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Steven Edelman v. Belsheim & Bruckert

May 29, 2012


The opinion of the court was delivered by: Reagan, District Judge:


A. Introduction

As explained in the Court's May 21, 2012 Order herein (Doc. 46), this lawsuit involves the financing for a multi-use real estate development called Forest Lakes. In the January 26, 2012 Second Amended Complaint, Plaintiffs -- one individual and two trusts, through their trustees -- asserted claims of negligent misrepresentation and breach of fiduciary duty against a law firm, a title company, and an insurer/underwriter.*fn1 More specifically, Plaintiffs collectively loaned three million dollars to a non-party, Caseyville Sport Choice, LLC, in reliance on representations that the loan was secured by a first lien mortgage on a parcel of real property.

Only later did Plaintiffs discover that their mortgage on the property was subordinate to a $20,000,000 prior mortgage in favor of Meridian Bank. Meridian Bank foreclosed on the property, and Plaintiffs lost their investment. They sue in this United States District Court, seeking to recover their pecuniary losses plus interest, attorney's fees, and costs.

The Second Amended Complaint ("complaint") contained three negligent misrepresentation claims against Belsheim/Bruckert (Counts 1-3), three breach of fiduciary duty claims against Belco (Counts 4-6), and three breach of fiduciary duty claims against ATG (Counts 7-9). Belco answered the complaint (Doc. 37). Defendant ATG moved to dismiss the three claims against it, a motion which the Court granted on May 21, 2012 (Doc. 46).

On March 12, 2012, Defendant Belsheim/Bruckert moved to dismiss Counts 1, 2, and 3 (Doc. 35). Plaintiffs jointly opposed the motion on April 16, 2012 (Doc. 45), and the motion became ripe when the reply deadline (see Doc. 38) elapsed on May 3, 2012, without a reply brief being filed. Enjoying subject matter jurisdiction via the federal diversity statute, the Court now resolves Belsheim/Bruckert's dismissal motion.

B. Applicable Legal Standards

Belsheim/Bruckert seeks dismissal of the three negligent misrepresentation claims against it (Counts 1, 2, and 3) under Federal Rule of Civil Procedure 12(b)(6). Analysis begins with standards governing Rule 12(b)(6) motions and then focuses on the facts specific to the three counts in question.

In deciding a motion to dismiss for failure to state a claim on which relief can be granted under Rule 12(b)(6), the district court's task is to determine whether the complaint includes "enough facts to state a claim to relief that is plausible on its face."

Khorrami v. Rolince, 539 F.3d 782, 788 (7th Cir. 2008), quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).

As the Court of Appeals for the Seventh Circuit has clarified: "Even after Twombly, courts must still approach motions under Rule 12(b)(6) by 'construing the complaint in the light most favorable to the plaintiff, accepting as true all well-pleaded facts alleged, and drawing all possible inferences in her favor.'" Hecker v. Deere & Co., 556 F.3d 575, 580 (7th Cir. 2009), cert. denied, 130 S. Ct. 1141 (2010), quoting Tamayo v. Blagoyevich, 526 F.3d 1074, 1081 (7th Cir. 2008).

However, legal conclusions and conclusory allegations that merely recite the elements of a claim are not entitled to the presumption of truth afforded to well-pled facts. See, e.g., McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011). Therefore, after excising the allegations not accepted as true, the Court must decide whether the remaining factual allegations plausibly suggest entitlement to relief. Id. In other words, the complaint must contain allegations plausibly suggesting (not merely consistent with) an entitlement to relief. Id., citing Twombly, 550 U.S. at 557. This determination is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." McCauley, 671 F.3d at 616, citing Ashcroft v. Iqbal, 556 U.S. 662, 663-64 (2009).

A Rule 12(b)(6) dismissal motion "must be decided solely on the face of the complaint and any attachments that accompanied its filing." Miller v. Herman, 600 F.3d 726, 733 (7th Cir. 2010), citing FED.R.CIV.P. 10(c) and Segal v. Geisha NYC, LLC, 517 F.3d 501, 504-05 (7th Cir. 2008). Accord General Insurance Co. of ...

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