# Wye Oak Technology, Inc. v. Republic of Iraq

> District Court, District of Columbia · August 27, 2019

URL: https://www.frixlaw.com/law-library/cases/4433744

## Case

- **Court:** District Court, District of Columbia
- **Decided:** August 27, 2019
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Judge Royce C. Lamberth
- **Nature of suit:** Civil
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4433744

## How later opinions describe it (automated extraction)

- holding that the Iranian “Ministry of Foreign Affairs must be treated as the state of Iran itself rather than its agent” because the conduct of foreign affairs is an indispensable governmental function

## Opinion text

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_______________________________________
)
WYE OAK TECHNOLOGY, INC., )
Plaintiff, )
)
v. ) Civil No. 1:10-cv-01182-RCL
)
REPUBLIC OF IRAQ et al., )
Defendants. )
)
_______________________________________)

MEMORANDUM OPINION
I. Legal Standard ............................................................................................................................. 2
II. Factual Background.................................................................................................................... 3
A. The Initial Effort to Rebuild Iraqi Armed Forces Following the U.S.-led Invasion in 20033
B. Iraq Contemplates Stopping Some Scrap Exports ............................................................... 6
C. Wye Oak and MoD Execute the BSA.................................................................................. 7
D. Wye Oak Begins Performance ........................................................................................... 11
E. Wye Oak and Zayna Sign a Limited Power of Attorney ................................................... 13
F. Wye Oak Presents Three Invoices to MoD........................................................................ 15
G. October 19, 2004 Meeting ................................................................................................. 16
1. MoD Approved Wye Oak’s Three Invoices ....................................................................... 16
2. Wye Oak and MoD Effectuated the First Amendment to the BSA ..................................... 17
H. MoD and GIG Sign the Contract of Financial Agreement ................................................ 21
I. MoD Paid Zayna Instead of Wye Oak ............................................................................... 24
J. Wye Oak Continued to Perform until Nonpayment Became a Serious Impediment ............ 25
1. Wye Oak Performed Work in Iraq ..................................................................................... 25
2. Wye Oak Performed Work in the United States ................................................................ 27
3. Nonpayment Eventually Became a Significant Impediment to Wye Oak’s Work .............. 28
K. December 5, 2004 Meeting ................................................................................................ 29
L. Wye Oak Goes Back to Work, But Dale Stoffel is Murdered ........................................... 31
M. Wye Oak Produced Armored Vehicles in Time for the January 2005 Elections, But
Eventually Ceased to Perform Work in Iraq Because It was Never Paid ................................. 33
N. Iraq Prohibits Scrap Sales .................................................................................................. 35
III. Legal Discussion ..................................................................................................................... 35
A. MoD is Not Separate from the Republic of Iraq ................................................................ 35
B. The Court has Subject Matter Jurisdiction and Personal Jurisdiction Over Defendants ... 39
1. The BSA was a “Commercial Activity” Under the FSIA .................................................. 40
2. This Action is Based Upon an Act Performed in the U.S. in Connection with a
Commercial Activity of Iraq Elsewhere................................................................................. 41
3. The Court has Personal Jurisdiction over Iraq and MoD................................................. 44
C. Defendants Breached the BSA........................................................................................... 45
1. Wye Oak’s Three Invoices Were Submitted Under the BSA .............................................. 45
2. Wye Oak was never paid for its three invoices .................................................................. 50
3. Wye Oak Performed Under the BSA.................................................................................. 51
4. MoD Materially Breached the Contract with Wye Oak .................................................... 52
D. The Court Rejects Defendants’ Affirmative Defenses ......................................................... 52
1. The Court Rejects the Defense Wye Oak was Not Properly Licensed ............................... 53
2. The Court Rejects the Defense Wye Oak was Not Owed Any Compensation Under the
BSA Because Wye Oak Did Not Conclude Any Sales Contracts ........................................... 55
3. The Court Rejects the Defense Wye Oak Waived any Breach ........................................... 55
IV. Damages ................................................................................................................................. 56
A. Dr. Gale’s Expert Damages Report ...................................................................................... 59
1. The Court Finds Defendants Breached the BSA on October 28, 2004 ............................. 60
2. Gale Did Not Err in Not Taking Into Account Subsequent Events .................................... 61
a. Dale Stoffel’s Murder .................................................................................................... 62
b. Wye Oak’s Withdrawal of American Personnel ............................................................ 63
c. The Scrap Ban ................................................................................................................ 63
B. Damages for the Three Invoices ........................................................................................... 67
C. Lost Profits ........................................................................................................................... 70
1. Defendants’ Overall Objections to Plaintiffs’ Lost Profits Calculations .......................... 70
2. Lost Profits from Construction .......................................................................................... 75
3. Lost Profits from Refurbishing Military Equipment .......................................................... 78
4. Lost Profits from Scrap Sales ............................................................................................ 88
5. Lost Profits From the Sale of Surplus Military Equipment ............................................... 93
D. Terminal Value ..................................................................................................................... 94
E. Discounted Future Income .................................................................................................... 95
1. Risk-Free Rate ................................................................................................................... 97
2. Equity Risk Premium ......................................................................................................... 97
3. Firm Size Premium ............................................................................................................ 98
4. Industry Risk Premium ...................................................................................................... 99
5. Defendants’ Objections that Gale Did Not Include a Company-Specific Risk Premium and
Did Not Apply a Higher Discount Rate to Damages in Option Years ................................ 100
6. Discount rate ................................................................................................................... 100
F. Prejudgment Interest ........................................................................................................... 101
G. Enhanced Damages ............................................................................................................ 102
H. Costs, Including Reasonable Attorney’s Fees and Expenses ............................................. 104
V. Conclusion ............................................................................................................................. 105
Fifteen years ago, Wye Oak Technology, an American company, entered into the Broker

Services Agreement (BSA) with the Iraqi Ministry of Defense (MoD) to play a key role in re-

equipping the Iraqi military. Iraq urgently needed to rebuild its armed forces as the Coalition

Provisional Authority (CPA) transferred sovereignty back to the Iraqi people and the interim Iraqi

government prepared to hold its first parliamentary elections since the fall of Saddam Hussein.

The BSA was set to be the central component of the Iraqi Military Equipment Recovery Project

(IMERP).

Under the BSA, Wye Oak was responsible for developing an inventory and assessing what

military equipment was salvageable and what was scrap, providing military refurbishment

services, arranging for scrap sales, and arranging for the sale of military equipment. Wye Oak

began performing as soon as the BSA was effectuated. By October 2004, Wye Oak submitted three

pro forma invoices to MoD for work in relation to the IMERP.

But MoD never paid these invoices to Wye Oak. Instead, MoD paid a third-party, Raymond

Zayna, the money owed to Wye Oak under the BSA. Nonetheless, Wye Oak continued to perform

under the contract while desperately trying to extract the funds it was owed. And briefly, Wye Oak

thought it succeeded. After months of performing vital activities as part of the IMERP despite not

being paid, all issues seemed to be solved after a December 5, 2004 meeting. However, this was

not the case.

A few days later, Wye Oak’s president Dale Stoffel and his colleague Joe Wemple were

brutally murdered on their way to arrange for funding to finally be released. Nonetheless, Wye

Oak still did not immediately abandon the IMERP even after Dale Stoffel’s tragic death. Instead,

Wye Oak exceeded the goal of producing a mechanized brigade of operational armored vehicles

1
for Iraq’s January 2005 parliamentary election. Yet Wye Oak was never paid for the vital work it

performed under the BSA.

Now, more than fifteen years after Wye Oak entered into the BSA, and more than a decade

after Wye Oak first filed suit, the Court finds MoD breached the BSA. And because MoD is an

integral component of the national government itself, the Republic of Iraq is also liable for the

breach.

Ultimately, the Court will award Wye Oak damages for its three invoices, lost profits from

construction, lost profits from refurbishing military equipment, and lost profits from scrap sales.

Also, the Court will award Wye Oak prejudgment interest and costs, including reasonable

attorney’s fees and expenses.

I. Legal Standard

Wye Oak bears the burden of proving its breach of contract claim by a preponderance of

the evidence. The preponderance of the evidence standard “simply requires the trier of fact to

believe that the existence of a fact is more probable than its nonexistence before [he] may find in

favor of the party who has the burden to persuade the [judge] of the fact’s existence.” Concrete

Pipe & Prods., Inc. v. Constr. Laborers Pension Tr., 508 U.S. 602, 622 (1993) (internal quotation

marks omitted). In a bench trial, the Court is the trier of fact and rules on the law. Wye Oak will

only succeed in its suit if it demonstrates it is more likely than not that the MoD materially breached

the BSA.

The BSA provides it “shall be exclusively construed and interpreted pursuant to the laws

of the Republic of Iraq.” Pl.’s Ex. 5 ¶ 21. Thus, under this choice-of-law clause, Iraqi law controls

for the purposes of interpreting the contract.

2
Under Iraqi law, the rules of evidence and procedure of the venue where the dispute is

pending control. Mallat Dep. 2/14/19, 33:17–34:4. Thus, the Federal Rules of Evidence apply to

any evidentiary issues in this matter.

Finally, under the Federal Rules of Evidence, “[i]n determining foreign law, the court may

consider any relevant material or source, including testimony, whether or not submitted by a party

or admissible under the Federal Rules of Evidence. The court’s determination must be treated as a

ruling on a question of law.” Fed. R. Evid. 44.1.

II. Factual Background

A. The Initial Effort to Rebuild Iraqi Armed Forces Following the U.S.-led Invasion in 2003

In March 2003, U.S. forces invaded Iraq and swiftly toppled Saddam Hussein’s dictatorial

regime. The U.S.-led Coalition forces set up the CPA to govern Iraq as a transitional government.

On June 28, 2004, the CPA transferred sovereignty to the Iraqi people and an interim Iraqi

government. This interim government held office until parliamentary elections occurred in January

2005.

As part of Iraq’s rebuilding efforts, Iraq needed to rebuild its own armed forces. This was

especially vital as a growing insurgency began to take hold following the U.S.-led invasion and

occupation.

Secretary of Defense Donald Rumsfeld requested that then-Lieutenant General David

Petraeus lead the Multi-National Security Transition Command–Iraq (MNSTC-I) to help rebuild

the Iraqi armed forces and police. MNSTC-I’s mission was to oversee and support the

reconstruction of Iraq’s Ministry of Defense and Ministry of Interior. MNSTC-I developed the

IMERP to re-equip the Iraqi military. The IMERP’s goal was to salvage the military equipment

3
that could be refurbished and the scrap military equipment that was scattered across Iraq after the

fall of Saddam Hussein’s regime.

Under Saddam Hussein, Iraq had an extremely large military with extensive stocks of

military equipment. Expert Report of John M. Gale app. C, 11, 43–47, Pl.’s Ex. 101. A significant

amount of this equipment consisted of Soviet weaponry. Tr. 12/18/18 PM 65:7–9; Tr. 12/19/18

PM 85:8–13. Destroyed and abandoned equipment littered the country following the U.S.-led

invasion. See Tr. 12/17/18 PM 28:25–29:25; Tr. 12/19/18 AM 13:7–14, 33:6–34:2; Tr. 12/20/18

PM 37:8–19; Petraeus Dep. 14:18–15:20; Pl.’s Ex. 63. The IMERP intended to determine what

equipment was recoverable and what could be scrapped, hoping to immediately repair salvageable

equipment so that a portion of the Iraqi armed forces could be rebuilt as quickly as possible.

IMERP’s immediate focus was to prepare at least one armored mechanized brigade to be on the

streets in time for the new Iraqi government’s parliamentary election in January 2005. See Tr.

12/17/18 PM 35:21–37:5; Tr. 12/19/18 AM 25:9–26:14; Joe Kane, Iraqi Mech Brigade Moves

Toward Initial Ops, The Advisor, Oct. 9, 2004, Pl.’s Ex. 16, at 1, 8. This was a critical component

of the Coalition and Iraq’s goal to withdraw American troops and have Iraqi security forces take

on greater responsibility. Petraeus Dep. 20:19–21:2, 28:19-30:3.

The Coalition and MNSTC-I leaders viewed Wye Oak and its president, Dale Stoffel, as

capable of executing the IMPERP effort. Wye Oak, and Dale Stoffel in particular, had extensive

familiarity with Soviet military equipment and had government contacts throughout the world. See

Tr. 12/18/18 PM 65:7–9; Pl.’s Ex. 1; Pl.’s Ex 5 ¶ 2. Further, Wye Oak possessed the necessary

arms and weapons licenses to perform the planned work. Pl.’s Ex. 1; Pl.’s Ex. 51. And Wye Oak

had a strong relationship with CLI Corporation, an American based construction firm that had

experience working in Iraq, as Dale Stoffel was a part owner of CLI. Pl.’s Ex. 51.

4
On June 25, 2004, Wye Oak officially presented MoD its proposal to carry out the IMERP.

Pl.’s Ex. 1. Wye Oak offered its services to “assess [MoD’s] discarded and/or damaged military

equipment to identify military salvageable equipment and scrap, account and inventory, value and

identify purchasers for such military equipment and scrap, to maximize and to assist you in

carrying out the Iraqi Military Equipment Recovery Project. In such role, Wye Oak would act as

the exclusive broker for such transactions for the [sic] Iraq’s Ministry of Defense for a minimum

of ten percent commission on each such transaction.” Id. Following this letter, on July 4, 2004,

Iraq’s Minister of Defense, Hazim al-Shalan, requested access to the military equipment

depositories at the Taji military base so MoD personnel and Dale Stoffel could inspect and assess

the equipment as part of the beginning phase of the IMERP. Pl.’s Ex. 2. Petraeus responded on

July 20, 2004 with his full support for the MoD’s expeditious initiation of the IMERP, and granted

al-Shalan’s request. Pl.’s Ex. 3.

Wye Oak and MoD began drafting the BSA. Nicholas Beadle, a United Kingdom

government official and senior Coalition advisor to the Iraqi MoD, Iraqi Minister of Defense

Hazim al-Shalan, and Iraqi MoD Secretary General Bruska Shaways, recalled his conversations

with Shaways in July 2004 regarding the draft contract. Beadle made sure Shaways understood

the MoD was agreeing to pay Wye Oak up front based on pro forma invoices—besides

commissions—without having seen the completed work and would only have an opportunity to

reconcile the payments at a later time. Tr. 12/20/18 PM 37:20–38:16, 53:11–54:3; Tr. 12/21/18

AM 36:16–38:20. On August 16, 2004, the MoD and Wye Oak officially entered into a contract,

the BSA, to carry out the IMERP.

5
B. Iraq Contemplates Stopping Some Scrap Exports

While Wye Oak and MoD were negotiating the BSA, Iraq was also in the process of

cracking down on scrap smuggling. On June 19, the General Secretary of Iraq’s Council of

Ministers informed the Ministries of Industry, Trade, and Finance that the Prime Minister directed

the formation of a committee of representatives from these ministries to study scrap exports and

provide a recommendation on the topic. Defs.’ Ex. 56.

Following this directive, the Ministry of Trade wrote the Council of Ministers to inform

the Council of its views on exporting scrap. Defs.’ Ex. 55. The Ministry of Trade stated the

decision to export scrap was implemented in accordance with CPA Order 54 on the Trade

Liberalization Policy of 2004 issued on February 26, 2004. Id. According to the Ministry of Trade,

CPA Order 54 in part sought to stop scrap smuggling and institute a legal regime to govern scrap

exports. Id. CPA Order 54 prohibited the export of “metals of all kinds, including scrap,” in

quantities in excess of personal use without a license from the Ministry of Trade. Defs.’ Ex. 54.

However, the Basra Governate apparently interfered with authorized scrap exports. Id. This led

the Ministry of Trade to request the Basra Governate be directed not to interfere with the export

of scrap done in accordance with previously granted licenses. Id.

The committee formed pursuant to the Prime Minister’s direction ultimately recommended

stopping scrap exports but allowing those who already had export licenses to continue their export

efforts because those licensees only accounted for a small portion of existing scrap. Defs.’ Ex. 57.

But the committee also urged the Ministry of Interior and General Commission of Customs to

institute strict procedures to prevent scrap smuggling. Id.

On July 17, 2004, the General Secretary of the Cabinet issued a letter to the Ministry of

Interior regarding the prohibition of exporting scrap with copies to the Office of the Prime

6
Minister, Ministry of Industry and Minerals, Ministry of Trade, and National Intelligence Service.

Defs.’ Ex. 53. Specifically, the letter stated the Prime Minister agreed to the Ministry of Industry

and Minerals’ proposal to stop exporting scrap, with the exception that some materials of a military

nature could still be exported upon the Prime Minister and his economic committee’s approval. Id.

Unfortunately, this Court was never provided with the Ministry of Industry and Minerals’ proposal

referenced in this letter, which makes it impossible to fully comprehend the exact terms of the

prohibition on exporting scrap the Prime Minister approved.

This deliberation on scrap exports and decision by the Prime Minister was never

communicated to Wye Oak at any time during the BSA negotiations or after Wye Oak and the

MoD signed the BSA. And Beadle testified he understood all orders prohibiting scrap sales to only

apply to private sales, not the MoD. Tr. 12/21/18 AM 7:25–8:10. Further, Neal testified General

Bashar, an MoD official working on the effort to recover vehicles, informed him the scrap ban was

intended to stop individuals from illegally taking scrap and did not affect Wye Oak. Tr. 12/19/18

AM at 29:22–31:16; Tr. 12/19/18 PM 4:9–18.1

C. Wye Oak and MoD Execute the BSA

Wye Oak and MoD entered into the BSA to carry out the IMERP on August 16, 2004. The

BSA was signed by Dale Stoffel on behalf of Wye Oak and countersigned by Iraqi MoD Secretary

General Bruska Shaways. Pl.’s Ex. 5. Secretary General Shaways had the “full signatory authority”

of MoD regarding all matters related to Wye Oak’s work recovering and selling scrap military

equipment. Pl.’s Ex. 6. Under the BSA, MoD was required to “work exclusively with [Wye Oak]

1
General Bashar’s declarations were admitted into evidence as admissions by a party-opponent—and therefore non-
hearsay—under Federal Rule of Evidence 801(d)(2). General Bashar was an MoD employee speaking on a matter—
whether the scrap ban applied to the MoD—within the scope of his relationship with the MoD, as he worked on the
IMERP, which contemplated exporting scrap as part of the program, while he was employed by the MoD. Fed. R.
Evid. 801(d)(2)(D).

7
regarding furnishing of Military Refurbishment Services, Scrap Sales and the sale of Refurbished

Military Equipment with respect to all Military Equipment.” Pl.’s Ex. 5. The BSA appointed Wye

Oak as the sole and exclusive broker for:

(i) the accounting, inventory, and assessment of discarded and/or damaged Military
Equipment in connection with the Iraqi Military Equipment Recovery Project to
identify which Military Equipment is salvageable and suitable for Military
Refurbishment Services and which Military Equipment is scrap;
(ii) the arranging of any Scrap Sales of any Military Equipment that is not suitable
for Military Refurbishment Services;
(iii) the provision of Military Refurbishment Services with respect to all of the
various military bases, offices and properties owned by, or under the control of, the
Ministry and/or the Republic of Iraq, wherever such bases, offices and property
maybe [sic] located and all the related military equipment located thereon or
otherwise owned by the Ministry and/or the Republic of Iraq; and
(iv) the arranging for the sale of Military Equipment and/or Refurbished Military
Equipment to Customers during the term of this Agreement or for Scrap Sales of
any such Military Equipment that is not suitable for Military Refurbishment
Services, which arranging shall include the valuation of any such Military
Equipment, whether original, refurbished or scrap, and the identification of
prospective Customers for such sales.

Pl.’s Ex. 5 ¶ 2. MoD agreed “not to conduct any Military Refurbishment Services or arrange for

the use, sale or lease of any Refurbished Military Equipment provided for under [the BSA] nor

engage in any scrap sales, except pursuant to an engagement with [Wye Oak] under [the BSA].”

Id. The BSA stated Wye Oak would begin performing services at five military facilities: “Taji

Military Base/Camp Cooke, Camp Normandy, Camp Ashraft, Camp Anaconda, and the Coalition

facilities at the Hilla Military Facility.” Id.

The BSA provided specific definitions for the terms military equipment, military

refurbishment services, refurbished military equipment, customers, and scrap sales. Military

equipment was defined as “any equipment that is used by or in the provision of military [sic],

including, without limitation, any and all vehicles, aircrafts, guns, missiles, armored personnel

carriers, heavy armor/tanks, military radar equipment, ballistic missiles, rocket launchers, artillery,

8
artillery scrap, small arms, small arms scrap or any parts or components thereof.” Id. ¶ 1. The

contract defined military refurbishment services as “any services sold, performed for, or provided

with respect to any Refurbished Military Equipment that is either retained by the Ministry or sold

or otherwise provided to Customers by the Ministry, including, but not limited to, the inspection

of the Military Equipment prior to performing any Military Refurbishment Services to make a

value assessment and a refurbishing assessment for such Military Equipment.” Id. The BSA

provided that “Refurbished Military Equipment shall mean any Military Equipment that has been

refurbished by, or under the direction of, the Broker pursuant to this Agreement, and sold or

provided to customers by the Ministry.” Id. Customers were defined as “purchasers of the ‘Military

Refurbishment Services’ and/or ‘Refurbished Military Equipment’ and ‘or Scrap sales’ including,

but not limited to, Iraqi Ministry of Defense, commercial establishments and governmental and

semi-governmental entities in the military sector.” Id. And scrap sales were defined as “sales to

any third party of any Military Equipment or other items which may not be defined as scrap but

contemplated by the nature of this Agreement (e.g., brass, gun barrels, etc.) that the Broker or Iraqi

Ministry of Defense determines is not suitable for Military Refurbishment Services in accordance

with the terms of this Agreement.” Id.

Further, Wye Oak was required to use “all reasonable commercial efforts to perform the

Military Refurbishment Services and in the development of markets and sales prospects for

Military Equipment, including Refurbished Military Equipment and Scrap Sales.” Id. ¶ 3. Wye

Oak was not under any obligation to expend any money in performing these services or activities,

except money that was advanced by the MoD to cover “certain expenses associated with the

performance of the Military Refurbishment Services, the sales of any Military Equipment,

Refurbished Military Equipment or any Scrap Sales.” Id. ¶ 3. In addition, MoD was required to

9
“fully inform [Wye Oak] at all times of all matters reasonably required to enable [Wye Oak] to

carry-out its duties as set forth [in the BSA].” Id. ¶ 4.

As compensation, MoD was required to pay Wye Oak “a commission of [a] minimum of

ten percent (10%) based on the Contract Value set out in each Sales Contract entered into by the

Ministry, pursuant to this Agreement.” Id. ¶ 5. With respect to Refurbished Military Equipment,

the MoD was required to pay Wye Oak 10% of such equipment’s refurbishment cost. Id. The

commissions were to be paid “pursuant to proforma invoices submitted by [Wye Oak] and then

reconciled by final invoice. Upon providing such proforma invoice, Ministry will make full

payment on such invoice immediately upon presentation. All payments to be made to [Wye Oak]

under this Agreement shall be made in United States Dollars in the form and manner as directed

by [Wye Oak].” Id. Also, the BSA provided significant protections for Wye Oak. Wye Oak was

entitled to receive and retain all commissions for sales contracts for military refurbishment

services, refurbished military equipment, or scrap MoD cancelled or terminated, regardless of the

cause. Id.

The BSA was set to last for one year. This one-year term was to renew automatically for

two subsequent, consecutive one-year periods unless either Wye Oak or the MoD gave the other

party written notice it would not renew at least sixty days prior to the end of any term. If

termination notice was provided, the BSA was set to terminate at the end of the then-current term.

Id. ¶ 6.

This Agreement was not assignable by either party. Id. ¶ 8. Any purported assignment of

the BSA without written consent from both parties was void and without effect. Id. A failure by

one of the parties to assert any right in the BSA or upon a breach of the BSA would not constitute

a waiver of such rights. Id. ¶ 12. And a written waiver of any right was not deemed to extend to

10
any subsequent breach. Id. The BSA was not to be amended or supplemented except in writing,

signed by both parties. Id. ¶ 13. The BSA constituted the entire agreement between Wye Oak and

the MoD. Id. ¶ 14.

In addition, the BSA contained an indemnification clause. Each party was to “indemnify,

defend and hold harmless the other party from and against any and all liabilities, demands, claims,

lawsuits, damages, judgments, costs (including reasonable attorney’s fees and expenses) including

but not limited to injury to persons (including death), loss or damage to, or destruction of property

arising out of that party’s breach of this Agreement or that party’s negligent or willful actions

while performing hereunder.” Id. ¶ 15.

Finally, the English version of the Agreement governed and the BSA was required to be

construed and interpreted pursuant to Iraqi law. Id. ¶¶ 18, 21.

D. Wye Oak Begins Performance

Wye Oak more likely than not began performing activities related to the BSA around the

same time as the contract was signed. In the days preceding the BSA, Wye Oak identified 70,000

tons of brass artillery casings it believed could be sold as scrap. Wye Oak began trying to broker

a sale of these scrap brass shell casings and had some communications with at least one potential

customer after the BSA was signed. See Defs.’ Ex. 91 (email from Coskun Akdeniz to Dale Stoffel

on August 18, 2004, regarding a potential customer for the scrap brass casings).2 Unfortunately,

these shell casings were stolen from the Iraqi military base where they were stored before Wye

Oak could broker any sales contract. See Pl.’s Ex. 24 (email from Dale Stoffel to Nick Beadle,

William Felix, and Colonel David Styles with the subject line “missing brass” and attached

pictures of the brass); Pl.’s Ex. 26 (email from Colonel David Styles to Dale Stoffel, Nick Beadle,

2
This exhibit was moved into evidence by defendants as a Wye Oak business record without objection by Wye Oak.
Tr. 12/18/18 AM 81:16–84:15.

11
and William Felix regarding the stolen brass); Tr. 12/18/18 AM 81:16–84:21 (David Stoffel

testifying the potential sale of the 70,000 tons of brass shell casings was never completed). While

Wye Oak claims MoD and Iraq were at fault for this theft, the evidence presented to the Court is

insufficient to establish this point.

Nonetheless, Wye Oak continued to move ahead. Wye Oak worked with its sister company

CLI, and Wye Oak and CLI hired Iraqi laborers. Tr. 12/18/18 PM 64:17-64:19; Felix Dep. 20:15–

23:1, 80:22–81:3. On September 6, 2004, Secretary General Shaways wrote to Multi-National

Forces-Iraq Commanding General George Casey to inform him that “Wye Oak has begun the

initial assessment of equipment and is preparing to assemble the necessary personnel to inventory,

assess and remove Iraqi military equipment or scrap for sale or use by the Iraqi Ministry of

Defense.” Pl.’s Ex. 10. Shaways then requested access to Iraqi military bases under the U.S.

military and Coalition forces’ control because military equipment and scrap were located on those

bases. Id.

On September 17, Dale Stoffel reached out to a Ukrainian company to invite specific

employees and affiliates to Iraq to assist Wye Oak in assessing, recovering, and refurbishing

military equipment for the IMERP. Pl.’s Ex. 11. Wye Oak offered to provide transportation from

Ukraine to Iraq and to arrange visas for these individuals. Id. Several witnesses testified Dale

Stoffel brought in a team from Ukraine to assist with the work. See, e.g., Tr. 12/19/18 AM 42:1–

9; Felix Dep. 102:24–104:06. While Dale Stoffel and individuals from CLI, Iraqi laborers, and

workers from Ukraine got started on identifying, assessing, and refurbishing military equipment

in Iraq, David Stoffel worked on the IMERP from the United States. David Stoffel oversaw all

information technology services for Wye Oak. Tr. 12/18/18 AM 31:7–32:1, 43:22–25, 44:11–20,

48:25–49:5.

12
By September 29, 2004, Wye Oak provided MNSTC-I project officer Colonel David Styles

an initial survey of equipment that had been reviewed thus far at Camp Normandy. Pl.’s Ex. 14.

This survey consisted of 745 units of military equipment, including various tanks, armored

personnel carriers, artillery, rocket launchers, anti-aircraft guns, and vehicles. Id. Even the

equipment marked “operational” still likely required at least some maintenance before it could be

put back into operation. Tr. 12/19/18 AM 12:14–20.

The Iraqi government announced in October 2004 it would be standing up a mechanized

brigade of about 3,000 soldiers by early 2005. Pl.’s Ex. 16 at1. Iraqi Brigadier General Mahmoud

Bashar, the official selected to lead the new brigade, proudly proclaimed most of the tanks and

personnel carriers would come from Iraq. Id. These statements were reported in The Advisor, an

authorized publication of MNSTC-I. This publication was authenticated as a self-authenticating

official publication and newspaper under Federal Rules of Evidence 902(5) and 902(6). The Iraqi

government and General Bashar’s declarations were admitted into evidence as admissions by a

party-opponent—and therefore non-hearsay—under Federal Rule of Evidence 801(d)(2). Nicholas

Beadle testified Wye Oak was the one performing the work to refurbish the vehicles discussed in

The Advisor’s October 2004 issue that the Iraqi government and General Bashar boasted about.

Tr. 12/20/18 PM 57:5–21. Beadle declared, “Wye Oak were the only show in town. They were the

only ones who were performing refurbishment work of this sort.” Tr. 12/20/18 PM 57:5–21.

E. Wye Oak and Zayna Sign a Limited Power of Attorney

On September 28, 2004, Wye Oak granted Raymond Zayna, a Lebanese businessman in

charge of the General Investment Group, s.a.l. (GIG), a limited power of attorney to arrange

financing and bank guarantees on behalf of Wye Oak for its contract with MoD. Pl.’s Ex. 13. Wye

Oak made clear Zayna’s authority under this agreement was circumscribed. Wye Oak specified

13
“GIG will provide financial services with respect to the IMERP Contract when and as requested

by Wye Oak.” Id. (emphasis added). The parties drastically differ on how Raymond Zayna came

to be involved with Wye Oak and MoD.

Wye Oak insists Zayna was inserted by MoD, while defendants claim Wye Oak and Zayna

had a business relationship dating back to summer 2004. Neither side offers definitive evidence

on this point. Wye Oak bases its contention on several witnesses’ personal observation giving the

impression that Dale Stoffel and Raymond Zayna did not have any form of relationship. See, e.g.,

Tr. 12/17/18 PM 24:6–21 (Clements stated he did not believe any relationship existed between

Stoffel and Zayna based on his observations of their interactions during meetings); Tr. 12/17/18

PM 25:21–26:7 (Clements recalled a December 5, 20004 meeting in which discussions focused on

the fact Zayna was holding funds on behalf of MoD and needed MoD’s authorization to release

those funds to Wye Oak); Tr. 12/20/18 76:24–77:24 (Beadle saw Zayna in the MoD without Stoffel

or anyone from Wye Oak on occasions). On the other hand, defendants point to an email from

Dale Stoffel in November 2004 indicating GIG paid for Ukrainian expert’s travel to Iraq to help

assess and repair military equipment (likely as a result of Dale Stoffel’s September 17, 2004

invitation) to indicate Dale and Zayna had a preexisting relationship. Pl.’s Ex. 31, 2 (“$112,150.00

from Invoice #MUQ002 due to GIG for completed work for the transportation of Ukrainian

Experts to assess the repair/overhaul work.”). But David Stoffel did not recall ever hearing about

Zayna until September or October 2004. Tr. 12/18/18 AM 57:13–18. And William Felix repeatedly

stated he associated Zayna with MoD. Felix Dep. 141:7–16. It is unlikely David Stoffel and

William Felix, two important players among a small group of people that made up Wye Oak and

CLI, would either not have heard of Zayna or viewed him as an interloper to Wye Oak’s

arrangement with MoD if Wye Oak was indeed the party who inserted Zayna into this deal in the

14
first place. This leads the Court to believe it is more likely than not that Zayna was inserted at the

behest of the MoD.

This conclusion is even more likely given that Ziad Cattan, the Deputy Secretary General

of the MoD, was convicted for his role, along with Bruska Shaways and Sawsan Jasim, in

concluding a financial agreement with GIG, Zayna’s company, that violated Iraqi law and

intentionally caused harm. See 34/CR3/2011, ECF No. 430; 34/CR3/2011, ECF No. 438-1. This

conviction indicates these MoD officials conspired with Zayna to steal millions of dollars. The

Court is left with the distinct inference from this Iraqi Integrity Commission case that Zayna had

a relationship with these MoD officials and was more likely than not inserted by these officials

into the arrangement between Wye Oak and MoD.

F. Wye Oak Presents Three Invoices to MoD

In October 2004, Wye Oak submitted three pro forma invoices to MoD for work in relation

to the IMERP. On October 11, 2004, Wye Oak submitted two pro forma invoices for construction

at the Muqdadiya Armored Depot (Invoice #MUQ001) and Taji Facility (Invoice #TAJI001). Pl.’s

Ex. 18. These invoices covered the initial construction costs for armored vehicle repair facilities,

costs of purchasing tools and moving spare parts, the initial hiring and training of workers, and a

10% mobilization fee for construction efforts at Taji. Id. Further, these invoices included a 15%

overhead cost and 10% profit. Id. Invoice #MUQ001 was for $2,302,300 and Invoice #TAJI001

was for $5,945,500. Id. On October 18, 2004, Wye Oak submitted a third invoice, Invoice

#MUQ002, for vehicle recovery efforts at Muqdadiya. Id. at 3. This invoice covered travel,

lodging, and food for technical experts, materials to wash and paint vehicles, costs for skilled and

unskilled labor, and costs for the initial repair of 246 armored vehicles at both Muqdadiya and

15
Taji. Id. This invoice also included a 15% overhead cost and 10% profit. Id. It was for

$16,466,897.15. Id. In sum, these three invoices totaled $24,714,697.15.

G. October 19, 2004 Meeting

On October 19, 2004, a meeting was convened at MoD headquarters to ensure the IMERP

was progressing. The meeting consisted of Shaways, Beadle, Marr, Dale Stoffel, Zayna, Styles,

Ziad al-Cattan, and Jasim. Tr. 12/20/18 AM 13:21–14:19; Pl.’s Ex. 20, 6.

Marr arrived at the MoD at about the same time as Dale Stoffel, and they waited together

for about an hour while Zayna met with the senior MoD officials in Shaways office. Tr. 12/20/18

AM 13:21–14:19. Beadle arrived shortly before Marr, Stoffel, and him entered Shaways office.

Id. And they were later joined by Colonel Styles. Id.

1. MoD Approved Wye Oak’s Three Invoices

During the meeting, the parties discussed Wye Oak’s three invoices and how they would

be financed. Tr. 12/20/18 PM 64:3–16. Ultimately, Marr testified that Shaways declared MoD

accepted the invoices. Tr. 12/20/18 AM 16:13–20. And Beadle further testified Shaways agreed

to pay the invoices to Dale Stoffel. Tr. 12/20/18 PM 65:23–66:4. This testimony regarding

Shaways’ ratification of the invoices and agreement to pay Dale Stoffel was admissible as non-

hearsay admissions by a party-opponent. Shaways was authorized to make such decisions for MoD

regarding all matters related to Wye Oak’s work under the BSA. See Pl.’s Ex. 6 (letter from

Shaways asserting he had full signatory authority on all matters with respect to the BSA, as

designated by the Iraqi Minister of Defense); Fed. R. Evid. 801(d)(2)(C). Further, Shaways was

an MoD employee speaking on a matter—work related to the IMERP—within the scope of his

relationship with MoD while he was employed by MoD. Fed. R. Evid. 801(d)(2)(D). The Court

16
therefore concludes it is more likely than not MoD approved Wye Oak’s three invoices and agreed

to pay this money to Wye Oak’s president, Dale Stoffel.

2. Wye Oak and MoD Effectuated the First Amendment to the BSA

In addition to discussing and approving the three Wye Oak invoices, the parties at the

October 19 meeting took up an amendment to the BSA. Tr. 12/20/18 AM 18:5–18:20; Tr. 12/20/18

PM 63:7–17. The amendment, termed the “First Amendment,” was presented to the Court as Wye

Oak’s business record, but lacked any signature from either Shaways or Dale Stoffel. Tr. 12/18/18

AM 26:4–35:25; Pl.’s Ex. 19; Pl.’s Ex. 19.1.

Defendants took issue with the unsigned amendment as initially presented to the Court

because defendants wanted to also admit the document’s metadata in addition to the document

itself. Tr. 12/18/18 PM 3:5–4:12. Wye Oak had no objection to the admission of the document’s

metadata. Tr. 12/18/18 PM 3:21–4:6. Metadata is data that describes and gives information about

other data. Here, the file’s metadata describes the file’s creation date, time saved, and who created,

edited, and saved the file. Pl.’s Ex. 19.1. The metadata showed William Felix last saved the

Microsoft Word document. Id. Indeed, David Stoffel testified this document was found on the

computer he had purchased for Felix. Tr. 12/18/18 PM 93:6–7. Further, the metadata showed the

document was created on October 25, 2004 at 3:26 a.m. and also last saved on October 25, 2004

at 3:26 a.m., with a total editing time of 6 minutes. Pl.’s Ex. 19.1. However, Marr and Beadle both

testified the First Amendment was brought up, and signed, during the October 19, 2004 meeting.

This raises a question as to whether the document presented to the Court was indeed the pertinent

document discussed at the October 19 meeting or whether it was created in the first instance on

October 25, after the meeting.

17
Metadata can be misleading. For example, “if a Microsoft Word document is created on

one machine, and transferred to and saved to a second machine without being altered, the copy on

the second machine (erroneously) will show the date the document was saved to the second

machine as the date created.” The Sedona Principles, Third Edition: Best Practices,

Recommendations & Principles for Addressing Electronic Document Production, 19 Sedona Conf.

J. 1, 171 (2018). “There is . . . the real danger that information recorded by the computer as

application metadata may be inaccurate.” Id. at 211. This is a significant note of caution regarding

the utility of metadata in determining a document’s true creation date.

Ultimately, the Court finds it is more likely than not that the First Amendment presented

to the Court during trial, Pl.’s Ex. 19, was a copy of the document discussed during the October

19 meeting. Marr and Beadle both testified during the trial this amendment was discussed by the

parties at the meeting. Tr. 12/20/18 AM 18:5–6 (“I saw a document, the document looked like

[Pl.’s Ex. 19].”); Tr. 12/20/18 PM 63:7 (“Well, they discussed this amendment, first of all.”). The

Court found Marr and Beadle to both be extremely credible witnesses, who participated in the

October 19 meeting. Their testimony, which corroborates one another, when weighed against the

inherent potential misimpressions metadata can produce, leads the Court to conclude the

preponderance of the evidence establishes this document was the same document the parties dealt

with at the October 19, 2004 meeting.

The Court must next decide whether this First Amendment was actually signed by

Shaways and Dale Stoffel. Both Marr and Beadle testified they personally saw Shaways and Dale

Stoffel sign the document. Referring to the First Amendment, Marr asserted “I saw Bruska

Shaways sign it and Dale Stoffel sign it.” Tr. 12/20/18 AM 18:9–10. Beadle also responded in the

affirmative when he was specifically asked by Wye Oak’s counsel whether he saw Bruska

18
Shaways sign the First Amendment and whether he saw Dale Stoffel sign the First Amendment.

Tr. 12/20/18 PM 63:12–17. While defendants contend these statements are hearsay that cannot be

admitted to establish the First Amendment was signed and effectuated as a valid amendment to

the BSA, the testimony about Shaways and Stoffel’s signatures is admissible.

First, signatures are written assertions and nonverbal conduct intended as assertions, which

makes them statements under Federal Rule of Evidence 801(a). Shaways signature is certainly not

hearsay, as it constitutes an admission by a party-opponent under Rule 801(d)(2). Shaways was

authorized to make decisions for the MoD regarding all matters related to Wye Oak’s work under

the BSA. See Pl.’s Ex. 6 (letter from Shaways asserting he had full signatory authority on all

matters with respect to the BSA, as designated by the Iraqi Minister of Defense). So Shaways was

authorized to amend the BSA. Accordingly, his signature was a statement made by an individual

authorized to make a statement on the subject that is now being offered against the defendants. See

Fed. R. Evid. 801(d)(2)(C). Shaways was also an MoD employee making a statement on a matter—

the BSA—within the scope of his relationship with MoD while that relationship existed. See Fed.

R. Evid. 801(d)(2)(C).

Further, Shaways and Stoffel’s signatures constitute verbal acts where the legal effects of

the statements flow just by virtue of the fact they were made. In other words, the significance of

these signatures lies solely in the fact they were made. Testimony about the fact the signatures

occurred was not offered to prove the truth of anything asserted. Accordingly, these signatures are

not hearsay. See Fed. R. Evid. 801(c) adv. comm. note (“If the significance of an offered statement

lies solely in the fact that it was made, no issue is raised as to the truth of anything asserted, and

the statement is not hearsay.”); Mueller v. Abdnor, 972 F.2d 931, 937 (8th Cir. 1992) (finding

communications relevant to making a contract, such as conversations and letters, are not hearsay

19
because such “verbal acts” are not assertions and are not offered to prove the truth of the matter);

2 McCormick on Evidence § 249 (7th ed. 2016) (“[P]roof of oral utterances by the parties in a

contract suit constituting the offer and acceptance which brought the contract into being are not

evidence of assertions offered testimonially but rather verbal conduct to which the law attaches

duties and liabilities.”); see also Preferred Properties, Inc. v. Indian River Estates, Inc., 276 F.3d

790, 799 n.5 (6th Cir. 2002); Stuart v. UNUM Life Ins. Co. of Am., 217 F.3d 1145, 1154 (9th Cir.

2000). The credible testimony from Marr and Beadle regarding Shaways and Stoffel signing the

First Amendment sufficiently demonstrates it is more likely than not both parties signed the First

Amendment and therefore validly amended the BSA.3

This amendment attempted to clarify the BSA. The First Amendment altered the definition

of “military refurbishment services” to read:

any services sold, performed for, or provided with respect to any Refurbished
Military Equipment that is either retained by the Ministry or sold or otherwise
provided to Customers by the Ministry, including, but not limited to, the inspection
of the Military Equipment prior to performing any Military Refurbishment Services
to make a value assessment and a refurbishing assessment for such Military
Equipment, including but not limited to, construction of facilities, bases, billeting,
service/repair depots, repair factories/facilities.

Pl.’s Ex. 19; Pl.’s Ex. 19.1. Wye Oak’s role as the sole and exclusive broker for providing military

refurbishment services was altered such that Wye Oak was now appointed for:

the provision of Military Refurbishment Services with respect to all of the various
military bases, offices and properties owned by, or under the control of, the
Ministry and/or the Republic of Iraq, wherever such bases, offices and property
maybe [sic] located and all the related military equipment located thereon or
otherwise owned by the Ministry and/or the Republic of Iraq, including but not
limited to, construction of facilities, bases, billeting, service/repair depots, repair
factories/facilities.

3
Beadle’s testimony was especially convincing. He was the Coalition’s senior advisor to the MoD at this time. Tr.
12/18/18 PM 26:20–24. Beadle had significant insight into MoD’s operations and closely worked with the MoD
figures involved in this contract. And Beadle demonstrated his impartiality throughout his testimony.

20
Pl.’s Ex. 19; Pl.’s Ex. 19.1. And one of the compensation terms in the BSA was altered such that:

The Ministry shall pay [Wye Oak] a commission of minimum of ten percent (10%)
based on the Contract Value set out in each Sales Contract entered into by the
Ministry, pursuant to this Agreement. With respect to Refurbished Military
Equipment and Military Refurbishment Services, the Ministry will pay [Wye Oak]
ten percent (10%) of such Military Refurbishment Services and equipment’s
refurbishment cost.

Pl.’s Ex. 19; Pl.’s Ex. 19.1.

H. MoD and GIG Sign the Contract of Financial Agreement

Defendants contend the parties at the October 19, 2004 meeting also discussed a financial

plan that ultimately resulted in the Contract of Financial Agreement (CFA) between MoD and

GIG. Under the CFA, GIG committed to finance the IMERP program MoD had contracted with

Wye Oak to carry out. Pl.’s Ex. 21. Defendants’ allegation that this arrangement was discussed

during the October 19 meeting is solely based on the fact the memorandum Marr signed (but did

not write) commemorating the meeting states that Shaways approved the three invoices and “the

financial plan,” which defendants claim refers to the CFA. See Pl.’s Ex. 20; Tr. 12/20/18 AM 25:8–

26:3. Defendants proceed to argue there is no evidence Dale Stoffel objected to the payment plan

set forth in the CFA despite being present when it was allegedly discussed and agreed upon during

the October 19 meeting. Defs.’ Proposed Findings of Fact & Conclusions of Law 16, ECF No.

431-1 [hereinafter ECF No. 431]. Defendants contend Wye Oak, through Dale Stoffel, had a legal

obligation under Iraqi law to express disagreement with the CFA’s payment plan under Article

81(1) of the Iraqi Civil Code. Article 81(1) provides: “No statement will be attributed to a silent

person but silence in the course of need for expression will be deemed to be an acceptance.” Pl.’s

Ex. 97. Defendants conclude Wye Oak’s failure to object to the CFA at the October 19 meeting or

at any time prior to Zayna being paid, as discussed in the following section, means Wye Oak

consented to such payment arrangement. ECF No. 431-1, at 45–46.

21
However, Marr robustly refuted this characterization of events when he testified during

trial. Marr testified he understood the term “financial plan” in the memorandum he signed to be

referring to the First Amendment. Tr. 12/20/18 AM 26:10–15. Indeed, Marr stated “[t]here was no

discussion of a financial plan that has been documented elsewhere in the exhibits,” referring to the

CFA, and the only financial plan he reviewed during the October 19 meeting was the First

Amendment. Tr. 12/20/18 AM 26:10–23. In addition, Beadle testified he never saw the CFA

before it was presented to him as an exhibit at trial. Tr. 12/20/18 PM 78:19–24. And Beadle

recalled the “financial plan” approved at the October 19 meeting referred to in Marr’s

memorandum was a plan “for the refurbishment program and the establishment of the facilities . .

. It was largely -- the conversation started on the basis of those -- of the second invoice, which

showed a proportion of what -- a much larger bill, and that bill was the financial plan.” Tr. 12/20/18

PM 67:4–12. Based on this testimony thoroughly rebutting the tenuous (at best) evidence put

forward by defendants, the Court concludes the CFA was not discussed during the October 19

meeting. This means no inference can be drawn that Dale Stoffel was ever even aware of—let

alone consented to—the CFA.

Thus, without any input from Wye Oak, MoD and GIG concluded and signed the CFA on

October 24, 2004. The CFA declared MoD had “signed contract [sic] with Wye Oak Technology

Inc. to implement the program of rehabilitation and repair of military equipment” and GIG had

“committed to funding this program of (Wye Oak Technology Inc.).” Pl.’s Ex. 21. The CFA stated

that “[MoD] gives to [GIG] several payments under the bank guarantees as far as the amount of

such payments for purposes of implementation of the contract,” and “[GIG] submits cost invoices

to the [MoD], so as to enable [GIG] of the resolve the invoices from the amount of the bank

guarantee provided for the [MoD].” Id. Despite focusing on Wye Oak and the IMERP, the Court

22
concludes the CFA did not legitimately implicate the BSA, as the evidence establishes the CFA

was not agreed to—let alone signed—by Wye Oak and therefore did not meet the requirements set

forth in the BSA’s modification clause. See Pl.’s Ex. 5 (“This Agreement shall not be amended or

supplemented except in writing, signed by both parties.”).

Further, following trial, this Court was presented with evidence—for the first time—that

MoD officials were convicted for violating Iraqi law and intentionally causing harm based on their

conclusion of a financial agreement with GIG, which the Court concludes more likely than not

refers to the CFA. After a decade of litigation and months after this trial concluded, defendants

produced a summary of the criminal conviction of Ziad Cattan along with Bruska Shaways and

Sawsan Jasim. 34/CR3/2011, ECF No. 430. The summary states:

In 2004, convicted fugitive Ziyad Tariq Abdallah Al Qattan, when he was working
as the Deputy Secretary-General at the Ministry of Defense, in conjunction with the
defendants Bruska Nouri Sadeeq and Sawsan Jasim Mohamed when they were
working at the Ministry of Defense, concluded a financial agreement with the
General Investment Group (GIG) Company to finance a Ukrainian company tasked
with the rehabilitation of tanks for the Ministry. Failure to follow the legal
procedures for contracting caused intentional harm to the state assets and to the
interest of the entity for which he was working. An amount of four million dollars
was paid for the maintenance of tanks type (T72). There was a second payment
valued at (twenty-four million and seven hundred fourteen thousand and six
hundred ninety-seven dollars and fifteen cents) for the maintenance of tanks type
(T55). . . . He was convicted by the Al Rasafa Criminal Court, the specialist in
integrity cases, and he was sentenced in absentia to seven years in prison, pursuant
to article (340) of the Criminal Penalties Code, on 24/3/2011 in case number
(34/CR3/2011).

34/CR3/2011, ECF No. 438-1.4 The second payment cited in the conviction summary matches the

exact amount owed to Wye Oak for the three invoices but paid to Zayna instead, as discussed

below. And the summary appears to be referring to the CFA, as this was an agreement constituted

4
Article 340 of the Iraqi Criminal Penalties Code states: “Any public official or agent who willfully inflicts damage
on the property or interests of the authority for which he works or to which he is associated by virtue of his position
or on another’s property that has been entrusted to him is punishable by a term of imprisonment not exceeding 7 years
or by detention.” ECF No. 438-2.

23
between MoD and GIG in 2004 relating to the IMERP, which included the rehabilitation,

refurbishment, and maintenance of tanks. This strongly indicates the CFA was a fraudulent scheme

between these MoD officials and Zayna to steal millions of dollars.

I. MoD Paid Zayna Instead of Wye Oak

Following the CFA, MoD proceeded to pay Zayna for the invoiced amounts in three checks

mirroring the three Wye Oak invoices, despite the fact Wye Oak was not a party to the CFA. On

October 25, 2004, MoD paid three checks to Zayna. The first check was for $5,945,500, the second

check was for $2,302,300, and the third check was for $16,466,897. Pl.’s Ex. 22 at 4. These

amounts matched the totals of Invoice #TAJI001, Invoice #MUQ001, and Invoice #MUQ002,

respectively, minus 15 cents.5 Compare id., with Pl.’s Ex. 18. This leads the Court to conclude

these checks were payments for Wye Oak’s three invoices, which MoD approved and had agreed

to pay to Dale Stoffel at the October 19, 2004 meeting.

Although Felix testified Dale Stoffel was aware MoD released the money to Zayna and

conveyed this to him, Felix Dep. 163:4–164:20, there is no evidence to indicate Wye Oak directed

MoD to release the funds in this manner or concurred with this action. Cf. Pl.’s Ex. 5 (“All payment

to be made to [Wye Oak] under this Agreement shall be made in United States Dollars in the form

and manner directed as by [Wye Oak].”). As discussed, Wye Oak was not a signatory to the CFA

so this agreement did not modify the BSA. And under the limited power of attorney granted by

Wye Oak to Zayna, GIG was only supposed to provide financial services “when and as requested

by Wye Oak,” yet there is no evidence to suggest Wye Oak ever made such a request. Accordingly,

the Court concludes these payments to Zayna—not Wye Oak—constituted a material breach of

the BSA by MoD.

5
Invoice #MUQ002 was for $16,466,897.15, whereas the third check to Zayna was for $16,466,897.00. The other
two checks from MoD to Zayna matched Invoice #TAJI001 and Invoice #MUQ001 exactly.

24
J. Wye Oak Continued to Perform until Nonpayment Became a Serious Impediment

1. Wye Oak Performed Work in Iraq

Nonetheless, Wye Oak continued to perform activities as part of the IMERP. At trial, Major

Todd Neal testified he observed Wye Oak working on the IMERP when he was tasked with leading

the effort to refurbish vehicles to operational condition to be provided to the Iraqi military. Neal

remembered that Dale and Ukrainian experts inspected warehouses at Taji and assessed military

equipment. Tr. 12/19/18 AM 42:1–9; see Pl.’s Ex. 64. Dale Stoffel worked on the equipment

alongside others at Muqdadiya and Taji, or had laborers working at those installments. Tr. 12/19/18

AM 42:12–43:4. Dale Stoffel brought Iraqi mechanics to these installations to have them perform

work under the IMERP. Tr. 12/19/18 PM 59:2–10. Neal specifically recalled Dale Stoffel

providing instructions for these workers and paying them for their work. Tr. 12/19/18 PM 59:2–

10, 60:4–6. When asked whether he had knowledge of GIG hiring a workforce at Taji and

Muqdadiya for the IMERP, Neal unequivocally responded GIG did not employ such a workforce.

Tr. 12/19/18 PM 63:22–64:3. Neal reiterated the workers he interacted with were employed by

Dale Stoffel, not anyone else. Tr. 12/19/18 PM 63:22–64:3. And based on his recollection, Neal

estimated Wye Oak had between 12 and more than 20 people working at Muqdadiya and between

12 to 15 people working on armored vehicles alone at Taji. Tr. 12/19/18 AM 27:11–28:5.

As further evidence of Wye Oak’s work, on October 23, 3004, Major John Petkosek wrote

Colonel Styles, copying Dale Stoffel on the email, to report that “Dale and his team have been here

[Muqdadiya] for a few days and they are doing great work. They have been working on the vehicles

for several days now.” Pl.’s Ex. 50.6 Major Petkosek even attached a photograph—one of many

admitted into evidence—of Wye Oak’s team working on military vehicles. Id.

6
This exhibit was admitted as a business record of Wye Oak’s without objection. Tr. 12/18/18 AM 33:23–24; Tr.
12/18/18 PM 3:1–5:5.

25
In addition, Beadle recalled that Wye Oak was making progress and General Petraeus

shared his pleasure with Wye Oak’s labor. Tr. 12/20/18 PM 70:2–5; Petraeus Dep. at 40:12–16,

41:2–7. Petraeus avowed Wye Oak had “ [a] lot of wrench-turners, as we used to say, and they

were cranking out refurbished vehicles pretty expeditiously . . . what I saw was a lot of elbows and

other parts of the body, as we used to say, actively turning wrenches, fixing equipment, repairing

parts, replacing parts, and all the rest of this. Again, it was quite a beehive of activity up there.”

Petraeus Dep. 40:12–16, 41:2–7.

Finally, plaintiff cites another article from The Advisor, published on November 27, 2004,

authenticated as a self-authenticating official publication and newspaper under Federal Rules of

Evidence 902(5) and 902(6), to support the notion Wye Oak continued to perform into November

2004. See Pl.’s Ex. 29. In this article, the Iraqi 1st Mechanized Brigade Commander states the

brigade represents the core of what could potentially be an expanded Iraqi force and could grow

into a full division. Id. Although this assertion by an Iraqi MoD official was obviously an out-of-

court statement, it is not hearsay and is admissible into evidence. The statement is not offered to

prove the truth of the matter asserted—that the brigade could potentially lead to an expanded Iraqi

force; rather, the statement is solely offered to show a brigade was actually being developed at this

time.7 Therefore, this falls outside the rule against hearsay. The Iraqi MoD official’s statement is

further acknowledgement that a brigade was being produced as part of the IMERP. This coincides

with multiple pieces of evidence discussed above pointing to Wye Oak being the one conducting

this IMERP work.

And Wye Oak was aided in its work by its informal partnership with CLI. Although Wye

Oak never had a formal, signed subcontract agreement between it and CLI, CLI worked with Wye

7
Even if this assertion was offered to prove the truth of the matter asserted, it would still be admissible as an admission
by a party-opponent under Rule 801(d)(2). Fed. R. Evid. 801(d)(2).

26
Oak on the IMERP. Tr. 12/18/18 AM 53:8–25; Felix Dep. 42:14–44:21. David Stoffel recalled

Wye Oak prepared a formal subcontract agreement for CLI, but the parties never went ahead with

officially consummating that agreement because Wye Oak was waiting payment for the three

invoices so it could use that money to pay its subcontractor. Tr. 12/18/18 AM 53:8–25. Wye Oak

did not want to sign the agreement with CLI unless it actually had the money to pay CLI under

that agreement. Tr. 12/18/18 AM 53:8–25. Nonetheless, William Felix testified the two companies

had a verbal agreement. Felix Dep. 42:22–45:16. CLI employees, such as Kenny Kelzer and Joe

Wemple, worked with Wye Oak on the IMERP due to the close relationship between these two

companies. Tr. 12/19/18 AM 43:1–4; Tr. 12/18/18 PM 8:1–4, 50:21–25; Felix Dep. 6:16–7:24,

42:14–45:16, 114:1–115:11.

2. Wye Oak Performed Work in the United States

While Dale Stoffel and others on Wye Oak’s team performed in Iraq, David Stoffel

supported the group from the U.S. David Stoffel focused on writing a computer program that could

ultimately be used to inventory and track all the equipment Wye Oak was refurbishing and would

potentially broker for sales. Tr. 12/18/18 AM 38:11–41:17; Pl.’s Ex. 65. Dale Stoffel would send

David Stoffel information regarding the equipment and how far along pieces of equipment were

in the refurbishment and scrapping process. Tr. 12/18/18 AM 38:11–41:17; Pl.’s Ex. 65. David

used this information to build the computer program to aid the company in its IMERP work.

David Stoffel also purchased computer equipment and materials, such as software, for the

business in the U.S. Tr. 12/18/18 AM 44:5–19. He oversaw all electronic communications, in part

to ensure Wye Oak’s leadership was aware of all messages they received, as the team traveled

frequently and maintaining e-mail communications and Internet connection could be challenging

at times in Iraq during this period. Tr. 12/18/18 AM 44:5–19. In addition to these duties, David

27
Stoffel maintained regular communication with the Wye Oak members in Iraq to see what they

needed him to work on. Tr. 12/18/18 AM 50:1–24.

3. Nonpayment Eventually Became a Significant Impediment to Wye Oak’s Work

Eventually, the nonpayment of Wye Oak’s three invoices to Wye Oak created a significant

impediment to their continued IMEPR work. Frustrated by not receiving payment, Dale Stoffel

returned to the U.S. in November 2004. Tr. 12/18/18 AM 60:18–20. Yet, his brother, David,

observed him continuing to work on the Wye Oak venture focused on the IMERP even when he

was back in the United States during this time. Tr. 12/18/18 AM 60:18–61:15. David and Dale

Stoffel reached out to American officials, including senators and Secretary of Defense Donald

Rumsfeld, during this period to notify them about the significant hurdles to accomplishing the

IMERP’s goal. Tr. 12/18/18 AM 59:17–60:20. In late November, Dale Stoffel and Bob Irey, a

member of CLI, met with then-Senator Rick Santorum’s staff regarding the lack of payment to

Wye Oak for work it performed under the IMERP initiative. Pl.’s Ex. 60, 6.8 Wye Oak and CLI

representatives also met with then-Deputy Under Secretary for International Technology Security

John Shaw to discuss this issue. Id.

On November 25, 2004, Dale Stoffel emailed Zayna to stress the necessity of GIG releasing

the funds for the work being conducted under the IMERP. Pl.’s Ex. 31.9 Stoffel conveyed officials

had become concerned over delays in the IMERP and he wanted the funds to be released to prevent

any future delays. Id.10 However, Zayna refuted Stoffel’s characterization of events—claiming

8
This document was admitted into evidence under the public records exception to the rule against hearsay. Fed. R.
Evid. 803(8). The documents in this exhibit were released pursuant to the Freedom of Information Act (FOIA) by the
U.S. Department of State. They are records of a public office setting out that office’s activities and therefore fall under
the public records exception. Id.
9
This email was admitted as evidence without objection as a business record of Wye Oak’s. Tr. 12/18/18 AM 33:23–
24; Tr. 12/18/2018 PM 3:1–5:5.
10
Dale instructed Zayna to transfer money owed to Wye Oak to Wye Oak’s bank account at national City Bank of
Pennsylvania in Monongahela, Pennsylvania. Pl.’s Ex. 31.

28
GIG was a partner in the project and was paying for everything. Pls.’ Ex. 33.11 And Zayna urged

Dale Stoffel to return to Iraq to sort through these financial issues. Id.

Finally, Brigadier David Clements set up a call with Stoffel at the end of November to try

to convince Stoffel to return to Iraq. Tr. 12/17/18 PM 17:7–18:9. The IMERP was a critical

program and those involved needed to figure out a way to get the program moving forward once

again. Ultimately, at the end of the call between Stoffel and Clements, Stoffel agreed to return to

Iraq. Id.

K. December 5, 2004 Meeting

Brigadier Clements’s staff convened a meeting at MoD headquarters on December 5, 2004

to remedy the problem that had arisen with the IMERP. Tr. 12/17/18 PM 18:10–13. Dale Stoffel

attended the meeting on behalf of Wye Oak; Ziad Cattan, Bruska Shaways, Michal al-Sarraf, and

others attended on behalf of MoD; Clements, Beadle, Styles, Marr, and others attended on behalf

of the Coalition; and Zayna also attended. Tr. 12/17/18 PM 19:4–20:11; Tr. 12/20/18 AM 33:3–

14; Tr. 12/20/18 PM 71:17–72:16.

Clements, Marr, and Beadle each testified at trial regarding their recollection of what

transpired at this meeting. The conversation focused on why Wye Oak had not been paid. Clements

asked the Iraqi officials to respond to the allegation Wye Oak had not been paid despite submitting

the invoices and doing the work under the IMERP:

[Brig. Clements]: Ziad Cattan spoke first. And in what can only be
described as a display of some bluster, started off by saying: Well, the work hasn’t
been done, and there are problems with the work and that’s why the invoices hadn’t
been paid.
I tried to pin him down to say precisely what had not been done or what
work was unsatisfactory. He was unable to give any concrete examples of this, and
became increasingly agitated as he was trying to describe things that he didn’t have
the facts for.

11
This email was admitted as evidence without objection as a business record of Wye Oak’s. Tr. 12/18/18 AM 33:23–
24; Tr. 12/18/2018 PM 3:1–5:5.

29
He was interrupted, at some point, by Bruska Shaways, who said: Well,
actually, the real issue is, we cannot pay the invoices because the money to pay the
invoices is being held by this gentleman. And he pointed to the person who hadn’t
been introduced to me at the start of the meeting. And he explained that this was
somebody who I later learned was Mr. Zayna, who was some form of intermediary
holding the funds in Beirut, Lebanon. And that was the first I or, indeed, any of my
staff who briefed me on the contractual arrangements had heard of the funding
arrangements for IMERP.
[Plaintiff’s Counsel]: So you learned that the funds actually had been paid
but had been paid to a Mr. Zayna, and those funds were in Lebanon, correct?
[Brig. Clements]: That’s what I was told, yes.
[Plaintiff’s Counsel]: All right. Did you then make inquiry of the MOD as
to how they could get those funds paid to Wye Oak?
[Brig. Clements]: I think I made the inquiry of Mr. Zayna to say: Well, are
you going to pay this money to Wye Oak and to Mr. Stoffel?
Bruska Shaways had explained to me that this somewhat unusual
arrangement was necessary as a means of transferring money from Baghdad,
because the banking system was not working after the invasion and in the difficult
circumstances at the time. So I said: Okay. But let’s talk about this. And I asked
Zayna, directly what he needed to pay the money to Wye Oak. And he explained
that he could not pay that money without the authorization of the Iraqi MOD.
I went back to the Iraqi MOD and I said: Can you give Mr. Zayna the
authorization to pay the monies to Wye Oak? And despite the earlier bluster from
Mr. Cattan, both he and Mr. Shaways agreed that, yes, they could give that direction
to Mr. Zayna, and that they would tell him to pay the money to Wye Oak.
I asked Zayna if he was happy with what the Iraqi MOD would tell him; he
said he was. And I asked Mr. Stoffel if he was happy with what the Iraqis and Mr.
Zayna had said, and Mr. Stoffel said that, yes, he was satisfied with that.

Tr. 12/17/18 PM 20:12–22:25 (emphasis added). Marr and Beadle each recounted substantially

similar versions of what transpired at the December 5 meeting. Each recalled that Cattan or

Shaways initially objected to paying Wye Oak, but eventually agreed the money should be

released, through Zayna, to Wye Oak. Tr. 12/20/18 AM 33:15–34:25, 35:9–25, 36:14-37:1; Tr.

12/20/18 PM 72:17–73:21; 73:22–74:9.

The statements by Cattan, Shaways, and Zayna were all admissible as admissions by party-

opponents—and therefore non-hearsay—under Federal Rule of Evidence 801(d)(2). Cattan and

Shaways were authorized by the MoD to make statements regarding the BSA and IMERP, and

were both MoD officials making statements on a matter—the BSA—within the scope of their

30
relationships with MoD while that relationship existed. See Fed. R. Evid. 801(d)(2)(C)–(D). Also,

Zayna was MoD’s agent, as MoD had paid Zayna the money for the invoices and Zayna was being

used as an intermediary by MoD to pay Wye Oak. Thus, Zayna’s statements constituted assertions

made by MoD’s agent on a matter—the payments under the BSA for the three invoices—within

the scope of that relationship while it existed. Fed. R. Evid. 801(d)(2)(C).

Ultimately, the largely parallel testimony offered by Clements, Marr, and Beadle—three

highly credible witnesses who were present for the December 5 meeting—establishes by a

preponderance of the evidence MoD agreed to provide authorization for the release of the funds

by Zayna to Wye Oak to pay for the three invoices. The Coalition officials and Dale Stoffel

believed they had finally solved this critical issue and the IMERP program could proceed. See,

e.g., Tr. 12/17/18 PM 24:23–25:20; Tr. 12/20/18 AM 36:23–37:1; Pl.’s Ex. 40.

L. Wye Oak Goes Back to Work, But Dale Stoffel is Murdered

Several days after the meeting, on December 8, Clements toured Taji with Dale Stoffel to

review Wye Oak’s work. Tr. 12/17/18 PM 26:8–25; see Pl.’s Ex. 59 (pictures from Clements’s

December 8 tour of Wye Oak’s activities at Taji). Clements observed a “vast area of armored

vehicles and other equipment in various states of repair,” and specifically focused on numerous

vehicles that were in decent condition and were selected to be refurbished next. Tr. 12/17/18 PM

28:13–24, 30:7–23; Pl.’s Ex. 59 at 4 (a picture of Clements, Stoffel, General Bashar (the Iraqi

Mechanized brigade Commander), and others standing in front of one of the tanks deemed suitable

for the refurbishment effort). Wye Oak and MNSTC-I personnel set up a triage process to

determine what vehicles were most suitable for refurbishment. Tr. 12/17/18 PM 34:15–35:1. The

IMERP appeared ready to once again move forward.

31
But tragedy struck. Dale Stoffel left Taji with his interpreter and Joe Wemple, who was the

construction manager working with Dale on the IMERP, to travel to Baghdad to arrange for

funding to be released later in the day on December 8. Tr. 12/18/18 PM 5:3–6:11; Pl.’s Ex. 42;

Defs.’ Ex. 40. Their car was attacked and Dale Stoffel and Joe Wemple were brutally murdered.

Pl.’s Ex. 42. Dale Stoffel and Joe Wemple were shot multiple times and killed, and their car was

shot up. Id. It remains unknown what happened to the translator traveling with them. Although a

terrorist group claimed responsibility for their murders, numerous witnesses speculated this

terrorist group was just a cover-up and Zayna and Cattan were actually responsible for their

killings.12 Tr. 12/18/18 AM 70:7–72:2; Tr. 12/19/18 PM 6:20–7:18; Tr. 12/20/18 PM 16:8–18:16,

20:9–24.

Wye Oak’s work, led by Dale Stoffel, had already made a significant impact. Indeed,

General Petraeus credited Dale Stoffel for refurbishing a significant number of armored vehicles

and tanks in his letter to Dale Stoffel’s wife, Barbara Stoffel, after his murder. On December 15,

2004, General Petraeus wrote:

While there is nothing I can say to minimize your grief, I hope that in time you will
take comfort in knowing that Dale made a direct and lasting contribution to our
efforts to create capable and effective Iraq security forces. Only months ago the
Iraqi Armed Forces had no mechanized force; now, there are already many
operational tanks and armored vehicles, and Iraq is on track to have a battalion’s
worth of soldiers trained and equipped prior to January’s elections. None of this
would have been possible without your husband’s visionary leadership, relentless
drive, and complete dedication. An irreplaceable member of our team, he will be
sorely missed by all who knew him.

Petraeus Dep. 26:23–30:3; Pl.’s Ex. 43.

The Court is unable to make a definitive assessment of who was responsible for Dale Stoffel and Joe Wemple’s
12

murders based solely on the testimony elicited during trial.

32
M. Wye Oak Produced Armored Vehicles in Time for the January 2005 Elections, But
Eventually Ceased to Perform Work in Iraq Because It was Never Paid

Nonetheless, Wye Oak did not immediately abandon the IMERP after Dale’s death and

actually exceeded the goal of producing a mechanized brigade of operational armored vehicles for

Iraq’s January 2005 parliamentary election.

William Felix took over as Wye Oak’s CEO and President following Dale’s death. Felix

Dep. 200:8–15. And Wye Oak and CLI’s American personnel either returned to the U.S. or stayed

in the U.S. rather than travel back to Iraq. Felix Dep. 48:24–49:7. Yet Wye Oak did not abandon

the IMERP. They relied on their local contractors to move forward. Tr. 12/18/18 AM 72:15–23.

David Stoffel specifically testified Ahmet Ersavci, a Turkish businessman, continued working with

Wye Oak through 2005. Tr. 12/18/18 PM 7:14–19. And Major Neal, who was charged with

overseeing the work on behalf of the U.S. military to ensure the IMERP progressed, testified the

same personnel continued to conduct work at Muqdadiya and Taji even after Dale’s death as had

been working on the IMERP for Wye Oak prior to Dale’s murder. Tr. 12/19/18 AM 24:18–25:8.

In particular, Neal recalled that an individual named Karem, Wye Oak’s Iraqi supervisor and

foreman at Muqdadiya who Dale hired, was in charge of Wye Oak’s labor force in Iraq after Dale’s

death. Tr. 12/19/18 PM 65:3–21; Pl.’s Ex. 44. And Neal provided instructions to Karem during

this period, essentially becoming a project manager as they worked to accomplish the IMERP

mission. Tr. 12/19/18 PM 65:3–21. Neal testified Zayna stepped in after Dale’s death to pay the

workers, but he never actually saw Zayna provide payment to the workers. Tr. 12/19/18 AM

21:12–23:20. And Beadle adamantly stated Zayna and GIG did not do any work in connection

with refurbishing military equipment, bases, or facilities while Beadle was in Iraq, which was until

March 2005. Tr. 12/21/18 AM 12:11–22; 17:11–17.

33
By December 17, 2004, Wye Oak’s team, under Karem and Neal’s leadership, had 26 tanks

running and an MTLB (a Soviet multi-purpose armored vehicle) and seven troop carriers ready to

move from Muqdadiya to Taji. Pl.’s Ex. 44 at 1. Neal also projected they would have another 20

vehicles, mostly tanks, ready the following week. Id. Wye Oak’s work was on display during Iraq’s

January 5, 2005 Army Day parade to Iraqi Prime Minister Ayad Allawi. Iraqi tanks and armored

vehicles all flying the Iraqi flag were featured in this parade. Petraeus Dep. 21:3–22:9. General

Petraeus and Beadle both testified the tanks and armored vehicles on display during the Army Day

parade were the result of Wye Oak’s refurbishment efforts. Tr. 12/21/18 AM 1:11–12:22; Petraeus

Dep. 39:2–40:16.

And by January 15, 2005, the Iraqi 1st Mechanized Brigade was fully operational and ready

to assume its mission. In an article in The Advisor, Iraqi Staff Brigadier General Kasim Jasim

Nazal declared “[t]he brigade is at the Ministry to protect it and all the election centers . . . We are

also going to keep Baghdad secure and protect the main gates of the city; the brigade will be very

visible on election day.” Pl.’s Ex. 47 at 3.13 Neal testified Wye Oak exceeded the goal of producing

a battalion of hard-skinned vehicles and tanks to have in Baghdad for the January 30, 2005 election.

Tr. 12/19/18 AM 25:9–25, 26:6–14. It was very important to have Iraqi forces providing security

for the first Iraqi elections since the fall of Saddam Hussein. Tr. PM 12/17/18, 36:1–10. “The

original mandate was to provide one battalion of armored vehicles. At the elections we had

provided two and a half battalions of armored vehicles, almost the entire brigade complement.”

Tr. 12/19/18 AM 25:9–25, 26:6–14; see Pl.’s Ex. 64 at 63 (a picture of U.S. and Iraqi forces with

tanks at a checkpoint in Baghdad as the Coalition delivered the vehicles to Baghdad for the

13
This statement was admissible as an admission by a party-opponent under Rule 801(d)(2). Fed. R. Evid. 801(d)(2).
Iraqi Staff Brigadier General Nazal was an Iraqi MoD official authorized to make statements about the mechanized
brigade he was tasked with leading and was an employee making a statement on a matter within the scope of his
employment relationship while it lasted.

34
election); Tr. 12/19/18 AM 46:20–47:4. And Neal asserted: “Wye Oak’s people refurbished [those

vehicles].” Tr. 12/19/18 AM 25:9–25, 26:6–14.

But eventually, the lack of funding caused Wye Oak to cease operations in Iraq sometime

after the January 2005 election.14

N. Iraq Prohibits Scrap Sales

Finally, while Wye Oak worked to provide armored vehicles in time for the January 2005

election, the Council of Ministers issued a decision to prohibit scrap sales to private parties. Defs.’

Ex. 58. On December 28, 2004, the General Secretary of the Council of Ministers sent a letter

addressed to all ministries stating scrap materials were proscribed from being sold to merchants or

any private sector entities. Id. Further, the letter required ministries to deliver extra scrap to the

state-owned companies belonging to the Ministry of Industry and Minerals. Id.

Yet, as with the scrap policy decision made in July 2004, there is no evidence Wye Oak

was ever informed of this directive and the Court does not believe defendants established it ever

applied to MoD.15 No copy of this letter was found in MoD’s files, and as discussed below, the

Court has reason to believe the absence of a copy of this letter indicates it did not apply to MoD.

III. Legal Discussion

A. MoD is Not Separate from the Republic of Iraq

This Court previously held MoD and Iraq are separate juridical entities as a matter of Iraqi

law in an opinion denying Wye Oak’s motion for judgment on the pleadings on this narrow

question. Wye Oak Tech., Inc. v. Republic of Iraq, 72 F. Supp. 3d 356, 359 (D.D.C. 2014). This

14
The Court was not presented with any evidence or testimony Wye Oak continued to perform work on the IMERP
after early 2005.
15
As stated supra in Section II(B), Neal testified General Bashar, an MoD official working on the effort to recover
vehicles, informed him the scrap ban was intended to stop individuals from illegally taking scrap and did not affect
Wye Oak. Tr. 12/19/18 AM 29:22–31:16; Tr. 12/19/18 PM 4:9–18.

35
determination was grounded in Iraq’s answer to Wye Oak’s complaint that stated MoD is a

separate juridical entity from the Republic of Iraq. Id. at 360–61. On a motion for judgment on the

pleadings, the Court was required to accept as true all facts pled by the non-moving party and make

all reasonable inferences favorable to the non-movant. Peters v. National R.R. Passenger Corp.,

966 F.2d 1483, 1485 (D.C. Cir. 1992). Accordingly, this Court made the presumption that MoD is

a legally separate entity from Iraq for purposes of determining liability in this case. Id. The Court

recognized the ultimate determination on this issue was necessarily fact dependent and reserved

final judgment on the matter until the then-sparse record at that stage in litigation was more fully

developed. Now that the Court has had the benefit of completing the bench trial and having expert

testimony from plaintiff’s Iraqi law expert (the only Iraqi law expert presented to this Court), the

Court is finally able to resolve this issue. MoD is not separate from the Republic of Iraq—MoD

and Iraq are legally one and the same.

The Foreign Sovereign Immunities Act (FSIA) provides federal courts with original

jurisdiction over suits against foreign states if one of the statute’s enumerated exceptions to

sovereign immunity applies. 28 U.S.C. § 1330. Under the FSIA, a “foreign state” includes “a

political subdivision of a foreign state or an agency or instrumentality of a foreign state.” Id. §

1603. The distinction between (1) a political subdivision of a foreign state and (2) an agency or

instrumentality of a foreign state is fundamental under the FSIA.

Without the benefit of a complete record, this Court turned to the Supreme Court’s decision

in First National City Bank v. Banco Para El Comercio Exterior de Cuba (Bancec), 462 U.S. 611

(1983), addressing the separate juridical status of state-owned entities. In Bancec, the specific

question was whether a separate instrumentality, a state-owned bank, could be held liable for

actions of the foreign state. Id. The Supreme Court held that “government instrumentalities

36
established as juridical entities distinct and independent from their sovereign should normally be

treated as such.” Id. at 626–27. However, this presumption could be overcome if: (1) the

instrumentality was so extensively controlled by the sovereign that a relationship of principal and

agent is created; or (2) recognizing the instrumentality as a separate entity would “work a fraud or

injustice.” Id. at 629–30.

Now that this Court has a fully developed record, the Court can now finally assess whether

MoD is an inseparable part of the Republic of Iraq or constitutes an agency or instrumentality. The

Court concludes the Bancec presumption does not apply here because no meaningful distinction

can be drawn between MoD and Iraq. Bancec focused on foreign sovereigns’ instrumentalities,

but MoD is an integral component of the national government itself.

Courts use the “core functions” test to distinguish between foreign states and their agencies

and instrumentalities. Under the core functions test, the Court must determine whether the foreign

entity’s core functions are predominantly government or commercial. Transaero, Inc. v. La Fuerza

Aerea Boliviana, 30 F.3d 148, 151 (D.C. Cir. 1994). If the entity’s core functions are

governmental, then the entity is considered part of the state itself. See e.g., Roeder v. Islamic

Republic of Iran, 333 F.3d 228, 234 (D.C. Cir. 2003) (holding that the Iranian “Ministry of Foreign

Affairs must be treated as the state of Iran itself rather than its agent” because the conduct of

foreign affairs is an indispensable governmental function); Transaero, 30 F.3d at 151 (holding the

Bolivian Air Force was a foreign state because its core functions were governmental); see also

Garb v. Republic of Poland, 440 F.3d 579 (2d Cir. 2006) (concluding the Polish Ministry of the

Treasury is not an “agency or instrumentality” for purposes of the “takings” exception of the FSIA,

but rather is an integral part of Poland’s political structure with an indisputable governmental

function, and as such is the “foreign state” itself).

37
MoD’s core functions are primarily governmental. MoD was established as part of the

transitional government by CPA Order 67. Pl.’s Ex. 113. Professor Chibli Mallat, plaintiff’s Iraqi

law expert, testified CPA Order 67 and other CPA orders “re-organiz[ed] the government in a way

that would extricate it from its regrettable antecedence of bearing the main features of a

dictatorship . . . the CPA order is the establishing order for the operation of government in Iraq

and this has naturally an important consequence in this case on the placing of the Ministry of

Defense as part and parcel of the Iraqi government.” Mallat Dep. 2/14/19 37:11–21. Mallat

repeatedly stressed the CPA orders promulgated at this time regarding the MoD were intended to

“subordinate” the MoD to Iraq’s civilian institutions that were elected by the Iraqi people. Mallat

Dep. 2/14/19, 37:22–41:4. CPA Order 67 explicitly states “all those who work in the MoD are

responsible to lawfully elected civilian authority.” Pl.’s Ex. 113 § 5(c). Indeed, the Prime Minister

is the commander-in-chief of the Iraqi armed forces. Pl.’s Ex. 111 art. 78; Pl.’s Ex. 112 art. 39.

Further, CPA Order 67 declares “[t]he mission of the MoD is to secure, protect, and guarantee the

security of Iraq’s borders and to defend Iraq.” Pl.’s Ex. 113 § 4. Nothing could be a more core

governmental function.

Also, the Iraqi Law of Executive Authority, which Iraq uses to argue MoD is a separate

instrumentality, provides that each ministry “shall be considered as an expression of the word

government.” Law of Executive Authority No. (50) 1964, art. I, para. 2, Pl.’s Ex. 108. Contrary to

Iraq’s contention, this text demonstrates MoD, as a ministry, is “part and parcel of the

government.” Mallat Dep. 2/14/19, 53:4–55:22.

As the D.C. Circuit determined in Transaero, “armed forces are as a rule so closely bound

up with the structure of the state that they must in all cases be considered as the ‘foreign state’

itself, rather than a separate ‘agency or instrumentality’ of the state. The ‘powers to declare and

38
wage war’ are among the ‘necessary concomitants’ of sovereignty.” Transaero, 30 F.3d at 153

(D.C. Cir. 1994) (citing United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 318 (1936)).

The Court’s examination of the evidence and testimony presented in this case lead it to determine

this rule is aptly applied to the MoD here. No governmental entity is more closely linked with the

state itself than the MoD—the entity charged with defending the nation. As a result, the Court

holds that MoD is an inseparable part of the Republic of Iraq. And the Republic of Iraq is therefore

liable for any breach of the BSA by MoD.

B. The Court has Subject Matter Jurisdiction and Personal Jurisdiction Over Defendants

The FSIA provides the only means of suing a foreign sovereign in U.S. courts. Argentine

Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 439 (1989). A foreign state is

presumptively immune from federal and state courts’ jurisdiction, subject to several codified

exceptions. See id. §§ 1604–1607.

Jurisdiction in this case is predicated upon the FSIA’s commercial activity exception to

sovereign immunity. Under the FSIA:

A foreign state shall not be immune from the jurisdiction of courts of the United
States or of the States in any case . . . in which the action is based [1] upon a
commercial activity carried on in the United States by the foreign state; or [2] upon
an act performed in the United States in connection with a commercial activity of
the foreign state elsewhere; or [3] upon an act outside the territory of the United
States in connection with a commercial activity of the foreign state elsewhere and
that act causes a direct effect in the United States.

Id. § 1605(a)(2). Wye Oak only needs to establish its claim falls within one of the exceptions

provided in § 1605(a)(2) because the exceptions are disjunctive and only one needs to apply to

bestow jurisdiction.

39
1. The BSA was a “Commercial Activity” Under the FSIA

The FSIA defines “commercial activity” as “either a regular course of commercial conduct

or a particular commercial transaction or act. The commercial character of an activity shall be

determined by reference to the nature of the course of conduct or particular transaction or act,

rather than by reference to its purpose.” Id. § 1603(d). The Supreme Court has further elaborated

on what constitutes commercial activity under the FSIA. In Weltover, the Court concluded:

when a foreign government acts, not as a regulator of a market, but in the manner
of a private player within it, the foreign sovereign’s actions are “commercial”
within the meaning of the FSIA. Moreover, because the [FSIA] provides that the
commercial character of an act is to be determined by reference to its “nature” rather
than its “purpose,” 28 U.S.C. § 1603(d), the question is not whether the foreign
government is acting with a profit motive or instead with the aim of fulfilling
uniquely sovereign objectives. Rather, the issue is whether the particular actions
that the foreign state performs (whatever the motive behind them) are the type of
actions by which a private party engages in “trade and traffic or commerce.”

Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 614–15 (1992) (citing Black’s Law

Dictionary 270 (6th ed. 1990)). Specifically, the Supreme Court stated “a contract to buy army

boots or even bullets is a ‘commercial’ activity, because private companies can similarly use sales

contracts to acquire goods.” Id. at 615.

Under the BSA, Wye Oak was contracted to provide commercial services to MoD. Wye

Oak was appointed as the sole and exclusive broker to conduct inventory, assess, and rehabilitate

military equipment in connection with the IMERP; arrange scrap sales; provide military

refurbishment services, including constructing facilities; and arrange military equipment sales. See

Pl.’s Ex. 5; Pl.’s Ex. 19. A contract to engage in these activities is undoubtedly commercial in

nature because private companies can similarly contract to have goods inventories and

rehabilitated, contract to have facilities constructed, and contract with a broker to arrange the sale

of goods. It is irrelevant under § 1603(d) that the contract involved activities related to the military

40
and aimed to re-equip the Iraqi military to enhance that country’s security—a core sovereign

interest. Accordingly, the BSA constituted a “commercial” activity under the FSIA.

2. This Action is Based Upon an Act Performed in the U.S. in Connection with a
Commercial Activity of Iraq Elsewhere

This Court has jurisdiction under clause two of the commercial activity exception. Wye

Oak’s breach of contract claim is based on acts performed in the U.S. in connection with a

commercial activity of the foreign state, Iraq, elsewhere.16

The Fourth Circuit previously concluded Wye Oak sufficiently showed that its breach of

contract claim could proceed under clause two in denying Iraq’s appeal of the denial of its motion

to dismiss on sovereign immunity grounds.17 Wye Oak Tech., Inc. v. Republic of Iraq, 666 F.3d

205, 216 (4th Cir. 2011). The Fourth Circuit determined Wye Oak’s computer programming and

administrative activities performed in the U.S. in connection with MoD’s activities regarding the

BSA in Iraq demonstrated the breach of contract claim was based on an act performed in the U.S.

in connection with a commercial activity of the foreign state elsewhere. Id.

Although the case was transferred to this Court, and therefore is no longer within the Fourth

Circuit, the law-of-the-case principle indicates the Fourth Circuit’s opinion should nonetheless

control. The law-of-the-case principle stipulates a court should be loath to disturb its own or a

coordinate court’s prior decisions absent extraordinary circumstances. Christianson v. Colt Indus.

Operating Corp., 486 U.S. 800, 817 (1988); see Hill v. Henderson, 195 F.3d 661, 678 (D.C. Cir.

16
The Court refers to the foreign state as Iraq in its discussion on its subject matter and personal jurisdiction over
defendants because MoD is part of the state itself. See supra Section III(A).
17
The Fourth Circuit’s opinion had the oddity of being decided after the case was transferred to this Court. The Eastern
District of Virginia district court that originally had the case transferred it to the U.S. District Court for the District of
Columbia, but reached the issue of jurisdiction in the same opinion granting Iraq’s request to transfer the case to this
district. Wye Oak Tech., Inc. v. Republic of Iraq, No. 1:09cv793, 2010 WL 2613323 (E.D. Va. June 29, 2010). Iraq
appealed that district court’s denial of its motion to dismiss based on sovereign immunity, and this Court stayed the
case pending the outcome of the Fourth Circuit’s decision. The Fourth Circuit determined it had jurisdiction over
Iraq’s appeal. Wye Oak Tech., Inc. v. Republic of Iraq, 666 F.3d 205, 209–11 (4th Cir. 2011).

41
1999) (recognizing “a decision of a court of coordinate state is entitled to be considered law of the

case”) (internal quotations marks omitted); see also Charles A. Wright et al., Federal Practice and

Procedure § 4478.4 (4th ed. 2007) (“Special situations . . . may bring the same case successively

to different courts of appeals. . . . In all of these circumstances, an appellate court tends to defer to

the earlier appellate decision in much the same way as it would defer to its own earlier decision.”).

The mandate rule further compels this Court to follow the Fourth Circuit’s decision on this

matter. The mandate rule forbids lower “courts from reconsidering issues that have already been

decided in the same case.” Indep. Petrol. Ass’n of Am. v. Babbitt, 235 F.3d 588, 597 (D.C. Cir.

2001) (quoting LaShawn A. v. Barry, 87 F.3d 1389, 1393 n.3 (D.C. Cir. 1996) (en banc)). “When

matters are decided by an appellate court, its rulings, unless reversed by it or by a superior court,

bind the lower court.” Ins. Grp. Comm. v. Denver & R. G. W. R. Co., 329 U.S. 607, 612 (1947).

And in any event, the Fourth Circuit’s determination was correct. The Supreme Court in

Nelson held that the phrase “based upon” in the FSIA’s commercial activity exception refers to

“those elements that, if proven, would entitle a plaintiff to relief under his theory of the case.”

Saudi Arabia v. Nelson, 507 U.S. 349, 357 (1993). In Nelson, an American employee of a Saudi

hospital sued the Kingdom of Saudi Arabia seeking damages for injuries he allegedly suffered

while detained and tortured by the Saudi government. Id. The employee argued the commercial

activity exception applied because the hospital recruited him in the U.S. Id. While the Supreme

Court determined these recruiting activities “led to the conduct that eventually injured” the

employee, they were not the basis for the suit. Id. at 358. The torts Saudi Arabia allegedly

committed formed the basis for the suit—not the arguably commercial activities that came before

their alleged commission. Id. Because the employee had no need to demonstrate the hospital

42
recruited him in order to prevail on the merits, the hospital’s recruiting activities provided no basis

for his suit. Id.

Although Nelson interpreted the phrase “based upon” in the commercial activity

exception’s first clause, the nearly identical statutory text and structure of clauses one and two led

the D.C. Circuit to conclude that “based upon” means the same thing in both clauses. Odhiambo

v. Republic of Kenya, 764 F.3d 31, 37 (D.C. Cir. 2014). The D.C. Circuit noted, “to the degree that

the text leaves any ambiguity, the legislative history is ‘crystal clear’ that clause two’s reference

to acts ‘performed in the United States in connection with a commercial activity of the foreign

state elsewhere’ is ‘limited to those’ acts ‘which in and of themselves are sufficient to form the

basis of a cause of action.’” Id. at 37–38 (quoting Zedan v. Kingdom of Saudi Arabia, 849 F.2d

1511, 1514 (D.C. Cir. 1988) (quoting H.R. Rep. No. 94–1487, at 19 (1976), 1976 U.S.C.C.A.N.

6604)); see S. Rep. No. 94–1310, at 18 (1976), 1976 U.S.C.C.A.N. 1983.

In Odhiambo, the D.C. Circuit fashioned a test under clause two based on Nelson. The D.C.

Circuit stated: “a suit against a foreign sovereign may proceed under clause two only if the ‘act

performed in the United States in connection with a commercial activity of the foreign state

elsewhere’ establishes a fact without which the plaintiff will lose.” Odhiambo, 764 F.3d at 38.

Here, the acts Wye Oak performed in the U.S. in connection with the BSA in Iraq established Wye

Oak performed under the BSA, which is a necessary aspect to succeeding in a breach of contract

case when a defendant asserts the plaintiff did not perform.

As discussed in Section II(J)(2), Wye Oak performed work in the United States. David

Stoffel conducted activities supporting Wye Oak’s efforts under the BSA. David Stoffel focused

on writing a computer program that could ultimately be used to inventory and track all the

equipment Wye Oak was refurbishing and would potentially broker for sales. Tr. 12/18/18 AM

43
38:11–41:17; Pl.’s Ex. 65. This work aided Wye Oak’s efforts under the IMERP. Further, David

Stoffel oversaw the company’s electronic communications from his perch in the U.S., in part to

ensure Wye Oak’s leadership was aware of all messages they received, as the team traveled

frequently and maintaining e-mail communications and Internet connection could be challenging

at times in Iraq during this period. Tr. 12/18/18 AM 44:5–49:18. In addition, Wye Oak performed

administrative activities in the U.S. in support of the BSA. Tr. 12/18/18 AM 49:19-50:24.

These acts performed in the U.S. were done in connection with Iraq’s commercial activity,

the BSA, in Iraq. And these U.S.-based acts establish Wye Oak performed (partly in the U.S. and

partly outside the U.S.) under the BSA. Performance is a fact without which Wye Oak would lose.

So Wye Oak’s action falls within clause two: the action is based upon “an act performed in the

United States in connection with a commercial activity of the foreign state elsewhere.” 28 U.S.C.

§ 1605(a)(2). Thus, the Court has subject matter jurisdiction over Iraq and MoD.

3. The Court has Personal Jurisdiction over Iraq and MoD

This Court has personal jurisdiction over Iraq and MoD under 28 U.S.C. § 1330(b). Section

1330(b) provides that “[p]ersonal jurisdiction over a foreign state shall exist as to every claim for

relief over which the district court” has subject matter jurisdiction under the FSIA as long as the

defendant was properly served under 28 U.S.C. § 1608. As discussed above, this Court has subject

matter jurisdiction over defendants, as Iraq and MoD are not entitled to sovereign immunity based

on the FSIA’s commercial activity exception. And proper service was effectuated in this case in

accordance with 28 U.S.C. § 1608(a)(3).18 The Clerk of Court mailed a copy of the summons,

complaint, and notice of suit, together with a translation of each into the official language of the

foreign state to the head of Iraq’s Ministry of Foreign Affairs at the Minister’s office in Baghdad,

18
28 U.S.C. § 1608(a)(3) requires that service be sent “by any form of mail requiring a signed receipt, to be addressed
and dispatched by the clerk of court to the head of the ministry of foreign affairs of the foreign state concerned.”

44
Iraq. Certificate of Clerk, ECF No. 127; Service, ECF No. 128.19 The Court does not need to

examine whether Iraq and MoD have the minimum contacts that would otherwise be required to

find personal jurisdiction under the Fifth Amendment’s Due Process Clause, as foreign sovereigns

are not “persons” protected by the Fifth Amendment. I.T. Consultants, Inc. v. Islamic Republic of

Pakistan, 351 F.3d 1184, 1191 (D.C. Cir. 2003); see also Practical Concepts, Inc. v. Republic of

Bolivia, 811 F.2d 1543, 1548 n.11 (D.C. Cir. 1987) (in FSIA cases, “subject matter jurisdiction

plus service of process equals personal jurisdiction”) (internal quotation marks and citation

omitted). Accordingly, this Court has personal jurisdiction over the defendants.

C. Defendants Breached the BSA

1. Wye Oak’s Three Invoices Were Submitted Under the BSA

Wye Oak’s three invoices were submitted pursuant to the BSA. Under the BSA, Wye Oak

was the sole and exclusive broker for several enumerated activities. Pl.’s Ex. 5 ¶ 2. Two of these

activities are applicable to the three invoices. First, Wye Oak was appointed as MoD’s sole and

exclusive broker for “the accounting, inventory, and assessment of discarded and/or damaged

Military Equipment in connection with the Iraqi Military Equipment Recovery Project to identify

which Military Equipment is salvageable and suitable for Military Refurbishment Services and

which Military Equipment is scrap.” Id. Second, Wye Oak was appointed as MoD’s sole and

exclusive broker for “the provision of Military Refurbishment Services with respect to all of the

various military bases, offices and properties owned by, or under the control of, the Ministry and/or

the Republic of Iraq, wherever such bases, offices and property maybe [sic] located and all the

19
MoD and Iraq each filed their answers to Wye Oak’s amended complaint after proper service was effectuated.
Answer by the Ministry of Defense of the Republic of Iraq, ECF No. 129; Answer by the Republic of Iraq, ECF No.
139.

45
related military equipment located thereon or otherwise owned by the Ministry and/or the Republic

of Iraq.” Id.

The BSA further directed Wye Oak to provide military refurbishment services pursuant to

the terms of the Agreement, designated the military installations where the work would commence,

and required Wye Oak to use all reasonable commercial efforts to perform the work. Id. ¶ 2–3.

The BSA specified Wye Oak was not under any obligation to spend any sum of money in

performing military refurbishment services or in developing markets and sales prospects for

equipment and scrap under the BSA other than money advanced by MoD to cover expenses

associated with performing military refurbishment services, selling military equipment or

refurbished military equipment, or scrap sales. Id. ¶ 3.

As detailed in Section II(C), the BSA provided specific definitions for the terms used in

the contract. The terms “military equipment,” “military refurbishment services,” “refurbished

military equipment,” and “customers” are all applicable to determining whether the three invoices

fall under the BSA. Military equipment was defined as “any equipment that is used by or in the

provision of military, including, without limitation, any and all vehicles, aircrafts, guns, missiles,

armored personnel carriers, heavy armor/tanks, military radar equipment, ballistic missiles, rocket

launchers, artillery, artillery scrap, small arms, small arms scrap or any parts or components

thereof.” Id. Military refurbishment services was defined as “any services sold, performed for, or

provided with respect to any Refurbished Military Equipment that is either retained by the Ministry

or sold or otherwise provided to Customers by the Ministry, including, but not limited to, the

inspection of the Military Equipment prior to performing any Military Refurbishment Services to

make a value assessment and a refurbishing assessment for such Military Equipment.” Id. The

BSA provided that “Refurbished Military Equipment shall mean any Military Equipment that has

46
been refurbished by, or under the direction of, the Broker pursuant to this Agreement, and sold or

provided to customers by the Ministry.” Id. And customers were defined as “purchasers of the

‘Military Refurbishment Services’ and/or ‘Refurbished Military Equipment’ and ‘or Scrap sales’

including, but not limited to, Iraqi Ministry of Defense, commercial establishments and

governmental and semi-governmental entities in the military sector.” Id.

In October 2004, Wye Oak submitted three pro forma invoices to MoD: Invoices

#MUQ001, #TAJI001, and #MUQ002. These invoices covered the initial construction costs for

armored vehicle repair facilities and for the initial repair of 246 armored vehicles at Muqdadiya

and Taji. Pl.’s Ex. 18. They also covered the costs of purchasing tools and moving spare parts; the

costs of initial hiring and training of skilled and unskilled workers; the costs of travel, lodging, and

food for technical experts; the costs of materials to wash and paint vehicles; and a 10%

mobilization fee for construction efforts at Taji. Id. Finally, these invoices included a 15%

overhead cost and 10% profit. Id.

These invoiced costs all fall within the BSA. First, these activities involved the accounting,

inventory, and assessment of military equipment in connection with the IMERP to identify which

equipment was salvageable and suitable for refurbishment services and which equipment was

scrap as called for in § 2(i) of the BSA. See Pl.’s Ex. 5 ¶ 2(i). To carry out these responsibilities,

Wye Oak needed to construct facilities, purchase tools, hire and train workers, and bring in

technical experts. Wye Oak would not be able to conduct these duties under the BSA without

places to carry out such work, the equipment necessary to carry out such work, and the workers

required to perform such work. Neal testified the facilities necessary to scrap and refurbish

armored vehicles were largely non-existent at Taji and Muqdadiya in 2004 and 2005. Tr. 12/19/18

AM 34:4–35:15. There was only a tank depot at Taji, but it was not operational and needed to be

47
overhauled to be capable of working on armored vehicles to determine if they should be scrapped

or could be refurbished. Tr. 12/19/18 AM 34:4–35:15. And Wye Oak was not under any obligation

to spend its own money in carrying out these activities. Rather, MoD was to advance the sums of

money to cover the expenses associated with performing these activities, as these activities all

constituted military refurbishment services under the BSA. These activities were focused on

developing the capability to inspect military equipment prior to performing refurbishment efforts

to assess the equipment and to carry out such inspection. They were also carried out with respect

to military equipment that was being refurbished by Wye Oak and provided to MoD. Accordingly,

these invoiced costs fell squarely within the BSA.

Second, the invoiced activities involved the direct provision of military refurbishment

services as called for § 2(iii) of the BSA. See Pl.’s Ex. 5 ¶ 2(iii). Constructing repair facilities,

repairing armored vehicles, hiring and training workers, bringing in technical experts, acquiring

tools and spare parts, and acquiring materials to wash and paint vehicles are all core aspects of

refurbishing military equipment to sell or provide to MoD. Wye Oak would not have been able to

carry out the military refurbishment services without engaging in these activities and undertaking

such costs. Thus, these invoiced costs were also covered by the BSA. And again, while the BSA

provided Wye Oak was required to use all reasonable commercial efforts to perform these military

refurbishment services, Wye Oak was not under any obligation to spend money carrying out these

services. Instead, MoD was supposed to cover the expenses associated with performing military

equipment services.

The First Amendment further supports these conclusions. The First Amendment clarified

the definition of military refurbishment services to explicitly include the “construction of facilities,

bases, billeting, service/rapier depots, repair factors/facilities.” Pl.’s Ex. 19; Pl.’s Ex. 19.1. The

48
Court believes such construction activities were already covered under the BSA’s original

definition of military refurbishment services, as this construction would always be required to

provide Wye Oak with the spaces needed to inspect, assess, and refurbish military equipment. So

such construction would be a service “performed for[] or provided with respect to any Refurbished

Military Equipment.” Pl.’s Ex. 5 ¶ 1(e). But the First Amendment makes it unquestionable that

construction activities, which were part of the invoices, were covered under the contract as

amended.

And contrary to defendants’ contention, the BSA did not provide that MoD would only pay

Wye Oak a 10% commission on sales contracts for military refurbishment services, refurbished

military equipment, and scrap sales. ECF No. 431-1, 4–5. This commission was just one aspect of

Wye Oak’s potential compensation under the BSA. MoD was also required to pay Wye Oak 10%

of the refurbishment cost for refurbished military equipment, which consists of any military

equipment refurbished by Wye Oak and sold or provided to customers, including MoD itself. Pl.’s

Ex. 5 ¶ 5(a). Refurbishment cost necessarily includes the costs associated with conducting the

refurbishment, such as labor, equipment, and the construction of facilities—the costs accounted

for in the three invoices. This was clarified in the First Amendment, which made explicit that MoD

was required to pay Wye Oak 10% of military refurbishment services and equipment’s

refurbishment cost. Pl.’s Ex. 19; Pl.’s Ex. 19.1.

Payments to Wye Oak based on sales contracts or refurbishment costs were to be paid

pursuant to pro forma invoices submitted by Wye Oak. Pl.’s Ex. 5 ¶ 5(b). The BSA required the

MoD to fully pay such invoices “immediately upon presentation.” Id. Here, Wye Oak presented

the three pro forma invoices to MoD.

49
Defendants’ assertion also ignores the fact the BSA required Wye Oak to use all reasonable

commercial efforts to perform the military refurbishment services yet did not require Wye Oak to

spend any money carrying out these services. Instead, MoD was supposed to cover the expenses

associated with performing military equipment services. As explained, this was another basis in

the BSA for payment to Wye Oak from MoD for the invoiced costs.

Finally, while the BSA made Wye Oak ultimately “responsible for its own administrative

costs, expenses and charged necessary or incidental to its functions” under the Agreement, this

does not change the clear language throughout the rest of the BSA that MoD was to advance funds

to Wye Oak and pay 10% of the refurbishment cost for refurbished equipment.

Accordingly, Wye Oak’s three invoices were submitted under the BSA.

2. Wye Oak was never paid for its three invoices

Although Wye Oak submitted the three invoices pursuant to the BSA, MoD never paid

Wye Oak. Instead, MoD paid Zayna these amounts. See supra Section II(I). But Wye Oak never

authorized Zayna to receive these funds on its behalf. See supra Section II(I).

Defendants contend ¶ 10 of the BSA provided that MoD had the right to determine payment

terms for sales contracts or contractual arrangements equivalent to sales contracts Wye Oak

arranged. Defendants assert they could therefore insert intermediaries or demand bank guarantees

as referenced in the CFA. Defs.’ Further Rebuttal to Wye Oak’s Proposed Findings of Fact &

Conclusions of Law 14, ECF No. 431-2 [hereinafter ECF No. 431-2]. However, this section only

required Wye Oak to obtain written instructions from MoD concerning the terms of commitments

and contract offers made in the name of or on behalf of MoD. Pl.’s Ex. 5 ¶ 10 (“[Wye Oak] is not

authorized to enter into commitment of any kind in the name or on behalf of the Ministry, nor shall

[Wy Oak] make any contractual offers to Customers or prospective Customers on behalf of

50
Ministry unless [Wye Oak] shall have first obtained written instructions from Ministry concerning

the terms of such offers.”). This had nothing to do with the invoiced activities that related to

military refurbishment services. Thus, MoD was not authorized under the BSA to require bank

guarantees never referenced in the contract or to insert a middleman into the contractual

relationship absent a written amendment including such new terms signed by both parties, which

never occurred. See id. ¶ 13.

And, as the Court concluded in Section II(G)(1), Wye Oak established by a preponderance

of the evidence that MoD approved Wye Oak’s invoices and agreed to pay this money to Wye

Oak’s president, Dale Stoffel, at the October 19, 2004 meeting. See supra Section II(G)(1). Yet

this money was to Zayna, not Wye Oak. Wye Oak was never paid for the three invoices.

3. Wye Oak Performed Under the BSA

As discussed in Sections II(D), (J), (L), and (M), Wye Oak performed under the BSA.

Shortly after signing the BSA, Wye Oak began putting together the necessary workforce and

identifying, recovering, and assessing military equipment in Iraq. Wye Oak then started

refurbishing armored vehicles—a critical part of the IMERP. And although nonpayment of Wye

Oak’s three invoices created a significant impediment to Wye Oak continuing to work on the

IMERP—and resulted in the October 19 and December 5 meetings in which MoD agreed to pay

the funds—Wye Oak ultimately continued performing. Wye Oak refurbished a significant number

of armored vehicles. And even after Dale Stoffel’s murder, Wye Oak did not abandon the IMERP.

In fact, Wye Oak exceeded the goal of producing a mechanized brigade of operational armored

vehicles for Iraq’s January 2005 parliamentary election. Eventually, Wye Oak did cease operations

in Iraq sometime after the January 2005 election, though, as it never received funding from MoD

despite MoD’s promises at the October 19 and December 5 meetings.

51
4. MoD Materially Breached the Contract with Wye Oak

Accordingly, MoD materially breached the BSA by not paying Wye Oak for the three

invoices and the work Wye Oak performed. Wye Oak submitted two pro forma invoices on

October 11, 2004, and a third pro forma invoice on October 18, 2004. Under the BSA, MoD was

required to fully pay these invoices immediately upon their presentation. Id. ¶ 5. And MoD

approved these three invoices and agreed to pay this money to Wye Oak’s president, Dale Stoffel,

at the October 19, 2004 meeting. Yet MoD never paid Wye Oak.

Wye Oak’s damages expert assessed the date of breach as October 28, 2004, and Wye Oak

has proposed this date as the date of breach. Wye Oak and its damages expert reason that while

payment on the invoices was due immediately upon presentation (October 11 for two invoices and

October 18 for the third) and MoD approved the invoices on October 19, a ten-day grace period to

October 28 for payment to occur was reasonable. The Court sees no reason to reject plaintiff’s

allowance of a grace period during which payment should have occurred, especially since payment

should have occurred immediately under the strict terms of the BSA. Thus, the Court finds MoD

materially breached the BSA on October 28, 2004.

MoD’s material breach meant Wye Oak was no longer required to perform. Therefore,

Wye Oak did not breach the contract by ceasing to perform sometime after the January 2005

election, as its duties had already been discharged by this point in time.

D. The Court Rejects Defendants’ Affirmative Defenses

Iraq and MoD have put forward several affirmative defenses to this suit. To prevail on an

affirmative defense, defendants bear the burden of proving the affirmative defense by a

preponderance of the evidence. Bowden v. United States, 106 F.3d 433, 437 (D.C. Cir. 1997). The

Court finds defendants have not met their burden for any of the alleged affirmative defenses.

52
1. The Court Rejects the Defense Wye Oak was Not Properly Licensed

Iraq and MoD argue Wye Oak failed to receive permission from the Ministry of Trade to

act as a broker and therefore could not have consummated sales contracts. Iraq and MoD cite Iraq’s

Law of Trade, stating: “A non-Iraqi person can exercise a commercial activity in accordance with

the requirements of the national plan by permission from the Concerned Entity.” Article 8 of the

Law of Trade (Law No. 30 of 1984). They allege Wye Oak failed to ever apply for and receive

permission to act a broker from the Ministry of Trade so it cannot claim damages under the BSA.

Defendants cite several Iraqi court cases in which a plaintiff’s failure to prove the plaintiff applied

for and received the required permission necessitated the court deny any claims for broker fees

and dismiss the lawsuit. So defendants contend Wye Oak is unable to obtain relief on its breach of

contract claim as a result of its omission to obtain the required license.

However, plaintiff’s Iraqi law expert gave numerous reasons why this license requirement

did not apply to Wye Oak. First, Mallat distinguished the current matter from the Iraqi court cases

cited by defendants. Those cases involved a different Iraqi trade law, not the provision of Iraq’s

Trade Law cited by Iraq and MoD here. In the cases cited by Iraq and MoD, an Iraqi plaintiff sued

a foreign government official and foreign state-owned corporation claiming the defendants did not

pay him pursuant to their contracts. The Iraqi courts rejected the plaintiff’s claims because he had

not obtained the required business license to represent a foreign person or corporation. ECF No.

253-3. Here, Wye Oak was working with MoD, part of the Iraqi government, not a foreign person,

corporation, or government. The law at issue in the cases cited by Iraq and MoD is clearly not

applicable to this suit. Therefore, these cases do not demonstrate Wye Oak was required to obtain

any license.

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Second, this expert asserted CPA Order 39 modified Iraq’s Law of Trade when it was

enacted in September 2003. Chibli Mallat 3rd Expert Report 3, Pl.’s Ex. 117. Mallat informed the

Court CPA Order 39 liberalized trade and placed foreign and domestic business on equ

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4433744. Public record. Not legal advice.