disclosure documents after they executed the Swap Agreement. Further, although Plaintiffs generally allege that Defendants "had the intent to further those violations [of the CEA] by MJ Capital Management, Allamian, Manning and/or Paszkiet" (R. 15-1, Pls.' First Am. Compl. ¶ 83), Plaintiffs do not provide specific allegations that Defendants intended to further the CEA violations at issue.
In addition, Plaintiffs do not allege that Defendants acted in furtherance of the commodities violations. Instead, Plaintiffs allege numerous acts by Defendants to carry out the Swap Agreement. The existence of the Swap Agreement, however, is not the alleged fraud. Instead, it is the failure to disclose the terms of that Agreement in the Disclosure Documents and the use of the Disclosure Documents that Plaintiffs allege constitute part of the alleged commodities fraud.
Finally, Plaintiffs do not allege that the Defendants undertook any affirmative acts in furtherance of the commodities fraud. When asserting an aiding and abetting a commodities violation, the plaintiff must allege "some affirmative conduct; that is, there must be evidence that [the] defendant committed an overt act designed to aid in the success of the venture." Weber v. E.D. & F. Man Intern'l, Inc., No. 97 C 7518, 1999 WL 35326 (N.D.Ill. Jan. 13, 1999). Here, Plaintiffs do not allege any such affirmative acts by Defendants. To the contrary, Plaintiffs allege that Defendants "undertook no steps to ensure that Asset Allocation and MJ Capital Management made complete and accurate disclosure to prospective investors including Plaintiffs," (R. 15-1, Pls.' First Am. Compl. ¶ 70f.)
V. STANDING TO BRING STATE LAW CLAIMS
Defendants next argue that Plaintiffs do not have standing to bring Counts Four through Seven. Defendants contend that the limited partners do not have standing to bring these claims because they cannot seek generalized damages incurred by the limited partnership and shared by all limited partners.
Illinois courts have held that "[l]imited partners do not have a cause of action for damages to their interest in a limited partnership." Northern Trust Co. v. VIII South Michigan Assoc., 276 Ill. App.3d 355, 363, 212 Ill. Dec. 750, 657 N.E.2d 1095, 1101 (Ill.Ct.App. 1995). See also Gagan v. American Cablevision, Inc., 77 F.3d 951, 959 (7th Cir. 1996) ("There is some authority which prohibits limited partners from bringing a suit for damages against the partnership as long as the partnership exists and has not been dissolved or liquidated"). When assessing whether an action is derivative of an injury suffered by the limited partnership, the courts look to whether the plaintiff must show an injury or breach of duty to the limited partnership in order to prevail. See, e.g., Frank v. Hadesman and Frank, Inc., 83 F.3d 158, 160 (7th Cir. 1996) ("An action in which the holder [i.e., the investor] can prevail only by showing an injury or breach of duty to the corporation should be treated as a derivative action. . . . An action in which the holder can prevail without showing an injury or breach of duty to the corporation should be treated as a direct action that may be maintained by the holder in an individual capacity.") (citation and quotation omitted); LID Asso. v. Dolan, 324 Ill. App.3d 1047, 258 Ill. Dec. 592, 756 N.E.2d 866, 884 (2001) ("Limited partners are in positions analogous to shareholders and cannot pursue individual actions for damages to their interests in a limited partnership.").
Counts Four and Five are based on fiduciary duties owed by Defendants to Asset Allocation, the limited partnership, and are, therefore, derivative. Accordingly, Plaintiffs do not have standing to bring these claims.*fn3
Plaintiffs apparently argue that Counts Four and Five are based on the breach of fiduciary duties by a commodity pool operator to a commodity pool. Contrary to Plaintiffs' suggestion, however, Counts Four and Five do assert breach of duties owed to the limited partnership, not the commodity pool.
Plaintiffs do have standing to bring Counts Six and Seven though. With those claims, Plaintiffs allege that Defendants interfered with the contracts that the limited partners entered with Asset Allocation, not with contracts entered by the limited partnership. Plaintiffs claim injury directly to them rather than the limited partnership, and thus, those claims are not derivative. Plaintiffs, therefore, have standing to bring Counts Six and Seven.
VI. COUNTS SIX — INTENTIONAL INTERFERENCE WITH CONTRACTUAL RELATIONS
In order to state a claim in Illinois for tortious interference with a contract, Plaintiffs must allege the following elements: (1) the existence of a valid and enforceable contract between Plaintiffs and another, (2) the Defendants' awareness of the contract; (3) an intentional interference by the Defendant inducing breach of contract; (4) a breach of contract caused by the Defendant's acts; and (5) damages to Plaintiff. See Fieldcrest Builders v. Antonucci, 311 Ill. App.3d 597, 611, 243 Ill. Dec. 740, 724 N.E.2d 49, 61 (1999); see also Higher Gear Group, Inc. v. Rockenbach Chevrolet Sales, Inc., 223 F. Supp.2d 953, 959 (N.D.Ill. 2002). Defendants contend that Plaintiffs have failed to allege elements two through five.
Plaintiffs allege that they entered into contracts with Asset Allocation and that "at all material times, the ZCM Defendants had knowledge of the contracts between Plaintiffs and Asset Allocation." (R. 15-1, Pls.' First Am. Compl. ¶ 98.) Plaintiffs further allege that Asset Allocation breached its contracts with Plaintiffs and that the "ZCM Defendants intentionally and without justification induced Asset Allocation to breach its contracts with Plaintiffs." (Id. ¶ 99.) Plaintiffs claim Defendants "intentional, unjustified, and wrongful conduct" caused the breach of the contracts. (Id. ¶ 100.) In addition, Plaintiffs assert that the breach via the Swap Agreement caused damages to the Plaintiffs. (Id. ¶ 101.) Given the liberal notice pleading requirements under the Federal Rules, these allegations are sufficient to state a claim for intentional interference with a contract.
VII. COUNT SEVEN — NEGLIGENT INTERFERENCE WITH CONTRACTUAL RELATIONS
Illinois does not recognize a cause of action for negligent interference with commercial contracts where the plaintiff, as here, seeks to recover only economic damages. See Great Cent. Ins. Co. v. Insurance Services Office, Inc., 74 F.3d 778, 785 (7th Cir. 1996) (refusing to permit claim for tortious interference with a contract based on negligent interference); see also Kurtz v. Illinois Nat. Bank of Springfield, 179 Ill. App.3d 719, 729, 128 Ill. Dec. 562, 534 N.E.2d 1007, 1013 (1989) (recovery for purely economic injuries not allowed in cause of action based on negligence). Accordingly, Count Seven is dismissed.
VIII. COUNT EIGHT — AIDING AND ABETTING COMMON LAW FRAUD
As Defendants correctly point out, Illinois does not recognize a separate cause of action for aiding and abetting common law fraud. Renovitch v. Kaufman, 905 F.2d 1040, 1049 (7th Cir. 1990); Cenco Inc. v. Seidman & Seidman, 686 F.2d 449, 452-53 (7th Cir. 1982).
Plaintiffs suggest that Eastern Trading Co. v. Refco, Inc., 229 F.3d 617 (7th Cir. 2000), counsels against dismissal of their aiding and abetting claim. In that case, the Seventh Circuit confirmed that Illinois does not have a separate tort for aiding and abetting common law fraud, noting that "[t]here is nothing to be gained by multiplying the number of torts, and specifically by allowing a tort of aiding and abetting a fraud to emerge by mitosis from the tort of fraud, since it is apparent that one who aids and abets a fraud, in the sense of assisting the fraud and wanting it to succeed, is himself guilty of fraud." Id., 229 F.3d at 623. Instead, the Seventh Circuit suggested that a plaintiff could bring a claim for common law fraud against the one who had assisted in the alleged fraud, rather than aiding and abetting. Id.
Even if the Court converts Plaintiffs' aiding and abetting claim into a claim for common law fraud, Count Eight fails to state a claim. Under Illinois law, Plaintiffs must allege: (1) a false statement of material fact; (2) known or believed to be false by the party making it; (3) intended to induce the other party to act; (4) action by the other party in reliance on the truth of the statement; and (5) damages to the other party resulting from such reliance. Hillman v. Resolution Trust Corp., 66 F.3d 141, 144 (7th Cir. 1995). Because Plaintiffs do not allege all of the elements for common law fraud, Count Eight must be dismissed.
Defendants' motion to dismiss Plaintiffs' complaint (R. 18-1) is granted in part and denied in part. Counts One and Three are dismissed without prejudice. Counts Four, Five, Seven and Eight are dismissed with prejudice.