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Dastranj v. Dehghan

United States District Court, D. Maryland

August 17, 2017




         Pending are Plaintiff's and Defendant's cross-motions for summary judgment (ECF Nos. 66, 67). The issues are fully briefed and hearing was held on Friday, August 4, 2017. For the reasons stated below, both motions are granted in part and denied in part.

         I. BACKGROUND[1]

         Plaintiff Farhad Dastranj (“Dastranj”) is an Iranian citizen and resident seeking to immigrate to the United States. He attempted to obtain an Employment Based Fifth Preference Immigrant Investor Visa (“EB-5 Visa”) under the Immigrant Investor Program (the “EB-5 Program”). ECF No. 67-2 at 1. To be eligible for an EB-5 Visa, the applicant must invest, or be actively in the process of investing, at least $500, 000 in an enterprise that will benefit the United States economy by creating full time employment for not fewer than ten (10) qualified individuals. USA Investco (“Investco”), Northern Riverfront Marina and Hotel LLP (“Northern Riverfront”), and Wilmington Riverfront Development LLC (“Wilmington Riverfront”) are North Carolina-based companies that facilitate prospective EB-5 investors' visa requirements by coordinating investment in a qualified project located in Wilmington, North Carolina (the “EB-5 Project”).[2] Id.

         Defendant Mehdi Dehghan (“Dehghan”) was employed by Investco as its Senior Vice President for Investor Relations and President of Middle East and Central Asian affairs. His responsibilities included acquiring investor capital for the Northern Riverfront and Wilmington Riverfront projects. Id. at 1-2.[3] For each EB-5 investor whom Dehghan brought to invest in the EB-5 Project, Investco paid Dehghan a $35, 000 commission. Id. at 2.

         Dehghan first met Dastranj in 2010 in Iran to discuss Dastranj's participation in the EB-5 Program generally and his investment in the Wilmington EB-5 Project more specifically. Over several meetings in Iran, Dehghan presented Dastranj with written documents prepared by Investco about the Wilmington EB-5 Project and discussed the terms of Dastranj's participation. Id. at 2. Dehghan specifically informed Dastranj the EB-5 visa Project required a minimum of $500, 000 in a qualified investment such as the Wilmington project, plus a $75, 000 administrative and attorneys' fee. Dehghan provided Dastranj with a Subscription Agreement to purchase an interest in the Wilmington EB-5 Project, which Dastranj signed on August 8, 2010. Id. at 3.

         As of August 2010, federal law prohibited United States persons from engaging in financial transactions involving Iran without first obtaining a license issued by the Department of Treasury's Office of Foreign Asset Control (“OFAC”). Thus, a necessary prerequisite to transferring Dastranj's funds into the United States for the EB-5 Project was obtaining the proper OFAC license. See generally Iranian Transactions and Sanctions Regulations (“ITSR”), 31 C.F.R. §§ 560.101-560.901. Dehghan therefore connected Dastranj to Investco's attorney Ali Herischi to facilitate obtaining the OFAC license.

         Because Dastranj did not have $575, 000 at the time the gentlemen discussed the EB-5 program, Dastranj and Dehghan orally agreed that Dastranj would transfer funds incrementally to Dehghan who would hold the funds in his Iranian bank account until the funds totalled the dollar equivalent of $ 575, 000. ECF No. 67-2 at 4. Dastranj and Dehghan further agreed that, once the payments reached the equivalent of $ 575, 000 and the OFAC license was issued, Dehghan would transfer Dastranj's investment to United States and the EB-5 Project. Dastranj also informed Dehghan that he, Dastranj, would need to inspect and approve personally the EB-5 Project in North Carolina prior to authorizing the transfer of funds to the United States.

         Beginning in the fall of 2010 and throughout 2011 and 2012, Dastranj made partial periodic payments that were transferred to Dehghan's Iranian bank account. See ECF No. 67-2 at 4-5. Aside from an initial $75, 000 payment, Dastranj made these payments in Iranian rials. See Id. Dehghan would then provide Dastranj signed, hand-written receipts documenting the value of the specific payment in both rials and United States dollars. See id.

         On June 17, 2012, Dastranj applied for a B1/B2 nonimmigrant visa to enter the United States for inspection of the EB-5 investment Project. Id. at 6. His visa application was denied in October 2012. On June 30, 2013, Ali Herischi informed Dastranj and Dehghan that the United States granted the OFAC license for Dastranj's investment. Id. at 5.

         Nonetheless, Dastranj was never able to visit and personally approve the investment project. Accordingly, on or about May 2013, Dastranj requested that Dehghan return his investment. See Pl.'s Mot. Summ. J., ECF No. 67-1 at 5. Dehghan never claimed that Dastranj's demand for his money back was inconsistent with the terms of their agreement. Dehghan simply did not return any the funds. For several years to follow, Dastranj continued to demand return of the funds to no avail. Although Dehghan repeatedly assured Dastranj that he would return the money (once claiming he would do so after he was “paid” by Investco), repayment to Dastranj never happened. See ECF No. 67-2 at 8-9. To date, Dehghan has not returned any of Dastranj's investment.

         On August 17, 2015, Dastranj filed the instant Complaint against Dehghan asserting six counts: (1) breach of contract; (2) unjust enrichment; (3) fraud; (4) “Consumer Protection Violation- N.C. Gen. Stat. § 75-1.1;” (5) “Fraudulent and Other Prohibited Practices- N.C. Gen. Stat. § 78A-8”; and (6) “Fraudulent Interstate Transactions-15 U.S.C. § 77q.” ECF No. 1. Dastranj's claims center on Dehghan's refusal to return Dastranj's investment monies once Dastranj was unable to visit the EB-5 project site and thus participate in the EB-5 program. See generally Id. On February 10 and 11, 2017, Dastranj and Dehghan filed cross-motions for summary judgment. See ECF Nos. 66 & 67. The Court begins with Plaintiff's motion.


         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing predecessor to current Rule 56(a)). The burden is on the moving party to demonstrate the absence of any genuine dispute of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). If sufficient evidence exists for a reasonable jury to render a verdict in favor of the party opposing the motion, then a genuine dispute of material fact is presented and summary judgment should be denied. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). However, the “mere existence of a scintilla of evidence in support of the [opposing party's] position” is insufficient to defeat a motion for summary judgment. Id. at 252. The facts themselves, and the inferences to be drawn from the underlying facts, must be viewed in the light most favorable to the opposing party, Scott v. Harris, 550 U.S. 372, 378 (2007); Iko v. Shreve, 535 F.3d 225, 230 (4th Cir. 2008), who may not rest upon the mere allegations or denials of his pleading but instead must, by affidavit or other evidentiary showing, set out specific facts showing a genuine dispute for trial, Fed.R.Civ.P. 56(c)(1).

         When a court is called upon to decide cross-motions for summary judgment, it must review each motion separately as to whether either party deserves judgment as a matter of law. Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003). Thus, as with any motion for summary judgment, the court must review the facts and reasonable inferences therefrom in the light most favorable to the party opposing that motion. Id.


         A. Choice of Law

         This Court is presiding over a diversity action in Maryland, and thus applies Maryland choice of law rules. See Wells v. Liddy, 186 F.3d 505, 521 (4th Cir. 1999) (“A federal court sitting in diversity must apply the choice-of-law rules from the forum state.”). For causes of action sounding in tort, Maryland adheres to the lex loci delicti rule, applying the substantive law of the state in which the alleged tort took place. Philip Morris Inc. v. Angeletti, 358 Md. 689, 744-45 (2000). For causes of action sounding in contract, Maryland follows the doctrine of lex loci contractus, applying the substantive law of the place where the contract was formed. Allstate Ins. Co. v. Hart, 327 Md. 526, 529 (1992). Finally, where a case involves causes of action sounding in tort and contract, Maryland embraces the concept of “dépeçage.” That is, the court will apply lexi loci delicti to the tort-based issues and lex loci contractus to those based in a contract. Erie Ins. Exch. v. Heffernan, 399 Md. 598, 620 (2007).

         Dehghan originally argued, in connection with a prior motion to dismiss, that Iranian law governs this case because Dastranj's alleged injuries occurred in Iran. See ECF No. 59 at 4-8. Indeed, the meetings between Dehghan and Dastranj, the transfer of Dastranj's funds, and Dastranj's subsequent efforts to recapture his investment, all occurred in Iran. But this Court cannot apply foreign law unless “the requirements of Rule 44.1 of the Federal Rules of Civil Procedure are [first] met.” Baker v. Booz Allen Hamilton, Inc., 358 F. App'x 476, 481 (4th Cir. 2009). Rule 44.1 states:

A party who intends to raise an issue about a foreign country's law must give notice by a pleading or other writing. In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination must be treated as a ruling on a question of law.

         Where, as here, a party fails to carry its burden under Rule 44.1, the forum law applies. Baker, 358 F. App'x at 481(citing Ferrostaal, Inc. v. M/V Sea Phoenix, 447 F.3d 212, 216 (3d Cir. 2006) and The Hoxie, 297 F. 189, 190 (4th Cir. 1924), for its holding in a “pre-Rule 44.1 case, that forum law applies unless the party seeking to use foreign law establishes that foreign law differs from forum law”)).

         At the motion to dismiss stage, Dehghan failed to satisfy his burden under Rule 44.1 regarding application of foreign law, and has since abandoned his efforts in this regard. Dehghan now concedes that Maryland law applies to Dastranj's common law claims. See ECF No. 66-1 at 10. The Court will therefore apply Maryland law to Dastranj's common law claims of breach of contract, unjust enrichment, and fraud.

         In Counts IV and V of his complaint, Dastranj alleges that Dehghan violated two North Carolina statutes-§ 75.1.1 of North Carolina's Unfair and Deceptive Trade Practices Act (“UDTPA”), N.C. Gen. Stat. Ann. § 75-1.1; and § 78A-8 the North Carolina Securities Act (“NCSA”), N.C. Gen. Stat. Ann. § 78A-8. See ECF No. 1 at 9-12. Section 75-1.1 of UDTPA declares unlawful “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.” Section 78A-8 of the NCSA prohibits persons, “in connection with the offer, sale or purchase of any security, directly or indirectly: (1) To employ any device, scheme, or artifice to defraud; (2) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading or; (3) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.” A claim under the NCSA is, in many ways, like an action under the UDTPA. See Associated Packaging, Inc. v. Jackson Paper Mfg. Co., No. 10 CVS 745, 2012 WL 707038, at *4 ( N.C. Super. Mar. 1, 2012).

         In support of the North Carolina statutory claims, Dastranj alleges that Dehghan duped Dastranj to transfer funds based on false promises of facilitating Dastranj's investment in the EB-5 Project. Dehghan's deceptive conduct, says Dastranj, not only violated the UDTPA, but also the NCSA because it was in furtherance of the sale of a security, namely, a stake in the EB-5 Project. If Dastranj were to prevail on his UDTPA claim, he is entitled to treble damages pursuant to N.C. Gen. Stat. § 75-16. See Marshall v. Miller, 302 N.C. 539, 547 (1981) (finding that the “Legislature intended trebling of any damages assessed to be automatic once a violation is shown.”). The Court in its discretion may also award attorney's fees to the prevailing ...

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