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Robert G. Martinell v. Navistar International Corp

June 28, 2012


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:


Robert Martinell has sued Navistar International Corp. (Navistar), the parent of his former employer Navistar, Inc., for breach of contract and unjust enrichment. Navistar has moved to dismiss for failure to state a claim. For the reasons stated below, the Court grants Navistar's motion.


The Court takes the following recitation of the facts from Martinell's amended complaint.

Navistar, Inc. employed Martinell as an attorney from June 1983 until June 2004. In December 1997, Martinell and Navistar entered into an employment contract (Contract), including an Incentive Stock Option Agreement Supplement (the Supplemental Option Contract). The Supplemental Option Contract provided that in exchange for one year of employment, Martinell would have the option to purchase 2,131 shares of Navistar stock at the price of $23.3125 per share over a ten year period expiring on December 16, 2007. Martinell alleges that the Supplemental Option Contract required Navistar to keep available sufficient shares of common stock to satisfy the agreement's terms and to comply with applicable securities laws and regulations so that it could issue marketable stock.

Prior to December 2007, Navistar announced that it was no longer in compliance with certain financial reporting requirements of the Securities and Exchange Commission. As a result, the New York Stock Exchange delisted Navistar's stock, preventing it from being traded on the exchange. As a result, the stock traded only in the "over the counter" market.

On December 10, 2007, Martinell delivered a notice to Navistar along with $49,678.94, stating that he was exercising his option to the purchase of the 2,131 shares referred to in the Supplemental Option Contract. The market price of the stock on that date was approximately $54.65 per share. Martinell's notice stated that if Navistar was unable to issue marketable stock, he wanted the cash value instead. Navistar declined to issue marketable stock to Martinell or to pay him the cash value of the stock and instead, issued him 2,131 shares of restricted stock, which could not be traded on the open market.

In May 2008, Navistar became current with its financial reporting, and Navistar stock resumed public trading. Shortly thereafter, Martinell exercised all of his other Navistar stock options. He sold those shares shortly thereafter for an average of $76 per share.

Martinell alleges that on various occasions, he asked Navistar to remove the restriction from the 2,131 shares so he could sell them. He contends that on various occasions, Navistar indicated that it would remove the restriction from the 2,131 shares one year after the exercise of the option on December 10, 2007. Despite this, however, Navisar did not do so.

Finally, on March 31, 2009, 2,131 shares of unrestricted Navistar stock were transferred into Martinell's brokerage account. In May 2009, Martinell sold these shares at a price of $38.0022 per share.

Martinell's claims

In Count 1 of his amended complaint, Martinell alleges that Navistar breached its written contract with him by failing to comply with securities law requirements and issuing him unmarketable stock. In Count 2, he alleges that Navistar breached an oral agreement to remove the restrictions from the stock once it returned to compliance with financial reporting requirements and could issue unrestricted stock. He contends that he was injured by these breaches in that he was unable to sell the 2,131 shares for a higher price. In Count 3, a claim of unjust enrichment, Martinell contends that Navistar was unjustly enriched by receiving and retaining the amount he paid in December 2007 to exercise the stock options.

Navistar has moved to dismiss all of Martinell's claims pursuant to Federal Rule of Civil Procedure 12(b)(6). Navistar contends that Counts 1 and 2 are time-barred and that Martinell cannot assert an unjust enrichment claim because there is a contract that governs his dealings with Navistar concerning the stock options.In deciding a motion to dismiss for failure to state a claim, the Court accepts the plaintiff's allegations as true and draws all reasonable inferences in the plaintiff's favor. E.g., Parish v. City of Elkhart, 614 F. 3d 677, 679 (7th Cir. 2010). The plaintiff's allegations "must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545 (2007). Rather than simply stating facts that suggest a claim to relief is possible, plaintiffs must provide "enough facts to state a claim to relief that is plausible on its face." Id. at 570.

As indicated earlier, Navistar's motion to dismiss is based in part on its contention that the Martinell's claims are time-barred. Although the statute of limitations is an affirmative defense, it may be asserted by way of a motion to dismiss if "the allegations of the complaint itself set forth everything necessary to satisfy the affirmative defense." Brooks v. Ross, 578 F.3d 574, 579 (7th Cir. 2009) (internal quotation marks omitted). Put differently, if the facts set forth in the complaint establish that the claim ...

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