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PRO INDUS. v. SCHMIDT

October 3, 1995

SERVPRO INDUSTRIES, INC., Plaintiff,
v.
WILLIAM W. SCHMIDT and SERVPRO OF ARLINGTON HEIGHTS/NAPERVILLE, INC., Defendants/Counterclaimants, v. SERVPRO INDUSTRIES, INC., RANDALL ISAACSON, TED ISAACSON, ROBERT MARSHALL, SUSAN STEEN, RICHARD FORSTER, TED HABERMANN, JAMES O'CONNOR, and WILLIAM WEBER, Counterdefendants.



The opinion of the court was delivered by: ALESIA

 Before the court is counterdefendant William Weber's ("Weber") motion to dismiss Count VI of defendants/counterclaimants William W. Schmidt's and Servpro of Arlington Heights/Naperville, Inc.'s (collectively, "Schmidt"), third amended counterclaim pursuant to FED. R. CIV. P. 12(b)(6). As set forth fully below, the court denies Weber's motion to dismiss.

 I. BACKGROUND1

 Servpro Industries, Inc. ("Servpro"), provides professional home and office cleaning services, and grants franchises for the operation of cleaning businesses using the Servpro system. In March 1985, Servpro entered into a franchise agreement with Schmidt for the territory of Arlington Heights, Illinois. That agreement also provided that Schmidt would be a "director distributor" for northern Illinois, for which he would earn additional commissions. In December 1987, Servpro and Schmidt entered into another franchise agreement for the territory of Naperville and Lisle, Illinois. Weber also was a Servpro franchisee, with franchises located in Rockford, Illinois, and Wisconsin.

 At some time not specified in Schmidt's counterclaim, and with Servpro's agreement, Weber diverted income from his Rockford franchise, which was within Schmidt's distributorship territory, to his Wisconsin franchise. By diverting the income in this way, Weber avoided paying commissions to Schmidt for work his Rockford franchise did, and Servpro could pay commissions on the diverted income at a lower rate than what should have been due to Schmidt on the income. Weber and Servpro carried out this scheme to terminate Schmidt's franchises for their own financial benefit.

 In July 1994, Servpro terminated Schmidt's franchises. Schmidt has continued to operate his businesses under the Servpro name, however. In September 1994, Servpro sued Schmidt on numerous grounds, including trademark infringement, unfair competition, and breach of contract. Schmidt then filed a counterclaim against Servpro (and its officers and directors, on some counts), also on various bases, including breach of covenant of good faith and fair dealing, fraudulent misrepresentation, violation of the Illinois Franchise Disclosure Act, and fraud. Schmidt added Weber as a counterdefendant in the counterclaim and named Servpro and Weber in a count for conspiracy, which is the subject of this motion.

 Weber has moved to dismiss Count VI, the conspiracy count, of Schmidt's third amended counterclaim on the grounds that Weber is not a proper counterclaim defendant pursuant to FED. R. CIV. P. 19(a) and that Schmidt has failed properly to state a claim for conspiracy against Weber. For the following reasons, Weber's motion to dismiss Count VI of Schmidt's third amended counterclaim is denied.

 II. DISCUSSION

 A. Standard of Review

 When deciding a motion to dismiss under FED. R. CIV. P. 12(b)(6), the court must accept all factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Cromley v. Board of Educ. of Lockport, 699 F. Supp. 1283, 1285 (N.D. Ill. 1988). If, when viewed in the light most favorable to the plaintiff, the complaint fails to state a claim upon which relief can be granted, the court must dismiss the case. See FED. R. CIV. P. 12(b)(6); Gomez v. Illinois State Board of Educ., 811 F.2d 1030, 1039 (7th Cir. 1987). However, the court may dismiss the complaint only if it appears beyond doubt that the plaintiff can prove no set of facts in support of its claims that would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80 (1957).

 Weber contends that he must be dismissed as a party to Schmidt's counterclaim because Schmidt has failed to plead sufficiently that Weber should be made a counterclaim defendant under Rule 19(a) of the Federal Rules of Civil Procedure.

 Rule 19 of the Federal Rules of Civil Procedure governs situations where a party must be joined in a lawsuit in order to achieve "just adjudication." FED. R. CIV. P. 19. That rule provides:

 
A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) impair or impede the person's ability to protect that interest or (ii) leave any of the persons already ...

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