Burget v.
| Decision Date | 23 July 2015 |
| Docket Number | CAUSE NO. 2:14-CV-373-PRC |
| Parties | RON BURGET, Plaintiff, v. R.A.M. ENTERTAINMENT, LLC and MARK SENAK, Defendants. |
| Court | U.S. District Court — Northern District of Indiana |
This matter is before the Court on a Motion to Dismiss [DE 20], filed by Defendant Mark Senak on December 8, 2014. The motion is fully briefed and ripe for ruling. The Court sua sponte raised the issue of subject matter jurisdiction, which is now also fully briefed by the parties.
BACKGROUND
On October 13, 2014, Plaintiffs Ron Burget and Dos Amigos, LLC ("Dos Amigos") filed a Complaint against Defendants R.A.M. Entertainment Group, LLC ("RAM") and Mark Senak. Counts I through IV are brought by Burget against Defendants for breach of contract/promissory note (Count I), unjust enrichment (Count II), conversion (Count III), and fraud and misrepresentation (Count IV). Count V is brought by Burget and Dos Amigos, LLC for trademark infringement.
The Complaint makes the following allegations. RAM is a Nevada limited liability company. Burget is a Lake County, Indiana, resident. Dos Amigos, LLC is an Indiana LLC formed to do business as Tequila Restaurante. Senak is an Illinois resident. On June 3, 2014, Defendants RAM and Senak signed a promissory note whereby they would pay Burget $44,136.00 with interest at the rate of 4% annually with equal payments of $2,000.00 per month beginning August 1, 2014, until paid in full ("June 3, 2014 Promissory Note"). As of the filing of the Complaint, Defendants had notmade the payments for August 1, 2014, September 1, 2014, and October 1, 2014. Burget has made several demands for payment that have gone unanswered. Defendants encouraged Burget to provide the funds upon the presumption that Burget would be involved in the business, benefit from the business, be a participant in the business, and receive profit from the business.
Burget expended approximately $12,000.00 in travel expenses, money provided to Defendants, and other costs related to the start up of a restaurant venture in Las Vegas, Nevada. Senak was Burget's attorney. Senak encouraged and induced Burget to become partners in the restaurant venture and to contribute significant funds to the business. Meanwhile, Senak invested no funds although he made it appear in various documents as if he had. Senak created documents and schemes whereby Burget would be liable to other individuals for payment, including a March 13, 2014 promissory note for $65,000.00 to attorney Edward Sweeney, who is affiliated with Senak, while Senak had no liability or obligation ("Sweeney Promissory Note"). Sweeney made payment to Senak of $65,000.00, which Senak deposited into his personal bank account. Senak would then dispense money from his personal account to the RAM bank account at his discretion. None of the funds belonged to Senak. Senak did not make himself liable for these funds, and he did not guaranty these funds.
Senak represented to Burget that he would draft a partnership agreement and other documents whereby Burget would be a primary partner in a restaurant venture in Las Vegas, Nevada. Instead, Senak drafted the documents to represent himself as 96% partner, despite lack of financial contribution in order to disguise true investment percentages to the Nevada Gaming Commission for purposes of obtaining a gaming license. Thereafter, Burget was pushed out of the partnership but, in exchange, was to be paid the $44,136.00 via promissory note. Senak encouragedBurget to invest and encouraged Burget to provide recipes, staffing, the restaurant concept, and even the restaurant name and methods of operation. While all of these items were provided by Burget, he has been ousted from the operation, while the operation continues to use the name, recipes, methods, and concepts created and utilized by Burget.
Senak represented to the landlord of the Las Vegas, Nevada, property that he was acting as attorney for Burget and another involved individual, while in actuality, he listed himself as 96% partner in the venture after the lease was signed and after Senak encouraged Burget to provide the security deposit and sign as guarantor.
Defendant Mark Senak filed the instant Motion to Dismiss on November 12, 2014, seeking dismissal of Counts I-IV of the Complaint. Plaintiffs filed a response in opposition on January 9, 2015.
On January 13, 2015, the parties filed forms of consent to have this case assigned to a United States Magistrate Judge to conduct all further proceedings and to order the entry of a final judgment in this case. Therefore, this Court has jurisdiction to decide this case pursuant to 28 U.S.C. § 636(c).
On January 19, 2015, Senak filed a reply in support of the Motion to Dismiss.
On February 23, 2015, the Court ordered the parties to file a brief addressing specific questions the Court raised regarding the Court's subject matter jurisdiction. Plaintiffs filed their statement on March 10, 2015, Defendants filed a response on March 25, 2015, and Plaintiffs filed a reply on April 1, 2015.
Also in response to the Court's subject matter jurisdiction inquiry, Plaintiffs filed a Motion to Voluntarily Dismiss Count V of the Complaint. After the motion was fully briefed, the Court granted the motion on April 2, 2015, dismissing the claim of trademark infringement brought inCount V by Burget and Dos Amigos, LLC. As Count V contained the only claims brought by Plaintiff Dos Amigos, LLC, Burget is the only remaining plaintiff in this litigation.
SUBJECT MATTER JURISDICTION
Based on the language in the Complaint's jurisdictional statement suggesting that Plaintiffs were asserting subject matter jurisdiction based only on diversity, the Court ordered Plaintiffs to clarify the membership of the limited liability company parties in this litigation, including the members of any member limited liability companies and to provide competent proof that the amount in controversy exceeds $75,000.00. The Court further ordered Plaintiffs to clarify whether the trademark infringement claims were brought under federal law and whether Plaintiffs were alleging that the Court has federal question jurisdiction.
As for the trademark infringement claims, without clarifying whether the claims were brought under federal or state law, Plaintiffs informed the Court that they would be seeking voluntary dismissal of Count V for trademark infringement, which they subsequently did.
As for the members of the limited liability companies, Plaintiffs offered evidence that, on the date of filing, the only member of Plaintiff Dos Amigos, LLC was Ronald Burget, whose residence is in Indiana. Plaintiffs also represent that the members of RAM Entertainment Group, LLC at the time the Complaint was filed were Mark Senak, an Illinois resident, and Harry Floros, a Nevada resident; Defendants do not dispute the membership of RAM Entertainment Group, LLC.
As for the amount in controversy, the claim in Count I for Breach of Contract/Promissory Note seeks recovery of $44,136.00. In Count III for conversion, Burget seeks return of the $44,136.00 as well as $12,000.00 in travel expenses, punitive damages, and attorney fees. And, in Count IV, Burget alleges that Defendants fraudulently created documents making Burget liable fordebts in excess of $65,000. Defendants do not dispute that the amount in controversy exceeds $75,000.00.
Accordingly, the Court finds that it has subject matter jurisdiction based on diversity jurisdiction.
ANALYSIS
In the Motion to Dismiss, Defendant Mark Senak seeks dismissal of Counts I, II, III, and IV against him for failure to state a claim. A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint and not the merits of the suit. See Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). In ruling on such a motion, the Court accepts as true all of the well-pleaded facts alleged by the plaintiff and all reasonable inferences that can be drawn therefrom. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007); see also Tamayo v. Blagojevich, 526 F.3d 1074, 1082 (7th Cir. 2008).
To survive a 12(b)(6) motion to dismiss for failure to state a claim, the complaint must first comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), such that the defendant is given "fair notice of what the . . . claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); see also Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). Second, the "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 570); see also Tamayo, 526 F.3d at 1082. The Supreme Court explained that the "plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555(quotation marks and brackets omitted); see also Iqbal, 556 U.S. at 678-79; Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009). Determining whether a complaint states a plausible claim for relief requires the Court to draw on its judicial experience and common sense. Iqbal, 556 U.S. at 679.
Before turning to Senak's arguments, the Court addresses several preliminary matters. First, footnote 1 to both the motion and memorandum in support provides that Defendant RAM Entertainment, LLC ("RAM") "joins Defendant Senak's Motion to Dismiss Counts II, III, and IV of Plaintiff's Complaint, and adopts and incorporates by reference Sections II-IV of Defendant Senak's Memorandum in Support of his Motion to Dismiss as Defendant RAM's Memorandum in Support of its Motion to Dismiss." However, the motion and memorandum were filed by Attorney Mark Senak, who has not entered...
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