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Kay Brothers Enterprises Inc. v. Parente

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

October 3, 2016

KAY BROTHERS ENTERPRISES, INC., an Illinois Corporation, Plaintiff,
v.
JOSEPH PARENTE, DAWN PARENTE, PROVENCAL CONSTRUCTION COMPANY, an Illinois Corporation, Defendants. JOSEPH PARENTE and DAWN PARENTE, Third-Party Plaintiffs,
v.
ROBERT MIFFLIN, d/b/a R.A MIFFLIN ARCHITECTS, Third-Party Defendant.

          OPINION AND ORDER

          SARA L. ELLIS United States District Judge.

         After Plaintiffs Kay Brothers Enterprises (“Kay Brothers”) sued Defendants and Third Party Plaintiffs Joseph and Dawn Parentes for copyright infringement, conversion, quantum meruit, and unjust enrichment following the Parentes' construction of a custom residence using plans allegedly owned by Kay Brothers, the Parentes counter-sued Third Party Defendant Robert Mifflin, d/b/a R.A. Mifflin Architects, (“Mifflin”) alleging that Mifflin breached the Parentes' implied non-exclusive license to use Mifflin's architectural plans to build their custom home when he transferred his rights to the plans to Kay Brothers Enterprises, Inc. (“Kay Brothers”) and omitted and misrepresented material information during his contract discussion with the Parentes. The Parentes allege that Mifflin's actions delayed the completion of the construction of their home and precipitated Kay Brothers' lawsuit against the Parentes. The Parentes bring third-party claims against Mifflin for breach of contract (Count I), indemnification (Count II), and violation of the Illinois Consumer Fraud and Deceptive Business Practice Act (“ICFA”), 815 Ill. Comp. Stat. 505/2 (Count III), which Mifflin now moves to dismiss [43] pursuant to Federal Rule of Civil Procedure 12(b)(6). The Court grants in part and denies in part the motion. Because the Parentes allege the existence of a valid agreement and a breach of that agreement, the Court denies the motion with respect to Count I. Because there is no right to indemnification for copyright infringement, however, the Court dismisses Count II with respect to that claim; nonetheless, Count II survives with respect to the indemnification for Kay Brothers' conversion and unjust enrichment claims against the Parentes because the claim is not premature. The Court denies the motion with respect to Count III because Mifflin fails to adequately present an argument as to why the Parentes' claim fails to satisfy Federal Rule of Civil Procedure 9(b).

         BACKGROUND[1]

         In 2014, Joseph Parente contacted Kay Brothers, a custom home building company, about building a custom home on a lot owned by the Parentes at 8734 Johnston Road, Burr Ridge, Illinois (“Johnston Residence”). On November 11, 2014, the Parentes met with Kay Brothers and Mifflin to discuss the proposed construction.

         On December 9, 2014, Joseph Parente and Mifflin agreed Mifflin would modify a set of architectural plans he had previously produced for Kay Brothers, this time to be used for construction of the Johnston Residence. The written agreement included a list of fees Joseph Parente would pay to Mifflin and the steps Mifflin would take to modify the original plans to suit the Johnston Residence. Joseph Parente paid Mifflin all payments required by the agreement and Mifflin completed the modifications to the plans and delivered them to the Parentes. At this point, Mifflin granted the Parentes an implied non-exclusive license to utilize the plans to construct the Johnston Residence.[2]

         Subsequently, in early 2015, the Parentes and Kay Brothers failed to come to terms on a contract to complete the construction of the Johnston residence and ended their relationship. The Parentes then hired a different construction company, Provencal Construction Company, to complete construction using the modified plans.

         On December 15, 2015, Mifflin assigned all rights to the original and the modified plans to Kay Brothers. Mifflin did not disclose to Kay Brothers that he had previously provided the Parentes with a license to use the modified plans to construct the Johnston Residence. The document memorializing Mifflin's assignment to Kay Brothers noted that Mifflin had previously transferred his interest in the original plans to Kay Brothers in 2002, even though Mifflin and Kay Brothers did not memorialize the 2002 transfer at the time, nor had Mifflin disclosed the alleged 2002 transfer to the Parentes.

         On January 1, 2016, Kay Brothers filed suit against the Parentes and Provencal Construction Company alleging copyright infringement, conversion, quantum meruit, and unjust enrichment. The Parentes filed the instant third-party complaint against Mifflin on March 22, 2016.

         LEGAL STANDARD

         A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed.R.Civ.P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “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.” Iqbal, 556 U.S. at 678.

         Rule 9(b) requires a party alleging fraud to “state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b). This “ordinarily requires describing the ‘who, what, when, where, and how' of the fraud, although the exact level of particularity that is required will necessarily differ based on the facts of the case. AnchorBank, 649 F.3d at 615 (citation omitted). Rule 9(b) applies to “all averments of fraud, not claims of fraud.” Borsellino v. Goldman Sachs Grp., Inc., 477 F.3d 502, 507 (7th Cir. 2007). “A claim that ‘sounds in fraud'-in other words, one that is premised upon a course of fraudulent conduct-can implicate Rule 9(b)'s heightened pleading requirements.” Id.

         ANALYSIS

         I. Breach of Contract (Count I)

         The Parentes allege that Joseph Parente and Mifflin entered into an agreement to modify a set of existing architectural plans to be used for the construction of the Johnston Residence. To state a claim for a breach of contract under Illinois law a party must allege “(1) the existence of a valid and enforceable contract; (2) substantial performance by the plaintiff; (3) a breach by the defendant; and (4) resultant damages.” Reger Dev., LLC v. Nat'l City Bank, 592 F.3d 759, 764 (7th Cir. 2010) (citing W.W. Vincent & Co. v. First Colony Life Ins. Co., 814 N.E.2d 960, 967, 351 Ill.App.3d 752, 286 Ill.Dec. 734 (2004). Mifflin argues that the Parentes have failed to meet the first element: “the existence of a valid and enforceable contract, ” and therefore, the Court must ...


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