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International Star Registry of Illinois v. ABC Radio Network

September 18, 2006


The opinion of the court was delivered by: Milton I. Shadur Senior United States District Judge


In this diversity action ABC Radio Network, Inc. ("ABC Radio") has moved under Fed. R. Civ. P. ("Rules") 9(b) and 12(b)(6) to dismiss Counts II, III and IV of the First Amended Complaint ("Complaint") brought against it by International Star Registry of Illinois, Ltd. ("Star Registry").*fn1 ABC Radio has also moved to dismiss Complaint Count I as well as Counts II, III and V as assertedly barred by limitations to the extent that the events at issue occurred before February 2, 2001. For the reasons set out in this memorandum opinion and order, ABC Radio's motion is granted in its entirety.

Star Registry's Claim*fn2

Star Registry creates and sells "personalized certificates which allow purchasers to name a star" (Complaint ¶8). From 1984 to 2004 it contracted orally with ABC Radio for on-air radio advertisements of its star-naming business (id. ¶12). When doing so it "dealt primarily with a single ABC Radio representative--Kevin Lally" (id. ¶28). It began to suspect in December 2004 that ABC Radio had failed to run its advertisements as often as agreed upon under the parties' contract (id. ¶17). So in January 2005 Star Registry asked ABC Radio to provide information as to the number of times it aired Star Registry's advertisements during the December 2004 campaign (id. ¶20). ABC Radio responded by providing information that was "both inadequate and intended to mislead" (id. ¶19).

Star Registry next asked that ABC Radio provide it with "Radar postings": independent reports that could provide detailed information about the frequency with which ABC Radio ran Star Registry's advertisements (Complaint ¶20). When ABC Radio provided those reports, Star Registry believed that they demonstrated that ABC Radio had failed to deliver the agreed-upon quantity of advertising for the time period surrounding major holidays during 2004: Christmas, Mother's Day and Father's Day (id. ¶25). That in turn has led Star Registry to conclude that ABC Radio has failed to deliver the correct quantity of advertising throughout the duration of their 20-year relationship (id.).

Despite the fact that Rule 10(b)'s final sentence does not contemplate the use of separate counts to assert a single claim, Star Registry's counsel have followed the widespread practice of splintering its claim by advancing five different theories of recovery in as many counts: breach of an oral contract (Count I), fraudulent inducement of Star Registry to renew its contract year after year for over 20 years (Count II), fraudulent concealment of ABC Radio's breach of contract (Count III), violation of the Illinois Uniform Deceptive Trade Practices Act ("Act")(Count IV) and tortious interference with Star Registry's business relations (Count V). Because this Court has subject matter jurisdiction based on diversity of citizenship, Illinois law (including its choice of law rules) provides the rules of decision--and the parties agree that means the application of Illinois substantive law (see M.T. Bonk Co. v. Milton Bradley Co., 945 F.2d 1404, 1407 (7th Cir. 1991)).

Standards for a Motion To Dismiss

Under Rule 12(b)(6) all well-pleaded allegations in the Complaint must be credited, with all reasonable inferences drawn in favor of Star Registry (Jackson v. E.J. Brach Corp., 165 F.3d 971, 977-78 (7th Cir. 1999)). This Court must then inquire "whether there is any possible interpretation of the complaint under which it could state a claim" (Jets, Inc. v. Shell Oil Co., 381 F.3d 627, 629 (7th Cir. 2004)).

As already indicated, "[o]ne set of facts producing one injury creates one claim for relief, no matter how many laws the deeds violate" (NAACP v. Am. Family Mut. Ins., 978 F.2d 287, 292 (7th Cir. 1992)). NAACP, id. teaches that "[i]dentifying legal theories may assist defendants and the court in seeing how the plaintiff hopes to prevail, but this organization does not track the idea of 'claim for relief' in the federal rules." Where as here a plaintiff utilizes separate counts to set out different legal theories, that does not multiply the number of claims for relief--it merely does more than the Rules require: "limn the grievance and demand relief" (id.). Nonetheless this opinion will follow Star Registry's pleading pattern for analytical purposes.

Breach of Contract

ABC Radio does not dispute that Star Registry has met the liberal pleading standards of Rule 8(a) in its contention that ABC Radio breached the parties' oral contract.*fn3 It does, however, contend that Star Registry's potential recovery should be limited by the five-year statute of limitations imposed on oral contracts by Illinois law (735 ILCS 5/13-205). In that respect "a cause of action accrues, and the statute of limitations begins to run, when the party knows or reasonably should know both that an injury has occurred and that it was wrongfully caused" (LeBlang Motors, Ltd. v. Subaru of Am., Inc., 148 F.3d 680, 690 (7th Cir. 1998)(internal quotation marks omitted)). Illinois courts have held that when the statute of limitations begins to run is usually (though not always) a question of fact for the jury (id. at 690 n.6). As to that question, the Illinois discovery rule provides that a breach of contract claim accrues when plaintiff knew or should have known that defendant breached the contract (see Commonwealth Ins. Co. v. Stone Container Corp., 323 F.3d 507, 512 (7th Cir. 2003)). Here Star Registry asserts that it may avoid the five-year statute of limitations based on the doctrine of fraudulent concealment. For that purpose "the burden is on the plaintiff to prove that the claim has been filed within the limitations period" (Weger v. Shell Oil Co., 966 F.2d 216, 218 (7th Cir. 1992)(per curiam)). Thus Star Registry is bound by the statutory five-year limitation unless it establishes fraudulent concealment (see Jackson v. Rockford Hous. Auth., 213 F.3d 389, 394 (7th Cir. 2000)).

In Illinois fraudulent concealment is governed by statute (735 ILCS 5/13-215):

If a person liable to an action fraudulently conceals the cause of such action from the knowledge of the person entitled thereto, the action may be commenced at any time within 5 years after the person entitled to bring the same discovers that he or she has such cause of action, and not afterwards.

Specific acts or representations by the defendant must have been "calculated to lull or induce [plaintiff] into delaying filing [its] claim or to prevent [it] from discovering [its] claim" (Barratt v. Goldberg, 296 Ill.App.3d 252, 257, 694 N.E.2d 604, 608 (1st Dist. 1998)).

For Star Registry to invoke the fraudulent concealment statute, it must show that ABC Radio took "active steps" such as "hiding evidence or promising not to plead the statute of limitations"(Shanoff v. Ill. Dep't of Human Servs., 258 F.3d 696, 702 (7th Cir. 2001)). And fraudulent concealment is inapplicable "when the plaintiff retained the ability, notwithstanding the defendant's delay or resistance, to obtain information necessary to pursue his claim" (id.).*fn4

In this instance Star Registry's allegations do not support the proposition either that ABC Radio took active steps to conceal the alleged fraud or that Star Registry lacked the ability to obtain the information about the frequency of its advertisements. Instead Star Registry alleges only that ABC Radio sales representative Kevin Lally ("Lally") consistently affirmed that Star Registry's advertising aired with the frequency dictated by the contract terms. And of course those statements did not prevent Star Registry from requesting reports that detailed the frequency with which its advertisements were actually aired--after all, it requested and obtained the very same reports in advance of filing this action (see Pratt v. Sears Roebuck & Co., 71 Ill.App.3d 825, 829, 390 N.E.2d 471, 475 (1st Dist. 1979)).

During the course of the parties' 20 year relationship, Star Registry was never prevented from verifying that ABC Radio was performing its duties under the contract. Illinois' discovery statute does not "extend a limitation period when with ordinary diligence the plaintiff might have discovered, within the limitation period, that the cause of action existed," (Leffler v. Engler, Zoghlin & Mann, Ltd., 157 Ill.App.3d 718, 721, 510 N.E.2d 1018, 1020 (1st Dist. 1987)). Star Registry's failure to evaluate and monitor ABC Radio's performance for all the years that it could readily have done so, but did not, equates to a total absence of the ordinary diligence ...

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