## Facts

- Rafic Saadeh, a non-U.S. citizen residing in Athens, Greece, loaned $550,000 in 1984 to Fawaz Farouki and Dinavest, Ltd., to finance an investment tied to a California business venture.
- Farouki was a citizen of Jordan who had been admitted to the United States as a lawful permanent resident and was domiciled in Maryland when suit was filed.
- The parties restructured the debt after defaults, including agreements in 1986 and 1987 reflecting increased amounts due from interest and charges and providing collateral rights.
- After continued nonpayment, Saadeh sued Farouki in the U.S. District Court for the District of Columbia for breach of the 1987 agreement, invoking diversity jurisdiction under 28 U.S.C. § 1332(a).
- The district court dismissed other defendants (including Dinavest) and, after a bench trial, entered judgment against Farouki for $758,470.
- On appeal, the court raised subject-matter jurisdiction on its own motion and ordered briefing on whether § 1332(a) supported jurisdiction.

## Issues

1. Whether 28 U.S.C. § 1332(a), as amended in 1988, permits federal diversity jurisdiction over a suit between a foreign citizen and a lawful permanent resident alien domiciled in a U.S. state when no U.S. citizen is a party.
2. Whether diversity jurisdiction is determined at the time of filing such that later developments cannot cure an initial jurisdictional defect.

## Decision

- The court held the district court lacked subject-matter jurisdiction under 28 U.S.C. § 1332(a).
- The court vacated the judgment and remanded with instructions to dismiss the complaint.
- The court applied the time-of-filing rule to assess citizenship and alienage status when the action commenced.
- The court construed the 1988 “permanent resident alien” clause narrowly, rejecting an interpretation that would allow alien-versus-alien cases into federal court.

## Legal Principles

- Subject-matter jurisdiction under § 1332 is determined based on the parties’ status at the time the complaint is filed.
- The diversity statute’s alienage provisions traditionally do not authorize federal jurisdiction when all parties are aliens.
- The 1988 amendment deeming a lawful permanent resident alien a citizen of the state of domicile is not read to create diversity jurisdiction in a dispute between two non-U.S. citizens.
- Statutory interpretation may avoid readings that produce illogical results inconsistent with the statute’s structure and purpose and that raise serious constitutional questions.

## Conclusion

The court ruled that a lawful permanent resident alien’s state domicile does not supply diversity jurisdiction in a case against another alien, vacated the contract judgment, and required dismissal for lack of subject-matter jurisdiction.


Saadeh v. Farouki, 107 F.3d 52 (D.C. Cir. 1997)