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Lansing v. Carroll

United States District Court, N.D. Illinois, Eastern Division

June 29, 2015

Robert T.E. Lansing, et al., Plaintiffs,
George Carroll and GW Carroll VI LLC, Defendants. and George Carroll and GW Carroll VI LLC, Counter-Plaintiffs,
Robert T.E. Lansing, Realty Portfolio Holdings LP, Michael Coulter Smith, as trustee of Celebrate Life Trust, Richard J. Stephenson, et al., Counter-Defendants.



Robert Lansing and George Carroll created a real-estate investment business. When their relationship soured, each of the partners attempted to buy out the other. But neither attempt went smoothly, and the parties ultimately became embroiled in litigation: Lansing filed a breach-of-contract claim against Carroll, and Carroll brought a series of counterclaims against Lansing and others, including a man named Richard Stephenson. Carroll, as it turns out, had made several remarks about Stephenson and the Stephenson family to a few investors when contacting the latter about the buyout. Stephenson filed a counterclaim against Carroll for defamation, and Carroll moved to dismiss. For the reasons discussed below, Carroll’s motion is granted.

I. Legal Standard

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires that a claim for relief contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” The complaint need not include specific facts, but it must provide the defendant with fair notice of what the claim is, and the grounds upon which it rests. Olson v. Champaign Cnty., Ill., 784 F.3d 1093, 1098–99 (7th Cir. 2015) (citing Erickson v. Pardus, 551 U.S. 89, 93 (2007); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The complaint must present enough factual matter, accepted as true, that the claim to relief “is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). In considering a motion to dismiss under Rule 12(b)(6), the district court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in the (counter-)plaintiff’s favor. Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 946 (7th Cir. 2013) (quoting Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010)).

II. Facts

At bottom, this case is about a business divorce between two individuals, Robert Lansing and George Carroll. The details of their dispute are set forth in an earlier ruling. [197].[1] For the purpose of resolving the present motion, however, a brief review is helpful.

Lansing and Carroll created together a real-estate investment business. Each owned an equal number of shares in the business, though the two co-owners worked out of different offices. (Lansing managed operations in Illinois, while Carroll took the helm in California.) Ultimately, however, the relationship soured, and in November 2010 Lansing exercised the “buy/sell” provisions in the business’ governing agreements. Pursuant to those provisions, Lansing offered both to buy Carroll’s shares and to sell to Carroll Lansing’s own shares for approximately $14.5 million. Carroll chose to buy Lansing’s shares, thus accepting the “sell” portion of Lansing’s offer. But the closing date for the sale came and went, and Carroll was unable to raise the money necessary to complete the transaction.

A flurry of action ensued. Lansing sued Carroll for breach of contract, then purported to take control of Carroll’s shares by executing (unilaterally) a transfer agreement. Carroll then filed a series of counterclaims based on the alleged conversion of his interests, including a claim against Lansing for fiduciary breach, and a claim against Richard Stephenson for aiding and abetting that breach. Stephenson, according to Carroll, could be held liable under an aiding-and-abetting theory because it was he who had designated a certain trust (Celebrate Life Trust) as the funding source for the allegedly-unlawful purchase of Carroll’s shares. After Stephenson’s motion to dismiss the counterclaim was denied, Stephenson filed an answer and his own counterclaim (against Carroll) for defamation. See [240], later amended at [254].[2]

Stephenson claims that when Lansing invoked the buy/sell provisions in November 2010, and Carroll elected to buy Lansing’s shares rather than to sell his own, Carroll began to reach out to investors over e-mail about raising the funds to make the purchase. Although the ostensible purpose of the e-mails was to obtain money for the buyout, Stephenson contends that in reality the messages served an alternative objective: to destroy Lansing’s and Stephenson’s reputations by spreading falsehoods about them. See [254] at 60 ¶¶ 4–5; id. at 64–65 ¶¶ 25–28. Stephenson claims that Carroll defamed him by making the following (false) statements about Stephenson to two different investors:

(to Eliot Wadsworth) that “Steve Graver at Graver Capital Management . . . brought us the Stephensons, and then terminated the relationship after he found out they were crooks”;
(to Wadsworth) that “I [Carroll] will meet with [Lansing] . . . tomorrow . . . to discuss some possible solutions that will a) save his reputation; b) facilitate the transfer; c) reduce the likelihood of him roaming the streets of Lake Forest with his worldly possessions in a grocery cart; d) allow me to get rid of and him [sic] to take advantage of the unsavory Stephenson people . . . .”
(to Wadsworth) that Lansing had drifted to the “dark side, ” and that “[g]iving more money in the form of debt to [Lansing] at this point would be like giving a case of vodka to an alcoholic”;
(to Wadsworth) that Lansing’s investment project with Stephenson amounted to “deceit”;
(to Jack Humphreville) that “Stephenson appears to be the type that likes to control things. I wouldn’t be surprised if they eventually thought they could squeeze Lansing out”; and
(to Humphreville) that “[t]he patriarch [of two other companies] is Richard J. Stephenson. Google him for more information. . . . You can be sure any guy with assets in Switzerland and [the Virgin Islands] has absolutely nothing to hide.”

Id. at 65–66 ¶¶ 30(a)–(f) (citing Exhibits A through F to the counterclaim, [254-1] at 1–27). Stephenson also listed in his counterclaim a series of statements in which Carroll allegedly accused Lansing of fraud. See Id. at 66 ¶¶ 31(a)–(g).

Carroll moved to dismiss the defamation claim on the ground that it fails to state a ...

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