IN THE SUPERIOR COURT
OF THE VIRGIN ISLANDS

FILED

July 224, 2021
ST-2013-CV-O0227

TAMARA CHARLES IN THE SUPERIOR COURT OF THE VIRGIN ISLANDS
CLERK OF THE COURT DIVISION OF ST. THOMAS & ST. JOHN
RRR REEK
HASSAN ABDALLAH,
Plaintiff, CASE NO. ST-2013-CV-00227

-VS-

HASAN ABDEL-RAHMAN,
MALEA KIBLAN RAHMAN,
ABDUL SAMAD,

FOAD SAMAD, and

AYMAN ABDEL-SAMAD,

Defendants.

HASSAN ABDEL-RAHMAN,
Individually and derivatively on behalf of
DOCKSIDE CONVENIENCE, LLC,
MALEA KIBLAN RAHMAN,

ABDUL SAMAD, FOAD SAMAD,
AYMAN ABDEL-SAMAD, and
FALAHEEN ENTERPRISES, INC.,

Counter-Plaintiff,
-VS-
HASSAN ABDALLAH, AHMAD ABDALLAH,
PETRLEUM BROKERS, LLC, and
GIANT MARKET, LLC
Counter-Defendants,

DOCKSIDE CONVENIENCE, LLC,

Nominal Counter-Defendants.

Nee OO OO OO ee ee Ne ee (eee (ee (ewe So SS SS

ACTION FOR ACCOUNTING,
DEBT BREACH OF CONTRACT
and FRAUD

COUNTERCLAIM FOR FRAUD,
BREACH OF FIDUCIARY DUTY
IMPOSITION OF
CONSTRUCTIVE TRUST,
ACCOUNTING, ALTER EGO,
and BREACH OF CONTRACT


Hasan Abdel Rahman et al v. Hassan Abdallah et al
Case No. ST-2013-CV-00227

Memorandum Opinion & Order

Page 2 of 6

MEMORANDUM OPINION and ORDER

q1 THIS MATTER is before the Court on Counter-Plaintiff’s, Hasan Abdel-Rahman, as a
member of Dockside Convenience LLC (hereinafter “Dockside”), and Foad Samad, as a member
of Dockside (hereinafter “Movants”), motion for judicial dissociation of Counter-Defendant
Hassan Abdallah (hereinafter “Abdallah”) from Dockside Convenience LLC, filed February 9,
2021, under V.I. CODE ANN. tit. 13 § 1601(6); Plaintiff's Opposition to the Emergency Motion
for Dissociation filed on February 23, 2021; and Defendants’ Reply to Opposition to Emergency
Motion for Judicial Dissociation of Hassan Abdallah from Dockside Convenience LLC due to
Criminal Guilty Plea and Impending Judgment of Forfeiture filed on February 26, 2021. The Court
heard oral argument March 24, 2021, and allowed counsel to file supplemental legal authority, if
the parties deemed it necessary. On March 30, 2021, Defendants filed a Notice of Supplemental
Legal Authority re: Motion for Judicial Dissociation. No response was received from Plaintiff.

I. FACTS

q2 Movants are two of the three members of Dockside, a limited liability company based in
the Virgin Islands. Abdallah is the third member of Dockside. He is a resident of Michigan who
owned and operated several pharmacies in the Dearborn and Detroit area.

q3 On January 19, 2021, Abdallah plead guilty to Count One of a Federal Indictment that
charged Plaintiff and several other individuals, in the U.S. District Court in the Eastern District of
Michigan, Southern Division, in Criminal Case No. 2:20-cr-20162. Count One charged the
Plaintiff with conspiracy to commit health care fraud and wire fraud in violation of 

. Sentencing was scheduled for April 20, 2021.!

q4 A condition of the plea agreement required that Abdallah pay restitution totaling $6,
519,189.44, payable to the U.S. Department of Health and Human Services, and $363,382.42,
payable to Blue Cross Blue Shield of Michigan.

q5 Abdallah also agreed to the forfeiture of money found in three listed bank accounts, as well
as $20,154 in U.S. currency. These funds would be used to satisfy the forfeiture money judgment
to be entered against Abdallah totaling $4,264,227. Abdallah agreed to the forfeiture of substitute
assets in order to satisfy the money judgment and waived his right to oppose the forfeiture of
substitute assets.

q6 On February 9, 2021, movants filed a motion requesting relief pursuant to 13 V.LC. §
1601(6)(i), a judicial order dissociating Abdallah from Dockside Convenience LLC, due to his

* The Court notes that the April 20, 2021, sentencing date was continued without date and is still pending at the time
of writing this Memorandum and Opinion.


Hasan Abdel Rahman et al v. Hassan Abdallah et al
Case No. ST-2013-CV-00227

Memorandum Opinion & Order

Page 3 of 6

engaging in wrongful conduct that adversely and materially affected the company’s business. The
operating agreement that governs Dockside does not address misconduct and does not include a
mechanism that allows for dissociation by the members. The movants are therefore seeking a
judicial order dissociating Abdallah from Dockside. Abdallah filed a response to the motion on
February 23, 2021, with the movants filing a reply to Abdallah opposition filing on February 26,
2021. A hearing was held on March 24, 2021, during which the court heard arguments on the
motion.

Il. LEGAL STANDARD

q7 A motion for judicial dissociation of a member from a limited liability company is
governed by 13 V.LC. § 1601(6), which creates three scenarios in which a judicial order is
permissible. The member must have “engaged in wrongful conduct that adversely and materially
affected the company’s business, willfully or persistently committed a material breach of the
operating agreement or of a duty owed to the company or the other members, or engaged in conduct
relating to the company’s business which makes it not reasonably practicable to carry on the
business with the member.” Movants argue that Abdallah’ actions warrant a judicial order under
the first prong of 1601(6).

qs When interpreting statutory text, the Court’s first step is to determine whether the language
at issue has a plain unambiguous meaning by reading the words and phrases of the statute in
context and construing them according to the common and approved use of the English language.*
When the language is ambiguous, the Court will proceed to examine the legislative history of the
statute and its purpose to determine the legislature’s intent. The Court shall be mindful that ‘a
statute should not be construed and applied in such a way that would result in injustice or absurd
consequences.°

Ill. ANALYSIS

A. Banks Analysis

q9 The movants argue that Abdallah’s criminal actions in Michigan constitute wrongful
conduct. The term wrongful conduct can be understood on its plain meaning. Black’s Law
Dictionary defines wrongful conduct as “an act taken in violation of a legal duty; an act that
unjustly infringes on another’s rights.” Virgin Islands courts have yet to apply this definition to

> V.I. Code Ann. tit. 13 § 1601(6)

> One St. Peter, LLC v. Bd. Of Land Use Appeals, 67 V.1. 920, 924 (V.I. 2017).
4 Id. at 926.

° Gilbert v. People, 52 V.1. 350, 356 (V.I. 2009).

° BLACK’S LAW DICTIONARY 337 (9th ed. 2009).


Hasan Abdel Rahman et al v. Hassan Abdallah et al
Case No. ST-2013-CV-00227

Memorandum Opinion & Order

Page 4 of 6

the context of a limited liability company. Where the Virgin Islands Supreme Court has yet to rule
on an issue, further analysis a is necessary per Banks v. Int'l Rental & Leasing Corp..’

q10 =A Banks analysis is a three-part test to determine the best rule for the Virgin Islands. The
first step is to determine whether Virgin Islands courts have previously adopted a particular rule.
The second step is to review the rule adopted by a majority of courts from other jurisdictions. The
third step is to determine the soundest rule for the Virgin Islands.®

qj11 Regarding the first factor, Courts in the Virgin Islands have yet determined what actions
constitute wrongful conduct under 13 V.I.C. 1601(6). Therefore, the Court must look to other
jurisdictions to determine the majority rule.

q12 In determining what actions fall under the definition of wrongful conduct, courts in other
jurisdictions have limited the definition to actions that occur within the sphere of business
activities.’ In Left Coast Wrestling, LLC v. Dearborn International LLC, a California district court
found that a company member’s use of his current company’s trademark for another business
constituted wrongful conduct and merited judicial dissociation under California’s judicial
dissociation statute.!°

qi3 In Kenny v. Fulton Assocs., an Illinois court found that the improper exercise of managerial
authority and unauthorized hiring of several attorneys using company funds constituted wrongful
conduct that merited judicial dissociation under the Illinois judicial dissociation statute.!!

414 In Raley v. Brinkman, a Tennessee court found that the misappropriation of funds for
personal benefit and the withholding of large portions of other members distributions and salary
constituted wrongful conduct warranting judicial dissociation under the Tennessee judicial
dissociation statute. !*

q1S = The final step in the Banks analysis is to determine the soundest rule for the Virgin Islands.
The plain meaning of wrongful conduct is understood to be conduct that violates a legal duty or
infringes on another’s rights. Other jurisdictions, in their application of the term wrongful conduct,
have limited the use of judicial dissociation to those actions which have a tangible connection to
the limited liability company from which the dissociation will occur. These actions vary from

” Banks v. Int’l Rental & Leasing Corp., 

 (V.I. 2011).

8 

” See Left Coast Wrestling, LLC v. Dearborn International LLC, No. 3 17CV00466LABNLS, 

 (S.D.
Cal. May 23, 2018) (mounting of a competing tournament by use of the marks, customers, and contacts of the LLC
constituted wrongful conduct); Kenny v. Fulton Assocs., LLC IL App (1*) 1525365-U at *78 (unauthorized hiring of
attorneys constituted wrongful conduct); Raley v. Brinkman, 

, 214 (Tenn. Ct. App. 2020) (failure to
pay capital contribution and misappropriating funds for personal use constituted wrongful conduct).

*° Left Coast Wrestling, LLC v. Dearborn International LLC, No. 317CV00466LABNLS, 

 (S.D.
Cal. May 23, 2018); see also 

.

* Kenny v. Fulton Assocs., LLC IL App (1%) 1525365-U at *78; see also 805 ILCS 180/35-45.

'? Raley v. Brinkman, 

, 214 (Tenn. Ct. App. 2020); see also Tenn. Code Ann. 48-249-503.


Hasan Abdel Rahman et al v. Hassan Abdallah et al
Case No. ST-2013-CV-00227

Memorandum Opinion & Order

Page 5 of 6

unauthorized use of management authority, to misappropriation of company funds, to use of
company marks and contacts but all the actions have a tangible connection to the business activities
of the company.'? After analyzing the plain meaning of the term and determinations of other
jurisdictions, the Court finds that the best rule for the Virgin Islands is that wrongful conduct under
13 V.LC. 1601(6)(a), includes actions that violate a legal duty to or infringe on the rights of another
member or the company, and must have a tangible connection to the activities of the limited
liability company requesting dissociation.

B. The wrongful conduct of Abdallah and the potential harm caused to Dockside do
not meet the standard required in 13 V.I.C. 1601(6)(i)

416 The conduct which movants claim warrants judicial dissociation in the case of Abdallah
and Dockside was criminal conduct involving a group of pharmacies in Michigan. While the
actions of Abdallah violated the law, those actions did not violate a legal duty or infringe on the
rights of his fellow Dockside members. It is important to note that the operating agreement that
governs Dockside does not address misconduct and has no mechanism that allows for dissociation
by the members. Movants also fail to show that criminal conduct occurring in Michigan had any
tangible connection to Dockside in the Virgin Islands. Therefore, the Court finds that the
Abdallah’s conduct does not meet the standard required for wrongful conduct under 13 V.L.C.
1601(6)(i).

417 ~=Additionally, the harm that movants allege is a potential future harm and not one that has
already occurred. Movants argue that Dockside’s property may, in the future be forfeited as part
of Abdallah’s plea agreement. The statute requires that the wrongful conduct has adversely and
materially affected the company.'*Using a plain meaning reading, the past tense word affected,
requires that the harm has already occurred. It can not be a future prospective harm. Therefore, the
Court finds that the potential for property forfeiture does not meet the standard for adverse and
material harm required by the statute. The Court also notes that movants have several avenues
available to mitigate this potential harm.!>

IV. CONCLUSION

q18 This matter is before the Court on movants motion for dissociation seeking to have
Abdallah dissociated from Dockside by judicial order. The court has determined through a Banks
analysis that the best interpretation of wrongful conduct under 13 V.I.C. 1601(6)(i) includes
actions that violate a legal duty to or infringe on the rights of another member or the company and

3 See Left Coast Wrestling, LLC v. Dearborn International LLC, No. 317CV00466LABNLS, 

(S.D. Cal. May 23, 2018); see also Kenny v. Fulton Assocs., LLC IL App (1) 1525365-U at *78; see also Raley v.
Brinkman, 

, 214 (Tenn. Ct. App. 2020).

4 VI. Code Ann. tit. 13 § 1601(6)(i).

*’ Movants may assert their third party interest in property included in a forfeiture under 

(n). They
may also assert the innocent owner defense permitted under 

(d).


Hasan Abdel Rahman et al v. Hassan Abdallah et al
Case No. ST-2013-CV-00227

Memorandum Opinion & Order

Page 6 of 6

must have a tangible connection to the activities of the limited liability company requesting
dissociation. Additionally, the adverse and material impact that the wrongful conduct has had on
the other members and the company must have already occurred. Prospective future harm does not
fall under the meaning of the statute. The conduct of Abdallah and the prospective harm that
movants allege do not fall under the meaning of the statute.

419 Accordingly, it is hereby

ORDERED that movants motion for dissociation is DENIED WITHOUT PREJUDICE;
and it is further

ORDERED that a copy of this Memorandum Opinion & Order shall be directed to counsel

of record.
DATED: July ZZ, 2021
STGRID TEJO
Judge of Superiok Court of the Virgin Islands
ATTEST: :
TAMARA CHARLES

Clerk, of the Court
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Court Clerk S eee a ahh /