United States District Court, E.D. Virginia, Alexandria Division
MEMORANDUM OF DECISION AND ORDER
ANTHONY J. TRENGA UNITED STATES DISTRICT JUDGE
DiMuroGinsberg, P.C. ("DMG") and Artabane &
Belden, P.C. ("Artabane"), Virginia and D.C. law
firms, respectively, have not been paid for legal services
provided to Defendants VLOX, LLC ("VLOX") and
Starwalker PR, LLC ("Starwalker"). VLOX and
Starwalker are government contract companies owned and
controlled by Defendant Hamed Wardak ("Wardak"),
who, Plaintiffs allege, used those companies as his alter ego
and, through improper transfers to himself, deprived those
entities of any ability to satisfy their outstanding bills.
Plaintiffs seek judgments against all three Defendants for
their billed fees and costs, together with punitive damages,
pre- and post-judgment interest, injunctive relief as to
certain transferred assets, and reasonable attorneys'
fees and costs incurred in pursuing this litigation.
Defendants allege that they had a representation agreement
only with Artabane and therefore do not owe DMG any fees or
costs, that the amount billed by Artabane is unreasonable in
light of the work performed, that Wardak's distributions
to himself were proper, that he properly maintained corporate
formalities as to VLOX and Starwalker, and that he therefore
has no personal liability for any fees and expenses due and
their five-count Amended Complaint, Plaintiffs assert claims
for Breach of Contract (Count I), Quantum Meruit
(Count II), Fraud in the Inducement (Count III),
Corporate Veil Piercing (Count IV), and Fraudulent Transfer
(Count V). See [Doc. 34]. The Court held a bench
trial on those claims on June 4 and 5, 2019 and heard closing
arguments on June 13, after which the Court took the matter
under advisement. As directed, the parties have submitted
their proposed findings of fact and conclusions of law. By
way of summary, the Court finds and concludes the following:
(1) Both DMG and Artabane had a valid representation
agreement with VLOX and Starwalker.
(2) $92, 299.80 is a fair and reasonable amount for the legal
services and expenses provided by DMG.
(3) $242, 440.40 a fair and reasonable amount for the legal
services and expenses provided by Artabane.
(4) The equities favor an award of prejudgment interest in
favor of Plaintiffs.
(5) The veil piercing of VLOX is appropriate as to Wardak;
and Wardak is personally liable, jointly and severally, with
VLOX and Starwalker, for the judgments entered in this case.
(6) Wardak's transfer of assets from VLOX and Starwalker
and from Starwalker to himself, while fraudulent conveyances,
do not under all the circumstances warrant an award of
equitable relief to the Plaintiffs;
the Court finds in favor of the Plaintiffs on Count I (breach
of contract) and Count IV (corporate veil piercing) and will
enter judgments as follows:
1. in favor of Plaintiff DMG and against Defendants VLOX,
Starwalker, and Wardak, jointly and severally, in the amount
of $92, 299.80, with interest at the rate of 6% as of May 13,
2. in favor of Plaintiff Artabane and against Defendants
VLOX, Starwalker and Wardak, jointly and severally, in the
amount of $242, 440.40, with interest at the rate of 6% as of
May 13, 2016; and
3. in favor of Defendants on Counts II (Quantum
Meruit), Count III (Fraudulent Inducement), and Count V
further support of this verdict, the Court issues the
following findings of fact and conclusions of law pursuant to
Federal Rule of Civil Procedure 52(a).
OF FACT AND CONCLUSIONS OF LAW
Findings of Fact
on the evidence presented at trial, including the Court's
assessment of the credibility of the witnesses, the weight to
be given each piece of evidence, and the reasonable
inferences to be drawn from that evidence, the Court makes
the following findings of fact:
1. DMG is a Virginia law firm located in Alexandria,
Virginia. Artabane is a Washington D.C. law firm. All DMG
attorneys who performed legal work for VLOX in this matter
are Virginia attorneys, and Joseph Artabane, the only
Artabane attorney who performed legal work for VLOX in this
matter, is a Washington D.C. attorney.
2. Mr. Artabane performed his work for VLOX at DMG's
offices in Alexandria, Virginia.
3. Wardak resides in Dorado, Puerto Rico.
4. VLOX is a District of Columbia limited liability company
wholly owned by Wardak, its sole member. VLOX began
operations as NLC Construction, LLC. In June 2008, NLC
Construction, LLC changed its name to NCL Holdings, LLC. On
February 1, 2011 NCL Holdings, LLC changed its name to VLOX.
VLOX operated without a board of directors since 2009.
5. Starwalker is a Puerto Rico limited liability company
wholly owned by Wardak, its sole member.
6. In 2012, VLOX retained DMG to represent it before the
United States Court of Appeals for the Fourth Circuit in
connection with an appeal from a judgment in the amount of
$2, 814, 034.12 entered against it in favor of Mirzada
Transport & Logistics Co. ("Mirzada") and
related collection discovery by Mirzada with respect to that
unpaid judgment. VLOX and DMG signed a written engagement
letter dated December 4, 2012 in connection with that
7. The engagement letter stated DMG partner Ben DiMuro's
rate at $450 per hour, the rate for DMG associates at $300
per hour, the rate for DMG paralegals at $75 per hour, and
the rate for law clerks at $100 per hour. By its terms, the
representation letter applied only to the Fourth Circuit
appeal, although the letter did say that "[w]e would, of
course, be happy to discuss further representation on a
mutually agreeable basis after the Fourth Circuit issues its
final decision." [Doc. 101-15].
8. In April 2013, while this representation was ongoing, the
parties began discussing DMG's potential representation
of VLOX in an action to enforce the terms of a contract VLOX
had with the Army to provide shipping services in Afghanistan
before the Armed Services Board of Contract Appeals
("ASBCA") in Falls Church, Virginia ("the HNT
9. Wardak viewed himself as the ultimate owner of the HNT
Contract; and the HNT Contract dispute centered on amounts
owed under two provisions: the "base year
demurrage" provision and demurrages under the
"first year option" provision, which were being
pursued in two separate appeals before ASBCA.
10. At that time, DMG did not have an attorney on staff who
specialized in government contract matters and therefore
referred VLOX to Artabane, who specialized in this area.
11. From April to September 2013, VLOX was bidding on another
matter and chose not to pursue the HNT Contract claims while
bidding on that project. Therefore, the parties did not reach
a formal agreement for Artabane to represent VLOX until after
that bidding and selection process was completed, which
occurred by September 2013. VLOX did not win the bid, and
discussions about Artabane's representation of VLOX on
the HNT Contract matters resumed in earnest in September 23,
12. Those discussions pertaining to Artabane's
representation took place over a series of telephone calls
and emails between VLOX and Plaintiffs. Artabane initially
quoted an hourly rate of $650; but at DiMuro's request,
quoted a reduced hourly rate of $550. Neither Mr. Artabane
nor DiMuro informed defendants how often they would be
13. In a September 2013 conference call on which Mr.
Artabane, DiMuro, and Wardak were present, Wardak verbally
approved the rate of $550 per hour for Artabane and retained
Artabane to represent VLOX on the HNT Contract matters,
including both the base year demurrage appeal, which had
already been filed by VLOX's former counsel, Smith
Pachter and was still pending, and the first-year option
14. As a result of their discussions and agreements,
Defendants had an express representation agreement with
15. Artabane began working on both claims in September 2013,
but initially focused primarily on the base year claim. DMG
attorneys did not initially perform work on the base year
claim. However, Artabane began focusing on the option year
claim in early 2014, at which time DMG also began working on
the option year claim.
16. Throughout DMG's involvement in the option year
representation, Wardak and other VLOX personnel interacted
with DG attorneys and never questioned ...