requires the plaintiff at a minimum to notify each defendant of the fraudulent acts for which it is charged. Plaintiffs seek to avoid this requirement by stating that "each defendant either controls or is the agent or partner of the other. As such, each defendant is responsible for the conduct and representations of the other." That each defendant may be liable for the actions of the others does not obviate the need to identify the perpetrator of each alleged fraudulent act. As we stated above, one reason for requiring the plaintiff to attribute the misconduct to specific defendants is to provide adequate notice. The defendants as a group must be informed of the precise actions or inactions that constitute the misrepresentation or omission. The most that we can glean from the complaint is that someone somewhere misrepresented or omitted material facts. Accordingly, we dismiss Counts I through III and VI through VII; but, to the extent any of these claims survive defendants' motion to dismiss under Fed.R.Civ.P. 12(b)(6), we give plaintiffs leave to amend their complaint within ten days to comply with Rule 9(b) as interpreted above, if they so choose.
Failure to State a Claim
Defendants also move under Fed.R.Civ.P. 12(b)(6) to dismiss six of the counts for failure to state an essential element of the claim.
A. Count II: Section 17(a) of the Securities Act of 1933
In Count II, plaintiffs seek relief for violations of section 17(a) of the 1933 Securities Act. In Bear Stearns & Co., Inc. v. Zeier, 691 F. Supp. 145 (N.D. Ill. 1988), we held without qualification that a private cause of action is unavailable under § 17(a).
Plaintiffs have presented no basis for questioning that decision. Accordingly, we dismiss Count II.
B. Count III: Section 12(2) of the Securities Act of 1933
Defendants contend that plaintiffs have not satisfactorily pled privity between the plaintiff-purchaser and defendant-seller of the security, an essential element of a § 12(2) claim. Sanders v. John Nuveen & Co., 619 F.2d 1222, 1226 (7th Cir. 1980), cert. denied, 450 U.S. 1005, 101 S. Ct. 1719, 68 L. Ed. 2d 210 (1981). We disagree and accordingly deny the motion to dismiss Count III on these grounds. The clear inference from the allegations in the complaint is that Lakeside II sold limited partnership interests to the plaintiffs and at least two of the named defendants are general partners in Lakeside II. The partnership agreement that created Lakeside is attached to the complaint and identifies defendants W-K Investment Co. and Siem Limited Partnership as general partners. As general partners of the seller of the limited partnership interests, they are in privity with the plaintiffs for purposes of the sale.
C. Count VI: Section 12 of the Illinois Blue Sky Act of 1953
Section 12 provides a purchaser of a security with the authority to void the sale in the event the seller used untrue statements or omitted material facts in connection with the sale. Before the purchaser may bring a Section 12 claim to void the sale, "notice . . . shall be given by the purchaser within 6 months after the purchaser shall have knowledge that the sale of the securities to him or her is voidable, to each person from whom recovery will be sought." Ill.Rev.Stat. ch. 121-1/2, para. 137.13(B). The plaintiff must plead compliance with this provision, Burkhart v. Allson Realty Trust, 363 F. Supp. 1286 (N.D. Ill. 1973), by generally alleging compliance, if not the actual dates of discovery of voidability and notice to the seller. Darling & Co. v. Klouman, 87 F.R.D. 756, 758 (N.D. Ill. 1980). Plaintiffs have not alleged compliance, but represent that they can if given leave to amend. We give them leave to do so within ten days, if they so choose. We accordingly dismiss Count VI without prejudice.
D. Count VII: Section 2 of the Illinois Consumer Fraud and Deceptive Business Practices Act
Defendants move to dismiss Count VII on the basis of Vanek v. Cosmano, No. 85 C 0334 (N.D. Ill. Jan. 24, 1986), an unpublished opinion, in which Judge Paul E. Plunkett held that the Consumer Fraud and Deceptive Business Practices Act ("Act"), Ill.Rev.Stat. ch. 121-1/2, para. 261 et seq., does not apply to federally and state-regulated securities transactions. See also Coron, Inc. v. American Heritage Savings & Loan Asso., No. 86 C 6380 (N.D. Ill. Feb. 3, 1986) (Plunkett, J.) (reaffirming Vanek without discussion). We join the majority of judges in this district who have held, to the contrary, that the Act does apply to conduct additionally regulated by federal and state securities laws. Horizon Federal Savings Bank v. Selden Fox & Assoc., No. 85 C 9506, 1988 U.S. Dist. LEXIS 6598 (N.D. Ill. June 30, 1988) (Leinenweber, J.); Preston v. Kruezer, 641 F. Supp. 1163, 1168-69 (N.D. Ill. 1986) (Roszkowski, J.); Campbell v. Moseley, Hallgarten, Estabrook & Weeden, Inc., Fed.Sec.L.Rep. (CCH) para. 92,082 at 91,415-17 (N.D. Ill. 1985) (Holderman, J.); Onesti v. Thomson McKinnon Securities, Inc., 619 F. Supp. 1262, 1267 (N.D. Ill. 1985) (Bua, J.).
Section 10b of the Act provides "Nothing in this Act shall apply to (1) Actions or transactions specifically authorized by laws administered by any regulatory body or officer acting under statutory authority of this State or the United States . . ." ch. 121-1/2, para. 270b(1). The Illinois courts have not read this provision, as did the court in Vanek, to preclude application of the Act to any conduct regulated by other laws. Rather, they have viewed compliance with those other laws as a defense to an action under the Act. For example, in Lanier v. Associates Finance, Inc., 114 Ill. 2d 1, 499 N.E.2d 440, 447, 101 Ill. Dec. 852 (1986), the Illinois Supreme Court held that the compliance with the disclosure requirements of the Truth in Lending Act is a defense to liability under the Act. Accord, Preston, 641 F. Supp. at 1168-69 ("The Act expressly provides for situations where it might collide with other state or federal statutory schemes by making conformity with such schemes an affirmative defense to Consumer Fraud Act suits."). In sum, § 10b "seems to indicate that the legislature foresaw [the Act's] use in securities cases." Horizon Federal Savings Bank, 1988 U.S. Dist. Lexis 6598, 19.
Accordingly, in recognition of the broad remedial nature of the Act, see generally, American Buyers Club, Inc. v. Honecker, 46 Ill. App. 3d 252, 361 N.E.2d 1370, 1374, 5 Ill. Dec. 666 (5th Dist. 1977), we hold that securities transactions are subject to the Consumer Fraud Act, and compliance with federal and state regulations is a defense to liability, rather than a bar to any claim, under the Act.
E. Count IX
In Count IX, plaintiffs allege that by their misrepresentations and omissions, defendants breached the limited partnership agreement. To state a claim for breach of contract, a plaintiff must allege the formation of a contract, its terms, performance by the plaintiff, that defendants breached and damages. Cleland v. Stadt, 670 F. Supp. 814 (N.D. Ill. 1987). A general allegation that the defendant breached is insufficient. Plaintiff must set forth the actions or inactions that constitute the breach. Latex Glove Co., Inc. v. Gruen, 146 Ill. App. 3d 868, 497 N.E.2d 466, 469, 100 Ill. Dec. 488 (1st Dist. 1986); Costa v. Stephens-Adamson, Inc., 142 Ill. App. 3d 798, 491 N.E.2d 490, 492, 96 Ill. Dec. 444 (2d Dist. 1986). Plaintiffs have alleged the formation of a contract, its terms, their performance, the misconduct that amounts to a breach and damages. Defendants nevertheless challenge this claim on the grounds that plaintiffs have not identified precisely which contractual terms were breached. Plaintiffs need not do so. As long as the terms of the contract are set forth in their entirety and defendants are informed of the alleged misconduct, plaintiffs have stated a claim. The appropriate place for defendants to raise this challenge to the claim is in their answer and, if the merits of their denial are apparent on the face of the complaint, in a motion for judgment on the pleadings.
F. Count X
Finally, plaintiffs charge in Count X that the misrepresentations and failures to disclose made prior to formation of the partnership relationship constitute a breach of fiduciary duty. At a minimum, plaintiffs must plead a fiduciary relationship. The only alleged fiduciary relationship between the plaintiffs and defendants arises from their partnership agreement. Bandringa v. Bandringa, 20 Ill. 2d 167, 170 N.E.2d 116 (1960); Nelson v. Warnke, 122 Ill. App. 3d 381, 461 N.E.2d 523, 77 Ill. Dec. 900 (1st Dist. 1984). However, that relationship came into being after defendants' alleged misconduct. While the formation of a partnership relationship may pre-date the execution of a partnership agreement, Hofner v. Glenn Ingram & Co., 140 Ill. App. 3d 874, 489 N.E.2d 311, 95 Ill. Dec. 90 (1st Dist. 1985), plaintiffs have alleged no facts to support such an inference. Accordingly, plaintiffs have failed to state a claim of breach of fiduciary duty.
Count II is dismissed with prejudice for failure to state a claim. Counts VI and X are dismissed without prejudice for failure to state a claim. Counts I, III, VI, VII and VIII are dismissed without prejudice for failure to plead fraud with particularity. The motion to dismiss Count IX is denied. Plaintiffs, if they so choose, are given leave to file within ten days an amended complaint to cure the deficiencies in Counts I, III, VI, VII, VIII and X. Defendants are to answer to Count IV and V or if appropriate to an amended complaint, ten days thereafter. Status hearing is reset for March 3, 1989, at 10:00 a.m. It is so ordered.
DATED January 20, 1989