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TABFG, LLC v. Pfeil

October 28, 2009

TABFG, LLC, PLAINTIFF,
v.
RICHARD PFEIL, DEFENDANT.



The opinion of the court was delivered by: Judge Robert W. Gettleman

MEMORANDUM OPINION AND ORDER

Plaintiff TABFG, LLC has brought a four count First Amended Complaint ("Amended Complaint") against defendant Richard Pfeil ("Pfeil") alleging conversion, tortious interference with contractual relations, conspiracy and punitive damages. Defendant Pfeil has moved to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim and to strike certain allegations under Fed. R. Civ. P. 12(f). For the reasons stated below, defendant's motion is granted in part and denied in part.

BACKGROUND

In April 2003, plaintiff entered into a joint venture with NT Prop Trading, LLC ("NT Prop"), an Illinois limited liability company, for the purpose of trading securities and futures products. The managers of NT Prop were Larry Nocek and William D. Anthony, Jr. According to the Amended Complaint, defendant Pfeil was not an officer, director or manager of NT Prop, although a "sham" entity owned by Pfeil, Pfeil Electronic Trading, LLC, formerly Pfeil Commodities Fund LLC ("Pfeil Commodities"), was a member of NT Prop. According to the Amended Complaint, Pfeil directed Anthony's actions in connection with the joint venture for Pfeil's own personal interest.

Under the terms of the joint venture agreement, plaintiff made all the trades for the joint venture and NT Prop provided funding. The agreement further provided for a distribution to plaintiff of 50% of the net trading profits of the joint venture, less plaintiff's share of certain start-up expenses, legal fees and settlement costs.

The joint venture traded from its inception in April 2003 until September 17, 2003, at which time the United States District Court in Philadelphia ordered that plaintiff, Cal Fishkin and Igor Chernomzav, plaintiff's employees who were trading for the joint venture, be enjoined from making certain trades that they were conducting on behalf of the joint venture. During the time that the joint venture traded, it realized substantial trading profits in the amount of at least $3,411,144.70.

After the injunction was entered, plaintiff made numerous requests and demands to Pfeil, Anthony and Nocek that the joint venture funds be distributed in accordance with the joint venture agreement. In late 2003, Pfeil and Nocek transferred all of the funds belonging to the joint venture, approximately four million dollars, to a new account at the Lakeside Bank.

The Amended Complaint alleges that as of January 2004, $1,019,634.41 of the funds held in the account at Lakeside Bank belonged to plaintiff, based on its right to 50% of the net trading profits of the joint venture after certain costs, expenses, and payments. At that time, $290,000 of this amount was distributed to Fishkin and Chernomzav, employees of the plaintiff. The Amended Complaint alleges that Pfeil and Nocek then converted the remaining $719,364.41 that belonged to plaintiff. Pfeil and Nocek distributed $2,720,000 to Pfeil personally, $650,000 to Nocek personally, $100,000 to pay legal fees for themselves and their business entities, and then left $100,000 in the account under their control.

DISCUSSION

I. Legal Standard

The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits. Gibson v. Chicago, 910 F.2d 1510, 1520 (7th Cir.1990). Federal notice pleading requires only that the plaintiff "set out in her complaint a short and plain statement of the claim that will provide the defendant with fair notice of the claim." Scott v. City of Chicago, 195 F.3d 950, 951 (7th Cir.1999). When ruling on a motion to dismiss, the court must accept all factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Szumny v. Am. Gen. Fin., Inc., 246 F.3d 1065, 1067 (7th Cir.2001). Further, the court will not consider documents or other materials beyond those attached to or referred by the complaint itself. See Fed. R. Civ. P. 12(d); see also Scibetta v. Rehtmeyer, Inc., 2005 WL 331559, at *1--2 (N.D. Ill. Feb. 9, 2005) (considering contracts attached to the plaintiff's complaint, but not exhibits attached to a motion to dismiss) (citing Wright v. Assoc. Ins. Cos., 29 F.3d 1244, 1248 (7th Cir.1994)). To survive a Rule 12(b)(6) motion, a plaintiff need not provide detailed factual allegations, but must provide "more than labels and conclusions, and a formulaic recitation of the elements of the cause of action." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level." Id. at 1965.

Fed. R. Civ. P 12(f) provides that a court "may order stricken from any pleading any insufficient defense or any redundant, immaterial, or scandalous matter." Cumis Ins. Soc., Inc. v. Peters, 983 F.Supp. 787, 798 (N.D. Ill.1997). A movant must show that the allegations are devoid of merit, unworthy of any consideration, and unduly prejudicial. Id. A motion to strike is generally disfavored. Heller Fin., Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir.1989).

II. Conversion

In Count I of the Amended Complaint, plaintiff alleges that by jointly distributing and acting in concert to take the joint venture funds for themselves, Pfeil and Nocek converted $719,364.41 that belonged to plaintiff. Pfeil has moved to dismiss Count I for failure to state a claim, arguing that the Amended Complaint fails ...


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