The opinion of the court was delivered by: Magistrate Judge Young B. Kim
MEMORANDUM OPINION and ORDER
In 2007 and 2008 the parties' business relationship fell apart. This multi-count diversity suit represents the remains. Kenneth Tola, Jr. and BI3, Inc. (together, "the plaintiffs") allege that Alan Hamor, WK Networks, Inc., and CampaignLocal, Inc. (collectively, "the defendants"), failed to pay them money owed in connection with their work on various technology consulting projects, committing various acts of fraud and breaches of fiduciary duty along the way. The defendants filed seven counterclaims stemming from their allegations that the plaintiffs essentially stole an important client, luring it away by tortiously sharing confidential information. Currently before the court are the plaintiffs' motion for summary judgment as to the defendants' counterclaims and the defendants' motion for summary judgment as to all remaining counts of the amended complaint. For the reasons set forth below, the motions are granted in part and denied in part:
Tola and BI3 filed their original ten-count complaint on April 25, 2008, seeking damages and equitable relief based on their claims for breach of contract, unjust enrichment, and fraud stemming from the defendants' alleged failure to pay them for completed technology consulting projects. (R. 1, Compl. ¶¶ 103-131.) They also sought rescission of a patent assignment related to an invention called Data Trender based on lack of consideration, failure of consideration, conversion, and breach of fiduciary duty. (Id. ¶¶ 132-206.) Less than a month later, the defendants answered the complaint and filed seven counterclaims against the plaintiffs, alleging breach of contract, misappropriation of trade secrets, breach of fiduciary duty, tortious interference with business relationships, and unjust enrichment. (R. 11, Counterclaims ¶¶ 64-129.) In June 2008, the parties consented to the jurisdiction of the assigned magistrate judge. See 28 U.S.C. § 636(c); (R. 20).
On April 29, 2009, the court granted the plaintiffs' motion to amend their complaint to add three counts: one for breach of fiduciary duty based on the misappropriation of a corporate opportunity, one seeking a declaratory judgment that Hamor is liable based on a corporate veil-piercing theory, and one for violation of the Stored Wire and Electronic Communications Act, 18 U.S.C. § 2701, et seq. (R. 48, 51.) On the defendants' motion, the court dismissed the Stored Wire and Electronic Communications Act claim pursuant to Federal Rule of Civil Procedure 12(b)(6), leaving twelve counts at play in the amended complaint. (R. 60, 61.)
In December 2009 the plaintiffs filed the current motion for summary judgment on the defendants' counterclaims. (R. 67.) The defendants filed the current motion for summary judgment on the twelve counts remaining in the amended complaint in April 2010.
(R. 91.) In May 2010, the case was transferred to the undersigned magistrate judge. (R. 107.) The next month the defendants moved to dismiss six counts of the amended complaint-all related to allegations surrounding the Data Trender invention-under Rule 12(b)(7), for failure to join a necessary party.
In the summer of 2010, with the court's support, the parties engaged in settlement negotiations. As those negotiations progressed into the fall of 2010, at the parties' urging this court reserved ruling on the pending summary-judgment motions or entering a briefing schedule on the motion to dismiss. (R. 133.) When the settlement negotiations failed to bear fruit by October, the court informed the parties that it would move forward with the pending motions. (R. 134.) After allowing full briefing, on January 14, 2011, this court entered an order granting in part the defendants' motion to dismiss for failure to join a necessary party and dismissed counts four through eight. (R. 139.) Accordingly, only counts one through three and nine through twelve are subject to the defendants' current motion for summary judgment.
It must be noted at the outset that the parties have made this court's job in resolving these motions unnecessarily difficult by omitting from their briefs any recitation of the relevant facts. Both sides point out that they have filed the statement of undisputed facts required by Local Rule 56.1(a)(3) and "incorporate" those facts into their briefs by that singular reference. This practice deprives the court of a summation of the relevant undisputed facts and the necessary context through which to view the argument that follows. See Malec v. Sanford, 191 F.R.D. 581, 585-86 (N.D. Ill. 2000). In particular, the nonmoving parties' failure to include a fact statement results in a missed opportunity to explicitly identify material disputes of fact requiring a trial. See id. at 586. It also must be noted that in their analysis of the issues the parties failed to cite to the statements of fact required by Local Rule 56.1. Instead they cite directly to various pieces of the record, thus forcing the court to engage in a treasure hunt to discern whether the cited material is disputed. This practice diminishes the utility of the Local Rule 56.1 statements, which are intended to provide the court with a central repository of disputed and undisputed facts which support or detract from the motions for summary judgment.
One more preliminary factual matter-the defendants have argued in their reply in support of summary judgment that an entire string of paragraphs from two affidavits submitted in support of the plaintiffs' briefs should be stricken on hearsay grounds. As laid out in this court's case management procedures, motions to strike portions of an opposing party's Local Rule 56.1 statement will not be considered. Such requests are unnecessary and most often pointless. See Custom Vehicles, Inc. v. Forest River, Inc., 464 F.3d 725, 727-28 (7th Cir. 2006). The initial portion of the defendants' reply develops an argument with respect to only 3 of the 41 affidavit paragraphs they seek to have stricken as hearsay. They have not attempted to illustrate how any of the remaining paragraphs are material, otherwise undisputed, or constitute hearsay.*fn1 Where the defendants have taken the time to develop an evidentiary argument with respect to specific material testimony, the court will factor those arguments into its analysis. Where the defendants have failed to make any particularized argument, their request is underdeveloped and thus waived. See Gross v. Town of Cicero, Ill., 619 F.3d 697, 705 (7th Cir. 2010).
Turning to the issues presented in the competing motions for summary judgment, the vast majority of the material facts are disputed. What follows is a fairly thin narrative of the underlying events as told through the few available undisputed facts. Tola is the president and sole stockholder of BI3, a company through which he provides internet technology consulting services. Hamor is the director and majority shareholder of WK Networks and CampaignLocal. (R. 106, Pls.' Resp. to Defs.' Facts ¶ 4.) WK Networks is a company "engaged in the business of developing software for network-based bidding and commerce systems." (R. 92-1, Defs.' Facts, Ex. A at 1.) From December 2005 through January 2007, Hamor also served as the CEO of Auto Bid Systems, Inc. ("ABS"). (R. 106, Pls.' Resp. to Defs.' Facts ¶ 6.) Tola first became acquainted with Hamor through contacts at ABS, and eventually, Hamor recruited him to work with ABS on a project called AutomoAds. (R. 127, Defs.' Resp. to Pls.' Add'l Facts ¶ 1.) AutomoAds was a web-based advertising platform designed for the retail automotive industry. (Id. ¶ 8.) In August 2006, BI3 and WK Networks entered into a written consulting agreement ("the Consulting Agreement") for work on the AutomoAds project. (R. 106, Pls.' Resp. to Defs.' Facts ¶ 7.) The Consulting Agreement provided that WK Networks would pay BI3 $3,000 per week for its services.
(R. 127, Defs.' Resp. to Pls.' Add'l Facts ¶ 4.)
By January 2007 Tola already believed that WK Networks was not living up to its obligations under the Consulting Agreement. On January 8, 2007, Tola sent Hamor an email attaching an invoice stating that WK Networks was $39,125 behind on payments owed to BI3 under the Consulting Agreement. (R. 92-4, Defs.'Facts, Ex. D at 1-2.) Nonetheless, Tola and Hamor began to discuss and negotiate the terms of additional jobs, specifically for BI3's work on budding CampaignLocal projects. (R. 127, Defs.' Resp. to Pls.' Add'l Facts ¶ 10; R. 106, Pls.' Resp. to Defs.' Facts ¶¶ 11, 13, 27.) Hamor and Tola discussed building a search engine marketing ("SEM") management platform that could be used outside the automotive industry. (R. 127, Defs.' Resp. to Pls.' Add'l Facts ¶ 8.) Tola estimated that work on the SEM marketing platform would take six to eight months. (Id.)
Whether the additional discussions and negotiations surrounding this new project led to binding agreements is a matter of vigorous disagreement. The parties agree, however, that they at least discussed payment to BI3 of $250,000 for work to be performed for CampaignLocal from January through August 2007. (R. 106, Pls.' Resp. to Defs.' Facts ¶¶ 24-26.) They also agree that Hamor offered Tola 20% of the shares of CampaignLocal, but they disagree over whether that offer was contingent on CampaignLocal obtaining new clients. (Id. ¶ 28.) Tola also was "under the impression" that he would serve as Chief Technology Officer ("CTO") of CampaignLocal indefinitely, unless he officially resigned. (Id. ¶ 32.) Following the email and telephone exchanges in January 2007, the parties intended to have Hamor's attorney prepare a written agreement relating to that work. (Id. ¶ 24.) The written agreement was never prepared. (Id.)
Nonetheless, from January through August 2007 Tola served as a developer of CampaignLocal's software. (R. 106, Pls.' Resp. to Defs.' Facts ¶ 49.) It appears to have been a time of growing discontent among the parties. In early 2007, Hamor informed Tola that he wanted the SEM management project to expand to incorporate banner advertising, phone call tracking, and other features. (R. 127, Defs.' Resp. to Pls.' Add'l Facts ¶ 12.) CampaignLocal also brought in several additional clients during this time and Hamor asked Tola to take on new responsibilities with client and campaign management. (Id. ¶ 13.) Tola never agreed to reduced compensation, but in March and April 2007 Hamor only made partial payments for his work. (Id. ¶¶ 15-16.) In August 2007, Tola completed the development of the project Hamor had asked him to finish, transferred software and emails to Hamor's servers, and stopped working for CampaignLocal. (Id. ¶ 18.) In October 2007, Tola told Hamor that he wished to resign as CTO of CampaignLocal, and on January 24, 2008, Tola resigned in writing. (R. 88, Defs.' Resp. to Pls.' Facts ¶¶ 18-20.) When he resigned, Tola owned approximately 20% of CampaignLocal's shares. (R. 101, Pls.' Resp. to Defs' Add'l Facts ¶ 2.)
The remaining undisputed facts relate to the defendants' counter-claims, which center on Tola's and BI3's dealings with Jay Pivec and his company, Pivnet, Inc., a one-time CampaignLocal client. In November 2006, Pivnet and CampaignLocal entered into a contract for CampaignLocal to provide SEM services. (R. 88, Defs.' Resp. to Pls.' Facts ¶ 9.) In March 2007 Hamor asked Tola to serve as the primary contact on the Pivnet account. (Id. ¶ 10.) In March and early April 2007 ABS sued Hamor, WK Networks, CampaignLocal, BI3, and Tola in state court in Virginia ("the Virginia litigation"), alleging that Tola, BI3, Hamor, and WK Networks conspired to deprive ABS of the work product BI3 had created for AutomoAds and to direct those projects to WK Networks and CampaignLocal. (R. 127, Defs.' Resp. to Pls.' Add'l Facts ¶ 17.) In July 2007 Pivnet terminated its contract with CampaignLocal. (R. 88, Defs.' Resp. to Pls.' Facts ¶ 13.) Pivnet's departure left CampaignLocal without any clients. (Id. ¶ 16.)
Five days after Tola resigned from CampaignLocal, on January 29, 2008, Tola and ABS discussed settling the claims pending in the Virginia litigation. (R. 88, Defs.' Resp. to Pls.' Facts ¶¶ 20-21.) Shortly thereafter, they reached a settlement and ABS dismissed its claims against Tola; Tola also agreed to dismiss a counterclaim he had filed against ABS and a cross-claim filed against WK Networks. (Id. ¶ 22.) In February 2008, after the Virginia claims had been dismissed, Tola and BI3 entered into a contract with ABS to perform SEM services on behalf of Pivnet. (Id. ¶¶ 25, 31.) These are the same kinds of services that CampaignLocal provided to its clients. (R. 101, Pls.' Resp. to Defs.' Add'l Facts ¶ 5.) The parties agree that based on the on-going litigation between ABS and Hamor, ABS would not have offered CampaignLocal or WK Networks the Pivnet work. (R. 88, Defs.' Resp. to Pls.' Facts ¶ 27.)
Tola opened an account with Google in February 2008 through which Pivnet could run SEM campaigns. (R. 88, Defs.' Resp. to Pls.' Facts ¶ 29.) Tola did not start running campaigns for Pivnet until March 2008 and did not complete its set-up process for Pivnet until May or June 2008. (Id. ¶ 30.) In June 2008 the defendants entered into their own settlement agreement with ABS in the Virginia litigation and transferred all of their rights to AutomoAds and the CampaignLocal software applications to ABS. (Id. ¶ 50.)
Summary judgment is appropriate where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A genuine issue of material fact exists when there is evidence from which a reasonable jury could find for the non-movant. Buscaglia v. United States, 25 F.3d 530, 534 (7th Cir. 1994). In reviewing a motion for summary judgment, this court draws all reasonable inferences from the evidence in the light most favorable to the nonmoving party. Carmichael v. Village of Palatine, Ill., 605 F.3d 451, 456 (7th Cir. 2010).
I. Defendants' Motion for Summary Judgment
As a result of the decisions dismissing counts four through eight and thirteen of the amended complaint, seven counts remain in play. As set forth below, five of those claims involve a multitude of disputed facts, rendering summary ...