United States District Court, N.D. Illinois, Eastern Division
TERENCE W. OCHS, Plaintiff,
NICHOLAS C. HINDMAN, SR., Defendant
For Terence W. Ochs, Plaintiff: Matthew Michael Wawrzyn, LEAD ATTORNEY, Stephen Charles Jarvis, Wawwrzyn LLC, Chicago, IL.
Nicholas C. Hindman, Sr., Defendant, Pro se, Lisle, IL.
MEMORANDUM OPINION AND ORDER
Ruben Castillo, Chief United States District Judge.
Terence W. Ochs (" Plaintiff" ) brings this one-count diversity action against Nicholas C. Hindman, Sr. (" Defendant" ) alleging breach of a promissory note (the " Note" ). Presently before the Court are Defendant's motion to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(b)(7) and Plaintiff's motion for sanctions. For the reasons set forth below, Defendant's motion to dismiss is denied, and Plaintiff's motion for sanctions is denied.
Plaintiff is a citizen of Wisconsin. (R. 14, Am. Compl. ¶ 1.) Defendant is a citizen of Illinois and the president of Infratel Communications Corporation (" Infratel" ). ( Id. ; R. 14-1, Ex. A, Note at 3.) On July 1, 2010, Plaintiff executed the Note with Infratel and Defendant. (R. 14, Am. Compl. ¶ 7.) In the Note, Infratel, as maker, and Defendant, as guarantor, promise to pay Plaintiff $200,000.00 plus interest in consideration for a loan of the same amount made by Plaintiff to Infratel. ( Id. ) Defendant signed the Note on behalf of Infratel, as President, and in his individual capacity as the guarantor of Infratel's promise. ( Id. ; R. 14-1, Ex. A, Note at 3.)
The Note does not contain a specific maturity date; instead, the terms of the Note state that " [i]f the Lender desires repayment in full or in part of the principal sum, Lender shall give the Maker 90 days notice of such repayment." (R. 14-1, Ex. A, Note at 1.) If an " event of default" occurred, however, the Note provides that all amounts owed on the Note would become " due and payable forthwith" and
Plaintiff was not required to provide notice. ( Id. ) The Note defines an " event of default" as when (1) Infratel failed to pay the loan plus all accrued interest pursuant to the terms of the Note; (2) there was a change of control of more than 50% of Infratel's voting stock; (3) Infratel dissolved, became insolvent, or ceased to exist; (4) a material portion of Infratel's assets was transferred, sold, or assigned to a third party; or (5) there was an assignment of assets to the benefit of creditors or an initiation by or against Infratel of any bankruptcy proceedings. ( Id. ) Infratel became insolvent and was involuntarily dissolved on October 14, 2011. (R. 14, Am. Compl. ¶ 8.) Neither Infratel nor Defendant has paid any principal amount or interest on the Note. ( Id. ¶ 11.)
Plaintiff filed his complaint on April 24, 2013, alleging a breach of the Note. (R. 1, Compl.) He only named Defendant in his claim for the principal and interest, and he did not bring suit against Infratel. ( Id. ) Defendant, proceeding pro se , filed his first motion to dismiss on May 20, 2013, (R. 10, Def.'s First Mot. Dismiss), and Plaintiff filed an amended complaint on June 10, 2013, (R. 14, Am. Compl.). Defendant filed a second motion to dismiss on July 2, 2013, alleging failure to state a claim pursuant to Rule 12(b)(6) and failure to join a necessary party pursuant to Rule 12(b)(7). (R. 16, Def.'s Second Mot. Dismiss.) Plaintiff responded on August 1, 2013, (R. 18, Pl.'s Mem.), and also filed a motion for sanctions against Defendant on August 6, 2013, (R. 19, Pl.'s Mot. Sanctions). Defendant replied to Plaintiff's memorandum in opposition to his motion to dismiss and responded to Plaintiff's motion for sanctions on September 5, 2013. (R. 23, Def.'s Reply; R. 22, Def.'s Resp. Mot. Sanctions.) Defendant's motion to dismiss and Plaintiff's motion for sanctions are presently before the Court.
A motion under Rule 12(b)(7) seeks dismissal based on the failure to join a necessary party as required by Federal Rule of Civil Procedure 19. Fed.R.Civ.P. 12(b)(7). A Rule 12(b)(7) motion to dismiss requires the court to accept the allegations in the complaint as true, but the court may consider extrinsic evidence beyond the pleadings. Davis Cos. v. Emerald Casino, Inc., 268 F.3d 477, 480 n.4 (7th Cir. 2001). On a Rule 12(b)(7) motion, the movant bears the burden of demonstrating that the absent party is a necessary and indispensable party that must be joined. NanoeXa Corp. v. Univ. of Chi., No. 10 C 7177, 2011 WL 4729797, at *1 (N.D. Ill. Apr. 13, 2011); see Ploog v. HomeSide Lending, Inc., 209 F.Supp.2d 863, 873 (N.D. Ill. 2002).
The purpose of a Rule 12(b)(6) motion to dismiss is to test the sufficiency of the complaint, not to resolve the case on the merits. Autry v. Nw. Premium Servs., 144 F.3d 1037, 1039 (7th Cir. 1998). A plaintiff must plead " only enough detail to give the defendant fair notice of what the claim is and the grounds upon which it rests." Reger Dev., LLC v. Nat'l City Bank, 592 F.3d 759, 764 (7th Cir. 2010) (quoting Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008) ...