but the

interest should begin to accrue at the time Plaintiff filed its complaint, rather than at the time

Defendants failed to pay upon signing the contract. That is, the undersigned believes “the

equities in this case do not support an award of prejudgment interest from the date of the first

violation . . . but rather favor an award beginning on a later date.” Kansas v. Colorado, 533 U.S.

1, 14 (2001); see also Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 657 (1983) (determining

“it may be appropriate to limit prejudgment interest, or perhaps even deny it altogether, where

the [plaintiff] has been responsible for undue delay in prosecuting the lawsuit”).

Further, even if Plaintiff can persuade the Court that its delay is understandable, “there is

no doubt that the interests of both [parties] would have been served if the claim had advanced

promptly after its basis became known.” Kansas, 533 U.S. at 16. Additionally, it was “uniquely

in [Plaintiff’s] power to begin the process by which those damages would be quantified.” Id.

Accordingly, the undersigned believes Plaintiff is entitled to $16,002,000 in

compensatory damages. Moreover, since breach of contract cases are typically accompanied by

an award of prejudgment interest, the undersigned recommends that Plaintiff is also entitled to

prejudgment interest based on custom and usage, with the interest starting to accrue at the date

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the complaint was filed, rather than when the injury occurred, due to Plaintiff’s unwarranted

delay in bringing suit for the breach.

Unless fixed by contract, the rate of interest for forbearance of money under D.C. Code §

28–3302 is calculated at six percent per annum. This should be awarded as simple, rather than

compound, interest because the contract does not include any provision regarding the issue.

When the agreement is silent on the issue of awarding simple or compound interest, courts

generally do not award compound interest. See Allen v. Yates, 870 A.2d 39, 51 (D.C. 2005)

(holding that “because the parties did not provide for compound interest, interest . . . should be

calculated on the principal balance alone”); see also Rastall v. CSX Transp., Inc., 697 A.2d 46,

53 (D.C. 1997) (determining that, “[a]bsent a contractual provision, prejudgment and judgment

interest are not usually compounded”).

From December 23, 2015, when Plaintiff filed the complaint, to the present day, the

unpaid balance on the liquidated amount remains at $16,002,000. (See Mot. 22.) Defendants

thus owe $881,207.45 in prejudgment interest during this time period, calculated at six percent

per annum.8 In sum, to date, Defendants owe Plaintiff $16,002,000 for the principal, plus

$881,207.45 for interest on the unpaid balance, totaling $16,883,207.45.

b. Prejudgment Interest on Lost Business Opportunities

Plaintiff also seeks prejudgment interest on the damages for loss of business

opportunities. (See Mot. 25.) As discussed earlier, the undersigned does not believe Plaintiff is

entitled to lost business damages, so this request is moot.

However, even if the Court awards Plaintiff damages for the unexecuted contracts, the

undersigned recommends that it is improper to award prejudgment interest on the lost business

8

This is the amount of prejudgment interest through the date this Report and Recommendation was filed.

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damages. While the lost business perhaps constitutes an easily ascertainable sum insofar as the

contracts had been pre-negotiated for set prices, these additional damages are not a part of the

liquidated debt Plaintiff seeks to recover, as required under D.C. Code § 15-108. Moreover,

Plaintiff has not pointed to any case or otherwise demonstrated that it is customary to pay interest

on lost business damages. (See Mot. 25–27.) Rather, prejudgment interest serves to compensate

Plaintiff “for the loss of use of money that a debtor wrongfully withholds.” Bassin, 828 A.2d at

732. With its lost business claim, Plaintiff does not seek to recover money that Defendants

wrongfully withheld and is thus not entitled to prejudgment interest on the lost business

damages.

3. Costs

Plaintiff asks the Court to award $827.60 in costs, consisting of a $400.00 court filing fee

and $427.60 for service of process expenditures. (Miller Decl. ¶ 10, Ex. Z. [24-28]) Under FED.

R. CIV. P. 54(d), “costs—other than attorney's fees—should be allowed to the prevailing party.”

A party who prevails under a default judgment is equally entitled to costs incurred in the

prosecution of this action. See Limbach Co., LLC v. Ten Hoeve Bros., LLC, 126 F. Supp. 3d 105,

109–110 (D.D.C. 2015). Accordingly, the undersigned recommends that Plaintiff be awarded

those costs that qualify under 28 U.S.C. § 1920, which includes fees of the Clerk and Marshal.

VI. RECOMMENDATION

Based on consideration of the record, pleadings, exhibits entered into evidence, and the

testimony given at the hearing, the undersigned recommends that the Court issue a Default

Judgment in favor of Plaintiff CapitalKeys, LLC against Defendants Democratic Republic of

Congo and Central Bank of the Democratic Republic of the Congo. The undersigned further

recommends the Court award Plaintiff $16,002,000 in compensatory damages, $881,207.45 in

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prejudgment interest on the principal unpaid balance, and $827.60 for costs. Thus, the

recommended total award should be $16,884,035.05, plus any remaining prejudgment interest, at

an annual interest rate of six percent as simple interest, after the date of this Report and

Recommendation.

VII. REVIEW BY THE DISTRICT COURT

The parties are hereby advised that under the provisions of Local Rule 72.3(b) of the

United States District Court for the District of Columbia, any party who objects to the Report

and Recommendation must file a written objection thereto with the Clerk of this Court within 14

days of the party’s receipt of this Report and Recommendation. The written objections must

specifically identify the portion of the report and/or recommendation to which objection is made,

and the basis for such objections. The parties are further advised that failure to file timely

objections to the findings and recommendations set forth in this report may waive their right of

appeal from an order of the District Court that adopts such findings and recommendation. See

Thomas v. Arn, 474 U.S. 140 (1985).

DATED: _____11/21/2016_______ ____________/s/______________________

ALAN KAY

UNITED STATES MAGISTRATE JUDGE

30