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Mitri v. Rahma

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

December 12, 2019

ISSA J. MITRI, PLAINTIFF,
v.
NABIL ABU RAHMA, et al., DEFENDANTS.

          MEMORANDUM OPINION AND ORDER

          HON. SARA LIOI, UNITED STATES DISTRICT JUDGE

         In this tort action premised on diversity jurisdiction, pro se defendant Nabil Abu Rahma (“Rahma”) has filed three motions to dismiss the first amended complaint (“FAC”) of plaintiff Issa J. Mitri (“Mitri”). (Doc. No. 22 [“MTD I”]; Doc. No. 25 [“MTD II”]; and Doc. No. 33 [“MTD III”].) Mitri opposes the motions, and separately moves the Court for an order requiring the commencement of discovery. (Doc. No. 27 [“MTD II Opp'n”]; Doc. No. 34 [“MTD III Opp'n”]; Doc. No. 35 (Discovery Motion [“Dis. Mot.”]).)[1] For the reasons that follow, the motions to dismiss are DENIED, and the motion to commence discovery is DENIED as MOOT.

         I. Background

         All disputed facts are taken from the allegations in the FAC, and, for consideration of the present dispositive motions, are presumed to be true. Mitri is a retired pharmacist who lives in California. (Doc. No. 19 (FAC) ¶ 1.) In May 2017, Mitri met Rahma in an airport in Amman while traveling overseas. The two men struck up a conversation that included the virtues of doing business in the State of Ohio. (Id. ¶¶ 8-9.) Rahma, a resident of Ohio, advised Mitri that he owned a business in Youngstown, Ohio, and that he could put Mitri in some good investments in the area. (Id. ¶¶ 2, 9.) Rahma invited Mitri to come to Ohio so that he could introduce Mitri to some financial opportunities. (Id.) After returning to the United States, Rahma contacted Mitri on several occasions to discuss business ventures. One such venture involved Mitri extending a business loan to co-defendants Lena Amad Esmail (“Esmail”) and Mohammad Hajjawi (“Hajjawi”). Mitri declined to make the loan. (Id. ¶ 10.)

         In September 2017, Mitri accepted Rahma's invitation to visit Ohio and discuss business ventures with Rahma and to explore other investment opportunities. (Id. ¶ 11.) After advising Mitri against another opportunity he was considering, Rahma informed Mitri that he knew of a “great investment opportunity in a restaurant and grocery store” and promised to introduce him to the store's owners-Esmail and Hajjawi. (Id.) At the initial meeting, Esmail and Hajjawi offered to sell Mitri a 50% interest in the store in exchange for a capital investment of $90, 000. (Id. ¶ 12.) Esmail and Hajjawi represented that the restaurant and market would be immediately profitable, and they guaranteed that Mitri would begin to see a return on his investment in the first few months. (Id. ¶¶ 12-13.)

         Rahma vouched for Esmail and Hajjawi and assured Mitri that the business venture would yield a very good return. (Id. ¶ 14.) In addition, Rahma offered to assist Mitri by reviewing and executing all documents necessary to memoralize the transaction, and, for a monthly fee, he further agreed to monitor the business on Mitri's behalf to ensure that it was not mismanaged. (Id. ¶ 15.) Based on defendants' various representations, Mitri agreed to purchase a 50% interest in Knafa Corporation, the corporation through which Esmail and Hajjawi ran Knafa Restaurant and Grocery, and executed an “Ohio Limited Power of Attorney Form” (“POA”). (Id. ¶ 16; see Doc. No. 19-1 (POA).) Mitri signed the POA as the principal. (FAC ¶ 17.)

         Presumably on the strength of the POA, Rahma entered into a “Close Corporation Agreement [‘CCA'], ” which memoralized the sale of the one-half interest in the restaurant venture to Mitri. (Id. ¶ 19; see Doc. No. 19-2 (CCA).) He also entered into a number of other agreements on behalf of Mitri. One agreement purportedly bound Mitri to assume corporate liabilities in connection with a lease agreement for certain real property. (FAC ¶ 21; see Doc. No. 19-3.) Another agreement, referred to in the FAC as the “General Partnership Agreement [‘GPA'], ” required Mitri to “fund 50% of the ongoing operating losses” of the restaurant and market business. (FAC ¶ 23; see Doc. No. 19-4 (GPA).)

         Mitri maintains that he never realized the profits he was promised from the restaurant venture. (FAC ¶ 26.) Further, he insists that he did not authorize Rahma to enter into the agreements executed by Rahma on his behalf, which modified the terms and conditions of the oral agreement he had with Esmail and Hajjawi. (Id. ¶¶ 23-24.) On September 28, 2018, he filed suit in federal court, seeking damages from Esmail, Hajjawi, and Rahma. The FAC raises four claims: common law fraud (Count One); conversion-civil theft (Count Two); negligence, negligent misrepresentation, and breach of fiduciary duty (Count Three); and breach of fiduciary duty (Count Four). Counts One and Two are brought against all three defendants, while Count Three is asserted against Rahma and Count Four is brought against Esmail and Hajjawi.

         Through a series of dispositive motions, Rahma now seeks dismissal of Counts One, Two, and Three. The motions are largely duplicative. A common theme woven through the motions is that Rahma was authorized by the POA to enter into the agreements on behalf of Mitri that materially changed the terms of the parties' oral business agreement and vitiate Mitri's tort claims.

         II. Standard of Review

         A motion to dismiss under Rule 12(b)(6) tests the sufficiency of the pleading. Davis H. Elliot Co., Inc. v. Caribbean Util. Co., Ltd., 513 F.2d 1176, 1182 (6th Cir. 1975). All allegations of fact by the nonmoving party are accepted as true and construed in the light most favorable to that party. See Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. 1998) (citing Meador v. Cabinet for Human Res., 902 F.2d 474, 475 (6th Cir. 1990)). The Court, however, “need not accept as true legal conclusions or unwarranted factual inferences.” Mixon v. Ohio, 193 F.3d 389, 400 (6th Cir. 1999) (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)). Nor is the Court required to accept as true complaint allegations that are contradicted by public records and other evidentiary materials of which the Court may take judicial notice. See Moody v. CitiMortgage, Inc., 32 F.Supp.3d 869, 874-75 (W.D. Mich. 2014) (“court may disregard allegations in the complaint if contradicted by facts established by exhibits attached to the complaint[]”); see also Williams v. CitiMortgage, Inc., 498 Fed.Appx. 532, 536 (6th Cir. 2012) (“if a factual assertion in the pleadings is inconsistent with a document attached for support, the Court is to accept the facts as stated in the attached document[]”).

         The sufficiency of the pleading is tested against the notice pleading requirements of Fed.R.Civ.P. 8(a)(2), which provides that a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief[.]” Although this standard is liberal, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). A claim is facially plausible “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. (citing Twombly, 550 U.S. at 556). If the plaintiff has not “nudged [his] claims across the line from conceivable to plausible, [the] complaint must be dismissed.” Twombly, 550 U.S. at 570.

         Because the first cause of action in the FAC sounds in fraud, this claim must also meet the heightened particularity requirements of Fed.R.Civ.P. 9(b). “‘Rule 9(b) states that in alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.'” Jackson v. Segwick Claims Mgmt. Servs., Inc., 699 F.3d 466, 475 (6th Cir 2012) (quoting Heinrich v. Waiting Angels Adoption Servs., Inc., 668 F.3d 393, 403 (6th Cir. 2012) (quotation marks and citation omitted)); see Kuvedina, LLC v. Cognizant Tech. Sols., 946 F.Supp.2d 749, 758 (S.D. Ohio 2013) (“Fraud claims are analyzed under the heightened pleading standard in Federal Rule of Civil Procedure 9(b)”.) “This includes alleging the ‘time, place, and content' of the fraudulent acts, the existence of a fraudulent scheme, the intent of the participants in the scheme, and ‘the injury resulting from the fraud.'” Jackson, 699 F.3d at 476 (quoting Heinrich, 688 F.3d at 403).

         In deciding a motion to dismiss under Rule 12(b)(6), the Court generally may not consider matters outside of the pleadings without converting the motion into a motion for summary judgment under Rule 56. But as the Sixth Circuit has held, there are a number of exceptions to this rule. Indeed, it is well settled that, in ruling on a Rule 12 dispositive motion, a district court “may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein.” Bassett v. Nat'l Coll. Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008); see also Commercial Money Ctr., Inc. v. ...


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