DYNACORP LTD., et al. v. ARAMTEL LTD., et al., 208 Md. App. 403

WATTS, J.

Appellants, Dynacorp Limited (“Dynacorp”), Moutiny Limited (“Moutiny”), and Faisal Fadul, appeal a judgment by the Circuit Court for Howard County against them in favor of appellees, Aramtel Limited (“Aramtel”), Jay Salkini, and Te-core Wireless Systems Middle East and Africa FZ-LLC (“TWS”), as to counterclaims alleging one direct claim of fraudulent inducement and seven derivative claims-for breach of contract, fraud, constructive fraud, negligent misrepresentation, breach of fiduciary duty, conversion, and usurpation of corporate opportunity and corporate waste-as a result of a failed joint venture to provide a wireless telecommunications network in Iraq.

Appellants raise four issues, which we rephrase and reorder as follows: I. Whether the circuit court erred in entering judgment in favor of appellees as to the direct claim for fraudulent inducement? II. Whether the circuit court erred in finding that appellees had standing to bring derivative claims on Moutiny’s behalf against appellants? III. Whether the circuit court erred in exercising personal jurisdiction over Dynacorp and Fadul as to the seven derivative claims? IV. Whether the circuit court erred in entering judgment in favor of appellees as to the seven derivative claims?

For the reasons set forth below, we answer the first three questions in the negative. We answer the fourth question in the affirmative. We, therefore, affirm the judgment of the circuit court as to Count I, fraudulent inducement, and affirm the award of $45,089,392.81, plus interest. We vacate the judgments of the circuit court as to Count II through Count VIII, the derivative claims. FACTUAL AND PROCEDURAL BACKGROUND Because our resolution of question I involves the legal sufficiency of the evidence, we must set forth the lengthy and detailed facts of the case.

The facts set forth below are summarized from testimony and exhibits introduced at trial, and the pleadings and motions filed in the case. In 2003, after the United States invaded Iraq, much of Iraq’s infrastructure, including Iraq’s wireless telecommunications network, was damaged, destroyed, or obsolete. Fadul— who had been born and educated in Iraq, but immigrated to the United States in 1981—saw an opportunity to make money and “help Iraqis” by providing telecommunications.

As a result, Fadul traveled to Iraq to set up a telecommunications company and work with the Ministry of Communications of Iraq (the “MOC”) to operate a wireless local loop (“WLL”) network.

In 2004, with the help of Niran Al-Hadethy, an Iraqi attorney, Fadul organized and incorporated an Iraqi company whose English name was “VitalTel” and whose Arabic name was “Al Khat Al Hayawi.” For at least two years, Fadul and his staff engaged in discussions with the Minister of Telecommunications of the MOC to establish a contract between VitalTel and the Iraqi Telecommunications and Post Company (the “ITPC”) for the license necessary to provide telecommunications in Iraq through a WLL network.

(1) The VitalTel License On November 27, 2005, VitalTel and the ITPC entered into a WLL Operations and Management Agreement (the “Li~ cense”), which permitted VitalTel to provide wireless telephone services in ten provinces in Iraq for eight years with the option to renew the license for an additional eight years. Under the License, VitalTel agreed to “make investments, provide and install equipment, set up, operate and maintain the access network and provide Services in Iraq based on a WLL[ ] system!.]” VitalTel expended $2,600,000 to obtain the License, and valued the License at $75,000,000.

According to Fadul, at the time VitalTel obtained the License, VitalTel lacked the funds to build the required network. As a result, Fadul began to search for investors to finance the project.

(2) The Joint Venture Salkini is: (1) the CEO and owner of Tecore, Inc. (“Te-core”), a telecommunications company headquartered in Columbia, Maryland, (2) the managing director and owner of TWS, a company based in Dubai, United Arab Emirates, responsible for telecommunications projects in the Middle East and Africa, and (3) the director of Aramtel, a United Arab Emirates holding company that is owned by Salkini’s brother and invests in telecommunications operations. In 2005, Salkini began negotiations with Fadul to invest in Vital-Tel.

On December 14, 2005, Fadul sent Salkini an e-mail, attaching a document concerning VitalTel titled the “Eight Year Financial Plan” (the “Plan”). The Plan contained no restrictions or disclaimers, and projected large profits for VitalTel over the course of eight years. On December 22, 2005, Fadul sent Salkini an e-mail, attaching a document titled “Business Plan and Fiscal Infusion Analysis” (the “business model”). The business model stated that “VitalTel [was] positioned to become [t]he Verizon of Iraq[,]” and projected a net profit in excess of $1,000,000,000 by VitalTel’s fifth year.

On or around January 30, 2006, Fadul sent Salkini a document, titled the “VitelTel

Summary Proposal” (the “Proposal”), that outlined a business plan for VitalTel. The Proposal contained a disclaimer on the cover, stating: “This document is not meant to be relied upon by investors.” The Proposal touted that “VitalTel [was] positioned to become [t]he Verizon of Iraq by installing and operating a national wireless telephone and data network in Iraq” and projected profits of over $1,000,000,000 by VitalTel’s eighth year. On February 1, 2006, Fadul sent Salkini an e-mail, stating: “Attached please find VitalTel’s

article of [injcorporation [from] Iraq[,]” and attached a document titled “[V]it[a]l[T]el [CJontract.” The document’s first page displayed the name “VitalTel” in English and VitalTel’s logo and telephone number, but was otherwise in Arabic. An English translation of the document attached to Fadul’s February 1, 2006, e-mail states that:

(1) Fadul is the sole owner and founder of “AlKhat Al-Hayawi,” (2) the name of the company is “ Al-Khat Al-Hayawi’ (VitalTel),” and (3) the company is headquartered in Baghdad, Iraq. (

a) March 2006 Moutiny Operating Agreement (“March Operating Agreement”) and Creation of Moutiny On March 16, 2006, Aramtel and VitalTel entered into an agreement titled the “Moutiny Limited Operating Agreement” (the “March Operating Agreement”), in which the parties agreed to authorize the formation of a company known as Moutiny, incorporated in the United Arab Emirates. Fadul was to serve as Moutiny’s managing member and chief executive officer. Salkini signed the March Operating Agreement on behalf of Aramtel, as director, and Fadul signed the agreement on behalf of VitalTel, as chief executive officer.

Fadul signed the March Operating Agreement for VitalTel and TeckTel for the purpose of binding VitalTel and TeckTel. Salkini signed the March Operating Agreement for TWS for the purpose of binding TWS. The March Operating Agreement identified Moutiny’s purposes, in pertinent part, as follows: (

i) to provide [WLL] and other telecommunication services in the Republic of Iraq and elsewhere; (ii) to acquire, develop, exploit, sublicense, and otherwise deal in licenses, permits, and all manner of rights to provide wireless telecommunications serviees[.] The March Operating Agreement contained the following language in

Section 1.8: Enforceability of the terms of this Agreement under the laws of any Jurisdiction and the transfer of any Equipment Funds or Operating Funds (as set forth in

Section 3.8(ii)) is subject to the approval of this Agreement and TWS as equipment supplier by the Republic of Iraq Ministry of Communications. As part of the March Operating Agreement, Aramtel agreed to contribute $500,000 in cash and VitelTel agreed to contribute the License, which was valued by the parties at $500,000 and described as “that certain WLL O & M Agreement by and between [ITPC] and VitelTel, dated November 27, 2005.” Aramtel agreed to lend Moutiny up to $25,000,000 to purchase telecommunications equipment from TWS and an additional $5,000,000 for operating expenses. Both Aramtel and VitalTel were to own 50% of Moutiny.

Section 14.5 of the March Operating Agreement provided: “Irrespective of the place of execution or performance, this Agreement shall be governed by and construed in accordance with the laws of the United Arab Emirates, exclusive of any conflicts of laws principles.” On March 16, 2006, the same day on which the March Operating Agreement was signed, TWS and Moutiny entered into a “Wireless System Supply Purchase Agreement” (the “March Purchase Agreement”), in which TWS agreed to sell Moutiny the equipment necessary to set up the “system.” According to Fadul, in March 2006, the ITPC declined to approve the transfer of the License from VitalTel to Moutiny and to agree to the use of TWS equipment, and the March Operating Agreement lapsed as anticipated by

Section 1.8 of the March Operating Agreement. Nonetheless, Fadul and Salkini continued discussions about reaching a new agreement. On April 7, 2006, Fadul and Salkini met at Fadul’s office in Virginia to discuss “getting the deal back on track[.]” At that meeting, the parties discussed the terms of a potential new operating agreement for Moutiny. (

b) April 2006 Operating Agreement (“April Operating Agreement”) On April 12, 2006, in Columbia, Maryland, Aramtel and Dynacorp—a company owned solely by Fadul—entered into an agreement titled the “Moutiny Limited Operating Agreement” (the “April Operating Agreement”), in which the parties again agreed upon the organization of Moutiny. Salkini signed the April Operating Agreement on behalf of Aramtel, as director, and Fadul signed the agreement on behalf of Dynacorp, as director. Salkini signed the April Operating Agreement for TWS, for the purpose of binding TWS.

Fadul signed the April Operating Agreement for TeckTel, for the purpose of binding TeckTel, and providing ownership of Dynacorp. As in the March Operating Agreement, Fadul was to serve as the managing member of Moutiny as well as the chief executive officer. The April Operating Agreement provided that “the parties [ ] organized Moutiny Limited to own 100% of the ownership interests in Vit[a]lTel” and that “the parties desire to set forth and agree upon the terms and conditions governing the operation of Moutiny!.]” In

Section 1.3 of the April Operating Agreement, Moutiny’s purposes are identified, in pertinent part, as follows: (

i) to own 100% of the ownership interests in Vit[a]lTel, which shall be engaged in the business of providing [WLL] and other telecommunication services in the Republic of Iraq and elsewhere; Vit[a]lTel’s responsibilities shall include, but shall not be limited to, the installation, commissioning, and provisioning of all systems, operations and maintenance of all systems, and sales and marketing of [WLL] Services; The parties acknowledge and agree that the primary purpose and function of [Moutiny] is to serve as a “holding-company” to own all of the ownership interests in Vit[a]lTel, and that Vit[a]lTel (and not the company) shall conduct business operations to carry out the activities specified in clause (i), above.

As to initial capital contributions, in

Section 3.1 of the April Operating Agreement, Aramtel agreed to contribute $500,000 in cash. Dynacorp and/or Fadul agreed to contribute 100% of all of their ownership interests in VitalTel, valued at $500,000. The parties agreed that Aramtel and Dynacorp would each own 50% of Moutiny. In

Section 3.1 of the agreement, Dynacorp and Fadul, jointly and severally, made the following representations: (

i) Dyna[c]orp, [ ] Fadul and/or his relatives or his Affiliates own or control 100% of the ownership interests in Vit[a]lTel; (iii) Other than with respect to the License,[] prior to the date of this Agreement, Vit[a]lTel has not conducted or transacted business, nor has it entered into any contract or agreement with any third party; (

v) Other than as set forth in paragraph (iii) above, Vit[a]lTel has no debts, obligations, liabilities or commitments to any third party or any governmental agency, and Vit[allTel’s only asset is the License. In

Section 3.8 of the April Operating Agreement, titled “Loans,” Aramtel agreed to advance $25,000,000 to Moutiny and/or VitalTel “to be used exclusively ... to fund the purchase of telecommunications equipment from” TWS and to advance $5,000,000 to be used for operating expenses. The loan was described as “sufficient to fund Vit[a]lTel for six months to build a telecommunications system sized for 200,000 subscribers based on the business plan developed by Vit[a]lTel.” In

Section 4.1 of the April Operating Agreement, titled “No Management Power,” the parties agreed that “[n]o Member solely by virtue of being a Member may take

part in the management, conduct or control of the business of [Moutiny] or have any right or authority to act for or bind [Moutiny] as a Member, except as otherwise provided in this Agreement.” In

Section 4.2 of the April Operating Agreement, titled “Management by Managing Member,” the parties agreed that Fadul, as the Managing Member, would run the day-to-day operations of Moutiny and VitalTel and “do any and all other things ... deem[ed] necessary or desirable in connection with the conduct of the business and affairs of [Moutiny] and/or Vit[a]lTel.” In

Section 4.2 of the agreement, Fadul agreed to “exercise his best efforts on behalf of [Moutiny] and Vit[a]lTel and [ ] at all times seek to enhance and promote the business interests of [Moutiny] with Vit[a]lTel.”

Section 4.3 of the agreement, titled “Restrictions on Authority,” restricted the Managing Member’s authority, providing, in pertinent part, as follows: With respect to [Moutiny] and its property, and Vit[a]lTel and its property, the Managing Member shall have no authority to perform any act in violation of the Act or any other applicable laws or regulations thereunder, nor shall the Managing Member have any authority, except with the consent of the Majority of Members, to: (in) do any act in contravention of this Agreement; (iv) cause [Moutiny] and/or Vit[a]lTel to merge or consolidate [Moutiny] and/or Vit[a]lTel with another Person or entity, or sell all or a substantial part of [Moutinyjs or Vit[a]lTel’s assets to another Person or entity; (vi) do any act which would make it impossible to carry on the ordinary business of [Moutiny] and/or Vit[a]lTel; (viii) cause [Moutiny] and/or Vit[a]lTel to enter into, terminate, modify, amend, sublicense, transfer, or otherwise dispose or deal with the License or any other license pertaining to the business of [Moutiny] and/or the business of Vit[a]lTel.

Section 4.6 of the agreement provided as follows: The Managing Member, [ ] Fadul, Dyna[c]orp and TeckTel, Ltd.[,] and any Affiliate of the foregoing (

i) may not engage in any other wireless telecommunication business activity in the Republic of Iraq that are competitive with the wireless telecommunications business of Vit[a]lTel; and (ii) shall have the obligation to present to [Moutiny] and Vit[a]lTel any particular business opportunity relating in any such manner to the wireless telecommunication business of Vit[a]lTel in the Republic of Iraq, even if such opportunity is one which could not be advantageous to [Moutiny] or Vit[a]lTel. This restriction shall expire on November 30,

Section 14.5 of the April Operating Agreement, titled “Governing Law; Venue,” provided: Irrespective of the place of execution or performance, this Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, U.S.A., exclusive of any conflicts of laws principles. This Agreement has been executed in the State of Maryland, U.S.A., and the parties hereto hereby agree to resolve any disputes arising hereunder in a court of competent jurisdiction located within the State of Maryland.

Each party agrees to submit to the personal jurisdiction of any such court, and further agrees that any judgment issued by any such court shall be fully enforceable in the courts or other judicial bodies of any other jurisdiction. The April Operating Agreement differed from the March Operating Agreement in several key aspects. The March Operating Agreement was between Aramtel and VitalTel, and provided that VitalTel would transfer to Moutiny the License, which Moutiny would use to provide WLL and other telecommunication services in Iraq.

In contrast, the April Operating Agreement was between Aramtel and Dynacorp, and provided that Moutiny would solely own VitalTel—the company that would provide WLL and other telecommunication services in Iraq. In the March Operating Agreement, Aramtel and Vital-Tel each owned 50% of Moutiny, but in the April Operating Agreement, Aramtel and Dynacorp each owned 50% of Moutiny. The March Operating Agreement was contingent upon the MOC’s approval of TWS as equipment supplier, as outlined in

Section 1.8, whereas the April Operating Agreement contained no such contingency.

The March Operating Agreement provided that the agreement be “governed by and construed in accordance with the laws of the United Arab Emirates,” whereas the April Operating Agreement provided that the agreement be “governed by and construed in accordance with the laws of the State of Maryland,” and significantly also provided that the agreement had been executed in Maryland and that the parties specifically “agree[d] to resolve any disputes arising hereunder in a court of competent jurisdiction located within the State of Maryland.” On April 12, 2006, Salkini and Fadul also executed a “Security Agreement” on behalf of Aramtel and Moutiny, respectively, with Aramtel agreeing to lend Moutiny and VitalTel $30,000,000.

Fadul executed a “Loan Promissory Note” (the “Note”), on behalf of Moutiny and VitalTel, promising to pay Aramtel $30,000,000, plus interest. Moutiny and VitalTel granted Aramtel a security interest in the following: (1) the License; (2) any other license that Moutiny or VitalTel obtained; (3) all of Moutiny’s and VitalTel’s equipment; (4) all related records; and (5) “any substitutes for and any proceeds of any of the foregoing, including insurance proceeds thereof!;.]” On the same day, the parties signed a “Wireless System Supply Purchase Agreement” (the “April Purchase Agreement”).

Salkini signed the April Purchase Agreement on behalf of TWS, as managing director, and Fadul signed the agreement on behalf of Moutiny and VitalTel, as chief executive officer. After the April Operating Agreement, the Security Agreement, and the April Purchase Agreement were signed, Aramtel made the required capital contribution of $500,000 and began lending money to Moutiny for operating expenses and the purchase of equipment. (

c) The Purported Transfer of VitalTel to Moutiny and Suspension of VitalTel’s License After the signing of the April Operating Agreement, the following events transpired with respect to Fadul’s transfer of VitalTel to Moutiny. On May 12, 2006, Salkini sent an e-mail to Fadul informing him that he had signed and forwarded two Arabic documents to Fadul—one titled “Contract to Sell Shares” and another titled “Authorization.” The Contract to Sell Shares provided that Fadul agreed to sell all of his shares of VitalTel to Moutiny.

The Authorization, which Salkini signed on behalf of Moutiny, stated that Moutiny authorized Al-Hadethy, the legal representative of VitalTel, to sign on behalf of Moutiny “to purchase all the shares in VitalTel[.]” On May 20, 2006, Fadul sent Salkini an e-mail in which he stated that Al-Hadethy “should complete the transaction papers of Moutiny [to VitalTel] by this week” and that she “plans to have them authenticated from the Ministry of Foreign Affairs before we FedEx them to you.” On May 22, 2006, Fadul sent Salkini another e-mail with an update, stating: “I spoke today with [Al-Hadethy] and she thinks she will pick up today the completed papers from the government entity, which registers company’s transactions.

She also told me that she intends to take the completed paper work to the Iraqi Foreign ministry for their ratification tomorrow.” On May 30, 2006, Salkini sent an e-mail to Fadul requesting an update on the “status of the share transfer of VitalTel” to Moutiny. On June 2, 2006, Fadul sent an e-mail to Salkini attaching a “Vital[T]el Document 2,” which he received from Al-Hadethy. The attached document was in Arabic. The record contains no translation of the document.

A month later, on July 4, 2006, Fadul sent an e-mail to Salkini and stated: “By the way I was informed Moutiny papers were completed by the Iraqi Foreign Affairs. Where would you like me to sen[d] them to?” Salkini replied, and Fadul responded that he would have Al-Hadethy send the papers via DHL to Salkini at the Tecore address in Dubai. On July 16, 2006, Salkini sent an e-mail to Fadul, which stated as follows: We are very concerned that the documents for Moutiny shares transfer [from VitalTel] are still not completed.

It now has been several months, and we have committed a very large amount of funding as you know. We need to have all documents by no later than July 18. Please let me know the status, and give me a call to discuss. On July 16, 2006, Fadul responded to Salkini via e-mail: The papers were completed and ratified by the [Department of [C]ommerce and sent to you. The additional approvals you requested from the Ministry of Foreign Affairs [were] processed as fast as humanly possible under these circumstances____Moutiny[’s] attorney will be contacted to have her FedEx the papers to TECORE address in Dubai.

On July 17, 2006, Fadul sent another e-mail to Salkini, stating the following: Moutiny Dubai papers have been sent via DHL a few minutes ago. Here is the DHL tracking] number: 3114949681. Moutiny Iraq papers still within the Ministry of Interior for approval in Iraq. Moutinyt’s] attorney is following up on them and as soon as I hear any[ ]thing I will let you know. Two days later, on July 19, 2006, Salkini received an e-mail from someone named Nazih Poulos in Dubai, in which he was informed that the “Moutiny Dubai papers” had been received.

On July 20, 2006, Salkini received an e-mail from Poulos with an attachment labeled “VitalTel Doe06.” The attached documents were written in Arabic, but displayed the name “VitalTel” in various locations.

English translations of the documents, introduced into evidence as defense exhibit 34B, demonstrate that the attachment contained the following four documents: (1) “Establishment of Al-Khat Al-Hayawi (Vital Tel) For telecommunications Services, Ltd.,” in which Al-Hadethy purported to submit an application to the Iraqi Business Registrar “for the purpose of registering a company in the name of ‘AI-Khat Al-Hayawi’ (2) “Completion of Process,” a document from the Iraqi Ministry of Trade which certified that “the process ha[d] been completed for finalizing the sale of company shares of Al-Hayawi (VitalTel) ... to [ ]Moutiny ... in accordance with Corporate Law # 21”; (3) “Business Registration Certificate,” a document from the Company Registrar which reflected that Moutiny owned “100%” of the shares of a company; and (4) a letter from the Iraqi Ministry of Trade to the Iraqi Ministry of Foreign Affairs with a subject line titled “Confirmation,” which certified that a company named “Al-Khat Al-Hayawi” was registered as an Iraqi company.

In a motion in limine filed by appellants pre-trial, appellants sought to exclude the transfer documentation Salkini received on July 20, 2006, at trial, and argued as follows: “[Appellees] seek to introduce the Transfer document ... as proof that ownership of a company known as ‘VitalTel/Al Khat Al Hayawi’ was transferred to Moutiny Ltd.

However, the Iraqi Corporation Registration Office has already advised ... that [the Transfer document] is a forgery.” In the motion in limine, appellants represented that Fadul would “testify that the actual transfer of ownership document, from VitalTel to Moutiny” was a document attached to the in limine motion “bearing bates-stamp FADUL000779 [defense exhibit 49].” An English translation of the document bearing bates-stamp FADUL000779 (defense exhibit 49) attached to the motion stated that Fadul, as the “authorized manager” of VitalTel, sold one million shares of VitalTel to Moutiny.

At trial, however, when asked on cross-examination whether he signed the document introduced into evidence as defense exhibit 49, Fadul testified that the signature on the document did not “resemble” his signature, and that, although the signature on the document was in Arabic, he had not signed anything in Arabic since 1980, and had not given permission to anyone to sign on his behalf.

When asked on cross-examination about defense exhibit 34A, the documents sent via DHL on July 20, 2006, Fadul testified: “I do not know that they were these papers included, because I wasn’t there, I instructed to complete certain papers and send them to Dubai.

If these papers were in the DHL, I cannot tell you if they were or they were not.” When asked if he received a copy of the papers, Fadul testified that he did not recall seeing the papers, but he discussed them—at some later point in time— with Al-Hadethy and “she did not think these were the same papers.” In a letter dated August 7, 2006, the MOC notified VitalTel that the WLL License issued to VitalTel on November 27, 2005, was no longer valid.

In the letter, which was addressed to several different companies that had been granted WLL licenses-including VitalTel—the Minister of the MOC stated: Reference to the (previous) contracts signed with you, and based on the directions of the Cabinet of Ministers for the need to first obtain their approval of these contracts, and since this approval is not present until now, these contracts are not considered valid. Therefore, it is not allowed at the moment to implement any

article in the contract related to establishment, operation, etc. until these contracts are reviewed and until we obtain the approval of the Cabinet of Ministers on that. According to Salkini, despite the letter of August 7, 2006, Aramtel continued to make payments to Moutiny pursuant to the April Operating Agreement, and TWS continued to deliver equipment pursuant to the April Purchase Agreement.

Salkini testified that he “had assurances from the Minister [of the MOC] and from Fadul specifically that the [L]icense [was] going to be reinstated, that it [was] just in suspension status, and that all the provinces that were assigned to th[e L]icense [were] going to be reinstated.” According to invoices submitted to Moutiny by TWS from November 2006 to March 2007, after the License was suspended, Aramtel made payments in the amount of $9,044,712.91 on behalf of Moutiny for the equipment that was provided to Moutiny by TWS pursuant to April Purchase Agreement.

On September 17, 2006, Fadul sent an e-mail to Salkini advising that the launching date for the wireless network was estimated to be on or about January 1, 2007, and that “there [was] a need to have $500,000 in [Moutiny’s] account in Iraq to cover the on[ ]going expenses.” On December 12, 2006, Fadul sent an e-mail to Salkini attaching a status report on Moutiny. In the status report, Fadul provided the following information: The [April] Operating Agreement ... specified that Aramtel [ ] ... was to provide an aggregate of USD $5,500,000 in operating capital.

To date, Moutiny has received USD $3,500,000 in operating capital from Aramtel []. An additional USD $500,000 is in transit. The remaining USD $1,500,000 has yet to be provided. A report was requested by [ ] Salkini ... before additional funds are to be made available[.] As to the business plan and budget update, Fadul wrote: “The original business plan specified that Moutiny’s WLL services would be launched in Iraq on October 1, 2006.

This self imposed deadline was impossible to meet due to the license suspension letter we received from the [MOC] in August 2006---- The ensuing delay forced me to dramatically conserve operating funds.” Fadul concluded the status report as follows: I [Fadul] am sensitive to the fact that the MOC breached its legally written commitment by their letter in August. As a result, I have done everything in my power to restore the [L]icense and make this project a success....

That said, it is my belief that as soon as the amendment to the [License is executed, fairness requires [Aramtel] and you [Salkini] to commit the funds necessary to fully deploy a 200,000 subscriber network.... In addition, such funding makes good business sense [ ] because it will allow Moutiny to deploy its services more quickly and be the first to render services in many areas .... Regardless of whatever budget is made available, no efforts will be spared to have Moutiny succeed.

On December 20, 2006, Fadul sent an e-mail to Salkini, stating that, “[a]s far as the [License is concerned,” the Minister of the MOC had met with the Iraqi Prime Minister and he (Fadul) “was told everything was sorted out fine to approve the amendments of all WLL licenses. It is my understanding that the approval papers were left with the prime minister[’s] office to sign and to then be mailed to the” MOC. On January 12, 2007, Fadul sent another e-mail to Salkini, stating: “I was advised that the prime minister[’s] office has signed our papers; however, I did not get solid assurance yet.

I am still not worried about this subject.” In December 2006 and January 2007, VitalTel/Moutiny’s Quickbook accounts, introduced into evidence as defense exhibit 99A, demonstrate that on four occasions—December 18, 2006, and January 16, 21, and 28, 2007—Fadul withdrew money for “Cash on Hand” in the amounts of $90,000, $50,000, $50,000, and $100,000, respectively, without authorization from Aramtel. On March 8, 2007, Moutiny held a meeting, which was attended by Fadul and Salkini.

The meeting’s minutes state that Fadul provided an update on the status of the License and that the amended License “still ha[d] not been officially released to Moutiny.” On March 14, 2007, Fadul, representing Dynacorp, and Salkini, representing Aramtel, held a “special meeting” of Moutiny in Baltimore, Maryland. Also in attendance at the special meeting were Shiblie Shiblie (on behalf of TWS), and counsel for Aramtel and Dynacorp.

The minutes of the special meeting reflect the following: [ ] Salkini was concerned that the [MOC] had rescinded the November 2005 license agreement between the [ITPC] and Vit[a]lTel. [ ] Fadul noted that MOC authorizes activities one day and then rescinds its authority the next week. He is lobbying within Iraq to get an amendment reinstating the [LJicense so that the network deployment can proceed. [ ] Salkini also expressed significant concern that additional costs are being incurred to build sites.

During the special meeting, the parties scheduled a date for the next progress meeting, to be held on June 1, 2007, at the Center Club in Baltimore, Maryland. On May 6, 2007, the MOC sent VitalTel a letter which stated: “We would like to inform you that the old contract regarding the extending of WLL service signed with your company has been cancelled.” At some point after receiving the letter, in early May, Fadul told Salkini, during a telephone conversation, that he was not going to continue working with him and that if Salkini wanted to “continue this project, [ ] go ahead. Do it on your own.

I’m out of this.” Over the weekend of May 19, 2007, Salkini met with the Iraqi Minister of Communications in Washington, D.C. At that time, the Minister told Salkini that the License issued to VitalTel “was valid and was in the process of being reinstated.” On May 22, 2007, Salkini spoke with the Director General of the ITPC and was informed that the revised License “was finalized and [that] the corresponding license had been issued by the ITPC approximately ten (10) days earlier, but that it was issued to another entity or person at the direction of [ ] Fadul.” (Emphasis omitted) (

d) Al-Shams and Al Nakheel On October 11, 2006—while Moutiny was still operating— unbeknownst to Salkini, Fadul and another man, Aref Kamel Abdul Ameer (also known as Aref A1 Bahash) (“Al Bahash”), presented a “Resolution license to establish a company” to the Companies Registration Department of the Ministry of Trade of Iraq. In the resolution, which was admitted into evidence at trial as Meuse exhibit 41, Fadul and Al Bahash requested the establishment of a company named “A[l-]Shams for wireless communications services Ltd.” (“Al-Shams”).

On the same day, October 11, 2006, a Company Registrar of Iraq issued a “Certificate of establishment [of] a company,” confirming the establishment of Al-Shams. The certificate was signed by AlHadethy, Moutiny’s attorney. On November 10, 2006, an application for the establishment of Al-Shams was filed with the Ministry of Trade.

The Al-Shams’s “[Foundation [Skatement,” which was admitted into evidence at trial as defense exhibit 43, described the purpose of the company as follows: to “invest[ ] capitals in the field of national and international wireless communications[,] develop local and international communication systems aiming at creating efficient communication capable of coping with world developments.” Al-Shams’s meeting minutes from October 27, 2006, and November 20, 2006, admitted into evidence as defense exhibits 42 and 61, respectively, state that Fadul was a shareholder of the company.

Fadul testified that he and A1 Bahash were “associated with” a company called “A1 Nakheel.” A document titled “Founder Resolution” dated March 13, 2007, introduced into evidence as defense exhibit 70, stated that on February 21, 2007, an establishment certificate had been issued for A1 Nakheel in Iraq, and that a person named Salman Fadhil Salman was appointed as the company’s commissioner director. Fadul acknowledged that Salman Fadhil Salman is his brother-in-law. Fadul testified that, at the beginning of June 2007, A1 Bahash approached him, asking about acquiring companies from him.

Fadul testified that, at that time, he “turned over” two companies to A1 Bahash—“Al Khat A1 Hayawi for General Telecommunications Services, Limited” and “Al Berak, Limited.” According to Fadul, on June 16, 2007, he signed a document, introduced into evidence as plaintiffs exhibit 336, “allowing the shares of Al Khat A1 Hayawi for General Communications Services, Limited, to [be transferred] to Aref A1 Bahash.” Fadul testified that, at some point in June 2007, A1 Khat A1 Hayawi—the company conveyed to A1 Bahash— obtained a license from the ITPC.

Fadul acknowledged that he did not inform Salkini about his involvement with A1 Nakheel or in obtaining a license for Al Khat A1 Hayawi for use by A1 Nakheel. On July 9, 2007, Fadul sold all of his shares of Al Khat A1 Hayawi to A1 Nakheel. On July 16, 2007, a document filed with the Department of Taxation in Iraq—introduced into evidence as defense exhibit 65—showed that Fadul sold all of his shares of “(Al Kahat A1 Hayawi for Communications Services Ltd) (Moutiny)” to A1 Nakheel.

On October 1, 2007, at a meeting of the General Board of Al-Shams, the board merged Al-Shams with A1 Nakheel for the purpose of “investing] capitals in the field of national and international communication; developing] national and international communication systems, and aiming at creating an efficient communications capable at coping with the world developments.” On October 10, 2007, the Company Registrar of Iraq issued a document titled “Decision to merge limited companies,” which demonstrated the merger of both “Al Khat A1 hayawi for Communication Services, Ltd and Al[-]Shams for Wireless Communications Services Ltd” into A1 Nakheel.

Fadul testified that, in 2008, while he was serving as the chief executive officer of A1 Nakheel, he solicited investors,

an act for which he was paid a commission of five percent for each investment in addition to his salary. Under an agreement with A1 Nakheel, Fadul was paid a salary of $10,000 per month until the subscriber base reached 25,000 people, after which time his salary increased to $20,000 per month. If the subscriber base reached 100,000 while Fadul was serving as chief executive officer, he was to receive an additional 5.4% interest in the company’s equity. Fadul testified that, by July 2008, Al Nakheel had 20,000 to 25,000 subscribers and by the first half of 2009, it had 100,000 subscribers.

At trial, appellees introduced into evidence a letter dated June 28, 2009, from Imad Muhsin Si’oud, the Director General of the Legal Department for the Ministry of Telecommunication for the Republic of Iraq, indicating that the License previously issued to VitalTel had been reissued to Al Khat A1 Hayawi on May 15, 2007.

The letter stated, in pertinent part, as follows: 1— ... [Contracts for deploying the wireless telephone services were signed with many companies including AlKhat Al-Hayawi Company (Vital Tel) and the contracted conditions were amended and new contracts were signed with the same companies with the approval of the General Secretariat of the Cabinet by its letter [ ] on [April 8,]2007, the contract was signed with Vital[ ]Tel Company in 2005 and the new contract was signed with Al-Khat.

Al-Hayawi which is considered the same company according to the official letters and correspondence with it on the date of signing the contract on [May 15,]2007. 2— Al[ ]Nakheel Company is working according to the contact signed with Al-Khat Al-Hayawi, since the company of Al-Khat Al-Hayawi had been merged with Al-Shams Company and changed to Al[ jNakheel Company according to the letter of the Ministry of Trade/Companies Registration Department ... on [November 5,]2007 and the company is still operating according to the indicated contract^] Hanadi Faris, an executive manager at A1 Nakheel and former executive manager of Moutiny, testified that, as of the date of trial, in addition to A1 Nakheel, there were five companies with contracts, or licenses, with the MOC, including: Al Khat A1 Hayawi for Telecommunications Services, A1 Khat A1 Hayawi for Trading and Contracting, Jezan, AlBerak, and Al-Shams.

According to Faris, A1 Nakheel operates in the provinces of Baghdad, Najaf, Hilla, Qadasiya, Karbala, Samawah, and Al-Basrah. Many of these provinces were previously allocated to VitalTel under the License.

(3) Procedural History (

a) The Complaint and Motion to Dismiss On February 12, 2008, Dynacorp and Fadul filed a complaint in the Circuit Court for Howard County against appellees and Tecore, alleging breach of contract, promissory estoppel, breach of duty of good faith and fair dealing, fraudulent inducement, defamation and bad faith, seeking damages and a declaratory judgment that appellants were no longer obligated by the April Operating Agreement, the Note, or the Purchase Agreement.

On April 14, 2008, appellees and Tecore filed a “Motion to Dismiss and to Strike Scandalous Material from the Complaint.” In a memorandum accompanying the motion, appellees advised that Aramtel had filed a separate action in the Circuit Court for Howard County against appellants for breach of the April Operating Agreement. According to appellees, in July 2007, in that case, the circuit court entered a confessed judgment in favor of Aramtel and against Moutiny and VitalTel in the amount of $28,731,302.77, the amount due pursuant to the April 12, 2006, Note signed by Fadul on behalf of Moutiny.

Appellees advised that, on March 27, 2008, the circuit court denied Moutiny’s and VitalTel’s motion to vacate the confessed judgment. On May 2, 2008, appellants filed an opposition to the motion to dismiss. On the same day, appellants filed a verified amended complaint, adding Moutiny as a plaintiff and omitting Tecore as a defendant. On June 2, 2008, appellees filed an answer to the verified amended complaint and a Motion to Dismiss the Verified Amended Complaint or, in the alternative, for Partial

Summary Judgment. On March 20, 2009, appellees filed an amended answer to the verified amended complaint. On July 17, 2008, appellants filed an opposition to the motion to dismiss. On August 26, 2008, the circuit court held a hearing on the motion to dismiss the complaint and the Motion to Dismiss the Verified Amended Complaint or, in the alternative, for Partial

Summary Judgment. On February 10, 2009, the circuit court issued a Memorandum Opinion and Order, denying the motion to dismiss or to strike as moot in light of appellants having filed the verified amended complaint. As to the Motion to Dismiss the Verified Amended Complaint or, in the alternative, for Partial

Summary Judgment, the circuit court denied the motion, in part, and granted the motion, in part. The circuit court granted the motion to dismiss as to: (1) breach of contract claims concerning the April Operating Agreement, Note, April Purchase Agreement, and Security Agreement against Salkini; (2) breach of contract claims concerning the Note and the Security Agreement against TWS; and (3) the declaratory judgment claim against all appellees. (

b) The Counterclaim and Answer to Counterclaim On January 27, 2009, Aramtel filed a counterclaim against Fadul and Dynacorp, alleging fraudulent inducement, fraud (intentional misrepresentation and concealment/nondisclosure), constructive fraud, and negligent misrepresentation. On April 16, 2009, appellants filed an answer to the counterclaim. On May 14, 2009, appellants filed a motion to dismiss Aramtel’s counterclaim for fraud in the inducement and a motion for

summary judgment as to Aramtel’s counterclaims for fraud, constructive fraud, and negligent misrepresentation. In the motion, appellants argued, in part, that Aramtel’s counterclaims for fraud; constructive fraud, and negligent misrepresentation failed as a matter of law because they were direct actions for injuries rather than derivative actions on behalf of Moutiny. On June 1, 2009, appellees filed an opposition to the motion to dismiss and motion for

summary judgment. On June 3, 2009, the circuit court denied appellants’ motion to dismiss and motion for

summary judgment as to Aramtel’s counterclaims. (

c) The First Amended Counterclaim and Third-Party Complaint On May 28, 2009, Aramtel, individually and in a derivative capacity on Moutiny’s behalf, filed a first amended counterclaim against Fadul and Dynacorp and a third-party complaint against TeckTel, asserting a direct claim for fraudulent inducement as Count I (against Fadul, Dynacorp, and TeckTel), and seven derivative claims, including: Count II—breach of contract, Count III—fraud, Count IV—constructive fraud, Count V—negligent misrepresentation, Count VI—breach of fiduciary duty, Count VII—conversion, and Count VIII— usurpation of corporate opportunity and corporate waste (against Fadul, Dynacorp, and TeckTel).

In Count I, fraudulent inducement, Aramtel alleged that Fadul, Dynacorp, and TeckTel falsely represented that Vital-Tel had been incorporated in Iraq as a public limited company, and that they “[w]ould take no actions which would make it impossible to carry on the ordinary business of Moutiny and/or Vit[a]lTel.” Aramtel alleged that Fadul, Dynacorp, and TeckTel “made ... other false and misleading statements in order to defraud Aramtel and entice it into ... entering into the [April] Operating Agreement, the Promissory Note, and related agreements.” Aramtel alleged that it relied on Fadul’s, Dynacorp’s, and TeckTel’s representations to its detriment, and that had it known the statements were false, it would not have conducted business with Fadul, Dynacorp, and TeckTel.

As a result, Aramtel sought damages in the amount of $34,047,801.18.

As to Count II, breach of contract, Aramtel alleged that Fadul, Dynacorp, and TeckTel breached the April Operating Agreement, which obligated “each to engage in certain activities for the advancement of the business interests of Moutiny and Vit[a]lTel/Al Khat Hayawi and prohibited] each of them from engaging in certain activities that would impede those business interests.” As to Count III, fraud, Aramtel alleged that Fadul failed to disclose several pieces of key information to Aramtel and Moutiny, and that Fadul, Dynacorp, and TeckTel knew and made false and misleading representations for the purpose of defrauding Moutiny and Aramtel.

As to Count IV, constructive fraud, Aramtel alleged that Dynacorp and Fadul owed legal, equitable, and fiduciary duties to Moutiny and Aramtel that were breached. As to Count V, negligent misrepresentation, Aramtel alleged that Fadul, Dynacorp, and TeckTel made false representations of material fact to Moutiny and Aramtel and failed to disclose other material facts.

As to Count VI, breach of fiduciary duty, Aramtel alleged that Fadul, as Moutiny’s Managing Member and chief executive officer, was in a fiduciary relationship with Moutiny and owed Moutiny fiduciary duties, which he breached “by failing to perform his duties with the utmost good faith and loyalty; by engaging in self-dealing to the detriment of Moutiny and its interest holders and creditors; by failing to perform his duties in a manner that was in the best interest of Moutiny; and by failing to perform his duties with the care that an ordinarily prudent person in a like position would use under similar circumstances.” As to Count VII, conversion, Aramtel alleged that Fadul improperly conveyed or transferred the License from VitalTel to Al Nakheel, “without permission or justification,” and that the License had a value of at least $75,000,000.

As to Count VIII, usurpation of corporate opportunity and corporate waste, Aramtel alleged that Fadul’s, Dynacorp’s, and TeckTel’s “wrongful conduct” constituted usurpation of corporate opportunity and corporate waste which caused “legal injury[.]” (

d) The Motions to Dismiss First Amended Counterclaim and Third-Party Complaint On June 12, 2009, Dynacorp filed a motion to dismiss the first amended counterclaim and accompanying memorandum, arguing that the first amended counterclaim failed to state a claim upon which relief could be granted and failed to allege any facts “upon which Dynacorp could be held liable for any action it took independent of [ ] Fadul ... [or] for [ ] Fadul’s actions.” On the same day, June 12, 2009, TeckTel filed a motion to strike, or in the alternative, dismiss the third-party complaint and accompanying memorandum in support, arguing, in part, that it was “not subject to the jurisdiction” of the circuit court because it is an Iraq-based company with a branch in Virginia.

Also on June 12, 2009, Fadul and Moutiny filed a motion to dismiss the first amended counterclaim, or in the alternative, a motion for

summary judgment and accompanying memorandum of law, arguing, in part, that the first amended counterclaim failed to state a claim upon which relief could be granted, that Aramtel was contractually precluded from pursuing derivative claims, and that the circuit court lacked jurisdiction. On June 30, 2009, appellees filed an opposition to TeckTel’s motion to strike or dismiss. On July 7, 2009, appellees filed an opposition to the motion to dismiss filed by Fadul and Moutiny. On July 8, 2009, the circuit court issued an order denying the motions filed by Dynacorp, TeckTel, Fadul, and Moutiny. On July 27, 2009, appellants filed an answer to the first amended counterclaim. (

e) The Second Amended Complaint On June 10, 2009, appellants filed a second amended complaint. As to Count I for breach of contract regarding the April Operating Agreement, appellants modified the count to reflect that Moutiny alleged a breach of contract by Aramtel and TWS, noting that Dynacorp withdrew its claim, and that the claim against Salkini was dismissed by the circuit court. As to Count II for breach of contract regarding the Note, appellants modified the count to reflect that Moutiny alleged a breach of contract by Aramtel only, noting that the circuit court dismissed claims against Salkini and TWS.

As to Count III for breach of contract regarding the April Purchasing Agreement, appellants modified the count to reflect that Moutiny alleged a breach of contract by TWS only, noting that the claim against Aramtel was withdrawn. Appellants withdrew Moutiny’s claim against Aramtel for breach of contract regarding the Security Agreement contained within Count IV. Fadul’s claim for tortious interference with business relationship, Count V, against all appellees remained unchanged, as did Dynacorp’s claim for fraud in the inducement, Count VI, against all appellees.

Appellants noted that the circuit court dismissed Count VII for declaratory judgment for Dynaeorp and Moutiny against all appellees. In the second amended complaint, appellants added three counts:

(1) Count VIII, Fadul’s claim against Salkini for breach of contract and fiduciary duty;

(2) Count IX, Moutiny’s claim against Salkini for breach of fiduciary duty; and

(3) Count X, Fadul’s claim against Salkini and Aramtel for defamation. On June 30, 2009, appellees filed a motion to strike the second amended complaint or, in the alternative, motion to dismiss or for

summary judgment on Counts I—III, V, and VIII-X. On July 16, 2009, appellants filed an opposition to the motion to strike.

(4) Trial From August 3, 2009, to August 7, 2009; August 10, 2009, to August 14, 2009; November 23, 2009, to November 25, 2009; and January 14, 15, and 19, 2010, the circuit court held a sixteen-day bench trial.

On August 3, 2009, after hearing argument from the parties as to the motion to strike the second amended complaint, the circuit court ruled from the bench, granting appellees’ motion to strike and dismiss Count V (Fadul’s claim against all appellees for tortious interference with business relationship), Count VIII (Fadul’s claim against Salkini for breach of contract and fiduciary duty), Count IX (Moutiny’s claim against Salkini for breach of fiduciary duty), and Count X (Fadul’s claim against Salkini and Aramtel for defamation) of the second amended complaint, and denying appellees’ motion for

summary judgment as to Counts I—III. On the same day, August 3, 2009, the circuit court denied appellants’ oral motion for

summary judgment as to Counts II-VIII of the first amended counterclaim. On August 11, 2009, at the conclusion of appellants’ case, appellees orally moved for judgment. The circuit court denied the motion. On November 25, 2009, the circuit court denied appellants’ motion for judgment as to the first amended counterclaim and reserved ruling on appellees’ motion for judgment. On January 19, 2010, at the conclusion of all of the evidence in the case, appellants moved for judgment and appellees renewed their motion for judgment. The circuit court denied both motions.

The circuit court instructed counsel for the parties to submit closing arguments in writing within sixty days.

On April 27, 2010, appellees filed “Proposed Findings of Fact and Conclusions of Law” and a “Brief in Support of Their Proposed Findings of Fact and Conclusions of Law.” On the same day, appellants filed a “Joint Post Trial Memorandum” accompanied by “Proposed Findings of Fact” and “Proposed Conclusions of Law.” On May 27, 2010, appellees filed a rebuttal to appellants’ proposed findings of fact and a “Rebuttal Brief in Support of Their Proposed Findings of Fact and Conclusions of Law.” On the same day, appellants filed a “Joint Post Trial Memorandum Replying to and Rebutting Memorandum of [Appellees]” and supplemental proposed findings of fact.

(5) The Circuit Court’s Order and Memorandum Opinion On June 21, 2011, approximately thirteen months after receipt of the last post-trial filing, the circuit court issued a Memorandum Opinion and Order finding against appellants as to each of their claims, finding in favor of appellees to each of its claims, and ordering appellants to pay appellees damages in the amount of $41,637,099.46.

In the Memorandum Opinion, the circuit court ruled, in pertinent part, as follows: JURISDICTION The Court finds that Aramtel’s shareholder derivative claims are properly within the Court’s jurisdiction. [Appellants] raise the issue of jurisdiction for [the] first time in their post-trial memorandum. Specifically, [appellants] assert that this Court does not have personal jurisdiction over Fadul and Dynacorp regarding Aramtel’s derivative claims brought on behalf of Moutiny. [Appellants] propose this argument even after initiating the instant suit in the Howard County Circuit Court.

This Court finds that [appellants] waived the defense of lack of personal jurisdiction, and that the exercise of personal jurisdiction over [appellants] is constitutionally reasonable. Pursuant to Maryland Rule 2-322, the defense of lack of jurisdiction over the person “shall be made by motion to dismiss filed before the answer, if an answer is required.” The rule definitively states that if this defense is not raised in a motion to dismiss, and instead an answer is filed, the defens'e is waived. Maryland Rule 2-322.

While Fadul and Dynacorp filed a Motion to Dismiss on other grounds, they failed to raise the defense of lack of personal jurisdiction. TeckTel raised the defense of lack of personal jurisdiction in a Motion to Dismiss on July 8, 2009, but this Court denied TeckTel’s motion, finding that this Court did have personal jurisdiction over Tecktel. Because [appellants] failed to file a Motion to Dismiss asserting lack of jurisdiction over the person, and instead filed an Answer, [appellants] waived this defense.

Furthermore, [appellants] initiated the instant lawsuit in Maryland and therefore cannot avoid the jurisdiction of this Court. Fadul, Dynacorp and Tecktel contractually consented to the jurisdiction of this Court. According to

Section 14.5 of the Operating Agreement: “This Agreement has been executed in the State of Maryland, U.S.A., and the parties hereto hereby agree to resolve any disputes arising hereunder in a court of competent jurisdiction located within the State of Maryland.

Each party agrees to submit to the personal jurisdiction of such court, and further agrees that any judgment issued by any such court shall be fully enforceable in the courts or other judicial bodies of any other Jurisdiction.” [Appellants] argue that because Moutiny did not enter into the contract, Moutiny cannot be subject to personal jurisdiction in Maryland. However, this Court finds that because Moutiny was created as a result of the Operating Agreement, it is bound by its terms.

This Court further finds that even if Fadul, Dynacorp and Tecktel had never contractually consented to the jurisdiction of this Court, this Court would still have personal jurisdiction over them under a constitutional analysis. The Court must engage in a two-step analysis to determine whether it has personal jurisdiction over a party. The court must consider whether personal jurisdiction is permissible under the State’s long-arm statute, and whether personal jurisdiction complies with due process under the federal constitution. Beyond Systems, Inc. v.

Realtime Gaming Holding Co., 388 Md. 1, 14-15 [878 A.2d 567] (2005). In this case, Fadul, Dynacorp and Tecktel signed two separate operating agreements in Maryland involving the telecommunications project in Iraq. Both operating agreements state that these agreements were executed in the state of Maryland. Throughout the negotiation process Fadul frequently corresponded with [ ] Salkini, David Claburn, Shiblie Shiblie and Haider Thamir, who were living in Maryland at the time. Fadul also attended numerous meetings in Maryland to discuss the joint venture.

Based on the frequent contacts that Fadul had in the state of Maryland, this Court finds that [appellants] had the requisite minimum contacts to justify personal jurisdiction in Maryland. STANDING This Court also finds that Fadul lacks standing to bring claims on behalf of Moutiny in this lawsuit. Pursuant to the operating agreement, Fadul was the managing member of Moutiny, and was in charge of overseeing the day-to-day management.

However, during the hearing on March 27, 2008, Fadul testified that he had withdrawn as managing member of Moutiny[.] Because Fadul is no longer the managing member of Moutiny, he lacks the authority to act on its behalf, and therefore has no standing to authorize Moutiny to bring claims in this lawsuit. Fadul has also lost his status as managing member of Moutiny because he was concurrently serving as the CEO of a competing company, Al Nakheel, beginning in February 2008. Dynacorp also does not have standing to authorize Moutiny to bring claims in this case.

According to the Operating Agreement, any action required consent of the majority of the members, which was defined as members that own 75% of the interest in the company. The Operating Agreement set out that Dynacorp owned 50% of Moutiny and Aramtel owned the other 50%. Because Dynacorp has less than 75% interest in Moutiny, it does not have the authority to take action without AramteFs consent. Aramtel did not consent to Moutiny bringing claims against it in the instant lawsuit, and therefore Dynacorp does not have standing to assert claims on behalf of Moutiny.

No authority exists under Maryland Corporate law that authorizes Moutiny to pursue this litigation unilaterally, without consent of the majority of members. According to Maryland law, a director may not act on behalf of a corporation without authority from the rest of the board.... Because Fadul and Dynacorp did not act on behalf of Moutiny without approval from Aramtel, Moutiny does not have standing to bring the claims asserted in the instant lawsuit. ANALYSIS II. Claims Asserted by [] Aramtel and Salkini B.

Aramtel’s Derivative Claim for Fraud and Intentional Misrepresentation and Concealment/Norir-Disclosure This Court notes that [appellants] failed to call Ms. Niran Al-Hadethy as a witness at trial. Ms. Hadethy was legal counsel for Fadul, TeekTel, Moutiny, VitalTel, Al Khat A1 Hayawi, and Al[-]Shams, and continues to serve in such capacity for A1 Nakheel. Ms. Hadethy’s testimony would have been material to this case and may have resolved many of the issues in dispute. * * * Given [appellants’] failure to offer this critical witness [Al-Hadethy] at trial, the Court can reasonably infer that Ms.

Hadethy would testify to the following: ...

(3) VitalTel and Al Khat A1 Hayawi are not different companies, but are, in fact, the same company—VitalTel being the company’s English name and Al Khat A1 Hayawi being the company’s Arabic name;

(4) After the April Operating Agreement was executed, she was asked by Fadul to effectuate the transfer of all of the shares of VitalTel (Al Khat A1 Hayawi) to Moutiny;

(5) The documents that comprise [Defense Exhibit] # 34A are the documents that were sent to Salkini ... to establish that 100% of the shares of VitalTel (Al Khat A1 Hayawi) has been successfully transferred to Moutiny and that Moutiny was the sole owner of VitalTel[.] This Court finds that Moutiny and Aramtel relied on Fadul’s false misrepresentations and material omissions. Based on Fadul’s representations that VitalTel and its license had been transferred to Moutiny, Aramtel continued to loan significant sums to Moutiny and Moutiny continued to incur significant debt.

Fadul failed to offer into evidence any document demonstrating that VitalTel was transferred to Moutiny in accordance with the April Operating Agreement. It can reasonably be inferred that Aramtel would have stopped loaning money to Moutiny if Fadul [had] not sent the allegedly fraudulent share transfer documents.... This Court draws negative inferences from Fadul’s failure to introduce documents into evidence that would have supposedly existed if Fadul’s version of the events were truthful. This Court finds that the following documents are conspicuously missing from the Court record:

(1) Articles of [I]ncorporation or other documents from Al Khat A1 Hayawi; (2) documents from the Iraqi Company Registrar for VitalTel or Al Khat A1 Hayawi;

(3) Any documents showing that VitalTel was transferred to Moutiny;

(4) Correspondence from the Company Registrar informing VitalTel that it was not properly registered;

(5) Any of the license applications that Fadul prepared that would demonstrate that Al Khat A1 Hayawi and VitalTel are different entities;

(6) Any of the licenses under which Al Nakheel is operating, including the license received by Al Khat A1 Hayawi;

(7) The power of attorney that [Fadul] gave to Ms. Hadethy; and

(8) Any record of communications that Fadul had with Ms. Hadethy. H. Arambel’s Direct Claim for Fraud in the Inducement This Court finds by clear and convincing evidence that Fadul perpetrated a fraud on Moutiny. On February 1, 2006, Fadul sent an e-mail to Salkini with a copy of Vital-Tel/Al Khat Al Hayawi’s formation papers.

Fadul specifically stated: “Attached please find VitalTel’s articles of [incorporation” from Iraq.[ ] The attachment to the email included several formation documents that led Salkini to believe that VitalTel had been properly formed and incorporated under its Arabic name, Al Khat A1 Hayawi. While this Court does believe that Fadul planned to set up the joint venture in good faith from the beginning, this Court ultimately finds that Fadul committed a fraud in the inducement.

DAMAGES This Court finds that Aramtel initially invested five hundred thousand dollars ($500,000.00) in Moutiny and then promised to loan five million dollars ($5,000,000.00) to be used for operating expenses. Aramtel then loaned Moutiny twenty-five million dollars ($25,000,000.00) to be used to fund the purchase of telecommunications equipment from TWS. This Court therefore finds that Aramtel suffered $30,500,000.00 in damages, and Orders Fadul to compensate Aramtel for its investment by repaying this amount plus interest.

In determining the proper measure of damages in fraud and deceit cases, Maryland applies the “flexibility theory.” ... Under this “flexibility theory”, a victim of fraudulent or negligent misrepresentation may elect to recover “out-of-pocket” expenses or “benefit-of-the-bargain” damages. Moutiny was deprived the benefit of its bargain as a result of Fadul’s fraudulent scheme and many violations of his contractual and fiduciary duties.

Because the future profits of Moutiny are unknown, this Court will not [ojrder damages based on the loss of ownership of the WLL license, the lost profits or the benefits Fadul received from the A1 Nakheel opportunity. While Moutiny may have successfully deployed the WLL network in Iraq if it had the WLL license, it still may have failed for numerous other reasons. Because [appellees] cannot prove Moutiny’s profits with certainty, this Court cannot make a determination as to the potential damages. The

section titled “Interest” of the Loan Promissory Note provides that interest accrues on the outstanding unpaid balance of the loans at “a per annum rate of twelve percent (12%)” and that such interest “shall be computed on the basis of a 365-day year and the actual number of days elapsed.[”] The

preamble to the note states that the outstanding principle of the loan “shall be due and payable on January 2, 2013” and that interest on the outstanding balance “shall be due and payable on the first day of each calendar quarter beginning on January 1, 2008 and ending on January 1, 2013[.]” At the March 2007 Members’ Meeting, the parties agreed that interest on the operating expense loan would be calculated “from the day funds are paid by Aramtel to Moutiny” which date “will be deemed to be the day the funds arrived in an account in Moutiny’s name.” Based on this information, this Court orders [appellants to] pay [appellees] $11,137,099.46 in interest in addition to the $30,500,000.00, resulting in a total of $41,637,099.46.

CONCLUSION This Court finds that [ ] Dynacorp and Moutiny have not met their burden in proving that [appellees] are liable on any of the four remaining counts of [appellants’] Second Amended Complaint. This Court finds [appellees]’ claims to have merit, and Orders that [appellants] pay [appellees] $41,637,099.46 in damages. (Emphasis added).

(6) Post-Trial Motions On July 5, 2011, appellees filed a motion to amend judgment, requesting that the circuit court amend the judgment to include interest through the date that the circuit court’s order is paid in full. According to appellees, in calculating the judgment, the circuit court failed to account for the accrual of daily interest at the rate of $8,161.45 between April 27, 2010, the last day for which interest was awarded in the circuit court’s order, and June 24, 2011, the date of the circuit court order.

As such, appellees requested that an additional $3,452,293.35 be added to the judgment, and that the judgment be amended to include an award of $8,161.45 for each day that the judgment amount is unpaid. On July 20, 2011, appellants filed an opposition to the motion to amend judgment. On the same day, appellants—Fadul, Dynacorp, and Moutiny—noted an appeal of the judgment in the amount of $41,637,099.46. TeckTel was not named as an appellant in the notice.

On August 12, 2011, the circuit court granted appellees’ motion to amend and issued an amended order—increasing the amount of the judgment to $45,089,392.81, plus interest at a per diem rate of $8,161.45 beginning June 24, 2011. On August 25, 2011, appellants—Fadul, Dynacorp, and Moutiny— noted an appeal of the judgment in the amount of $45,089,392.81. TeckTel was not named as an appellant in the notice.

On August 26, 2011, appellees filed a “Motion to Revise Judgment Pursuant to M[aryland] Rule 2-534” and accompanying memorandum seeking: (1) an award of attorneys’ fees; (2) punitive damages; (3) that Fadul be required to disgorge his ownership interest in AI Nakheel and any other benefits he received as a result of stealing Moutiny’s corporate opportunity; and (4) compensatory damages equal to the value of the License. On September 13, 2011, appellants filed a memorandum in opposition. On December 19, 2011, the circuit court denied the motion. DISCUSSION I. Fraudulent Inducement

(1) Contentions Appellants contend that the circuit court erred in entering judgment in appellees’ favor as to the claim for fraudulent inducement. Appellants argue that the “evidence was insufficient as a matter of law to satisfy each of the necessary elements” of fraudulent inducement.

As to the element of false representation, appellants assert that “there [was] no basis to find that [ ] Fadul’s February 1, 2006 representation to Aramtel regarding the corporate formation of VitalTel was false.” Appellants argue that the circuit court expressly found that “the documents attached to [ ] Fadul’s February 1, 2006 e[-]mail were, in fact, YitalTel’s actual formation papers and correctly reflect that the company’s Arabic name is Al Khat A1 Hayawi.” As to the elements of knowledge of falsity, the purpose of defrauding, and reliance, appellants maintain that the circuit court failed to make specific findings.

As to the element of reliance, and the right to rely on the false representation, appellants assert that “the [circuit [c]ourt’s finding that [ ] Fadul committed a [fraudulent] inducement is inconsistent with its finding that

Section 14.2 of the April [Operating] Agreement—the ‘integration clause’—precluded a party from relying on representations that were not incorporated into the written April Agreement.” As to causation of actual damages, appellants maintain that “Aramtel did not suffer compensable injury as a result of [ ] Fadul’s alleged misrepresentation.” Appellants argue that “the [c]ircuit [c]ourt erroneously ordered [ ] Fadul to ‘repay’ mon[ies] ... loaned by Aramtel to Moutiny and VitalTel, [ ] where Aramtel expressly agreed that, as a condition to get [ ] Fadul to sign the April Agreement, [] Fadul would not be liable on the up to $30 million loan[.]” (Emphasis omitted).

Appellants assert that “Aramtel has not suffered a compensable injury due to [ ] Fadul’s alleged misrepresentation because the [e]ircuit [c]ourt found Moutiny ‘may have failed for numerous other reasons.’ ” (Footnote omitted). Appellees respond that they “presented clear and convincing evidence that [appellants] fraudulently induced [appellees] into entering the [April] Operating Agreement.” Appellees contend that appellants knowingly made false representations to them for the purpose of defrauding appellees.

Specifically, appellees argue that “Aramtel presented sufficient evidence from which the [c]ircuit [c]ourt was able to infer either that Fadul actually knew that VitalTel/Al Khat Al Hayawi was not properly incorporated prior to entering into the Operating Agreement, or that Fadul made the statements regarding VitalTel’s proper formation with reckless indifference to their truth.” Appellees maintain that judicial estoppel and equitable estoppel prevent appellants from contending on appeal that VitalTel and Al Khat A1 Hayawi were the same company after contending in the circuit court that VitalTel and Al Khat A1 Hayawi were two different companies.

In a reply brief, appellants contend that judicial estoppel does not apply because the circuit court did not accept appellants’ position that VitalTel and Al Khat A1 Hayawi were two different companies. Appellants argue that equitable estoppel does not apply because appellees did not rely on, but rather disputed, appellants’ position.

(2) Standard of Review An appellate court reviews a trial court’s factual findings for clear error, and reviews the trial court’s legal conclusions de novo. See Md. R. 8-131(c) (An appellate court “will not set aside the judgment of [a] trial court on the evidence unless clearly erroneous, and will give due regard to the opportunity of the trial court to judge the credibility of the witnesses.”); Ramlall v.

MobilePro Corp., 202 Md.App. 20, 34, 30 A.3d 1003 (2011) (“The clearly erroneous standard does not apply to La trial] court’s legal conclusions, however, to which [an appellate court] accord[s] no deference and which [the appellate court] reviewfs] to determine whether [or not] they are legally correct.”). The appellate court views the evidence in the light most favorable to the prevailing party, City of Bowie v. MIE Props., Inc., 398 Md. 657, 676, 922 A.2d 509 (2007), and resolves all evidentiary conflicts in the prevailing party’s favor. First Union Nat'l Bank v. Steele Software Sys.

Corp., 154 Md.App. 97, 107 n. 1, 838 A.2d 404 (2003), cert. denied, 380 Md. 619, 846 A.2d 402 (2004).

(3) Law In First Union Nat’l Bank, id. at 134, 838 A.2d 404, this Court listed the five elements of fraudulent inducement, stating: To entitle the plaintiff to recover it must be shown [by clear and convincing evidence]: (1) that the representation made is false; (2) that its falsity was either known to the [defendant], or the misrepresentation was made with such a reckless indifference to truth as to be equivalent to actual knowledge; (3) that it was made for the purpose of defrauding the [plaintiff]; (4) that [the plaintiff] not only relied upon the misrepresentation, but had a right to rely upon it in the full belief of its truth, and that [the plaintiff] would not have done the thing from which the injury resulted had not such misrepresentation been made; and (5) that [the plaintiff] actually suffered damage directly resulting from such fraudulent misrepresentation. (Citation omitted).

In First Union Nat’l Bank, id. at 170, 136, 838 A.2d 404, this Court held that the evidence, viewed in its entirety, fell short of establishing fraudulent inducement.

We concluded that: (1) the defendant’s “intentions regarding [a] ‘best efforts’ clause were not sufficient to show the scienter necessary to prove fraudulent intent not to perform, [as the] clause was ambiguous, and the parties did not discuss what it meant[,]” (2) the defendant’s other “representations [] could not be reasonably relied on in this commercial transaction because they contradicted] the express terms of the” agreement, and (3) the defendant’s other “representations [were] so broad and vague that they are not actionable misrepresentations, and fall within the category of ‘puffing.’ ” Id. at 136, 838 A.2d 404.

The plaintiff, “a settlement service company,” contracted with the defendant, a bank, to provide “a new, centralized and automated system for obtaining title searches and appraisals for home equity loans.” Id. at 107, 838 A.2d 404. Because the parties did not discuss the contract’s “best efforts” clause, we concluded “the jury could not reasonably infer [ ] fraudulent intent simply from [the defendant’s representative] saying that he never intended to refer [the plaintiff] more than 50%” of the defendant’s business. Id. at 147, 838 A.2d 404.

The plaintiffs could not reasonably rely on the defendant’s “statements about a ‘long term mutually beneficial relationship’ ... [because they were] so vague and general as to be incapable of particular application.” Id. at 164, 838 A.2d 404 (citation and some internal quotation marks omitted). In First Union Nat’l Bank, id. at 149, 838 A.2d 404, the plaintiff contended that the defendant’s “immediate breach of the contract, without a change in circumstances, together with [the defendant’s] subsequent conduct” demonstrated a fraudulent intent.

Although we rejected the plaintiffs contention on appeal, concluding that the defendant had engaged in “meaningful partial performance” and that a “significant change in circumstances” occurred after signing the contract, we discussed the breach of contract and subsequent conduct as evidence of fraudulent intent as follows: A fraudulent pre-existing intent not to perform a promise made cannot be inferred from the failure to perform the promise alone. But, it may be considered with the subsequent conduct of the promisor and the other circumstances surrounding the transaction in sustaining such an inference.

And it has been stated that under certain conditions, a failure or refusal to perform is strong evidence of an intent not to perform the promise at the time it was made, as where only a short period of time elapses between the making of the promise and the failure or refusal to perform it, and there is no change in the circumstances. Id. (emphasis added) (quoting Tufts v. Poore, 219 Md. 1, 10, 147 A.2d 717 (1959)).

In Tufts, 219 Md. at 10-11, 147 A.2d 717 a case involving circumstantial evidence of fraudulent intent based, in part, upon the party’s subsequent conduct, the Court of Appeals discussed the valuation of facts related to demonstrating fraudulent intent, stating: In valuing facts relating to the question of a present intention not to perform a promise made, courts have frequently stressed the importance and significance of the situation of the parties, the relations existing between them, the activity of the promisor in procuring the instrument, and the failure of the promisor to perform.

As to fraudulent inducement, in Goldstein v.

Miles, 159 Md.App. 403, 437, 859 A.2d 313 (2004), cert. denied, 384 Md. 581, 865 A.2d 589 (2005), this Court held that the plaintiffs “failed to produce sufficient evidence that they reasonably relied upon [the defendant]^ representations” because the defendant’s “statements were too indefinite, vague, and general to be considered as anything more than expressions of expectation or probability and therefore [were] not actionable as fraudulent ... misrepresentations.” The defendant, a lawyer, had stated that, upon his retirement, he would sell his law firm below market value to the plaintiffs, also lawyers.

Id. at 436, 859 A.2d 313. We concluded that the plaintiffs could not reasonably rely on the defendant’s statements, which “did not contain any material terms of the sale. No purchase price, date of sale, interest rate, or terms of payment were discussed, much less agreed upon.” Id. at 437, 859 A.2d 313.

(4) Analysis (

a) Grounds for Establishing Fraudulent Inducement Returning to the instant case, although we ultimately reach the same conclusion as the circuit court—that appellants fraudulently induced appellees—we decide the issue of sufficiency of the evidence for fraudulent inducement on grounds that differ from those of the circuit court, which held that appellants fraudulently induced appellees by representing that VitalTel had been properly incorporated as Al Khat Al Hayawi. We explain.

The circuit court concluded that on February 1, 2006, Fadul sent an e-mail to Salkini that served to fraudulently induce Salkini to enter into the April Operating Agreement. The email read, in pertinent part: “Attached please find VitalTel’s

article of [injcorporation [from] Iraq.” One of the e-mail’s attachments—which has since been translated into English— reads, in pertinent part: “I, company registrar, certify herein that on [June 13, 2004], [Al-Khat Al-Hayawi Telecommunications Services, Ltd.] was registered in our books[.]” At trial, Fadul contended that VitalTel and Al Khat A1 Hayawi were two different companies—thus, Fadul could convey “VitalTel” to Moutiny and “Al Khat A1 Hayawi” to A1 Bahash. The circuit court found that Fadul was not a credible witness.

The circuit court rejected Fadul’s contention and concluded that “VitalTel” and “Al Khat A1 Hayawi” were the same company—which Fadul purported to convey to Moutiny, when in fact he actually conveyed VitalTel to A1 Bahash. We agree with these conclusions by the circuit court. The conclusion that VitalTel and Al Khat A1 Hayawi were the same company, however, means that Fadul did not make a false representation in purporting to attach VitalTel’s incorporation papers to Fadul’s February 1, 2006, e-mail to Salkini.

It is undisputed that VitalTel was properly incorporated under the Arabic name “Al Khat A1 Hayawi.” Fadul, however, testified that “VitalTel” and “Al Khat A1 Hayawi” were two different companies. Thus, in Fadul’s February 1, 2006, email to Salkini, Fadul made a representation—that VitalTel and Al Khat A1 Hayawi were the same company—about which he later testified differently. Yet, the representation was actually true. Within this litigation, appellants have taken inconsistent positions as to whether or not “VitalTel” and “Al Khat A1 Hayawi” were two different companies.

At trial, appellants contended that “VitalTel” and “Al Khat A1 Hayawi” were two different companies. Fadul did so to argue that Moutiny did not own “Al Khat A1 Hayawi,” which he could thus convey to Al Bahash. On appeal, appellants contend that “VitalTel” and “Al Khat A1 Hawayi” were the same company. Appellants do so to argue that Fadul’s representation to Salkini via the February 1, 2006, e-mail—that VitalTel was incorporated under the Arabic name “Al Khat A1 Hawayi”—was true.

In the interests of justice, although Fadul should not benefit from his own disingenuousness, we need not reach the parties’ contentions regarding the applicability of the principles of equitable estoppel or judicial estoppel. We find sufficient evidence of fraudulent inducement on grounds that differ the circuit court’s.

We conclude that Fadul’s false representation was his promise in the April Operating Agreement to convey VitalTel to Moutiny—which the evidence established he not only failed to do, but also never intended to do—not his representation to Salkini via the February 1, 2006, e-mail that VitalTel was incorporated under the Arabic name “Al Khat A1 Hayawi.” We address the five elements of fraudulent inducement, and conclude that the evidence establishes that Fadul fraudulently induced appellees to invest $500,000 in, and loan $30,000,000 to, Moutiny by falsely representing that Fadul would convey VitalTel to Moutiny. (

b) The Five Elements of Fraudulent Inducement (

i) False Re

[…]