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Consumer Program Administrators, Inc. v. K.B. Parrish & Co.

December 9, 2009

CONSUMER PROGRAM ADMINISTRATORS, INC., PLAINTIFF,
v.
K.B. PARRISH & CO., L.L.P. DEFENDANT.



The opinion of the court was delivered by: Judge Blanche Manning

MEMORANDUM AND ORDER

Plaintiff Consumer Program Administrators, Inc. ("CPA") brought suit against K.B. Parrish & Co., LLP, alleging negligence in connection with a personal financial statement that Parrish prepared for an individual named James Rathmann and his car dealerships. Parrish moves to dismiss the complaint on several grounds, including that the court does not have personal jurisdiction over Parrish and that venue is not proper in the Northern District of Illinois. Alternatively, Parrish moves, pursuant to Fed. R. Civ. P. 12(b)(6), to dismiss the complaint on the ground that it fails to state a claim. Finally, Parrish asserts that if the complaint is not dismissed, CPA should be required to file a more definite statement under Fed. R. Civ. P. 12(e). For the reasons stated below, Parrish's motion is granted in part and denied in part.

I. Facts

In general, the complaint alleges that Rathmann retained Parrish to prepare personal financial statements for his wife and him. CPA alleges that when Parrish was retained, it knew that Rathmann intended to use the personal financial statements to assist in obtaining financing from third parties for the continuing operations of his two closely-held car dealerships, Jim Rathmann Chevrolet ("JRC") and Palm Bay Chevrolet ("PBC"). According to the complaint, the values of the Rathmanns' assets as stated in the personal financial statements prepared by Parrish were false, and Parrish knew or should have known that the stated asset values were false. Moreover, Parrish, despite knowing that the financial statements were going to be presented to third parties in order to obtain financing, failed to correct the false asset values or address the reliance by third parties on those purportedly false asset values.

CPA alleges that it reasonably relied on the false personal financial statements when it agreed to loan $2 million to Rathmann and his car dealerships. Rathmann defaulted on the note and allegedly breached other agreements entered into by the parties at the time the note was executed. In 2007, CPA sued Rathmann and his dealerships in the Northern District of Illinois, 07 C 3983, Consumer Program Administrators, Inc. v. Jim Rathmann Chevrolet, et al., which was pending before Judge Lefkow. Rathmann declared personal bankruptcy and PBC Investments, LP, another defendant, also declared bankruptcy. A default judgment in an amount over $4 million was entered against Jim Rathmann Chevrolet, but CPA has not recovered any of those damages.

Parrish alleges that it was "not until long after Rathmann and PBC filed for bankruptcy in November 2007. . . that CPA discovered and learned, for the first time," that the asset values stated in the personal financial statements were materially false and that it was Parrish, not Rathmann or anyone else, which calculated the false values.

II. Standard

A. Rule 12(b)(2)

In ruling on a motion to dismiss pursuant to Rule 12(b)(2) based on lack of personal jurisdiction, the court may consider matters outside the pleadings, such as affidavits and other materials submitted by the parties. See Fed. R. Civ. P. 12(b). The plaintiff bears the burden of establishing personal jurisdiction. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). In making its determination regarding personal jurisdiction the court must resolve any factual disputes in the plaintiff's favor, but must accept the allegations in the complaint as true only to the extent that they are not controverted by other evidence in the record. Id. The court must also accept uncontested jurisdictional facts presented by the defendant as true. Connolly v. Samuelson, 613 F.Supp. 109, 111 (N.D.Ill. 1985).

B. Rule 12(b)(6)

Rule 12(b)(6) permits a motion to dismiss a complaint for failure to state a claim upon which relief can be granted. To state such a claim, the complaint need only contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). On a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the court accepts the allegations in the complaint as true, viewing all facts, as well as any inferences reasonably drawn therefrom, in the light most favorable to the plaintiff. See Marshall-Mosby v. Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000).

The Seventh Circuit has recently synthesized the relevant Supreme Court caselaw as follows:

So, what do we take away from Twombly, Erickson, and Iqbal? First, a plaintiff must provide notice to defendants of her claims. Second, courts must accept a plaintiff's factual allegations as true, but some factual allegations will be so sketchy or implausible that they fail to provide sufficient notice to defendants of the plaintiff's claim. Third, in considering the plaintiff's factual allegations, courts should not accept as adequate abstract recitations of the elements of a cause of action or conclusory legal statements.

Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009).

Moreover, the Brooks court stated that the "plausibility requirement applies across the board, not just to antitrust cases." Id. However, the court should also take into consideration the complexity of the case when addressing whether a complaint alleges sufficient facts. See Limestone Dev. Corp. v. Village of Lemont, Ill., 520 F.3d 797, 803 (7th Cir. 2008) (amount of factual allegations required to state a plausible claim "will depend on the type of case" and "[i]n a complex antitrust or RICO case a fuller set of factual allegations than found in the sample complaints in the civil rules' Appendix of Forms may be necessary"). To be facially plausible, a ...


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