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Adams v. Pull'R Holding Co.

April 20, 2010


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


Plaintiff/Counter-defendant Robert G. Adams has brought a three count amended complaint against defendants/counter-plaintiffs Pull'R Holding Company, LLC. ("PHC"), Vincent Lin, Hugo Lin, Jason Liu, Judy Lee, and Anthony Ranallo alleging: breach of contract against PHC (Count I); civil conspiracy against Hugo Lin, Anthony Ranallo, Jason Liu, and Judy Lee (Count III); and declaratory judgment (Count IV).*fn1 Defendants have moved to dismiss Counts II and III of the amended complaint pursuant to Fed. R. Civ. P. 12(b)(6). Because plaintiff has voluntarily dismissed Count II, the court will consider only defendants' arguments as related to Count III.

Defendants/Counter-plaintiffs have filed a fifteen-count counterclaim alleging: breach of operating agreement (Claim I); breach of employment agreement (Claim II ); breach of assignment agreement (Claim III); breach of fiduciary duty (Claim IV); fraud (Claim V); unjust enrichment - improper payments (Claim VI); breach of contract (Claim VII); conversion (Claim VIII); tortious interference with a prospective business advantage (Claim IX); defamation per se (Claim X); declaratory judgment - ownership of inventions (Claim XI); declaratory judgment -plaintiff's credit cards (Claim XII); violation of the Illinois Trade Secrets Act (Claim XIII); violation of restrictive covenants (Claim XIV); and injunctive relief for defamation (Claim XV). Plaintiff has moved to dismiss Claims I-III, V, VIII-X, and XIV-XV of defendants' counterclaim.

For the reasons stated herein, defendants' motion to dismiss is granted. Plaintiff's motion to dismiss is granted in part and denied in part.


For the purposes of the amended complaint and the counterclaim, the parties are in agreement on the basic facts unless noted. PHC was formed on August 15, 2006, and is in the business of manufacturing, distributing, and marketing proprietary hoist/puller products, jacks, tools, accessories, fence installation tools, replacement parts, work wear, protective products, and construction and do-it-yourself tools. The company is governed by an operating agreement ("Operating Agreement") which sets forth the structure of company, the board of directions, and details the rights and obligations of its members ("Members"). The undisputed Members of PHC, are Vincent Lin, Hugo Lin, Jason Liu, Anthony Ranallo, and Judy Lee. The parties dispute whether plaintiff is a Member. On November 1, 2006, plaintiff was hired by PHC as its President and Chief Executive Officer. The terms of his employment were memorialized in an employment agreement ("Employment Agreement"). Plaintiff was terminated for cause in September 2009.


I. Legal Standard

Defendant has moved to dismiss the complaint under Fed. R. Civ. P. 12(b)(6) and 9(b). When ruling on a motion to dismiss for failure to state a claim, the court accepts the complaint's well-pleaded factual allegations as true and draws all reasonable inferences in the plaintiff's favor. Sprint Spectrum L.P. v. City of Carmel, Indiana, 361 F.3d 998, 1001 (7th Cir. 2004). The complaint must describe the claim in sufficient detail to give the defendant fair notice of what the claim is and the grounds on which the claims rest. The allegations must plausibly suggest that the plaintiff has a right to relief, raising the possibility above the "speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-73, 167 L.Ed.2d 929 (2007). Additionally, allegations of fraud must meet the particularity requirements of Fed. R. Civ. P. 9(b), which means the complaint must allege the "who, what, when, where, and how" of the fraud. DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990). At the motion to dismiss stage, Rule 9(b) requires only that the plaintiff identify the alleged misrepresentations, not actually prove that the statement was false. See Bankers Trust Co. v. Old Republic Ins., Co., 959 F.2d 677, 683 (7th Cir. 1992).

II. Defendants' Motion to Dismiss Count III

Plaintiff alleges that Hugo Lin, Anthony Ranallo, Jason Liu, and Judy Lee entered into an agreement with one another to harm plaintiff and acted in concert with each other to falsify reasons to terminate plaintiff for cause. The Illinois courts define civil conspiracy as "a combination of two or more persons for the purpose of accomplishing by concerted action either an unlawful purpose or a lawful purpose by unlawful means." McClure v. Owens Corning Fiberglas Corp., 188 Ill. 2d 102, 133 (1999). To state a claim for civil conspiracy, a plaintiff must allege an agreement and a tortious act committed in furtherance of that agreement. Adcock v. Brakegate, Ltd., 164 Ill. 2d 54, 62-64 (1994).

Plaintiff's allegations fail to state a cause of action for civil conspiracy. Although plaintiff has alleged that defendants engaged in a "lawful act in an unlawful manner," he has failed to allege an underlying tortious act to support this allegation. "The conspiracy theory has the effect of extending liability for a tortious act beyond the active tortfeasor to [participating] individuals." McClure, 188 Ill 2d at 133. Plaintiff's only other substantive claim is for breach of contract. Absent any claims or allegations of tortious conduct, plaintiff's civil conspiracy claim fails. Accordingly, defendants' motion to dismiss Count III of the amended complaint is granted. III. Plaintiff's Motion to Dismiss Claims I-III, V, VIII-X, and XIV-XV of the Counterclaim

A. Additional Allegations Included in the Counterclaim

On August 15, 2006, plaintiff entered into the Operating Agreement as a Member of PHC. The Operating Agreement defines "Member"as "a Person who is named in this Agreement as a Member owning a Membership Interest, and any Person who later becomes a Member pursuant to the provisions of this Agreement." The counterclaim alleges that plaintiff was a Member of PHC and therefore bound by the terms of the Operating Agreement. Plaintiff is alleged to have also executed an assignment agreement ("Assignment Agreement") whereby ...

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