Tuesday, June 18, 2024


The United States Court of Appeals for the Fourth Circuit vacated an order of dismissal and remanded a civil action 

The Ministry of Defence of the State of Kuwait entered three contracts with Joseph M. Naffa and his fictitious law firm, Naffa & Associates, LLP, under which Naffa and his firm were to provide legal advice to the Ministry’s Defence Attaché Office in Washington, D.C. Naffa also represented the Ministry in transactions related to its real estate purchases in Virginia. Unbeknownst to the Ministry, Naffa was not authorized to practice law in the United States, and Naffa & Associates, LLP was not a real law firm. Naffa did not disclose these facts or correct anyone who referred to him as a lawyer when he provided legal advice and services to the Office.

The Ministry eventually became aware that Naffa was not authorized to practice law in the United States and that he kept a credit meant for the Ministry from one of the real estate transactions. The Ministry subsequently sued Naffa and Naffa & Associates, LLP alleging that Naffa breached their agreements when he provided legal services despite not being authorized to practice law in the United States as, it says, the contracts required; and that he converted its funds from the real estate transaction. The district court dismissed the Ministry’s claims under Rule 12(b)(1), and the Ministry now appeals.

The only issue ripe for our review is whether the Ministry pleaded damages sufficient to meet the amount in controversy requirement. We conclude that the district court erred in dismissing the Ministry’s claims for lack of subject matter jurisdiction because the complaint contains sufficient allegations to invoke the court’s diversity jurisdiction. Accordingly, we reverse the district court’s jurisdictional decision, vacate all other determinations the court made, and remand the case for further proceedings.

The Ministry had sought a law firm to assist in various matters and awarded the contract to Naffa

The agreement remained effective for three years and the Office paid Naffa $45,000 each year.


At the end of 2019, the Office asked Naffa to produce documentation demonstrating that he was licensed to practice law in the United States. In response, Naffa presented his American Bar Association card and several graduate school degrees claiming that he was a licensed attorney, and that the Bar Association card was his license. At some point thereafter, the Office investigated and learned that Naffa never passed a bar exam, was not licensed to practice law anywhere in the United States, and never established “Naffa & Associates, LLP” as a legal entity.

Attempting to uncover any further dishonesty, the Office audited one of the real estate transactions that Naffa represented it in. The Office discovered that Naffa instructed the closing agent on that transaction to disburse a credit to him that was meant for the Office. Naffa did not disclose the credit to the Office, and the version of the purchase contract he submitted to the Office’s accountant did not show the credit or the payment to Naffa. Naffa eventually returned the full amount of the credit to the Office.

A complaint was filed with the District of Columbia Committee on Unauthorized Practice

After investigating, the UPL Committee concluded that (1) Naffa did not engage in the unauthorized practice of law because he served as in-house counsel for the Office and other offices in Kuwait’s government, and (2) the Office did not have a reasonable expectation that Naffa was an attorney because the Defense Attaché who hired Naffa knew that Naffa was not authorized to practice law in the United States. J.A. 101–03. The Committee explicitly took “no position on any other matter in dispute between the parties.” J.A. 103

In total, the Office paid Naffa $635,000 throughout the duration of the parties’ contractual relationship — $135,000 under the first agreement, $280,000 under the second agreement, $170,000 under the third agreement, and $50,000 for representing the Office in various real estate transactions.

Evidence of damages

The district court below did not heed the Supreme Court’s advice. Instead, the district court erroneously considered Naffa’s potential defenses and evidentiary issues and concluded that any damages that the Ministry could recover after accounting for those defenses would fall below the statutory minimum. In doing so, the court improperly and prematurely assessed the merits of the Ministry’s breach of contract claim despite explicitly cabining its analysis to the jurisdictional issue. See J.A. 199 (district court’s opinion stating “because the Court begins and ends with the jurisdictional challenge, the Court need not address the latter argument”). That was legal error.


The district court erroneously concluded that the Ministry’s claims did not meet the statutory amount in controversy and dismissed the case for lack of subject matter jurisdiction. Because we conclude that the Ministry sufficiently pleaded an amount in controversy above the statutory minimum, we reverse the court’s jurisdictional determination, vacate all other determinations it made, and remand for further proceedings.

(Mike Frisch)


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