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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 10, 2006 Decided August 18, 2006

No. 04-7167

CONSEIL ALAIN ABOUDARAM, S.A.,

APPELLANT/CROSS-APPELLEE

v.

JACQUES DE GROOTE,

APPELLEE/CROSS-APPELLANT

Consolidated with

04-7168

Appeals from the United States District Court

for the District of Columbia

(No. 01cv00006)

James L. Marketos argued the cause for appellant/crossappellee. With him on the briefs was Alexander C. Vincent.

Stephen Sale argued the cause for appellee/cross-appellant.

With him on the briefs was John D. Quinn.

Before: TATEL and GARLAND, Circuit Judges, and

EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge GARLAND.

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GARLAND, Circuit Judge: Plaintiff Conseil Alain

Aboudaram, S.A. (“CAASA”), a Swiss corporation, sued

Jacques de Groote, a Belgian national, claiming that de Groote

failed to repay CAASA for loans the corporation made to him

under a pair of promissory notes. De Groote asserted that it was

he and not CAASA who was owed money. He filed

counterclaims alleging that CAASA failed to pay him for

consulting work he performed for the corporation. Although a

jury sided with CAASA on both its claim and de Groote’s

counterclaims, the district court overturned the verdict as to the

former. We affirm the district court’s decision in all respects.

I

CAASA is a Swiss corporation owned principally by Alain

Aboudaram and his family. It offers financial advisory services

to a range of commercial and governmental clients. De Groote

is a Belgian national and resident of the District of Columbia,

who once served as an Executive Director at the World Bank.

Aboudaram and de Groote met in 1990 and for several years had

a mutually profitable relationship. De Groote parlayed his

extensive contacts in government and international finance into

business opportunities for Aboudaram, who in return aided de

Groote by helping him meet his personal financial obligations.

Aboudaram’s most important assistance to de Groote was to

loan him money so that he could avoid defaulting on the

mortgage on his Georgetown townhouse. Both parties agree that

Aboudaram extended those loans in his personal capacity, and

that de Groote continues to owe Aboudaram for them.

During the 1990s, De Groote also forged a relationship with

Aboudaram’s corporation, CAASA. Through it, de Groote

gained more than $1 million -- and this lawsuit. Two aspects of

that relationship form the basis of the present dispute. 

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The first, which underlies CAASA’s breach of contract

claim, involves two promissory notes pursuant to which CAASA

loaned money to de Groote. Each note was identical to the other

in all relevant respects, except for its date and “principal sum.”

The first note was dated December 19, 1995, and stated a

principal sum of $400,000; the second was dated October 13,

1998, and stated a principal sum of $100,000. See J.A. 108-09,

111-12. In both, de Groote agreed to pay on demand “to the

order of Conseil Alain Aboudaram S.A. [CAASA] . . . the

principal sum . . . or, if less, the aggregate principal amount of

all advances made hereunder by the Lender to the Borrower

(including advances made prior to the date hereof), outstanding

at the time of such demand, together with interest” at a set rate.

J.A. 108, 111. Both notes defined CAASA as the “Lender,” and

de Groote and his wife, collectively, as the “Borrower.” Id. The

notes were to be “governed by and construed in accordance with

the laws of the State of New York.” Id. at 109, 112. Each note

was secured by a deed of trust on de Groote’s Georgetown

townhouse.

CAASA alleges that de Groote borrowed extensively under

the two notes and that he failed to repay those borrowings.

CAASA -- but not Aboudaram personally -- sued de Groote for

breach of contract on January 3, 2001. When the case went to

trial in early 2004, the two sides offered the jury fundamentally

different views of their dealings under the notes. Aboudaram

testified that he and de Groote understood the promissory notes

to cover not only CAASA’s corporate loans to de Groote, but

Aboudaram’s personal loans as well. For his part, de Groote

testified that the promissory notes covered only loans that

CAASA made to him, and did not include Aboudaram’s

personal advances. If Aboudaram was correct that the

promissory notes held by CAASA applied to Aboudaram’s

personal loans, then CAASA stood to recover more than

$500,000 in unpaid principal and interest. See CAASA v. de

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Groote, No. 01-0006, Mem. Op. at 7 (D.D.C. June 7, 2004). By

contrast, if de Groote was correct, then CAASA stood to recover

nothing, as CAASA had loaned de Groote only about $25,000

under its own name and de Groote had repaid it all. See id. at 5

n.6. 

 The other relevant aspect of the parties’ relationship, which

underlies de Groote’s counterclaims, involves consulting work

that de Groote performed for CAASA. Among the transactions

that de Groote alleges he worked on was CAASA’s

representation of SkodaExport, a Czech company that sought

advice on obtaining a contract from the World Bank to construct

an oil pipeline in India. De Groote claims to have completed

several tasks for CAASA on behalf of SkodaExport, among

them exploring the status of the project within the World Bank,

determining how much money the Bank had earmarked for it,

identifying SkodaExport’s potential competitors, and

introducing Aboudaram to the Bank official in charge of the

project. 

The parties stipulated that CAASA received nearly $8.9

million for its work on behalf of SkodaExport. See Mem. Op.

at 4 n.3 (June 7, 2004). They disputed, however, the amount of

compensation owed to de Groote. According to de Groote, he

and Aboudaram orally agreed that CAASA would pay de Groote

one-third of the fees CAASA earned from SkodaExport, which

would amount to almost $3 million. CAASA denied that it had

agreed to pay de Groote for his SkodaExport work on a

percentage basis and instead insisted that it had already

compensated him on flat-rate terms for individual services

rendered. The parties agree that CAASA did pay de Groote at

least $1 million. See Appellant’s Br. 12 n.24; Appellee’s Br. 3.

Before the case was submitted to the jury, de Groote moved

for judgment as a matter of law under Federal Rule of Civil

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1

The district court also denied a motion by CAASA to reform the

promissory notes to reflect its assertion that de Groote’s promise was

to pay both CAASA’s and Aboudaram’s advances, and to amend its

complaint to state an additional claim for reformation of the notes.

See Mem. Op. at 9-12 (June 7, 2004). CAASA has made no argument

regarding that motion on appeal.

Procedure 50(a) against CAASA’s breach of contract claim,

contending that the plain language of the promissory notes did

not encompass loans made by Aboudaram in his personal

capacity. The court reserved judgment on the motion in order

to permit thorough briefing of the issue. The jury then returned

verdicts in favor of CAASA on both its claim and de Groote’s

counterclaims. Thereafter, pursuant to Rule 50(b), de Groote

renewed his motion for judgment as a matter of law against

CAASA’s claim. This time, the district court granted de

Groote’s motion, holding that “the unambiguous language of the

promissory notes between CAASA and de Groote causes them

to extend only to debts” between those two parties, debts “that

have already been repaid.” Mem. Op. at 19 (June 7, 2004).1

CAASA filed a motion for reconsideration, which the

district court denied. See CAASA v. de Groote, No. 01-0006,

Mem. Op. at 6 (D.D.C. Aug. 31, 2004). At the same time, de

Groote filed a motion to sanction CAASA for discovery abuses

under Federal Rule of Civil Procedure 37, which the district

court also denied. See id. The court then entered judgment “for

CAASA as to de Groote’s counterclaims and for de Groote on

CAASA’s claim[] on the promissory notes.” Id. Both parties

filed timely notices of appeal. We consider CAASA’s challenge

in Part II and de Groote’s in Part III.

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II

CAASA maintains that the district court erred in granting

de Groote judgment as a matter of law against CAASA’s claim

for breach of the promissory notes. We review that ruling de

novo and may affirm “only if we find . . . that no reasonable jury

could [have reached] a verdict in the plaintiff’s favor.”

Holbrook v. Reno, 196 F.3d 255, 259 (D.C. Cir. 1999).

As the district court noted, “[u]nder New York law, the

initial interpretation of a contract is a matter of law for the court

to decide.” Mem. Op. at 9 (June 7, 2004) (quoting Alexander &

Alexander Servs., Inc. v. These Certain Underwriters at Lloyd’s,

136 F.3d 82, 86 (2d Cir. 1998)). “Included in this initial

interpretation is the threshold question of whether the terms of

the contract are ambiguous.” Alexander, 136 F.3d at 86; see

Omni Quartz, Ltd. v. CVS Corp., 287 F.3d 61, 64 (2d Cir. 2002);

Curry Road Ltd. v. K Mart Corp., 893 F.2d 509, 511 (2d Cir.

1990). And “‘where the language and the inferences to be

drawn from it are unambiguous,’” a district court may

“‘construe a contract as a matter of law and grant . . . judgment

accordingly.’” Alexander, 136 F.3d at 86 (emphasis omitted)

(quoting Cable Science Corp. v. Rochdale Vill., Inc., 920 F.2d

147, 151 (2d Cir. 1990)).

We agree with the district court that “[t]he stubborn,

unavoidable fact at the root [of this dispute] is that the

promissory notes, on their faces, cover only ‘advances [made]

hereunder by the Lender to the Borrower,’ and unequivocally

define CAASA as the Lender.” Mem. Op. at 12 (June 7, 2004)

(quoting First. Am. Compl. Exs. A, B (J.A. 108, 111)). The

wording of the promissory notes -- drafted by CAASA’s own

corporate counsel -- leaves no room for anything but a single

interpretation: that CAASA alone is the lender under the notes.

Indeed, even CAASA’s litigation counsel conceded that the

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phrase “advances made hereunder by the Lender” is not

ambiguous, and can only be read as covering advances made by

the corporation. See Oral Arg. Tr. at 10; see also Trial Tr. at 88-

89 (Feb. 24, 2004).

To circumvent the acknowledged clarity of the contractual

language, CAASA maintains that the district court should have

considered extrinsic evidence, including the parties’ behavior

before and after executing the promissory notes. Such evidence,

the corporation asserts, would have demonstrated the parties’

intent to incorporate Aboudaram’s personal advances within the

ambit of the notes. In New York, however, the well-established

rule is that “[o]nly when the language of the contract is

ambiguous may a court turn to extrinsic evidence of the

contracting parties’ intent.” Curry Road, 893 F.2d at 511; see

In re Silberman’s Will, 242 N.E.2d 736, 740-41 (N.Y. 1968).

Conversely, “a court may not admit extrinsic evidence in order

to determine the meaning of an unambiguous contract.” Omni

Quartz, 287 F.3d at 64; see Namad v. Salomon Inc., 543 N.E.2d

722, 723 (N.Y. 1989). Because the language of the promissory

notes is unambiguous, the district court properly barred

reference to extrinsic evidence.

CAASA nonetheless insists that, if we would just look at

the extrinsic evidence, we would see that the notes are in fact

ambiguous; moreover, once this realization dawned on us,

examination of additional extrinsic evidence would lead

inexorably to the conclusion that the notes are broad enough to

cover Aboudaram’s personal advances. The circularity of this

argument requires little discussion. Under New York law, “the

question of ambiguity . . . must be determined from the face of

the agreement, without reference to extrinsic evidence. Mem.

Op. at 15 (June 7, 2004) (citing Kass v. Kass, 696 N.E.2d 174,

180 (N.Y. 1998)). “[E]xtrinsic or parol evidence is not

admissible to create an ambiguity in a written agreement that is

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otherwise clear and unambiguous.” Petracca v. Petracca, 756

N.Y.S.2d 587, 587 (N.Y. App. Div. 2003). 

CAASA further argues that the district court mistakenly

failed to consider a ledger sheet or “grid” that was attached to a

copy of the December 19, 1995 promissory note that was in turn

appended to the Complaint. The grid is titled “Advances and

Payments of Principal,” and it contains eight dollar figures under

the heading “Amount of Advance.” J.A. 110. CAASA contends

that the grid provides intrinsic evidence of the note’s ambiguity,

which thus warrants resort to extrinsic evidence to divine the

note’s true meaning.

There are two problems with this argument. First, it is not

clear whether the grid was entered into evidence. At trial, de

Groote objected to its admission on the ground that the numbers

on the grid were not on the document he signed. CAASA then

consented to detaching the grid from the promissory note and

excluding it from the record. See Mem. Op. at 10 (June 7,

2004). In any event, the grid -- which contains neither

signatures nor initials -- does not “identify Aboudaram as the

source of the recorded advances or otherwise facially contradict

the language of the note.” Mem. Op. at 4 (Aug. 31, 2004). We

therefore agree with the district court that Aboudaram “cannot

now insist upon confounding what is, on its face, a

straightforward document drafted to CAASA’s specifications.”

Id. at 5.

Finally, CAASA contends that de Groote should have been

estopped from denying his liability to CAASA, principally

because his pretrial pleadings admitted that CAASA made

advances to him under the promissory notes. Indeed, there was

a “stipulated agreement of the parties that CAASA made some

payments [under the notes] to de Groote -- totaling . . .

approximately $25,000.” Mem. Op. at 5 n.6 (June 7, 2004).

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2

The district court also rejected CAASA’s motion for

reconsideration. That motion focused primarily on the grid

purportedly attached to the December 19, 1995 promissory note, and

the district court rejected it for the reasons affirmed in the text above.

The court also concluded that “[n]one of the other issues mentioned

by CAASA in its motion for reconsideration approach the ‘clear error

or manifest injustice’ standard” required to grant relief. Mem. Op. at

5 n.5 (Aug. 31, 2004) (referencing the standard discussed in Firestone

v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996)). We review the

denial of such a motion for abuse of discretion, see Firestone, 76 F.3d

at 1208, and find no such abuse here. 

The issue at trial, however, was not the money that CAASA

advanced to de Groote, but the money that Aboudaram

personally loaned him. CAASA bore the burden of proving that

the promissory notes covered those loans, see Paz v. Singer Co.,

542 N.Y.S.2d 10, 11 (N.Y. App. Div. 1989), and de Groote’s

concession regarding other unspecified advances did not relieve

the corporation of that burden.

In sum, we find no error in the district court’s grant of

judgment as a matter of law in favor of de Groote and against

CAASA on the latter’s claim for breach of contract.2

III

De Groote asserts that the district court erred both in

instructing the jury regarding his counterclaims, and in denying

his motion for discovery sanctions under Federal Rule of Civil

Procedure 37. We review the lawfulness of the district court’s

jury instructions de novo, see Joy v. Bell Helicopter Textron,

Inc., 999 F.2d 549, 556 (D.C. Cir. 1993), and its denial of Rule

37 sanctions for abuse of discretion, see Hull v. Eaton Corp.,

825 F.2d 448, 452 (D.C. Cir. 1987).

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A

The verdict form posed the following question to the jury

regarding de Groote’s counterclaims: “Did CAASA and de

Groote reach an agreement (i.e., a contract) requiring CAASA

to pay de Groote one-third of the fees Skoda[E]xport paid

CAASA in exchange for de Groote’s consulting services to

CAASA?” J.A. 718. De Groote insists that this verdict form

and its associated jury instructions constitute reversible error

and necessitate a new trial, because from them the jury “could

conclude that CAASA and de Groote had no agreement for [de

Groote’s] services” when, in fact, the parties had “always

stipulated an agreement for services between de Groote and

CAASA.” Cross-Appellant’s Reply Br. 20-21. In de Groote’s

view, the court should have instructed the jury that there was a

contract, and then freed the jury to choose any figure it believed

to be the contract’s compensation term.

Under New York law, a binding contract requires

“agreement with respect to all material terms,” Express Indus.

& Terminal Corp. v. N.Y. State Dep’t of Transp., 715 N.E.2d

1050, 1053 (N.Y. 1999), and a price term is certainly material,

see Tufano v. Morris, 728 N.Y.S.2d 835, 837 (N.Y. App. Div.

2001). It is a nice law school exam question whether a contract

is binding when the parties stipulate to its existence but disagree

about a material term. In context, however, it is highly doubtful

that the jury thought it was sitting for such an exam. As de

Groote notes, the witnesses did not dispute that CAASA agreed

to pay him for his work on the SkodaExport project. Indeed,

there was no dispute that CAASA did pay him at least $1

million. See Appellant’s Br. 12 n.24; Appellee’s Br. 3. This left

only one question for the jury: whether the parties had reached

an agreement “requiring CAASA to pay de Groote one-third of

the fees SkodaExport paid CAASA,” exactly the question the

verdict form asked. J.A. 718. The possibility that the jury might

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have “conclude[d] that CAASA and de Groote had no agreement

for [de Groote’s] services” at all, Cross-Appellant’s Reply Br.

21, is simply too speculative to be of concern. Even if the form

of the question left that possibility open, it was at best a

harmless error. See FED R. CIV. P. 61; Material Supply Int’l,

Inc. v. Sunmatch Indus. Co., Ltd., 146 F.3d 983, 992 (D.C. Cir.

1998).

B

Rule 37 authorizes a district court to sanction a party that

“fails to obey an order to provide or permit discovery.” FED.R.

CIV. P. 37(b)(2). De Groote alleges that he was “repeatedly

ambushed at trial by CAASA’s reliance on evidence it

concealed, [which] in many cases directly contradicted evidence

[it] produced in discovery.” Appellee’s Br. 34. According to de

Groote, these “ambush[es]” had the effect of forcing him “to

spend much of the trial responding to CAASA’s concealed

evidence, tainting [his] case and eliminating his ability to defend

and to prosecute the case coherently.” Id. He therefore sought

“severe sanctions” under Rule 37 in order to ensure that

“CAASA’s pervasive discovery abuses [were] deterred and

punished.” Id. at 35-36.

In denying de Groote’s Rule 37 motion, the district court

observed that “‘[t]he central requirement of Rule 37 is that any

sanction must be just.’” Mem. Op. at 5 (Aug. 31, 2004)

(quoting Bonds v. District of Columbia, 93 F.3d 801, 808 (D.C.

Cir. 1996)). The court concluded that granting the sanctions

requested by de Groote “would not be just” in light of “the

frequent, untimely, and inefficient filings by both sides.” Id. at

6. As the court explained, “CAASA could almost certainly

match the litany of discovery abuses recited by de Groote if it

chose to consume yet more ink and paper than it already has.”

Id. Our review of the record discloses that the district court

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displayed admirable patience in adjudicating what was

obviously a bitter personal dispute, and we perceive no ground

for second-guessing its decision to deny the motion for

sanctions.

IV

There is, of course, one unexplained mystery in this case.

As the district court noted, “Aboudaram may well have an

action against de Groote for unpaid personal debts, but he is a

stranger both to this case and to the plain language of the

promissory notes.” Mem. Op. at 4 (Aug. 31, 2004). Once the

parties’ relationship broke down, there was nothing Aboudaram

could have done to fix the latter problem. Yet, while he could

have readily cured the former simply by becoming a plaintiff,

Aboudaram never sought to make himself one. See id.

Although this mystery remains unresolved, the district court’s

reasoning and rulings are unimpeachable, and we therefore

affirm the judgment in all respects.

Affirmed.

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