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JONSON v. HINTZ

July 26, 2004.

WILLIAM D. JONSON, Plaintiff,
v.
LARRY J. HINTZ, H & H SORTING, SERVICES, INC., an Illinois corporation, and H & H VENTURES, INC., an Illinois corporation, Defendants.



The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendants Larry J. Hintz's ("Hintz"), H&H Sorting Services, Inc.'s ("H&H Sorting") and H & H Ventures, Inc.'s ("H&H Ventures") joint motion to dismiss. For the reasons stated below, we grant the motion to dismiss in part and deny the motion to dismiss in part.

BACKGROUND

  From 1983 through 1990 Jonson worked for a trucking company owned by Hintz. In the late 1980s Hintz began a business involving the sorting of screws, fasteners, and hand assembling parts ("sorting business"). In 1991 Hintz hired Jonson to manage the sorting business and formed an Illinois Corporation entitled H&H Sorting Services, Inc. as the entity to own and operate the business. In December of 1993 Jonson entered into a written purchase agreement ("PA") with Hintz to purchase the sorting business. In accordance with the PA, Hintz formally changed the name of his corporation from H&H Sorting Services, Inc. to H&H Ventures, Inc. in order to enable Jonson to name his new corporation H&H Sorting Services, Inc. and use the original name and good will of the company built up by Hintz.

  Under the PA Jonson agreed to pay the purchase price in monthly installments over twenty years. Jonson alleges that from December of 1993 through December of 1998, he fully performed his obligations under the terms of the contract, including paying Hintz $6,000 a month towards the purchase price. In December of 1998 Jonson retired from the H&H Sorting Services, Inc. and under paragraph 25(b) of the contract Hintz exercised his option to repurchase the shares of H&H Sorting Services, Inc. Paragraph 25(b) fo the contract provides as follows: "Upon the death of Jonson or his retirement from Buyer, Seller has an option to purchase the shares from Jonson or his estate upon the same terms and conditions of this contract for sale of shares." Thus, the terms of the new contract formed involving the repurchase by Hintz were the exact reverse of the terms in the sale from Hintz to Jonson.

  Accordingly, Jonson claims that he became the seller of H&H Sorting Services, Inc. and Hintz became the buyer and all terms included in the first contract became binding upon Hintz as a purchaser. Jonson claims that he transferred his shares of H&H Sorting Services, Inc. to Hintz and that Hintz was required in exchange to pay the calculated purchase price of $2,187,616.60. Jonson alleges that Hintz made two or three nominal payments of $1,000 but did not otherwise abide by terms of the contract.

  On December 16, 2003, Jonson filed the instant action against Hintz, H&H Sorting Services, Inc., and H&H Ventures, Inc. The complaint contains a breach of contract claim (Count I), and breach of fiduciary duty claim (Count II). Defendants have brought a motion to dismiss all claims.

  LEGAL STANDARD

  In ruling on a motion to dismiss, the court must draw all reasonable inferences that favor the plaintiff, construe the allegations of the complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in the complaint. Thompson v. Illinois Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). The allegations of a complaint should not be dismissed for a failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Nonetheless, in order to withstand a motion to dismiss, a complaint must allege the "operative facts" upon which each claim is based. Kyle v. Morton High School, 144 F.3d 448, 445-55 (7th Cir. 1998); Lucien v. Preiner, 967 F.2d 1166, 1168 (7th Cir. 1992). Under current notice pleading standard in federal courts a plaintiff "need to plead facts that, if true, establish each element of a "cause of action.'" See Sanjuan v. American Bd. of Psychiatry and Neurology, Inc, 40 F.3d 247, 251 (7th Cir. 1994) (stating that a "[a]t this stage the plaintiff receives the benefit of imagination, so long as the hypotheses are consistent with the complaint" and that "[m]atching facts against legal elements comes later."). The plaintiff need not allege all of the facts involved in the claim and can plead conclusions. Higgs v. Carter, 286 F.3d 437, 439 (7th Cir. 2002); Kyle, 144 F.3d at 455. However, any conclusions pled must "provide the defendant with at least minimal notice of the claim," Id., and the plaintiff cannot satisfy federal pleading requirements merely "by attaching bare legal conclusions to narrated facts which fail to outline the bases of [his] claim." Perkins, 939 F.2d at 466-67.

  DISCUSSION

  I. Breach of Contract Claims (Count I)

  Hintz argues that the breach of contract claim should be dismissed against him individually. H&H Sorting Services, Inc. and H&H Ventures, Inc. provide a separate argument as to why the breach of contract claim should be dismissed against them as well.

  A. Breach of Contract Claim Against Hintz

  Hintz argues that he is not personally liable to Jonson because Hintz was not the seller referred to in the PA and thus he is not bound by the formed contract relating to the repurchase. Hintz re-acquired H&H Sorting Services, Inc. by exercising his option under paragraph 25(b) of the PA. Jonson and Hintz do not dispute that the contract they entered into in 1993 was for the sale of H&H Sorting Services, Inc. from Hintz to Jonson. However, the parties dispute what is meant by the term "seller" in the PA. The PA refers to the seller numerous times in the contract, sometimes in the plural, and sometimes in the singular. Hintz maintains that the parties did not intend for the term seller to refer to Hintz personally. Hintz contends that the term was intended ...


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