The opinion of the court was delivered by: JOAN H. LEFKOW, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Richard L. Fogel ("Fogel") has filed a one-count second
amended complaint against defendants Gordon & Glickson, P.C., Gordon &
Glickson, L.L.C., and Michael E.C. Moss ("Moss"). Fogel alleges
defendants are liable for fraud. Defendants have moved to dismiss the
second amended complaint based on Fogel's failure to plead fraud under
Federal Rules of Civil Procedure 9(b) and 12(b)(6). The court has
diversity jurisdiction under 28 U.S.C. § 1332 in that there is complete
diversity of citizenship between the parties*fn1 and the amount in
controversy exceeds $75,000. For the reasons set forth below, the motion
MOTION TO DISMISS STANDARDS
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)
challenges the sufficiency of the complaint for failure to state a claim
upon which relief may be granted. General Elec. Capital Corp. v. Lease
Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). Dismissal is
appropriate only if it appears beyond a doubt that the plaintiff can prove
no set of facts in support of his claim that would entitle him to
relief. Conley v. Gibson, 355 U.S. 41, 45-46(1957); Kennedy v. Nat'l
Juvenile Det. Ass'n, 187 F.3d 690, 695 (7th Cir. 1999). In ruling on the
motion, the court accepts as true all well pleaded facts alleged in the
complaint, and it draws all reasonable inferences from those facts in
favor of the plaintiff. Jackson v. E.J. Brach Corp., 176 F.3d 971, 977
(7th Cir. 1999); Zemke v. City of Chicago, 100 F.3d 511, 513 (7th Cir.
ALLEGATIONS IN THE FIRST AMENDED COMPLAINT
The facts, taken as true from plaintiff's second amended complaint, are
as follows: In March 1986, Fogel joined the law firm Gordon & Glickson,
P.C. (the "P.C.") as an associate attorney. In January 1991, he became an
income partner. In January 1993, he became an equity shareholder of the
P.C., purchasing 2,500 shares for $2,500.
In 1997 and 1998, respectively, the P.C. created "investment pools" for
its equity shareholders. The investment pools were comprised of stocks
and stock options received or otherwise purchased from various corporate
clients. To purchase these stocks and stock options, the P.C. used funds
that it otherwise could have distributed to the equity shareholders.
Because the investment pools were assets of the P.C., they were subject
to the claims of the P.C.'s general creditors.
The investment pools were managed through an "Asset Management
"Investment Committee") comprised of Moss, Mark L. Gordon and Philip P.
McGuigan. The Investment Committee handled all transactions for the P.C.
with respect to the investment pools and periodically issued reports
about these pools to the P.C.'s equity shareholders. The reports detailed
the estimated current fair market value of the pools' assets and each
equity shareholder's interest in the pools.
On April 30, 1999, the P.C. re-organized and transferred general
operations, assets and liabilities to Gordon & Glickson, L.L.C. (the
"L.L.C."). At this time, the equity shareholders of the P.C., including
Fogel, became members of the L.L.C. Further, the members of the P.C.'s
Investment Committee became members of the L.L.C.'s Investment Committee
and performed the same duties as before.
In 1999, certain stocks and stock options of the P.C.'s 1997 and 1998
investment pools (the "initial investments") were transferred to the
L.L.C. The L.L.C. accounted for these initial investments in the same way
as did the P.C. Certain stocks and stock options, however, remained in
the P.C.'s 1997 investment pool. This was done because the Investment
Committee determined that certain cash and securities should remain in
the P.C. to satisfy current and future firm obligations.
At the time of reorganization, the firm created a Deferred Compensation
Plan and Agreement (the "Plan") for the benefit of certain employees. The
Plan included provisions detailing how deferred compensation was to be
paid to employees upon their withdrawal from the firm.
On December 15, 1999, Fogel voluntarily resigned from his position with
the law firm and provided a notice of withdrawal from the L.L.C. to be
effective January 14, 2000. On the
morning of November 12, 1999, firm member and Investment Committee
chair Mark L. Gordon ("Gordon") left two voice mail messages for Fogel
urging Fogel to re-draft his notice of withdrawal from the firm to
indicate a withdrawal date after January 1, 2000. Gordon suggested that
by doing so Fogel would ultimately receive a greater amount of deferred
compensation. Based upon Gordon's recommendation, on December 15, 1999,
Fogel provided an amended written notice of withdrawal to be effective
January 14, 2000. Fogel ceased practicing law as a member of the firm as
of January 14, 2000. At the time of his withdrawal, the firm determined
that it owed him $462,570.87 in deferred compensation. (Complaint ¶
By January, 2000, the firm, through an email to Fogel from Moss, was
expressing concern in relation to potential adverse tax ramifications
posed by the firm's 1999 reorganization. To facilitate the firm and its
members, including Moss, meeting their April 15, 2000, tax filing
obligations, the firm decided prior to February 21, 2000, to sell certain
stock in the 1997 investment pool and distribute the proceeds of that
sale to firm members. According to Fogel, the sale of this stock "would
result in the Investment Pool not having sufficient assets to meet firm
deferred compensation obligations to Fogel." (Id. ¶ 20.) Thus, the
firm, through Moss, "began a campaign in January, 2000, to convince Fogel
to forego his right to deferred compensation beginning in 2001" and
remain a member of the investment pools. (Id.; Ex. F.)
Fogel ultimately did not elect the firm's proposal, maintaining his
right to receive deferred compensation owed to him. However, Fogel was
not advised by the firm that by not accepting their proposal he would not
receive full payment of his deferred compensation. (Id. ¶ 22.) Firm
correspondence in August, 2000, through Moss, indicated that Fogel ...