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Northstar Aviation LLC v. Alberto

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

July 31, 2018

NORTHSTAR AVIATION, LLC, et al., Plaintiffs,
ALDEN BURT ALBERTO, et al., Defendants.


          T. S. Ellis, III United State District Judge.

         At issue in this diversity action is defendants' Motions to Dismiss the Amended Complaint. The matter has been fully briefed and argued and is now ripe for disposition.

         This action arises out of (i) defendant Alden Alberto's (“Alberto”) payment of allegedly unauthorized bonuses to himself and to co-conspirators over the course of four years, (ii) Alberto's allegedly false communications to plaintiffs' business contacts, and (iii) Alberto's allegedly unauthorized withdrawal of significant sums of money from plaintiffs' bank accounts. Plaintiffs allege that defendant Alberto took all of these actions in an attempt to destroy plaintiffs' business and to start a competing company, Vulcan Aviation LLC (“Vulcan Aviation”). Based on these actions, plaintiffs assert eight claims against individual defendant Alberto, including: breach of fiduciary duty, common law and statutory conspiracy, fraud, tortious interference with business relationships, defamation, conversion, and unjust enrichment. Plaintiffs also assert one claim of Virginia statutory conspiracy against corporate defendant Vulcan Aviation. Defendants have now moved to dismissed each of these claims, arguing that plaintiffs have failed to state claims upon which relief may be granted and that some portions of each claim are time-barred.


         Plaintiff NorthStar Aviation USA LLC (“NorthStar USA”) is a limited liability company organized and existing under the laws of Delaware with its principal place of business in Florida. NorthStar USA's sole member is plaintiff NorthStar Aviation LLC (“NorthStar UAE”), which is a limited liability company organized under the laws of the United Arab Emirates with its principal place of business in the UAE. NorthStar UAE's two members are Rotana Jet Aviation LLC and Dr. Ahmed Bin Saif (“Dr. Bin Saif”). Dr. Bin Saif serves as Chairman of the Board of Directors for NorthStar UAE (“NorthStar Board”). Plaintiffs NorthStar USA and NorthStar UAE (collectively “NorthStar”) are in the business of manufacturing and selling helicopters and providing aircraft maintenance, repair, and pilot training.

         Defendant Alberto, a resident of Virginia, is the former Chief Executive Officer (“CEO”) of NorthStar USA and CEO and Managing Director of NorthStar UAE. Defendant Alberto worked for NorthStar USA from the company's offices in McLean, Virginia. Defendant Vulcan Aviation is a Virginia limited liability company also in the business of selling helicopters and providing maintenance, repair, and pilot training services. The Amended Complaint alleges that Vulcan Aviation's members include Alberto, Terry Key (“Key”), and Hillary Holcombe (“Holcombe”).[2] Key and Holcombe were also former employees of NorthStar USA who worked from McLean, Virginia.

         The Amended Complaint alleges that in 2011, NorthStar UAE's members entered into a Memorandum of Association and formed NorthStar UAE. The Memorandum of Association named Alberto as Managing Director of NorthStar UAE and provided that Alberto would be at all times responsible to, and subject to the control of, NorthStar UAE's Board of Directors (“NorthStar Board”). See NorthStar Mem. of Association ¶¶ 9.8, 9.10. The Memorandum of Association also gave Alberto the power to carry out the day-to-day management of the company's affairs, including the power to enter into agreements on behalf of the company, to draw and issue checks on behalf of the company, and to fix the salaries of employees on behalf of the company. See Id. ¶¶ 9.8, 9.9.

         The next year, in May 2012, NorthStar USA was incorporated in Delaware, and Alberto was named CEO of both NorthStar UAE and NorthStar USA. And in 2013, Northstar UAE granted Alberto Power of Attorney over NorthStar UAE. Alberto's Power of Attorney again authorized Alberto to conduct the day-to-day management on behalf of the company, including entering into agreements, drawing and issuing checks, and fixing the salaries of employees. See NorthStar Power of Attorney ¶¶ (a), (e), (n).

         The Amended Complaint alleges that from May 2012 through October 2017, Alberto improperly used his authority as CEO to direct NorthStar's Finance Director to transfer funds and issue checks from NorthStar's accounts to cover “improper, unmerited, and unauthorized bonus payments” to Alberto, Key, and Holcombe in total amounts of $19, 307, 399, $1, 990, 000, and $220, 000, respectively. The Amended Complaint alleges that Alberto knew that he did not have the authority to issue these bonus payments without approval from the NorthStar Board but that Alberto nonetheless failed to seek such approval.

         The Amended Complaint alleges that by 2016, NorthStar was experiencing significant financial difficulties. Despite Alberto's awareness of these financial difficulties, the Amended Complaint alleges that Alberto continued to pay improper bonuses to himself, Key, and Holcombe and that Alberto concealed these bonuses from Dr. Bin Saif. For example, the Amended Complaint alleges that Alberto disclosed to Dr. Bin Saif that company-wide bonus payments in November 2016 totaled $3, 678, 970, but that Alberto did not disclose to Dr. Bin Saif that Alberto, Key, and Holcombe received nearly 75 percent of this amount.

         The Amended Complaint further alleges that in the summer of 2017, Dr. Bin Saif explicitly directed Alberto to find ways to reduce NorthStar's expenses. The Amended Complaint also alleges that despite these instructions, Alberto paid himself approximately $10 million in bonuses in late June and early October 2017 and authorized additional bonuses for Key and Holcombe. Around the same time, the Amended Complaint alleges that Alberto laid off ten of the forty-six people working for NorthStar, targeting the highest-paid corporate and operations employees as well as those employees who had questioned NorthStar's finances.

         The Amended Complaint further alleges that around this time, Alberto, Key, and Holcombe began planning to launch a new company named Vulcan Aviation to compete with NorthStar. The Amended Complaint alleges that, as part of this plan, Alberto attempted to transfer NorthStar's equipment from a hanger in the UAE to a hanger in Florida for use by Vulcan Aviation.

         On October 17, 2017, Alberto attended a meeting of the NorthStar Board. At this meeting, the NorthStar Board indicated that they intended to audit NorthStar's finances. Two days later, on October 19, 2017, NorthStar UAE revoked Alberto's Power of Attorney, and on the same day, Alberto registered Vulcan Aviation with the Virginia State Corporation Commission. The Amended Complaint alleges that around this same time Alberto, Key, and Holcombe also (i) began informing NorthStar USA's vendors that NorthStar USA was renaming itself as Vulcan Aviation and (ii) began contacting NorthStar USA employees to lure them to Vulcan Aviation.[3] Key, it is alleged, also contacted a representative of Kuwait, with whom NorthStar had been discussing the potential for a new contract, and ordered the Kuwaiti representative to withdraw any plans concerning NorthStar's potential sale of helicopters to Kuwait. And the Amended Complaint further alleges that Alberto attempted to transfer NorthStar USA's International Traffic in Arms Regulation (“ITAR”) export license to Vulcan Aviation. The Amended Complaint alleges that after Alberto's attempts to transfer the license were unsuccessful, Alberto requested that the U.S. State Department rescind NorthStar USA's ITAR licenses. Alberto also drafted a letter to the UAE Armed Forces, a client of NorthStar's, informing the UAE Armed Forces that NorthStar's services under their contract would terminate on October 25, 2017.

         That same day, on October 25, 2017, Alberto resigned from NorthStar. After resigning, the Amended Complaint alleges that Alberto continued to access NorthStar USA's bank accounts, and from October 26, 2017 through October 31, 2017, Alberto transferred and withdrew more than $664, 000 from NorthStar USA's bank accounts, leaving the accounts with a negative balance. Alberto also used his NorthStar USA credit card to make purchases for his new company, Vulcan Aviation, including charging payments to attorneys and a graphic designer.

         Plaintiffs filed the Amended Complaint in this diversity action on April 13, 2018, asserting eight claims against four defendants, Alberto, Key, Holcombe, and Vulcan Aviation. On May 3, 2018, the parties entered into a stipulation of dismissal, dismissing the claims against Key and Holcombe. As such, the remaining claims in plaintiffs' Amended Complaint include: (i) breach of fiduciary duty against Alberto, (ii) common law conspiracy against Alberto, (iii) fraud against Alberto, (iv) statutory conspiracy against Alberto and Vulcan Aviation, (v) tortious interference with business expectancy against Alberto, (vi) conversion against Alberto, (vii) defamation against Alberto, and (viii) unjust enrichment against Alberto.

         Defendants filed the Motion to Dismiss at issue here on April 27, 2018, arguing that each of plaintiffs' claims should be dismissed. Specifically, defendants argue as a threshold matter that portions of plaintiffs' fraud, fiduciary duty, conversion, and unjust enrichment claims are time-barred. Defendants also argue that the Amended Complaint cannot survive threshold dismissal because it is unclear from the Amended Complaint which law governs plaintiffs' claims. Finally, defendants contend that plaintiffs have failed to state claims for relief sufficient to survive threshold dismissal pursuant to Rule 12(b)(6), Fed.R.Civ.P. Plaintiffs oppose each of these arguments, contending (i) that the continuing violations doctrine saves the portions of their claims that would otherwise be time-barred, (ii) that the Amended Complaint makes clear that Virginia law applies, and (iii) that they have adequately alleged the necessary elements of each of their claims.


         The standard on a motion to dismiss pursuant to Rule 12(b)(6), Fed. R. Civ. P., is too well-settled to warrant extensive elaboration. Put simply, a court may dismiss a claim if, after accepting all well-pleaded allegations in the complaint as true and drawing all reasonable factual inferences in the plaintiff's favor, the complaint does not allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).


         As a threshold matter, it is necessary to address defendants' choice-of-law and statute-of-limitations concerns. With respect to choice of law, it is undisputed that a court sitting in diversity must apply the choice-of-law rules of the state in which it sits. Klaxon v. Stentor Mfg. Co., 313 U.S. 487, 496 (1941). And it is also undisputed that in determining which law governs a tort action, the Supreme Court of Virginia “adhere[s] to the lex loci delicti, or place of the wrong, standard … .” Jones v. R. S. Jones & Assocs., 431 S.E.2d 33, 34 (Va. 1993). In this regard, Virginia law defines “the place of the wrong” as “the place where the last event necessary to make an actor liable for an alleged tort takes place.” Quillen v. Int'l Playtex, Inc., 789 F.2d 1041, 1044 (4th Cir. 1986) (internal quotation marks and citations omitted).

         Plaintiffs assert in their opposition that the injuries occurred in Virginia where Alberto worked and where NorthStar USA's offices were located, and both parties apply Virginia law for the purposes of this motion. Accordingly, although a more complete record at summary judgment might require the application of a different state's laws, the facts ...

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