contend that this count fails to state a claim against GMBH because it was not a party to the Shareholders' Agreement. They also insist that the count fails to state a claim against Marklin because it does not allege any wrongdoing.
The court agrees with the defendants that the plaintiff cannot pursue GMBH under this count. Although the plaintiff insists that GMBH was a signatory of the License Agreement, and that the Shareholders' Agreement and License Agreement were "part and parcel of the same thing," he fails to explain how GMBH can have a contractual duty of good faith under a contract to which it was not a party. Accordingly, insofar as this count seeks liability against GMBH, it is insufficient.
Count VII does state a claim, however, against Marklin. The defendants' sole argument with respect to this defendant -- that the count fails to allege any actionable wrongdoing -- simply ignores the fact that, under Illinois law, "a party vested with contractual discretion must exercise that discretion reasonably and with proper motive, and may not do so arbitrarily, capriciously, or in a manner inconsistent with the reasonable expectation of the parties." Dayan v. McDonald's Corp., 125 Ill.App.3d 972, 991, 81 Ill. Dec. 156, 466 N.E.2d 958 (1984). The plaintiff alleges that Marklin breached this mandate through its efforts to depress the value of the plaintiff's stock. Count VII therefore states a claim.
Count VIII alleges that GMBH and Marklin breached the Shareholders' Agreement by failing to retain an independent accounting firm in calculating the value of the plaintiff's stock. As with Count VII, this count fails with respect to GMBH since GMBH was not a party to the agreement. The defendants to not deny that this count states a claim against Marklin, but they do warn the plaintiff that unless he withdraws this claim, they will move for summary judgment and Rule 11 sanctions on the ground that an arbitration provision in the Shareholders' Agreement required the plaintiff to assert his breach of contract claims during the earlier arbitration proceedings. Since the plaintiff has seen fit to pursue this claim, the court will allow it, and await with anticipation the defendants' future motions.
Count IX of the amended complaint, like Count VII of the original complaint, alleges that GMBH breached its License Agreement with Marklin, and that as a third party beneficiary of the agreement the plaintiff is entitled to recovery for the breach. In the July 7 Order, this court dismissed this claim on the grounds that the plaintiff's status as a Marklin minority shareholder did not make him a third party beneficiary of Marklin's contracts, but the plaintiff now insists that he has established his third party status by alleging that the License Agreement between Marklin and GMBH was executed "for the specific benefit and protection of [the plaintiff]." Am. Comp. para. 65. GMBH, in turn, argues that the claim still fails because a third party acquires rights under a contract only when the contract clearly identifies him as a beneficiary, and the License Agreement does not do so. The plaintiff's response is twofold. He first argues that the defendants misstate Illinois law. He then contends that, irrespective of Illinois law, his claim survives because Wisconsin law governs this dispute and, under Wisconsin law, the court must look to all of the circumstances surrounding the contract in determining whether one is a third party beneficiary of it.
The plaintiff appears to be correct on the choice of law issue, but it does not matter in any event. Case law from both states suggests that, although third party beneficiary status ordinarily requires that the contract manifest an intent to benefit the third party, such manifestation is not essential when the circumstances surrounding the creation of the contract clearly demonstrate that the contracting parties intended directly to benefit him. See Carson Pirie Scott & Co. v. Parrett, 346 Ill. 252, 178 N.E. 498 (Ill. 1931); People ex rel. Resnik v. Curtis & Davis, 78 Ill. 2d 381, 36 Ill. Dec. 338, 400 N.E.2d 918 (Ill. 1980); Bates & Rogers v. Greeley & Hansen, 109 Ill. 2d 225, 93 Ill. Dec. 369, 486 N.E.2d 902 (Ill. 1985) (Illinois law); Pappas v. Jack O.A. Nelsen Agency, Inc., 81 Wis. 2d 363, 260 N.W.2d 721, 725 (Wis. 1978) (Wisconsin law). The complaint here not only summarily alleges that Marklin and GMBH executed the License Agreement for the plaintiff's benefit, but further sets forth facts indicating that this agreement was signed in conjunction with the Shareholders' Agreement (to which the plaintiff was a party) for the specific purpose of protecting the plaintiff's interests. These allegations suffice to state a third party beneficiary claim.
Count X, the analog to Count VIII in the original complaint, alleges that, beginning in 1983, all of the defendants participated in a conspiracy to defraud the plaintiff. The defendants make two objections to this claim: that the plaintiff has not alleged an actionable tort; and that, even if he has, he fails to allege any tortious conduct by defendants Kelter and Marklin.
The defendants' first argument fails because, as discussed earlier, the plaintiff successfully has pleaded fraud against GMBH. The defendants' second argument simply misses the point of a conspiracy claim. The plaintiff alleges that Kelter and Marklin joined the conspiracy to defraud him; if they did, then they are subject to liability even if, alone, they did not perform any tortious acts. Accordingly, this count stands.
This court has determined that six of the counts in the amended complaint state viable claims. Although most, if not all, of these claims have substantial problems, the plaintiff is entitled, at least for now, to pursue them. See Fed.R.Civ.P. 15(a).
The plaintiff's motion to file a first amended complaint is granted. Counts I, II, III, and VI of the amended complaint are dismissed with prejudice.
DATE: November 15, 1989