The opinion of the court was delivered by: Michael M. Mihm United States District Judge
Now before the Court are Defendants Robert Bosch Tool Corporation's, Barry MacLean's, J. Fred Risk's, and David P. Ransburg's ("Individual Defendants") Motions to Dismiss*fn1 pursuant to Federal Rule of Civil Procedure 12(b). For the reasons set forth below, Individual Defendant's Motions [#36], [#38], [#40] are GRANTED IN PART AND DENIED IN PART.
Plaintiff Rubbermaid Incorporated ("Rubbermaid") filed its Complaint [#3] against Defendants Robert Bosch Tool Corporation, Barry L. MacLean, J. Fred Risk, David P. Ransburg, LRN Holding, Inc., and John and Jane Does in the Central District of Illinois on November 25, 2009. Rubbermaid then filed an amended complaint [#32] on March 3, 2010.
Individual Defendants filed their Motions to Dismiss the Amended Complaint in early April 2010.
Rubbermaid is the owner of various trademarks having particular value. L.R. Nelson Corporation (later known as LRN Holding) ("LRN") manufactured and sold sprinklers, nozzles, timers, and other products related to watering lawns and gardens. Barry L. MacLean, J. Fred Risk, and David P. Ransburg are officers, directors, and shareholders of LRN ("Directors"). Bosch Tool Corporation ("Bosch") is a successor-in-interest to the judgment debtor, LRN, from a previously resolved dispute between Rubbermaid and LRN. This dispute resutled in a $2.75 million principal judgment being entered against LRN in North Carolina. Rubbermaid recorded this judgment in the Central District of Illinois on August 24, 2009 [Case No. 09-1053].
Rubbermaid and LRN negotiated terms of a licensing agreement in the fall of 2005 whereby Rubbermaid granted LRN use of its intellectual property in the sale of certain LRN products in return for royalty payments on those products. The license contained a guaranteed minimum periodic royalty payment clause. At or before the time of this agreement, LRN allegedly retained the services of a financial consulting firm to assist with LRN's financial difficulties. Rubbermaid was not aware of LRN's financial troubles. As of 2006, LRN had only paid $150,000 of the $1.1 million license agreement and requested that Rubbermaid amend the license agreement to reduce the minimum royalties figure for 2007, claiming that Rubbermaid prevented LRN from effectively launching royalty products. LRN did not disclose the company's financial difficulties. Rubbermaid amended the agreement in June 2006.
From 2006 until 2008, LRN still failed to pay on the license agreement and allegedly entered into several loan agreements with outside organizations such as Wells Fargo Foothill, Inc. ("Wells Fargo") and National City Bank ("NCB"). During this time, LRN also executed promissory notes and negotiated security interests with Defendants Ransburg, Risk, and MacLean while negotiating a further decrease in its minimum royalty payments to Rubbermaid in a second amended license agreement. In 2008, LRN started marketing its sale, which it did not disclose to Rubbermaid. LRN also renegotiated its lending agreement with Wells Fargo. LRN did not repay its promissory notes owed to Risk and MacLean nor did Risk or MacLean attempt to enforce the terms of their notes.
In March 2008, Rubbermaid filed a claim against LRN for breach of a license agreement and was granted a $2.75 million judgment. While this claim was being litigated, LRN allegedly entered into two separate agreements to convey all of its business assets. LRN conveyed one of its smaller divisions to Signature Control Systems, Inc. LRN conveyed the substantial remainder of its business assets to Defendant Bosch. In this agreement, Bosch allegedly agreed to assume all of LRN's debts and obligations except for the license agreement with Rubbermaid. After these transactions, Rick, MacLean, and Ransburg released their security interests and liens. Risk and MacLean then allegedly received personal guarantees from Ransburg for $1 million from Ransburg's personal funds. Risk, MacLean, and Ransburg were later allegedly paid over $4 million with funds collected on the sale of LRN's business assets. Bosch was purportedly responsible for earmarking several of these payments by collecting, identifying, and segregating amounts collected from one of LRN's accounts.
Rubbermaid alleges counts against Defendants MacLean, Risk, and Ransburg for (1) insider preferences (Count I); (2) fraudulent transfer with intent to hinder, delay, or defraud (Count II); (3) fraudulent transfers not made in good faith (Count III); (4) insider debt recharacterization (Count IV); (5) equitable subordination (Count V); (6) equitable trust (Count VI); and (7) alter ego and veil piercing (Count IX). Additionally, Rubbermaid alleges a fraudulent transfer count (Count X) against Defendant Bosch. Finally, Rubbermaid alleges counts against Individual Defendants for (1) civil conspiracy to commit fraud (Count VII), and (2) aiding and abetting fraudulent transfers (Count VIII).
Individual Defendants have now moved to dismiss these counts. Rubbermaid filed its response, and this Order follows.
A complaint must provide a "short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a)(2). That statement must be sufficient to provide the defendant with "fair notice" of the claim and its basis. Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). In other words, the complaint must describe the claim in sufficient detail to give the defendant "fair notice of what the... claim is and the grounds upon which it rests," and its allegations must plausibly suggest that the plaintiff has a right to relief, raising that possibility above a "speculative level." EEOC v. Concentra Health Services, Inc. 496 F.3d 773, 776 (7th Cir. 2007). Conclusory allegations are "not entitled to be assumed true." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1951 (2009) (citing Twombly, 550 U.S. 544 (2007)).
In a motion to dismiss, a complaint is construed in the light most favorable to the plaintiff, its well-pleaded factual allegations are taken as true, and all reasonably-drawn inferences are drawn in favor of the plaintiff. See Albright v. Oliver, 510 U.S. 266, 268 (1994); Hishon v. King & Spalding, 467 U.S. 69 (1984); Lanigan v. Village of East Hazel Crest, 110 F.3d 467 (7th Cir. 1997); M.C.M. Partners, Inc. v. Andrews-Bartlett & ...