United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
JOHNSON COLEMAN UNITED STATES DISTRICT COURT JUDGE
Stephen McKillip, Sr. brings this action against Jason
Lambert, Stephen McKillip, Jr., and other parties to the
relevant Merger Agreement alleging breach of contract and
fraud claims. Before the Court is Lambert's motion to
dismiss McKillip's first amended complaint pursuant to
Federal Rules of Civil Procedure 12(b)(6) and 12(b)(7). For
the reasons explained below, the Court grants in part with
prejudice and denies in part Lambert's motion.
following facts are summarized from the first amended
complaint,  as well as the Merger Agreement underlying
this lawsuit. Stephen McKillip, Sr. (“McKillip”),
Lambert, and others entered into a merger agreement
(“Merger Agreement”) on December 29, 2017.
Pursuant to the Merger Agreement, defendant One of Kind
Prints, Inc. was merged into defendant McKillip Industries,
Inc. leaving McKillip Industries as the surviving entity.
McKillip alleges that Lambert and McKillip, Jr. agreed to
purchase ownership of McKillip Industries for $2, 000, 000 to
be paid in $8, 000 bi-weekly installments. McKillip also
contends that Lambert and McKillip, Jr. abandoned the
business on May 10, 2018 and have stopped making payments for
the purchase of McKillip Industries.
Count I, McKillip alleges a breach of contract claim against
Lambert and McKillip, Jr. for failure to make payments in
accordance with the Merger Agreement. In Count II, McKillip
alleges a common law fraud claim against Lambert.
motion to dismiss pursuant to Rule 12(b)(6) for failure to
state a claim tests the sufficiency of the complaint, not its
merits. See Camasta v. Jos. A. Bank Clothiers, Inc.,
761 F.3d 732, 736 (7th Cir. 2014). When considering dismissal
of a complaint, the Court accepts all well pleaded factual
allegations as true and draws all reasonable inferences in
favor of the plaintiff. Erickson v. Pardus, 551 U.S.
89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam).
To survive a motion to dismiss, plaintiff must “state a
claim for relief that is plausible on its face.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555,
570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A complaint is
facially plausible when plaintiff alleges “factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). When ruling on a
motion to dismiss, courts “may consider documents
attached to the pleadings so long as the documents are
referred to in the complaint and central to the
plaintiff's claims.” Doe v. Columbia Coll.
Chicago, 933 F.3d 849, 854 (7th Cir. 2019).
of Contract Claim
first argues that McKillip's breach of contract claim
fails to state a claim because the Merger Agreement requires
McKillip Industries, not Lambert or McKillip, Jr., to pay $2,
000, 000 for the purchase of McKillip Industries. In making
this argument, Lambert ignores the plain language of the
Merger Agreement and asks the Court to consider the
Subordinated Security Agreement instead. First, the Merger
Agreement equivocally states:
Stephen McKillip, Jr. and Jason Lambert shall purchase
ownership of McKillip from Stephen McKillip, Sr. and become
50/50 owners of McKillip.
The Purchase Price of ownership of McKillip shall be Two
Million and No/100 Dollars ($2, 000, 00.00), through seller
financing and paid in installments as indicated
herein… $8, 000.00 paid bi-weekly[.]
The purchase of the ownership of McKillip shall be
seller-financed through Stephen McKillip, Sr., with Stephen
McKillip, Sr. taking a subordinate position to the lending
the Subordinated Security Agreement between McKillip and
McKillip Industries (as the debtor) states that it is a
“partial security for the payment and performance by
Debtor of the Seller Note, which security agreement shall be
subordinated to Debtor's senior lender, namely Providence
Bank and Trust[.]” In short, the Subordinated Security
Agreement and Seller Note pertain to the financing of the
merger. Thus, it appears Lambert is asking the Court to delve
into the bank loan and the transaction(s) that ...