Westland v. Sero of New Haven, Inc.

• Decision Date: 18 January 1985
• Docket Number: No. 83 C 1823.,83 C 1823.
• Citation: 601 F. Supp. 163
• Parties: Frederick D. WESTLAND, Plaintiff, v. SERO OF NEW HAVEN, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

601 F. Supp. 163

Frederick D. WESTLAND, Plaintiff, v. SERO OF NEW HAVEN, INC., Defendant.

No. 83 C 1823.

United States District Court, N.D. Illinois, E.D.

January 18, 1985.

Richard J. Grossman, New York City, for plaintiff.

Harold Hirshman, Robert H. Oakley, Sonnenschein, Carlin, Nath & Rosenthal, Chicago, Ill., for defendant.

MEMORANDUM OPINION AND ORDER

ROVNER, District Judge.

Plaintiff Frederick D. Westland ("Westland") brings this action based on an alleged wrongful termination of an oral employment agreement by defendant Sero of New Haven, Inc. ("Sero"). Westland acted as Sero's midwest sales representative for Sero's line of women's shirts and sportswear until his discharge on June 15, 1982. In Count I, Westland alleges that his termination breached his agreement with Sero and requests damages for all commissions that he would have earned in the remainder of 1982 and for all of 1983. Count II alleges that Sero's termination of Westland interfered with and denied him a "prospective business advantage" and seeks, in addition to compensatory damages, $100,000 in punitive damages. Presently pending before this Court are several motions.

Sero's Motion to Dismiss Count II

As part of its trial brief, filed on September 7, 1984, Sero moved to dismiss Count II of the original complaint. On September 12, 1984, Westland filed a motion for leave to file an amended complaint. Count II of Westland's proposed amended complaint is identical to Count II of the original complaint, and thus this Court will address Sero's motion to dismiss Count II first.

In Count II, Westland claims in part that he expended substantial amounts of time and money in developing customers, that Sero's wrongful termination left him "without a line of clothing to represent of the same character and quality" as that of Sero, and that he suffered a loss of commissions from sales for such lines as well as injury to his good will and business reputation because he was unable to service and meet the expectations of his customers. (Complaint, ¶¶ 28, 29.) He asserts that Sero's actions "have denied plaintiff a prospective business advantage and prevented him from accepting any additional lines while he represented defendant." (Complaint, ¶ 32.) Both parties have treated these allegations as asserting a claim for tortious interference with prospective economic advantage.

As an initial matter, Westland argues that Sero failed to present its motion to dismiss prior to the time that Sero filed the answer to the complaint, and thus Westland moves in its brief to strike Sero's motion to dismiss, presumably because Sero has waived dismissal for failure to state a claim as a defense. Sero counters by asserting that Westland's argument "ignores the plain language of Rule 12(c), which states: `After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings.'"

Both parties are in error. Sero has never moved for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, and, indeed, the only relief it requests is dismissal of Count II for failure to state a claim of the tort of intentional interference with prospective economic advantage. Because Count II arguably states additional causes of action, and because Sero has not addressed all the claims presented in Count II, judgment dismissing Count II in its entirety is inappropriate. Nonetheless, Westland's waiver theory for Sero's alleged failure to timely file its motion to dismiss is also in error. Under Rule 12(h)(2) of the Federal Rules of Civil Procedure, Sero has not waived its Rule 12(b)(6) motion to dismiss because that defense was raised as its First Affirmative Defense in Sero's answer to the complaint. Fed.R.Civ. Pro. 12(h)(2). Accordingly, this Court will address Sero's substantive argument that Count II fails to state a claim for the tort of intentional interference with prospective economic advantage.¹

Under Illinois law, that tort consists of the following elements: (1) a reasonable expectation of entering into a valid business relationship; (2) knowledge of that relationship on the part of the interferer; (3) intentional interference by the defendant inducing or causing a third party to breach or terminate the relationship or expectancy; and (4) injury resulting from the interference. Parkway Bank & Trust Co. v. City of Darien, 43 Ill.App.3d 400, 2 Ill.Dec. 234, 357 N.E.2d 211 (2d Dist.1976); Tom Olesker's Exciting World of Fashion, Inc. v. Dun & Bradstreet, Inc., 16 Ill. App.3d 709, 306 N.E.2d 549 (1st Dist.1973), aff'd in part, rev'd in part, 61 Ill.2d 129, 334 N.E.2d 160 (1975).

In this case, although Westland has alleged adequately the existence of a valid business expectancy with his customers to provide them with women's shirts and sportswear of a quality comparable to that of Sero, Sero's knowledge of that expectancy, and injury resulting from Sero's conduct, Westland has not alleged in his complaint any conduct by Sero which interfered with his business opportunities with third parties.

Westland does not dispute that an allegation of conduct directed by defendant toward a third party through which the defendant purposely causes that third party not to enter into or continue with a prospective contractual relationship with the plaintiff is essential to stating a cause of action for the tort of intentional interference with a prospective business opportunity. McIntosh v. Magna Systems, Inc., 539 F.Supp. 1185 (N.D.Ill.1982); DP Service, Inc. v. AM International, Inc., 508 F.Supp. 162 (N.D.Ill.1981). Instead, he argues in his brief that under the liberal notice pleading standard for deciding motions to dismiss, this Court can infer from his allegations that he has in fact met the third party pleading requirement by asserting that Sero contacted his customers and told them "that they must now deal with them if they expect to continue to purchase Sero shirts ...." Such an inference, however, simply cannot be drawn from the allegations contained in the complaint.

The Court recognizes that in deciding a motion to dismiss for failure to state a claim, it must not only accept as true all well-pleaded facts in the complaint and inferences reasonably to be drawn therefrom, but must also construe those allegations in favor of the party opposing the motion. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). Assertions made in a party's brief, however, simply cannot substitute for allegations that should have been pled in that party's complaint. Moreover, even if this Court were to infer, as Westland suggests, that Sero contacted Westland's customers and told them that they must deal with Sero if they wished to continue to purchase Sero shirts, that inference does not satisfy the third party pleading requirement. Assuming that Sero did contact Westland's customers as Westland contends, Sero merely told them the truth: once Westland was terminated, for whatever reason, his customers had no choice but to deal with Sero, or Sero's representative, if they wished to continue to purchase Sero products.

In this regard, Judge Shadur's opinion in DP Service, Inc. v. AM International, supra, is instructive. The plaintiff in DP Service alleged that the defendant AM had terminated DP as a distributor so that it could acquire DP's business for itself and sell directly to DP's customers. The court granted the plaintiff's motion to dismiss because the act that prevented DP from selling to those customers was its termination as a distributor by the defendant, not the defendant's contacts with these third party customers. Judge Shadur stated, "Even were DP able to prove that AM's motive in breaching the contract was to sell directly to DP's customers, under the Illinois cases that would not constitute the tort of intentional interference with prospective economic opportunity." 508 F.Supp. at 169.

The conduct alleged in DP Service conceivably was worse than that of Sero in this case. Here, Sero is merely alleged to have terminated Westland and assigned his territory to new sales representatives, whereas in DP Service, the defendant allegedly acquired the plaintiff's...