Hammoud v. Societe Generale De Banque Au Liban

Background

Jamal Hammoud sued Société Générale de Banque au Liban, a Lebanese bank, under New York law for breach of contract, conversion, and unjust enrichment. He alleged that the bank improperly refused to transfer most of the funds in accounts held in the name of Milestones Capital ME S.A.L., a Lebanese company. Hammoud alleged that he was a signatory authorized to conduct banking operations for the company and that the bank had previously transferred funds at his request.

In November 2019, Hammoud asked the bank to convert and transfer funds to an account identified as a First Niagara account in New York State. The bank refused. After the case was filed, the parties represented that the bank tendered checks to the account holder for the balances in the accounts and closed them. Hammoud argued that the checks were worthless.

Jurisdiction

The court examined its authority to hear the case even though neither party had raised the issue. The bank had asserted diversity jurisdiction under 28 U.S.C. § 1332(a), but diversity jurisdiction requires the parties to be citizens of different states or countries in the legally required way.

The court held that the pleadings did not establish complete diversity. They said that Hammoud operated a business located in New York and described him as a “New York business person,” but they did not allege where Hammoud himself was domiciled. The location of one of his companies was not enough to establish Hammoud’s personal citizenship. The defendant was identified as a Lebanese bank.

Standing

The court also held that Hammoud had not shown standing, meaning that he had not shown that he was the proper person to bring these claims or that he personally suffered the required injury. The complaint said that the accounts belonged to Milestones Capital ME S.A.L., and the account-opening application identified that company as the account owner. Although Hammoud was authorized to conduct transactions, the court found that authorization did not establish that he owned the accounts or was a party to the account agreements.

The court also found that Hammoud had not clearly alleged a personal injury from the refusal to transfer the funds. The complaint did not say whether the destination account was Hammoud’s personal account or another company account, and it did not clarify whether the payment obligations he identified were his personal debts or company debts. The court therefore concluded that Hammoud had not established standing to assert the claims.

Ruling and Effect

The court granted the defendant’s motion to dismiss and dismissed the complaint without prejudice for lack of subject matter jurisdiction. It granted Hammoud leave to amend, ordering him to file any amended complaint by April 22, 2021. The court stated that it seriously doubted whether amendment could cure the problems but concluded that it could not yet determine that amendment would be futile.

The court identified several potential problems with any amended complaint, including the effect of adding the Lebanese company as a plaintiff, the application of New York law to a dispute involving a Lebanese company and a Lebanese bank, and whether the case might be moot after the bank tendered checks. The court did not resolve those issues or decide the merits of the contract, conversion, or unjust-enrichment claims.