United States District Court, Northern District of Illinois, W.D
November 14, 1984
WAYNE M. MILLER AND EUNICE E. MILLER, PLAINTIFFS,
AFFILIATED FINANCIAL CORPORATION, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
All the defendants other than Joann Smith (for convenience
simply "defendants") have filed a counterclaim against Wayne
Miller ("Wayne") in response to the action brought by Wayne and
Eunice Miller (collectively "Millers"), as to which this Court
has issued a November 6, 1984 memorandum opinion and order (the
"Opinion"). 600 F. Supp. 987. Wayne has moved to dismiss the
counterclaim and, at a minimum, to strike certain of its
allegations. For reasons stated in this memorandum opinion and
order, Wayne's motion is granted in part and denied in part.
It is plain defendants are subscribers to a variant on a
familiar maxim: They believe a good offense is the best defense.
But while that proposition might win ball-games, it does not
always win lawsuits. As the following brief discussion reflects
(for the counterclaim does not require anything resembling the
extended treatment in the Opinion), defendants' attack survives
only in part — and not necessarily for the long run.
Count I is dismissed. As defendants acknowledge (Mem. 2) — but
for the wrong reasons — no RICO claim is stated by that count.
Haroco, Inc. v. American National Bank & Trust Co. of Chicago,
747 F.2d 384, 399-402 (7th Cir. 1984); Parnes v. Heinold
Commodities, Inc., 548 F. Supp. 20, 23-24 (N.D.Ill. 1982). If
defendants plan to refile (as their Mem. 2 states), this Court
expects them to have done their homework in advance. Not every
dispute can be reshaped into a RICO cause of action.
Count II will not be dismissed. Hishon v. King & Spalding, ___
U.S. ___, 104 S.Ct. 2229, 2233, 81 L.Ed.2d 59 (1984) reconfirms
the very low threshold posed for stating a cause of action under
Fed.R.Civ.P. ("Rule") 8. By that standard defendants survive
Wayne's Rule 12(b)(6) onslaught. One important caveat is
nevertheless in order here, as it is with respect to the other
surviving counts in the Counterclaim: Serious questions as to the
bona fides*fn1 of defendants' claims are raised by the Complaint and
the affidavits tendered by Millers on the current motion.*fn2 This
Court will not of course prejudge any of those matters. But if
Millers are right, defendants and their counsel would do well to
be mindful of the potential sting contained in now-revised Rule
11, in 28 U.S.C. § 1927 and in the inherent judicial power to
deal with abuses of the justice system.
Count III is dismissed. Wayne correctly points to the fatal
flaw in defendants' asserted claim for negligent
misrepresentation, as succinctly stated in Knox College v.
Celotex Corp., 117 Ill.App.3d 304, 307-08, 72 Ill.Dec. 703, 706,
453 N.E.2d 8, 11 (3d Dist. 1983) (citations omitted):
In Illinois, there is no cause of action for
negligent misrepresentation unless the defendant is
in the business of supplying information for the
guidance of others in their business transactions
with third parties.
Indeed Def.Mem. 5 unjustifiably seeks to rely on Duhl v. Nash
Realty, Inc., 102 Ill.App.3d 483, 493-94, 57 Ill.Dec. 904, 913,
429 N.E.2d 1267, 1276 (1st Dist. 1982), which in fact stands for
precisely the same proposition as Knox College.
Count IV will not be dismissed, not because of its untenable
claim (Paragraph 54) as to Wayne's failure to contribute farm
machinery and equipment to the limited partnership*fn3 but because
of Wayne's other claimed anticipatory breaches. It may be (as
Wayne claims) defendants are better off, not worse off, due to
Wayne's nonperformance, so there would then be no damages to
defendants and therefore no legally assertable claim. That
however cannot be resolved under Rule 12(b)(6). Once more the
caveat as to Count II applies with equal force here.
Count V will not be dismissed. Defendants have confirmed the
obvious by making a demand under the promissory notes whose
nonpayment is the gravamen of Count V.
Count VI is dismissed. It purports to sound in indemnification
against any defendant liable to Eunice, apparently*fn4 on the basis
that such liability would be attributable to Wayne's having
fraudulently induced defendants to enter into the limited
partnership agreement. That will not wash. If Eunice prevails
against defendants on the Complaint's charges, it will be because
of defendants' fraudulent representations and misconduct. Even if
(as defendants would have it) Wayne misled defendants into making
the deal in the first place, that would give defendants no
license to defraud Eunice. In familiar tort terms defendants' and
not Wayne's conduct would be the proximate cause of Eunice's
Finally Counterclaim ¶¶ 6-16 and 51 and Counterclaim Count I ¶
60.d. are stricken. None of those paragraphs is a component of
defendants' claimed causes of action.
It is unnecessary to repeat the respects in which defendants'
Counterclaim does and does not survive Wayne's attack, for this
opinion has dealt with them in brief compass. Wayne is ordered to
answer the surviving portions of the Counterclaim on or before
November 26, 1984.