United States District Court, E.D. Virginia, Alexandria Division
Ellis, III United State District Judge.
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.
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.
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.
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”). Key and Holcombe were also former
employees of NorthStar USA who worked from McLean, Virginia.
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.
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).
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.
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.
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.
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.
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. 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.
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
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
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.
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).
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).
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