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Craftwork, Inc., A Florida Corporation, and Joseph R. Minnix v. Theodore Robinson

December 6, 2011


The opinion of the court was delivered by: Judge Robert M. Dow, Jr.


This matter is before the Court a motion to dismiss [49] filed by Defendants Jeffrey Deer and Deer, Stone & Maya, P.C. ("DS&M") (collectively the "Deer Defendants"). The Deer Defendants move to dismiss Counts III, V, VI, VII, VIII, and IX of Plaintiffs' amended complaint. For the following reasons, the Court denies the Deer Defendants' motion to dismiss [DE 49] in its entirety.

I. Factual Background*fn1

In November and December 2008, Plaintiffs Joseph Minnix and Craftwork, Inc. ("Plaintiffs") invested $601,500 pursuant to two separate schemes. The first scheme, allegedly spear-headed by Defendant Theodore Robinson, involved a $341,500 investment by Plaintiffs. The money was transferred by Plaintiffs to the client trust fund account at DS&M, with Attorney Jeffery Deer allegedly acting as escrow agent for Plaintiffs. The second scheme involved a $260,000 loan from Plaintiffs to Defendant Curtis Eisenberg. The money again was transferred to the client trust fund account at DS&M, with Deer acting as escrow agent for Plaintiffs.

According to Plaintiffs' amended complaint, with respect to the first scheme, Robinson marketed to Minnix a "confidential, proprietary securities trading program," and Plaintiffs bit. Plaintiffs were to deposit significant sums of money with Robinson and his "business partners," who would then make "trades" via affiliates on the West Coast and in Europe and Australia. According to Plaintiffs, Robinson told them how he would take his clients' cash and "leverag[e] it up to ten times to permit significant trading volume to occur, thereby generating cash to repay the principal invested and to pay a significant return (50% to 100%) within four (4) months-all with no risk to the principal invested." Amended Complaint at ¶ 16. On November 21, 2008, Plaintiffs wired a $15,000 "investment" to DS&M's client funds account at Bank Financial in Deerfield, Illinois. On December 24, 2008, Plaintiffs wired $300,000 to the client funds account. On January 8, 2009, Plaintiffs wired another $26,500 directly to Robinson's bank.

According to the amended complaint, Deer instructed Plaintiffs to contact him if they had any questions concerning their "investment." Beginning in early 2009 and continuing over the next several months, Minnix began asking Deer if he knew when the "trading" would start and when he would begin to see profits on the investment. Each time that Plaintiffs inquired with Deer as to the status of the "trading," Plaintiffs allege that there was "some explanation" for why the trading had not yet started and why no distribution of money could be paid at that time. On June 29, 2009, Plaintiffs asked Deer what his "comfort level" was with respect to the "investment" and Deer replied that he had a "good comfort level." Plaintiffs allege that Deer affirmatively reassured Plaintiffs that he was drafting trading contracts while other members of the scheme were traveling to Europe to start trading. None of the money that Plaintiffs allegedly invested has been repaid, nor did they make any return on their investment.

With respect to the second scheme, in late January 2009, Robinson and Deer contacted Minnex to discuss a real estate project. Deer allegedly asked Minnix to loan $260,000 for the Village of Lake Bluff to hold in escrow for a project called Wimbledon Estates of Lake Bluff. Minnex orally agreed on behalf of Craftwork to loan the money. Plaintiffs alleged that Deer "specifically informed Minnex that [Deer] would be acting as Craftwork's 'escow attorney' with respect to the loan." Deer then drafted and signed a letter dated January 29, 2009, purportedly on behalf of Curtis Eisenberg and Wimbledon Lake Bluff LLC, which memorialized the terms of the loan. The letter stated that Eisenberg and "the owners of Lake Bluff property" had retained Deer and his law firm, and that Craftwork agreed to loan Eisenberg and Wimbledon $260,000 for four months which a possible 30 day extension of this term. The letter also stated that Craftwork was to receive a fee of $50,000 and an option to perform any mill work that may be needed for improvements to the property. Deer sent the letter to Plaintiffs, and Minnex signed the letter on behalf of Craftwork. That same day, Plaintiffs wired $260,000 to DS&M's client funds account.

As of January 29, 2009, Plaintiffs believed that the Deer Defendants were acting on behalf of Eisenberg and Wimbledon. Plaintiffs also believed that the Deer Defendants were acting as their attorney, based on Deer's assurance that he was Craftwork's "escrow attorney" for purposes of the loan. Since filing the lawsuit, Plaintiffs have learned that Eisenberg and Wimbledon contend that the Deer Defendants were not authorized to act as their agent or enter into the loan agreement on their behalf. Although Plaintiffs requested documentation confirming that the $260,000 was given to the Village of Lake Bluff to hold in escrow, no such documentation was ever provided. Instead, the money was placed in an account at Lake Forest Bank and Trust to support a letter of credit that the bank issued in favor of Wimbledon. Furthermore, Eisenberg and Wimbledon contend that they received only $200,000 of the $260,000 that Plaintiffs wired on January 29, 2009. Deer now contends that the remaining $60,000 was not given to Eisenberg and Wimbledon but was used for "costs associated with the loan placement." According to Plaintiffs, they never authorized Deer to pay himself a "placement fee." Plaintiffs have never been repaid for their loan.

II. Legal Standard for Rule 12(b)(6) Motions to Dismiss

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint, not the merits of the case. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to dismiss, the complaint first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief" (Fed. R. Civ. P. 8(a)(2)), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief above the "speculative level," assuming that all of the allegations in the complaint are true. E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555, 569 n.14). "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly, 550 U.S. at 562. The Court accepts as true all of the well-pleaded facts alleged by the plaintiff and all reasonable inferences that can be drawn therefrom. See Barnes v. Briley, 420 F.3d 673, 677 (7th Cir. 2005).

Rule 9(b) of the Federal Rules of Civil Procedure creates exceptions to the federal regime of notice pleading and specifies that, for "all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed. R. Civ. P. 9(b); see also Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 507 (7th Cir. 2007). "Read together, Rule 9(b) and Rule 8 require that the complaint include the time, place and contents of the alleged fraud, but the complainant need not plead evidence." Amakua Development LLC v. Warner, 411 F. Supp. 2d 941, 947 (N.D. Ill. 2006) (citing Nissan Motor Acceptance Corp. v. Schaumburg Nissan, Inc., 1993 WL 360426, at *3 (N.D. Ill. Sept. 15, 1993)). In other words, the complaint must allege the "the who, what, when, where, and how: the first paragraph of a newspaper story." Borsellino, 477 F.3d at 507 (quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990)). Any of Plaintiffs' claims sounding in fraud will be viewed under this heightened pleading standard.

III. Analysis

Plaintiffs have brought the following claims against the Deer Defendants: breach of contract (Count III), conversion (Count V), fraud (Count VI), professional negligence (Counts VII and VIII), and civil conspiracy between Deer and Robinson (Count IX). The Deer Defendants have filed a motion to dismiss all claims asserted against them, maintaining that there never was an attorney-client relationship between Plaintiffs and ...

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