United States District Court, N.D. Illinois, Eastern Division
August 29, 2005.
GERHARD VON DER RUHR, and MARK VON DER RUHR, individuals and SEPTECH, INC., a Nevada corporation, Plaintiffs
IMMTECH INTERNATIONAL, INC., T. STEPHEN THOMPSON, GARY C. PARKS, and ERIC L. SORKIN, Defendants.
The opinion of the court was delivered by: ROBERT GETTLEMAN, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs Gerhard Von Der Ruhr ("GVDR") and his son Mark
("MVDR"), and Septech, Inc., have brought a five count amended
complaint against defendants Immtech International, Inc., T.
Stephen Thompson, Gary C. Parks and Eric L. Sorkin. Counts I and
II, brought by GVDR against Immtech seeks damages for a breach of
a stock "lock-up" agreement, and a stock option agreement,
respectively. Count III, also seeks damages on behalf of GVDR for
breach of a separate stock option agreement allegedly expiring on
April 14, 1992. In Count IV, both GVDR and MVDR charge Parks,
Thompson and Sorkin with tortiously interfering with the VDRs'
contracts with Immtech. Count V is brought by Septech and GVDR
against Immtech for breach of a licence agreement. Defendants
have moved for partial summary judgment on Counts III, IV and V.
For the reasons set forth below the motion is granted in part and
denied in part. FACTS
Defendant Immtech is a bio-pharmaceutical company focused on
the discovery and commercialization of therapeutic treatments for
patients afflicted with opportunistic infectious diseases,
cancers or compromised immune systems. Plaintiff GVDR was a
founder of Immtech and former Chairman of the Board. He is a
shareholder of Immtech stock and holds various stock options.
MVDR is GVDR's son and also an Immtech shareholder. Prior to an
initial public offering of Immtech's stock, it financed
operations through private placements of securities and cash
contributions by shareholders. One of Immtech's major security
holders was Criticare Systems, Inc. ("Criticare"), another
company founded by GVDR. In a June 25, 1998, Letter Agreement
(the "Letter Agreement"), Immtech agreed to sell to Criticare
certain of Immtech's intangible assets. Under that agreement,
Criticare paid $150,000 to Immtech in exchange of 86,207 shares
of Immtech stock and, among other things not related to the
instant action, an exclusive royalty free worldwide license for
patent no. 5,404,832 (granted to Immtech employee Dr. Lawrence
Potempa) to utilize mCRP for the treatment of septicema as set
forth in a separate license agreement ("the License Agreement")
attached to the Letter Agreement. mCRP is a blood protein which
increases the body's ability to resist a variety of diseases.
Under the terms of the Letter Agreement, Criticare was to
receive the right to Potempa's services in the development of
mCRP, and the right to purchase mCRP from Immtech at cost. The
Letter Agreement provided that it "shall not be assignable by
either party without prior written consent of the other." The
License Agreement also provided that it "may not be assigned, in
whole or in part, by either party without the prior written
consent of the other party, which consent shall not be
unreasonably withheld." In November 1998 GVDR resigned as President and Chairman of the
Board of Criticare. Under his severance agreement, GVDR received
the right to purchase from Criticare the shares of Immtech stock
and the mCRP technology received by Criticare from Immtech
pursuant to the Letter Agreement. GVDR gave the shares of Immtech
stock to MVDR.
In late 1998 and early 1999 Immtech contemplated an initial
public offering ("IPO") to raise funds. Immtech requested that
both GVDR and MVDR enter into long term lock-up agreements that
would restrict their ability to sell their shares after the IPO.
GVDR objected and on March 13, 1999, resigned as Chairman of
Immtech. Ultimately both GVDR and MVDR each signed a modified
lock-up agreement dated March 29, 1999.
In June 1999, pursuant to his severance agreement with
Criticare, GVDR arranged for Criticare to assign the rights to
the mCRP technology to Septech, a company he founded to
commercialize the septice technology.
In Count III, GVDR alleges that Immtech breached an option
agreement "ending on April 14, 2002." GVDR attempted to exercise
that option on May 12, 2002, to purchase 7,839 shares at $.34 per
share by sending a check for $2,605.26. On February 20, 2002,
defendant Parks, Immtech's CFO, informed GVDR that he had failed
to exercise the option by the September 27, 2001, expiration
date. As explained in this court's earlier opinion denying
defendants' motion to dismiss Count III, the complaint is careful
to avoid pleading the existence of an actual written option
agreement, instead alleging a breach of an agreement as set forth
in a footnote in Immtech's registration statement under the
Securities Act of 1933 (the "SB-2/A"). Von Der Ruhr v. Immtech, Inc., 326 F. Supp.2d 922, 926-27 (N.D.
Ill. 2004). Because the complaint did not reference the actual
written contract, the court could not consider, on a motion to
dismiss under Fed.R.Civ.P. 12(b)(6), the actual contract
submitted by defendants in support of their motion. Id.
The court can, of course, consider the written contract in
deciding the current motion for summary judgment. Fed.R.Civ.P.
56. The actual option agreement at issue in Count III was granted
to GVDR by Immtech's Board of Directors on September 27, 1991,
and memorialized in a written contract dated April 14, 1992. That
agreement specifically provides:
This Option, or any portion thereof, must be
exercised within ten (10) years of the date of grant
(September 27, 1991), or it shall lapse.
It is undisputed that GVDR did not attempt to exercise the
option until February 12, 2002, over four months after the option
lapsed by its own terms. It is also undisputed that GVDR
possessed the agreement, knew what it said, and knew that the
footnote in the SB-2/A was inconsistent with the explicit terms
of that agreement. There is also evidence in the record that GVDR
was advised in advance of the expiration date in writing that the
option expired on September 27, 2001.
Unable to dispute the indisputable, GVDR argues that the
written option agreement is ambiguous because, due to various
corporate actions, the number and price of the shares subject to
the option was reduced. Even if GVDR is correct, any ambiguity
created would concern the number of shares and price only, not
the expiration date, the agreement clearly and unambiguously sets
forth. An unequivocal statement that is not contradicted by any
other provision in the contract cannot be deemed ambiguous.
Miller & Co. v. China Nat'l Minerals Import and Export Corp., 1991 WL 171268 at *7 (N.D. Ill. 1991)
(quoting Lyons Savings & Loan Association v. Geode Co.,
641 F. Supp. 1313, 1332 (N.D. Ill. 1986). Accordingly, summary judgment
is granted to defendant Immtech on Count III.
In Count IV, GVDR and MVDR allege that defendants Parks,
Thompson and Sorkin tortiously interfered with the lock-up
agreement and other option agreements. Because Parks, Thompson
and Sorkin were all corporate officers and/or directors of
Immtech, their conduct is privileged unless unjustified or
malicious. George A. Fuller Co. v. Chicago College of
Osteopathic Medicine, 719 F.2d 1326, 1330 (7th Cir. 1980).
To overcome this privilege, plaintiffs must establish that these
defendants induced the breach "to further their personal goals or
injure the other party to the contract, and acted contrary to
the best interest of the corporation." Id. at 1333 (emphasis in
original). Defendants argue that plaintiffs have no evidence to
support a claim that they acted to further their own goals or
injure plaintiffs, or that any of their actions were contrary to
the best interest of the company. Plaintiffs respond, however,
that these defendants' actions in refusing to honor the
agreements, instructing Dr. Potempa to refuse to respond to
GVDR's request for help and refusing to remove restrictive
legends on the stock until April 26, 2004, were done in
retaliation for GVDR's decision to resign from the board in lieu
of supporting a long term lock-up agreement to which these
defendants had already committed.
Although plaintiffs' evidence is slim, particularly as to
whether these defendants' actions were not in the best interest
of the corporation, it is nonetheless sufficient to defeat
summary judgment. There is some evidence that defendants were
acting with malice toward GVDR as a result of his unwillingness
to go along with their plans and his decision to resign from the
board immediately prior to the IPO. On summary judgment the court must
read all facts in the light most favorable to the non-moving
party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254
(1986). This standard is applied with added rigor where issues of
motive and intent are involved. See Sarsha v. Sears, Roebuck &
Co., 3 F.3d 1035, 1038 (7th Cir. 1993). Accordingly,
defendants' motion for summary judgment on Count IV is
In Count V, Septech alleges that Immtech breached the June 1998
License Agreement between Immtech and Criticare, which was
assigned by Criticare to Septech. There were actually two June
1998 agreements relating to mCRP for septice between Immtech and
Criticare. The first, the License Agreement, was titled
"International Patent Know-How and Technology License Agreement"
and related strictly to the use of mCRP for the treatment of
sepsis. The second is the more comprehensive Letter Agreement
dated June 25, 1998, executed on June 29, 1998, with a closing
date of July 2, 1998, by which Immtech transferred the various
technology licenses including the License Agreement, among other
things, to Criticare. Under the Letter Agreement Immtech
committed itself to make Dr. Potempa available to Criticare for
three years for the development and use of mCRP technology for
the treatment of sepsis, and made a five year commitment to sell
mCRP to Criticare at Immtech's cost. The Letter Agreement
specifically attaches and incorporates the License Agreement.
GVDR claims that he resigned as President of Criticare in
November 1998. Pursuant to a severance agreement, GVDR received
the right to purchase Criticare's Immtech stock and the mCRP septice technology received by Criticare pursuant to the
Letter Agreement. On June 14, 1999, Criticare executed an
assignment agreement, purporting to assign to Septech all of
Criticare's rights under the Letter Agreement, which was
incorporated and attached and which itself incorporated and
attached the License Agreement.
Septech alleges that Immtech breached the Letter Agreement by
not making available to it the modified mCRP, and the technology
and services of Dr. Potempa. Immtech has moved for summary
judgment arguing that any purported assignment of rights under
the Letter Agreement is invalid for failure to obtain Immtech's
prior written approval.
Paragraph 11 of the Letter Agreement specifically provides:
This Letter Agreement shall be binding upon in and/or
to the benefit of the parties' successors and
assignees, but shall not be assignable by either
party without the prior written consent of the other;
provided, however, that nothing herein shall prevent
Criticare from assigning its rights and obligations
hereunder to an affiliated corporation or subsidiary
corporation controlled by or under common control
The License Agreement had a similar provision, but also
provides that the prior written consent of the other party shall
not be unreasonably withheld.
It is undisputed that Criticare did not receive written consent
from Immtech prior to assigning the rights under the two
agreements to Septech. It is also undisputed, however, that
Immtech was aware of the attempted assignments. It had a copy of
the assignment documents in its files, and there is evidence in
the record that by the Fall of 1999 GVDR, on behalf of Septech,
was attempting to arrange for Dr. Potempa's assistance as
required by the two agreements. Despite these repeated requests,
Immtech, instead of indicating that any purported assignment was
invalid, apparently simply remained silent. Indeed, the record
reflects that internally at least, Immtech believed that Criticare had no rights under the
agreements (and thus could assign no rights) because Criticare
had failed to fulfill what Immtech thought was a condition
precedent, a position rejected by this court in its earlier
opinion. Von Der Ruhr, 326 F. Supp.2d at 927-28. Finally, on
September 8, 1999, GVDR's lawyer wrote to Immtech, specifically
indicating that the Letter Agreement had been assigned by
Criticare to GVDR, and objecting to Immtech's refusal to honor
the agreements. Again, Immtech apparently chose to remain silent
rather than responding that the assignment was invalid.
Whether Immtech actually remained silent and, if so, whether
that silence constituted an acceptance of the assignment, see
First National Bank v. Atlantic Tele-Network Co., 946 F.2d 516,
519 (7th Cir. 1991), or whether, as plaintiffs argue,
Immtech's silence is a breach of its covenant of good faith and
fair dealing, see Prudential Insurance Company of America v.
McCurray, 143 Ill.App.3d 222 (3rd Dist. 1986), are issues
not properly adjudicated on summary judgment. Accordingly,
defendants' motion for summary judgment on Count V is denied.
For the reasons set forth above, defendants' motion for summary
judgment is granted as to Count III and denied as to Counts IV
and V. This matter is set for a report on status on September 13,
2005, at 9:00 a.m.
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