United States District Court, E.D. Virginia, Alexandria Division
O'GRADY, UNITED STATES DISTRICT JUDGE
matter comes before the Court following a two-day bench
trial. The parties submitted pre-trial briefs and oppositions
thereto. As such, the claims and counterclaims in this case
are now ripe for disposition.
reasons that follow and for good cause shown, the Court finds
in favor of Plaintiff Lulit Mulugeta and against Defendant
Samuel Tafesse Ademachew on all claims and counterclaims in
this case. Plaintiff Mulugeta will be awarded relief as
Lulit Mulugeta and Defendant Samuel Tafesse Ademachew are
Ethiopian natives who immigrated to the United States and
became United States citizens. After the parties became
romantically involved, Ademachew convinced Mulugeta to move
to Ethiopia where he operates his businesses and, as one of
the richest men in the county, is well-connected. Mulugeta
moved to Ethiopia, and the parties created a company called
Salit Academy PLC to form and run a school on one of
Ademachew's properties to provide Mulugeta with a source
of income. Ademachew did almost everything to form Salit
Academy PLC and create and operate the school, including
providing the funds; Mulugeta's role was largely limited
to providing her signature when necessary.
after Mulugeta moved to Ethiopia, she became pregnant with
Ademachew's son. She also quickly began to fear for her
safety after a series of incidents involving Ademachew's
wife. As a result, the parties agreed that Mulugeta should
return to the United States. To give Mulugeta money to care
for their son, start a business in the United States, and
relieve her of any remaining obligations in Ethiopia, the
parties entered into a contract to dissolve Salit Academy PLC
and sell the school to Ademachew.
the parties' romantic relationship soured, however,
Ademachew failed to make the scheduled payments for the
school to Mulugeta as required by the contract. Mulugeta sued
Ademachew for breach of contract in this Court, and Ademachew
countersued for breach of contract, unjust enrichment,
fraudulent conveyance, and alter ego liability. Ademachew
also sued Salit Academy PLC in Ethiopia and obtained
judgments that the contract was a mere draft.
Court declined to terminate this case in light of the
Ethiopian judgments at the motion to dismiss and summary
judgment stages. The Court then held a two-day bench trial to
evaluate the parties' respective claims and determine
whether the Ethiopian judgments should be recognized in
evaluating those claims. At trial, the Court heard testimony
from Plaintiff Lulit Mulugeta and Mr. Alemayehu Mengesha,
Mulugeta's purported expert on corruption in the
Ethiopian judiciary. Ademachew did not appear at either day
of the bench trial, despite being on Mulugeta's witness
list, and his counsel did not call any witnesses. As the
parties had already submitted pre-trial briefs, this case is
now ripe for a decision.
FINDINGS OF FACT
The Parties' Relationship with Each Other and the
Formation of Salit Academy.
noted above, both Mulugeta and Ademachew are Ethiopian
natives who relocated to the United States, became United
States citizens, and renounced their Ethiopian
citizenship.Ademachew is a billionaire and has been
represented to be the second wealthiest man in Ethiopia.
Although he is now domiciled in Virginia, Ademachew continues
to visit Ethiopia frequently to maintain his prominent
construction business and has remained well connected with
top officials in the Ethiopian government. Mulugeta
immigrated to the United States in 1992 after graduating high
school and obtained a bachelor's degree in business
administration with a concentration in finance. At the time
the parties met, Mulugeta was working at Boeing in Seattle.
first saw Mulugeta at a New Year's Eve function in 2008.
After seeing Mulugeta at the function, Ademachew began
pursuing a romantic relationship with her. Mulugeta was
married and was not interested in becoming romantically
involved with Ademachew. Ademachew, who was also married,
nevertheless kept pursuing a romantic relationship with her.
The parties eventually met in person for the time in August
2009 while Mulugeta was visiting a friend in Las Vegas,
Nevada. At the time of that meeting, Mulugeta was separated
from her husband and living in Seattle, while Ademachew was
still married to his wife and living in Virginia.
that initial in-person meeting in Las Vegas, Ademachew
finally convinced Mulugeta to begin a romantic relationship
with him. Ademachew never promised Mulugeta that he would
divorce his wife, but told Mulugeta that he had a
"sisterly relationship" with his wife while
"it was love at first sight" with Mulugeta. He told
Mulugeta that in five years he would be able to "figure
something out," and gave her what became the first
promise ring of many throughout the course or their
also told Mulugeta that he wanted her to move closer to him.
Although Ademachew lived in Virginia and had become a United
States citizen, he remained a well-known and well-connected
real estate and construction mogul in Ethiopia. He told
Mulugeta that businesses are profitable in Ethiopia, and that
he would open a school for her in Ethiopia and make her a
multi-millionaire. At first, Mulugeta was hesitant to move to
Ethiopia to be with Ademachew because her life and career
were in Seattle. She also had never thought about opening a
school before and did not have any special training in
education. Eventually, however, Ademachew convinced her to
move to Ethiopia for him.
Mulugeta left Seattle, she purchased a home in Maryland to
maintain her credit through mortgage payments. She purchased
the home in Maryland instead of Seattle because Ademachew
insisted that her United States home be close to his home in
officially moved to Ethiopia in March 2010. Ademachew then
took the lead in establishing a school for her. He chose one
of his developed properties to be the location of the school,
told Mulugeta everything she needed to do to establish Salit
Academy PLC,  and had "expediters" help speed
up what would have otherwise been a slow process.
Mulugeta's role in creating Salit Academy was largely
limited to accompanying Ademachew to meetings to sign
documents. Ademachew paid for everything for Salit Academy
PLC and the school, including the price to rent and later
purchase the school's land from his company for 4.2
million Ethiopian birr, the purchase price he
Ademachew also drafted the Articles of Incorporation for
Salit Academy PLC, which Mulugeta owns with her mother
because two owners are necessary to form a PLC.
after moving to Ethiopia, Mulugeta became pregnant with
Ademachew's son. She also began to feel unsafe after
Ademachew's wife came to the house Ademachew was renting
for Mulugeta and later left a letter at the house telling
Mulugeta "you should go back to where you came from, or
you're going to suffer dire consequences." As a
result, Mulugeta resigned as the general manager of Salit
Academy and moved back to Maryland in September 2010.
Academy had not yet opened before Mulugeta left Ethiopia.
After Mulugeta left and resigned as general manager, her
brother Tatek became the school's general manager at
Ademachew's suggestion. Mulugeta remained the owner of
the school, but was never involved in running the school and
was not given updates about the school even when she asked.
2014, Mulugeta decided to end her romantic relationship with
Ademachew because she "felt like he wasn't the
person that [she] thought he was going to be," although
she strived to maintain a cordial, platonic relationship for
the sake of their son. Sometime in 2014 or 2015, the parties
agreed to close Salit Academy. Ademachew told Mulugeta the
school was never profitable, and he was tired of infusing
money into it. Mulugeta also had no interest in moving back
to Ethiopia to run the school and wanted to reestablish
herself in the United States. The parties therefore agreed to
sell the school and have Mulugeta use the money from the sale
to run a business in the United States.
found a buyer for the school and assured Mulugeta that the
sale would go through and that he would cover the sale price
if the buyer did not pay it in full. Based on Ademachew's
representations, Mulugeta flew to Ethiopia to complete the
necessary paperwork to complete the sale. Upon her arrival in
Ethiopia, however, Ademachew informed Mulugeta that the buyer
had changed his mind.
weeks later, the parties agreed that Ademachew would buy the
school from Salit Academy PLC and pay Mulugeta the sale price
personally in United States dollars, which Mulugeta would
then use to establish a business in the United States. The
parties later formalized their oral agreement in the written
contract that is the subject of this litigation.
The Terms of the Contract.
contract was drafted in Ethiopia on June 27, 2015 and signed
on August 4, 2015.Although the contract was written in
Amharic, the Court has been provided with a certified English
contract provides that Salit Academy PLC will sell the school
to Ademachew for one million dollars. Contract ¶¶
2, 4. Ademachew suggested the $1 million price and although
Mulugeta was told she could get more for the school, she
agreed to that amount because it was a good round number, the
parties had agreed the money would go directly to Mulugeta,
and the parties contracted that Mulugeta would not be
responsible for any other costs.
contract provides that Ademachew was to pay the $1 million in
three installments. Id. ¶ 4. The parties
further agreed that the $1 million would be paid to Mulugeta
directly to help her reestablish herself and start a business
in the United States.
first scheduled payment installment was for $435, 000.
Id. at ¶ 4.1. Half of the first installment was
due on July 22, 2015, and the second half was due on
September 15, 2015. Id. The contract specifies that
these payments were to "be deposited in Ms. Lulit
Mulugeta['s] name at her account in America with the
official exchange rate." Id.
second scheduled payment installment of $217, 500 was to be
paid in full on October 25, 2015 by depositing that sum in
"Ms. Lulit Mulugeta's U.S. account with an official
exchange rate." Id. at ¶ 4.2.
third payment installment of $347, 500 was to be exchanged in
person "after [Salit Academy PLC] gets a clearance and
gets a sells [sic]" - i.e., title transfer - "contract
ready to be signed, from the office of documents registration
and approval, and informs [Ademachew], before November 30
2015 [sic], and Ms. Lulit Mulugeta signs within sixty
days." Id. at ¶ 4.3. Although paragraph
4.3 stated that Salit Academy PLC was to obtain the clearance
and title transfer contract, Mulugeta understood that
Ademachew had agreed to take on these responsibilities in
paragraph 5.2 because Mulugeta was never really involved with
the school and needed to return to the United States to care
for their son, while Ademachew was often in Ethiopia and had
experience selling property in Ethiopia. Consistent with
Mulugeta's understanding, paragraph 5.2 states:
The building on this contract is sold because it was decided
to dissolve Salit Academy Pic. Hence we have agreed that it
is the responsibility of the buyer [Ademachew], either
himself or through a representative, to follow up all the
responsibilities of the hired manager of the association of
all the tasks regarding dissolving the association and
getting a clearance, checking the right documents have been
given to the concerned government offices, [and ensuring] the
account books of the association have been closed.
Id. ¶ 52
also agreed to assume the responsibility of providing the tax
clearance forms for the sale of the school, id. at
¶ 3.3, and "cover all expenses... related to name
transfer," including taxes, id. at ¶ 5.1.
Additionally, consistent with both Mulugeta's
understanding and Ademachew's representations of
Ethiopian law governing the transfer of property title, the
contract's final paragraph regarding the parties'
obligations specifies that the title transfer contract will
be "presented to the Office of Document Registration and
Approval and signed" to effectuate the name transfer.
Id. at ¶ 5.4.
than returning to Ethiopia to ultimately sign the title
transfer paperwork, the only other obligation Mulugeta
retained on behalf of Salit Academy PLC was to obtain a
dissolution paper for the corporation from the Document
Authentication and Registration Office ("DARO")
within "six month (180) days of the signing of this
contract." See Id. at ¶ 3.1 (quoted
meantime, the parties agreed that Ademachew would be given
immediate control of the school and assume all expenses and
responsibilities for the property. Id. at
event Ademachew defaulted on any of his obligations under the
contract, he agreed to pay a $100, 000 penalty
"according to the Civil Code No. 1889."
Id. at ¶ 4.4. The contract does not contain any
other provisions that would apply in the event of a breach.
contract also does not contain a choice-of-law clause
governing the interpretation and enforcement of the contract.
There is, however, a provision specifying that "all
relevant proclamations of the civil code law will prevail in
relation to the building [Salit Academy PLC] is transferring
to [Ademachew]." Id. at ¶ 6.
as the designated officer and deputy manager of Salit Academy
PLC, and Ademachew signed the contract on August 4, 2015,
certifying their agreement "that this contract is
binding from the day the contracting parties signed on
it" and that they "have agreed, with all
willingness and desire, to implement the responsibilities and
tasks implicated within this contract." Id. at
¶¶ 1, 7.
Events Following the Formation of the Contract.
in Ethiopia to sign the contract, Mulugeta completed the only
step the parties agreed she was required to take until she
signed the title transfer document: obtain a dissolution
certification from DARO. Mulugeta also transferred control of
the school to Ademachew, with her brother serving as general
failed to pay the first installment of the contract price as
required. The contract required the first payment of $435,
000 to be paid in half by July 22, 2015, and in full by
September 15, 2015. Id. at ¶ 4.2. Ademachew
paid Mulugeta $99, 955 on July 9, 2015,  Pl.'s Ex.
2, $235, 000 on August 5, 2015, Pl.'s Ex. 3, and $100,
000 on September 8, 2015, Pl.'s Ex. 4. Together, these
three payments were $45 shy of the $435, 000 Ademachew owed
Mulugeta. Mulugeta was told the disparity was the result of
wire transfer fees.
never received any portion of the second installment of the
contract price. Mulugeta repeatedly asked Ademachew about the
payment, and he kept responding that he would get it done. At
some point, however, Ademachew began making additional
demands of Mulugeta before he would send her the second
installment. For example, Ademachew asked Mulugeta to give
him the Salit Academy PLC dissolution papers so he could sell
the school and pay Mulugeta from the proceeds. Ademachew also
asked for a new agreement that differed from the contract the
parties had signed. Mulugeta refused to give Ademachew the
dissolution papers before she received the second payment
installment required by the contract because once she gave
Ademachew the dissolution papers, she believed there would be
no way to get the school back or the money she was owed.
months of Ademachew also missing child support payments and
threatening to reduce child support, Mulugeta sued Ademachew
in Maryland for sole custody of their son and for court
mandated child support. After the custody suit was filed,
Ademachew told Mulugeta that he was "not doing anything
hoped that the parties' child support, child custody, and
contract disputes could all be resolved in a single
settlement. To that end, after Mulugeta received a legal
notice from Ademachew requesting that Mulugeta provide him
with signed tax documents,  Mulugeta's attorney in the
Maryland case sent a letter to Ademachew with the following
Ms. Mulugeta has been awaiting payment since October 25, 2015
under the parties' contract, but Mr. Ademachew has
recently voiced concerns about his ability to transfer the
school to his name without Ms. Mulugeta's completion of
documents that will help clear any clouds on title. We
propose that Mr. Ademachew deposit the $565, 000.00 owed to
Ms. Mulugeta in an escrow account in Maryland. After the
funds are deposited, Ms. Mulugeta will complete the documents
required to clear title on the school so that Mr. Ademachew
can transfer the school to his name. Ms. Mulugeta will
provide the completed documents to Mr. Ademachew, after which
the escrowed funds can be transferred to her.
Pl.'s Ex. 5. Ademachew did not accept Mulugeta's
believes that unless her contract with Ademachew is enforced,
she will be damaged. Mulugeta testified that she would not
feel safe traveling to Ethiopia to try to sell the property
and, in any event, she believes Ademachew would interfere
with any attempts she made to sell the property. Mulugeta
also testified that she cannot hire a real estate agent to
sell the property for her because when she attempted to do
just that, the real estate agent was told to leave and that
the property was not for sale. As a result, when Ademachew
refused to comply with the contract or accept her settlement
offer, Mulugeta filed this present lawsuit for breach of
this lawsuit was filed, the parties discussed settling the
case. During those discussions, Ademachew told Mulugeta
"I may not win, but I am going to exhaust you
financially litigating it." Ademachew also filed
counterclaims alleging (1) breach of contract, (2) unjust