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Siegel v. General Star Management Co.

April 26, 2007

DANIEL SIEGEL, PLAINTIFF,
v.
GENERAL STAR MANAGEMENT CO., GENERAL REINSURANCE CORP., GENERAL STAR NATIONAL INSURANCE CO., AND GENERAL STAR INDEMNITY CO., DEFENDANTS.



The opinion of the court was delivered by: Honorable David H. Coar

MEMORANDUM OPINION AND ORDER

Plaintiff Daniel Siegel ("Plaintiff" or "Siegel") has brought this action for breach of contract and related claims against Defendant General Star Management Co. ("General Star"), along with General Star Reinsurance Corp., General Star National Insurance Co., and General Star Indemnity Co. ("related General Star parties") (collectively "Defendants"), under 28 U.S.C. § 1332. Before this Court is Defendants' motion to dismiss (Docket No. 9). For the reasons stated below, the motion is DENIED in part and GRANTED in part.

FACTS*fn1

Siegel worked to transition an underwiting group headed by Faith Logsdon ("Logsdon Group") into General Star. Patricia Roberts ("Roberts"), president of General Star, understood and agreed that Siegel would be compensated for this work if his efforts proved successful.

Within the insurance industry, compensation for such consultant work typically amounted to "at least one percent of the gross written premiums ("GWP") underwritten by the transitioned underwriters for a period of thirty-six months following issuance of their first policy." Compl. ¶ 9. In or around January of 2002, the Logsdon Group joined General Star. Shortly afterward, Roberts confirmed that General Star would compensate Siegel at the minimum typical compensation level of one percent for three years.

Soon after, Roberts and Siegel renegotiated a compensation package whereby Siegel would receive a flat fee of "around $140,000" and ".625% of the Logsdon Group's GWP for the first year, and .3125% of the Logsdon Group's GWP for the second year." Id. ¶ 11. The percentage points on the Logsdon Group premiums were to be paid out of the commissions going from General Star to reinsurance broker Guy Carpenter ("Carpenter"). Carpenter agreed to transfer a portion of his Logsdon Group commissions to Siegel for a period of two years. Siegel received the promised $140,000, along with $125,000 of Carpenter's commissions for one year. However, General Star failed to renew their reinsurance arrangement with Carpenter and, as a result, Siegel received no compensation for the second year.

Siegel complained to Roberts that General Star still owed him an amount equal to .3125% of the Logsdon Group's GWP for the second year. Roberts proposed to resolve any remaining dispute over Siegel's compensation by giving him $135,000. Siegel accepted this proposal but was never paid any portion of the funds.

On February 16, 2007, Plaintiff filed this complaint, alleging: breach of an express contract promising one percent of commissions for two years (Count I); breach of an implied-in-fact contract on the same basis (Count II); quantum meruit based on General Stars acceptance of over $100 million in GWP following Logsdon Group's transfer (Count III); breach of the accord obligating percentage payments by way of the Carpenter commissions (Count IV); and breach of the second accord promising Siegel $135,000 (Count V). Defendant now moves to dismiss all counts.

STANDARD OF REVIEW FOR MOTION TO DISMISS

On a motion to dismiss, the Court accepts all well-pleaded allegations in the plaintiff's complaint as true. Fed. R. Civ. Plaintiff. 12(b)(6). The purpose of a 12(b)(6) motion is to decide the adequacy of the complaint, not to determine the merits of the case. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990) (citation omitted). A complaint should not be dismissed "unless it appears beyond all 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).

A complaint that complies with the Federal Rules of Civil Procedure cannot be dismissed because it fails to allege facts. The Rules require simply that the complaint state a claim; they do not require the complaint to plead facts that would establish the validity of that claim. Higgs v. Carver, 286 F.3d 437, 439 (7th Cir. 2002). "All that need be specified are the bare minimum facts necessary to put the defendant on notice of the claim so that he can file an answer." Id. (citing Beanstalk Group, Inc. v. AM General Corp., 283 F.3d 856, 863 (7th Cir. 2002)). The Seventh Circuit has held that stating a claim in a complaint in federal court requires only "a short statement, in plain (that is, non-legalistic) English, of the legal claim." Kirksey v. R.J. Reynolds Tobacco Co., 168 F.3d 1039, 1041 (7th Cir. 1999). Plaintiffs "don't have to file long complaints, don't have to plead facts, don't have to plead legal theories." Id.

"Complaints need not anticipate or attempt to defuse potential defenses." United States Gypsum v. Indiana Gas Co., Inc., 350 F.3d 623, 626 (7th Cir. 2004) (citing Gomez v. Toledo, 446 U.S. 635 (1980)). "[D]ismissal under Rule 12(b)(6) on the basis of an affirmative defense is appropriate only where the plaintiff pleads himself out of court by 'admit[ting] all the ingredients of an impenetrable defense.'" Id. (citing Xechem, Inc. v. Bristol-Myers Sguibb Co., 372 F.3d 899, 901 (7th Cir. 2004)). At the same time, "when the existence of a valid affirmative defense is so plain from the face of the complaint that the suit can be regarded as frivolous, the district judge need not wait for an answer before dismissing the suit." Walker v. Thompson, 288 F.3d 1005, 1009 (7th Cir. 2002). "Unless the complaint alleges facts that create an ironclad defense, a limitations argument must await factual development." Foss v. Bearns, Stearns & Co., Inc., 394 F.3d 540, 542 (7th Cir. 2005).

ANALYSIS

In its motion to dismiss, Defendant alleges that: there was no express contract involving the alleged one percent payments because there was no consideration; the alleged accords were invalid because Plaintiff has not properly alleged the necessary elements as a result of a lack of consideration; there are no allegations of an actual breach of the terms between Defendants and Plaintiff; the implied contract claims inappropriately reference the explicit ...


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