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Kay Brothers Enterprises, Inc. v. Parente

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

July 31, 2018

KAY BROTHERS ENTERPRISES, INC., an Illinois Corporation, Plaintiff,
v.
JOSEPH PARENTE, DAWN PARENTE, PROVENCAL CONSTRUCTION COMPANY, an ILLINOIS CORPORATION, RON VARI, R. VARI & ASSOCIATES, LLC, HAROLD LIESENFELT, and MICHAEL CANDELA, 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.

         This case arises out of a negotiation to build a stately home in Burr Ridge, Illinois, gone awry. Plaintiff Kay Brothers Enterprises, Inc. (“KBEI”), alleges that Defendants Joseph and Dawn Parente misappropriated architectural plans for which KBEI owns the copyright and distributed them to Defendants Provencal Construction Company (“Provencal”), Harold Liesenfelt, Michael Candela, Ron Vari, and R. Vari & Associates, LLC, to be used in the construction of a custom home for the Parentes. KBEI brings claims for copyright infringement against all defendants and a claim for Quantum Meruit against the Parentes. The Parentes answered KBEI's Second Amended Complaint (“SAC”) and filed a third-party complaint naming KBEI's architect Robert Mifflin d/b/a R.A. Mifflin Architects, alleging that Mifflin breached his contract with the Parentes to modify architectural drawings for the Parentes to use in the construction of their home by purporting to transfer ownership of the copyright in those drawings to KBEI. The Parentes also allege that Mifflin violated the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”), 815 Ill. Comp. Stat. 505/1 et seq., by failing to disclose to the Parentes that he had assigned his ownership interest in the Plans to KBEI and that he therefore lacked authority to enter into the agreement with the Parentes to modify those plans for use in construction of their home.

         Discovery has closed and the Parentes and KBEI now cross move for summary judgment on the copyright claim. KBEI moves for partial summary judgment as to the Parentes' liability and the Parentes move for summary judgment arguing that they had an implied non-exclusive license to use the revised Plans to build their home. Provencal and its principles Liesenfelt and Candela also move for summary judgment on the copyright claim against them, arguing that if the Court grants summary judgment in favor of the Parentes, their liability by extension is also extinguished. Finally, Mifflin moves for the second time to dismiss the claims against him, arguing that the ICFA claim is inadequately pleaded under Federal Rule of Civil Procedure 9(b), that the Parentes have not adequately alleged standing to bring their ICFA claim, that the Parentes do not allege that Mifflin engaged in a deceptive or unfair practice necessary to state an ICFA claim, and that the Parentes do not allege damages sufficient to support their breach of contract claim.

         Because there is a genuine dispute as to whether KBEI's objective conduct demonstrated intent to provide the Parentes with a non-exclusive license to use the Plans to build their home, the Court denies all three motions for summary judgment. And, because the Court previously found the Parentes' ICFA claim adequately pleaded and they are not required to amend their complaint after discovery, and because the Parentes otherwise adequately pleaded their ICFA claim, the Court denies Mifflin's motion to dismiss the ICFA claim. Additionally, the Court denies Mifflin's motion to dismiss the breach of contract claim because the Parentes adequately alleged damages.

         Finally, the Parentes also bring a motion to strike various portions of the declarations KBEI submits in support of its Statement of Additional Disputed Facts (“SADF”). The Court denies this motion because the challenged statements are not hearsay and are consistent with prior deposition testimony.

         BACKGROUND[1]

         A. The Parties

         Defendants Joseph and Dawn Parente, husband and wife, are residents of Burr Ridge, Illinois. The Parentes are the owners of a home located at 8734 Johnston Road, Burr Ridge, Illinois (the “Johnston Residence”). Defendant Provencal Construction Company (“Provencal”) is a construction company that built the Johnston Residence for the Parentes. Defendants Candela and Liesenfelt are the sole shareholders of Provencal. Defendant Vari is a friend of Joseph Parente and an architect. Vari is the principal of Defendant R. Vari & Associates, LLC.

         Plaintiff KBEI is an Illinois corporation that constructs single-family homes, including both custom and speculative homes. John Kajmowicz and Robert Kajmowicz are the sole owners of KBEI. Third Party Defendant Mifflin is an architect. Mifflin owned R.A. Mifflin Architects.

         B. The Original Plans

         In 2002, at KBEI's request, Mifflin prepared a set of architectural drawings for a single-family home to be constructed on a KBEI-owned lot at 6679 Lee Court, Burr Ridge, Illinois (the “Original Plans”). On June 13, 2002, Mifflin executed an assignment of rights in the Original Plans to KBEI. KBEI never constructed the residence depicted in the Original Plans.

         In 2008, the Parentes acquired a vacant lot at 8734 Johnston Road adjacent to their existing residence in Burr Ridge, Illinois. Sometime prior to 2009, the Parentes met with Bob Kajmowicz, who showed the Parentes the Original Plans prepared by Mifflin. The Parentes elected not to build a new residence at that time and their discussions with KBEI ceased without any agreement to do business together.

         C. Modification of the Plans

         In 2014, the Parentes elected to move forward with building a new residence on their vacant lot on Johnston Road. In November 2014, KBEI and the Parentes met to review the Original Plans and discuss modifications to conform the drawings to the 8734 Johnston Road lot and to the Parentes' personal taste. At Bob Kajmowicz's invitation, Mifflin attended a November 2014 meeting to discuss Mifflin making the Parentes' requested modifications to the Original Plans. This was the first time the Parentes met Mifflin. KBEI consented to Mifflin making modifications to the Original Plans at the direction of the Parentes and did not require that the Parentes sign a build-to-suit contract prior to Mifflin modifying the Original Plans.

         Mifflin prepared a letter agreement dated November 13, 2014 (the “Letter Agreement”), proposing terms for the revisions of the Original Plans for the Parentes' Johnston Residence. The Letter Agreement required the Parentes to pay Mifflin $10, 000 and provided for additional services to be billed at an hourly rate. Mifflin sent a draft of the Letter Agreement to John Kajmowicz for KBEI's review and approval before transmitting the Letter Agreement to the Parentes. John Kajmowicz instructed Mifflin to revise the Letter Agreement to denote that the Original Plans were “owned by” KBEI. Mifflin did not make this change.

         The Letter Agreement did not condition the Parentes' use of the modified version of the Original Plans (the “Modified Plans”) upon KBEI serving as their builder. The Letter Agreement stated that “[t]he original plans were prepared for [KBEI] and designed for their lot at 6679 Lee Court, Burr Ridge.” Doc. 142-15. The Letter Agreement proposed that in consideration of a “fixed fee” of $10, 000, “[r]evisions will be completed, based on this existing set of drawings in order for the proposed home to be constructed on a walk out lot (#69) in the Highland Fields subdivision, Burr Ridge, owned by Mr. and Mrs. Joseph Parente.” Id.

         On December 10, 2014, John Kajmowicz emailed the unsigned Letter Agreement to the Parentes; this version also did not state that KBEI owned the Original Plans. Joseph Parente believes he signed the Letter Agreement on December 9, 2014. Mifflin received a signed copy of the Letter Agreement sometime in December 2014. The Parentes paid Mifflin $11, 700 by March 1, 2015, and made an additional, final payment of $500 in August 2015, completing payment for Mifflin's services pursuant to the terms of the Letter Agreement.

         At some point, Bob Kajmowicz, on behalf of KBEI, delivered the Modified Plans to the Parentes. KBEI never told Mifflin not to deliver copies of the Modified Plans to the Parentes. On February 20, 2015, KBEI submitted the architectural plans, a building permit application, and $1, 000.00 to the Village of Burr Ridge for the construction of the Johnston Residence. The Parentes have never reimbursed KBEI the $1, 000.00.

         D. Build-to-Suit Contract Negotiations

         From February 2015 to July 2015, the Parentes and KBEI negotiated a build-to-suit contract for the Johnston Resident. The negotiations produced at least five iterations of the build-to-suit contract. On June 5, 2015, Joseph Parente's attorney e-mailed an iteration of the build-to-suit contract to Joseph Parente and John Kajmowicz, asking KBEI to sign and return the contract. But KBEI did not sign because the parties were unable to agree upon a penalty clause in the event of KBEI's delayed performance, and negotiations deteriorated.

         On July 7, 2015, John Kajmowicz e-mailed Joseph Parente stating, “Joe please be advised that after emails and phone calls with no response. Kay Bros Ent. is no longer involved in any of your current or future building efforts. Also be advised that the current plans you have in your possession for 8734 Johnston Road, Burr Ridge, IL are the sole property of Kay Bros Ent. and any use, alteration or reproduction of the (sic) these drawings and plans without consent from Kay Bros Ent. is strictly prohibitive (sic) and will be strongly enforced. Feel free to call and discuss.” Doc. 142-31.

         On July 7, 2015, Joseph Parente responded to John Kajmowicz's e-mail stating “Ok.” On July 7, 2015, Joseph Parente responded to John Kajmowicz's e-mail again stating “E-mail got caught (sic) off . . . Ok, will call to discuss.” Doc. 142-31. Joseph Parente never called John Kajmowicz or Bob Kajmowicz to discuss the issues raised in John Kajmowicz's July 7, 2015 email.

         E. Village Approval and Construction with Another Builder

         Before negotiations between KBEI and the Parentes formally collapsed, the Village of Burr Ridge (the “Village”) approved the Modified Plans for the Johnston Residence, and on June 16, 2015, Joseph Parente paid the Village $17, 019.20 for the building permit and performance bond for the construction of the Johnston Residence. The Village provided the Parentes copies of the Modified Plans on file at the Village.

         On June 26, 2015, Vari, on behalf of Joseph Parente, e-mailed Mifflin requesting that he forward copies of the Modified Plans for the Johnston Residence to him. On June 27, 2015, Mifflin responded that he would not send copies of the plans to Vari because the Parentes were not using KBEI to construct the Johnston Residence.

         On July 7, 2015, Vari e-mailed Joseph Parente inquiring whether he should reach out to Mifflin for an “engineers's (sic) grading plan.” On July 7, 2015, Joseph Parente forwarded John Kajmowicz's July 7, 2015 e-mail to Vari. On July 7, 2015, Joseph Parente responded to Vari's e-mail regarding reaching out to Mifflin by saying “No.” Doc. 142-32.

         On August 16, 2015, Mifflin e-mailed a copy of his invoice for modifications to the Original Plans to Vari and asked, “Is anybody going to pay this?” Doc. 142-34. Vari forwarded Mifflin's e-mail to Joseph Parente. Joseph Parente responded to Vari by e-mail stating, “Sure if I get release of ownership of prints . . . If not, no.” Id. On August 17, 2015, Vari e-mailed Mifflin stating, “Hi Bob spoke to Joe he indicated that he would like a release from the Kay brothers (sic) indicating that Joe now has ownership of the prints and he would be happy to pay the balance.” Id. On August 19, 2015, Mifflin responded to Vari's e-mail stating “The $500.00 is the balance remaining for revisions as requested by Joseph Parente to existing Kay builder plans. The changes are complete and a permit was issued. The final payment is due. As far as Joseph's request for a release of the plans from the [KBEI], they are the property of [KBEI], I have nothing to say about that. You should contact them regarding the rights to the plans.” Id.

         Joseph and Dawn Parente never requested that KBEI grant them consent to freely copy, distribute, or otherwise use the Original Plans or the Modified Plans. Joseph and Dawn Parente took no action to obtain KBEI's consent to use the Modified Plans in the construction of their home with a homebuilder other than KBEI. Joseph and Dawn Parente never inquired whether KBEI would object to their use of either set of plans with a homebuilder other than KBEI.

         The Parentes eventually contracted with Provencal on September 11, 2015, to construct the Johnston Residence using the Modified Plans. Provencal completed construction of the Johnston Residence in June 2017. KBEI never received payment of any kind from Joseph and Dawn Parente.

         LEGAL STANDARD

         Summary judgment obviates the need for a trial where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. To determine whether a genuine issue of fact exists, the Court must pierce the pleadings and assess the proof as presented in depositions, answers to interrogatories, admissions, and affidavits that are part of the record. Fed.R.Civ.P. 56 & advisory committee's notes. The party seeking summary judgment bears the initial burden of proving that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In response, the non-moving party cannot rest on mere pleadings alone but must use the evidentiary tools listed above to identify specific material facts that demonstrate a genuine issue for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). Although a bare contention that an issue of fact exists is insufficient to create a factual dispute, Bellaver v. Quanex Corp., 200 F.3d 485, 492 (7th Cir. 2000), the Court must construe all facts in a light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

         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 ...


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