The opinion of the court was delivered by: Matthew F. Kennelly, District Judge
MEMORANDUM OPINION AND ORDER
Donald Willer brings this action against Civil Contractors & Engineers, Inc. ("CCE") and Mukesh Jhaveri under the Securities Act of 1933 ("Securities Act"), the Securities Exchange Act of 1934 ("Exchange Act"), the Illinois Securities Law of 1953, Illinois common law, and the Employee Retirement Income Security Act of 1974 ("ERISA"). CCE and Jhaveri have moved to dismiss Willer's complaint for failure to state a claim.
For the following reasons, the Court dismisses Counts 1, 2, and 3, with leave to amend Count 2, but denies defendants' motion without prejudice as to Counts 4 through 14.
In his complaint, Willer alleges that in May 1989, Jhaveri asked him to join in starting a construction company. That month, Jhaveri incorporated CCE. At the same time, he entered into an oral preorganization subscription agreement with Willer. The agreement, which was later reduced to writing, allowed Willer to acquire up to 24.5 percent of the stock of CCE.
Willer began working for CCE as a vice-president in June 1989 and exercised his subscription right on December 31, 1995, acquiring 24.5 percent of CCE's common stock for $307. Jhaveri retained ownership of the remaining 75.5 percent of CCE's common stock.
On or about November 12, 1999, Willer and Jhaveri entered into a Buy-Sell Agreement ("Agreement") containing a put option that allowed Willer to sell his stock back to CCE. The Agreement provided that an independent appraiser acceptable to Willer and Jhaveri would set the price by determining the fair market value of CCE as a going concern. If the parties could not agree on an appraiser, the Agreement provided that each party would then name his own appraiser. If the lower appraised value was at least 90 percent of the higher figure, the figures would be averaged. Otherwise, the two appraisers would appoint a third appraiser to make a final appraisal.
The parties ultimately did not use the procedure detailed in the Agreement to determine the value of Willer's put option, instead negotiating a price of $310,000 without employing an independent appraiser. During negotiations, Willer alleges, Jhaveri successfully dissuaded him from contacting an independent appraiser or reviewing any of CCE's books and records. Willer also asserts that Jhaveri concealed material corporate documents and financial statements from him and failed to state material facts about the value of CCE.
On February 20, 2005, Willer sent Jhaveri a letter stating that he wished to exercise his put option under the installment terms set out in the Agreement. The letter directed that CCE pay $10,000 either to the Health and Welfare Insurance Benefits/Laborers International Pension and Welfare Fund or to Willer in cash by July 1, 2005; $150,000 to Willer by April 1, 2005; and $150,000 to Willer by July 1, 2005. Willer claims that he has not received the full consideration to which the parties agreed. He also contends that the actual value of CCE at the time he exercised his put option was at least $5.3 million and that his 24.5 percent interest was therefore worth at least $1,298,500, rather than $310,000.
Several of Willer's claims also concern CCE's pension and profit sharing plans. Willer became a participant in the pension plan at the time of its inception on January 1, 1990. Although it is unclear when CCE formed the profit sharing plan, Willer participated in that plan, too. Jhaveri and CCE later merged the pension plan into the profit sharing plan, effective December 1, 2002. At that time, defendants amended the profit sharing plan to provide that no additional benefits would accrue after November 15, 2002.
Willer claims that he did not receive any information from defendants about his interest in the merged plan after October 20, 2004. On that date, Willer's wife received a fax stating the value of Willer's interests in the two earlier plans as of December 31, 2002. The fax listed the value of Willer's pension plan account on that date as $106,600.97 and the value of his profit sharing plan account as $140,150.52. Willer states that he made unsuccessful attempts after that time to find out from defendants the status of the merged profit sharing plan, the value of his interest in it, the nature of the merged plan's investment portfolio, and his own return on investment.
Willer alleges that defendants' conduct with respect to the Buy-Sell Agreement and the exercise of his put option violated the Securities Act, the Exchange Act, and the Illinois Securities Law. Willer also alleges that defendants breached the Buy-Sell Agreement and the put option contract. He further claims that defendants breached the indemnification provision in the Agreement and that they committed fraud in inducing him to enter into the Agreement and to exercise the put option. Willer additionally claims that CCE is liable for all of Jhaveri's conduct under the doctrine of respondeat superior. Willer's last common law claim is that Jhaveri, as the majority shareholder of CCE, breached his fiduciary duty to Willer, the minority shareholder. Finally, Willer claims that Jhaveri and CCE breached their fiduciary duties under ERISA.
Defendants CCE and Jhaveri contend that Willer's federal securities claims should be dismissed for failure to state a claim, that his state and common law claims should then be dismissed for lack of jurisdiction following the dismissal of the federal claims, and that his ERISA claims should be either dismissed as moot with leave to reinstate or held in abeyance. ...