Lex Digitales Digital economy regulation trends monitor

← back to the document

What changed

Strum v. Mardam-Bey · редакция 1 → 2 · зафиксировано 2026-09-17 03:03 · +9 −9 lines

## UNITED STATES DISTRICT COURT
Starting in “mid-2020,” Mardam-Bey and Merchant Edge allegedly “began to promote
AUSF.” ECF No. 55 ¶ 28. Strum was part of the audience for this initial promotional effort, as well as for later pitches from Mardam-Bey and Merchant Edge.1See id. ¶¶ 28–29. Strum alleges that in 2021 he received a “webinar and document package on a cryptocurrency” from Mardam-
AUSF.” ECF No. 55 ¶ 28. Strum was part of the audience for this initial promotional effort, as well as for later pitches from Mardam-Bey and Merchant Edge.1 See id. ¶¶ 28–29. Strum alleges that in 2021 he received a “webinar and document package on a cryptocurrency” from Mardam-
Bey and Merchant Edge. Id. ¶ 29. The promotions apparently worked. Strum says that he first tried to invest in AUSF in May 2021, but that transaction fell through. Id. ¶¶ 34–36.
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). A plaintiff states a facially plausible claim when he pleads “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court accepts as true “all well-pleaded factual allegations” and “construes reasonable inferences from those allegations in the plaintiff’s favor.” Sissel v. HHS, 760 F.3d 1, 4 (D.C. Cir. 2014).But “mere conclusory statements” are not enough to establish a plausible claim, and courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678(quoting Twombly, 550 U.S. at 555). At the motion to dismiss stage, the party moving for dismissal bears the burden of showing that no plausible claim for relief exists. See Intelsat USA Sales Corp. v. Juch-Tech, Inc., 24 F. Supp. 3d
544, 570 (2007). A plaintiff states a facially plausible claim when he pleads “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court accepts as true “all well-pleaded factual allegations” and “construes reasonable inferences from those allegations in the plaintiff’s favor.” Sissel v. HHS, 760 F.3d 1, 4 (D.C. Cir. 2014). But “mere conclusory statements” are not enough to establish a plausible claim, and courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). At the motion to dismiss stage, the party moving for dismissal bears the burden of showing that no plausible claim for relief exists. See Intelsat USA Sales Corp. v. Juch-Tech, Inc., 24 F. Supp. 3d
32, 48–49 n.10 (D.D.C. 2014); Ctr. for Biological Diversity v. Trump, 453 F. Supp. 3d 11, 48 (D.D.C. 2020).
Fund Ins. Co., 263 F. Supp. 3d 74, 78 (D.D.C. 2017) (cleaned up). Although “the terms of a signed written agreement” offer the “most clear[] evidence[]” of a “meeting of the minds,” a “signed
3 District of Columbia choice-of-law rules apply to all the state-law claims at issue here. See Ideal Elec. Sec. Co. v. Int'l Fid. Ins. Co., 129 F.3d 143, 148 (D.C. Cir. 1997). For a tort claim like fraud, as well as for unjust enrichment claims, those rules call for “a modified governmental interests analysis which seeks to identify the jurisdiction with the most significant relationship to the dispute.” In re APA Assessment Fee Litig., 766 F.3d 39, 51 (D.C. Cir. 2014); Chambers v. NASA Fed. Credit Union, 222 F. Supp. 3d 1, 8 (D.D.C. 2016). The same analysis applies to contract claims where the contract does not specify which law governs the agreement. See Bode & Grenier, LLP v. Knight, 808 F.3d 852, 864 (D.C. Cir. 2015). Applying those principles, D.C. law governs the state-law claims in the Third Amended Complaint. The parties do not argue that their contract specified the law to be applied to disputes arising out of the agreement. And under D.C.’s “modified interests analysis,” the District of Columbia is the “jurisdiction with the most significant relationship to the dispute.” In re APA Assessment Fee Litig., 766 F.3d at 51. Strum lives here. ECF No. 55 ¶1. And he alleges that “Mardam-Bey and Merchant Edge solicited funds for AUSF from Jonathan Strum in Washington DC (and from others in the Washington DC area)”; that they “[s]ent documents for Mr. Strum in Washington DC to sign for the purpose of investment in Alphemy”; and that Strum was in the District when he “caused the JDS Trust to transfer the $50,000 Strum Funds to the personal account of Mardam-Bey.” Id. ¶¶ 16, 22, 43. That Defendants are not citizens of the District of Columbia does not outweigh these other considerations.
3 District of Columbia choice-of-law rules apply to all the state-law claims at issue here. See Ideal Elec. Sec. Co. v. Int'l Fid. Ins. Co., 129 F.3d 143, 148 (D.C. Cir. 1997). For a tort claim like fraud, as well as for unjust enrichment claims, those rules call for “a modified governmental interests analysis which seeks to identify the jurisdiction with the most significant relationship to the dispute.” In re APA Assessment Fee Litig., 766 F.3d 39, 51 (D.C. Cir. 2014); Chambers v. NASA Fed. Credit Union, 222 F. Supp. 3d 1, 8 (D.D.C. 2016). The same analysis applies to contract claims where the contract does not specify which law governs the agreement. See Bode & Grenier, LLP v. Knight, 808 F.3d 852, 864 (D.C. Cir. 2015). Applying those principles, D.C. law governs the state-law claims in the Third Amended Complaint. The parties do not argue that their contract specified the law to be applied to disputes arising out of the agreement. And under D.C.’s “modified interests analysis,” the District of Columbia is the “jurisdiction with the most significant relationship to the dispute.” In re APA Assessment Fee Litig., 766 F.3d at 51. Strum lives here. ECF No. 55 ¶ 1. And he alleges that “Mardam-Bey and Merchant Edge solicited funds for AUSF from Jonathan Strum in Washington DC (and from others in the Washington DC area)”; that they “[s]ent documents for Mr. Strum in Washington DC to sign for the purpose of investment in Alphemy”; and that Strum was in the District when he “caused the JDS Trust to transfer the $50,000 Strum Funds to the personal account of Mardam-Bey.” Id. ¶¶ 16, 22, 43. That Defendants are not citizens of the District of Columbia does not outweigh these other considerations.
writing is not essential to the formation of a contract.” Davis v. Winfield, 664 A.2d 836, 838 (D.C.
by spending Strum’s money “for their personal and/or business purposes,” rather than investing it in AUSF. Id. ¶ 53; CorpCar Servs. Hou., Ltd., 325 A.3d at 1245. And Strum has alleged “damages caused by the breach” in the form of financial loss and other injuries. CorpCar Servs. Hou., Ltd.,
325 A.3d at 1245; see ECF No. 55 ¶¶ 54–56. That is enough for “the court to draw the reasonable inference that the defendants”—Mardam-Bey and Merchant Edge—are “liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. Defendants have not shouldered their burden of proving that no legally cognizable claim for relief exists. SeeCtr. for Biological Diversity, 453 F. Supp. 3d at 48.
325 A.3d at 1245; see ECF No. 55 ¶¶ 54–56. That is enough for “the court to draw the reasonable inference that the defendants”—Mardam-Bey and Merchant Edge—are “liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. Defendants have not shouldered their burden of proving that no legally cognizable claim for relief exists. See Ctr. for Biological Diversity, 453 F. Supp. 3d at 48.
Finally, Defendants argue that Strum’s breach-of-contract damages allegations are “facially implausible.” ECF No. 59 at 17. First, they contend that “[a] plaintiff cannot recover contract damages that exceed the alleged contract value without pleading facts to support such recovery, which Plaintiff does not do here.” Id. at 18. But “the amount of damages Defendants owe is a fact question” and thus not appropriate to resolve on a motion to dismiss. Elkins v. Dist. of
Columbia, 250 F.R.D. 20, 22 (D.D.C. 2008). Second, Defendants say that “[b]ecause Plaintiff’s breach of contract claim does not support punitive damages as a matter of law, that demand must be dismissed or stricken.” ECF No. 59 at 18. Not so. True, a plaintiff cannot recover punitive damages for breach of contract. See Fireman’s Fund Ins. Co. v. CTIA,480 F. Supp. 2d 7, 12 (D.D.C. 2007). But Strum does not appear to seek punitive damages in connection with that specific claim. See ECF No. 55 ¶¶ 49–56.
Columbia, 250 F.R.D. 20, 22 (D.D.C. 2008). Second, Defendants say that “[b]ecause Plaintiff’s breach of contract claim does not support punitive damages as a matter of law, that demand must be dismissed or stricken.” ECF No. 59 at 18. Not so. True, a plaintiff cannot recover punitive damages for breach of contract. See Fireman’s Fund Ins. Co. v. CTIA, 480 F. Supp. 2d 7, 12 (D.D.C. 2007). But Strum does not appear to seek punitive damages in connection with that specific claim. See ECF No. 55 ¶¶ 49–56.
B.
Strum states that he intended to allege conversion as to Akeel too. See ECF No. 62 at 19–20. But that is too late. “It is a well-established principle of law in this Circuit that a plaintiff may not amend her complaint by making new allegations in her opposition brief.” Budik v. Ashley, 36 F.
Supp. 3d 132, 144 (D.D.C. 2014), aff’d sub nom.Budik v. United States, No. 14-5102, 2014 WL
Supp. 3d 132, 144 (D.D.C. 2014), aff’d sub nom. Budik v. United States, No. 14-5102, 2014 WL
6725743 (D.C. Cir. Nov. 12, 2014). And in any case, what Strum says in his opposition would not be enough to state a plausible claim against Akeel. He merely says that “with respect to conversion, even when the initial possession is lawful, the once plaintiff makes a demand for the return of the converted goods and they are not returned it becomes conversion.” ECF No. 62 at
Bey never paid him back. Id. By emphasizing that Newendorp sent the money via “wire transfer,”
Strum appears to invite the Court to infer that this was “wire fraud” and thus a predicate RICO offense. Seeid.; 18 U.S.C. § 1961(1). But Rule 9(b) prevents the Court from doing so. Neither
Strum appears to invite the Court to infer that this was “wire fraud” and thus a predicate RICO offense. See id.; 18 U.S.C. § 1961(1). But Rule 9(b) prevents the Court from doing so. Neither
Strum nor the exhibits he submitted about Newendorp’s case provide any insight into the “time, place, and content of the false misrepresentations, and the fact misrepresented” for any fraud in which Newendorp was victimized. Kowal., 16 F.3d at 1278; see ECF Nos. 47-7, 47-8. Strum merely states that “Mardam-Bey borrowed $100,000 from his colleague Terry Newendorp . . . and failed to repay.” ECF No. 55 ¶ 61. But “mere refusal to pay a debt is not a fraud.” McClaskey v.
S.P.R.L. v. Imrex Co., 473 U.S. 479, 496–97 n.14 (1985). That is especially true here where the “number of victims” and “number of perpetrators” is so low. Edmondson & Gallagher, 48 F.3d at 1265 (cleaned up).
In his opposition, Strum invokes a hypothetical from a Supreme Court RICO case. The hypothetical imagines a “hoodlum” who “sell[s] ‘insurance’ to the neighborhood’s storekeepers to cover them against breakage of their windows, telling his victims he would be reappearing each month to collect the ‘premium’ that would continue their ‘coverage.’” H.J. Inc.,492 U.S. at 242.
In his opposition, Strum invokes a hypothetical from a Supreme Court RICO case. The hypothetical imagines a “hoodlum” who “sell[s] ‘insurance’ to the neighborhood’s storekeepers to cover them against breakage of their windows, telling his victims he would be reappearing each month to collect the ‘premium’ that would continue their ‘coverage.’” H.J. Inc., 492 U.S. at 242.
The Supreme Court explained that “[t]hough the number of related predicates involved may be small,” the hypothetical satisfies the “pattern” element because “the racketeering acts themselves include a specific threat of repetition extending indefinitely into the future.” Id. But that hypothetical illustrates why Strum comes up short. Here, Strum has not pleaded “a specific threat of repetition.” Id. And while the “hoodlum” has racketeered a neighborhood’s worth of shopkeepers,
Strum alleges that “[e]ach Defendant knowingly agreed to facilitate and benefit from the scheme(s)” and “committed or agreed to commit overt acts in furtherance of the conspiracy, and those acts caused injury to Plaintiff’s property.” ECF No. 55 ¶¶ 84–85. But because Strum has failed to plead a substantive RICO violation, his “claim under § 1962(d) must fail, because there was no violation in which the defendant could have conspired.” E. Sav. Bank, FSB v. Papageorge,
31 F. Supp. 3d 1, 15 (D.D.C. 2014), aff’d, 629 F. App’x 1 (D.C. Cir. 2015); seeEdmondson &
31 F. Supp. 3d 1, 15 (D.D.C. 2014), aff’d, 629 F. App’x 1 (D.C. Cir. 2015); see Edmondson &
Gallagher, 48 F.3d at 1265.
United States District Judge Date: September 4, 2026