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Ferguson v. The Goodmojo Corp.

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

August 12, 2019

ANTHONY B. FERGUSON, Plaintiff,
v.
THE GOODMOJO CORP. and ALFRED CHEUNG, Defendants.

          MEMORANDUM OPINION

          CHARLES P. KOCORAS, UNITED STATES DISTRICT JUDGE

         Before the Court is Defendants the GoodMojo Corp. (“GoodMojo”) and Alfred Cheung's (“Cheung”) (collectively, the “Defendants”) motion to dismiss Plaintiff Anthony B. Ferguson's (“Ferguson”) first amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the Court grants in part and denies in part the motion.

         BACKGROUND

         For purposes of this motion, the Court accepts as true the following facts from the amended complaint. Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). All reasonable inferences are drawn in Ferguson's favor. Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).

         Defendant GoodMojo is a Delaware corporation with its principal place of business in California. GoodMojo is a computer software development and applications business which provides services to governmental agencies, not-for-profit organizations, and small businesses. Defendant Cheung is a California resident and GoodMojo's chief executive officer, having co-founded the company in March of 2015. Plaintiff Ferguson, an Illinois resident, served as GoodMojo's general counsel and head of business development from April 30, 2015 until May 4, 2018.

         Since its formation, GoodMojo has had issues with its liquidity. As a result, Ferguson did not collect a salary for most his employment period. Further, GoodMojo requested that Ferguson incur expenses on the company's behalf with the understanding that he would be reimbursed for those expenses. Specifically, Ferguson incurred expenses related to a $105, 000 loan, a $32, 000 state tax payment, and $151, 000 in miscellaneous company expenses.

         With respect to the loan, on or about January 12, 2017, Ferguson, GoodMojo, and Cheung, as borrowers, executed a note payable to Timothy J. Rand (“Rand”), as lender and note holder, in the principal amount of $105, 000. To secure the note, the parties entered into a loan agreement (collectively referred to as the “loan documents”). On June 15, 2017, approximately six weeks before the note matured, Rand assigned and transferred all of his rights and interest in the loan documents to Ferguson. On June 28, 2018, Ferguson demanded the note be repaid. According to the complaint, the note has been in default since August 1, 2017, with $115, 500 owed to Ferguson.

         Regarding the state tax payment, Ferguson entered into an agreement with Cheung on March 29, 2018 to advance $32, 000 to GoodMojo to satisfy the Employment Development Department tax imposed by the State of California. In exchange, once GoodMojo received its tax refund, it would repay Ferguson. However, once GoodMojo received its tax refund on June 15, 2018, it did not reimburse Ferguson.

         Finally, Ferguson incurred over $151, 000 in company expenses between 2015 and 2018. These expenses ranged from transportation and lodging to corporate filing fees and company loans. Despite a demand for repayment, GoodMojo has failed to reimburse Ferguson for these costs.

         On October 15, 2018, Ferguson filed his first amended complaint against the Defendants, alleging claims for breach of contract, unjust enrichment, and a violation of the California Labor Code. On December 17, 2018, the Defendants filed the instant motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).

         LEGAL STANDARD

         A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) “tests the sufficiency of the complaint, not the merits of the case.” McReynolds v. Merrill Lynch & Co., 694 F.3d 873, 878 (7th Cir. 2012). The allegations in the complaint must set forth a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Plaintiffs need not provide detailed factual allegations, but they must provide enough factual support to raise their right to relief above a speculative level. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A claim must be facially plausible, meaning that the pleadings must “allow…the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The claim must be described “in sufficient detail to give the defendant ‘fair notice of what the…claim is and the grounds upon which it rests.'” E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” are insufficient to withstand a 12(b)(6) motion to dismiss. Iqbal, 556 U.S. at 678.

         DISCUSSION

         I. Personal ...


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