Group Can Stay Though Museum Plan Fell Apart

(CN) - The Armenian Assembly of America can stay in a downtown Washington, D.C., building meant to house a contentious, and now defunct, Armenian Genocide museum and memorial project, a federal judge ruled.

Earlier this year, the court ruled that the failure to develop the property into a museum by the Dec. 31, 2010, deadline triggered the reversion clause of an 11-page grant agreement between the Cafesjian Family Foundation and the Armenian Assembly of America.

U.S. District Judge Colleen Kollar-Kotelly largely dismissed a series of claims and counterclaims between the assembly and two former board members after a 12-day bench trial in November.

The reversion clause required the assembly to transfer all properties associated with the project over to one of the defendants, Gerard Cafesjian, according to the court.

Cafesjian helped purchase a building for an Armenian Genocide museum and memorial, conceived in the late 1990s, and also bought four properties adjacent to the building, which he later donated to expand the project.

Cafesjian also assisted in the formation of Armenian Genocide Museum and Memorial Inc. (AGM&M) but distanced himself from the nonprofit's board after it failed to reach consensus on how to complete the museum.

Cafesjian handpicked John Waters, the other defendant, as his successor on the board. But after Cafesjian sued the assembly for payment of an unpaid promissory note, the board excluded Waters from further participation in the project.

"This resulted in a series of lawsuits filed by the parties fighting for control of AGM&M and alleging mismanagement of the corporation," the court said. "The three other AGM&M trustees attempted to move forward with the project without Waters's involvement, but they were unable to raise the funds necessary to implement a development plan."

After Kollar-Kotelly upheld the validity of the reversion clause, Cafesjian asked the assembly and Armenian National Institute to vacate one of the buildings he purchased: the Families U.S.A. Building.

When the assembly refused, arguing that it held a valid leasehold to the property, Cafesjian asked the court to void that leasehold interest under the reversion clause.

But Kollar-Kotelly noted Monday that the court had already found that the lease did not violate the grant agreement.

"Defendants have assumed without discussion that the reversion clause in the grant agreement created a defeasible estate," according to the 13-page opinion. "However, based on the structure of the transactions through which AGM&M acquired title, the court cannot conclude that AGM&M's interest in the property was defeasible by CFF's exercise of the reversion clause."

Kollar-Kotelly conceded to the defendants' basic proposition that the assembly's leasehold interest would have been extinguished when AGM&M transferred the property to the Cafesjian Family Foundation if AGM&M's property interest in the Families U.S.A. building was defeasible.

Neither Cafesjian nor his foundation, however, ever held a "direct interest" in the Families U.S.A. building or other adjacent properties after they were conveyed to AGM&M by third-party sellers, according to the court.

Thus, Cafesjian and the foundation did not "retain a reversionary interest in the properties," Kollar-Kotelly said.

"At most, Cafesjian and CFF could have an executory interest in the properties," she wrote. "However, any defeasible fee interest subject to an executory interest would have to be created by deed under D.C. law."

Kollar-Kotelly stated that the deed conveying title of the building to AGM&M made "no reference to any conditions that would make the fee interest defeasible."

"Therefore, AGM&M took a fee simple absolute interest in the Families U.S.A. building, and that interest was transferred, not extinguished, when CFF exercised its rights under the reversion clause in the grant agreement," the decision states. "Accordingly, the leasehold interest conveyed by AGM&M to the Assembly is also transferred."

The court also denied Cafesjian's motion for attorneys' fees for vexatious litigation.

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