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Cerner Middle East Ltd. v. Al-Badie Al-Dhaheri

United States District Court, D. Massachusetts

February 28, 2017

CERNER MIDDLE EAST LIMITED, a Cayman Islands Exempted Company, Plaintiff,


          F. Dennis Saylor IV, United States District Judge

         This is an action for recognition and enforcement of a foreign arbitral award. Plaintiff Cerner Middle East Limited has brought suit against two individuals, Ahmed Saeed Mahmoud Al-Badie Al-Dhaheri (“Ahmed Dhaheri”) and his son, Abdulla Ahmed Al-Badie Al-Dhaheri (“Abdulla Dhaheri”). The complaint alleges that Ahmed Dhaheri owes Cerner more than $62 million pursuant to an arbitral award issued by the International Court of Arbitration of the International Chamber of Commerce (“ICC”). The complaint further alleges that Ahmed Dhaheri fraudulently transferred a joint interest in a condominium located at 29 Otis Street in Cambridge, Massachusetts, to his son six months after the issuance of the award, and that the pair later transferred the property to a third party for $990, 000. Cerner seeks damages from Ahmed Dhaheri and to reach and apply the proceeds from the sale of the 29 Otis Street property.

         Defendants have moved to dismiss the complaint for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2).[1] For the following reasons, the motion will be denied.

         I. Background

         A. Factual Background

         Plaintiff Cerner Middle East Limited is a foreign company organized under the laws of the Cayman Islands, with a principal place of business in Kansas City, Missouri. (Compl. ¶ 2). Defendants Ahmed Dhaheri and his son, Abdulla Dhaheri, are both residents of Abu Dhabi, United Arab Emirates, and are U.A.E. citizens. (Id. ¶¶ 3-4; Ahmed Dhaheri Decl.). Ahmed Dhaheri is one of two members of iCapital, LLC, which is a U.A.E. limited liability company. (Ahmed Dhaheri Decl.)

         1. Arbitral Award

         In 2008, iCapital and Cerner entered into a $94 million contract concerning the development of a medical information technology platform in the U.A.E. (Compl. ¶ 5). According to the complaint, iCapital promptly defaulted on its payment obligations under that contract. (Id. ¶ 15).

         On December 29, 2012, after a series of amendments to the contract, iCapital and Cerner entered into a Settlement and Payment Agreement (“SPA”) and a Fifth Amendment to the contract. (Id. ¶¶ 19-22; Hadas Decl., Ex 3; Hadas Decl., Ex. 4). The Fifth Amendment provided that “in the event of a dispute” the parties to the contract would submit to a “binding arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce.” (Hadas Decl., Ex. 4 § 9.3). The SPA is governed by Missouri law, as is the underlying contract. (Id. § 14; Id., Ex. 2 § 9.14). Cerner and iCapital, but not Ahmed Dhaheri, are signatories to the SPA and Fifth Amendment. (Id., Ex. 3-4).

         iCapital again failed to make payments in accordance with the SPA and Fifth Amendment. (Compl. ¶¶ 23-24). On August 23, 2013, Cerner filed a request for arbitration with the ICC against both iCapital and Ahmed Dhaheri. (Id. ¶ 30). In November 2014, an arbitration hearing was held in Paris, France. (Id. ¶¶ 34-35). Neither iCapital nor Ahmed Dhaheri appeared in that proceeding to contest Cerner's claims. (Hadas Decl., Ex. 5 ch. 1.2.4). On July 16, 2015, the arbitral tribunal issued a final award of more than $62 million in favor of Cerner against iCapital and Dhaheri, jointly and severally. (Id. ch. 12). The arbitral tribunal found that a valid arbitration agreement existed between Cerner and iCapital arising from both the SPA and the Fifth Amendment, and that it had jurisdiction over Ahmed Dhaheri on the basis that he was acting as the alter ego of iCapital with respect to the relevant transactions. (Id. ch. 12.1, 10.2.54).

         2. Massachusetts Real Property

         In July 2007, Ahmed Dhaheri purchased a condominium located at 29 Otis Street, Unit 601, in Cambridge, Massachusetts, for $799, 000. (McGovern Decl., Ex. A). On January 3, 2016, about six months after the final arbitral award was issued, Ahmed Dhaheri transferred the property to himself and Abdulla Dhaheri as joint tenants with a right of survivorship for nominal consideration. (Id., Ex. B). On July 15, 2016, defendants sold the property to a third party for $990, 000. (Id., Ex. C).

         B. Procedural Background

         Cerner brought this action in Middlesex Superior Court on August 1, 2016. The complaint alleges three claims arising under both federal and state law. Defendants removed this action pursuant to 9 U.S.C. § 205, asserting jurisdiction under 9 U.S.C. § 203. Defendants have moved to dismiss the complaint on the basis of lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2).

         Although defendants have moved to dismiss, they have not yet been properly served with the complaint in this action. Defendants, as U.A.E. citizens, must be served in accordance with U.A.E. civil procedure, which presents multiple “procedural hurdles.” See Orsi v. Falah, 2012 WL 4469120, at *4 (D. Mass. Sept. 25, 2012), (describing U.A.E. procedures for effecting service of process).[2] Plaintiff expects that service of process may take up to eighteen months to complete. (Pl. Opp. 17).

         II. Standard of Review

         Plaintiff bears the burden of establishing that the court has personal jurisdiction over the defendants. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir. 2002). In considering a motion to dismiss under Rule 12(b)(2), the court may employ several standards to assess whether plaintiff has carried that burden: the “prima facie” standard; the “preponderance-of-the-evidence” standard; or the “likelihood” standard. See Id. at 50 n.5; Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 145-46 (1st Cir. 1995). Where, as here, the court is called to make that assessment without first holding an evidentiary hearing, the prima facie standard is applied. See United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001). Under that standard, the court takes plaintiff's “properly documented evidentiary proffers as true and construe[s] them in the light most favorable to [plaintiff's] jurisdictional claim.” A Corp. v. All American Plumbing, Inc., 812 F.3d 54, 58 (1st Cir. 2016) (citing Phillips v. Prairie Eye Ctr., 530 F.3d 22, 26 (1st Cir. 2008)). A plaintiff may not “rely on unsupported allegations in [its] pleadings.” A Corp., 812 F.3d at 54 (quoting Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118, 134 (1st Cir.2006) (alteration in original)). “Rather, [the plaintiff] must put forward ‘evidence of specific facts' to demonstrate that jurisdiction exists.” Id. (quoting Foster-Miller, 46 F.3d at 145). Facts offered by the defendant “become part of the mix only to the extent that they are uncontradicted.” Astro-Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1, 8 (1st Cir. 2009) (quoting Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007)).

         To establish personal jurisdiction, plaintiff must show that the requirements of the Massachusetts long-arm statute, Mass. Gen. Laws ch. 223A, § 3, are satisfied, and that the exercise of jurisdiction is consistent with constitutional due process. Daynard, 290 F.3d at 52; Intech, Inc. v. Triple “C” Marine Salvage, Inc., 444 Mass. 122, 125 (2005). Due process requires that a plaintiff alleging specific personal jurisdiction establish the existence of three conditions:

First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's in-state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence ...

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