Rustom v. Naser Rustom & N. Star Trust Co.
| Decision Date | 21 August 2018 |
| Docket Number | No. 17 C 9061,17 C 9061 |
| Parties | MAHER RUSTOM, Plaintiff, v. NASER RUSTOM and NORTH STAR TRUST COMPANY, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Hon. Marvin E. Aspen
Plaintiff Maher Rustom filed this action asserting claims for quiet title, equitable accounting, and fraud relating to the ownership of a commercial property and two businesses. Presently pending is Defendants Naser Rustom and North Star Trust Company's motion to dismiss Plaintiff's second amended complaint pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). (Mot. (Dkt. No. 70).) Defendants also seek judgment on Plaintiff's accounting claims pursuant to Rules 12(d) and 56(a). For the reasons set forth below, we grant Defendants' motion to dismiss Counts I and IV, as well as Count II as it relates to the property, without prejudice pursuant to Rules 9(b) and 12(b)(6). In addition, under Rules 12(d) and 56(a), we grant Defendants' motion for summary judgment on Counts II and III as to the businesses.
Plaintiff's verified second amended complaint sets forth a dispute with his brother, Naser Rustom ("Naser"), concerning ownership of commercial real estate and two companies. Plaintiff is a doctor educated in Syria and is a citizen of Saudi Arabia, where he currently practices medicine. (Id. ¶¶ 7, 11.) Naser is also a doctor and is a citizen of Illinois. (Id. ¶ 9.) Plaintiff has a visa to the United States, which he uses to travel to this country "from time-to-time" including to visit Naser and their mother. (Id. ¶¶ 3, 12.)
On September 26, 1995, Plaintiff bought a commercial building located at 4941 N. Kedzie, Chicago, Illinois (the "property"). (Id. ¶¶ 2, 13; see also 1995 Deed (Dkt. No. 61-1).) Plaintiff alleges he entered into an agreement with Naser to manage the property and use the rent from the building's ten tenants to pay the mortgage and other expenses. (2d Am. Compl. ¶ 2.) On one visit to the United States in 1999, Plaintiff signed a quitclaim deed that transferred ownership of the property to Naser. (Id. ¶¶ 3, 18-19; see also 1999 Quitclaim Deed (Dkt. No. 61-2).) The quitclaim deed was recorded in the Cook County Recorder on November 12, 1999. (2d Am. Compl. ¶ 19.)
However, Maher alleges that he never intended to transfer ownership of the property to Naser, instead asserting Naser intentionally led him to believe the quitclaim deed would only "permit Naser to manage the building and act on his behalf" as the owner. (2d. Am. Compl. ¶¶ 3, 18-19, 30-31.) He "never spoke or wrote English well enough and completely depended and trusted his younger brother Naser with all the investments he made in the United States." (Id. ¶ 19.) Plaintiff also alleges he signed the first page of the quitclaim deed, but that his notarized signature on the Grantor and Grantee Statement attached to the deed is a forgery. (Id. ¶¶ 3, 18-22, 30-31.) Further, contrary to the language of the quitclaim deed, Plaintiff asserts no consideration was transferred for the property. (Id. ¶¶ 4, 24.) From 1999 to August 2017, both Plaintiff and Naser "publicly admitted, before family, relatives and friends, that [Plaintiff] was the owner of the subject building." (Id. ¶¶ 4, 23.)
Naser "currently . . . is the named owner of the subject real property and has possession of the subject assets." (Id. ¶¶ 9, 33.)1 Plaintiff alleges he first learned that he had transferred ownership to Naser in August 2017 when he went to an attorney "to check on his property and make sure that the property tax was being paid." (Id. ¶¶ 25, 34.) Plaintiff contends he is the rightful owner of the property and seeks to remove the cloud on the title created by the 1999 quitclaim deed. (Id. ¶¶ 4, 28, 32.)
Plaintiff alleges he purchased the property in part to allow Galilee Medical Center, S.C. (the "Medical Center") to operate out of the building rent free. (Id. ¶ 2.) Plaintiff created the Medical Center along with his brothers Naser and Amer Rustom in 1994, and he alleges each had a one-third ownership interest in the business. (Id.) Plaintiff used the rent-free arrangement as his investment in the Medical Center in exchange for his one-third ownership stake. (Id.) Defendants argue Plaintiff never owned any part of the Medical Center, and Plaintiff alleges he relied on unidentified "intentional false statements" by Naser to give him one-third ownership and that "[i]n the event [Plaintiff] could not be part owner of the Medical Center, then this would constitute further fraud by Naser." (Id. ¶ 17.)
In addition to the property and his alleged one-third ownership interest in the Medical Center, Plaintiff maintains he is the sole owner of a second business, Open MRI Ltd. (Id. ¶ 5.) Plaintiff asserts he owns 100 percent of the shares of Open MRI, and pursuant to an employment agreement, Naser was the President, Secretary, and Treasurer of the business untilMarch 1, 2018, when Plaintiff removed him from office. (Id. ¶ 5.) Plaintiff alleges he signed a corporate resolution on March 13, 2018 appointing Basil Salem as President, Secretary, and Treasurer of Open MRI. (Id.)
Plaintiff filed his verified second amended complaint on June 7, 2018. In Count I, he asserts a quiet title claim for the property. (Id. ¶¶ 29-35.) Count II seeks an accounting from Naser "for all income and expenses for the subject commercial building's rent income" as well as income for the Medical Center from 1999 to present. (Id. ¶¶ 36-42.) Similarly, in Count III, Plaintiff contends he is entitled to an accounting from Naser "for all income and expenses" for Open MRI from 2002 to present. (Id. ¶¶ 43-48.) Plaintiff alleges an accounting is necessary for the property, the Medical Center, and Open MRI because "[g]iven the 1999 false and fraudulent conduct of Defendant Naser, the income and expenses he reported . . . are not truthful." (Id. ¶¶ 38, 45.) Finally, in Count IV, Plaintiff asserts a claim for common law fraud, alleging Naser made false statements to Plaintiff (1) in connection with the 1999 quitclaim deed, (2) in leading Plaintiff to believe he was a one-third owner of the Medical Center, and (3) in taking all income and assets from Open MRI. (Id. ¶¶ 49-56.)
"The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits." Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990) (citing Triad Assocs., Inc. v. Chi. Hous. Auth., 892 F.2d 583, 586 (7th Cir. 1989)). A court may grant a motion to dismiss under Rule 12(b)(6) only if a complaint lacks "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007); accord Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949(2009). The plausibility standard is not a "probability requirement," but it asks for "more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 555, 127 S. Ct. at 1965). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. While the plaintiff need not plead "detailed factual allegations," he must allege facts sufficient "to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S. Ct. at 1964-65. At the motion to dismiss stage, we accept all well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in the Plaintiff's favor. Cole v. Milwaukee Area Tech. Coll. Dist., 634 F.3d 901, 903 (7th Cir. 2011).
Defendants have moved to dismiss all of Plaintiff's claims. Defendants argue Plaintiff's complaint is "replete with allegations of demonstrably false facts, that, even if accepted as true, cannot establish the elements of the causes of action pleaded and do not establish any cognizable claims." (Mem. in Support of Mot. to Dismiss ("Mem.") (Dkt. No. 72) at 1.) Defendants contend Plaintiff has not owned the property since he signed the quitclaim deed in 1999, he never owned the Medical Center, and he has not owned Open MRI since August 2005. (Id. at 4-10.) In addition, Defendants argue Plaintiff has failed to state a claim for common law fraud, and in any case, the entire complaint fails because it is grounded in allegations of fraud but fails to plead the circumstances constituting fraud with particularity under Federal Rule of Civil Procedure 9(b). (Id. at 12-15.) Finally, Defendant also argues Plaintiff's fraud claim is time-barred. (Id. at 10-12.)
Rule 9(b) requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed. R. Civ. P. 9(b); DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990). To establish the "circumstances constituting fraud," the complaint must allege "the identity of the person making the misrepresentation, the time, place, and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff." Windy City Metal Fabricators & Supply, Inc. v. CIT Tech. Fin. Servs., Inc., 536 F.3d 663, 668 (7th Cir. 2008) (quotation omitted). In other words, the plaintiff must plead the "who, what, when, where, and how" of the alleged fraud. Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 441-42 (7th Cir. 2011); DiLeo, 901 F.2d at 627. "[T]he particularity requirement of Rule 9(b) is designed to discourage a 'sue first, ask questions later' philosophy." Id.; see also Fidelity Nat'l Title Ins. Co. of N.Y. v. Intercounty Nat'l Title Ins. Co., 412 F.3d 745, 748-49 (7th Cir. 2005) (...
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