United States District Court, S.D. Illinois
MEMORANDUM AND ORDER
R. Herndon, United States District Judge
before the Court is Counter-Defendant Alan Johnson's
Motion to Dismiss Counts IV-VIII of
Defendant/Counter-Claimant's Second Amended Complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc.
Defendant/Counter-Claimant, Brady McCasland, Inc.
(hereinafter “BMI”), opposes the motion on
grounds that the pleading requirements of 12(b)(6) are
satisfied and Counter-Defendant has adequate notice of
Defendant/Counter-Claimant's claims (Doc. 70). For the
reasons explained below, the Court DENIES
Counter-Defendant's Motion to Dismiss (Doc. 58).
8, 2015, BMI removed this case from the Circuit Court of St.
Clair County, Illinois, based on diversity jurisdiction under
28 U.S.C. §§ 1332 and 1341 (Doc. 1). Upon removal,
defendants filed a motion to dismiss Plaintiff's
complaint for failure to state a claim (Doc. 7). Thereafter,
Plaintiff sought leave to file her First Amended Complaint
(Doc. 9). The Court granted the request, and on July 16,
2015, Womack d/b/a PJW Enterprises, filed a three count
amended complaint (Doc. 13). On August 13, 2015, BMI filed a
Motion to Dismiss the First Amended Complaint (Doc. 21). On
March 22, 2016, this Court entered an Order denying BMI's
Motion to Dismiss (Doc. 34). BMI then filed its Answer,
Affirmative Defenses, and Counterclaim (Doc. 35).
1, 2016, BMI filed a Motion for Leave to File a Second
Amended Counterclaim and Motion for Joinder of a Third Party
(Doc. 46). On July 21, 2016, BMI filed a nine (9) count
Second Amended Complaint against Counter-Defendants James
Womack, Jordan Womack, and Alan Johnson (hereinafter referred
to as Johnson) (Doc. 48). Counts IV, V, VI, VII, and VIII are
directed at Johnson and allege the following under Illinois
law: fraud (Count IV), conspiracy to commit fraud (Count V),
aiding and abetting fraud (Count VI), breach of fiduciary
duty (VII) and conspiracy to breach fiduciary duty (VIII).
Motion to Dismiss
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) challenges the sufficiency of the complaint for
failure to state a claim upon which relief may be granted.
Gen. Hallinan v. Fraternal Order of Police Chicago Lodge
No. 7, 570 F.3d 811, 820 (7th Cir. 2009). The Supreme
Court explained in Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007), that in order to withstand Rule
12(b)(6) dismissal, a complaint “does not need detailed
factual allegations, ” but must contain “enough
facts to state a claim for relief that is plausible on its
face.” 550 U.S. at 570.
and Ashcroft v. Iqbal, 556 U.S. 662 (2009) retooled
federal pleading standards, but notice pleading remains all
that is required in a complaint. “A plaintiff still
must provide only ‘enough detail to give the defendant
fair notice of what the claim is and the grounds upon which
it rests and, through his allegations, show that it is
plausible, rather than merely speculative, that he is
entitled to relief.'” Tamayo v.
Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008)
(citation omitted). In making this assessment, the district
court accepts as true all well-pleaded factual allegations
and draws all reasonable inferences in the plaintiff's
favor. See Rujawitz v. Martin, 561 F.3d 685, 688
(7th Cir. 2009); St. John's United Church of Christ
v. City of Chi., 502 F.3d 616, 625 (7th Cir. 2007).
the established standard discussed above, Federal Rule of
Civil Procedure 9(b) articulates the following heightened
standard for fraud or mistake and conditions of mind:
“In alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or
mistake. Malice, intent, knowledge, and other conditions of a
person's mind may be alleged generally.”
Fed.R.Civ.P. 9(b). The Seventh Circuit has held that in order
to survive dismissal on a Rule 12(b)(6) motion, the complaint
“must plead the ‘who, what, when, where, and
how' of the alleged fraud.” DiLeo v. Ernst
& Young, 901 F.2d 624, 627 (7th Cir. 1990);
Lachmund v. ADM Investor Services, Inc., 191 F.3d
777, 782 (7th Cir. 1999) (quoting Uni* Quality, Inc. v.
Infotronx, Inc., 974 F.2d 918, 923 (7th Cir. 1992));
Rao v. BP Products North America, Inc., 589 F.3d
389, 401 (7th Cir. 2009) (citing DiLeo, 901 F.2d at
627). As such, “circumstances of fraud or
mistake” include “the identity of the person who
made the misrepresentation, the time, place and content of
the misrepresentation, and the method by which the
misrepresentation was communicated to the plaintiff.”
Windy City Metal Fabricators & Supply, Inc. v. CIT
Technology¸536 F.3d 663, 668 (7th Cir. 2008)
(quoting Gen. Elec. Capital Corp. v. Lease Resolution
Corp., 128 F.3d 1074, 1078 (7th Cir. 1997)).
claims that are not by definition claims of fraud, but which
“sound in fraud, ” i.e. are “premised
upon a course of fraudulent conduct, ” still warrant
the Rule 9(b) heightened pleading standard. Borsellino v.
Goldman Sachs Group, Inc., 477 F.3d 502, 507 (7th Cir.
2007) (citing Rombach v. Chang¸355 F.3d 164,
170-71 (2d Cir. 2004)); See also Sears v.
Likens, 912 F.2d 889, 893 (7th Cir. 1990). Whether the
rule applies will depend on the plaintiffs' factual
allegations. Id. (citing In re Daou Sys.,
Inc., 411 F.3d 1006, 1027-28 (9th Cir. 2005) and
Cal. Pub. Employees' Ret. Sys. v. Chubb Corp.,
394 F.3d 126, 160-61 (3d Cir. 2004)). Each of the challenged
claims at issue here are based upon the same alleged acts of
fraud. Therefore, Rule 9(b) applies to Count IV, as well as
Counts V-VIII. The pleadings must be specific enough to put
fraud defendants on notice of the conduct alleged.
Freedom Mortg. Corp v. Burnham Mortg., Inc., 720
F.Supp.2d 978, 989 (N.D. Ill. 2010). With this heightened
standard in mind, the Court turns to Counts IV-VIII of
BMI's Second Amended Complaint, as applied to
Counter-Defendant Alan Johnson.
Count IV: Fraud
Johnson argues that Count IV of BMI's counterclaim is
“comprised of legal conclusions and conclusory
statements” and is not pled with “the specificity
required under the law” because of the following: (1)
the specific date of when the under loading occurred is not
stated; (2) only Johnson's length of employment at BMI is
claimed to give rise to “special confidence”; (3)
concerted action is claimed without any “details [of]
how they acted in concert”; and (4) there is nothing
demonstrating how BMI determined the cars were under loaded,
what benefit Johnson realized, or what actions were taken to
conceal the “Scheme.” Doc. 59, Pg. 4-5.
Furthermore, Johnson identifies as conclusory BMI's
allegations that Johnson “knowingly and voluntarily
encourage[d], facilitated, and participated in the Scheme in
concert with the Womacks, concealed the scheme from the
Womacks and realized a ...