United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER 
I. SCHENKIER United States Magistrate Judge
Jackson Avenue Subs, Inc. ("JAS"), Feroz Fazal,
Iqbal Ali, and Subway Real Estate Corp. ("SREC")
(collectively "plaintiffs"), have filed a
four-count complaint against Defendants 407 Dearborn, LLC
("407 Dearborn"), Jeffrey A. Silver, and Sidney
Ferenc (collectively "defendants"), asserting
claims of breach of contract and alter ego liability (doc. #
1-1, Ex. A: Compl.). Presently before the Court is
defendants' motion to dismiss the complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6) (doc # 17:
Defs.' Mot.). For the reasons set forth below,
defendants' motion to dismiss is granted in part and
denied in part.
begin with the allegations in the Complaint, which we accept
as true for the purposes of the motion. Tamayo v.
Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). This
lawsuit stems from defendants' alleged breach of a lease
agreement ("the Lease") for failing to return a
security deposit, as well as from the alleged breach of a
lease termination agreement ("the Termination
Agreement") that required defendants to make payments to
plaintiffs during a specified period. Because the Complaint
attaches as exhibits the Lease and the Termination Agreement,
we consider both documents as part of the pleadings for the
purposes of the motion to dismiss. See Hecker v. Deere
& Co., 556 F.3d 575, 582 (7th Cir. 2009) (holding
that it was within the district court's discretion to
consider, on a motion to dismiss, documents to which the
complaint referred that were concededly authentic and central
to the plaintiffs claim).
Lease, attached to the complaint as Exhibit A, was entered
into by SREC and Old Colony Partners Limited Partnership (to
which 407 Dearborn is the successor in interest) on January
22, 2003, for a space located at 407 S. Dearborn Street in
Chicago, Illinois (Compl. ¶ 12; Ex. A, at 44). The Lease
provided that SREC may sublease the premises to a
franchisee/licensee for use as a Subway sandwich shop
(Id. ¶ 13). Mr. Fazal and Mr. Ali were
franchisees/licensees who subleased the property, and JAS is
the entity that operated the Subway on their behalf
(Id. ¶¶ 14-15). SREC paid $5, 500.00 as a
security deposit to 407 Dearborn (Id. ¶ 16).
Section 4 of the Lease states that "[i]f Tenant shall
have fully complied with all of the covenants and conditions
of this Lease the amount of the security deposit then held by
the Landlord, shall be repaid to Tenant, without interest,
within thirty (30) days after the expiration or sooner
termination of this Lease" (Compl. Ex. A ¶ 4, at
allege that the Termination Agreement was entered into on
January 31, 2014 "by plaintiffs and defendants"
(Compl. ¶ 18). The Termination Agreement, attached to
the Complaint as Exhibit B, does not identify Mr. Ferenc as a
party to the agreement; Mr. Silver signed the Termination
Agreement, but only in his capacity as Escrowee (Compl. Ex.
B, at 8).
3 of the Termination Agreement provides that upon the
Termination Agreement date, plaintiffs would vacate the
premises and 407 Dearborn would compensate plaintiffs for a
period of time called the "Go Dark Period" (Compl.
¶ 19), The Go Dark Period and payments would terminate
upon the occurrence of specific events related to the
building being fit for resumption of operation of a Subway
restaurant, a new lease being entered into with the new
owner, and the health department issuing final approval
(Compl. Ex. B ¶ 3, at 2-3). The Termination Agreement
provided that 407 Dearborn would compensate
"Subway®" in the amount of $3, 150.00 per month
and "Fazal/Ali" in the amount of $5, 000.00 per
month during the Go Dark Period (Id.). Paragraph 3
of the Termination Agreement included a "note"
specifying that the payments to Mr. Fazal and Mr. Ali would
be made from an escrow account held by Mr. Silver as
Escrowee, which was to be funded with $90, 000.00 deposited
by 407 Dearborn upon the sale of the property that was
subject to the Termination Agreement (Id.). Although
the Complaint alleges that the escrow account shall cover
"payments owed described in Section 3 of the Termination
Agreement, " which would include both the payments to
SREC and to Mr. Fazal and Mr. Ali (Compl. ¶ 23), the
note in the Termination Agreement states that funds in the
escrow account would be disbursed to cover the payments due
under paragraph 3(b), which is the paragraph describing the
payments to Mr. Fazal and Mr. Ali (Comp. Ex. B ¶ 3(b),
at 3). The Termination Agreement does not state that funds in
the escrow account would be disbursed to SREC to satisfy the
payments it was due to recover, pursuant to paragraph 3(a),
during the Go Dark Period.
allege that the events ending the Go Dark Period have not yet
occurred and that as of the filing of the Complaint on March
30, 2016, payments under the Termination Agreement are owed
to SREC in the amount of $31, 500.00, and to Mr. Fazal, Mr.
Ali, and JAS in the amount of $55, 000.00 (Compl.
¶¶ 25-26). Plaintiffs also allege that the $5,
500.00 security deposit was never returned, in violation of
the Lease (Id. ¶¶ 27-28). Thus, plaintiffs
allege they are owed a total of $92, 000.00 as of March 31,
2016 (Id. ¶ 31).
have sued defendants on four grounds: two breach of contract
claims against 407 Dearborn for failing to make the required
payments under the Termination Agreement and for failing to
return the security deposit; a breach of contract claim
against Mr. Silver as Escrowee; and an alter ego claim
against Mr. Ferenc as director, officer, and/or owner of 407
Dearborn, which seeks to pierce the corporate veil and hold
him personally liable for the payments allegedly required of
407 Dearborn (Compl. ¶¶ 32-59). The parties agree,
and both the Lease (Compl. Ex. A ¶ 45.4, at 34) and the
Termination Agreement (Id., Ex. B ¶ 11(b), at
5) provide, that Illinois law applies.
reviewing the sufficiency of a complaint, we must accept all
well pled facts as true and draw all permissible inferences
in favor of the plaintiff." Agnew v. Nat'l
Collegiate Athletic Ass'n, 683 F.3d 328, 334 (7th
Cir. 2012). To determine if plaintiffs' allegations are
sufficient to state a claim, we must determine if they both
give the defendants notice of the claims to which they must
respond and make the asserted claims "plausible on
[their] face." Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009); see also Agnew, 683, F.3d at 334
("The Federal Rules of Civil Procedure require only that
a complaint provide the defendant with 'fair notice of
what the,, . claim is and the grounds upon which it
rests'"). "A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged." Barnett v.
Webster, 658 F.3d 742, 752 (7th Cir.2011) (citing
Iqbal, 556 U.S. at 678).
Count I, plaintiffs claim that SREC is entitled to $3, 150.00
per month and Mr. Ali, Mr, Fazal, and JAS collectively are
entitled to $5, 000.00 per month under the Termination
Agreement (Compl. ¶¶ 33-34). Plaintiffs allege the
events that would terminate the payment obligations have not
occurred (Id. ¶ 35).
argue that Count I should be dismissed, apparently in its
entirety, because it improperly includes JAS among the
plaintiffs to whom payment is due, when in fact Paragraph 3
of the Termination Agreement does not identify JAS as an
entity entitled to any payments (Defs.' Mot. at 2).
Defendants' argument is not framed clearly; while in one
passage the motion says Count I should be dismissed, two
sentences later, defendants appear to narrow their request to
seeking dismissal only of "[a] 11 claims purportedly
brought by or on behalf of JAS . . . ." (Id.).
In any event, there is no basis to dismiss a claim by SREC,
Mr. Ali, and Mr. Fazal simply because a plaintiff ...