United States District Court, N.D. Illinois, Eastern Division
SWERVO ENTERTAINMENT GROUP, LLC, a Minnesota limited liability company, Plaintiff,
LINDA S. MENSCH, an individual, LINDA S. MENSCH, P.C., an Illinois corporation, BRYAN CAVE, LLP, a Missouri limited liability partnership, RSK ENTERPRISES, LLC, a Delaware limited liability company, and ROBERT S. KELLY p/k/a R. Kelly, an individual, Defendants.
MEMORANDUM OPINION AND ORDER
Z. Lee United States District Judge
Swervo Entertainment Group, LLC (“Plaintiff”)
brings suit against Defendants Linda S. Mensch and Linda S.
Mensch, P.C. (collectively, “Mensch”), as well as
Bryan Cave, LLP (“Bryan Cave”), RSK Enterprises,
LLC (“RSK”), and Robert S. Kelly (“R.
Kelly”). Plaintiff alleges that while it was in
negotiations with RSK and R. Kelly over the terms of a
proposed artist tour agreement, Mensch requested an advance
deposit in the sum of $500, 000 as a gesture of good faith in
exchange for continuing negotiations. Negotiations eventually
broke down, and the advance deposit was never returned to
Third Amended Complaint, Plaintiff asserts claims for
conversion (Count I), fraud in the inducement (Count II),
breach of fiduciary duty (Count III), negligence (Count IV),
breach of escrow agreement (Count V), unjust enrichment
(Count VI), and promissory estoppel (Count VII). Defendants
have moved to dismiss the Third Amended Complaint for failure
to state a claim to relief pursuant to Federal Rule of Civil
Procedure (“Rule”) 12(b)(6). They have also moved
to strike Plaintiff's request for attorney's fees.
For the reasons stated below, Defendants' motions to
dismiss are granted in part and denied in part, and the
motion to strike is granted.
is a Minnesota limited liability company in the business of
promoting and producing concerts. See 3d Am. Compl.
¶ 1, ECF No. 52. Its principal place of business is in
Minnesota, where its sole member resides. Id.
¶¶ 1-2. RSK is a Delaware limited liability company
with its principal place of business in Illinois.
Id. ¶ 10. RSK's sole member is music artist
R. Kelly, a resident of Georgia. Id. ¶¶
11-12. Linda Mensch is an attorney and a resident of
Illinois, and she is the sole shareholder and officer of the
Illinois corporation Linda S. Mensch, P.C. Id.
¶¶ 3-5. At all times relevant to this case, Mensch
held herself out to be an attorney of counsel for the law
firm Bryan Cave. Id. ¶ 18.
January 2016, Plaintiff began negotiations with RSK and R.
Kelly regarding a proposed artist tour agreement, whereby
Plaintiff would receive the exclusive right to promote and
produce certain concerts performed by R. Kelly in exchange
for a performance fee. Id. ¶ 16. During these
negotiations, RSK and R. Kelly were represented by Mensch.
Id. ¶ 17.
January 6, 2016, Mensch requested that Plaintiff wire an
advance deposit in the sum of $500, 000 as a gesture of good
faith in exchange for continuing negotiations regarding the
terms of the tour agreement. Id. ¶ 22.
Plaintiff insisted the funds be held in a trust or escrow
account and that they not be released until a final tour
agreement was executed. Id. ¶ 24. On January
13, 2016, Mensch offered an escrow account at Lakeside Bank
in Chicago, Illinois, into which Plaintiff could wire the
advance deposit. Id. ¶ 25. According to
Plaintiff, Mensch represented at this time that Defendants
would return the advance deposit if the parties did not
finalize a tour agreement. Id. ¶ 27.
Additionally, Mensch represented that Plaintiff retained an
absolute and unconditional right to the return of the advance
deposit in the event that the parties did not reach a final
agreement. Id. ¶ 28. On January 15, 2016,
relying upon these representations, Plaintiff transferred the
$500, 000 advance deposit to the escrow account. Id.
¶¶ 29-30. The escrow account was entitled
“LINDA S. MENSCH, P.C. RSK CLIENT ESCROW
ACCOUNT.” Id. ¶ 30.
February 5, 2016, Plaintiff sent Mensch a draft of the tour
agreement. Id. ¶ 33. In this draft, paragraph
4.4 was entitled “Timing of any payments” and
included a provision stating: “Advance of Five Hundred
Thousand Dollars ($500, 000.00) upon full execution of
this Agreement.” Id. ¶ 34 (emphasis
added); id., Ex. 2. Plaintiff asserts that this
version of paragraph 4.4 evinces Mensch's understanding
that the advance deposit belonged to Plaintiff at all times
prior to execution of a tour agreement. Id. ¶
February 23, 2016, Mensch sent Plaintiff a new, revised
version of the tour agreement. Id. ¶ 35. In
this version, Mensch had modified paragraph 4.4 so that it
read: “Advance of Five Hundred Thousand Dollars ($500,
000.00), acknowledged as received.”
Id. ¶ 38 (emphasis added); id., Ex. 3.
Additionally, Mensch inserted the following language in
paragraph 4.5: “[t]he initial deposit in the amount of
$500, 000 is hereby acknowledged as received by RSK
Enterprises, LLC and all such funds have been authorized by
[Plaintiff] to be released from the Linda S. Mensch PC Escrow
account.” Id. ¶ 39; id., Ex. 3.
Plaintiff never approved these revisions and did not have an
opportunity to review or discuss them with Mensch before she
unilaterally inserted them. Id. ¶¶ 37, 60.
March 8, 2016, Plaintiff requested that Mensch return the
advance deposit if the parties were unable to finalize the
tour agreement by March 11, 2016. Id. ¶ 43.
Later that day, Mensch left Plaintiff's counsel a
voicemail confirming her receipt of this request.
Id. ¶ 45.
March 14, 2016, the parties had not reached a final
agreement, so Plaintiff sent written correspondence to Mensch
demanding return of the advance deposit. Id. ¶
49. Mensch did not respond to this request or return the
advance deposit. Id. ¶ 50. On March 18, 2016,
Plaintiff sent written correspondence to a managing partner
of Bryan Cave's Chicago office, again requesting return
of the advance deposit. Id. ¶ 51. Bryan Cave
denied receiving the advance deposit and further denied
having any control over the escrow account. Id.
¶ 52. The parties never finalized a tour agreement, but
the advance deposit was never returned to Plaintiff.
Id. ¶¶ 53-54.
motion under Rule 12(b)(6) challenges the sufficiency of the
complaint. Christensen v. Cnty. of Boone, Ill., 483
F.3d 454, 457 (7th Cir. 2007). Under the federal notice
pleading standards, “[a] plaintiff's complaint need
only provide a short and plain statement of the claim showing
that the pleader is entitled to relief, sufficient to provide
the defendant with fair notice of the claim and its
basis.” Tamayo, 526 F.3d at 1081 (internal
quotation marks omitted); see also Fed R. Civ. P.
8(a)(2). When considering a motion to dismiss under Rule
12(b)(6), the Court must “accept[ ] as true all
well-pleaded facts alleged, and draw[ ] all possible
inference in [the plaintiff's] favor.”
Tamayo, 526 F.3d at 1081.
a complaint must allege “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) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). For a claim
to have facial plausibility, a plaintiff must plead
“factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. “The
plausibility standard is not akin to a ‘probability
requirement, ' but it asks for more than a sheer
possibility that a defendant has acted unlawfully.”
Id. Plausibility, however, “does not imply
that the district court should decide whose version to
believe, or which version is more likely than not.”
Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th
complaint alleges fraud, the heightened pleading standard set
forth in Rule 9(b) applies, rather than the liberal pleading
standard of Rule 8(a). See Fed R. Civ. P. 9(b);
Graue Mill Dev. Corp. v. Colonial Bank & Trust Co. of
Chi., 927 F.2d 988, 992 (7th Cir. 1991). Under Rule
9(b), a complaint must plead allegations of fraud with
particularity. Fed.R.Civ.P. 9(b).
Count I of the Third Amended Complaint, Plaintiff brings a
claim of conversion, alleging that Defendants have wrongfully
assumed control of Plaintiff's $500, 000 advance deposit
without authorization. 3d Am. Compl. ¶ 61. In moving to
dismiss Count I, Defendants argue that Plaintiff has failed
to sufficiently allege the elements of a conversion claim.
state a claim for conversion under Illinois law, a plaintiff
must allege: (1) the defendant's unauthorized and
wrongful assumption of control, dominion, or ownership of the
plaintiff's property; (2) the plaintiff's right in
the property; (3) the plaintiff's absolute and
unconditional right to the immediate possession of the
property; and (4) a demand for the possession of property.
G.M. Sign, Inc. v. Elm St. Chiropractic, Ltd., 871
F.Supp.2d 763, 767 (N.D. Ill. 2012) (quoting General
Motors Corp. v. Douglass, 565 N.E.2d 93, 96-97
asserted right to money generally does not support a claim
for conversion under Illinois law. Horbach v.
Kaczmarek, 288 F.3d 969, 978 (7th Cir. 2002). An
exception to this general rule exists where the money at
issue is “specific chattel”-that is, “a
specific fund or specific money in coin or bills.”
Id. (internal quotation marks omitted). In addition,
to prove that its right to the money was absolute and
unconditional, the plaintiff must show that “the money
claimed, or its equivalent, at all times belonged to
the plaintiff.” Id. (emphasis in original)
(quoting In re Thebus, 483 N.E.2d 1258, 1261 (Ill.
the $500, 000 advance deposit qualifies as “specific
chattel, ” as the deposit constituted a determinable
amount and was segregated in an escrow account. See
DeGeer v. Gillis, 707 F.Supp.2d 784, 789 (N.D. Ill.
2010). But Plaintiff's allegations do not indicate that
the advance deposit absolutely and unconditionally belonged
to Plaintiff at all times. To the contrary, the allegations
show that Plaintiff's right to the advance deposit, once
it was placed into the escrow account, was explicitly
conditioned upon the parties' inability to execute a
final tour agreement. See 3d Am. Compl. ¶ 28
(emphasis added) (“Mensch agreed that Plaintiff
retained an absolute and unconditional right to the return of
the Advance Deposit in the event that Plaintiff and
[RSK and R. Kelly] were unable to successfully negotiate and
execute a final Tour Agreement.”); id. ¶
61 (emphasis added) (“Plaintiff transferred [the
advance deposit] to [Mensch and Bryan Cave] on the
condition that the funds be held by them in an escrow
account until Plaintiff and [RSK and R. Kelly] executed a
final Tour Agreement.”).
Plaintiff alleges that its right to the return of the advance
deposit was subject to a condition, Plaintiff cannot show
that this right was absolute and unconditional, and Plaintiff
therefore cannot state a claim for conversion. See
Horbach, 288 F.3d at 977-78 (affirming dismissal of
conversion claim under Illinois law where plaintiff's
right to return of allegedly converted money was conditional
upon defendants' failure to meet certain performance
conditions); DeGeer, 707 F.Supp.2d at 789-91
(dismissing conversion claim under Illinois law where
plaintiff's right to allegedly converted money was
subject to conditions). Accordingly, Defendants' motion
to dismiss Count I is granted. Given Plaintiff's allegations
regarding the circumstances ...