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Rustom v. Rustom

United States District Court, N.D. Illinois, Eastern Division

August 27, 2019

MAHER RUSTOM, Plaintiff,
v.
NASER RUSTOM and NORTH STAR TRUST COMPANY, Defendants.

          MEMORANDUM OPINION AND ORDER

          MARVIN E. ASPEN, DISTRICT JUDGE

         Plaintiff Maher Rustom's third amended complaint asserts claims for fraud, conversion, partition, and unjust enrichment against his brother, Defendant Naser Rustom. (3d Am. Compl. (Dkt. No. 93).) Defendant moves to dismiss. (Mot. (Dkt. No. 98) at 1.) For the reasons set forth below, we dismiss all counts with prejudice.

         BACKGROUND

         For purposes of a motion to dismiss, we accept all well-pleaded factual allegations as true and draw all reasonable inferences in favor of the plaintiff. Katz-Crank v. Haskett, 843 F.3d 641, 646 (7th Cir. 2016). The present dispute concerns ownership of a commercial property and two businesses. (3d Am. Compl. ¶¶ 1-2.) Plaintiff resides in and practices medicine in Saudi Arabia, occasionally visiting the United States. (Id. ¶¶ 4, 9.) He was not educated in the United States and “does not speak or write English well.” (Id. ¶ 1.) Defendant, also a doctor, is a citizen of Illinois and fluent in English. (Id. ¶¶ 1, 5.) Plaintiff claims he is the “owner of the . . . assets and real property” that are the subject of this action and that Defendant unlawfully possesses those properties. (Id. ¶¶ 4-5.)

         A. The Property at 4941 N. Kedzie, Chicago, Illinois

         On September 26, 1995, Plaintiff bought a commercial building (“the Property”) at 4941 North Kedzie in Chicago, Illinois, which he allowed Defendant to manage while Plaintiff lived in Saudi Arabia. (Id. ¶ 7.) Plaintiff alleges that during one of his visits to the United States in 1999, Defendant told him to sign a quitclaim deed that would allow Defendant to manage the Property “without problems from local government officials” in Plaintiff's absence. (Id. ¶ 9.) Plaintiff signed the quitclaim deed with no knowledge the document would transfer ownership to Defendant; he only intended for Defendant “to continue to manage the building and act on [Plaintiff's] behalf as the owner.” (Id.) Plaintiff asserts “he lost title of ownership to the real property” in reliance on Defendant's representation of the deed's purpose. (Id. ¶ 33.)

         B. The Medical Center

         Plaintiff purchased the Property in 1995 to provide a building in which the Galilee Medical Center, SC (“the Medical Center”) would operate. (Id. ¶ 7.) Plaintiff alleges that he, Defendant, and their brother Amer Rustom created the Medical Center in 1994 with the understanding they were to each have a one-third ownership interest in the company. (Id. ¶ 8.) Plaintiff claims that Defendant misrepresented Plaintiff's ownership interest in the Medical Center because Defendant knew that only Illinois-licensed doctors could own medical centers under Illinois law. (Id. ¶¶ 7, 37.) Specifically, Defendant (1) made untruthful statements in 1994 and 1995 to Plaintiff about his ownership of the Medical Center and (2) presented Plaintiff with a fake document titled “trust” in 2003 showing each of the brothers as “1/3 beneficiaries to the Medical Center.” (Id. ¶ 37.) Because Plaintiff believed Defendant's representations, he allowed Defendant to use the Property for the Medical Center rent-free. (Id. ¶ 39.)

         C. Open MRI

         Plaintiff alleges he has owned all the shares of another company, Preferred Open MRI Ltd. (“Open MRI”), since 2002, and that he fired Defendant from his positions as Open MRI's president, secretary, and treasurer on March 1, 2018. (Id. ¶ 12.) He claims that “[w]ithout Maher's knowledge or authorization, Naser merged [Open MRI] with a medical center” on an unspecified date to prevent Plaintiff from owning the resultant entity, as Defendant knew Plaintiff could not own a medical services corporation under Illinois law. (Id. ¶ 13.) He also alleges Defendant used false and fraudulent documents in attempting to prove Defendant purchased Open MRI. (Id. ¶¶ 14, 18.) Although Plaintiff contends he “has always been the owner of [Open MRI], ” he simultaneously states that he wishes to “restore his ownership interest in the MRI company.” (Id. ¶¶ 13, 15.) Finally, Plaintiff alleges Defendant knowingly misrepresented the income and expenses of Open MRI, and that Defendant's false statements and fake accounting documents led Plaintiff to receive an inadequate profit from the business. (Id. ¶ 42.)

         D. Plaintiff's Claims

         Plaintiff filed his third amended complaint on September 3, 2018. Count I asserts that Defendant fraudulently induced Plaintiff to sign the 1999 quitclaim deed, (id. ¶¶ 27-35), while Count II claims Defendant fraudulently induced Plaintiff to allow the Medical Center to operate rent-free in the Property, (id. ¶¶ 36-40). Count III states Defendant committed common law fraud pertaining to the Property, the Medical Center, and Open MRI. (Id. ¶¶ 41-44.) Count IV alleges that Defendant wrongfully converted Open MRI. (Id. at ¶¶ 45-50.) Count V seeks a partition of Open MRI. (Id. at ¶¶ 51-56.) Count VI pleads unjust enrichment in the alternative. (Id. at ¶¶ 57-63.)

         STANDARD OF REVIEW

         “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. Housing 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 inferences in the Plaintiff's favor. Cole v. Milwaukee Area Tech. Coll. Dist., 634 F.3d 901, 903 (7th Cir. 2011).

         When a complaint pleads fraud or mistake, Rule 9(b) requires the circumstances constituting fraud or mistake to be stated with particularity. Fed.R.Civ.P. 9(b); see 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 who made 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 ...


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