Caplan v. International Fidelity Ins. Co.
| Decision Date | 27 October 1995 |
| Docket Number | No. 94 C 6814.,94 C 6814. |
| Citation | 902 F. Supp. 170 |
| Parties | Mitchell H. CAPLAN, Plaintiff, v. INTERNATIONAL FIDELITY INSURANCE COMPANY, a Corporation, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
COPYRIGHT MATERIAL OMITTED
Judith Anne Halprin, Chicago, IL, Richard A. Halprin, Chicago, IL, for plaintiff.
Anton Ronald Valukas, William A. Von Hoene, Jr., Jenner & Block, Chicago, IL, for defendant.
Before the court is defendant International Fidelity Insurance Company's ("IFIC") motion to dismiss Counts I, II, III, and IV of plaintiff Mitchell H. Caplan's ("Caplan") second amended complaint pursuant to FED. R.CIV.P. 12(b)(6). As set forth fully below, the court grants in part and denies in part IFIC's motion to dismiss.
IFIC is a New Jersey corporation with its principal place of business in New Jersey. Caplan, an Illinois resident, has owned 53,000 shares of IFIC stock since 1968.2 In June 1993, IFIC offered to repurchase Caplan's stock for $530,000. Caplan acknowledged the offer and requested information and documents so that he could evaluate and respond to the offer.
In October 1993, IFIC's president, Francis Mitterhoff ("Mitterhoff"), told Caplan that IFIC's chairman, Philip Konvitz ("Konvitz"), had remembered that Caplan did not own the stock, which actually had been issued as collateral for a loan made in 1968 by Irwin Weiner ("Weiner") to IFIC. Mitterhoff told Caplan that Konvitz had talked with Weiner and recalled that Weiner had the stock issued in Caplan's name but held for Weiner's benefit; that Weiner had been repaid; and that the $530,000 repurchase offer was a mistake.
Caplan told Mitterhoff that what Konvitz had said was false. Mitterhoff responded that Konvitz would call Caplan directly. Konvitz called Caplan later that day, reiterated what Mitterhoff had told Caplan earlier, and said that he would further investigate his memory and get back to Caplan. Several days later, Caplan wrote to IFIC, Konvitz, and Mitterhoff, memorializing his conversations with Konvitz and Mitterhoff, restating that Weiner's claim was false, and repeating his information request. Neither IFIC, Konvitz, nor Mitterhoff responded.
Caplan wrote another letter on November 4, 1993, to which Steven Radin ("Radin"), an attorney for IFIC, responded. Radin acknowledged Caplan's record ownership of the stock and IFIC's repurchase offer, Caplan's request for information, and IFIC's failure to respond to Caplan's information request. Radin told Caplan that Weiner had not been repaid, but wanted to be repaid and have the stock returned to IFIC. Radin told Caplan that IFIC perceived that a dispute as to who owned the stock existed and requested that Caplan provide documents, dating from 1968, to establish that he owned the stock. Radin also told Caplan that, as an attorney for IFIC, he was undertaking an investigation of the Weiner claim and its effect on Caplan's record ownership of the stock.
In November and December 1993, Caplan corresponded with Radin, requesting evidence of the claims of Konvitz and Weiner and providing information establishing his ownership of the stock. In December 1993, IFIC filed a lawsuit in the New Jersey Superior Court against Caplan and Weiner, alleging that Weiner had loaned IFIC money in 1968, and that Caplan's stock was Weiner's collateral.
In February 1994, Caplan sued IFIC, Konvitz, Mitterhoff, and Weiner in the Circuit Court of Cook County, seeking declaratory judgment of his ownership of the stock. In September 1994, the Illinois court granted declaratory judgment in favor of Caplan. In October 1994, the New Jersey court also granted declaratory judgment in favor of Caplan.
Caplan then sued IFIC in this court, alleging breach of fiduciary duty (Count I), fraud (Count II), slander of title (Count III), and conspiracy (Count IV), and asserting an oppressed minority shareholder action (Count V). IFIC now moves to dismiss Counts I through IV of Caplan's second amended complaint pursuant to FED.R.CIV.P. 12(b)(6), on the ground that those counts fail to state claims for which relief can be granted.
When deciding a motion to dismiss under FED.R.CIV.P. 12(b)(6), the court must accept all factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Cromley v. Board of Educ. of Lockport, 699 F.Supp. 1283, 1285 (N.D.Ill.1988). If, when viewed in the light most favorable to the plaintiff, the complaint fails to state a claim upon which relief can be granted, the court must dismiss the case. See FED.R.CIV.P. 12(b)(6); Gomez v. Illinois State Board of Educ., 811 F.2d 1030, 1039 (7th Cir.1987). However, the court may dismiss the complaint only if it appears beyond doubt that the plaintiff can prove no set of facts in support of its claims that would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957).
IFIC contends that Caplan's breach of fiduciary duty claim is based on a New Jersey statute, N.J. STAT. ANN. 14A:6-14, defining duties of directors, and that the statute is wholly inapplicable to the present case, because it pertains only to directors' liability to their corporations for failing to act in good faith. Thus, according to IFIC, Caplan's breach of fiduciary duty claim falls outside of the scope of the statute upon which it purportedly is based, and therefore must be dismissed.
IFIC is correct that the New Jersey statute cited by Caplan in his complaint pertains to liability of directors for failing to act in good faith. However, Caplan explicitly states in his complaint that IFIC, "through its agents Konvitz, Mitterhoff and Radin, has breached statutory and common law duties to plaintiff, in part defined by" the New Jersey statute. (Second Am.Compl. ¶ 56 (emphasis added).) Thus, Caplan has not limited his breach of fiduciary duty claim to statutory breach of fiduciary duty based upon the New Jersey statute.
Furthermore, the portion of the statute quoted by Caplan in his complaint simply sets forth the duties of corporate directors. It provides: "Directors ... shall discharge their duties in good faith and with that degree of diligence, care and skill which ordinarily prudent people would exercise under similar circumstances in like positions." N.J. STAT. ANN. 14A:6-14(1). The complaint then sets forth several ways in which Konvitz, Mitterhoff, and Radin, as agents of IFIC, acted in bad faith in their dealings with Caplan. Moreover, in the 55 paragraphs preceding Count I, Caplan sets forth a plethora of facts supporting Caplan's allegation that IFIC owed a duty to Caplan, its shareholder, to act in good faith, and that it breached that duty.
The Federal Rules of Civil Procedure require only "`a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957) (quoting FED.R.CIV.P. 8(a)(2)). "To this end, pleadings are liberally construed and each theory need not be explicitly spelled out, so long as the other side receives notice as to what is at issue in the case." Bob Willow Motors, Inc. v. General Motors Corp., 872 F.2d 788, 791 (7th Cir. 1989) (citing American Timber & Trading Co. v. First Nat'l Bank of Oregon, 690 F.2d 781, 786 (9th Cir.1982)).
The court finds that Caplan's second amended complaint gave IFIC fair notice of the breach of fiduciary duty claim against it and the grounds upon which the claim rests, and therefore that Count I sufficiently states a claim for breach of fiduciary duty.
Accordingly, the court denies IFIC's motion to dismiss Count I of Caplan's second amended complaint.
IFIC next argues that Caplan has not stated and cannot state a claim for fraud because he has not alleged and cannot allege that he relied on any misrepresentations by IFIC or that any reliance, if it existed, was to his detriment or damage.
To state a claim for fraud, Caplan must have alleged that (1) IFIC made a false statement of material fact; (2) knowing it was false; (3) with the intent to induce Caplan to rely upon it; and that (4) Caplan reasonably relied upon the misrepresentation; (5) to his detriment. See, e.g., Redarowicz v. Ohlendorf, 92 Ill.2d 171, 185-86, 65 Ill.Dec. 411, 418, 441 N.E.2d 324, 331 (1982); R.A. Intile Realty Co. v. Raho, 259 N.J.Super. 438, 475, 614 A.2d 167, 186 (1992).
Caplan alleges very explicitly the actions that Konvitz, Mitterhoff, and Radin took in an attempt to defraud Caplan and divest him of his stock. Much of what is stated in Caplan's fraud count may support a claim for fraud. However, the fraud count is fatally deficient in at least one respect: part of it is based on alleged misrepresentations to and reliance thereon by the defendant, IFIC, rather than the plaintiff, Caplan.
First, it seems somewhat schizophrenic of Caplan to sue IFIC for fraud based on allegations that IFIC was the victim of the fraud. Second, a claim for fraud must allege that the plaintiff relied on misrepresentations to his detriment. See Redarowicz, 92 Ill.2d at 185-86, 65 Ill.Dec. at 418, 441 N.E.2d at 331; Raho, 259 N.J.Super. at 475, 614 A.2d at 186. The court does not find persuasive Caplan's urging that Hartmann v. Prudential Insurance Co. of America, 9 F.3d 1207 (7th Cir.1993), holds differently. Hartmann should be limited to its unusual facts and reasoning: plaintiffs, who would have been beneficiaries to their deceased father's life insurance policy were it not for the misrepresentations made to the father by his insurance agent, need not have relied on the misrepresentations; their father relied on the misrepresentations and they were consequently harmed. Id. at 1213. Moreover, the foregoing is merely dictum, because the court...
To continue reading
Request your trial
-
Macon Cnty. v. Merscorp, Inc.
...for conspiracy is not the conspiracy itself, but the wrongful acts done in furtherance of the conspiracy. Caplan v. Int'l Fid. Ins. Co., 902 F.Supp. 170, 175 (N.D.Ill.1995). If the underlying claim is dismissed, then the conspiracy claim must also fail. See Cumis Ins. Soc., Inc. v. Peters, ......