KUVEDINA, LLC, an Illinois Limited Liability Company, Plaintiff,
RAKESH PAI and MHALSA TECHNOLOGIES, a Forfeited Kansas Corporation, Defendants. RAKESH PAI. Individually and doing business as MHALSA TECHNOLOGIES, Counter-Plaintiff,
KUVEDINA, LLC, an Illinois Limited Liability Company, Counter-Defendant.
MICHAEL P. MCCUSKEY, District Judge.
This case is before the court for ruling on the Motion to Dismiss (#99) and Motion for Summary Judgment (#101) filed by Defendant Rakesh Pai, individually and doing business as Mhalsa Technologies. This court has carefully reviewed the arguments of the parties and the documents filed by the parties. Following this careful and thorough review, this court accepts the Report and Recommendation (#112) filed by Magistrate Judge David G. Bernthal and DENIES Defendant's Motion to Dismiss (#99). Defendant's Motion for Summary Judgment (#101) is GRANTED in part and DENIED in part. Summary judgment is granted on Plaintiff's conversion claim and denied as to Plaintiff's claims of breach of contract, tortious interference with business relationship and common law fraud.
Plaintiff, Kuvedina, LLC, is an Illinois Limited Liability Company that serves as a consulting firm and provides project management services to businesses throughout the United States. Anil Baddi lives in Champaign, Illinois and is the sole shareholder, director and officer of Plaintiff. On or about February 18, 2010, Plaintiff entered into a contract with Cognizant, Inc. (Cognizant), one of the nation's largest consulting firms, to provide consulting services for Cognizant's client, WellPoint, Inc. Under the contract, Plaintiff was to receive monies in return for providing the services of consultants hired by Plaintiff. Therefore, Plaintiff sought to hire consultants with the kind of expertise to accommodate Cognizant and WellPoint. Effective May 2, 2010, Plaintiff and Defendant Rakesh Pai entered into a Sub-Contractor's Agreement and related agreements whereby Defendant would provide consulting work to Cognizant and WellPoint.
Problems developed in the relationship between Plaintiff and Defendant. One of the problems was that Plaintiff insisted that Defendant provide services at Cognizant's location in Ohio, and Defendant received permission from an employee of WellPoint to work from home. Plaintiff terminated its agreement with Defendant some time in the fall of 2010. Two notices were sent to Defendant which stated that Plaintiff expected November 4, 2010 to be the last date of performance of any services. On November 19, 2010, Plaintiff filed a Petition for Injunction against Defendant in the circuit court of Champaign County. A temporary restraining order was entered on November 24, 2010. The order required Defendant to return a laptop computer and proprietary information to Plaintiff. Baddi signed a receipt on December 8, 2010, acknowledging that Plaintiff received the laptop and other items from Defendant. On December 16, 2010, the circuit court entered an Order Granting Injunctive Relief which prohibited Defendant from disclosing or continuing to use any proprietary information received from Plaintiff or Plaintiff's clients and from soliciting or continuing to communicate in any way with any of Plaintiff's clients.
In August 2011, Plaintiff filed a petition for rule to show cause, alleging that Defendant violated the injunction. Defendant moved to dismiss the petition and also filed a motion for sanctions. The trial court granted Defendant's motion for sanctions and awarded $2, 730. Plaintiff appealed and the Illinois Appellate Court, Fourth District, affirmed. The court concluded that Plaintiff did not show that Defendant violated the injunction and found that the trial court did not abuse its discretion in awarding sanctions. The court stated that Plaintiff "and its counsel should have been able to ascertain the communications were not barred based on the plain language of the communications, the injunction, and the Shareholder's Agreement." Kuvedina, LLC v. Pai, Case No. 2012 IL App (4th) 120072-U (unpublished order entered 11/6/2012). Plaintiff's case against Defendant remains pending in the circuit court of Champaign County.
On March 13, 2011, Plaintiff filed a Complaint (#1) against Defendant in the Northern District of Illinois. Jurisdiction was based on diversity because Plaintiff is a citizen of Illinois and Defendant is a citizen of either Kansas or Washington State. Plaintiff alleged that, when entering the contract, Defendant made false representations that Mhalsa Technologies was an active Kansas corporation, in good standing. Plaintiff also alleged that Defendant collected payments from Plaintiff despite his absence from Plaintiff's client's place of business. Plaintiff further alleged that Defendant threatened to destroy Plaintiff's business by revealing sensitive payment terms and refused to return a laptop computer and proprietary information, requiring Plaintiff to obtain a restraining order in the Champaign County court. Plaintiff alleged that it lost its present contract with Plaintiff's client (Cognizant) as a direct result of Defendant's actions. In Count I, Plaintiff sought damages for breach of contract. In Count II, Plaintiff sought damages for tortious interference with business relationship. In Count III, Plaintiff sought damages for conversion, and, in Count V, for common law fraud. Baddi signed a "Verification by Certification" attached to the Complaint which stated that he "certifies, under penalties as provided by law that the statements set forth in this Complaint are true and correct."
On November 29, 2011, this case was transferred to this court. On February 13, 2012, this court entered an Order (#48) which granted, in part, and denied, in part, Defendant's Motion to Dismiss. On March 23, 2012, Defendant filed an Answer (#53) to Plaintiff's Complaint and a Counterclaim (#54). In the Counterclaim, Defendant alleged that he performed services for Plaintiff in October 2010 and November 2010. Defendant alleged that he submitted an invoice to Plaintiff in the amount of $8, 064.00 for work performed in October 2010 and an invoice in the amount of $6, 528.00 for work performed in November 2010. Defendant therefore sought damages from Plaintiff in the amount of $14, 592.00.
A scheduling conference was held on September 5, 2012, and a Discovery Order (#73) was entered on September 18, 2012. The Discovery Order set a discovery deadline of April 1, 2013 and a deadline for filing case dispositive motions of June 17, 2013. No jury trial date was set. On June 17, 2013, Defendant filed a Motion to Dismiss (#99) and a Motion for Summary Judgment (#101) with attached exhibits.
In support of the Motion for Summary Judgment, Defendant provided a copy of the transcript of the deposition of Baddi, taken March 14, 2013. Defendant has also submitted documents which show that Plaintiff filed a lawsuit in the Southern District of Ohio, Eastern Division. In the Ohio action, Plaintiff sued Cognizant, Crystalsoft, Inc., and Mahesh Kashyap, an agent of Cognizant. Plaintiff alleged that Cognizant's late payment of Plaintiff's invoices caused it to be unable to pay its consultants in a timely fashion, resulting in several consultants leaving Plaintiff. Plaintiff further alleged that Cognizant caused sensitive information about its business practices and billing rates to be released to one or more third parties, also causing Plaintiff to lose consultants. Plaintiff also alleged that Kashyap engaged in conduct which resulted in inhibiting Plaintiff's business relationship with Cognizant. In the Ohio action, Plaintiff stated that it was seeking damages in an amount exceeding $4, 000, 000.00. Baddi filed an Affidavit in the Ohio case, dated August 16, 2012, stating that he declared under penalty of perjury that these allegations were "true and accurate to the best of my knowledge, information and belief."
MOTION TO DISMISS
In the Motion to Dismiss (#99), Defendant argued that this court should abstain from exercising jurisdiction and dismiss this action because the action pending in the circuit court of Champaign County involves the same parties and the same underlying facts. Plaintiff filed a Memorandum in Opposition (#103). Plaintiff argued that Defendant was aware of the state court litigation pending in Champaign County from the time Plaintiff filed its Complaint in this case. Plaintiff pointed out that ...