El Samad v Shoukry

Filing 40

OPINION AND ORDER: The court GRANTS the motion to dismiss (DE # 14) inpart as to Counts I and II. Furthermore, the court GRANTS plaintiff until August 22, 2018 to move for leave to amend the complaint in order to (1) include the real parties in inte rest for all claims that remain in the amended complaint and (2) demonstrate that complete diversity exists for all parties. Because the question of subject matter jurisdiction remains, the court will not address any further arguments in the motion to dismiss or any other motions at this time. Accordingly, the court DENIES plaintiff's "motion for enjoinder" (DE # 27) with leave to refile once jurisdiction is resolved. Signed by Senior Judge James T Moody on 7/23/18. (ksp)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
AHMAD EL SAMAD,
Plaintiff,
v.
AHMED F. SHOUKRY,
Defendants.

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No. 2:17 CV 365

OPINION and ORDER
Plaintiff Ahmad El Samad (“El Samad”) brings suit against defendant Ahmed F.
Shoukry (“Shoukry”). (DE # 1.) The matter is now before the court on defendant’s
motion to dismiss. For the reasons set forth below, the motion to dismiss (DE # 14) will
be granted in part.
I.

BACKGROUND
Plaintiff alleges that he and defendant had a “partnership contract for the

operation of a medical clinic (podiatry) in the State of Illinois.” (DE # 1 ¶ 2.) In addition
to the partnership agreement, defendant also worked under an employment agreement.
(See id. ¶ 6.) According to plaintiff, defendant failed meet the requirements of these
agreements, causing financial loss and other damages. (Id. ¶ 7.) Based on these events,
plaintiff filed a complaint against defendant on September 18, 2017, alleging “breach of
contract,” “breach,” “extortion,” and “false claims.” (Id.)
The two alleged agreements—the partnership and employment agreements—

are at the heart of the complaint. Defendant’s employment agreement is titled
“Agreement for Professional Services” and it is attached to the complaint.
(“Employment Agreement,” DE # 1-1 at 5–12.) The parties to that agreement are
defendant Dr. Shoukry and The Institute of Foot & Ankle Reconstructive Surgery, LLC,
an Indiana limited liability company (the “Indiana LLC”). (Id. at 5.) Plaintiff did not
attach the partnership agreement to the complaint.
On October 13, 2017, defendant filed a motion to dismiss the claims against
him. (DE # 14.) He attached the partnership agreement, which is titled “Operating
Agreement of The Institute of Foot & Ankle Reconstructive Surgery of Illinois, LLC.”
(“Partnership Agreement,” DE # 15-1.) The parties to that agreement are The Institute
of Foot & Ankle Reconstructive Surgery of Illinois, LLC (the “Illinois LLC”) (signature
by El Samad as a manager for the LLC), El Samad (as a member of the LLC), Shoukry
(as a member of the LLC), and Dr. Murad Abdel-Qader (as a member of the LLC). (Id. at
11–12.) Both of these two agreements are relevant, as Count I of plaintiff’s complaint
alleges anticipatory breach of the Employment Agreement and Count II alleges breach
of “both agreements,” meaning both the Employment and Partnership Agreements.1 (Id.
¶¶ 6–7.)
On November 27, 2017, plaintiff responded to defendant’s motion to dismiss.

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Plaintiff contends that the complaint is “solely about the Indiana [Employment]
Agreement.” (DE # 27-1 at 7.) However, this argument is clearly inconsistent with the
plain wording of Count II which references the Employment and Partnership
Agreements and alleges the “breach of both said agreements.” (Id. (emphasis in
original).)
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(DE # 27.) On December 8, 2017, defendant filed a reply in support of his motion to
dismiss. (DE # 29.) Thus, the motion is fully briefed and ripe for review.
II.

LEGAL STANDARD
Defendant has moved to dismiss plaintiffs’ claims under Federal Rule of Civil

Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. A judge
reviewing a complaint under a Rule 12(b)(6) standard must construe it in the light most
favorable to the non-moving party, accept well-pleaded facts as true, and draw all
inferences in the non-movant’s favor. Erickson v. Pardus , 551 U.S. 89, 93 (2007); Reger
Dev., LLC v. Nat’l City Bank, 595 F.3d 759, 763 (7th Cir. 2010). Under the liberal noticepleading requirements of the Federal Rules of Civil Procedure, the complaint need only
contain “a short and plain statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a)(2). To satisfy Rule 8(a), “the statement need only ‘give the
defendant fair notice of what the . . . claim is and the grounds upon which it rests.’”
Erickson, 551 U.S. at 93 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
“While the federal pleading standard is quite forgiving, . . . the complaint must
contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face.” Ray v. City of Chicago, 629 F.3d 660, 662-63 (7th Cir. 2011);
Twombly, 550 U.S. at 555, 570. A plaintiff must plead “factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). To meet this standard, a complaint
does not need detailed factual allegations, but it must go beyond providing “labels and

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conclusions” and “be enough to raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555 (citing Sanjuan v. Am. Bd. of Psychiatry & Neurology, 40 F.3d 247,
251 (7th Cir. 1994) among other authorities). As the Seventh Circuit recently explained,
a complaint must give “enough details about the subject-matter of the case to present a
story that holds together.” Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010).
Defendant also moves for dismissal under Federal Rule of Civil Procedure
12(b)(1). A motion to dismiss under Rule 12(b)(1) asserts that the court lacks jurisdiction
over the subject matter. A Rule 12(b)(1) motion can present either a facial or factual
challenge to subject-matter jurisdiction. Apex Digital, Inc. V. Sears, Roebucks & Co., 572
F.3d 440 (7th Cir. 2009). A facial attack is a challenge to the sufficiency of the pleading
itself. Id. When such a challenge has been presented, the court takes all well-pleaded
factual allegations as true and draws all reasonable inferences in favor of the plaintiff.
Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999). Conversely, where there is
a factual challenge to subject-matter jurisdiction, “the district court may properly look
beyond the jurisdictional allegations of the complaint . . . to determine whether in fact
subject matter jurisdiction exists.” Sapperstein v. Hager, 188 F.3d 852, 855 (7th Cir. 1999)
(internal quotation marks and citation omitted).
III.

DISCUSSION
Defendant moves to dismiss the claims against him on multiple grounds.

However, the court will first address his argument that the action should be dismissed
because this court lacks subject matter jurisdiction, along with the related argument for

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dismissal pursuant to Rule 17 of the Federal Rules of Civil Procedure. Without
jurisdiction, this court cannot proceed in this case at all. Steel Co. v. Citizens for a Better
Env’t, 523 U.S. 83, 94 (1998).
Plaintiff pleads that jurisdiction is proper in this court based on diversity. (DE # 1
at 2.) A federal court may exercise diversity jurisdiction if the parties are citizens of
different states and the amount in controversy exceeds $75,000, exclusive of interest and
costs. 28 U.S.C. § 1332. Since plaintiff has invoked federal jurisdiction, he bears the
burden of demonstrating its existence. Hart v. FedEx Ground Package Sys. Inc., 457 F.3d
675, 79 (7th Cir. 2006). On the face of the complaint, plaintiff’s allegations seem to
establish diversity, because plaintiff is a resident of Indiana, defendant is a resident of
Illinois, and the amount in controversy “exceeds $ 200,000.” (See DE # 1 at 2.) Defendant
does not dispute those allegations. Instead, he argues that plaintiff’s suit has neglected
to include proper parties—the Indiana LLC and the Illinois LLC—whose inclusion
would defeat diversity. (DE # 15 at 7.)
For support, defendant relies on the language of the Employment and
Partnership Agreements which include the Indiana and Illinois LLCs as parties,
respectively. (See id. at 4–7.) Because defendant’s challenge to jurisdiction pertains to
facts outside of the pleadings, the court may consider evidence outside of the pleadings.
See Sapperstein v. Hager, 188 F.3d 852, 855 (7th Cir. 1999); see also Rittmeyer v. Advance
Bancorp, Inc., 868 F. Supp. 1017, 1021 (N.D. Ill. 1994). Thus, the court may examine the
Partnership Agreement provided by defendant, in addition to the Employment

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Agreement which was attached to the complaint. The court will now examine those
agreements, beginning with the Employment Agreement and the associate claims for
anticipatory breach (Count I) and breach (Count II).
A.

The Employment Agreement

According to the terms of the Employment Agreement, it is an agreement
between defendant Shoukry and the Indiana LLC. (DE # 1-1 at 5.) Plaintiff El Samad is
not listed as a party to the agreement. Accordingly, defendant argues that the Indiana
LLC is the proper plaintiff for claims relating to the Employment Agreement as it is the
“real party in interest in this case,” rather than El Samad. (DE # 15 at 4.) Rule 17(a)(1) of
the Federal Rules of Civil Procedure states that “[a]n action must be prosecuted in the
name of the real party in interest.”
To determine the real party in interest, the court must look to the applicable state
substantive law. Am. Nat’l Bank & Trust Co. v. Weyerhaeyser Co., 692 F.2d 455, 459–60 (7th
Cir. 1982). The Employment Agreement is governed by the laws of the state of Indiana.
(DE # 1-1 at 11.) Generally, under Indiana law, plaintiff would not have rights under the
Employment Agreement, since he is not a party to it, per the terms of the contract itself.
See Dulworth v. Bermudez, 97 N.E. 3d 272, 278 (Ind. Ct. App. 2018); see also Sunman
Dearborn Cmty. Sch. Corp. v. Kral-Zepf-Freitag & Assocs., 338 N.E. 3d 707, 709 (Ind. Ct.
App. 1975) (“As a general rule, the identity of the parties to a contract is ascertained
from an examination of the written instrument . . . .”). Thus, plaintiff would have no
authority to bring claims for breach of the Employment Agreement and would not be

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the real party in interest.
In his response, plaintiff asserts that he is the proper party in interest under Rule
17, but he provides no Indiana substantive law in support of that assertion. (See DE
# 27-1 at 8.) Rather, he asserts only that he may sue in his own name under the Indiana
Agreement because he is an “administrator” of the agreement. (Id.) According to Rule
17(a)(1), an “administrator” may file suit “in their own [name] without joining the
person for whose benefit the action is brought,” Fed. R. Civ. P. 17(a)(1) (emphasis
added).
Still, there are two problems with plaintiff’s argument. First, El Samad is not
listed as an administrator anywhere in the Employment Agreement or even in the
complaint itself. (See DE ## 1, 1-1.) He is listed only as a “member” of the Indiana LLC.
(DE # 1-1 at 12.) Second, even if he was an administrator, plaintiff provides no support
for the notion that Rule 17(a)(1) applies to allow an individual to bring suit on behalf
of—and without joining—a limited liability company.
Since plaintiff provides no argument properly supported by Rule 17 or Indiana
law, the court will defer to the general rule that a non-party has no rights under the
contract. Therefore, the court finds that plaintiff has not demonstrated that he is the real
party in interest for the claims relating to the Employment Agreement. The Indiana
LLC, as a party to the Employment Agreement, is a “real party in interest.”
Although plaintiff’s complaint fails to name the Indiana LLC as a plaintiff, the
court may not dismiss these claims until it has given the Indiana LLC a reasonable time

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to join or be substituted into the action. Fed. R. Civ. P. 17(a)(2). Accordingly the court
will grant plaintiff 30 days to move for leave to file an amended complaint. However, in
the motion for leave, plaintiff must demonstrate that amendment would not be futile.
Gonzalez-Koeneke v. West, 791 F.3d 801, 807 (7th Cir. 2015) (“District courts . . . have
broad discretion to deny leave to amend . . . where the amendment would be futile.”
(internal quotation marks omitted)).
To prove that amendment would not be futile, plaintiff must demonstrate that
diversity jurisdiction would not be defeated by adding the Indiana LLC as a plaintiff.
“For diversity jurisdiction purposes, the citizenship of an LLC is the citizenship of each
of its members.” Thomas v. Guardsmark, LLC, 487 F.3d 531, 534 (7th Cir. 2006). For the
court’s information, plaintiff must provide a jurisdictional statement identifying the
citizenship of each of the members of the Indiana LLC as of the date of the complaint.
See id.; see also Belleville Catering Co. v. Champaign Mkt. Place, L.L.C., 350 F.3d 691, 693 (7th
Cir. 2003) (“It is not possible to litigate under the diversity jurisdiction with details kept
confidential from the judiciary.”). As of now, the court has no information on the
membership of the Indiana LLC. However, since defendant is a resident of Illinois, if
any of the Indiana LLC’s members are residents of Illinois, complete diversity would
not exist and this court would lack subject matter jurisdiction over the action. See
Belleville Catering Co., 350 F.3d at 693 (finding complete diversity was lacking where
some of the defendant LLC’s members were Illinois citizens and the plaintiff was an
Illinois corporation).

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B.

The Partnership Agreement

Next, the court looks to the Partnership Agreement and plaintiff’s related claim
for breach of that agreement (Count II). Defendant once again argues that plaintiff is not
a party to the agreement and is, therefore, not the “real party in interest” for the claim.
Yet, according to the plain terms of the Partnership Agreement, defendant is incorrect.
The very first page of the agreement states that “[t]his [Agreement] is entered into . . .
by the following parties: 1. Dr. Ahmed Fayez Shoukry . . . ; 2. Dr. Murad Abdel-Qader
. . . ; 3. Dr. Ahmad K. El-Samad . . . ; and 4. The Institute of Foot & Ankle Reconstructive
Surgery of Illinois, LLC.” (DE # 15-1 at 1.)
Curiously, plaintiff El Samad’s response brief does not mention his designation
as a “party” to the agreement. Once again, plaintiff merely argues that he is an
“administrator” of the Partnership Agreement. (DE # 27-1 at 8.) But, El Samad is not
listed as an administrator anywhere in the Partnership Agreement or in the complaint.
(See DE ## 1, 15-1.) Instead he is listed as a “member” and as a “manager” of the LLC.
(DE # 15-1 at 1–2.)
Rather than relying on the parties’ flawed arguments, the court is required to
determine the real party in interest using the applicable state substantive law. Am. Nat’l
Bank & Trust Co., 692 F.2d at 459–60. Here, the Partnership Agreement says it is to be
governed by the laws of the State of Illinois. (DE # 15-1 at 10.) Unfortunately, neither
party makes any reference to Illinois substantive law whatsoever on this issue.
Moreover, neither party addresses whether a member or manager of an LLC has a right

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to sue under an LLC operating/partnership agreement.
Given the lack of relevant arguments provided by either party on this issue, the
court cannot conclude, at this time, that plaintiff is not the real party in interest and the
court cannot grant the motion to dismiss on this basis.
Ultimately, if the court were to conclude that the Illinois LLC is the real party in
interest for claim for breach of the Partnership Agreement, then the Illinois LLC would
have to be added to the case pursuant to Rule 17(a)(2). The court would then need to
determine the Illinois LLC’s citizenship for diversity purposes. Unlike with the Indiana
LLC, the record contains a list of the members of the Illinois LLC and their citizenship.
(DE # 15-1 at 1.) According to the Partnership Agreement, the Illinois LLC has three
members, two who reside in Illinois (Shoukry and Abdel-Qader) and one who resides
in Indiana (El Samad). (Id.) Thus, based on the evidence before the court, the Illinois
LLC is a citizen of both Illinois and Indiana and, therefore, adding the Illinois LLC to
the suit as a plaintiff would defeat complete diversity.
Moving forward, if El Samad continues to assert a claim for breach of the
Partnership Agreement, he must demonstrate that joining the Illinois LLC is not
required under Rule 17. He must show that he is the real party in interest and support
his argument with some substantive Illinois law. If he does not, he will not have met his
burden of demonstrating subject matter jurisdiction. See Hart, 457 F.3d at 679.

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IV.

CONCLUSION
For the foregoing reasons, the court GRANTS the motion to dismiss (DE # 14) in

part as to Counts I and II. Furthermore, the court GRANTS plaintiff until August 22,
2018 to move for leave to amend the complaint in order to (1) include the real parties in
interest for all claims that remain in the amended complaint and (2) demonstrate that
complete diversity exists for all parties.
Because the question of subject matter jurisdiction remains, the court will not
address any further arguments in the motion to dismiss or any other motions at this
time. Accordingly, the court DENIES plaintiff’s “motion for enjoinder” (DE # 27) with
leave to refile once jurisdiction is resolved.
SO ORDERED.
Date: July 23, 2018
s/James T. Moody
JUDGE JAMES T. MOODY
UNITED STATES DISTRICT COURT

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