Mirror Finish PDR, LLC v. Cosmetic Car Co. Holdings, Inc.
| Decision Date | 15 January 2021 |
| Docket Number | Case No. 3:20-CV-00440-NJR |
| Citation | 513 F.Supp.3d 1054 |
| Parties | MIRROR FINISH PDR, LLC, and Wesley Adam Huff, Plaintiffs, v. COSMETIC CAR COMPANY HOLDINGS, INC., Cosmetic Car Company, LLC, Midwest Dent Company, Auto Dentician, Inc., Charles Daniel Binkley, Eric Stokes, and Andy Clawson, Defendants. |
| Court | U.S. District Court — Southern District of Illinois |
Sean K. Cronin, Donovan Rose Nester, P.C., Belleville, IL, for Plaintiffs.
Matthew J. Landwehr, Shaun Broeker, Thompson Coburn LLP, St. Louis, MO, for Defendants.
Pending before the Court is a Motion to Dismiss filed by Defendants Cosmetic Car Company Holdings, Inc., Cosmetic Car Company, LLC, Midwest Dent Company, Auto Dentician, Inc., Charles Daniel Binkley, Eric Stokes, and Andy Clawson (Doc. 17). For the reasons set forth below, the motion is granted in part and denied in part.
In January 2010, Wesley Adam Huff ("Huff"), the owner of Mirror Finish PDR LLC ("Mirror Finish"), joined Cosmetic Car Company, LLC, Midwest Dent Company, Auto Dentician, Inc., to form a partnership known as Carmed 45 for the purpose of providing paintless dent repair services (Doc. 15). To form Carmed 45, the parties allegedly agreed to adhere to the Partnership Agreement (Doc. 18-1, pp. 6-39). The Partnership Agreement contains a Non-compete, Nondisclosure, and Non-solicit Provision (Doc. 18-1, pp. 16-19).
Sometime in 2012, Carmed 45, LLC, was formed (Doc. 15). To form Carmed 45, LLC, Defendants contend that the parties agreed to adhere to the Operating Agreement (Doc. 18-1, pp. 1-5). The Operating Agreement includes a provision explaining that "Carmed 45, a partnership existing under the laws of Missouri [ ] is the predecessor to the Company ... [and] [t]he terms of the Partnership Agreement of the Partnership dated January 17, 2010, a copy of which is attached hereto, including the dispute resolution and arbitration provisions, are incorporated herein and shall apply to and govern the Company, subject to the following ...." (Id. at p. 1). In March 2013, Mirror Finish and Defendants purportedly executed the "Amendment to Carmed 45, LLC Operating Agreement" to redefine the area of operations (Doc. 18-2). On March 31, 2015, Mirror Finish resigned its membership from Carmed 45, LLC (Doc. 15, p. 3).
In February 2017, Carmed 45, LLC, and Defendants filed a petition in St. Louis County Circuit Court alleging that Huff violated the Non-compete, Nondisclosure, and Non-solicit Provision of the Operating Agreement. During the course of the St. Louis County case, Carmed 45, LLC, and Defendants attempted to amend their petition three times. Despite their failure to properly amend the petition, on January 20, 2019, Carmed 45, LLC, moved for sanctions pursuant to Missouri Supreme Court Rule 61.01 and requested an entry of default judgment. Almost a year later, on December 27, 2019, the St. Louis County Circuit Court granted Carmed 45, LLC's motion for sanctions and ordered Huff's pleadings to be stricken and a default judgment to be entered on behalf Carmed 45, LLC. The trial court entered judgment on April 10, 2020. Huff is appealing the judgment.
On March 30, 2020, Mirror Finish and Huff (together "Mirror Finish") filed a complaint against Defendants in St. Clair County Circuit Court (Doc. 25-1). According to Mirror Finish, Defendants misrepresented that they had a valuable ownership interest in Carmed 45, LLC, CM49, LLC, CM55, LLC, and CM53, LLC (Doc. 15, p. 2-3). Mirror Finish also alleges Defendants conspired to pillage customers of Carmed 45, LLC, and provide paintless dent repair services within the alleged Operations Area by and through other entities in which they have an ownership interest (Id. ). Mirror Finish continues by alleging that Defendants conspired to self-deal, embezzle assets and customers, and deplete all entities in which Mirror Finish had an ownership interest of value to deprive Mirror Finish of their interest (Id. at p. 3). These activities, according to Mirror Finish, were part of a fraudulent scheme wherein Defendants conspired to misrepresent the nature and value of Mirror Finish's ownership in the CCC-related entities and to deprive Mirror Finish of the rightful income and benefits from these entities (Id. at p. 4).
Defendants removed the case to this Court based on federal question jurisdiction, as Mirror Finish first alleged that Defendants violated the federal Racketeer and Corrupt Organizations Act ("RICO") (Doc. 1-1, pp. 8-9). The Court also exercised supplemental jurisdiction over the state law claims, as they formed part of the same case or controversy as the RICO claim (Doc. 23, p. 4). These state law claims include unjust enrichment (Count I), fraud (Count II), breach of fiduciary duty (Count III), tortious interference with contract (Count IV), fraudulent inducement (Count V), and civil conspiracy (Count VI) (Doc. 15).
On June 1, 2020, Mirror Finish amended its complaint, removing the RICO claim (Id. ). Mirror Finish then filed a Motion to Remand (Doc. 19), arguing for remand on the basis that a federal claim no longer existed and, thus, the principles of economy, convenience, and fairness would be best served by remand to state court (Id. at p. 14). This Court denied Mirror Finish's Motion to Remand (Doc. 23).
Defendants timely filed a Motion to Dismiss, arguing the First Amended Complaint fails to state a claim under Federal Rules of Civil Procedure 12(b)(6) and 9(b) (Doc. 17).
The purpose of a Rule 12(b)(6) motion is to decide the adequacy of the complaint, not to determine the merits of the case or decide whether a plaintiff will ultimately prevail. Gibson v. City of Chicago , 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to dismiss, a plaintiff only needs to allege enough facts to state a claim for relief that is plausible on its face. Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A plaintiff need not plead detailed factual allegations, but must provide "more than labels and conclusions, and a formulaic recitation of the elements." Id. For purposes of a motion to dismiss under Rule 12(b)(6), the Court must accept all well-pleaded facts as true and draw all possible inferences in favor of the plaintiff. McReynolds v. Merrill Lynch & Co., Inc. , 694 F.3d 873, 879 (7th Cir. 2012).
Defendants first assert that Mirror Finish filed its original Complaint seven days after the statute of limitations expired. Defendants support this fact by arguing that the claim accrued on March 31, 2015, thus the original Complaint was seven days late based on a filing stamp of April 7, 2020 (Doc. 18, p. 7). Mirror Finish responds by noting that the original Complaint was filed on March 30, 2020, and provides an order from June 4, 2020, by the St. Clair County Circuit Court acknowledging that the Circuit Clerk's office wrongly rejected this case when it was originally filed (Doc. 25-1).
This Court finds that the St. Clair County Circuit Court order incorporates into the record the correct filing date—March 30, 2020. Indeed, "if there is proper evidence of a clerical error, the [state] court may use a nunc pro tunc order at any time to correct the mistake." Peraino v. Cty. of Winnebago , 421 Ill.Dec. 798, 101 N.E.3d 780, 785 (Ill. App. 2018). "Stated differently, nunc pro tunc orders incorporate into the record judicial actions taken by the court that were inadvertently omitted due to a clerical error." Id. (citing People v. Melchor , 226 Ill.2d 24, 312 Ill.Dec. 632, 871 N.E.2d 32 (2007) ); see e.g. , Keller v. United States , 657 F.3d 675, 680 (7th Cir. 2011) () (quoting Opoka v. I.N.S., 94 F.3d 392, 394 (7th Cir. 1996) ).
The applicable statute of limitations for each of Mirror Finish's claims comes from Illinois law, not Missouri law. "[A]s to procedural matters, the law of the forum controls, and in Illinois, ‘[s]tatutes of limitations are procedural, merely fixing the time in which the remedy for a wrong may be sought, and do not alter substantive rights.’ " NewSpin Sports, LLC v. Arrow Elecs., Inc. , 910 F.3d 293, 300 (7th Cir. 2018) (quoting Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc. , 199 Ill.2d 325, 264 Ill.Dec. 283, 770 N.E.2d 177, 194 (2002) ). Because the statute of limitations in Illinois for Mirror Finish's claims is five years, and Mirror Finish filed on March 30, 2020—not April 7, 2020—Mirror Finish's Amended Complaint is not time barred.
Defendants also maintain that Mirror Finish's claims are barred by res judicata. Before evaluating the merits of Defendants’ res judicata arguments, the Court must determine what substantive law applies. Because this Court considers Mirror Finish's claims under its supplemental jurisdiction, it applies Illinois’ choice of law rules to determine the applicable substantive law. See McCoy v. Iberdrola Renewables, Inc. , 760 F.3d 674, 684 (7th Cir. 2014) (). Under Illinois’ choice of law rules, "the collateral estoppel or res judicata effect of a judgment is determined by the law of the jurisdiction where the judgment was rendered." Instituto Nacional De Comercializacion Agricola (Indeca) v. Cont'l Illinois Nat. Bank & Tr. Co. , 858 F.2d 1264, 1271 (7th Cir. 1988).
Missouri's res judicata principles apply here because the prior judgment was in St. Louis County Circuit Court. See e.g., Chicago Title Land Tr. Co. v. Potash Corp. of Saskatchewan Sales , 664 F.3d 1075, 1079 (7th...
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