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Prince v. Government of People's Republic of China

United States District Court, S.D. New York

March 31, 2014

LESLIE F. PRINCE, PRINCE SERVICES INTERNATIONAL INC., Plaintiffs,
v.
THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA, INSTITUTE OF ARCHITECTURE DESIGN AND RESEARCH, GESHAN CONSTRUCTION GROUP COMPANY LTD., GUNGSHA INTERNATIONAL CONSTRUCTION GROUP COMPANY, YEFANG CONSTRUCTION PRIVATE LIMITED, ETHIOPIAN AIRLINES, BDMA ENGINEERING PLC, YEIFI HE, GANG XIAO, YIMING HE, WAN WEI, GIRMA WAKE, BALEHAGER AYALEW, Defendants.

OPINION

THOMAS P. GRIESA, District Judge.

Plaintiff Leslie Prince, an independent consultant, helped facilitate a development project in Addis Ababa, Ethiopia, between two Chinese construction companies and Ethiopian Airlines. Prince alleges that the Chinese companies and Ethiopian Airlines breached their contracts to provide him with an equity stake in the project and a finder's fee, respectively.

Defendants Ethiopian Airlines and Girma Wake, the Chief Executive Officer of Ethiopian Airlines, move to dismiss the complaint. The motion to dismiss as to these two defendants is granted because Prince's breach of contract claim - the only claim in his complaint - is barred by New York's Statute of Frauds.

Additionally, Prince has moved for this court to enter a default judgment against the government of the People's Republic of China ("China") in the amount of $34 million for failure to answer his complaint. The court denies Prince's request because he has failed to provide sufficient evidence to warrant the entry of a default judgment under 28 U.S.C. ยง 1608(e) of the Foreign Sovereign Immunities Act ("FSIA").

The Complaint

The following facts are drawn from the complaint and assumed to be true for purposes of resolving the motions.

Prince is the director of Prince Services International, a consulting firm, which does business as PSI Consultants Inc. On August 15, 2008, Girma Wake, the CEO of Ethiopian Airlines, engaged Prince to find investors and developers to undertake the following development projects: (1) a 5, 000-person home site for Ethiopian Airlines employees, (2) an Ethiopian Airlines terminal in the west-African country of Benin, (3) a five-star, sixteen-story hotel for Ethiopian Airlines in Addis Ababa, and (4) the purchase of four regional jets from China. Prince alleges that Wake agreed to pay Prince a finder's fee of 3% of the total construction costs and promised to formalize the finder's fee agreement once Prince secured investors.[1]

Prince traveled to China to recruit construction companies to bid on the Ethiopian Airlines' projects. Prince subsequently entered into a consortium agreement with two Chinese companies - Geshan Construction Group Company Ltd. and the Institute of Architecture Design & Research, Chinese Academy of Science ("ADCAS") - to develop the Ethiopian Airlines housing project.[2] Prince alleges that ADCAS is owned by the Chinese government. On November 3, 2008, in Hangzhou, China, the parties signed an agreement formalizing the consortium. By the terms of the agreement, the Chinese companies agreed that Prince Services International "shall have at least 3% ownership interest in the project." In his complaint, Prince states that he and the Chinese partners agreed that he was entitled to 6% equity in the project.

On December 1, 2008, the Chinese companies, Prince, and Wake met at the Ethiopian Airlines headquarters in Addis Ababa to finalize the deal. Wake helped secure the visas for members of the Chinese companies to travel to Ethiopia. At the meeting, Ethiopian Airlines agreed to fund 30% of the project, with the Chinese companies agreeing to fund the remaining 70%.

After the parties reached an agreement, Prince approached Wake to discuss his compensation. Prince requested that Wake sign the consultancy-fee agreement. However, according to Prince, while Wake congratulated him on his work, Wake told Prince that first they should celebrate and then he would sign the agreement. Wake never signed the agreement.

Prince claims that once the Chinese companies and Ethiopian Airlines brokered the development agreement, the parties then cut all ties with him. Both Ethiopian Airlines and the Chinese companies refused to pay him for his services. On December 22, 2008, the Chinese companies submitted a letter to Prince terminating the consortium agreement. The companies stated that by the terms of the agreement, they were able to withdraw from the consortium based upon misrepresentations by Prince during their negotiations. Prince denies all of the alleged misrepresentations.

In August of 2009, the Chinese companies established a development corporation - Yeshang Construction Private Limited - in Ethiopia, presumably to begin work on the housing development project. Prince was not included in this process.

Prince claims that he was instrumental in securing the business deal between Ethiopian Airlines and the Chinese companies to develop the housing project. He claims that the parties breached their agreement with him when they decided not to pay him for his work in facilitating the deal. Prince asks the court to require the Chinese companies to pay him 6% of the total value of the housing development project and also, to require Ethiopian Airlines to pay the 3% finder's fee. While Prince estimates that the total cost of all the proposed development projects is $7 billion, he has not submitted an estimate as to the cost of the housing construction project.

Prince filed his complaint on March 29, 2013. Prince named the following defendants: the government of the People's Republic of China, ADCAS, Geshan Construction Group. Co. Ltd., Gungsha International Construction Company, Yefang Construction Private Limited, Ethiopian Airlines, BMDA Engineering PLC, Yeifi He, Gang Xiao, Yiming He, Wan Wei, Girma Wake, and Balehager Ayalew. The various individually named ...


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