Building that used to house the National Bank of Washington on the corner of G & 14 streets, N.W.
Building that used to house the National Bank of Washington on the corner of G & 14 streets, N.W. (Photo: Diego M. Radzinschi/NLJ)

A group of Armenian-American philanthropists have been fighting each other in court for years over stalled plans for an Armenian Genocide Museum and Memorial in Washington. Two decades after plans for the museum began, its future is still uncertain, but the legal wrangling is coming to a close.

The U.S. Court of Appeals for the D.C. Circuit on Tuesday confronted a long list of issues surrounding the project, including the control of a cluster of buildings in downtown Washington that were intended for the museum.

“More than seven years and millions of dollars in legal fees later, much of the parties’ work to achieve their dream of a museum appears to have been for naught, which is regrettable,” Judge Robert Wilkins wrote. “Whatever happens next, hopefully our decision today can at least serve as the last word on this dispute’s protracted journey through the courts.”

The three-judge panel upheld a trial judge’s ruling that one of the project’s major donors, the late businessman and philanthropist Gerard Cafesjian, had a right to seek the return of the downtown buildings he bought for the museum. The appeals court also found that Cafesjian did not breach his fiduciary duties to the nonprofit created to oversee the museum project.

Cafesjian, a Minnesota-based businessman and philanthropist, joined forces in the 1990s with other Armenian-American philanthropists—members of the Armenian Assembly of America—to develop a plan for an Armenian Genocide Museum and Memorial.

Cafesjian’s lawyer, John Williams of Williams Lopatto, said in an email that “we are pleased with the decision and glad that we can finally move forward.” Wiley Rein partner William Consovoy argued for the Armenian Assembly and the museum nonprofit. He also could not be reached on Tuesday morning.

In 2000, the Armenian Assembly, funded in large part by Cafesjian, bought the former National Bank of Washington building as the site of the future museum. Cafesjian also bought other properties nearby, which he donated to the museum project. The group created a separate nonprofit to focus on the museum project, and Cafesjian entered into an agreement with the Armenian Assembly about the terms of his gifts.

Under the agreement, if the properties weren’t developed by the end of 2010, the Armenian Assembly would have to return the money Cafesjian put in to buy the buildings or turn the properties over to him. That section of the agreement was known as the “reversion clause.”

Over the next few years, little progress was made on the museum. As the D.C. Circuit noted in Tuesday’s opinion, tensions also began to mount between Cafesjian and another philanthropist and businessman involved in the project, Hirair Hovnanian, who helped found the Armenian Assembly of America. Cafesjian resigned from the museum nonprofit in 2006, as did his “right-hand man,” John Waters Jr.

Beginning in 2007, Cafesjian became entangled in litigation against the Armenian Assembly of America and the museum nonprofit in federal courts in Minnesota and Washington. The claims were later consolidated before a federal judge in Washington. The nonprofit and the Assembly accused Cafesjian and Waters of misconduct and breaching their duties to both groups.

Cafesjian brought counterclaims accusing the nonprofit and the Assembly of violating their agreement with him. Cafesjian and Waters also wanted to be indemnified by the nonprofit for the costs of defending against its breach-of-fiduciary duty claims, under the terms of the nonprofit’s bylaws.

Following a bench trial, the judge mostly rejected the allegations made by both sides, although she did agree with Cafesjian and Waters’ indemnification claim. The judge found that the “reversion clause” in the agreement between Cafesjian and the Assembly was valid.

The D.C. Circuit on Tuesday upheld the dismissal of the breach-of-fiduciary claims against Waters and Cafesjian, who died in September 2013, as well as the trial judge’s finding that the reversion clause was valid.

“With the benefit of hindsight, appellants may now think this deal improvident, but no sense of buyer’s remorse can empower us to rewrite the plain terms of the contract to which they agreed,” Wilkins wrote.

The appeals court also ruled that Cafesjian and Waters should be indemnified against defending the nonprofit’s breach-of-fiduciary duty claims, and approved the $1.4 million the trial judge awarded to cover their legal expenses.

Chief Judge Merrick Garland and Senior Judge Douglas Ginsburg also heard the case.

Contact Zoe Tillman at ztillman@alm.com. On Twitter: @zoetillman.