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Bighorn Capital, Inc. v. 1000 SMA

March 30, 2006


The opinion of the court was delivered by: Judge Virginia M. Kendall


Bighorn Capital, Inc. ("Bighorn") and Moody Group International, Ltd. ("MGI") filed a multi-count complaint against Defendants for injuries stemming from a Loan Commitment agreement between the parties. Defendants have filed a Motion to Dismiss five of the six counts of Plaintiffs' complaint. For the reasons stated below, the motion is denied.


A complaint will not be dismissed for failure to state a claim unless it is "clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). This Court must take all allegations in the complaint as true, and draw all reasonable inferences in the light most favorable to the plaintiff. Pickrel v. City of Springfield, 45 F.3d 1115, 1117 (7th Cir. 1995). To survive a motion to dismiss, a plaintiff "need not plead particular legal theories or particular facts in order to state a claim." DeWalt v. Carter, 224 F.3d 607, 612 (7th Cir. 2000). The plaintiff need only give a short and plain statement of the nature of the claim so as to provide notice to the defendants. Id.


The following facts are taken from the Amended Complaint ("AC at ¶__"). Plaintiffs Bighorn Capital and MGI are a real estate finance firm and acquisition organization respectively. AC at ¶9-10. In the spring of 2005, Defendants sought loan commitments from Plaintiffs for the development of high-rise condominiums on a plot of land at 1000 South Michigan Avenue in Chicago (the "Property"). Id. at ¶13-14. Defendants provided Bighorn with both an appraisal of the Property, and an appraisal for the adjacent building's air rights allegedly owned by one of Defendants. Id. at ¶15-16. Plaintiffs allege that both appraisals played a central role in the decision to lend to Defendants. Id.

The Parties negotiated and executed a Loan Commitment agreement (the "Agreement"), whereby Bighorn would act as the syndicated loan agent for a multi-million loan for the development and construction of the Property, and MGI would be a major lender and equity holder. Id. at ¶19-20, Exhibit A. Under the Agreement, Bighorn would have received substantial fees for syndicating and administering the loan, and MGI would have received a 60% equity interest in Defendant 1000 SMA, LLC. Id. at ¶21-25. Plaintiffs had secured the letters of intent from each of the syndicated lenders on the basis of the appraisals tendered by Defendants. Id. at ¶ 18.

After the parties executed the Agreement, but prior to the closing, Plaintiffs allege that they became aware that the appraisals were substantially overvalued; specifically, the appraisal of the Property was less than half that originally provided to Plaintiffs. Id. at ¶26. Plaintiffs allege that the initial overvalued representation is a breach of the terms of the Agreement. Id. at ¶29. Plaintiffs allege that they mitigated damages by continuing to work with Defendants to reform the Agreement. Id. at ¶30. Defendants have since sought to sell the property at 1000 South Michigan to a third party. Id. at ¶32, Motion to Cancel Lis Pendens, Dkt. No. 14, at ¶6.

Plaintiffs brought suit for breach of contract and fraud, seeking three equitable remedies: reformation of the Agreement to reflect what the terms would have been had Defendants provided a correct appraisal; specific performance of that Agreement; and injunction of the sale of the property. In the alternative, Plaintiffs seek compensatory and punitive damages for two counts of breach of contract and one count of fraud. Defendants moved to dismiss the three equitable claims and the two claims for breach of contract. Defendants did not move to dismiss the claim for fraud.

Lack of Adequate Remedy at Law

Defendants move to dismiss all three claims for equitable relief pled by Plaintiffs on the basis that all three claims have an adequate remedy at law and are therefore inappropriate for pleading in equity. Equitable relief is not available if a party has an adequate remedy at law. Fulton-Carroll Center, Inc. v. Indus. Council of Northwest Chicago, 680 N.E.2d 1121, 1124 (Ill. App. Ct. 1993).

Defendants argue that monetary relief is available to Plaintiffs, thereby providing an adequate remedy at law making equitable relief inappropriate. As noted by the Court in its Memorandum Opinion and Order of November 9, 2005*fn1, in which the Court denied Defendants' motion to cancel lis pendens on the Property, this case involves the transfer of property because the Agreement at issue would have transferred 60% of the interest in Defendant 1000 SMA, LLC to Plaintiff MGI. The parties do not agree whether the transfer was a real estate interest or a stock interest, but the distinction is irrelevant for purposes of this ruling; either type of interest is sufficiently unique to allow Plaintiffs to plead equitable relief. See Sjogren v. Maybrooks, Inc., 573 N.E.2d 1367, 1368 (Ill. App. Ct. 1991) (giving real property and shares of corporate stock as examples of items suitable for equitable relief); Conway v. Connors, 427 N.E.2d 1015 (Ill. App. Ct. 1981) (suit for restitution of stock interest properly brought in equity); Dasher v. Bruno, 126 N.E.2d 404, 407 (Ill. App. Ct. 1956) (agreements making real or personal property the subject of a security interest properly brought in equity). Therefore, the claims in this case properly concern an equitable interest that cannot be cured solely by monetary damages.

Defendants also argue that the terms of the Agreement provide the only avenue of recovery for Plaintiffs - liquidated monetary damages. But the Agreement sets forth one clause for "partial liquidated damages" that may, but need not, be exercised at the option of Plaintiffs. AC Exhibit A at pp. 2-3. Whether Plaintiffs fully performed or exercised their right to take liquidated damages, and whether any liquidated damages should be the full extent of Plaintiffs' recovery, involve questions of fact and therefore will not be resolved by the Court on a motion to dismiss. See F. McConnell & Sons, Inc. v. Target Data ...

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