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Note: In 2012, Amerifone Corporation (Buyer) offered to purchase MetroBeam, operating under the name of Kulacom Jordan, a subsidiary of Galeana Telecommunications Investments, Inc. (Seller/Applicant), a broker in the international telecommunications industry. The purchase was conditioned on acquisition by MetroBeam of a 3G spectrum license to provide cellular services in Jordan.

Seller subsequently lobbied and met with officials within the Jordanian Telecommunications Regulatory Commission (TRC), after which the TRC opened a bidding process for a telecommunications carrier to acquire a 3G license and provide these services. Buyer’s attorney, Harold Oseff (Buyer’s Attorney) sent an email to Seller on 24 April 2012 with a Letter of Intent to purchase MetroBeam for USD 30 million if the Kingdom of Jordan granted MetroBeam the 3G license after the bidding process.

In December 2012, the Kingdom of Jordan officially announced that it would be releasing a bid tender for 3G and 4G licenses. Following this announcement, Buyer and Seller began negotiating and drafting a Stock Purchase Agreement. The Agreement was entered into on 8 January 2013. The Agreement stipulated the that Buyer would purchase 100 percent of the shares of MetroBeam on the condition that Seller secured the 3G and 4G licenses through the bidding process which Buyer also agreed to fully fund.

Subsequently, Buyer’s Attorney sent an email to Seller on behalf of Buyer, informing Seller that the funding for the bid had been delayed, and as a result requested that Seller pay upfront for any necessary expenses incurred in the bidding process, including obtaining bid documents and posting a bond.

In June 2013, the TRC officially and publicly announced the bid process and requirements.

Following the announcement, the parties negotiated an amendment to the Agreement (the Amendment). Per the Amendment, Buyer was required to prepare and submit the bid to the TRC based on all the rules and regulations set by the TRC. It further required Buyer to pay for all license fees and pay Seller USD 10 million as an initial deposit upon TRC’s accepting the bid.

Buyer submitted a USD 21,685,000 bank guarantee issued by Atlantic Bank to TRC. TRC informed Buyer guarantee was not a form acceptable to any Jordanian bank. TRC requested Buyer submit a bid bond from a Jordanian Bank or a letter of credit in a form that would be accepted by a Jordanian bank. Buyer did not make any attempt to cure the bid or submit a new bid to the TRC.

The opinion noted Seller’s assertion that the Jordanian Minister of Telecommunications and Governor of the Central Bank could not find information about Atlantic Bank. It was alleged that the contact person, Dhafir Dalaly, who was represented as owner of the First International Exchange Group (FIEG) and Buyer/Director of Atlantic Bank, Inc. vouched for their integrity. Buyer also vouched for their “legitimacy and financial solvency.” Seller asserted that FIEG was located in Michigan, U.S., but was not a bank, and that Atlantic Bank was not a bank authorized to transact business in the U.S.

Seller sued Buyer, FIEG, Corporate Officer, Buyer’s Attorney, and Financier for breach of contract, misrepresentation, and fraud. Buyer, Corporate Officer, and Buyer’s Attorney filed motions to dismiss. The United States District Court for the Eastern District of Michigan, Goldsmith, J. granted in part and denied in part Buyer’s and Corporate Officer’s motion to dismiss, dismissed Claimant’s fraud claims against Corporate Officer, dismissed Seller’s innocent misrepresentation claims against Buyer and Corporate Officer, and denied the motion in all other respects. The court further granted in part and denied in part Buyer’s Attorney’s motion to dismiss, dismissed Seller’s fraud claims against Buyer’s Attorney, and dismissed Seller’s innocent misrepresentation against Buyer’s Attorney, and denied the motion in all other respects.

Seller alleged that Buyer breached the Amendment because it did not cure or attempt to cure the bid not conforming to the rules and regulations of the TRC. To the contrary, Buyer alleged that the Agreement and Amendment became null and void when the TRC rejected the bid. Before enforcing the contract, the court first looked to the ambiguity of the language in the Agreement. The Judge did not find any latent ambiguity, and ruled that the Agreement and Amendment were not null and void. The opinion noted that after proving there was a valid contract, Michigan law required that a plaintiff show that the defendant’s breach caused the plaintiff’s injury. The Judge found Seller’s argument that due to the breach it was unable to mitigate damages by selling to a third party before the bidding window closed to reasonably support the link between Buyer’s breach and Seller’s injury. Thus, the Judge denied this portion of Buyer and Corporate Officer’s motion to dismiss Seller’s breach-of-contract claim.

[JLN/GMC]

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