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Naughton v. Alden Management Services, Inc.

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

April 3, 2017




         Pro se Plaintiff W. James Mac Naughton (“Mac Naughton”) alleges, inter alia, that Defendant Alden Management Services, Inc. (“Alden”) improperly converted various assets and was unjustly enriched at Mac Naughton's expense.[1] [1] at 1-10. Alden has moved to dismiss Mac Naughton's claims on res judicata grounds. [5] at 1-3. For the reasons explained below, Alden's motion is denied.

         I. Background [2]

         A. Factual Allegations

         In 2006, non-party Russian Media Group, LLC (“RMG”) sued non-party SA Satellite & Cable, Inc. (“USA Satellite”), in a matter captioned Russian Media Group, LLC v. Cable America, Inc., et al., No. 06-cv-3578 (N.D. Ill.) (the “RMG Action”). [1] at 5. RMG and USA Satellite settled the RMG Action in April of 2011. Id. Pursuant to that settlement agreement (the “RMG Settlement Agreement”), USA Satellite gave RMG “a first priority perfected security interest” in certain “Collateral” as “security for the payment” of USA Satellite's obligations. Id. The RMG Settlement Agreement defined “Collateral” as “all accounts receivable and contract rights of USA Satellite, both existing and future and the proceeds thereof.” Id. USA Satellite also pledged to give RMG any revenues it stood to receive from Alden (the “Alden Collateral”). Id.

         In August 2014, RMG assigned certain rights arising out of the RMG Settlement Agreement to Casco Bay Holdings, LLC (“Casco Bay”), including, without limitation, RMG's right to collect the Alden Collateral. Id. That same month Casco Bay sent a letter to Alden, demanding delivery of the Collateral. Id. at 6.

         Alden ignored Casco Bay's letter, and “continued to permit the payment” of the “Collateral to USA Satellite until in or about December 2014.” Id. Casco Bay later assigned its rights under the RMG Settlement Agreement to Mac Naughton in July of 2016. Id. at 5.

         B. Previous Litigation

         Alden's res judicata argument turns on two other cases in this judicial district: Casco Bay Holdings, LLC v. USA Satellite & Cable, Inc., et al., No. 14-cv-10134 (Darrah, J.) (“Case I”) and USA Satellite & Cable, Inc. v. W. James McNaughton and Casco Bay Holdings, LLC, No. 15-cv-6331 (St. Eve, J.) (“Case II”).

         Case I was initiated by Casco Bay, which brought claims against Alden, USA Satellite, Shai Harmelech (principal of USA Satellite) and the law firm of Leydig, Voit & Mayer, Ltd. (counsel to USA Satellite). See Case I, Dkt. 1. Case I was voluntarily dismissed by Casco Bay in September of 2015. See Case I, Dkt. 98.

         Case II, meanwhile, was brought by USA Satellite against Casco Bay and Mac Naughton in the Circuit Court of Cook County. See Case II, Dkt. 1. Casco Bay removed Case II to this judicial district, id., and subsequently filed cross-claims and third party claims against multiple parties, including Alden. See Case II, Dkt. 37 at *23-25. Alden moved to dismiss, arguing that jurisdiction was “improper” under Federal Rule of Civil Procedure 12. See Case II, Dkt. 103. Judge Amy J. St. Eve granted Alden's motion and dismissed the claims against it in June of 2016. See Case II, Dkt. 133. Judge St. Eve specifically found that there were “no claims in [Case II] that Alden is secondarily or derivatively liable as required under Rule 14(a), ” and the third-party claims against Alden were dismissed “without prejudice” in light of this same procedural defect. See Id. at *3.

         II. Legal Standard

         As a preliminary matter, the Court notes that res judicata “is [usually] not one of the affirmative defenses that Rule 12(b) permits . . .; rather, res judicata is an affirmative defense which should be raised in a motion for judgment on the pleadings under Rule 12(c).” U.S. Bank, Nat'l Ass'n v. JKM Mundelein LLC, No. 14-cv-10048, 2015 WL 2259474, at *2 (N.D. Ill. May 12, 2015). That said, depending upon the allegations raised and the content of the public records subject to judicial notice, “res judicata may provide grounds for dismissal under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.” Id.; see also Clark & Leland Condo., LLC v. Northside Cmty. Bank, 110 F.Supp.3d 866, 868-69 (N.D. Ill. 2015), on reconsideration in part sub nom. 2016 WL 302102 (N.D. Ill. Jan. 25, 2016) (“res judicata is an affirmative defense [however] the doctrine of res judicata may properly be raised as a basis to dismiss a complaint pursuant to Rule 12(b)(6)”).

         Under Rule 12(b)(6), then, the Court must determine whether the Complaint states “a claim to relief that is plausible on its face.” Yeftich v. Navistar, Inc., 722 F.3d 911, 915 (7th Cir. 2013). 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.” Id. This Court must construe the Complaint in the light most favorable to Plaintiff, accept as true all well-pleaded facts, and draw all reasonable inferences in its favor. Id.; Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999). Statements of law, however, need not be accepted as true. Yeftich, 722 F.3d at 915. Rule 12(b)(6) limits this Court's consideration to ÔÇťallegations set forth in the complaint itself, documents that are attached to the complaint, documents ...

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