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Moede v. Pochter

August 27, 2009


The opinion of the court was delivered by: Milton I. Shadur Senior United States District Judge


Peter Moede ("Moede") filed this suit to recover his share of the proceeds in a sale of property in which he was one of five investors. Three of the four co-investor defendants--Ronald Sandler ("Sandler"), Mitchell Miller ("Miller") and Robert Michelson ("Michelson")--have moved for partial summary judgment on their counterclaim for breach of contract.*fn1 For the following reasons, their motion is denied.

Procedural Issues

Two aspects of defendants' factual statements do not conform to the requirements of this District Court's LR 56.1. Those issues will be addressed at the outset, before this opinion turns to the merits.

First, defendants' response to Moede's statement of additional facts ("D. Resp.") includes claimed surreplies to eight of Moede's responses to defendants' original factual submission. But LR 56.1(a)(3) does not permit that. Instead it allows a movant to submit only a concise response to the non-movant's statement of additional facts, in the same form as that prescribed for the non-movant's response to the movant's original statement: "numbered paragraphs, each corresponding to and stating a concise summary of the paragraph to which it is directed, and a response to each numbered paragraph in the moving party's statement, including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting materials relied upon" (LR 56.1(b)(3)(B)). Moreover, a response to a statement of facts (or to a statement of additional facts) "is not the place for purely argumentative denials," an apt description of defendants' improper surreplies (see Malec v. Sanford, 191 F.R.D. 581, 584 (N.D. Ill. 2000)). So the purported surreplies will be disregarded.

Second, Moede contends that defendants' LR 56.1 statement of facts ("D. St.") should be stricken because all or part of D. St. ¶¶12, 14, 22 and 23 contain no record citations. Although failure to comply with the LR requirements may indeed constitute grounds for denial of a motion, such a draconian measure is not appropriate here. Moede seeks to rely on Mount v. LaSalle Bank Lake View, No. 92 C 5645, 1998 WL 381971 (N.D. Ill. July 2), where plaintiffs backed up none of their factual statements with citations to the record and also filed an amended fact statement "[w]ell past even the proverbial eleventh hour" (id. at *4).*fn2 By contrast, the vast majority of defendants' statements here did include record citations. In addition, Moede (unlike the defendant in Mount) would not be prejudiced by consideration of defendants' four unsupported statements, for he has submitted substantive responses to those statements along with his objection. Hence defendants' LR 56.1 statement will not be stricken.


On April 20, 2004 Moede, Pochter and the defendants entered into an Operating Agreement ("Agreement") to form BD Venture 2 LLC ("BD"), an Illinois limited liability company (D. St. ¶7). BD was created to own a 50% interest in Mt. Prospect Partners, LLC, a company that was to manage, develop and sell a parcel of real estate (the "Land") in Mount Prospect, Illinois (id. ¶8). Under the Agreement Moede would contribute $125,000 to the venture to hold a 50% interest in BD (id. ¶10), while each defendant would contribute $25,000 for a 10% interest (id.) and Pochter, who was designated as BD's managing member, would contribute $50,000 for a 20% interest (id. ¶¶9-10).

Shortly after BD's formation, each defendant contributed his $25,000 share (D. St. ¶11). Although between May 2003 and May 2004 Moede made several payments to Pochter totaling $38,250, he did not fund his contribution fully until January 2006 (M. St. ¶25).*fn3 Nonetheless, BD's 2004 tax return (D. Ex. B) reported that he had paid his full $125,000 contribution that year.

On October 24, 2006 Pochter sent an email to Moede and defendants (D. Ex. F) stating that BD had received an offer to buy its 50% stake in Mt. Prospect Partners for $200,000 (D. St. ¶15). Pochter recommended going forward with the sale, and he asked the others to let him know if they objected to his doing so. Moede did not respond to the email immediately (M. St. ¶30). Pochter went ahead with the sale anyway--indeed, it appears he had approved the deal even before he emailed his partners, for on October 25 a deposit was made of a $200,000 check dated October 24 (D. Ex. I).

That unilateral action by Pochter violated the Agreement, which required the consent of the LLC members holding a majority of the percentage interests for specified "major decisions," including "approving the selling of all or substantially all of the assets of [BD]" (D. Ex. A at §6.3). Because Moede held a 50% interest, that necessarily required his approval, which he had not given (M. St. ¶30).

On or about October 27, 2006 each defendant received $29,000 from Pochter--an amount equal to his original capital contribution plus a return on the investment (D. St. ¶21). After Miller advised Moede's accountant Daryl Nirode ("Nirode") that defendants had received those distributions, Moede directed Nirode to ask Pochter for his distribution from the sale (M. St. ¶¶32-33). Moede received a $100,000 check from Pochter on December 15, 2006, but he was unable to cash the check because a stop payment order had been placed (id. ¶33). Moede then received a second $100,000 check on December 27, 2006, but he was unable to cash that one because there were insufficient funds to cover it (id.).

Pochter later disappeared, and in June 2007 Moede obtained a $125,000 default judgment against him in this action. Moede has been unable to collect on the judgment.

Jurisdiction and Venue

Jurisdiction exists here under 28 U.S.C. §1332(a),*fn4 for there is the requisite diversity of citizenship and the amount in controversy exceeds $75,000. Venue is proper both (1) under Section 1391(a)(1) because all defendants reside in the Northern District of Illinois and (2) under Section 1391(a)(2) because a substantial part of the acts or omissions alleged in the Complaint occurred in this judicial district.

That current posture of the case has cured an earlier jurisdiction defect, for Moede's original Complaint for Declaratory Judgment had included BD as a defendant. That Complaint was dismissed without prejudice because BD's presence destroyed complete diversity--numerous cases exemplified by Thomas v. Guardsmark, LLC, 487 F.3d 531, 534 (7th Cir. 2007) teach that the citizenship of an LLC is that of each of its members. Moede was ...

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