United States District Court, N.D. Illinois
MEMORANDUM OPINION AND ORDER
Z. LEE UNITED STATES DISTRICT JUDGE
BankDirect Capital Finance, LLC (“BankDirect”),
Defendant Capital Premium Financing, Inc.
(“CPFI”), and Counter-Defendant Texas Capital
Bank National Association (“TCB”) have brought a
number of claims against one another which arise out of a
failed business relationship. BankDirect and TCB have moved
to dismiss Counts VII and VIII of CPFI's second amended
counterclaims. For the reasons given below, BankDirect and
TCB's motion is denied.
and CPFI originate and service loans for the financing of
insurance premiums. CPFI's 2d Am. Countercl.
(“Countercl.”) ¶ 2, ECF No. 172. TCB
controls BankDirect and directs its conduct. Id.
¶¶ 104, 105, 128. BankDirect's primary customer
segment is large insurance agencies, while CPFI focuses on
small to midsized insurance agencies. Id.
¶¶ 4, 5.
2010, CPFI and BankDirect entered into a set of agreements
under a Master Transaction Agreement (“Master
Agreement”) designed to substantially intertwine the
two companies' sales, marketing, and financing.
Id. ¶¶ 1, 9, 10. The Master Agreement also
gave BankDirect an option to purchase certain CPFI assets and
liabilities upon the Master Agreement's expiration.
Id. ¶ 10.
the Master Agreement expired in 2016, BankDirect attempted to
exercise the purchase option, and CPFI refused to sell.
Id. ¶ 136; 3d Am. Compl. ¶¶ 123-40,
ECF No. 160. As a result, BankDirect has brought a number of
claims, including breach of contract (Counts III, IV and V)
and breach of the implied duty of good faith (Count VI).
BankDirect also seeks a declaration that the agreements
between the parties are enforceable and that it
satisfactorily performed its obligations under the agreements
part, CPFI's counterclaims contend that BankDirect and
TCB breached the parties' agreements (Count II and III)
and the covenant of good faith and fair dealing (Count IV).
CPFI also alleges that BankDirect and TCB fraudulently
induced CPFI to enter into the agreements (Count VI); that
the agreements, including the purchase option, are void
(Count I); and that BankDirect and TCB have been unjustly
enriched (Count V). In addition, CPFI claims that BankDirect
and TCB misappropriated proprietary information in violation
of the Illinois Trade Secrets Act (“ITSA”), 765
Ill. Comp. Stat. 1065/1 et seq. (Count
VII). Lastly, CPFI brings a conversion claim (Count
VIII) alleging that, after the parties' dispute arose,
BankDirect and TCB unilaterally seized $1, 000, 000 from
CPFI's deposit account without having a contractual right
to do so.
the Court is BankDirect and TCB's motion to dismiss
CPFI's counterclaims for trade-secret misappropriation
and conversion (Counts VII and VIII, respectively).
motion under Rule 12(b)(6) challenges the sufficiency of
claims under Rule 8. See Christensen v. Cty. of
Boone, 483 F.3d 454, 457 (7th Cir. 2007). The federal
notice pleading standard requires claims to “contain
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
(2009)). Claims need provide only “enough detail to
give [defendants] 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). In
evaluating a Rule 12(b)(6) motion, all well-pleaded
allegations are accepted as true, and courts must draw all
reasonable inferences in the claimant's favor.
See Cole v. Milwaukee Area Tech. Coll.
Dist., 634 F.3d 901, 903 (7th Cir. 2011); Justice v.
Town of Cicero, 577 F.3d 768, 771 (7th Cir. 2009).
ITSA Claim (Count VII)
and TCB move to dismiss CPFI's trade-secret
misappropriation claim under the ITSA, 765 Ill. Comp. Stat.
1065/1 et seq. “To state a claim for trade
secret misappropriation, a plaintiff must allege: (1) that
the information at issue was a trade secret; (2) that it was
misappropriated; and (3) that it was used in the
defendants' business.” Fire ‘Em
Up, Inc. v. Technocarb Equip. (2004) Ltd., 799 F.Supp.2d
846, 849-50 (N.D. Ill. 2011) (citing Learning Curve Toys,
Inc. v. PlayWood Toys, Inc., 342 F.3d 714, 721 (7th Cir.
trade secret is information that ‘(1) is sufficiently
secret to derive economic value, actual or potential, from
not being generally known to other persons who can obtain
economic value from its disclosure or use; and (2) is the
subject of efforts that are reasonable under the
circumstances to maintain its secrecy or
confidentiality.'” Id. (quoting 765 Ill.
Comp. Stat. 1065/2(d)). “While it is true that
specificity of concrete trade secrets is required to support
a finding of misappropriation, . . . the alleged trade
secrets need not be disclosed in detail in a complaint to
survive a motion to dismiss.” Id. at 850
(citing AutoMed Techs., Inc. v. Eller, 160 F.Supp.2d
915, 920- 21 (N.D. Ill. 2001) (internal citation omitted);
see Motorola, Inc. v. Lemko Corp., 609 F.Supp.2d
760, 771 (N.D. Ill. 2009) (“ITSA plaintiffs are not
required to plead highly specific facts on improper trade
secret use, because such facts often will not be available
before discovery.”) (citing Sentry Pool v. Wave Tec
Pools, Inc., No. 07-4082, 2008 WL 3200837, at *3 (C.D.
Ill. Aug. 6, 2008)); see also Covenant ...