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Ben Gordon, G7, Inc. v. Vitalis Partners

July 31, 2008

BEN GORDON, G7, INC., AND BG4, INC., PLAINTIFFS,
v.
VITALIS PARTNERS, LLC; LARRY HARMON & ASSOCIATES, P.A.; KCD DEVELOPMENTS, LLC; LARRY HARMON AND KENNY CRUZ, DEFENDANTS.



The opinion of the court was delivered by: Charles P. Kocoras, District Judge:

MEMORANDUM OPINION

This matter comes before the court on Counterdefendant Ben Gordon's motion to dismiss the counterclaim of Counterplaintiffs Larry Harmon and Harmon & Associates, P.A. ("LHA") pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, Gordon's motion is denied as to Counts I-III and granted as to Count IV.

BACKGROUND

Gordon is a professional basketball player who plays for the Chicago Bulls, a team in the National Basketball Association ("NBA"). He is a citizen of Illinois. Harmon and LHA are citizens of California.

According to the counterclaim, on May 17, 2004, Gordon and LHA executed a consulting arrangement (the "Agreement") that provided that LHA would act as Gordon's financial advisors and consultants for the duration of his NBA career. Gordon terminated LHA's services in 2007, even though he was still playing for the Bulls. Gordon subsequently filed a suit against Harmon, LHA, and three other parties alleging breach of contract and breach of fiduciary duty. Although the suit was originally filed in Illinois state court, Defendants removed the case here on diversity grounds.

Harmon and LHA filed a four-count counterclaim against Gordon alleging breach of contract, defamation, commercial disparagement, and tortious interference with prospective business advantage. In the breach of contract claim, LHA alleges that Gordon was to pay LHA specific fees for a four-year period. For the first year, the fee was $4,000 per month plus out-of-pocket expenses; for the second, $5,000 per month plus out-of-pocket expenses; and for the third and fourth, $6,000 per month plus out-of-pocket expenses. LHA maintains that, in 2006, Gordon agreed to change the fee to 1.5% of his total income rather than the rates set out in the Agreement. LHA alleges that it fully performed all of its obligations under the Agreement, that Gordon breached the Agreement by prematurely terminating the relationship, and, as a result of that breach, LHA sustained significant financial damage.

Count II alleges that Gordon defamed Harmon and LHA by making the allegations set forth in the complaint and communicating them to third parties despite knowing they were false. The commercial disparagement claim incorporates the allegations of Count II but alleges that the statements also disparaged the quality of services offered by Harmon and LHA. Harmon and LHA allege that Gordon's actions have caused a substantial decrease in business.

Finally, in support of the tortious interference claim, Harmon and LHA assert that Gordon's statements interfered with their "legitimate expectancy" of entering into business relationships with prospective clients and prevented those expectancies from becoming valid relationships. The pool of prospective clients consisted primarily of "athletes in the United States."

Gordon now seeks to dismiss all four counts pursuant to Rule 12(b)(6).

LEGAL STANDARD

Rule 12(b)(6) evaluates the legal sufficiency of a plaintiff's complaint. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). A court, in ruling on a motion to dismiss a counterclaim, uses the same standards of review that apply to claims made in the main complaint. See Cozzi Iron & Metal Inc. v. U.S. Office Equipment, Inc., 250 F.3d 570, 574 (7th Cir. 2001). In ruling on a motion to dismiss, a court must draw all reasonable inferences in favor of the plaintiff, construe all allegations of a complaint in the light most favorable to the plaintiff, and accept as true all well-pled facts and allegations in the complaint. Bontkowski v. First Nat'l Bank of Cicero, 998 F.2d 459, 461 (7th Cir. 1993); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). To be cognizable, the factual allegations contained within a complaint must raise a claim for relief "above the speculative level." Bell Atlantic Corp. v. Twombly, -- U.S. --, 127 S.Ct. 1955, 1965 (2007). A pleading need only convey enough information to allow the defendant to understand the gravamen of the complaint. Payton v. Rush-Presbyterian-St. Luke's Med. Ctr., 184 F.3d 623, 627 (7th Cir. 1999).

With these principles in mind, we now consider Gordon's motion to dismiss.

DISCUSSION

Before turning to the substance of the arguments presented in the instant motion, we must briefly examine the question of which state's law provides the rules of decision ...


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