United States District Court, N.D. Illinois, Eastern Division
September 16, 2004.
SHELDON LUSTIG, Plaintiff,
ANNA BROWN, individually and d/b/a STRAY CAT TRANSPORT; EXPRESS BOAT TRANSPORT CORP., a Florida corporation; and YANEL L. MARTIN NURQUEZ, individually, Defendants.
The opinion of the court was delivered by: CHARLES KOCORAS, District Judge
This matter comes before the court on the motion of Defendant
Anna Brown motion to dismiss the complaint pursuant to Federal
Rule of Civil Procedure 12(b)(2) and 12(b)(6). For the reasons
set forth below, the motion is denied.
Because this is a motion to dismiss, we accept all well-pleaded
allegations in the complaint as true and draw all reasonable
inferences in favor of the plaintiff. See, e.g., Treadway v.
Gateway Chevrolet Oldsmobile Inc., 362 F.3d 971, 981 (7th Cir.
2004). On June 30, 2003, Plaintiff Sheldon Lustig needed to transport
a yacht from Mississippi to Illinois in time for the Fourth of
July holiday. Lustig contacted Brown to secure transportation of
the yacht. Brown, who informed Lustig that she "was in the
trucking business and was experienced in transporting large
yachts," offered to transport the yacht for $4,900. Brown and
Lustig agreed that Lustig would have the yacht ready for loading
onto a truck at 10 a.m. on July 2 and Brown would have the yacht
delivered to Chicago or Michigan City, Indiana, by noon on July
3, 2003. At no time during these negotiations or thereafter did
Brown disclose that she was acting on behalf of another.
The contract also required Brown to procure all necessary
permits and provide escort vehicles as provided by law. Brown
subcontracted with Defendant Express Boat Transport Corporation
("Express") to perform her obligations under the contract. At 10
a.m. on July 2, a crane operator hired by Lustig lifted the yacht
for loading. When Brown's truck failed to arrive as scheduled,
several conversations took place, during which Brown assured
Lustig that the truck's arrival was imminent and that the crane
should remain on-site with the yacht ready for loading. Brown
knew the cost of the crane and its operator was $250 per hour.
Brown's truck did not arrive until 6 p.m., necessitating eight
additional hours of crane time. By 7 p.m., the yacht was loaded onto the Express-owned truck
driven by Defendant Yanel Nurquez. Neither Brown nor Express had
obtained the necessary permits, escort vehicles, or "pole height
cars" for the yacht's interstate passage. Additionally, when
Nurquez arrived in Mississippi to pick up the yacht, he had
surpassed the maximum number of hours he was allowed to operate
the truck in a single day under federal and Arkansas law.
Nevertheless, Nurquez proceeded to transport the yacht. En route,
he was stopped by the Arkansas Highway Patrol and issued
citations for failing to have a permit for an oversize load and
for operating the truck in excess of the allowable number of
daily hours. Before he could continue, Nurquez was required to
obtain an oversize load permit and take the truck out of service
for eight hours so that he could rest.
As a result of these delays, the yacht could not be unloaded at
either of the originally intended harbors until July 6, and the
boat would have to remain loaded on the Express truck in the
interim. When Brown and Express informed Lustig of this
development, he sought and located an alternative marina in
Winthrop Harbor, Illinois, where the yacht could be unloaded on
July 4. Lustig informed Brown and Express of the new arrangement
and the yacht was rerouted to Winthrop Harbor for unloading. On
the night of July 3, the Express truck transporting the yacht
passed under a bridge near downtown Chicago. As the yacht came under the bridge, its
uppermost portion struck the underside of the bridge, damaging
On March 17, 2004, Lustig filed suit in Illinois state court,
alleging several violations of state law and federal highway
transportation regulations. Express and Nurquez removed the case
to this court. All three defendants subsequently filed a motion
to dismiss the complaint on grounds of preemption by the Carmack
Amendment of the Interstate Commerce Act. 49 U.S.C. § 14706. The
motion was granted in Lustig v. Brown, 2004 WL 1244147 (N.D.
Ill. June 3, 2004).
On June 24, Lustig filed an amended complaint, alleging
violations of the Carmack Amendment. Brown now moves to dismiss
the claims against her individually pursuant to Federal Rule of
Civil Procedure 12(b)(2) and 12(b)(6).
"The purpose of a motion to dismiss is to test the sufficiency
of the complaint, not to decide the merits." Gibson v. City of
Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). When a complaint
is challenged by a motion to dismiss, the court presumes that all
well-pleaded allegations are true, resolves all doubts and
inferences in the plaintiff's favor, and construes allegations of
the complaint in the light most favorable to the plaintiff. See
Treadway v. Gateway Chevrolet Oldsmobile Inc., 362 F.3d 971,
981 (7th Cir. 2004); Bontkowski v. First Nat. Bank of Cicero,
998 F.2d 459, 461 (7th Cir. 1993). A complaint need only specify "the bare minimum facts
necessary to put the defendant on notice of the claim so that he
can file an answer." Higgs v. Carver, 286 F.3d 437, 439 (7th
Cir. 2002). A court should only dismiss the allegations of a
complaint when "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).
With these principles in mind, we now address the motion before
Brown argues that Lustig's claims against her individually
should be dismissed on the grounds that Brown was acting as an
agent of Stray Cat Enterprises, Inc., a corporation doing
business as Stray Cat Transport. It is axiomatic that a
corporation operates only through its officers and directors, and
those agents must be able to exercise business judgment without
the specter of personal liability. See Stafford v. Puro,
63 F.3d 1436, 1442 (7th Cir. 1995).*fn1 As a result, corporate
officers, shareholders, and directors are generally not liable
for the corporation's obligations solely by their association with it. See Itofca, Inc., v.
Hellhake, 8 F.3d 1202, 1204 (7th Cir. 1993). Attached to Brown's
motion are documents evidencing Stray Cat's corporate status, but
Lustig does not appear to contest that Stray Cat is a
Lustig does not quarrel with the general rule that an agent is
not personally liable for a breach of contract by her principal
if the agency relationship has been disclosed at the time the
contract is executed. See Merrill Tenant Council v. U.S. Dep't
of Housing & Urb. Dev., 638 F.2d 1086, 1095 (7th Cir. 1981);
Strzelecki v. Schwarz Paper Co., 824 F. Supp 821, 829 (N.D.
Ill. 1993). Rather, he argues that this case represents an
exception to that general rule that occurs when the agent does
not inform the contracting party that she is acting on behalf of
a particular principal, the so-called "undisclosed principal"
exception. See Freeman v. Liu, 112 F.R.D. 35, 39 (N.D. Ill.
1986). A related exception involves a scenario in which the third
party is aware that the agent is contracting on behalf of a
principal but does not know the identity of the principal. See
id. at 39 n. 7. If either of these exceptions applies, the
contracting agent can be personally liable on the contract.
Evans Products Co. v. I.C.C., 729 F.2d 1107, 1113 (7th Cir.
1984); Freeman, 112 F.R.D. at 39. An agent wishing to avoid
personal liability has the burden to notify the third party of
the full name of the principal; it is not enough that the third
party could discover the identity of the principal after a
reasonable inquiry. Freeman, 112 F.R.D. at 39. The complaint unequivocally alleges that Brown did not disclose
to Lustig at any time that she was acting on behalf of another.
Although the written contract attached to the amended complaint
lists the contracting party as "Stray Cat Transport," there is no
indication within that document of Stray Cat's corporate status.
Accepting these facts as true and construing them in a light most
favorable to the plaintiff, as we must for purposes of this
motion, Lustig has pleaded a claim that could fall within one of
the exceptions to the general rule of nonliability for corporate
agents. That is sufficient to withstand Brown's motion to dismiss
the individual claims against her.
Based on the foregoing analysis, Brown's motion to dismiss is