The opinion of the court was delivered by: Judge Joan B. Gottschall
MEMORANDUM OPINION & ORDER
Judgment against Defendants M & M Marketing, LLC ("M & M") and Matthew H. Anselmo on Count I was entered in the amount of $2,200,000, plus prejudgment interest, on January 31, 2008. A default on Counts III and IV as against M & M and Anselmo was entered on May 29, 2009, and the court requested briefing from Blumenthal explaining how his complaint entitled him to punitive damages on these claims. The court also dismissed Count II on May 29, 2009. Blumenthal has filed a memorandum of law, and a declaration, in support of his damages claims.
The court has also been advised that an Involuntary Petition in Bankruptcy was initiated against M & M on June 3, 2009. An automatic stay related to M & M is therefore necessary. 11 U.S.C. § 362(a).
Anselmo being in default, all well-pleaded facts contained in the complaint are to be taken as true, except as to those relating to the amount of damages. Fed. R. Civ. P. 8(b)(6); Black v. Lane, 22 F.3d 1395, 1399 (7th Cir. 1994). However, this applies to well-pleaded facts only, not to legal conclusions, and "it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit to mere conclusions of law." Id. at 1407 (quoting 10 Charles A. Wright, Arthur R. Miller & Mary K. Kane, Fed. Prac. & Proc. § 2688 at 447-48 (1983)). The facts must come from the complaint only, for this is the only document properly served upon Anselmo, and the only document which Anselmo is deemed to have admitted as a result of his default. Id..
The basic facts in Blumenthal's complaint are as follows. Blumenthal was approached by Anselmo in May, 2007, representing that he and his company, M & M, had a business opportunity with Northrup Grumman Corp., for which Anselmo needed funding. Anselmo represented that an order from Northrup Grumman Corp. already existed for shirts that would be designed by M & M, but that he was short on operating capital and needed $1,200,000 from Blumenthal and a third party, Dr. Vicari, to complete the order. An agreement was reached whereby Blumenthal provided $585,000 in two payments, on May 14, 2007, and on May 25, 2007. On the same day, Anselmo requested an additional $600,000, and he promised to return all of the original principal, plus 25% interest, on or before June 6, 2007.*fn1
Anselmo failed to make the payment required on June 6, 2007, and made misrepresentations to Blumenthal about when payment would be made. Anselmo never made good on the contract.
II. Judgment on Count III, Conversion
Judgment on Count III, the conversion claim, is denied. To plead a conversion claim, a plaintiff must plead four elements: (1) he has a right to the property; (2) he has an absolute and unconditional right to the immediate possession of the property; (3) he made a demand for possession; and (4) the defendant wrongfully and without authorization assumed control, dominion, or ownership over the property. Cruthis v. Firstar Bank, N.A., 822 N.E.2d 454, 463, (Ill. App. Ct. 2004). However, a breach of contract does not automatically gives rise to a claim for conversion; conversion requires some additional tort, something beyond the mere failure to perform on the contract. See IOS Capital, Inc. v. Phoenix Printing, Inc., 808 N.E.2d 606, 615 (Ill. App. Ct. 2004) (Cook, J., concurring) (noting that simply failing to pay a debt does not give rise to conversion claim). This distinction between breach of contract and conversion has also been characterized as follows: "It must be shown that the money claimed, or its equivalent, at all times belonged to the plaintiff and that the defendant converted it to his own use." In re Thebus, 483 N.E.2d 1258, 1261 (Ill. 1985). For example, if a patron gives a waiter a $500 bank note to pay a bill of $6, but the waiter instead leaves with the bank note, then a conversion claim is appropriate-the note was owned at all times by the patron, and the patron never intended to relinquish ownership for any period of time to the waiter. See id.
Here, Blumenthal did relinquish ownership during the pendency of the contract. The money was to be returned to him, with substantial interest, on June 6, 2007, but Blumenthal has not established any facts that support his claim that he retained control over the funds throughout that period, nor that they would have been available to him prior to June 6, 2007. His complaint does state that "Plaintiff has an absolute right to his funds based upon the agreement made with the Defendants. That agreement required repayment on or before June 6, 2007." Compl. ¶ 67. But of course, that is the point-Blumenthal had a contract which established his right to the funds, on or after June 6, 2007. He had no right to retrieve his money prior to June 6. And he certainly did not have a right prior to June 6, 2007, to the original principal plus the 25 percent interest-the terms of the agreement between the parties-which is what he is asking this court to award him on his conversion claim.
In his declaration, and in Count IV of the Complaint, Blumenthal contends that the original agreement was fraudulently induced. This potentially could state a basis for a theory of conversion as to the original principal given by Blumenthal to the Defendants (but still not to the resulting interest, which only came into being because of the contract), for to some extent Blumenthal is alleging that Anselmo misappropriated the funds. However, this is a legal stretch-Blumenthal gave Anselmo the funds to invest them, and suggests that Anselmo diverted the funds for a purpose other than what he represented to Blumenthal. But this is merely a claim of fraudulent inducement, which has one of two remedies: rescission of the contract, or performance and a lawsuit for damages. Nessler v. Nessler, 902 N.E.2d 701, 706 (Ill. App. Ct. 2008). This is hardly an automatic and unconditional right to immediate possession.
Furthermore, the allegations in Count IV do not appear, by reference or otherwise, in Count III. This was possibly a mistake in drafting, but it ...