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Zoroastrian Center and Darb-E-Mehr of Metropolitan Washington, D.C. v. Rustam Guiv Foundation

United States District Court, E.D. Virginia, Alexandria Division

May 12, 2014

ZOROASTRIAN CENTER AND DARB-E-MEHR OF METROPOLITAN WASHINGTON, D.C., Plaintiff/Counterclaim Defendant,
v.
RUSTAM GUIV FOUNDATION, et al., Defendant/Counterclaim Plaintiff.

MEMORANDUM OPINION

LIAM O'GRADY, District Judge.

This dispute arises from the alleged breach of an amended ninety-nine year lease entered into for the sole purpose of creating a Zoroastrian place of worship in the Washington, D.C. metropolitan area. Before the Court are the parties' cross-motions for summary judgment. For the reasons stated below the Court finds the Plaintiff/Counterclaim Defendant has materially breached every binding agreement between the parties, consequently judgment should enter as a matter of law in favor of the Defendant/Counterclaim Plaintiff on two of its counterclaims.

BACKGROUND

The Defendant, Rustam Guiv Foundation ("RGF"), is a trust devoted to promoting the practice and advancement of Zoroastrianism, an ancient Persian religion. The Plaintiff, Zoroastrian Center and Darb-E-Mehr of Metropolitan Washington, D.C. ("ZCDMW") is a Virginia-based 501(c)(3) with the same mission as RGF. In 1991, RGF granted a ninety-nine year lease on almost seven acres of property located at 2347 Hunter Mill Road, Vienna, Virginia ("the Property") to ZCDMW. The sole purpose of the lease was the construction of a Zoroastrian center of worship. See Dkt. No. 56-3, Exh. C [hereinafter "the Original Lease"]. What followed was a turbulent contractual relationship that spanned two decades before leading to this litigation.

RGF claims this is a simple contract dispute. This is only half true. The controversy does require the Court to interpret a series of agreements and determine whether they were breached. As will soon be evident, however, that seemingly simple task is complicated by the precarious nature of the parties' relationship as well as actions taken in light of their common mission. In recounting these actions the Court imputes no ill will to either party, both of whom have expended significant resources attempting to accomplish a shared charitable goal. Rather, the Court merely seeks to acknowledge the undisputed material facts of this contract dispute.

Two documents control the controversy's contours. The first is the Original Lease. Under the terms of the Original Lease ZCDMW was to pay a nominal rent of one dollar per year, as well as all utilities and taxes on the Property, for ninety-nine years. See Original Lease at ¶¶ 3.1, 4.1, and 5.1. ZCDMW's main obligation under the Original Lease is found in Article VI which outlines the use of the Property. That clause mandates that the Property "only" be used for: (i) "construction of a place of worship for all Zoroastrians of the world;" (ii) "construction of a facility for the advancement of the Zoroastrian religion;" and (iii) "construction of a dwelling suitable for residence of a Mobed (priest)." See id. at ¶ 6.1. Although the Original Lease did not include a firm deadline for this construction, it did contain a "time is of the essence" clause. See id. at ¶ 19.1.

For a variety of reasons not material to the Court's inquiry, and much to the frustration of RGF, ZCDMW did not begin actual construction on the Property for several years following execution of the Original Lease. This inaction led to the creation of the second principal document involved in the controversy: an amendment to the Original Lease. See Dkt. No. 56-4, Exh. D [hereinafter "the Lease Amendment"]. This Lease Amendment was executed in January of 2009, over seventeen years after the Original Lease was signed. Importantly, the amendment noted that "[i]n the event of any conflict between the terms of the Lease and [the] Lease Amendment, the term of [the] Lease Amendment shall govern and control." Id. at § 2.

Although under the amendment it was possible for the lease term to extend through the year 2108, just a brief review of the document reveals that speeding the pace of constructing a place of worship was the motivating factor for the Lease Amendment. Several clauses of the document are pertinent. First, ZCDMW agreed to "undertake such construction no later than November 1, 2009 (the Start Date')." Id. at § 3. ZCDMW was also to "complete construction of the Center no later than March 13, 2011 (the Completion Date')." Id. The only adjustment to these firm deadlines contemplated by the Lease Amendment allowed RGF to extend the deadline for completion by two years. See id. at §§ 4 and 5. Importantly, however, the Lease Amendment stated that:

Anything to the contrary notwithstanding, and regardless of any and all extensions of the Start Date and/or the Completion Date, the Center must be completed no later than March 15, 2013 (the "Final Completion Date"). If Lessee has not achieved completion of construction of the Center satisfactory to Lessor by the Final Completion Date, then Lessor may by written notice terminate the Lease.

Id. at § 6. Together the Original Lease and Lease Amendment governed the parties' lessor-lessee relationship, but that did not prevent other incidents from impacting their dispute.

The first such incident occurred at some point in the beginning of 2010. While the exact date of certain events may be uncertain, the record makes abundantly clear ZCDMW had not met the "Start Date" deadline for construction the preceding winter. Given this failure RGF began pursuing different options for the construction of a Zoroastrian place of worship in the Washington, D.C. metropolitan area.[1] With RGF's focus shifting to this alternate site, the Trust requested that ZCDMW cease preparing construction on the Vienna property. On March 7, 2010, Dr. Daryoush Jahanian, who can best be described as RGF's lead trustee, sent ZCDMW an email noting that the alternative site would meet the needs of the regional Zoroastrian community and instructing ZCDMW members to "stop signing any contract and do not write any check as much as possible" for any construction activities on the Property. See Dkt. No. 56-6, Exh. F. On April 28, 2010, Farhad Shahryary, ZCDMW's joint secretary, responded to RGF's request with a formal letter stating the following:

Your recommendation of ceasing all efforts towards building of the Zoroastrian Center and Darb-E-Mehr of Metropolitan Washington, D.C. (ZCDMW) has us puzzled and discouraged... The Zoroastrian community was in shock, disbelief, and was hurt by your recommendation. For the past twenty years, the majority of them believed and was proud that the Hunter Mill property was their place for worship... Your recommendation does not reflect the fact, that at the time you reassigned the lease to ZCDMW, that you were well aware of [the construction of the alternate temple], you had sided with ZCDMW, and in 2007 declared your decision... that this property should remain as the Zoroastrian Center...
In order to fulfill its duties, ZCDMW has maintained this property while spending a large portion of its funds in preparation of the planning, constructing, and renovating of the Center...
[ZCDMW] considered your recommendation, temporarily stopped the progress of work as suggested by you, and discussed the matter with the Zoroastrian Community. It was determined, that in the best interest of the Zoroastrian community of Metropolitan Washington, D.C., area... to stay on course with the mission before us by continuing to progress and move [ sic ] forward, avoiding the creation of any obstacles or factions, in pursuits of continued Good Thoughts, Good Words, and Good Deeds.

See Dkt. No. 67-3, Exh. 6.

To summarize, by the end of April, 2010: (i) the Original Lease had been amended and now included particular construction deadlines, the first of which ZCDMW had missed; (ii) RGF had chosen to focus its efforts to construct a place of worship on an alternative site and had requested ZCDMW cease its construction efforts on the Property; and (iii) ZCDMW did momentarily cease such activity, but eventually decided to proceed with the project despite RGF's admonition not to do so.

The next event relevant to the contract dispute arose a year later in April of 2011. Although what occurred between 2010 and 2011 is far from certain, the legally material facts are undisputed. On March 31, 2011, Jahanian sent an email to Shahryary outlining the plans for an in-person meeting between the parties to discuss their future relationship. See Dkt. No. 56-8, Exh. H. The email acknowledged that RGF had "requested construction be cease[d], " and noted that the parties' shared goal of creating a place of worship would "become practical only with our goodwill and full co-operation." Id. The subsequent meeting occurred on April 16, 2011, and lasted several hours. At the close of the meeting Dr. Soroosh Sorooshian, an RGF trustee, drafted a one-page, hand-written Memorandum of Understanding that was signed by representatives of each party. See Dkt. No. 56-9, Exh. I. [hereinafter "the 2011 MOU"]. This Memorandum of Understanding included provisions stating that:

1-The Trust of Rustam Guiv Foundation will be in full cooperation with ZCDMW in facilitating the required paperwork.
2-ZCDMW will provide to The Trust an accounting book to list the names [and] amounts of all donations and all expenses. ZCDMW will also continue to provide quarterly financial report ...

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