United States District Court, S.D. Illinois
JOHN J. DUPONT and RANDY MOSELEY, Plaintiffs,
FREIGHT FEEDER AIRCRAFT CORPORATION, Defendant.
DONALD G. WILKERSON, Magistrate Judge.
This matter is before the Court on the Motion for Leave to File Second Amended Complaint filed by Plaintiff, John J. Dupont, on November 1, 2013 (Doc. 58) and the Motion for a Rule 16 Conference filed by the parties on December 10, 2013 (Doc. 61). For the reasons set forth below, the Motion to Amend is GRANTED IN PART and DENIED IN PART and the Motion for a Rule 16 Conference is DENIED AS MOOT.
This matter currently is proceeding on the First Amended Complaint (Doc. 13) in which Plaintiffs have sued a number of Defendants in relation to a settlement agreement (and addenda) made in May, 2011. Through various Orders (Docs. 34, 52, and 55) the parties (and claims) to this litigation have been whittled down to those listed in the caption above. Plaintiff now seeks to reassert claims against individual Defendants R. Darby Boland, David Bridges, Stephen Carmichael, Edward F. Eaton, Kim Littlefield, H. Cliff Saylor, and Will Weeks.
According to the First Amended Complaint, John J. Dupont founded American Utilicraft Corporation (now named Utilicraft) in 1990 in order to produce specialized freight aircraft. In 2007, Freight Feeder Aircraft Corporation ("FFAC") entered into an Asset Purchase Agreement with Utilicraft, to purchase certain patents related to the design, use, and control of freight aircrafts, and an employment agreement with Dupont. In 2009, the individual Defendants (who appear to be the principals and directors of FFAC) sought to buyout Dupont's interest in FFAC and terminate his employment agreement. The buyout agreement contained various clauses in which FFAC would compensate Dupont for relinquishing his interests in FFAC. Plaintiffs allege that FFAC failed to execute its part of the agreement, by failing to pay certain sums to Dupont, and further represented to him (in January 2010) that the buy-out agreement (a liability for FFAC) would be held by a shell corporation once the assets of FFAC were sold to a third party, MidAmerica Aircraft Corporation ("MidAmerica, " which also is owned and controlled by the individuals controlling FFAC). Plaintiff Randy Moseley began employment with FFAC in December 2007 as its Chief Financial Officer and director. He also had an employment agreement with FFAC that "has been inexorably terminated" by the sale of FFAC's assets to MidAmerica.
After these events, in April, 2010, Plaintiffs filed a Complaint in the District Court for the Northern District of Texas that was dismissed in December, 2010. Thereafter, the parties entered into settlement negotiations. When the negotiations stalled, Defendant FFAC filed a complaint in this Court in April, 2011. The parties again attempted to negotiate a settlement, and entered into a settlement agreement on May 4, 2011. This agreement again called for certain payments to Dupont, the timeline for the payments was extended by various addenda. Plaintiffs allege that Defendants have nonetheless failed to make payments to Dupont beginning in January, 2013. Plaintiffs further allege that FFAC has failed to make negotiated payments to Moseley (pursuant to the same or a separate agreement).
Finally, Plaintiffs allege that Defendants conspired with a bank, First National Bank of St. Louis ("First National"), to divest Dupont of his home located in Santa Fe, New Mexico. Plaintiffs allege that Defendants failed to make mortgage payments on the home, as they agreed, and instead compelled the bank to turn over its security for the mortgage, a Cessna aircraft, to them for the purpose of "forcing Plaintiff [Dupont] from his residence."
Plaintiffs assert three causes of actions, breach of contract against FFAC (Count 1), fraud against the individual defendants (Count 2), and fraud against First National (Count 3).
In an Order (Doc. 34) dated July 9, 2013, the District Court considered FFAC's Motion to Dismiss for lack of subject matter jurisdiction (Doc. 21) which resulted in the dismissal (without prejudice) of Defendant Kevin Williams (who shared the same citizenship at Plaintiffs). The District Court also considered a First National's Motion to Dismiss for failure to state a claim (Doc. 24) which resulted in the dismissal, without prejudice, of Count 3 for failure to plead with particularity as required by Federal Rule of Civil Procedure 9(b).
In a second Order dated September 13, 2013 (Doc. 52), the District Court considered Plaintiffs' claims against R. Darby Boland, Edward F. Eaton, Kim Littlefield, and Will Weeks. The Court previously had informed Plaintiffs that these Defendants would be dismissed because of Plaintiffs' failure to serve them within the time provided by Rule 4(m) (Doc. 42) unless Plaintiffs showed cause why they should not be dismissed. Plaintiffs failed to show cause and the Court dismissed, without prejudice, these Defendants. The Court instructed the Clerk of Court to enter judgment accordingly at the conclusion of this lawsuit.
In a third Order dated October 18, 2013 (Doc. 55), the District Court considered Defendants' Motion to Strike the First Amended Complaint. Defendants argued that Plaintiffs Dupont and Moseley had no authority to bring a lawsuit on behalf of Utilicraft. Plaintiff failed to respond to the Motion to Strike and the Court, instead of striking the entire pleading, struck Plaintiff Utilicraft and dismissed, without prejudice, claims purportedly brought by it against Defendants.
In a final Order, dated October 24, 2013 (Doc. 56), the District Court considered another Motion to Dismiss or for Judgment on the Pleadings filed by Defendants (Doc. 43), as to the claims in Counts 1 and 2 against the remaining individual Defendants, Bridges, Carmichael, and Saylor. The Court found that, as to Count 1, the contract at issue only obligated FFAC to perform certain acts and pay Plaintiffs the sums they are allegedly owed. Thus, the Court dismissed Count 1 as to the individual Defendants. The Court also found that Plaintiffs failed to plead Count 2 (fraud) with the requisite particularity required by Rule 9(b).
As a result of these rulings, the only claim that remains in this lawsuit is a breach of contract count (Count 1) against FFAC by Dupont and Moseley. Plaintiffs now have filed a Motion to Amend the Complaint and have attached a Second Amended Complaint ("SAC") (Doc. 58). Defendant has not responded to the Motion. Plaintiffs assert that they have attempted to plead the fraud counts with sufficient particularity as to the dismissed individual Defendants. Plaintiffs also have asserted an additional Count, breach of fiduciary duties as to the individual Defendants. The substantive changes are located in and after section IIIE of the proposed SAC.
Plaintiffs allege that the individual Defendants conspired, in January 2013, to direct FFAC to stop making "Adequate Protection Payments" to Plaintiff Dupont while at the same time representing that FFAC would make payments if "Plaintiffs" resigned from their positions with Utilicraft. (SAC, ¶¶ 39 and 40). Plaintiffs thereafter resigned their positions with Utilicraft but no payments were made. (SAC ¶ 40). In the section outlining Count II, fraud against the individual Defendants,  Plaintiffs allege that they represented that they would continue making payments to Plaintiff pursuant to the settlement agreement, that they knew this representation to be false, that Plaintiff relied on this statement by resigning from Utilicraft, that Defendants failed to make payment (through FFAC), and that Plaintiffs were harmed by the loss of their positions with Utilicraft (along with other economic damages). Plaintiffs also have asserted a breach of fiduciary duties claim (Count III). They assert that the individual Defendants owe ...