CapitalKeys, LLC v. Democratic Republic of Congo

Full title: CAPITALKEYS, LLC, Plaintiff, v. DEMOCRATIC REPUBLIC OF CONGO, et al.…

Court: United States District Court, District of Columbia.

Date published: Oct 6, 2017

278 F. Supp. 3d 265 (D.D.C. 2017)

Opinion

Civil Action No. 15–cv–2079 (KBJ)

10-06-2017

CAPITALKEYS, LLC, Plaintiff, v. DEMOCRATIC REPUBLIC OF CONGO, et al., Defendants.

Robert Hantman, Hantman & Associates, New York, NY, W. Todd Miller, Baker & Miller PLLC, Washington, DC, for Plaintiff.

KETANJI BROWN JACKSON, United States District Judge

Robert Hantman, Hantman & Associates, New York, NY, W. Todd Miller, Baker & Miller PLLC, Washington, DC, for Plaintiff.

MEMORANDUM OPINION ADOPTING IN PART THE REPORT & RECOMMENDATION OF THE MAGISTRATE JUDGE

KETANJI BROWN JACKSON, United States District Judge

I. BACKGROUND

On April 18, 2013, Plaintiff CapitalKeys, LLC ("CapitalKeys"), a public affairs firm based in Washington D.C., entered into a contract with the Democratic Republic of Congo and the Central Bank of the Democratic Republic of Congo ("Congo" and "Central Bank" respectively; collectively, "Defendants"). (See Decl. of Adam Falkoff ("Falkoff Decl."), ECF No. 24–29, ¶ 1.) Pursuant to the contract, CapitalKeys was to provide Defendants with "government relations and strategic communications services" (Retainer Agreement, Ex. A to Falkoff Decl., ECF No. 24–30, at 3) for a period of five years that began on November 18, 2013, and ended on November 17, 2018 (see id. at 5; Falkoff Decl. ¶ 6).¹ Under the contract's terms, Defendants were to pay the entire contract price of $16,602,000 upon signing. (See Falkoff Decl. ¶ 7; Retainer Agreement at 5.)

1 Page numbers citations refer to the page numbers that the Court's electronic case-filing system automatically assigns.

According to CapitalKeys, Defendants made an initial "good faith payment" of $600,000 in March of 2013, before the Agreement was signed (Falkoff Decl. ¶ 3), but failed to pay the balance of the contract price—$16,002,000—on the date that the contract was executed (see id. ¶ 9). Nevertheless, CapitalKeys allegedly began providing services to Defendants under the contract, purportedly based upon Defendants' repeated assurances that payment was forthcoming. (See, e.g. , id. ¶¶ 10, 14–18, 34.) Eventually, CapitalKeys lost patience with Defendants' promises, and on December 1, 2015, CapitalKeys filed the instant lawsuit, asserting common law claims for breach of contract (see Corrected Compl., ECF No. 11–1, ¶¶ 42–49), unjust enrichment (see id. ¶¶ 50–58), "lost business opportunities" (id. ¶¶ 59–64), and "account stated" (id. ¶¶ 65–71).

Defendants have thus far not participated in this lawsuit in any respect. They were served with the complaint early in 2016, on the 11^th and 12^th of February, respectively (see Cert. of Mailing, ECF No. 15; Returns of Service, ECF Nos. 18, 19), and CapitalKeys asserts that since it filed this action, Defendants have expressly acknowledged the pendency of this suit in the context of offering renewed assurances that payment is forthcoming (see Falkoff Decl. ¶¶ 33–34; Decl. of W. Todd Miller ("Miller Decl."), ECF No. 24–2, ¶¶ 7–8). On April 14, 2016, the Clerk of this Court declared both Congo and the Central Bank to be in default due to their failure to appear (see Clerk's Entry of Default, ECF Nos. 22 (Congo) & 23 (Central Bank)), and approximately two weeks later, CapitalKeys filed a motion for default judgment in the amount of $21,618,000, consisting of $16,602,000 for damages under the contract and $5,016,000 for lost business opportunities, plus prejudgment interest at a rate of 6% per annum (totaling over $2,000,000) and $827.60 for costs (see Pl.'s Mot. for Default J., ECF No. 24, at 25–27; Falkoff Decl. ¶ 49; Miller Decl. ¶ 10; MJ Hrg. Tr. at 20.)

On June 14, 2016, this Court referred CapitalKeys's motion for default judgment to a Magistrate Judge for a report and recommendation. The assigned Magistrate Judge, Alan Kay, held a hearing on the motion on October 7, 2016, at which time Defendants failed to appear. (See Min. Order of June 4, 2016; MJ Hr'g Tr., ECF No. 26.) Defendants have neither requested that the Court set aside the Clerk's entry of default nor responded to CapitalKeys's motion for default judgment. This Court held a status conference in this matter on April 6, 2017, during which Defendants were absent.

II. THE REPORT & RECOMMENDATION AND CAPITALKEYS'S OBJECTION

Before this Court at present is the comprehensive Report and Recommendation that Magistrate Judge Kay has filed regarding CapitalKeys's motion for default judgment. (See R. & R., ECF No. 27.)² The Report and Recommendation reflects Magistrate Judge Kay's opinion that this Court should issue a default judgment in favor of CapitalKeys and award damages in part. (See id. at 278–79, 293–94.) Specifically, Magistrate Judge Kay finds (1) that Defendants have waived their immunity under the Foreign Sovereign Immunities Act, such that the Court has subject matter jurisdiction over this lawsuit (see id. at 282–83); (2) that Defendants were properly served under 28 U.S.C. § 1608, and thus this Court has personal jurisdiction over them (see id. at 283–84); and (3) that the choice-of-law provision in the parties' contract, which provides that District of Columbia law governs the contract and disputes thereunder, is enforceable with respect to liability and damages (id. at 283–84). The Report and Recommendation further opines that CapitalKeys has established that Defendants are liable for breach of contract, based on Defendants' failure to make any payment on the contract beyond their initial $600,000 payment. (Id. at 285–87.)

2 The Report and Recommendation, which is 30 pages long, is attached hereto as Appendix A.

With respect to damages, Magistrate Judge Kay recommends awarding CapitalKeys $16,002,000 in "liquidated damages" (the contract price of $16,602,000 less the $600,000 initial payment) (see id. at 287–88), $881,207.45 in prejudgment interest, running from the date that CapitalKeys filed this lawsuit and measured as of the date that the Report and Recommendation was filed (see id. at 291–93 & n.8), and $827.60 in costs (see id. at 293–94). Magistrate Judge Kay further recommends denying CapitalKeys's request for $5,016,000 in damages for lost business opportunities, plus interest, on the grounds that CapitalKeys has not presented sufficient evidence to support its claims on this front. (Id. at 287–91, 292–93.)

The Report and Recommendation also cautions that any party "fail[ing] to file timely objections to the findings and recommendations set forth in this report may waive their right of appeal from an order of the District Court adopting such findings and recommendation." (Id. at 293 (citing Thomas v. Arn , 474 U.S. 140, 154, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985) ).) Under this Court's local rules, any party who objects to a Report and Recommendation must file a written objection with the Clerk of the Court within 14 days of the party's receipt of the Report and Recommendation, and any such written objection must specify the portions of the findings and recommendations to which each objection is made and the basis for each such objection. See LCvR 73.2(b).

On December 5, 2016, CapitalKeys filed an objection that is limited to Magistrate Judge Kay's recommendation that the Court should award prejudgment interest beginning on the date that CapitalKeys filed suit, rather than on the date that the $16,002,000 payment was due. (See Objs. to the Magistrate Judge's Proposed Findings & Recommendations ("Pl.'s Obj."), ECF No. 28, at 1; R & R at 291–92 (recommending that interest be calculated thusly because CapitalKeys unduly delayed filing its suit).) CapitalKeys argues that, contrary to Magistrate Judge Kay's determination that the Court has discretion on this issue, D.C. law mandates that the interest on a liquidated debt such as the one at issue in this case must run " ‘from the time when [the debt] was due and payable ... until paid.’ " (Id. at 2 (quoting D.C. Code. § 15–108 ) (emphasis omitted).) This Court issued an order for supplemental briefing on various questions related to the damages calculation and the duty to mitigate damages (see Order, ECF No. 29), and CapitalKeys submitted its supplemental brief on March 21, 2017 (see Suppl. Br. in Resp. to the Court's Order of Feb. 28, 2017 ("Suppl. Br."), ECF No. 30).

III. DISCUSSION

A court may only enter a default judgment against a foreign sovereign if "the claimant establishes his claim or right to relief by evidence satisfactory to the court." 28 U.S.C. § 1608(e). "A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge."Id. § 636(b)(1)(C). This Court has reviewed Magistrate Judge Kay's Report and Recommendation, and with the exception of his recommendation regarding an award of liquidated damages and related prejudgment interest, the Court agrees with Magistrate Judge Kay's careful and thorough analysis and conclusions regarding CapitalKeys's motion for default judgment. In particular, the Court agrees with the Magistrate Judge that this Court has both subject matter jurisdiction over this case and personal jurisdiction over Defendants (see R. & R. at 282–84); that D.C. law governs questions regarding liability and damages for breach of the parties' contract (see id. at 283–84); that Defendants in fact breached the parties' contract (see id. at 285–87); that CapitalKeys has not established that it is entitled to damages or interest for lost business opportunities (see id. at 287–91, 292–93); and that CapitalKeys is entitled to recover $827.60 in costs (see id. at 293–94). Therefore, the Court will ADOPT the Report and Recommendation with respect to those issues. However, for the reasons that follow, the Court departs from the Report and Recommendation with respect to the calculation of breach-of-contract damages and the accompanying computation of prejudgment interest.

A. Breach–Of–Contract Damages

The Report and Recommendation arrived at its recommended damages total of $16,884,035.05 by adding "$16,002,000 in compensatory damages, $881,207.45 in prejudgment interest on the principal unpaid balance, and $827.60 for costs." (Id. at 293.) The calculation of $16,002,000 in compensatory damages reflected the entire amount that Defendants promised to (but did not) pay CapitalKeys upon signing the contract, in consideration for the entire five-year period of CapitalKeys's services. (See id. at 278–79, 287–88.) The Report and Recommendation characterized the missed payment as "liquidated damages," and treated the entirety of the missed payment as damages to CapitaKeys, notwithstanding the fact that CapitalKeys had not yet performed its obligations under the contract. (Id. at 287–88.) See Dist. Cablevision Ltd. P'ship v. Bassin , 828 A.2d 714, 723–24 (D.C. 2003) (explaining that a non-breaching party may recover liquidated damages as an alternative to actual damages where the parties have agreed to a valid liquidated-damages clause).

However, upon review of the parties' Agreement, this Court finds that the contract that CapitalKeys seeks to enforce does not contain a liquidated-damages clause; the clause that required Defendants to pay the full contract price of $16,602,000 upon signing did create an obligation, but it did not "determine[ ] in advance the measure of damages if a party breaches the agreement." Black's Law Dictionary 1072 (Bryan A. Garner ed., 10th ed. 2014) (defining "liquidated-damages clause"); see also The Cuneo Law Group, P.C. v. Joseph , 669 F.Supp.2d 99, 112–13 (D.D.C. 2009) ("In assessing whether a provision in a contract amounts to a liquidated damages clause, the Court's first inquiry is whether the clause serves as a remedy for the breach of the contract."). CapitalKeys acknowledges this in its supplemental brief. (See Suppl. Br. at 1 ("Plaintiff does not contend ... that the ‘Fee Amount, Expenses and Payment Schedule’ clause constitutes a liquidated damages clause in the traditional sense."); id. at 2 ("The clause did not set an amount of damages to be paid upon breach, but rather created an obligation to pay $16,602,000 [including the $600,000 that Defendants did pay]; when that obligation was not met, Defendants breached the agreement.").) Therefore, in the absence of a contract that contains a liquidated-damages clause, the Court is required to calculate CapitalKeys's actual damages. See Dist. Cablevision , 828 A.2d at 729–30.

Under District of Columbia law, the standard measure of actual damages arising from a breach of contract is the non-breaching party's expectation interest—that is, an amount sufficient to give the non-breaching party the benefit of the bargain. See, e.g. , United House of Prayer for All People v. Therrien Waddell, Inc. , 112 A.3d 330, 339–40 (D.C. 2015) ; Vector Realty Grp., Inc. v. 711 Fourteenth St., Inc. , 659 A.2d 230, 234 n.8 (D.C. 1994) ("Contract damages ... are intended to give the [injured party] the benefit of his bargain by awarding him a sum of money that will, to the extent possible, put him in as good a position as he would have been in had the contract been performed." (alterations in original) (quoting Restatement (Second) of Contracts § 347 cmt. a (1981))). Expectation damages typically are

measured by (a) the loss in the value to [the injured party] of the other party's performance caused by its failure or deficiency, plus (b) any other loss, including incidental or consequential loss, caused by the breach, less (c) any cost or other loss that [the injured party] has avoided by not having to perform.

Restatement (Second) of Contracts § 347 (emphasis added). In this case, it is easy to calculate "the loss in value to [CapitalKeys] of the other party's performance by its failure or deficiency," id. —that amount is $16,002,000, which is the remaining amount that Defendants were obligated to pay upon signing the contract, but did not. (See Retainer Agreement at 5; Falcoff Decl. ¶ 9.) With respect to "other loss, [such as] incidental or consequential loss, caused by the breach," Restatement (Second) of Contracts § 347, as noted above, this Court agrees with Magistrate Judge Kay's conclusion that CapitalKeys has not established its right to recover for any such losses. (See R. & R. at 287–91.)

The most difficult component of calculating the actual damages in this case is quantifying the "cost or other loss that [CapitalKeys] has avoided by not having to perform." Restatement (Second) of Contracts § 347. Quantifying this amount is difficult for two reasons: first, it is not immediately clear what point in time the Court should use in order to isolate those future costs that CapitalKeys avoided by not having to perform, since, after Defendants failed to pay the amount due upon signing and thereby breached the contract, CapitalKeys proceeded to perform services under the contract for over two years before filing this lawsuit. (See Falkoff Decl. ¶¶ 10, 15.) What is more, CapitalKeys has continued to perform under the contract for nearly two years after filing this lawsuit, and it has represented that its performance is still ongoing. (See id. ¶ 34.) The second reason that it is hard to quantify the costs that CapitalKeys has avoided under the circumstances presented here is that there is scant evidence in the record from which this Court can infer CapitalKeys's costs of rendering performance under the contract or how those costs are allocated over the five-year contract period.

With respect to the timing issue, this Court concludes that the date of this Court's judgment is the relevant point in time for measuring CapitalKeys's costs, because under District of Columbia law, CapitalKeys was not required to stop rendering services to Defendants either at the point in which Defendants breached the contract or when CapitalKeys filed this lawsuit. The D.C. Court of Appeals has held that "[t]he duty to mitigate [damages] does not obtain so long as the breaching party ‘has not definitely repudiated the contract and continues to assure [the] plaintiff that performance will take place.’ " Edward M. Crough, Inc. v. Dep't of Gen. Servs. of D.C. , 572 A.2d 457, 467 (D.C. 1990) (quoting A. Corbin, 5 Corbin on Contracts § 1039 (1964)); accord Bolton v. Crowley, Hoge & Fein P.C. , 110 A.3d 575, 586 (D.C. 2015). And the instant record demonstrates that Defendants have never fully repudiated the contract; indeed, there is sworn testimony that Defendants have repeatedly assured CapitalKeys that they would pay the contract price that they failed to pay upon signing, and that such assurances continue. (See, e.g. , Falkoff Decl. ¶¶ 9–10, 14–18, 34.) Under these circumstances, then, "[i]t [wa]s not necessary for the plaintiff to take steps to avoid losses" by ceasing its work on the contract or declining to begin performing in the first place. Bolton , 110 A.3d at 586. Furthermore, while the D.C. Court of Appeals has not spoken to this particular issue, other courts have held, in essence, that the filing of a lawsuit is of no moment; that is, a plaintiff in a service contract is not required to stop performing services under the contract when its lawsuit is filed. See, e.g. , Tax Matrix Techs., LLC v. Wegmans Food Markets, Inc. , 154 F.Supp.3d 157, 172, 184 (E.D. Pa. 2016) (allowing contract claim to proceed in case where "the parties continued to move forward with multiple projects governed by" the contract "even after th[e] case was filed"). Accordingly, the Court will measure CapitalKeys's costs from the date of the Court's judgment—October 6, 2017.

This means that, under the Restatement's traditional framing of expectation damages, this Court must award CapitalKeys an amount that is equal to the unpaid portion of the contract price minus the cost to CapitalKeys of finishing its performance as of the date of this Court's judgment. See Restatement (Second) of Contracts § 347. However, as noted above, there is virtually no evidence in the record about CapitalKeys's costs of performance and how those costs are distributed over the life of the contract. Regarding its total costs, CapitalKeys's president Adam Falkoff represented to the Court at the status conference of April 6, 2017—in what amounted to unsworn oral testimony—that CapitalKeys's profits on the contract are "probably around ten percent" of the contract price, implying that its costs were around ninety percent of the contract price (Hrg. Tr. at 35), but no documentary evidence in the record supports that assertion. Moreover, with respect to the allocation of CapitalKeys's costs over the course of the five-year contract period, Mr. Falkoff suggested that CapitalKeys's work was front-loaded (see Hrg. Tr. at 36 (Mr. Falkoff stating that "we're almost done" with the work on the contract)), but the contract itself computes the contract price as the sum of equal monthly payments, suggesting that CapitalKeys's costs would be evenly spaced over time (see Retainer Agreement at 5 ("Client agrees to pay CK $276,700 per month for professional services (the ‘Retainer Fees’) for a total of $3,320,400 per year which is $16,602,000 for five years[.]")). None of this evidence inspires confidence, but ultimately, this Court finds, based on the available record, that CapitalKeys's costs were equal to ninety percent of the contract price ($14,941,800), and that they were evenly distributed over the life of the contract. See 28 U.S.C. § 1608(e) (providing that a default judgment against a foreign sovereign must rest on "evidence satisfactory to the court"). This means that, as of the date of this Court's judgment, with 407 days, or 22.3% of the contract period remaining, CapitalKeys's remaining costs of performance are $3,330,401.20 (22.3% of $14,941,800).

Accordingly, this Court concludes that the proper measure of CapitalKeys's damages is $12,671,598.80. This amount reflects the unpaid portion of the contract price ($16,002,000) minus CapitalKeys's remaining costs to complete performance as of the date of this judgment ($3,330,401.20).

B. Prejudgment Interest

Magistrate Judge Kay's Report and Recommendation concludes that the breach-of-contract damages in this case constitute a "liquidated debt," and as a result, that CapitalKeys is entitled to prejudgment interest under D.C. Code § 15–108, which provides that "[i]n an action ... to recover a liquidated debt on which interest is payable by contract or by law or usage[,] the judgment for the plaintiff shall include interest on the principal debt from the time when it was due and payable ... until paid." D.C. Code § 15–108. (See R. &. R. at 291–93.) The Report and Recommendation suggests that, although CapitalKeys is entitled to prejudgment interest, the interest should be calculated from the time that the lawsuit was filed—as opposed to the date that Defendants failed to pay upon signing the contract—to account for CapitalKeys's own undue delay in filing this lawsuit. (See R. & R. at 292–93; see also id. at 291–92 (suggesting that "district courts have wide discretion in terms of awarding prejudgment interest").) CapitalKeys objects to this last element of the Magistrate Judge's reasoning, arguing that, in liquidated-debt cases, prejudgment interest must be computed as of the date that the debt was due under D.C. Code § 15–108. (See Pl.'s Obj. at 1.)

As a threshold matter, this Court must determine whether the instant case is, in fact, "an action ... to recover a liquidated debt[,]" which is a prerequisite to the applicability of the District of Columbia's mandatory prejudgment interest statute. D.C. Code § 15–108. "A liquidated debt is one which at the time it arose was an easily ascertainable sum certain." Steuart Inv. Co. v. The Meyer Grp., Ltd. , 61 A.3d 1227, 1240 (D.C. 2013) (internal quotation marks, citation, and alteration omitted). D.C.'s liquidated debt statute reflects the common law rule that, where an amount is due and certain as of a particular date such that any delay in payment merely increases the damage to the creditor, "the creditor is entitled to interest from that time by way of compensation for the delay in payment[,]" and "interest begins to run at once." Riggs Nat'l Bank of Wash., D.C. v. District of Columbia , 581 A.2d 1229, 1253 (D.C. 1990) (quoting Young v. Godbe , 82 U.S. (15 Wall.) 562, 565–66, 21 L.Ed. 250 (1872) ). Notably, to trigger D.C.'s mandatory prejudgment interest statute, the debt must have been for a "sum certain" at the time that it arose, which for purposes of the statute happens only if its size was known to both parties at the time. See Wash. Inv. Partners of Del., LLC v. Secs. House, K.S.C.C. , 28 A.3d 566, 582 (D.C. 2011) ("Both parties knew exactly how much [appellant] had been paid under the [contract], and thus appellee's award was a ‘sum certain.’ " (citation omitted)). Moreover, for a damages award to trigger D.C. Code § 15–108, the plaintiff must have "had an immediate right, judicially enforceable[,]" to recover that sum certain at the time that the debt arose. Riggs Nat'l Bank , 581 A.2d at 1254.

In this case, even though the amount that Defendants were required to pay CapitalKeys upon signing the contract was certain, this Court concludes that the debt owed was not a "sum certain" in the requisite sense, because CapitalKeys did not have an immediate, judicially enforceable right to the entire unpaid balance ($16,002,000) at the time of the breach, and its damages at that time were unknown (at least to Defendants). That is, if CapitalKeys had sued immediately upon Defendants' failure to pay, CapitalKeys's recovery for Defendants' breach would not have been $16,002,000; rather, its recovery would have been equal to the contract price minus CapitalKeys's future costs of performance . See Restatement (Second) of Contracts § 347. (See also supra Part III.A.)³ When the contract was entered, the amount of CapitalKeys's future costs was unknown to Defendants. (See Retainer Agreement at 7 ("[CapitalKeys] will not account for the time or costs or otherwise, of its efforts or payments.").) Furthermore, CapitalKeys itself does not appear to have known what its future costs would be with any exactitude at the time that the contract was signed and the payment was owed. (See Hrg. Tr. at 35 (CapitalKeys's president estimating that "[t]he profit is probably around ten percent after it was all said and done").) Thus, because there is uncertainty (both then and now) regarding the amount to which CapitalKeys would actually have been entitled to receive in "an action ... to recover [the] debt" that was created when Defendants failed to pay, this is not a suit "to recover a liquidated debt," and the District's mandatory prejudgment interest statute does not apply. D.C. Code § 15–108.⁴

3 Indeed, the amount of CapitalKeys's damages has been increasing with each passing day, such that the amount the Court awards in this opinion is more than what CapitalKeys would have recovered had it sued immediately. This is because the amount of CapitalKeys's future costs of performance—which the Court must subtract in order to arrive at the damages amount, see Restatement (Second) of Contracts § 347 —decreases as the remaining portion of the contract period wanes, and that, in turn, makes for a larger recovery as time goes by.

4 There is a line of cases from the D.C. Court of Appeals that explains that a liquidated debt is not rendered unliquidated merely because the plaintiff's recovery is ultimately offset in litigation by a non-sum-certain counterclaim or other entitlement of the defendant. See, e.g. , Wash. Inv. Partners , 28 A.3d at 582 n.23 ; Dist. Cablevision , 828 A.2d at 731–33 ; Giant Food, Inc. v. Jack I. Bender & Sons , 399 A.2d 1293, 1299–1302 (D.C. 1979). But that situation is different from the one presented here; in the instant case, the setoff against CapitalKeys's recovery—i.e. , its own cost of future performance—arises as a matter of contract law in a manner that is inherent to CapitalKeys's contract claim itself. See Dist. Cablevision , 828 A.2d at 732 n.25 (noting that " ‘[i]t is the character of the [plaintiff's] original claim that counts, not the vicissitudes of the lawsuit’ " (alterations in original) (quoting 1 Dan B. Dobbs, Law of Remedies § 3.6(1) (2d ed. 1992))).

Notably, however, CapitalKeys can still avail itself of the District of Columbia's prejudgment interest statute pertaining to breach-of-contract actions involving un liquidated debts, which provides as follows:

In an action to recover damages for breach of contract the judgment shall allow interest on the amount for which it is rendered from the date of the judgment only. This section does not preclude the jury, or the court, if the trial be by the court, from including interest as an element in the damages awarded, if necessary to fully compensate the plaintiff.

D.C. Code § 15–109 ; see also Burke v. Groover, Christie & Merritt, P.C. , 26 A.3d 292, 304 (D.C. 2011) (noting that this statute "authorizes the award of pre-judgment interest in contract actions where the debt is not liquidated"). "The trial court has broad discretion in awarding prejudgment interest" under D.C. Code § 15–109 so as to fully compensate the plaintiff. House of Wines, Inc. v. Sumter , 510 A.2d 492, 499 (D.C. 1986).

This Court concludes that fully compensating CapitalKeys requires awarding prejudgment interest, but not on the full actual damages amount analyzed in Part III.A, supra , for the reasons already explained. (See supra note 3.) Conceptually, the Court's contract-damages award of $12,671,598.80 can be separated into two components for the purpose of the interest calculation: (1) the profits that CapitalKeys stood to earn on the contract in its entirety, less the amount that Defendants actually paid, which equals $1,060,200,⁵ and (2) the costs that CapitalKeys has incurred to date in the course of performing services under the contract, which is equal to $11,611,398.80.⁶ This framing of the Court's actual damages award is useful because it separates the total into the amount to which CapitalKeys would have been entitled had it sued immediately when Defendants failed to pay upon signing (profit, minus the $600,000 that Defendants had already paid, or $1,060,200), from the damages that CapitalKeys has incurred only by virtue of its decision to begin performing ($11,611,398.80). The first portion of the damages has been owed from the moment of the breach, and reflects additional harm that CapitalKeys has suffered by virtue of Defendants' failure to pay that amount during the intervening time. See Fed. Mktg. Co. v. Va. Impression Prods. Co. , 823 A.2d 513, 531 (D.C. 2003) ("The purpose of awarding prejudgment interest as part of the damages for breach of contract is to compensate the creditor for the loss of the use of money over time."). By contrast, the second portion of the damages has been incurred over time and relates to CapitalKeys's continuing performance, and CapitalKeys could have avoided these damages by not commencing performance on the contract (even if it did not have a legal duty to do so). The rationale for awarding prejudgment interest as an element of contract damages—compensating the plaintiff for damages that are solely attributable to the defendant's failure to pay a debt on time—does not apply with respect to this latter portion, which is instead attributable to CapitalKeys's decision to perform despite Defendants' nonpayment and its delay in seeking to recover the debt owed.

5 Mr. Falkoff represented that CapitalKeys's profits on the contract will be approximately ten percent of the contract price, or $1,660,200. (See Hrg. Tr. at 35.) Subtracting the $600,000 that the Defendants paid CapitalKeys from that total yields $1,060,200.

6 Above, the Court found that CapitalKeys's total cost of performing the contract is $14,941,800, and of that total, $3,330,401.20 of costs has yet to be incurred. The difference in these two numbers represents the costs that CapitalKeys has already incurred: $11,611,398.80.

Accordingly, this Court will award prejudgment interest only on $1,060,200. The Court will tabulate interest from the date that the payment was due until the date of this Court's judgment at a rate of 6% per year. See District of Columbia v. Pierce Assocs., Inc. , 527 A.2d 306, 311 (D.C. 1987) (explaining that 6% is the maximum rate of prejudgment interest under D.C. Code § 15–109 absent a contractual provision setting a higher rate). Thus, the amount of prejudgment interest equals $247,128.26. See Rastall v. CSX Transp., Inc. , 697 A.2d 46, 53 (D.C. 1997) ("Absent a contractual provision, prejudgment and judgment interest are not usually compounded.").

IV. CONCLUSION

After conducting its own review of the record, the Report & Recommendation, and the objection that CapitalKeys has filed, this Court accepts Magistrate Judge Kay's analysis and conclusions regarding CapitalKeys's motion for default judgment, except for his recommendation regarding the amount of damages and prejudgment interest, and thus, it will ADOPT IN PART the Report & Recommendation. Accordingly, CapitalKeys's Motion for Default Judgment (ECF No. 24) will be GRANTED IN PART , and damages will be awarded as follows:

Compensatory Damages : $12,671,598.80

Prejudgment Interest : $247,128.26

Costs : $827.60

A separate Order accompanies this Memorandum Opinion.

REPORT AND RECOMMENDATION

ALAN KAY, UNITED STATES MAGISTRATE JUDGE

Plaintiff CapitalKeys, LLC ("Plaintiff" or "CapitalKeys") seeks entry of Default Judgment against the Democratic Republic of Congo ("Congo") and the Central Bank of the Democratic Republic of the Congo ("Central Bank") (collectively, "Defendants") in Plaintiff's Motion for Entry of Default Judgment Against All Defendants and Memorandum of Law in Support thereof [24] (collectively, "Motion"). United States District Judge Ketanji B. Jackson referred the Motion to the undersigned for a Report and Recommendation. (See June 14, 2016 Minute Order.) On September 16, 2016, the undersigned held an evidentiary hearing ("Hearing") on the matter. Upon consideration of the record, the pleadings, the testimony given at the hearing, and for the reasons set forth below, the undersigned recommends that the Court issue a Default Judgment in favor of Plaintiff against the defaulting Defendants and award damages in part.

I. BACKGROUND

A. Contract Dispute

This case arises out of a contract dispute. Plaintiff is a public affairs firm based in Washington, D.C. (Plaintiff's Amended Complaint "Compl." [11] ¶ 5; Declaration of Adam Falkoff "Falkoff Decl." Ex. A [24–30] at 2.)¹ Defendants, the Congo² and the Central Bank, spent six months negotiating with Plaintiff before entering into a verbal agreement in or around February 2013 to retain Plaintiff's government relations and strategic communication services. (See Compl. ¶¶ 12, 16; Falkoff Decl. [24–29] ¶ 2.)

1 For purposes of this Report and Recommendation, the page numbers cited are the ECF page numbers found on the top right corner of each page of the Motion, Declaration of Adam Falkoff, Declaration of W. Todd Miller, and exhibits.

2 Throughout this Report and Recommendation, any mention of the Congo is in reference to the Democratic Republic of the Congo, not the Republic of the Congo—both of which are countries in Africa.

In March 2013, the Congo made "a good faith payment of $600,000 as consideration for the Retainer Agreement." (Falkoff Decl. ¶ 3, Falkoff Decl. Ex. B [24–31] at 2.) The following month, authorized representatives of the Central Bank traveled to Plaintiff's office in Washington, D.C. to formally execute the parties' agreement. (See Compl. ¶ 14; Falkoff Decl. ¶ 4.) Specifically, Plaintiff and Defendants agreed to a five-year term during which Plaintiff would provide its services to the Congo and the Central Bank in exchange for a one-time payment of $16,002,000, due upon signing the Retainer Agreement. (See Falkoff Decl. ¶¶ 6–7, Ex. A at 5.) This amount, plus the $600,000 that Defendants already paid, equaled the entire sum that Defendants agreed to pay Plaintiff for its services. (Falkoff Decl. Ex. A at 5; Falkoff Decl. Ex. B at 2.)

Acting as an agent for the Congo, the Governor of the Central Bank, Mr. Jean–Claude Masangu Mulongo, signed the written agreement after he received authorization from the President of the Congo. (See Compl. ¶ 17; Falkoff Decl. ¶¶ 2, 8; Falkoff Decl. Ex. A at 7.) The Congo was therefore bound by the Retainer Agreement as well, and both Defendants were aware of this fact. (Compl. ¶¶ 12, 17; Falkoff Decl. ¶¶ 2, 4–5, 8; Mot. 11.) Additionally, the parties understood that the Congo would direct and control Plaintiff's obligations under their agreement. (Falkoff Decl. ¶ 4.)

Upon signing the contract, Defendants did not make the agreed-upon payment during their visit to Washington, D.C. (Mot. 12; Falkoff Decl. ¶ 9.) Instead, they promised that "payment would be made shortly." (Compl. ¶ 18; Mot. 12; Falkoff Decl. ¶ 9.) Due to Defendants' promise of payment, Plaintiff began providing its services and also assisting Defendants with "extra things ... not in the contract," such as recommending talking points to the Governor of the Central Bank in order for the Government of the Congo to ultimately secure a $225,000,000 disbursement from the International Monetary Fund. (Hearing Transcript "Hearing Tr." [26] 39:16–23, 40:1–17 (Sept. 16, 2016); see Compl. ¶¶ 19–22; Falkoff Decl. ¶¶ 10–13.)

From June through August 2013, Defendants made weekly promises that payment was imminent, but to no avail. (See Compl. ¶ 23; Falkoff Decl. ¶ 14.) During this time, Defendants also sent a delegation to Plaintiff's office in Washington, D.C. and provided additional assurances that, upon the delegation's return to the Congo, Plaintiff would receive the full payment of $16,002,000. (See Compl. ¶ 25; Falkoff Decl. ¶ 16.) Defendants again failed to pay and, instead, continued to assure Plaintiff that payment was forthcoming. (See Compl. ¶¶ 25–26; Falkoff Decl. ¶¶ 16–17.)

Nevertheless, Plaintiff spent the following year providing its services to Defendants. (See Falkoff Decl. ¶¶ 18–20; Mot. 12.) These services included "elevating the global image of the Congo and assisting the Central Bank in modernizing their internal infrastructure." (Compl. ¶ 27; see Falkoff Decl. ¶ 18.) Despite having not received a single payment since the parties executed the contract, Plaintiff continued performing its obligations under the agreement because Defendants repeatedly promised to make payment and "because [Plaintiff] could not withdraw from these projects without consequence given the nature of Plaintiff's work." (Mot. 12; see Falkoff Decl. ¶ 34.)

On or around April 2014, about a full year after payment became due, Plaintiff received a letter, dated December 2013, from the President of the Congo. (See Falkoff Decl. ¶ 22; Mot. 13.) In the letter, the President of the Congo thanked Plaintiff for its services and stated that, upon receipt and confirmation of the letter, the Congo would send another delegation to Washington, D.C. to make the full payment. (Id .) Plaintiff promptly contacted the Congo and confirmed receipt of the letter, but Plaintiff did not receive any payment. (See Compl. ¶ 32; Falkoff Decl., Ex. C. [24–32] at 2; Mot. 13.)

The Congo subsequently promised full payment after receiving a "positive progress report" from another visiting delegation. (Falkoff Decl. ¶¶ 24–25.) During the Washington, D.C. visit, the delegates prepared a report "stating that operations were successful and thriving." (Falkoff Decl. ¶ 26.) The President of the Congo instructed the head delegate to return to the Congo at the end of the week with the progress report. (Compl. ¶ 36; Falkoff Decl. ¶ 27; Mot. 13.) Instead, the delegate spent an additional week in the United States visiting his daughter, which allegedly insulted the President of the Congo. (See Compl. ¶¶ 36–37; Falkoff Decl. ¶ 27; Mot. 13.) As a result, the President of the Congo refused to review the delegation's report or make payment. (See Compl. ¶ 37; Falkoff Decl. ¶ 28; Mot. 13.)

Throughout 2014 and 2015, Defendants often promised they would pay the full amount owed to Plaintiff under the Retainer Agreement, but they continued to fail in making their payment. (See Falkoff Decl. ¶¶ 29–32; Mot. 13.) Still, Plaintiff continued providing services to the Congo and the Central Bank with plans to "finish all pending projects as agreed upon." (Compl. ¶ 39; Falkoff Decl. ¶ 34.) In doing so, Plaintiff depleted its own resources to cover "substantial" costs, including salary, communication, and transportation expenses. (Compl. ¶ 40; Falkoff Decl. ¶¶ 35–37.)Moreover, Plaintiff asserts that its efforts to recover payment from Defendants precluded it from accepting three additional contracts worth an estimated total of $5,016,000. (Mot. 24; Falkoff Decl. ¶ 49.) In June and September of 2014, Plaintiff pre-negotiated two contracts for its services, totaling $4,260,000. (See Falkoff Decl. ¶¶ 40–41.) The first contract was worth $2,640,000, and the second contract was worth $1,620,000. (Id .) After reaching an agreement on pricing and contract terms, however, Plaintiff "realized that, due to our efforts to seek the much larger payment from the Congo, we would not have the time and resources to fully perform the contract[s]." (Falkoff Decl. ¶ 40.) Plaintiff ultimately turned down the first two contracts. (See Falkoff Decl. ¶ 44.)

In April 2015, Plaintiff scheduled a meeting in Arizona to finalize and sign a third pre-negotiated contract, which was worth $756,000. (See Falkoff Decl. ¶ 47.) However, prior to the meeting, Defendants contacted Adam Falkoff ("Mr. Falkoff"), President of CapitalKeys, to inform him that another delegation was coming to Washington, D.C. to discuss payment and that Mr. Falkoff "had to stay in Washington." (Id .) After Mr. Falkoff explained that this would cost him another business opportunity, Defendants assured Mr. Falkoff that the delegation would arrive. (Id .) Mr. Falkoff therefore canceled his trip to Arizona. (Id .) Just before the delegation was set to arrive, Defendants informed CapitalKeys that they would not be coming after all. (Falkoff Decl. ¶ 48.) According to Plaintiff, by that time, "it was too late" for Mr. Falkoff to travel to Arizona to sign the third contract. (Id .)

In multiple attempts to collect payment over the years, Plaintiff sent nine invoices to Defendants between May 2013 and August 2015. (See Compl. ¶ 66.) During that time, Defendants did not challenge those bills and, instead, continued to make promises of payment during their weekly conversations with Plaintiff. (Compl. ¶ 67; Falkoff Decl. ¶ 32.)

B. Legal Action

On December 23, 2015,³ Plaintiff filed this action against the Congo and the Central Bank to recover the overdue payment from Defendants. (See ECF [4]; Compl. ¶¶ 42–71.) Plaintiff alleges breach of contract, unjust enrichment in the alternative, account stated in the alternative, and loss of business opportunities. (See Compl. ¶¶ 2, 42–71.) Specifically, Plaintiff seeks $16,002,000 for damages under the contract, $5,016,000 for lost business opportunities, at least $2,000,000 for prejudgment interest, and $827.60 for costs. (See Compl. ¶¶ 49, 58, 64; Mot. 22, 24–27; Falkoff Decl. ¶ 49.) That is, Plaintiff requests a Default Judgment in the amount of $21,618,000, plus prejudgment interest and costs. (Mot. 1.)

3 Plaintiff originally filed its complaint on December 1, 2015. (See ECF [1].) However, that filing was entered in error. Plaintiff therefore filed a modified version of its complaint on December 23, 2015 and a summons was subsequently issued. (See ECF [4].) Accordingly, the filing date of the complaint is December 23, 2015.

In February 2016, the Clerk of this Court filed a Certificate of Mailing, certifying that copies of the summonses, complaint, and notice of suit had been sent to Defendants, along with French translations of each. (See Certificate of Mailing [15]; Declaration of W. Todd Miller "Miller Decl." [24–2] ¶¶ 5–6.) Shortly thereafter, Plaintiff filed returns of service for the Congo and the Central Bank, along with proof of delivery showing that both packages were signed for. (See Return of Service [18]; Return of Service [19]; Miller Decl. ¶ 6.)

Plaintiff indicates that based on its communication with Defendants, representatives of each Defendant are aware of the lawsuit, and still have simply continued promising imminent payment without following through on their promises. (See Falkoff Decl. ¶¶ 33–34; Miller Decl. ¶¶ 7–8, Exs. U, V, W, X. [24–23]-[24–26]; Hearing Tr. 37:9–23.) Despite Defendants' awareness of the lawsuit, Defendants never entered an appearance in this case, so the Clerk of the Court subsequently entered a default against Defendants on April 14, 2016 (See Clerk's Entry of Default [22]; Clerk's Entry of Default [23].)

Plaintiff then filed the instant Motion for Default Judgment Against All Defendants. (See Mot. 1.) In its Motion, Plaintiff contends that Defendants are liable for breach of contract, unjust enrichment in the alternative, account stated in the alternative, and loss of business opportunities. (See Mot. 7, 15–24.) Plaintiff also argues that an entry of default judgment in the amount requested is supported by the evidence. (See Mot. 7.)

On September 16, 2016, the undersigned held an evidentiary hearing on Plaintiff's Motion (See July 26, 2016 Minute Order; Sept. 16, 2016 Minute Entry). During the hearing, Plaintiff reiterated its request for damages in the amount of $21,618,000, plus prejudgment interest and costs (See Hearing Tr. 4:3–7.) Plaintiff also introduced an exhibit of a December 1, 2015 invoice showing those amounts. (See Hearing Tr. 20:3–21.) In referring the Court to its Motion, Plaintiff argued that its request for damages includes two elements: (1) the liquidated damages amount of $16,002,000 and (2) the consequential or incidental damages, resulting in lost business opportunities. (See Hearing Tr. 4:10–23.) Plaintiff noted that the liquidated damages covered payment for subcontractors, travel, and communication. (See Hearing Tr. 12:19–25, 15:15–24.) Plaintiff also maintained that Defendants are aware of these claims. (See Hearing Tr. 37:11–20.)

Mr. Falkoff then testified about Plaintiff's services for Defendants, the reasons for continuing to perform despite Defendants' failure to pay, and the basis for Plaintiff's lost business damages claim. He explained that Plaintiff's services for Defendants were primarily to help with "modernizing [the Central Bank's] procedures and the way they did banking and business which would in turn help the overall economy." (Hearing Tr. 7:9–14.)

As for why Plaintiff continued to perform, Mr. Falkoff said Plaintiff relied on Defendants' promises of payment, articulating to the Court that what makes someone pay is the ability to pay, reliance on the promise of payment, and the satisfaction of services. (See Hearing Tr. 27:19–25.) He also explained that this was a services contract, not a goods contract, and that Plaintiff could not just stop services and disrupt the Congo's way of doing business. (See Hearing Tr. 29:3–14.)

Regarding Plaintiff's claim for lost business damages, Mr. Falkoff spoke about the three pre-negotiated contracts. (See Hearing Tr. 21:20–25, 22:1–2.) He testified that Plaintiff turned down those contracts because Plaintiff's attempts to collect payment from Defendants was as if Plaintiff took on another client. (See Hearing Tr. 25:15–18.) For the third contract in particular, Mr. Falkoff did not believe anyone else would be as effective in meeting with the visiting delegation because he had the closest relationship with Defendants. (See Hearing Tr. 23:1–21.) Mr. Falkoff further explained that Plaintiff called Defendants about twice per week and sometimes sent an invoice by mail, costing time and money. (See Hearing Tr. 38:4–12.) He also explained Plaintiff's interest in maintaining its good reputation and not "spread[ing] ourselves too thin" by taking on too many clients while trying to collect payment from Defendants. (Hearing Tr. 44:5–9.)

The hearing concluded with Plaintiff explaining that the $16,002,000 amount is owed to Plaintiff regardless of the services or work Plaintiff performed; it is a liquidated amount that parties agreed to pay upon signing the Retainer Agreement. (See Hearing Tr. 48:10–25.)

II. JURISDICTION

A. Subject Matter Jurisdiction

The Foreign Sovereign Immunities Act ("FSIA" or "Act") vests this Court with original jurisdiction over actions against foreign states, so long as the foreign state is not entitled to immunity under the Act's relevant provisions. See 28 U.S.C. § 1330(a). A foreign state is defined under the FSIA to include any political subdivision of the state, or an agency or instrumentality of the state. See 28 U.S.C. § 1603(a). If the entity is an agency or instrumentality of the state, the Plaintiff must demonstrate that the agency or instrumentality is a "separate legal" entity from and an "organ" of the foreign state or, alternatively, that a foreign state or its political subdivision holds a majority ownership interest. 28 U.S.C. § 1603(b). The Plaintiff must also show that the agency or instrumentality of the state is neither a citizen of any state in the United States nor originated under the laws of a third country. Id .

Although foreign states are, by default, immune from suit under 28 U.S.C. § 1604, the FSIA provides several exceptions to immunity that, if met, subject the foreign state to suit. 28 U.S.C. §§ 1605, 1607. Plaintiff points to two such exceptions, arguing that Defendants fall under either one. (See Mot. 9, 10 n.1.) Under the first exception, a foreign state is not immune from this Court's jurisdiction if it has waived immunity, either explicitly or by implication. See 28 U.S.C. § 1605(a)(1). Alternatively, a foreign state may be subject to suit if the activity upon which the action is based is commercial in nature and occurs inside the United States. See 28 U.S.C. § 1605(a)(2).

Defendants in this action are both foreign states under the FSIA. Congo is itself a foreign state, thus qualifying under 28 U.S.C. § 1603(a). (See Compl. ¶ 7.) The Central Bank may be characterized as an agency or instrumentality of the Congo, as it is evidently a separate legal entity, but acts "as the agent and alter ego of Congo," thus arguably qualifying as an organ of the foreign state. (Compl. ¶ 14.)

Plaintiff asserts that Defendants have implicitly waived their immunity from suit in a manner sufficient under Section 1605(a)(1). (See Mot. 9–10.) This Court has held that a choice of law clause, in which the foreign state agrees that the contract will be governed by the law of a particular country, is sufficient to establish an implicit waiver of immunity. See Marlowe v. Argentine Naval Comm'n , 604 F.Supp. 703, 708–09 (D.D.C. 1985) ; Ghawanmeh v. Islamic Saudi Academy , 672 F.Supp.2d 3, 9 (D.D.C. 2009) (noting that "there can be no more obvious and implicit waiver of sovereign immunity than the sovereign's express intent to subject itself to the jurisdiction of a foreign court as demonstrated by a choice of law clause within a contract.").

Defendants in this suit signed a contract, stating that "[t]his Agreement will be governed by the laws of the District of Columbia without regard to principles of conflicts of law and a court in said place shall be the exclusive location for any suit or proceeding relating to this Agreement." (Falkoff Decl. Ex. A at 7.) Having consented to subject their contractual dealings with Plaintiff to United States law, Defendants have implicitly waived their sovereign immunity under 28 U.S.C. § 1605(a)(1).

Alternatively, immunity may be waived under the theory of commercial activity upon which the action is based. See 28 U.S.C. § 1605(a)(2). A qualifying activity includes either a "commercial activity carried on in the United States by the foreign state," or "an act performed in the United States in connection with a commercial activity of the foreign state." Id. For example, "[c]ontracts for services are generally considered commercial activities when entered into in the United States." Kettey v. Saudi Ministry of Educ. , 53 F.Supp.3d 40, 50 (D.D.C. 2014).

Authorized representatives from the Congo traveled to Plaintiff's office in Washington, D.C. to "formalize the parties' agreement in writing." (Mot. 10 n.1; see also Compl. ¶ 14.) The contract at issue here was both executed and performed within the United States and thus falls within the first category of a qualifying commercial activity. (See Compl. ¶ 14–19.) As Plaintiff's claim is based upon this activity, immunity may alternatively be waived under 28 U.S.C. § 1605(a)(2).

B. Personal Jurisdiction

The FSIA also vests this Court with personal jurisdiction over a foreign state for any claim over which this Court also has subject matter jurisdiction, provided that service was properly made pursuant to 28 U.S.C. § 1608. See 28 U.S.C. § 1330(b).

Section 1608(a)(3), governing service upon the Congo, requires that the Clerk of the Court send a copy of the summons, complaint, and notice to the head of the ministry of foreign affairs, along with a translation of each into the foreign state's official language. Plaintiff duly submitted copies and translations of each required document to the Clerk of this Court in February 2016. (See Certificate of Clerk [15]; Return of Service [18].) The Clerk sent these documents to Raymond Tshibanda, the head of the Congo's Ministry of Foreign Affairs, and later received confirmation that the package had been signed for. (See Mot. 8.) Thus, service upon Congo was compliant with the requirements under Section 1608(a)(3).

Section 1608(b)(3)(B), governing service upon the Central Bank, requires the same documents and translations to be sent directly to the agency or instrumentality to be served. Service was identically effectuated upon the Central Bank, whose representative also signed for the package. (See Certificate of Clerk [15]; Return of Service [19].) Thus, service upon the Central Bank was equally compliant with the requirements under Section 1608(b)(3)(B).

Service upon both Defendants was proper under Section 1608, and therefore this Court has personal jurisdiction over Defendants under Section 1330(b).

III. CHOICE OF LAW

Generally, an FSIA defendant "is subject under the FSIA to federal common law for determining the amount of damages a plaintiff can recover." Hill v. Republic of Iraq , 328 F.3d 680, 684 (D.C. Cir. 2003). However, the parties to this suit entered an agreement stipulating that the contract "will be governed by the laws of the District of Columbia without regard to principles of conflicts of law and a court in said place shall be the exclusive location for any suit or proceeding relating to this Agreement. " (Falkoff Decl. Ex. A at 7.) Contractual choice of law provisions are enforceable as long as there is no compelling or countervailing reason making enforcement unreasonable. Milanovich v. Costa Crociere, S.p.A. , 954 F.2d 763, 766–67 (D.C. Cir. 1992) ; cf. M/S Bremen v. Zapata Off–Shore Co. , 407 U.S. 1, 10–15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) (addressing the enforceability of a forum-selection clause in a contract); see also Restatement (Second) of Choice of Laws § 187 (1971). Choice of law provisions may be found unreasonable if (1) fraud or overreaching induced their formation; (2) the plaintiff is then deprived of his or her day in court; (3) the unfair nature of the chosen law may deprive the plaintiff of a remedy; or (3) their enforcement would conflict with the forum state's strong public policy. Allen v. Lloyd's of London , 94 F.3d 923, 928 (4th Cir. 1996) ; Cf. M/S Bremen , 407 U.S. at 12, 92 S.Ct. 1907 ; see also Restatement (Second) of Choice of Laws § 187 (1971).

These concerns are not at issue here. There have been no allegations of fraud or overreaching, deprivation of rights under District of Columbia state law, or arguments for why public policy dictates using federal common law. Moreover, Plaintiff regularly cites to District of Columbia state statutes and common law in support of its argument. (See Mot. 15–27.) Accordingly, the law of the District of Columbia should be applied in determining Defendants' liability and Plaintiff's entitlement to damages.

However, in determining whether this Court may ultimately enter a default judgment, the Federal Rules of Civil Procedure and the FSIA govern. Cf. Estate of Botvin ex rel. Ellis v. Islamic Republic of Iran , 772 F.Supp.2d 218, 227 (D.D.C. 2011) (applying the Federal Rules and FSIA provisions to the Court's legal standard for default judgment and standards of proof, even though Israeli law governed both liability and damages); see also Reed v. Islamic Republic of Iran , 439 F.Supp.2d 53, 59–60, 65 (D.D.C. 2006) (applying the Federal Rules and FSIA provisions to the Court's legal standard for default judgment, even though Massachusetts state law governed liability).

IV. LEGAL STANDARD

Under Federal Rule of Civil Procedure 55(a), the Clerk of the Court must enter a party's default "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise." FED. R. CIV. P. 55(a). Pursuant to Rule 55(b), after the Clerk of the Court has entered a default, a court may, upon the plaintiff's application and notice to the defaulting party, enter a default judgment. FED. R. CIV. P. 55(b)(2). "The determination of whether default judgment is appropriate is committed to the discretion of the trial court." Int'l Painters & Allied Trades Indus. Pension Fund v. Auxier Drywall, LLC , 531 F.Supp.2d 56, 57 (D.D.C. 2008) (citing Jackson v. Beech , 636 F.2d 831, 836 (D.C. Cir. 1980) ). The standard for default judgment is satisfied where the defendant makes no request to set aside the default and no suggestion that it has a meritorious defense. J.D. Holdings, LLC v. BD Ventures, LLC , 766 F.Supp.2d 109, 113 (D.D.C. 2011) (citing Int'l Painters & Allied Trades Indus. Pension Fund v. Auxier Drywall, LLC , 531 F.Supp.2d 56, 57 (D.D.C. 2008).

Following the entry of default by the Clerk of the Court, the "defaulting defendant is deemed to admit every well-pleaded allegation in the complaint." Fanning v. Hotel Mgmt. Advisors–Troy, LLC , 282 F.R.D. 280, 283 (D.D.C. 2012) (quoting Int'l Painters & Allied Trades Indus. Pension Fund v. R.W. Amrine Drywall Co. , 239 F.Supp.2d 26, 30 (D.D.C. 2002) ). While a default is an admission of the facts cited in a complaint, it is "not an absolute confession by the defendant of his liability and of the plaintiff's right to recover." Jackson v. Corr. Corp. of Am. , 564 F.Supp.2d 22, 26–27 (D.D.C. 2008). Moreover, under the Foreign Sovereign Immunities Act ("FSIA"), Plaintiff must "establish[ ] his claim or right to relief by evidence satisfactory to the court" in order for the Court to enter judgment against a defaulting party. 28 U.S.C. § 1608(e). Thus, it remains for the Court to determine whether the unchallenged factual allegations constitute a legitimate cause of action.

If liability is established, the court is still "required to make an independent determination of the sum to be awarded unless the amount of damages is certain." Robinson v. Ergo Solutions, LLC , 4 F.Supp.3d 171, 178 (D.D.C. 2014) (quoting Int'l Painters & Allied Trades Indus. Pension Fund v. R.W. Amrine Drywall Co. , 239 F.Supp.2d 26, 30 (D.D.C. 2002) ). Therefore, an "FSIA default winner must prove damages in the same manner and to the same extent as any other default winner." Hill , 328 F.3d at 683–84 (internal citations omitted).

To this end, the Court may hold an evidentiary hearing to conduct an accounting, determine the amount of damages, establish the truth of any allegation, or investigate any other matter. FED. R. CIV. P. 55(b)(2). "[D]amages cannot be awarded on the basis of mere speculation or guesswork ..." Hill , 328 F.3d at 684 (internal citations omitted). The Court, however, "has considerable latitude in determining the amount of damages." Boland v. Elite Terrazzo Flooring, Inc. , 763 F.Supp.2d 64, 67 (D.D.C. 2011) ; see also Luna v. A.E. Eng'g Servs., LLC , 938 A.2d 744, 749 n.19 (D.C. 2007) (allowing the trial court considerable discretion in determining the reasonableness of the requested damages).

V. ANALYSIS

A. Liability for Breach of Contract

In order to prove Defendants' liability for breach of contract, Plaintiff must establish "(1) a valid contract between the parties; (2) an obligation or duty arising out of the contract; (3) a breach of that duty; and (4) damages caused by breach." Francis v. Rehman , 110 A.3d 615, 620 (D.C. 2015) (quoting Tsintolas Realty Co. v. Mendez , 984 A.2d 181, 187 (D.C. 2009) ). Under this standard, Plaintiff's allegations, taken as true, establish that Defendants breached their contractual obligations.

First, Plaintiff must demonstrate "mutual assent of the parties to all the essential terms of the contract." Duffy v. Duffy , 881 A.2d 630, 633 (D.C. 2005). The contract in this case was "accepted and agreed to" by Jean–Claude Masangu Mulongo, the Governor of the Central Bank. (Falkoff Decl. Ex. A at 7; see Compl. ¶ 17.) For reasons set forth below, the undersigned is persuaded that the Central Bank and the Congo assented to the agreement's essential terms.

Plaintiff notes that under District of Columbia law, an agency relationship exists if there is "evidence of the parties' consent to establish a principal-agent relationship" and "evidence that the activities of the agent are subject to the principal's control." Jackson v. Loews Washington Cinemas, Inc. , 944 A.2d 1088, 1097 (D.C. 2008) (quoting Henderson v. Charles E. Smith Mgmt., Inc. , 567 A.2d 59, 62 (D.C. 1989) ). As evidence of consent, the Central Bank executed the contract under direct authorization from the President of Congo. (See Compl. ¶ 17, Falkoff Decl. ¶ 8.) According to Plaintiff's complaint, negotiation discussions prior to the contract's execution indicated that the Central Bank's assent was dependent on the Congo's authorization, that the Congo would be equally bound by the agreement, and that all contract obligations would be performed "under the control and at the direction of Congo." (Compl. ¶ 14; Falkoff Decl. ¶ 4–5.)

As further evidence of a principal-agent relationship, Defendants' conduct since the parties came to an agreement has similarly reflected this understanding. The first and only payment made by Defendants was ordered by the Office of the President of the Congo, and then executed by wire transfer from the Central Bank. (See Compl. ¶ 13, Ex. B at 2; Falkoff Decl. ¶ 3.) Thereafter, in June 2013, a delegate from the Congo visited Plaintiff's office. (Compl. ¶ 25.) Another delegate was sent by the President of the Congo in April 2014 and was thereafter ordered to report directly to the President. (Compl. ¶ 33–37; Falkoff Decl. ¶ 27.) Indeed, most assurances regarding payment came directly from the Congo and the President's Office, rather than from the Central Bank. (See Falkoff Decl. ¶ 17.) Moreover, the Congo, not the Central Bank, sent letters thanking Plaintiff for its services, requested updates and progress reports, and benefitted almost exclusively from Plaintiff's performance. (See Compl. ¶¶ 31, 34; Falkoff Decl. ¶ 13, 19, 22–26, Ex. C; Mot. 18.)

In short, the undersigned believes both the Congo and the Central Bank consented to establishing a principal-agent relationship and the Central Bank's activities appear to be subject to the Congo's substantial control. As such, there is sufficient evidence in Plaintiff's complaint to establish a valid contract to which all parties assented.

Second, the parties' Retainer Agreement, indeed, placed Defendants under an obligation to compensate Plaintiff for its government relations and communication services in the remaining amount of $16,002,000, due upon the agreement's execution. (See Compl. ¶ 16, Ex. A.)

Third, except for the one-time payment of $600,000 made prior to the formalized agreement, Defendants have failed to make any part of the remaining $16,002,000 payment since signing the agreement on April 18, 2013. (See Compl. ¶¶ 13–14, 18, Ex. B.) This is despite Plaintiff's repeated attempts at collection and Defendants' apparent knowledge of the outstanding debt. (See Compl. ¶¶ 23, 26, 66.) As such, the undersigned concludes that Defendants have been in breach of their obligation to pay $16,002,000 since April 18, 2013, which is when the contract was executed and Defendants' payment became due. (See Compl. ¶ 14, Ex. A.)

Fourth, Plaintiff "has been deprived of the use of the money withheld" and has incurred damages as a result of Defendants' breach. Bragdon v. Twenty–Five Twelve Assocs. Ltd. P'ship , 856 A.2d 1165, 1171 (D.C. 2004) (quoting District of Columbia v. Pierce Assocs., Inc. , 527 A.2d 306, 311 (D.C. 1987) ). Pursuant to the contract, Plaintiff is owed liquidated damages, which is the remaining $16,002,000 Defendants had to pay, regardless of the services Plaintiff provided. (See Hearing Tr. 48:10–25.) Based on the unchallenged facts, the undersigned believes Plaintiff has satisfied all four elements in establishing Defendants' liability for breach of contract.⁴

4 Finding the Defendants liable for breach of contract, the undersigned does not find it necessary to analyze Plaintiff's alternative claims of unjust enrichment and account stated.

B. Damages

Finding Defendants liable for breach of contract, the undersigned turns to the question of damages. In Plaintiff's Motion for Default Judgment, Plaintiff requests compensatory damages, prejudgment interest, and costs. (See Mot. 22–27.) Specifically, Plaintiff first seeks liquidated damages and damages for lost business, making up its compensatory damages claim of $21,618,000. (See Mot. 1, 7, 21.) Second, Plaintiff contends that the Court should award prejudgment interest based on both its liquidated damages and lost business claims. (See Mot. 25–27.) Finally, regarding costs, Plaintiff requests $827.60 for the court filing fee and for its service of process expenses. (Mot. 27; Miller Decl. ¶ 10.) Each of these damages claims will be addressed in turn.

1. Compensatory Damages

To support its request for compensatory damages, Plaintiff submitted several exhibits, including the parties' Retainer Agreement and an invoice from Plaintiff to Defendants for the initial $600,000 payment. (See Falkoff Decl. Ex. A, Ex. B.) Plaintiff also submitted a declaration from Mr. Falkoff, describing, among other things, the many times Defendants have demonstrated their awareness of both the debt and the lawsuit, as well as their intention to pay the full amount owed to Plaintiff. (See Falkoff Decl. ¶¶ 9, 14, 17, 25, 30–32, 34.) Plaintiff divides its claim for compensatory damages into two subcategories: (1) liquidated damages and (2) lost business damages. For the reasons set forth below, the undersigned recommends awarding liquidated damages and denying lost business damages.

a. Liquidated Damages

Having established a valid contract and Defendants' breach thereof, Plaintiff is entitled to the remaining amount owed. See Vector Realty Grp., Inc. v. 711 Fourteenth St., Inc. , 659 A.2d 230, 234 n.8 (D.C. 1994). Plaintiff argues that the remaining $16,002,000 Defendants owe Plaintiff is a liquidated debt. (See Mot 25–26.) A liquidated debt "is one which at the time it arose ... was an easily ascertainable sum certain." Dist. Cablevision Ltd. P'ship v. Bassin , 828 A.2d 714, 731 (D.C. 2003) (internal quotation marks omitted) (quoting Dist. of Columbia v. Pierce Assocs. Inc. , 527 A.2d 306, 311 (D.C. 1987) ).

There can be little doubt that when Defendants breached their agreement with CapitalKeys on April 18, 2013, they incurred an easily ascertainable debt of $16,002,000. (See Falkoff Decl. Ex. A at 5.) In fact, the agreement, the invoice, and all the correspondence between Plaintiff and Defendants reflect that same amount. (See Falkoff Decl. Ex. A, Ex. B.) Moreover, the contract clearly states that the sum is "due upon signing." (Falkoff Decl. Ex. A at 5.) Despite Plaintiff's continued prompting and mailing of several invoices, Defendants have not made any portion of this payment to date. (See Compl. ¶ 66; Falkoff Decl. ¶¶ 9, 14, 17, 25, 30–32, 34, Ex. B.) Thus, this is an action to recover a liquidated debt, and there is sufficient evidentiary basis for awarding the $16,002,000 Plaintiff demands under the agreement.

b. Damages for Loss of Business Opportunities

As for Plaintiff's claim for loss of business opportunities, Plaintiff submitted the declaration of Mr. Falkoff, detailing the three pre-negotiated contracts Plaintiff contends it was unable to accept due to Defendants' breach. (See Falkoff Decl. ¶¶ 39–50.) Plaintiff is careful to note that the lost business damages did not arise because of its duties under the contract with Defendants. (See Falkoff Decl. ¶ 39; Mot. 23–24.) Rather, Plaintiff claims its efforts to recover payment from Defendants prevented it from ultimately accepting these three contracts. (See Falkoff Decl. ¶¶ 39–41, 47–48.) Plaintiff maintains that because of "using extensive time and resources in seeking the much larger amount due from Defendants," Plaintiff had to forgo its other business opportunities. (Mot. 23.) The undersigned, however, is not convinced.

Under District of Columbia law, "[t]he doctrine of avoidable consequences, also known as the duty to mitigate damages, bars recovery for losses suffered by a non-breaching party ... that could have been avoided by reasonable effort and without risk of substantial loss or injury." Trs. of Univ. of Dist. of Columbia v. Vossoughi , 963 A.2d 1162, 1178 (D.C. 2009) (internal quotation marks omitted) (quoting Edward M. Crough, Inc. v. Dep't of Gen. Servs. of D.C. , 572 A.2d 457, 466 (D.C. 1990) ). This doctrine "comes into play after a legal wrong has occurred, but while some damages may still be averted, and bars recovery only for such damages." Vossoughi , 963 A.2d at 1178 (emphasis in original). As such, "if some of these damages could reasonably have been avoided by the plaintiff, then the doctrine of avoidable consequences prevents the avoidable damages from being added to the amount of damages recoverable." Foster v. George Washington Univ. Med. Ctr. , 738 A.2d 791, 795 n.6 (D.C. 1999) (quoting McCord v. Green , 362 A.2d 720, 725–26 (D.C. 1976) ).

Plaintiff could have avoided these damages by performing on the three pre-negotiated contracts. The first contract, in June 2014, was negotiated between CapitalKeys and the Congo for services unrelated to the contract at issue in this action. (See Falkoff Decl. ¶ 40.) The President of the Congo wanted Plaintiff to help with his re-election campaign. (Hearing Tr. 21:22–23.) The parties settled on a monthly price of $110,000 for a 24–month period and had also agreed that the full amount of $2,640,000 would be due up front. (See Falkoff Decl. ¶ 40.) The contract was ultimately not executed because, after these comprehensive negotiations, Plaintiff "realized that, due to our efforts to seek the much larger payment from the Congo, we would not have the time and resources to fully perform the contract." (Id .)

The second contract, in September 2014, was negotiated between CapitalKeys and Sierra Leone, with the parties agreeing to a payment of $1,620,000, also due up front. (See Falkoff Decl. ¶ 41.) In exchange for the payment, Plaintiff would help with an event in London that would ultimately help drive investment into Sierra Leone. (Hearing Tr. 21:23–25, 22:1–2.) Just as with the first contract, CapitalKeys turned down this 36–month contract after negotiations had concluded, again citing the "immense efforts" it was expending on seeking payment from Defendants. (See Falkoff Decl. ¶¶ 41, 43–44.)

The third contract was negotiated in April 2015 between CapitalKeys and a mining company in Arizona. (See Falkoff Decl. ¶¶ 47–48.) As before, the parties settled on a seemingly comprehensive set of terms and agreed to a one time up-front payment of $756,000 for services rendered over an 18–month period. (See Falkoff Decl. ¶ 47.) Mr. Falkoff scheduled a meeting in Arizona to finalize the agreement, but he later cancelled this meeting because he was informed that a delegation from the Congo would be coming to see Plaintiff at the same time. (Id .) On the day before the delegation was set to arrive, however, the Congo informed Mr. Falkoff that the delegation would not be coming. (See Falkoff Decl. ¶ 48.) According to Mr. Falkoff, "it was too late to meet with the mining company," and Plaintiff was thus ultimately unable to accept this contract. (Id .)

After reviewing evidence relating to these three contracts, the undersigned concludes there is insufficient evidentiary basis for awarding the $5,016,000 Plaintiff demands for loss of business opportunities.First, Plaintiff has not provided the Court with copies of the three pre-negotiated contracts or any other documents illustrating Plaintiff's lost business damages involving the three contracts. Instead, during the evidentiary hearing, Plaintiff pointed the Court to the declaration given by Mr. Falkoff as evidence of the three contracts. (See Hearing Tr. 42:24–25, 43:1–15.) Without more evidence, such as copies of the contracts or any other proof of the negotiations behind the set prices and duration of the work, the Court would be taking part in "mere speculation or guesswork" without having even a reasonable estimate of data. Havilah Real Prop. Servs., LLC v. VLK, LLC , 108 A.3d 334, 352 (D.C. 2015).

Second, even if Defendants had provided more evidence of the three pre-negotiated contracts, the undersigned believes Plaintiff's lost business opportunities were reasonably avoidable since Plaintiff could have ceased its performance immediately after Defendants failed to pay Plaintiff upon signing the Retainer Agreement on April 18, 2013. However, Plaintiff argues that this was a services contract and not a goods contract, so it could not just stop its performance and disrupt Defendants' way of doing business. (See Hearing Tr. 11:11–22.) The undersigned does not believe the distinction between a goods contract and a services contract plays any importance here. In fact, the parties' agreement contains a provision, stating that "[f]ailure by Client to pay subsequent professional service and expense fees, if required by this agreement and according to the schedule outlined above, will result in suspension of work by CK for Client." (Falkoff Decl. Ex. A at 5.)

Moreover, at the time of the first contract in June 2014, about fourteen months had elapsed since Defendants' failure to pay in April 2013, arguably amounting to a material or even total breach of the agreement on Defendants' part. (See Falkoff Decl. ¶¶ 1, 40); see also, e.g. , 3511 13th St., LLC v. Lewis , 993 A.2d 590, 592 (D.C. 2010) ; Siegel v. Banker , 486 A.2d 1163, 1165 (D.C. 1984) ("[T]he failure by one of the parties to perform his part of the obligation within the time prescribed discharges the other from all liability under the contract."). During these fourteen months, Defendants repeatedly assured Plaintiff that payment was forthcoming and repeatedly failed to follow through with these promises. (See Falkoff Decl. ¶¶ 9, 14, 16–17, 22–32, 34.) Yet, according to the contract, it was when Defendants failed to make the initial payment that Plaintiff should have ceased its performance.

Even if Defendants' immediate failure to pay in April 2013 had not alarmed Plaintiff, and even if their repeated empty promises over the course of the following year had not given Plaintiff pause, Defendants' multiple self-imposed conditions on Defendants' existing performance obligation—such as the need for a positive progress report—should have indicated that payment was neither imminent nor certain. See generally Sisco v. GSA Nat'l Capital Fed. Credit Union , 689 A.2d 52, 57 n.5 (D.C. 1997) (citing the fundamental principle that a "promise to perform pre-existing duties [is] not sufficient consideration to alter obligation"). Instead, by its own admission, Plaintiff continued "putting faith in the continued promises and reassurances of representatives of the Congo that payment was imminent." (Falkoff Decl. ¶ 51.)

Third, Plaintiff's claim that it did not have time to perform on any other contracts while it was attempting to collect payment from Defendants lacks support. Plaintiff contends that the amount of time and resources it spent prevented Plaintiff from performing other work because it was as if Plaintiff had taken on another client in trying to get Defendants to make payment. (See Falkoff Decl. ¶¶ 36–46; Hearing Tr. 25:14–24.) However, Plaintiff's accounts regarding its efforts are inconsistent. Plaintiff said "[i]t was a daily effort to communicate with [Defendants] and figure out what was going on over there as to why there was a delay in our payment." (Hearing Tr. 25:22–24) (emphasis added). Contrary to that, Mr. Falkoff stated that "[Plaintiff] speak[s] with them probably twice a week," costing about $50 a week to call over there and take on this "continuous separate project." (Hearing Tr. 38: 4–12.) If Plaintiff has to send an invoice, it would do that as well.⁵ (Id. )

5 Plaintiff did not send an invoice every week but, rather, sent a total of nine invoices between May 12, 2013 and August 5, 2015. (Compl. ¶ 66.) Similar to the telephone calls, sending invoices to Defendants was also not a daily effort.

Yet, Plaintiff found the time to pre-negotiate each of the three contracts, and even formalized their payment structure. (See Falkoff Decl. ¶ 39–41, 47.) All three of the negotiations for these contracts occurred during the same time period Plaintiff was attempting to collect its overdue payment from Defendants. (See Falkoff Decl. ¶¶ 39–49.) Therefore, the undersigned is not convinced that Plaintiff was not able to perform on these contracts.

Fourth, regarding the third pre-negotiated contract, it is possible Plaintiff had other options besides cancelling Mr. Falkoff's meeting in Arizona and waiting in Washington, D.C. for the delegation to arrive.⁶ After Defendants assured Plaintiff that a delegation would arrive, Mr. Falkoff admittedly "canceled [his] trip to Tucson because receiving the overdue payment ... was more important to [their] business than a much smaller contract." (Falkoff Decl. ¶ 47.) Mr. Falkoff claims that, once the delegation informed Plaintiff that they were no longer coming, it was "too late" to go to Arizona and meet with the mining company. (Falkoff Decl. ¶ 48.) Mr. Falkoff contends that, as a result, Plaintiff lost the contract. (Mot. 14.)

6 Plaintiff did not sufficiently explain why Mr. Falkoff could not delegate authority for another person to attend the meeting in Arizona or, alternatively, for another person to meet with the visiting delegation. (Hearing Tr. 15:2–25, 16:1–23, 17:4–19, 22:3–25, 23:1–21, 24:3–25, 25:1–10; see also Falkoff Decl. ¶¶ 47–48.) Instead, Mr. Falkoff stated that he decided to take a "calculated risk" in staying in Washington, D.C. to meet with the delegation, but he did not answer the Court's question of why someone else could not go to Arizona to finalize the other contract. (Hearing Tr. 22:23–25, 23:1–21.)

However, Plaintiff's suggestion that not showing up to the meeting resulted in the complete dissolution of the pre-negotiated contract is troublesome. After all, Plaintiff and the mining company participated in negotiations and subsequently decided on a comprehensive set of terms whereby Plaintiff would assist the mining company with governmental affairs over an 18–month period in exchange for an up-front payment of $756,000. (Falkoff Decl. ¶ 47.) Following their oral agreement, Mr. Falkoff scheduled a trip to Tucson, Arizona to meet with the mining company's chief executive officer and sign the contract. (Id .) That is, all that was left to do in order to finalize the contract, worth almost three quarters of a million dollars, was to find the time to go to Arizona and sign the agreement.

Despite Defendants alerting Plaintiff the day before their scheduled arrival that they were no longer visiting, it is hard to believe Plaintiff had no other option for executing the contract with the mining company when everything but the signing of the contract was already finished. It is also not clear to the undersigned why Plaintiff could not authorize another person to travel to Arizona to sign the agreement or why, alternatively, Mr. Falkoff could not find another day or another flight in order to both welcome the delegation and go to Arizona. Given the importance Plaintiff places on its reputation, it is difficult to understand why Plaintiff knowingly, and admittedly, jeopardized its pre-negotiated contract with the mining company when it could have made efforts to meet with the visiting delegation and with the mining company. (See Hearing Tr. 24:10–19.) Regardless of its reasoning, Plaintiff cannot then allege Defendants are responsible for Plaintiff's inaction with the third contract.

The undersigned believes it was unreasonable for Plaintiff to continue efforts to collect payment and accrue damages at the expense of accepting existing pre-negotiated contracts. Moreover, the undersigned is not convinced that Plaintiff's efforts to secure payment were so taxing that they prevented Plaintiff from performing contracts that Mr. Falkoff is "confident" it would have otherwise been able to perform. (Falkoff Decl. ¶ 42.) Plaintiff has not sufficiently proven that, were it not occupied with placing phone calls and sending invoices to Defendants, it surely would have had the time required to perform under these contracts. (See Falkoff Decl. ¶ 37.) The alleged lost business from the three contracts was thus not only reasonably avoidable, but the very existence of the loss is uncertain. As this Court may not award damages "based on mere speculation or guesswork," the undersigned does not recommend awarding Plaintiff damages for loss of business opportunities. Havilah Real Prop. Servs., LLC , 108 A.3d at 352.

2. Prejudgment Interest

Prejudgment interest is "an element of complete compensation to a creditor for the loss of use of money that a debtor wrongfully withholds." Dist. Cablevision Ltd. P'ship v. Bassin , 828 A.2d 714, 732 (D.C. 2003) (internal quotation marks omitted) (quoting Riggs Nat'l Bank of Washington, D.C. v. Dist. of Columbia , 581 A.2d 1229, 1253 (D.C. 1990) ).

Under D.C. Code § 15–108, Plaintiff is entitled to recover prejudgment interest in an action to recover a liquidated debt,⁷ if interest is payable by contract, law, or usage. See Bassin , 828 A.2d at 731. However, district courts have wide discretion in terms of awarding prejudgment interest. See Burke v. Groover, Christie & Merritt, P.C. , 26 A.3d 292, 304–05 (D.C. 2011) ; see also Fed. Mktg. Co. v. Virginia Impression Products Co., Inc ., 823 A.2d 513, 531–33 (D.C. 2003) ; Riggs , 581 A.2d at 1256 ; House of Wines, Inc. v. Sumter , 510 A.2d 492, 499 (D.C. 1986). Here, Plaintiff seeks prejudgment interest for its liquidated damages, as well as for its damages relating to loss of business opportunities.

7 Although D.C. Code 15–109 also applies here, being that it is a breach of contract claim, the undersigned does not address that Section after already recommending that Plaintiff's compensatory damages claim be categorized as a liquidated debt. Accordingly, the undersigned refers to D.C. Code 15–108 since that Section particularly addresses interest on a liquidated debt.

a. Prejudgment Interest on Liquidated Damages

Plaintiff argues that prejudgment interest should be awarded based on custom and usage. (See Mot. 25.) Both this Court and District of Columbia courts have noted that in breach of contract cases, "it is indeed customary to pay interest on funds that are withheld and not paid when due." Bragdon , 856 A.2d at 1172 (citations omitted); see also Bassin , 828 A.2d at 731.

Plaintiff also contends that "Defendants are culpable in the delay as they have consistently insisted that they would be paying ... in full on many, many occasions." (Mot. 26.) However, the undersigned does not believe this is entirely accurate. While it is indeed customary to award prejudgment interest when a party withholds funds, it is surely not customary for Plaintiff to delay litigation for almost two years after the other party breaches the contract, as is what happened in this case. (See Hearing Tr. 37: 22–25.) Plaintiff explains that it took "a lot of heartfelt searching ... and hesitation ... before Mr. Falkoff decided to resort to the U.S. courts." (Hearing Tr. 31: 22–24.) Moreover, Plaintiff claimed the decision to delay litigation was one that Mr. Falkoff made "as a business person." (Hearing Tr. 35:11–21.) It is clear to the undersigned that, while the D.C. Code supports the award of prejudgment interest on liquidated debt, this situation where Plaintiff causes unwarranted delay contradicts the intent of the statute.

Therefore, the undersigned believes Plaintiff should receive prejudgment interest, but the interest should begin to accrue at the time Plaintiff filed its complaint, rather than at the time Defendants failed to pay upon signing the contract. That is, the undersigned believes "the equities in this case do not support an award of prejudgment interest from the date of the first violation ... but rather favor an award beginning on a later date." Kansas v. Colorado , 533 U.S. 1, 14, 121 S.Ct. 2023, 150 L.Ed.2d 72 (2001) ; see also Gen. Motors Corp. v. Devex Corp. , 461 U.S. 648, 657, 103 S.Ct. 2058, 76 L.Ed.2d 211 (1983) (determining "it may be appropriate to limit prejudgment interest, or perhaps even deny it altogether, where the [plaintiff] has been responsible for undue delay in prosecuting the lawsuit").

Further, even if Plaintiff can persuade the Court that its delay is understandable, "there is no doubt that the interests of both [parties] would have been served if the claim had advanced promptly after its basis became known." Kansas , 533 U.S. at 16, 121 S.Ct. 2023. Additionally, it was "uniquely in [Plaintiff's] power to begin the process by which those damages would be quantified." Id .

Accordingly, the undersigned believes Plaintiff is entitled to $16,002,000 in compensatory damages. Moreover, since breach of contract cases are typically accompanied by an award of prejudgment interest, the undersigned recommends that Plaintiff is also entitled to prejudgment interest based on custom and usage, with the interest starting to accrue at the date the complaint was filed, rather than when the injury occurred, due to Plaintiff's unwarranted delay in bringing suit for the breach.

Unless fixed by contract, the rate of interest for forbearance of money under D.C. Code § 28–3302 is calculated at six percent per annum. This should be awarded as simple, rather than compound, interest because the contract does not include any provision regarding the issue. When the agreement is silent on the issue of awarding simple or compound interest, courts generally do not award compound interest. See Allen v. Yates , 870 A.2d 39, 51 (D.C. 2005) (holding that "because the parties did not provide for compound interest, interest ... should be calculated on the principal balance alone"); see also Rastall v. CSX Transp., Inc ., 697 A.2d 46, 53 (D.C. 1997) (determining that, "[a]bsent a contractual provision, prejudgment and judgment interest are not usually compounded").

From December 23, 2015, when Plaintiff filed the complaint, to the present day, the unpaid balance on the liquidated amount remains at $16,002,000. (See Mot. 22.) Defendants thus owe $881,207.45 in prejudgment interest during this time period, calculated at six percent per annum.⁸ In sum, to date, Defendants owe Plaintiff $16,002,000 for the principal, plus $881,207.45 for interest on the unpaid balance, totaling $16,883,207.45.

8 This is the amount of prejudgment interest through the date this Report and Recommendation was filed.
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b. Prejudgment Interest on Lost Business Opportunities

Plaintiff also seeks prejudgment interest on the damages for loss of business opportunities. (See Mot. 25.) As discussed earlier, the undersigned does not believe Plaintiff is entitled to lost business damages, so this request is moot.

However, even if the Court awards Plaintiff damages for the unexecuted contracts, the undersigned recommends that it is improper to award prejudgment interest on the lost business damages. While the lost business perhaps constitutes an easily ascertainable sum insofar as the contracts had been pre-negotiated for set prices, these additional damages are not a part of the liquidated debt Plaintiff seeks to recover, as required under D.C. Code § 15–108. Moreover, Plaintiff has not pointed to any case or otherwise demonstrated that it is customary to pay interest on lost business damages. (See Mot. 25–27.) Rather, prejudgment interest serves to compensate Plaintiff "for the loss of use of money that a debtor wrongfully withholds." Bassin , 828 A.2d at 732. With its lost business claim, Plaintiff does not seek to recover money that Defendants wrongfully withheld and is thus not entitled to prejudgment interest on the lost business damages.

3. Costs

Plaintiff asks the Court to award $827.60 in costs, consisting of a $400.00 court filing fee and $427.60 for service of process expenditures. (Miller Decl. ¶ 10, Ex. Z. [24–28] ) Under FED. R. CIV. P. 54(d), "costs—other than attorney's fees—should be allowed to the prevailing party." A party who prevails under a default judgment is equally entitled to costs incurred in the prosecution of this action. See Limbach Co., LLC v. Ten Hoeve Bros., LLC , 126 F.Supp.3d 105, 109–110 (D.D.C. 2015). Accordingly, the undersigned recommends that Plaintiff be awarded those costs that qualify under 28 U.S.C. § 1920, which includes fees of the Clerk and Marshal.

VI. RECOMMENDATION

Based on consideration of the record, pleadings, exhibits entered into evidence, and the testimony given at the hearing, the undersigned recommends that the Court issue a Default Judgment in favor of Plaintiff CapitalKeys, LLC against Defendants Democratic Republic of Congo and Central Bank of the Democratic Republic of the Congo. The undersigned further recommends the Court award Plaintiff $16,002,000 in compensatory damages, $881,207.45 in prejudgment interest on the principal unpaid balance, and $827.60 for costs. Thus, the recommended total award should be $16,884,035.05, plus any remaining prejudgment interest, at an annual interest rate of six percent as simple interest, after the date of this Report and Recommendation.

VII. REVIEW BY THE DISTRICT COURT

The parties are hereby advised that under the provisions of Local Rule 72.3(b) of the United States District Court for the District of Columbia, any party who objects to the Report and Recommendation must file a written objection thereto with the Clerk of this Court within 14 days of the party's receipt of this Report and Recommendation. The written objections must specifically identify the portion of the report and/or recommendation to which objection is made, and the basis for such objections. The parties are further advised that failure to file timely objections to the findings and recommendations set forth in this report may waive their right of appeal from an order of the District Court that adopts such findings and recommendation. See Thomas v. Arn , 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985).

DATED: 11/21/2016