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Window World of Chicagoland, LLC, and David L. Hampton v. Window World

May 23, 2012


The opinion of the court was delivered by: Judge George W. Lindberg


Before the court is defendants Window World, Inc., Tammy Whitworth and Dana Deem's motion to dismiss plaintiffs' second amended complaint. For the reasons stated below, the motion is granted in part and denied in part.

I. Factual Background

According to the second amended complaint, on August 29, 2005, plaintiff David Hampton entered into a licensing agreement with defendant Window World, Inc. ("Window World"), which granted Hampton the right to sell windows and related products under the "Window World" name in DuPage County, Illinois. Hampton entered into additional licensing agreements with Window World on February 8, 2006 for exclusive trade areas in north and south Cook County, Illinois. Plaintiffs entered into new license agreements for the north and south Cook County territories on November 21, 2008, and for the DuPage County territory on December 11, 2009. Hampton eventually operated his business under the name Window World of Chicagoland, LLC, which also is a named plaintiff in this action.

The second amended complaint alleges that before and after the license agreements were signed, defendant Window World's representatives, including defendants Dana Deem and Ruben Leon Whitworth, repeatedly told Hampton that his exclusive territories would be protected by the use of buffer areas around them, and that if a territory adjacent to his territories was to be sold that was not a part of a buffer area he would have a right of first refusal.

In 2009, another Window World licensee told Hampton that Window World was planning to sell buffer territories adjacent to plaintiffs' territories. Hampton repeatedly asked Window World for the Will County territory, but was told that it was not for sale. In February 2010, Hampton learned that Window World had sold the Will County territory to someone else.

In an October 28, 2011 letter, defendants Deem and Tammy Whitworth, acting on behalf of Window World, advised plaintiffs that their relationship with Window World was in fact a franchise, and that their license agreements violated franchise registration and disclosure laws. Window World gave plaintiffs 35 days to either agree to become a Window World franchisee, or rescind the license agreements and cease operating under the Window World name. According to the complaint, Window World was not registered to sell franchises in Illinois at that time, and did not have an approved form of Franchise Disclosure Document registered in Illinois. Plaintiffs elected to enter into a franchise agreement with Window World.

Plaintiffs filed this action on January 26, 2012. Their seven-count second amended complaint alleges violations of the Illinois Franchise Disclosure Act ("IFDA"), breach of contract, fraud, breach of the implied covenant of good faith and fair dealing, and civil conspiracy against Window World, Tammy Whitworth, Dana Deem, Ruben Leon Whitworth, and Marie Whitworth. Defendants Tammy Whitworth, Window World, and Dana Deem have moved to dismiss plaintiffs' claims against them.

II. Analysis

In considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court accepts the factual allegations in the second amended complaint as true, and draws reasonable inferences in plaintiffs' favor. See Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614, 618 (7th Cir. 2007). The complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The court "should not accept as adequate abstract recitations of the elements of a cause of action or conclusory legal statements." See Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009). The court may consider exhibits attached to the complaint, but disregards materials submitted by the parties that are not part of the complaint. See Fed. R. Civ. P. 12(d); Tierney v. Vahle, 304 F.3d 734, 738 (7th Cir. 2002).

A. IFDA Claims (Counts I-III)

Defendants first argue that plaintiffs' IFDA claims should be dismissed because they are time-barred. A complaint is not required to anticipate affirmative defenses, including statute of limitations. See Barry Aviation Inc. v. Land O'Lakes Municipal Airport Comm'n, 377 F.3d 682, 688 (7th Cir. 2004). However, a claim may be dismissed as untimely under Rule 12(b)(6) if the plaintiff pleads himself out of court by alleging facts that establish that the applicable limitations period has expired. See id.

The parties agree that plaintiffs' IFDA claims are subject to a three-year statute of limitations. See 815 ILCS 705/27. This limitations period expires three years "after the act or transaction constituting the violation upon which it is based." Id. Even if the relevant act or transaction is the signing of the license agreements, as defendants argue, plaintiffs filed this action within three years after the December 11, 2009*fn1 DuPage County license agreement was signed. The motion to dismiss the IFDA claims as time-barred is denied.

Defendants argue that even if plaintiffs' IFDA claims are not time-barred, their claims for rescission under the IFDA should be dismissed because plaintiffs previously declined defendants' October 28, 2011 rescission ...

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