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Van Dorn v. Peters

United States District Court, Northern District of Illinois, Eastern Division

March 24, 2015

BARBARA J. VAN DORN, an individual, Plaintiff,
v.
JOHN PETERS, an individual, and PETERS FINANCIAL GROUP, INC., an Illinois corporation, Defendants.

MEMORANDUM OPINION AND ORDER

Sharon Johnson Coleman, United States District Judge.

On May 28, 2014, Barbara J. Van Dorn (“Plaintiff”) filed a four-count complaint against Defendants John Peters (“Peters”) and Peters Financial Group, Inc. (“PFG”) (collectively, the “Defendants”) in the United States District Court for the Northern District of Illinois. The Complaint alleges common law fraud, violations of the Illinois Securities Law of 1953, and also seeks relief under theories of equitable estoppel and promissory estoppel. Defendants moved to dismiss the Complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b).

BACKGROUND

The following facts are based on Van Dorn’s Complaint and attached exhibits, and are accepted as true for the purposes of resolving Defendants’ motion to dismiss. Start-up company OneBig Tent operated two lines of business: a money transfer business and an online discount membership shopping site. It was initially led by Chief Executive Officer (“CEO”) Ken Jakubowski.

Van Dorn made her first investment in OneBig Tent on July 16, 2010. The money transfer portion of the business suffered financially in 2011 and 2012. Between June and September of 2011, however, the principals of OneBig Tent solicited an additional investment from Van Dorn. In June 2011, OneBig Tent’s president resigned and the company added a financial committee to its executive staff, adding John Peters as one of its “Financial Strategic Consultants.”

Relying on the executive team’s representations about OneBig Tent’s “health” and the online membership shopping market, Van Dorn invested an additional $250, 000 on September 20, 2011. Both of these investments were in the form of a “note which could be converted into a membership interest” in the company. Complaint, dkt 1, ¶¶ 16 and 19. OneBig Tent continued to suffer financially.

The executive team again solicited Van Dorn for an additional investment. Van Dorn was “refused to contribute any more money to the failing enterprise without a personal guarantee from one of its principals.” Id. at ¶ 22. She alleges that to induce her into making a third loan to OneBig Tent, Peters promised that his company, Peters Financial Group, Inc., would guarantee Van Dorn’s third loan. Id. at ¶ 23(a). From June 26-29, 2012, Peters and Jakubowski, CEO of OneBig Tent, exchanged emails with Van Dorn in which they outlined the terms of her investment and the guaranty. See Dkt 1, Ex. 1. On June 29, 2012, Peters forwarded to Van Dorn an e-mail from his lawyer, “Dean, ” setting forth the guaranty terms and attaching a draft guaranty agreement which provided that Van Dorn’s investment for $250, 000. Id. In his e-mail forward, Peters stated he had not yet read the guaranty draft and that he, Van Dorn, and Jakubowski should follow up with any proposed revisions. Id.

On July 2, 2012, Peters confirmed to her that the terms of the Guaranty were acceptable and “reiterated his promise that Peter’s (sic) Financial would guarantee Ms. Van Dorn’s investment[.]” Dkt. 1, ¶ 23(d). That same day, Van Dorn authorized a $200, 000 wire transfer to OneBig Tent, and the company received the funds on July 6, 2012.

On July 5, 2012, Jakubowski emailed Van Dorn executed copies of the promissory note and warranty agreement, as well as an unsigned and revised copy of the guaranty, reflecting the $200, 000 investment amount. Dkt 1, ¶ 26, Ex. 3 and 4. Jakubowski also advised Van Dorn to call Peters to arrange execution of the guaranty, stating that it would likely be sufficient if Van Dorn signed and returned the guaranty to Peters for his electronic signature. Ex. 2. Van Dorn returned the guaranty with her signature to OneBig Tent. The guaranty was never signed by Peters. Compl. ¶ 27, ¶ 29.

Jakubowski notified investors, including Van Dorn, on September 24, 2013, that OneBig Tent had encountered insurmountable financial obstacles and that it was winding up its business. Dkt 1, Ex. 6. Van Dorn called Peters the next day to demand payment. Months after she did not receive a response, Van Dorn mailed Peters a certified letter on January 6, 2014, again demanding payment. Dkt 1, Ex. 7. After speaking with her on the phone on January 13, 2014, Peters followed-up with Van Dorn in a letter dated January 17, 2014, summarizing their telephone conversation. Peters’ letter stated that prior to her July 2012 investment, Peters told OneBig Tent CEO Jakubowski that he was unwilling to provide a guarantee. Id. at Ex. 8. However, Peters did not inform Van Dorn of his decision not to guaranty her loan pursuant to the advice of counsel, who advised him not to dissuade other investors and because the attorney believed that Van Dorn, like other investors, would conduct her own due diligence. Id. Peters stated that he out of town when Van Dorn decided to fund the loan in July 2012 and he was surprised to learn Jakubowski had closed the loan without Peters’ guaranty. Id. Peters’ concluded that she had done her due diligence and determined that the loan was the proper investment for her. Van Dorn has not been reimbursed by Peters, Peters Financial Group, or OneBig Tent, and has brought this suit against all three to recoup her losses.

LEGAL STANDARD

When reviewing a motion to dismiss for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court accepts as true all well-pleaded facts alleged in the complaint and construes all reasonable inferences in favor of the nonmoving party. Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). The complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In other words, the complaint “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This does not require “‘detailed factual allegations, ’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id.

DISCUSSION

Pleading under Rule 12(b)(6)


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