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McGEE v. DRESNICK

August 24, 2005.

MICHAEL D. McGEE, Plaintiff,
v.
STEPHEN J. DRESNICK, Defendant.



The opinion of the court was delivered by: RONALD GUZMAN, District Judge

MEMORANDUM OPINION AND ORDER

Michael D. McGee ("McGee") has sued Stephen J. Dresnick ("Dresnick") for breach of fiduciary duty, breach of contract, promissory estoppel, fraudulent misrepresentation and unjust enrichment. The case is before the Court on defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(7) for failure to join an indispensable party.*fn1 For the reasons provided in this Memorandum Opinion and Order, the motion is granted in part and denied in part.

The Legal Standard

  On a Rule 12(b)(7) motion to dismiss, the Court accepts as true all well-pleaded factual allegations of the complaint. Davis Cos. v. Emerald Casino, Inc., 268 F.3d 477, 479 n. 2 (7th Cir. 2001). Defendant bears the burden of establishing that the party sought to be joined is a necessary and indispensable party under Rule 19. Florian v. Sequa Corp., No. 98 C 7459, 2002 WL 31844985, at *3 (N.D. Ill. Dec. 18, 2002).

  Factual Background

  McGee, an Illinois resident, and Dresnick, a Florida resident, are the principals and co-founders of PhyAm Acquisition Company, LLC, an Illinois limited liability corporation ("the LLC") that they formed to acquire the assets of PhyAmerica Physicians Group, Inc. ("PhyAmerica"). (Am. Compl. ¶¶ 1-4.) On November 8, 2002, PhyAmerica filed for bankruptcy, and McGee and Dresnick soon after agreed to pursue PhyAmerica's assets as equal partners with each partner absorbing half of the expenses they incurred in doing so. (Id. ¶¶ 13, 16, 61.)

  In July 2003, McGee and Dresnick jointly retained the Chicago law firm of Freeborn & Peters to assist in their business venture. (Id. ¶¶ 22-23.) On August 4, 2003, McGee and Dresnick formed the LLC. (Id. ¶ 24.) Throughout the summer and fall of 2003, McGee and Dresnick worked with financial advisers to create a plan of reorganization for PhyAmerica and to obtain financing for their bid for the company. (Id. ¶¶ 26-30, 32-36, 37-41, 46-48.)

  At some point during that time, unbeknownst to McGee, Dresnick decided that he would bid for PhyAmerica on his own. McGee was unaware of Dresnick's plan until September 9, 2003, when a lawyer appeared solely on Dresnick's behalf at a PhyAmerica bankruptcy hearing. (Id. ¶ 51.)

  On October 1, 2003, Dresnick informed Freeborn & Peters that he had terminated his relationship with McGee. (Id. ¶ 69.) On October 16, 2003, without McGee's consent, Dresnick caused Articles of Dissolution to be filed with the Illinois Secretary of State to dissolve the LLC. (Id. ¶¶ 72-74.)

  By early November 2003, Dresnick and another partner formed the company RD PhyAm to submit a bid for PhyAmerica's assets. (Id. ¶ 80.) On December 17, 2003, the bankruptcy court issued a confirmation order authorizing the sale of PhyAmerica to RD PhyAm. (Id. ¶ 85.)

  On May 12, 2004, Dresnick gave a presentation at a healthcare conference in New York in which he plagiarized materials McGee had created for their partnership. (Id. ¶ 91.)

  On October 15, 2004, McGee filed a complaint against Dresnick on his own behalf and on behalf of the LLC. (See Def.'s Mem. Law Supp. Mot. Dismiss, Ex. A, Compl.) Dresnick moved to dismiss the complaint for lack of subject matter jurisdiction because the LLC and Dresnick are both citizens of Florida. In response to that motion, McGee filed an amended complaint, which does not name the LLC as a party. Dresnick contends that the LLC, whose joinder will destroy diversity, is an indispensable party to this suit. Thus, he says the case must be dismissed.

  Discussion

  In the amended complaint, McGee asserts five claims against Dresnick: breach of fiduciary duty, breach of contract, promissory estoppel, fraudulent misrepresentation and unjust enrichment. Dresnick argues that these claims really belong to the LLC, which must be joined as a party. McGee claims he is suing only on his own behalf for injuries he ...


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