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Daniel Steven Teague v. Henry v. Teague

March 14, 2012


The opinion of the court was delivered by: Milton I. Shadur Senior United States District Judge


Daniel Steven Teague ("Daniel") has sued his brother Henry V. Teague, Jr. ("Henry"), charging him with breaching an agreement ("Assignment Agreement") between them relating to limited partnership Arlington Associates ("Arlington"). Henry has responded with a motion to dismiss the action under Fed. R. Civ. P. ("Rule") 12(b)(6), and the litigants have briefed the matter. For the reasons stated here, the motion is granted as to all claims antedating November 15, 2001.

Rule 12(b)(6) Standards

Under Rule 12(b)(6) a party may move for dismissal of a complaint because of its "failure to state a claim upon which relief can be granted." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 562-63 (2007) repudiated, as overly broad, the half-century-old Rule 12(b)(6) formulation announced in Conley v. Gibson, 355 U.S. 41, 45-46 (1957) "that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Twombly, 550 U.S. at 570 held that to survive a Rule 12(b)(6) motion a complaint must provide "only enough facts to state a claim to relief that is plausible on its face" (550 U.S. at 570). Or put otherwise, "[f]actual allegations must be enough to raise a right of relief above the speculative level" (id. at 555). Since then Erickson v. Pardus, 551 U.S. 89 (2007)(per curiam) and Ashcroft v. Iqbal, 556 U.S. 662 (2009) have provided further Supreme Court enlightenment on the issue.

Familiar Rule 12(b)(6) principles--still operative under the new pleading regime--require this Court to accept as true all of Daniel's well-pleaded factual allegations, with all reasonable inferences drawn in his favor (Christensen v. County of Boone, 483 F.3d 454, 457 (7th Cir. 2007)(per curiam)). What follows in this opinion adheres to those principles, with allegations in the Complaint cited simply "¶--."


In December 1983 Henry formed Arlington with a number of other general and limited partners (¶8). Arlington obtained a loan for the purchase, construction and commercial development of real estate in Arlington Heights, Illinois (the "Development"), which loan was secured by a mortgage on the Development (¶¶9-10). In August 1986 Daniel made a capital contribution in exchange for a 10% interest in Arlington, making him a special limited partner entitled to a 10% share of Arlington's profits, losses and distributions (¶¶12-13).*fn1

In December 1991 Henry paid Daniel's share of an Arlington capital call, in exchange for which Daniel transferred his 10% interest in Arlington back to Henry pursuant to the Assignment Agreement (id. ¶17). Under the Assignment Agreement Henry committed to pay Daniel (a) 10% of the net distributable cash flow from the Development and (b) 10% of the net future proceeds of any sale or refinance of the Development, but only to the extent that any such funds remained after the payment of all associated liabilities and costs and after the repayment of certain advances made by Arlington partners (¶¶18-20). Daniel was also entitled to receive upon request any documents necessary to "effectuate or evidence" the provisions of the Assignment Agreement (¶21).

In October 2002 Arlington refinanced its mortgage on the Development, resulting in a substantial payment to Arlington's majority partner, Northwestern National Life Insurance Company (¶¶31-32). Then in February 2003 Arlington sold the Development and received $1,791,340.89 in cash from the sale (¶¶33-34). Between December 1991 and August 2011 Daniel made several oral and written requests to Henry for information and documents regarding distributions to Arlington's partners and whether the Development had been sold, but Henry failed or refused to provide him with any response (¶¶43-44). Daniel first learned of the 2003 sale of the Development in March 2007 (¶47), and he filed this action on November 15, 2011.

On December 12, 2011 Henry moved to dismiss the action on several grounds, including a contention that Daniel's breach of contract claims arising before November 15, 2001 are barred by the ten year statute of limitations period applicable to written contracts. This Court denied the other grounds for dismissal and limited further briefing to the statute of limitations issue.

Statute of Limitations

Under Illinois law actions for breach of written contracts are subject to a ten year statute of limitations (735 ILCS 5/13-206).*fn2 In that respect Hi-Lite Prods. Co. v. Am. Home Prods. Corp., 11 F.3d 1402, 1408-09 (7th Cir. 1993)(citations omitted) teaches:

Contracts requiring continuous performance are capable of being partially breached ...

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