Ilyia v. El Khoury et al

Filing 38

ORDER denying 17 Defendants' Motion to Dismiss by Judge Robert S. Lasnik.(MD)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE
_______________________________________
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ELIAS ILYIA,
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Plaintiff,
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v.
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MAROUN N. EL KHOURY, et al.,
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Defendants.
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_______________________________________)

No. C11-1593RSL
ORDER DENYING DEFENDANTS’
MOTION TO DISMISS

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This matter comes before the Court on “Defendants’ Motion to Dismiss Pursuant
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to Rule 12(b)(6).” Dkt. # 17. On September 23, 2011, plaintiff Elias Ilyia filed a complaint
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seeking a declaration that a Durable General Power of Attorney and a Stock Purchase
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Agreement he executed in favor of defendant Maroun El Khoury are void. Plaintiff alleges that
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he lacked the capacity to enter into binding contracts in mid-2010 when the contracts were
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signed. Defendants argue that the complaint should be dismissed because (a) a request for
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declaratory judgment cannot stand alone and (b) plaintiff has failed to allege sufficient facts to
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show that he is entitled to such relief. Having reviewed the memoranda submitted by the parties,
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the Court finds as follows:
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(a) Defendants concede that diversity jurisdiction exists. They argue, however, that
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plaintiff must assert an independent cause of action which, if proven, would invalidate the
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contracts before he can seek a declaration that the contracts are void. Defendants rely on a string
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of cases in which the dismissal of plaintiff’s substantive claims (and/or the adverse factual
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ORDER DENYING DEFENDANTS’
MOTION TO DISMISS

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findings that underlie the dismissal) made it impossible for plaintiff to obtain declaratory or
injunctive relief regarding the same subject. There does not, however, appear to be any common
law or statutory bar against filing a complaint that seeks only declaratory judgment. In Skelly
Oil Co. v. Phillips Petroleum Co., 339 U.S. 667 (1950), Phillips Petroleum sought a declaration
under the Declaratory Judgment Act that its contract with a defendant remained in effect. Once
the Supreme Court assured itself that it had diversity jurisdiction over the parties, the fact that
Phillips Petroleum sought only a declaration of its contractual rights was not a concern. By
enacting the Declaratory Judgment Act, the legislature expanded the relief that could be afforded
by the federal courts to include recognition of a plaintiff’s rights even if no immediate
enforcement were requested. Skelly Oil, 339 U.S. at 671-72.
(2) Without addressing any specific allegation in the complaint or evaluating the

allegations as a whole, defendants move to dismiss under Bell Atlantic Corp. v. Twombly, 550
U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937 (2009). Dkt. # 17 at 6.
Defendants do not identify any allegation that should be ignored as a legal conclusion. Nor do
they explain why plaintiff’s story fails to raise a plausible entitlement to the relief requested.
Defendants have therefore failed to apply the Twombly/Iqbal analysis or otherwise show that
the pleading is insufficient under Fed. R. Civ. P. 8(a).
In reply, defendants take issue with the sufficiency of plaintiff’s fraud allegations
under Fed. R. Civ. P. 9(b) (Dkt. # 37 at 3) and argue that the allegations cannot support a
finding that there is a substantial controversy between the parties justifying declaratory
judgment (Dkt. # 37 at 3-4). Because these arguments were raised for the first time after
plaintiff had filed his opposition to the motion, plaintiff was deprived of his opportunity to
respond. The arguments are, therefore, rejected as untimely raised. Even if the Court were to
consider them on their merits, plaintiff’s cause of action does not necessarily rely on an
allegation of fraud, and the complaint adequately shows a real and substantial dispute between
the parties regarding the continuing control of various corporate entities.
ORDER DENYING DEFENDANTS’
MOTION TO DISMISS

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For all of the foregoing reasons, defendants’ motion to dismiss is DENIED.
Dated this 14th day of December, 2011.

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A

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Robert S. Lasnik
United States District Judge

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ORDER DENYING DEFENDANTS’
MOTION TO DISMISS

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