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ELGIN DAIRY FOODS, INC. v. SAVANT SOFTWARE

September 14, 2005.

ELGIN DAIRY FOODS, INC., an Illinois corporation, M & E DISTRIBUTION, LLC, an Illinois limited liability company, and ROBERT L. MARTIN, an individual, Plaintiffs,
v.
SAVANT SOFTWARE, INC., an Arizona corporation, JIM CAWLEY, an individual and DIANE CAWLEY, an individual, Defendants.



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

MEMORANDUM OPINION

This matter is before the court on Defendant Jim Cawley's ("J. Cawley") and Defendant Diane Cawley's ("D. Cawley") (collectively referred to as "the Cawleys") motion to dismiss. Additionally, this matter is before the court on Defendant Savant Software, Inc.'s ("Savant") motion to dismiss, motion to strike, and motion for a more definite statement. Finally, this matter is also before the court on Plaintiff/Counter-Defendant Elgin Dairy Foods, Inc.'s ("Elgin") and Plaintiff/Counter-Defendant M&E Distribution, LLC's ("M&E") motion to dismiss the fraud counter-claim (Count III). For the reasons stated below, we deny the Cawleys' motion to dismiss. We also grant in part and deny in part Savant's motion to dismiss, deny Savant's motion to strike, deny Savant's motion for a more definite statement, and deny Plaintiffs' motion to dismiss.

BACKGROUND

  Plaintiffs allege that prior to September 2003, they operated a warehouse distribution center in McCook, Illinois. Plaintiffs allegedly desired to expand their operations at the McCook facility and open an additional facility in Bolingbrook, Illinois. Plaintiffs allege that they contracted with ePartners Inc. to review the existing operating systems at the McCook facility and recommend software systems "for accounting and warehousing/logistics needs." (Compl. Par. 13). ePartners and Plaintiffs allegedly decided to use Great Plains for their accounting needs and Defendant Savant for their warehousing/logistics software needs. Plaintiffs claim that Savant represented "both on-line and in person" (Compl. Par. 15) at the McCook, Illinois facility and at ePartners in Schaumburg, Illinois that "the software provided by Savant would meet and exceed all of their needs and expectations." (Compl. Par. 15). Plaintiffs claim that during the discussions with Savant, the parties specifically discussed certain things that the Savant software would provide and that the Software needed to be compatible with the Great Plains software. Furthermore, Plaintiffs allege that Defendants represented that they were experienced in handling needs for third-party logistics customers.

  Plaintiffs contend that the software provided by Savant ("Software") did not meet the needs previously discussed by the parties, and was not compatible with the Great Plains software. Plaintiffs allege that they ultimately had to dispose of Savant's Software and purchase a new system. Plaintiffs claim that Savant had never implemented this system before and used plaintiffs as "guinea pigs" (Compl. Par. 23). Plaintiffs also allege that Savant placed on its website a testimonial provided by Robert L. Martin ("Martin"), Controller of Elgin Dairy Foods, Inc., stating that Savant had met all of the demands of its third-party customers and had helped the company to operate efficiently. Finally, Plaintiffs claim that neither Martin nor anyone working for Plaintiffs had authorized the statement.

  Plaintiffs brought the instant action and included in their complaint a breach of warranty claim (Count I), a claim alleging a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act ("Fraud Act"), 815 ILCS 505/12 et seq. (Count II), a common law fraud claim (Count III), a claim alleging a violation of the Right of Publicity Act ("Publicity Act"), 765 ILCS 1075/1 et seq. (Count IV), and a claim alleging violations of the Lanham Act, 15 U.S.C. ยง 1051 et seq. (Count V). Savant has filed three counter-claims, which include a breach of contract claim (Count I), a claim alleging that an account stated was created mandating certain payment, (Count II), and a common law fraud claim (Count III).

  The Cawleys have filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2). Savant has filed a motion to dismiss Counts II, III, and IV pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). Savant has also filed a motion to strike and a motion for a more definite statement. Plaintiff/Counter-Defendants Elgin and M&B have filed a motion to dismiss the fraud counter-claim (Count III).

  LEGAL STANDARDS

  Federal Rule of Civil Procedure 12(b)(1) ("Rule 12(b)(1)") requires a court to dismiss an action when it lacks subject matter jurisdiction. United Phosphorus, Ltd. v. Angus Chemical Co., 322 F.3d 942, 946 (7th Cir. 2003). If the concern of the court or party challenging subject matter jurisdiction is that "subject matter jurisdiction is not evident on the face of the complaint, the motion to dismiss pursuant to Rule 12(b)(1) would be analyzed as any other motion to dismiss, by assuming for purposes of the motion that the allegations in the complaint are true." Id.; see also Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995) (stating that when reviewing a motion to dismiss brought under Rule 12(b)(1), this court "must accept as true all well-pleaded factual allegations, and draw reasonable inferences in favor of the plaintiff"). However, if the complaint appears on its face to indicate that the court has subject matter jurisdiction, "but the contention is that there is in fact no subject matter jurisdiction, the movant may use affidavits and other material to support the motion." Id. For the purpose of determining subject matter jurisdiction, this court "may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." Ezekiel, 66 F.3d at 897 (quoting Capitol Leasing Co. v. Federal Deposit Insurance Corp., 999 F.2d 188, 191 (7th Cir. 1993)). The burden of proof in regard to a Rule 12(b)(1) motion is "on the party asserting jurisdiction." United Phosphorus, Ltd., 322 F.3d at 946.

  Federal Rule of Civil Procedure 12(b)(2) directs a court to dismiss a claim for lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2). For the purposes of such a motion to dismiss, the "court accepts all well-pleaded allegations in the complaint as true." Hyatt Intern. Corp. v. Coco, 302 F.3d 707, 712-13 (7th Cir. 2002). If a defendant moves to dismiss pursuant to Rule 12(b)(2), "the court must decide whether any material facts are in dispute" in regard to personal jurisdiction and "[i]f so, it must hold an evidentiary hearing to resolve them, at which point the party asserting personal jurisdiction must prove what it alleged." Id. If the court finds that there are material facts in dispute, "the party asserting personal jurisdiction need only make out a prima facie case of personal jurisdiction," if and until the court holds the necessary hearing. Id.

  In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6), 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); see also Baker v. Kingsley, 387 F.3d 649, 664 (7th Cir. 2004) (stating that although the "plaintiffs' allegations provide[d] little detail . . . [the court could not] say at [that] early stage in the litigation that plaintiffs [could] prove no set of facts in support of their claim that would entitle them to relief"). 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, 454-55 (7th Cir. 1998); Lucien v. Preiner, 967 F.2d 1166, 1168 (7th Cir. 1992). Under the current notice pleading standard in federal courts, a plaintiff need not "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 a plaintiff cannot satisfy federal pleading requirements merely "by attaching bare legal conclusions to narrated facts which fail to outline the bases of [his] claims." Perkins, 939 F.2d at 466-67. The Seventh Circuit has explained that "[o]ne pleads a `claim for relief' by briefly describing the events." Sanjuan, 40 F.3d at 251.

  DISCUSSION

  I. Personal Jurisdiction

  The Cawleys argue that the court lacks personal jurisdiction over them. In a diversity action, the extent of the court's personal jurisdiction is governed by state law regarding personal jurisdiction. Dehmlow v. Austin Fireworks, 963 F.2d 941, 945 (7th Cir. 1992). The Illinois Long Arm Statute authorizes service of process both on in-state defendants and out-of-state defendants, stating that "[a]ny person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, and, if an individual, his or her personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of such acts: . . . [t]he transaction of any business within this State; . . . [t]he commission of a tortious act within this State; . . . [and] [t]he making or performance of any contract or promise substantially connected with this State;. . . ." 735 ILCS 5/2-209. The Illinois Long Arm statute also provides that "[a] court may also exercise jurisdiction on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States." Id. Thus, in addition to ...


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