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Lyssenko v. International Titanium Powder

July 23, 2010


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


Taras Lyssenko has filed a six-count Fifth Amended Complaint against his former employer, International Titanium Powder ("ITP"), and its CEO, Stanley Borys, asserting claims for breach of contract (Count I), promissory estoppel (Count II), and defamation per se (Counts III, IV, V, and VI).*fn1 Defendants ITP and Borys filed a motion to dismiss Counts IV, V, and VI, which the court granted as to Counts IV and V and denied as to Count VI in its March 25, 2010, opinion (the "Opinion"). Lyssenko subsequently filed a motion to reconsider, which the court denied as to both counts. However, Lyssenko was given leave to amend the complaint to re-plead Count V.*fn2 Defendants have moved to dismiss Count V of the Fifth Amended Complaint filed on June 15, 2010, under Fed. R. Civ. P. 12(b)(6). For the reasons discussed below, defendants' motion to dismiss Count V is denied.

In addition, Lyssenko has moved to strike ITP's newly asserted affirmative defense. On May 5, 2010, ITP alleged for the first time that Lyssenko was not an ITP employee, and thus Lyssenko's contract with ITP (relating to Count I) and any related promise (relating to Count II) are illegal and unenforceable under 41 U.S.C. § 254 and 10 U.S.C. § 2306. For the reasons discussed below, Lyssenko's motion to strike ITP's affirmative defense is granted.


The facts alleged in the complaint are taken as true for purposes of the instant motions. Bontkowski v. First Nat'l Bank of Cicero, 998 F.2d 459, 461 (7th Cir. 1993). Lyssenko alleges that he entered into an oral agreement with ITP in 2002, under which he would seek government funding for ITP projects involving the development of a process to produce low-cost titanium and titanium alloys. ITP agreed to pay him 5% of the funds received as a result of his efforts. From 2002 to 2004, Lyssenko contacted members of Congress and representatives of various government agencies in pursuit of funding for ITP and engaged in business development activities that were outside the scope of his agreement with ITP.

In or around February 2004, after ITP received funding from the government, the parties modified their agreement. According to Lyssenko, obligations remained the same under the modified agreement (i.e., Lyssenko would continue to seek government funding on ITP's behalf, and ITP was still obligated to compensate Lyssenko in the amount of 5% of funding obtained), but additional provisions were agreed upon. Specifically, Lyssenko would receive installment payments in the form of a monthly salary of $9000, health insurance, and FICA, to pay down the total amount owed to Lyssenko under the original agreement. Although Lyssenko claims that ITP failed to pay the full amount owed to him, he does not claim that ITP failed to pay the agreed-upon monthly salary or provide benefits during the period from February 2004 through the termination of his employment in August 2007.

The parties' relationship soured. Lyssenko claims that although he continued to be successful in obtaining funds for ITP from a number of government sources, Borys and others at ITP began criticizing him and seeking ways to avoid paying him under the original agreement.

Lyssenko was terminated in August 2007. He claims that, in addition to refusing to pay the balance owed him, Borys and others at ITP have been defaming and disparaging Lyssenko since his termination. Specifically, Lyssenko alleges that during an ITP board meeting on January 10, 2008, Borys made false and defamatory statements in an attempt to prevent Lyssenko from receiving compensation for his efforts on behalf of ITP.


Motion to Dismiss

The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to rule on its merits. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). When considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the court accepts all well-pleaded allegations of the complaint as true and draws all reasonable inferences in the plaintiff's favor. McMillan v. Collection Prof'ls, Inc., 455 F.3d 754, 758 (7th Cir. 2006). Nevertheless, the complaint must plead sufficient facts to suggest plausibly that the plaintiff is entitled to relief. Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007).

Count V (Defamation Per Se)

Lyssenko alleges that, during a board meeting on January 10, 2008, Borys*fn3 stated to ITP board members and guests (Tracy Huber and Wayne Nyberg) that Lyssenko had "violat[ed] his employment conditions" at ITP, "remov[ed] and/or destr[oyed] ITP business records," engaged in "protracted hostility towards other ITP employees," and engaged in an "unauthorized diversion of the expected DOD Defense Appropriations line item from the Army to the Title III program." Lyssenko claims that these statements, which are taken almost verbatim from the board meeting minutes, constitute per se defamation because they prejudice him in his profession and because they suggest an inability to perform his employment duties and a lack of integrity. See, e.g., Hopewell v. Vitullo, 299 Ill. App. 3d 513, 517 (1 Dist. 1998) (recognizing five categories of statements that constitute defamation per se).

Defendants argue that the statements made at the board meeting are protected by a qualified privilege. A statement is protected by a qualified privilege if it is: (1) made in good faith; (2) made pursuant to an interest or duty to be upheld; (3) limited in scope to that purpose; (4) made on a proper occasion; and (5) published in a proper manner and to the proper parties. Edwards by Phillips v. Univ. of Chicago Hosps. and Clinics, 137 Ill. App. 3d 485, 489 (1 Dist. 1985). In its Opinion, ...

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