TRAK MICROCOMPUTER CORP. v. WEARNE BROS.

The opinion of the court was delivered by: McGARR, Chief Judge.

Plaintiffs Trak Microcomputer Corporation ("Trak") and Dr. Prem S. Chopra bring this action against defendants Wearne Bros. ("Wearne"), Wearnes (USA), Inc. ("Wearnes USA"), Wearnes Technology Pvt. Ltd. ("Wearnes Tech"), and Weltec Digital, Inc. ("Weltec"). Wearnes USA and Weltec have filed a counterclaim against Trak, Chopra, and James M. Rehnquist (even though the counterclaim, insofar as it applies to Rehnquist, who is not a plaintiff in this action, should be captioned a third-party complaint, it will hereinafter be referred to as the "counterclaim" and Rehnquist will be referred to as a counterdefendant). This cause is before this court on plaintiffs' motion for an order compelling Wearnes Tech to answer, the motion of the counterdefendants to dismiss the counterclaim, and defendants' motion to dismiss various aspects of plaintiffs' amended complaint.

Plaintiffs contend that Wearnes Tech, a Singapore corporation, was served with the complaint and summons in Singapore by mail, pursuant to Fed.R.Civ.P. 4(i)(1)(D). Rule 4(i)(1)(D) permits service in a foreign country to be made by any form of mail requiring a signed receipt, addressed and dispatched by the Clerk of the Court to the party to be served. Plaintiffs assert, and it is not disputed, that a summons and complaint were mailed to Wearnes Tech by the Clerk, return receipt requested. The summons and complaint, however, were returned to the Clerk. The envelope in which they had been sent was marked in a manner which reflected that the reason for the non-delivery of the package was that the package was refused. The package does not indicate by whom or for what reason the package was refused.

Rule 4(i)(2) provides that proof of service made pursuant to Rule 4(i)(1)(D) shall include a receipt signed by the addressee or other evidence of delivery to the addressee satisfactory to the court. By memorandum opinion and order dated February 15, 1985 (the "memorandum opinion"), this court granted Wearne Tech's motion to dismiss on the basis that it had not been effectively served. This court held that Trak had not provided any proof of delivery to Wearnes Tech; Trak did not produce a receipt signed by the addressee or any other proof of delivery. Memorandum opinion at p. 8.

This court now finds, based on the evidence before it, that plaintiffs have presented sufficient evidence of delivery of the summons and complaint to satisfy Rule 4(i)(2). The manner in which the returned envelope was marked suggests that actual delivery of the summons and complaint was made to Wearnes Tech. On the envelope, the Postal Service provided a space for the mail carrier to mark the reason for not delivering the package. The possible reasons for non-delivery were "gone away," "no such name," "no such number," or "refused." The mail carrier only marked "refused." It is reasonable to infer from this mark that the summons and complaint were delivered to Wearnes Tech at the address specified by the Clerk, but, for some unknown reason, a person who apparently spoke on behalf of Wearnes Tech refused to accept the package.

In addition to the evidence before this court which suggests that delivery of the summons and complaint was made on Wearnes Tech, this court also notes that Wearnes Tech has actual notice of the case at bar. Appearances have been filed by attorneys on behalf of Wearnes Tech. Thus, there is no danger that Wearnes Tech has not received notice of this action.

In light of the circumstances of this case, this court finds that sufficient proof of delivery of the summons and complaint has been made to satisfy Rule 4(i)(2). Wearnes Tech is ordered to file an answer to plaintiffs' amended complaint within 20 days.

Plaintiffs' Motion to Dismiss the Counterclaim

The counterclaim against Trak, Chopra, and Rehnquist seeks to recover damages allegedly resulting from the counterdefendants' fraud and misrepresentations. The counterclaim alleges Chopra and Rehnquist were seeking an investor or partner to pour cash into Trak, which was experiencing financial difficulties. To that end, Chopra and Rehnquist initiated meetings in Singapore which led to discussions in May through August of 1984, between Weltec and Wearnes USA on the one hand and the counterdefendants on the other. Wearnes USA and Weltec allege that during these discussions, counterdefendants made a series of false representations and material omissions in order to induce Wearnes USA and Weltec to pursue negotiations with Trak.

Specifically, the counterclaim alleges that the counterdefendants falsified Trak's March 31, 1984 financial statements, failed to disclose Trak's business decline after March 31, failed to disclose problems with certain Trak products, and submitted other financial projections, marketing plans, and brochures which described Trak's future in misleading glowing terms. Wearnes USA and Weltec allegedly relied upon the fraudulent misrepresentations and were misled by the material omissions, incurring damages in connection with their good faith negotiations and by pursuing the Trak venture to the exclusion of others.

Counterdefendants contend that the counterclaim should be dismissed because it fails to state the circumstances of the alleged fraud with the particularity required by Rule 9(b). Rule 9(b) requires a complaint for fraud to allege facts concerning the time period of the alleged misrepresentations, the nature of the alleged misrepresentations, and the individuals involved. Chicago Heights Venture v. Dynamit Nobel of America, Inc., 575 F. Supp. 214, 220 (N.D.Ill. 1983). Although the allegations of fraud must be concrete and particularized enough to give notice to the defendants of the conduct complained of to enable the defendants to prepare a defense, Rule 9(b) does not require the plaintiff to plead evidentiary matters. D & G Enterprises v. Continental Illinois National Bank & Trust Co. of Chicago, 574 F. Supp. 263, 267 (N.D.Ill. 1983).

This court finds that the counterclaim alleges fraud with sufficient particularity to withstand a motion to dismiss. The allegations notify the counterdefendants of the general time period in which the alleged misrepresentations were made. In addition, the allegations set forth the content of the alleged misrepresentations and the nature of the material which the counterdefendants omitted to reveal to Wearnes USA and Weltec. Finally, the allegations identify the persons who made the alleged misrepresentations. Because the allegations are sufficient to state a cause of action for fraud under Rule 9(b), counterdefendants' motion to dismiss the counterclaim is denied.

Chopra and Rehnquist contend that the counterclaim must nevertheless be dismissed as to them because it does not allege that they made any misrepresentations or material omissions as individuals. Rather, it merely alleges that they acted as officers and agents of Trak. It does not come as a surprise to this court that they fail to cite any authority in support of their argument. The law clearly holds a corporate officer individually liable for the fraudulent acts in which he participates. Citizens Savings & Loan Association v. Fischer, 67 Ill. App.2d 315, 322, 214 N.E.2d 612, 615 ...