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Cashen v. Integrated Portfolio Management

November 20, 2008


The opinion of the court was delivered by: Judge Robert M. Dow, Jr.


Defendants Integrated Portfolio Management, Inc., Liliana Shields and Earl Shields,*fn1 move to dismiss [23] Counts I-III of Plaintiff's complaint for failure to state a claim under Rule 12(b)(6).*fn2 For the following reasons, Defendants' motion to dismiss [23] is denied as to Count I and granted without prejudice as to Counts II and III, and Plaintiff is given leave to file an amended complaint within 21 days of the entry of this decision.

I. Background

This lawsuit arises out of a loan between family members, at least partially for business purposes, that was not repaid to Plaintiff's satisfaction. Plaintiff Robert Cashen ("Cashen" or "Plaintiff") is Defendant Earl Shields' stepbrother. Compl. at ¶ 4. At the time that the complaint was filed, Earl Shields was married to Defendant Liliana Shields, but the complaint alleges that they were in the process of divorcing. Id. at ¶ 5. Earl Shields and Liliana Shields are joint owners of Integrated Portfolio Management, Inc. ("IPM"). Id. at ¶ 8. IPM is an Illinois corporation which formerly was known as First Credit Services Inc. ("FCS") and also does (or has done) business as Stanley Weinberg & Associates. Id. at ¶ 6. Liliana Shields is IPM's Chief Executive Officer, Treasurer and Secretary. Id. at ¶ 14. Prior to September 25, 2007, Earl Shields was the President and Chief Operating Officer of IPM. Id. at ¶ 15. Liliana Shields terminated Earl Shields on or about September 25, 2007, and has taken over IPM. Id.

According to Cashen's complaint, on or about February 1, 2007, Defendants FCS and Earl Shields agreed to the terms of a note in favor of the Plaintiff. Compl. at ¶ 9. Plaintiff attached the note to his complaint, although it was not signed by any of the Defendants. Under the terms of the note, Plaintiff was to loan $575,000 to FCS in exchange for repayment of all principal and installment payments by October 1, 2007, in an amount totaling $614,069.92. Id. Earl Shields requested the loan for IPM's use and each of the defendants were aware of and benefitted from the loan. Id. at ¶ 10.

Cashen alleges that he complied with the terms of, and performed his obligations under, the note by providing $575,000 to FCS, which Defendants deposited.*fn3 Compl. at ¶ 12. Plaintiff did not receive the principal payment of $575,000 on October 1, 2007, or at any time prior to the filing of the complaint. Id. at ¶ 17. In addition, Plaintiff has neither received certain installment payments, nor the five percent late charges to which he was entitled under the note. Id. Plaintiff therefore seeks recovery of more than $616,948. Id. Plaintiff further alleges that the actions of Liliana Shields and Earl Shields have left IPM particularly vulnerable to corporate waste and mismanagement, affecting both the Plaintiff's secured interests as well as his ultimate ability to recover. Id. at ¶ 16.

Plaintiff attached to his complaint a UCC financing statement, filed in October of 2007. It lists "all goods, fixtures, personality, appliances, inventory, machinery, equipment, furniture, and trade fixtures owned by it [FCS] and located at [FCS] and any additions and/or replacements thereto." Compl. Ex. 2.*fn4

II. Standard of Review

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint and not the merits of the suit.See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to dismiss, the complaint first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1969 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief above the "speculative level," assuming that all of the allegations in the complaint are true. E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Bell Atlantic, 127 S.Ct. at 1965, 1973 n.14). "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Bell Atlantic, 127 S.Ct. at 1969. For present purposes, the Court accepts the allegations in the complaint as true, as precedent instructs. See, e.g., Singer v. Pierce & Assocs., P.C., 383 F.3d 596, 597 (7th Cir. 2004). The Court at this juncture takes no position on whether any of the allegations are, in fact, well founded.

As noted above, Plaintiff has attached to his complaint various documents, including an unsigned promissory note, a copy of a deposited check, and a UCC financing statement. "A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes." Fed. R. Civ. P. 10(c). While the Court must generally accept Plaintiff's allegations as true, the Court is free to examine independently and form its own conclusions as to the proper construction and meaning of documents attached to and made part of a complaint. See Rosenblum v. Ltd., 299 F.3d 657, 661 (7th Cir. 2002) (quoting 5 Wright & Miller, Federal Practice & Procedure: Civil 2d § 1327 at 766 (1990)). To the extent that the terms of attached documents conflict with the allegations of the complaint, the attached documents control. Centers v. Centennial Mortgage Inc., 398 F.3d 930 (7th Cir. 2005). "[A] plaintiff may plead himself out of court by attaching documents to the complaint that indicate that he or she is not entitled to judgment." Ogden Martin Sys. of Indianapolis, Inc. v. Whiting Corp., 179 F.3d 523, 529 (7th Cir. 1999) (quoting In re Wade, 969 F.2d 241, 249 (7th Cir. 1992)).

III. Discussion

Plaintiff's complaint consists of three counts: Count I -- Breach of Contract against IPM and Earl Shields; Count II -- Tortious Interference with Contract against Liliana Shields; and, Count III -- Constructive Trust against Liliana Shields and Earl Shields.

A. Breach of Contract

To state a claim for breach of contract under Illinois law, a plaintiff must allege: (1) the existence of a valid and enforceable contract; (2) its own performance under the terms of the contract; (3) a breach of the contract by the defendant; and (4) an injury suffered as the result of the defendant's breach. See, e.g., Dames & Moore v. Baxter & Woodman, 21 F. Supp. 2d 817, 823 (N.D. Ill. 1998) (citation omitted); Klem v. Mann, 279 Ill. App. 3d 735 (1st Dist. 1996). Defendants' motion to dismiss Count I rests entirely on the premises that (i) the unsigned promissory note attached to the complaint is a negotiable instrument subject to Article 3 of the Illinois UCC (810 ILCS 5/1-101 et seq.) and (ii) under Article 3, ...

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