United States District Court, S.D. Illinois
A COMMUNICATION COMPANY, INC., doing business as Acom Healthcare, Plaintiff,
PETER M. BONUTTI, BORIS P. BONUTTI, DEAN A. KREMER and UNITY ULTRASONIC FIXATION, LLC, Defendants
For A Communication Company, Inc., doing business as Acom Healthcare, Plaintiff: Jeffrey S. Raphaelson, LEAD ATTORNEY, Raphaelson & Raphaelson, Boston, MA; Erin E. Hysell, PRO HAC VICE, Raphaelson & Raphaelson, Boston, MA.
For Peter M. Bonutti, Boris P. Bonutti, Dean A. Kremer, Unity Ultrasonic Fixation, LLC, Defendants: Clark W. Hedger, Gregory C. Mollett, Joshua A. Stevens, Greensfelder, Hemker et al. - St. Louis, St. Louis, MO; Ryan T. Barke, Greensfelder, Hemker & Gale PC - Swansea, Swansea, IL.
For William F. Shea, Interested Party: Timothy L. Binetti, LEAD ATTORNEY, Dinsmore & Shohl LLP - Chicago, Chicago, IL; John W. McCauley, Dinsmore & Shohl, Cincinnati, OH.
MEMORANDUM AND ORDER
J. PHIL GILBERT, UNITED STATES DISTRICT JUDGE.
This matter comes before the Court on the motion to dismiss (Doc. 16) of defendants Peter M. Bonutti (" Peter" ), Boris P. Bonutti (" Boris" ), Dean A. Kremer (" Kremer" ), and Unity Ultrasonic Fixation, LLC (" Unity" ) (collectively " Defendants" ). Plaintiff A Communication Company, Inc. (" Acom" ) filed its response (Doc. 26) to which Defendants replied (Doc. 27). For the following reasons, the Court grants in part and denies in part the motion to dismiss.
Taking as true all facts alleged in the complaint, the following are the relevant facts. Peter invents, develops, patents, and markets medical technologies and devices through several companies of which he is the majority owner. Peter's brother, Boris, serves as the Chief Operating Officer and Kremer serves as the Chief Financial Officer for several of these companies. In the late 1990's Peter hired Acom to provide marketing and communication services for his various companies. Acom's services included: (1) determining Peter's medical technologies and devices most likely to succeed in the healthcare market; (2) identifying and marketing to companies likely to be interested in Peter's medical technologies and devices; (3) facilitating contacts of companies interested in Peter's medical technologies and devices; and (4) branding select medical technologies and devices.
After a review of Peter's various medical technologies and devices, Acom advised Peter to develop his patent for ultrasonic fixation technology, a method for closing or sealing surgical sutures. Peter took Acom's advice and created a new company to develop and market the ultrasonic fixation technology. The following represents the parties' agreed upon respective interests in the new company: 62 percent for Peter; 11.6 percent for Boris; 2 percent for Kremer; 17.4 for Avon Equity Holdings,
LLC (" Avon" ); and 7 percent for Acom. These agreed upon interests were memorialized in a document entitled " General Terms of Understanding, 10/25/02" and in a Consultant Agreement between William F. Shea, LLC, and Bonutti Research, Inc. Acom proceeded to create the new company's name, Unity Ultrasonic Fixation, and logo. In July 2002, the parties created Unity with their agreed upon ownership interests.
From 2002 to 2006, Acom identified and marketed to companies with a potential interest in the ultrasonic fixation technology. One such company with which Acom negotiated was Synthes USA (" Synthes" ), a company which ultimately consummated a financially significant transaction with Unity on April 16, 2008. This transaction included an initial payment of $5 million from Synthes to Unity and additional payments for reimbursement of development costs. Future payments from this transaction may potentially result in tens or hundreds of millions of dollars when Synthes takes Unity's product to market. Acom was not compensated for this transaction.
In 2007, after Synthes expressed its interest in the ultrasonic fixation technology, Boris terminated the business relationship with Acom. Boris discharged Acom from its work with Joint Active Systems, Inc. (" JAS" ), a company of which Peter was a majority owner, and asked Acom to turn over the artwork for JAS and Unity. Thereafter, there were no business dealings between Acom and Peter or any of Peter's companies.
A document dated January 15, 2008, entitled " Action by a Majority of the Membership Interest of Unity Ultrasonic Fixation," acknowledged Acom's 7 percent interest in Unity and declared that at the end of 2006 Unity had " permitted" Acom's interest " to be purchased by and issued to Dr. Peter Bonutti in exchange for their net book value, which was $1." The document further declared that (1) " at the beginning of 2007" Acom no longer had an ownership interest in Unity, and (2) Peter's interest in Unity increased from 62 percent to 69 percent. By September 2009, millions of dollars were paid out of Unity, none of which was paid out to Acom or Avon.
Unity's members failed to inform Acom of the purported termination or any reduction in Acom's interest. In fact, Acom did not learn of its termination and Peter's acquisition of Acom's interest until 2013. Defendants furthered their scheme to deprive Acom of its interest by transferring Synthes' money out Unity in various ways, including: (1) paying excessive distributions to or on behalf of Peter and paying nothing to Acom or Avon; (2) paying or reporting excessive illegitimate expenses; and (3) making or approving excessive payments to Peter for his preferred equity for loans made by him or on his behalf.
Acom filed the instant seven--count complaint alleging as follows: (1) Count One -- Breach of Fiduciary Duty/Fraud; (2) Count Two -- Conversion; (3) Count Three -- Aiding and Abetting; (4) Count Four -- Civil Conspiracy; (5) Count Five -- Declaratory Judgment -- Invalidity of Purported Operating Agreement; (6) Count Six -- Declaratory Judgment -- Inspection of Books and Records; and (7) Count Seven -- Action for ...