Petra Mini Mart, Inc. v. United States of America
MEMORANDUM Opinion and Order Signed by the Honorable John Robert Blakey on 6/6/2017. Mailed notice(gel, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
PETRA MINI MART, INC.,
Case No. 16-cv-4573
UNITED STATES OF AMERICA,
Judge John Robert Blakey
MEMORANDUM OPINION AND ORDER
Petitioner Petra Mini Mart, Inc. (“Petra”) initiated this action seeking review
of a Final Agency Decision (the “Decision”) entered by the United States
Department of Agriculture, Food and Nutrition Service (“USDA”).
that the Decision was not supported by sufficient evidence. The United States of
America, on behalf of the USDA, conversely insists that the Decision is valid, and
has accordingly moved for summary judgment on Petra’s claim.  at 1-2. 1 For
the reasons explained below, that motion is granted.
The government also originally brought a counterclaim against both Petra and its first owner,
Ayman Salaymeh (“Salaymeh”), seeking payment of the civil monetary penalty imposed by the
Decision.  at 2-5. On May 11, 2017, the Court requested supplemental briefing concerning its
putative jurisdiction over the government’s counterclaim.  at 1. Rather than providing the
requested briefing, the parties filed a joint motion to dismiss the government’s counterclaim,  at
1-2, which was granted on May 26, 2017.  at 1.
Petra operated at 2701 East 79th Street in Chicago, and was previously
qualified to participate as a retailer in the federal Supplemental Nutrition
Assistance Program (“SNAP”).
 at 2.
SNAP is overseen by the Food and
Nutrition Service (“FNS”). Id. at 1-2.
In April of 2014, FNS informed Salaymeh that it had evidence suggesting
Petra was “trafficking” in SNAP benefits.
Id. at 2; see also 7 C.F.R. § 271.2
(defining “trafficking” to mean, inter alia, the “buying, selling, stealing, or otherwise
effecting an exchange of SNAP” benefits “for cash or consideration other than
eligible food, either directly, indirectly, in complicity or collusion with others, or
acting alone.”). FNS subsequently charged Petra with trafficking SNAP benefits,
and on August 5, 2014, Petra was permanently disqualified from participating in
the SNAP program.  at 2. Neither Petra nor Salaymeh ever contested the
determination that Petra had been trafficking in SNAP benefits.
Petra, during the course of its operation, also accumulated over $40,000 in
tickets from the City of Chicago. Id. at 4. As a result of these tickets, Salaymeh
The government, in support of its motion for summary judgment , filed the appropriate Rule
56.1 statement. See  at 1-5; see also Local Rule 56.1(a) (“With each motion for summary
judgment filed pursuant to Fed. R. Civ. P. 56 the moving party shall serve and file . . . a statement
of material facts as to which the moving party contends there is no genuine issue and that entitle the
moving party to a judgment as a matter of law.”). Petra then filed a document that is captioned
“Petra Mini Mart’s Cross Motion for Summary Judgment.”  at 1-4. Without explanation, that
same filing is also described as a “response . . . in opposition” to the government’s summary
judgment motion. Id. Whether Docket Entry 15 was intended to serve as a response in opposition to
the government’s motion or a cross-motion for summary judgment is functionally irrelevant,
however, as the Court ultimately concludes that the government is entitled to summary judgment on
Petra’s claim as a matter of law. See infra at 9-10. Moreover, because Petra never filed the
responsive statement required by Local Rule 56.1(b), “[a]ll material facts set forth” in the
government’s statement are “deemed to be admitted” for the purposes of this section of the Court’s
could not “afford to stay in business,” and Jaffar Karakra (“Karakra”), a former
Petra employee, “want[ed] to take over.”
Id. at 3.
To that end, Karakra (not
Salaymeh) executed a lease with the owner of Petra’s location that began to run in
October of 2014. Id. Karakra also registered articles of incorporation for a new
business entity (A&S Food Mart #1 or “A&S”) on October 30, 2014, and A&S
received its business registration on November 1, 2014.
sought the licenses required to operate a food or tobacco store in the City of Chicago.
Id. Municipal authorities refused to issue these licenses until Karakra assumed
financial responsibility for Petra’s outstanding tickets. Id. at 4. Karakra agreed,
and his understanding with Salaymeh was memorialized in an “affidavit” jointly
executed on March 6, 2015. Id. The affidavit provides:
I, Jaffar Karakra SSN . . . certifies [sic] that I did purchase the
business Petra Mini Mart, Inc. 2701 E. 27th St., Chicago, IL 60649
from Mr. Ayman Salaymeh. This is also to certify that I will pay all
the tickets for the City of Chicago from the purchase price as it was
agreed with the City of Chicago to pay $2,600 per month for 17
Id. at 52. That same month, Petra ceased operations, A&S received its licenses to
sell tobacco and food, and A&S began operating at Petra’s former location on 79th
street. Id. at 5.
FNS informed Salaymeh in August of 2015, several months after Petra had
closed, that it had obtained evidence suggesting that Salaymeh had sold Petra to a
former employee, in violation of controlling federal law. Id. at 2; see also 7 U.S.C. §
2021(e)(1) (“In the event any retail food store or wholesale food concern that has
been disqualified [from participation in SNAP] is sold or the ownership thereof is
otherwise transferred to a purchaser or transferee, the person or persons who sell or
otherwise transfer ownership of the retail food store or wholesale food concern shall
be subjected to a civil penalty . . . .”); 7 C.F.R. § 278.6 (“In the event any retail food
store or wholesale food concern which has been disqualified is sold or the ownership
thereof is otherwise transferred to a purchaser or transferee, the person or other
legal entity who sells or otherwise transfers ownership of the retail food store or
wholesale food concern shall be subjected to and liable for a civil money penalty.”).
FNS’s charge was supported by both the previously-mentioned affidavit of
sale and Karakra’s lease over Petra’s location at 79th street, which began to run in
October of 2014—six months prior to Petra’s closing in March of 2015. Id. at 2.
Based upon this evidence, FNS imposed a $44,000 transfer-of-ownership-civilmoney-penalty against Salaymeh (the “TOCMP”). Id.
Salaymeh submitted a timely request for administrative review of the
TOCMP. Id. at 2-3. He argued that FNS did not have any evidence that he sold
Petra to Karakra. Id.
Salaymeh additionally insisted that he had simply closed
Petra in March 2015, and Karakra had opened a similar store in the same location
afterwards. Id. at 3.
On March 24, 2016, FNS affirmed its finding that Petra was sold and upheld
the $44,000 penalty triggered by the transfer. Id. This Decision was based upon
both the affidavit of sale and Petra’s leasing history. Id.
Petra initiated this lawsuit under 7 U.S.C. § 2023(a)(13), which provides that
if a “store, concern, or State agency feels aggrieved by such final determination, it
may obtain judicial review thereof by filing a complaint against the United States in
the United States court for the district in which it resides or is engaged in business .
. . within thirty days after the date of delivery or service of the final notice of
determination upon it, requesting the court to set aside such determination.” The
Decision was issued on March 24, 2016,  at 25, and Petra filed suit on April 22,
2016, , within the time period contemplated by § 2023(a)(13).
Summary judgment is appropriate if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law. Spurling v. C & M Fine Pack, Inc., 739 F.3d 1055, 1060 (7th Cir.
2014). A genuine dispute as to any material fact exists if “the evidence is such that
a reasonable jury could return a verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The party seeking summary
judgment has the burden of establishing that there is no genuine dispute as to any
material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In determining
whether a genuine issue of material fact exists, this Court must construe all facts
and reasonable inferences in the light most favorable to the nonmoving party. See
CTL ex rel. Trebatoski v. Ashland Sch. Dist., 743 F.3d 524, 528 (7th Cir. 2014).
This Court’s review of the Decision’s factual and legal conclusions is de novo.
See McGlory v. United States, 763 F.2d 309, 311 (7th Cir. 1985) (per curiam); see
also 7 U.S.C. § 2023(a)(15) (“The suit in the United States district court or State
court shall be a trial de novo by the court in which the court shall determine the
validity of the questioned administrative action in issue . . . .”). The record before
the “district court, not the record before the agency, is what counts.” McGlory, 763
F.2d at 311.
Petra bears “the burden of proving, by a preponderance of the
evidence, that the agency’s determination was invalid.” Fells v. United States, 627
F.3d 1250, 1252 (7th Cir. 2010); see also Bros. Food & Liquor, Inc. v. United States,
626 F. Supp. 2d 875, 879 (N.D. Ill. 2009) (“Plaintiff has the burden of proving by a
preponderance of the evidence on this fresh record that the administrative decision
was invalid because violations did not occur.”).
Should the Court conclude, after its de novo review of the record, that there
was a violation, it must give deference to the penalty imposed by the FNS and may
only overturn the imposed penalty if it is arbitrary and capricious. See Estremera v.
United States, 442 F.3d 580, 585 (7th Cir. 2006); Brooks v. United States, 64 F.3d
251, 256 (7th Cir. 1995); McGlory, 763 F.2d at 311.
Salaymeh Sold or Transferred Petra
Persons who sell or otherwise transfer ownership of retail food stores that
have been disqualified from participation in SNAP “shall be subjected to a civil
penalty.” 7 U.S.C. § 2021(e)(1). Petra does not dispute that in August 2014, it was
disqualified from participation in the SNAP program for trafficking in benefits. See
 at 1 (“The government correctly notes that the sole issue for the Court’s
determination is whether Salaymeh sold or transferred Petra Mini Mart to Jaffar
Karakra.”) (internal quotation omitted).
The Court accordingly turns to the
question of whether Salaymeh actually sold or otherwise transferred Petra to
The government’s evidence on this issue is overwhelming.
supra, Karakra and Salaymeh executed an affidavit explicitly commemorating the
sale of Petra.  at 52 (“I, Jaffar Karakra SSN . . . certifies [sic] that I did
purchase the business Petra Mini Mart, Inc. 2701 E. 27th St., Chicago, IL 60649
from Mr. Ayman Salaymeh.”). The affidavit also identifies Salaymeh as the “seller”
and Karakra as the “purchaser.” Id. In addition to this affidavit, the record reflects
that Karakra executed a lease over Petra’s location that began to run in October of
2014—six months prior to Petra’s closing in March of 2015. Id. at 2.
Petra’s Arguments are Unavailing
Petra attempts to evade the obvious implication of this evidence by arguing
that Salaymeh did not actually “sell or otherwise transfer ownership” of Petra
within the meaning of 7 U.S.C. § 2021(e)(1). Petra principally relies upon Huggins
v. United States, 858 F. Supp. 2d 694, 700 (N.D. Miss. 2012), which concerned a
store owner who was disqualified from participation in the SNAP program,
dissolved his business, and then leased the business’s former location to his relative.
Id. at 699.
The plaintiff’s relative then operated a grocery store at the same
location. Id. The FNS assessed a civil monetary penalty after determining that a
transfer of business ownership had occurred “based solely on the lease of the
Plaintiff’s building to his relative.” Id. at 700. The court in Huggins noted that,
aside from the lease, the evidence in the record suggested that no transfer had
occurred, including: (1) evidence suggesting plaintiff had closed his grocery store’s
bank account; (2) a letter from the plaintiff’s tax preparer stating that the plaintiff
had closed his business in accordance with IRS guidelines for dissolution; (3) a
letter from the town mayor personally attesting that plaintiff’s grocery store had
closed; (4) documentation showing the building stayed vacant for some time before
the plaintiff leased it to his relative; (5) a lease agreement and a tax permit
supporting the plaintiff's contention that he received monthly rent from his relative;
and (6) representations by the plaintiff that upon entering into the lease agreement,
he sold the store’s equipment and inventory so that only the empty shell of the
Id. at 701.
The court ultimately concluded that, given the
weight of this countervailing evidence, “the Plaintiff’s leasing of his own empty
building that had previously housed his grocery store business to his relative did
not, in and of itself, constitute a ‘transfer’ under the statute.” Id. at 705.
Higgins is readily distinguishable from the present case. The plaintiff in
Higgins adduced a laundry list of evidence suggesting that no “transfer” had
occurred. Id. at 701. In stark contrast, Petra has adduced no evidence at all, by
virtue of its failure to respond to the government’s statement of material facts as
required by Local Rule 56.
In fact, the only piece of evidence even cited by Petra, Salaymeh’s deposition
testimony, actually supports the government’s case. At his deposition, Salaymeh
was asked: “So did he [Karakra] pay you any other consideration [besides paying
Petra’s outstanding tickets] for the premises and the lease of the business?”  at
3 (emphasis added). Salaymeh responded: “Absolutely not even a penny.” Id. In
this exchange, Salaymeh implicitly acknowledges that he was, in fact, paid some
consideration in exchange for Petra. This concession comports with all the other
evidence in the record, and leads inescapably to the same conclusion: Salaymeh sold
Petra, a disqualified business, to Karakra, in exchange for Karakra’s agreement to
pay Petra’s outstanding tickets.
Estremera v. United States, 442 F.3d 580 (7th Cir. 2006), is instructive here.
In that case, the FNS had assessed a civil monetary penalty against an individual
determined to have sold his business following his permanent disqualification from
the food stamp program. Id. at 586. The FNS based this determination on various
evidence of the sale, including: (1) a consent action agreement signed by the store
owner to sell the store to a purchaser; (2) a bill of sale for the store; (3) a real estate
closing statement confirming the sale; (4) an affidavit attesting to the sale of the
store; (5) a mortgage note signed by the purchaser; (6) a lease between the store
owner and the purchaser; and (7) the store owner’s signed admission that she had
sold the store. See id. The store owner later challenged the civil money penalty,
contending, inter alia, that she had not sold ownership of the business, the sale was
never completed, and the would-be purchaser had never intended to follow through
on the sale. See id. at 584. The district court, pursuant to its de novo review,
upheld the civil monetary penalty, and the Seventh Circuit affirmed. The Seventh
Circuit explained that, plaintiff’s protestations to the contrary, “[a]ll of the
documents offered by the parties . . . demonstrate that there was a sale.” Id. The
court additionally noted that there was “nothing in the mortgage note to indicate
that the sale was not final until the note was fully paid.” Id.
Here, as in Estremera, all of the evidence before the Court reflects that
Salaymeh sold Petra to Karakra, in exchange for Karakra’s agreement to pay
certain tickets assessed by the City of Chicago. Moreover, there is “nothing in the”
affidavit of sale “to indicate” that it was “not final” or was otherwise illusory. Id. In
short, the undisputed evidence conclusively demonstrates that Salaymeh sold a
disqualified business, as commemorated in the Decision, and the government is
accordingly entitled to summary judgment. 3
For the sake of completeness, the Court notes that Petra does not contend that the amount of the
TOCMP was arbitrary or capricious. See  at 1 (“The government correctly notes that the sole
issue for the Court’s determination is whether Salaymeh sold or transferred Petra Mini Mart to
Jaffar Karakra.”) (internal quotation omitted). Regardless, there is no evidence in the record before
the Court to support such a finding.
For the foregoing reasons, the government’s motion for summary judgment
 is granted. Civil case terminated.
Date: June 6, 2017
John Robert Blakey
United States District Judge
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