Bank of Am., N.A. v. Oberman, Tivoli & Pickert, Inc.
| Decision Date | 22 January 2014 |
| Docket Number | No. 13 C 1168,13 C 1168 |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | Bank of America, N.A., Plaintiff, v. Oberman, Tivoli & Pickert, Inc., Defendant. |
Randall Marc Lending, Rebecca Lynn Dandy, Timothy Matthew Schank, Vedder Price P.C., Chicago, IL, for Plaintiff.
Andre Ordeanu, Zane D. Smith & Associates, Ltd., Chicago, IL, for Defendant.
Plaintiff Bank of America, N.A. (“BOA”) brings this action for breach of contract against Defendant Oberman, Tivoli & Pickert, Inc. (“OTP”). Presently before the Court is OTP's motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons stated below, this motion is denied.
BOA is a national banking association organized in Delaware with its principal place of business in Charlotte, North Carolina. OTP is a California corporation with its principal place of business in Los Angeles, California. (Id. ¶ 4.) On or around May 6, 2003, Merrill Lynch Business Financial Services, Inc. (“MLBFS”) and OTP entered into a WCMA1 Loan and Security Agreement (the “Loan Agreement”). (Id. ¶ 5.) As relevant here, Section 3.7(d) of the Loan Agreement states:
Customer shall pay or reimburse MLBFS for ... (iii) all fees and out-of-pocket expenses (including attorneys' fees and legal expenses) incurred by MLBFS in connection with the preparation, execution, administration, collection, enforcement, protection, waiver or amendment of this Loan Agreement, the other Loan Documents and such other instruments or documents, and the rights and remedies of MLBFS thereunder and all other matters in connection therewith.
( “Customer” is defined as OTP's predecessor, Oberman, Tivoli, Miller & Pickert, Inc. (R. 1–1, Ex. A, Loan Agreement at 1.) Following the October 1, 2010 merger between BOA and Merrill Lynch Commercial Finance Corp., BOA became the successor in interest to all of MLBFS's rights and remedies under the Loan Agreement. The line of credit in the Loan Agreement was renewed after the first year and subsequently renewed again, with the new maturity date set to June 30, 2006. (Id. ¶¶ 11–12.) In June 2006, BOA decided not to renew the line of credit pursuant to a provision in the Loan Agreement giving BOA sole discretion to renew. (Id. ¶ 13–14.)
On or around December 31, 2007, OTP filed a complaint in California state court against BOA and Merrill Lynch Pierce Fenner & Smith, Inc. (“Merrill Lynch”) asserting claims arising out of the Loan Agreement. (Id. ¶ 15.) BOA moved to dismiss the case based on the forum selection clause in the Loan Agreement; the California court granted the motion on March 2, 2009. (Id. ¶¶ 16–17.) Around August 15, 2009, OTP filed a substantially identical suit against BOA and Merrill Lynch in the Circuit Court of Cook County, Illinois asserting breach of contract, fraud, and breach of fiduciary duty. (Id.¶ 18.) BOA and Merrill Lynch moved to dismiss the complaint pursuant to 735 Ill. Comp. Stat. 5/2–619.1.2 (Id. ¶ 19.) On January 27, 2010, the Illinois court granted the motion and dismissed the complaint in its entirety, granting OTP leave to file an amended complaint. (Id. ) On April 23, 2010, OTP filed a nearly identical amended complaint, and BOA and Merrill Lynch filed a motion to dismiss the complaint for failure to state a claim pursuant to 735 Ill Comp. Stat. 5/2–615. (Id. ¶¶ 20–21.) The court again dismissed the complaint in its entirety, dismissing all but the fraud claims with prejudice. (Id. ¶ 22.) On October 4, 2010, OTP filed a second amended complaint, reasserting its fraud claims in addition to its breach of fiduciary duty claims and breach of contract claims that had previously been dismissed with prejudice. (Id. ¶¶ 23–25.) The Illinois court yet again granted BOA's and Merrill Lynch's motion to dismiss the complaint, emphasizing that OTP's breach of fiduciary duty and breach of contract claims had previously been dismissed with prejudice, and granted OTP another chance to adequately allege its fraud claims. (Id. ¶¶ 26–27.) On April 4, 2011, OTP filed its third amended complaint, alleging a single count of fraud against each BOA and Merrill Lynch. (Id. ¶ 28.) The Illinois court again granted BOA's motion to dismiss, and it dismissed the entire complaint with prejudice. (Id. ¶¶ 28–30.)
Undeterred, OTP appealed the circuit court's dismissal of its third amended complaint, and the Illinois Court of Appeals for the First District affirmed the lower court's dismissal on December 31, 2012. (Id. ¶¶ 31–32.) BOA alleges that it incurred $125,322.73 in attorneys' fees and costs to defend against the California suit and $138,221.15 in attorneys' fees and costs to defend against the Illinois suit and subsequent appeal. (Id. ¶¶ 33–35.) On February 7, 2012, BOA sent a demand letter to OTP demanding reimbursement for the attorneys' fees pursuant to Section 3.7(d)(iii) of the Loan Agreement. (Id. ¶ 37.) On January 16, 2013, BOA sent a second demand letter. (Id. ¶ 38.) To date, OTP has failed to reimburse BOA the requested attorneys' fees and costs. (Id. ¶ 39.) BOA now seeks to recover the attorneys' fees and costs incurred in connection with the defense of the California and Illinois suits, which amount to a total of $263,543.88, and the ongoing fees incurred attempting to enforce its rights under the Loan Agreement. (Id. ¶¶ 45–46.)
BOA initiated the present action on February 12, 2013. (R. 1, Compl.) The one-count complaint alleges that OTP breached its obligations under the Loan Agreement by refusing to reimburse BOA for the attorneys' fees and costs BOA incurred defending against OTP's suits. (Id. ¶ 43.) On April 16, 2013, OTP moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on the grounds that Section 3.7(d) of the Loan Agreement is unenforceable because it is ambiguous, unreasonable, and applicable only to third party claims. (R. 9, Def.'s Mot.) BOA filed its response to OTP's motion to dismiss on May 8, 2013, (R. 13, Pl.'s Resp.), and OTP replied to BOA's response on May 22, 2013. (R. 15, Def.'s Reply.)
A motion under Rule 12(b)(6) “challenges the sufficiency of the complaint to state a claim upon which relief may be granted.” Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir.2009). When reviewing a Rule 12(b)(6) motion to dismiss, the Court construes the complaint in the light most favorable to the nonmoving party, accepts all well-pleaded factual allegations as true, and draws all reasonable inferences in the non-movant's favor. Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir.2008). Pursuant to Rule 8(a)(2), a complaint must contain “a ‘short and plain statement of the claim showing that the pleader is entitled to relief,’ sufficient to provide the defendant with ‘fair notice’ of the claim and its basis.” Id. (quoting Fed. R. Civ. P. 8(a)(2) and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). “Detailed factual allegations” are not required, but the complaint “must 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ). Plausibility in this context does not imply that a court “should decide whose version to believe, or which version is more likely than not.” Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir.2010). Rather, to survive a motion to dismiss under Rule 12(b)(6), Id.
A document that is attached to a pleading “is a part of the pleading for all purposes.” Fed. R. Civ. P. 10(c). Thus, when ruling on a Rule 12(b)(6) motion to dismiss, a court must “consider documents attached to the complaint as part of the complaint itself.” Reger Dev., LLC v. Nat'l City Bank, 592 F.3d 759, 764 (7th Cir.2010) (citing Int'l Mktg., Ltd. v. Archer–Daniels–Midland Co., 192 F.3d 724, 729 (7th Cir.1999) ). “Such documents may permit the court to determine that the plaintiff is not entitled to judgment” in his favor. Id. (citing Hecker v. Deere & Co., 556 F.3d 575, 588 (7th Cir.2009) ).
BOA avers that this Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332, , which requires diversity of citizenship and an amount in controversy that exceeds $75,000. BOA is a Delaware corporation with its principal place of business located in North Carolina, (id. ¶ 1); OTP is a California corporation with its principal place of business located in California, (id. ¶ 4). The amount in controversy, for purposes of satisfying the jurisdictional requirement, must be “exclusive of interest and costs.” 28 U.S.C. 1332(a). When attorneys' fees that have already been incurred are sought as part of the underlying claim, however, they are properly considered as part of the amount in controversy. Mo. State Life Ins. Co. v. Jones, 290 U.S. 199, 202, 54 S.Ct. 133, 78 L.Ed. 267 (1933). Here, BOA asserts a contractual right to attorneys' fees that it incurred before filing the instant suit. Thus, the attorneys' fees BOA seeks reimbursement for in this action—which exceed $75,000.00—are properly considered as part of the amount in controversy, and this Court has subject matter jurisdiction to decide this case on the merits.
A federal court sitting in diversity applies state substantive law and federal procedural law. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 80, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The Erie doctrine extends to conflict of laws principles and requires the...
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