Williams v. Caterpillar, Inc

Filing 21

ORDER & OPINION entered by Judge Joe Billy McDade on 4/15/2013. The Court denies in part and grants in part Defendant's #13 Motion to Dismiss for Failure to State a Claim and #19 Motion to Dismiss. The Defendant's Request for Oral Argument is DENIED. This matter is referred back to the Magistrate Judge for further pretrial proceedings with regard to the claim for Anticipatory Breach of Contract. Entered by Judge Joe Billy McDade on 4/15/2013. (RK, ilcd)

E-FILED

Monday, 15 April, 2013 02:35:20 PM
Clerk, U.S. District Court, ILCD

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
ED WILLIAMS, as assignee of the
Bankruptcy Estate of Firefly Energy,
Plaintiff,
v.
CATERPILLAR INC., a Delaware
corporation,
Defendant.

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Case No. 12-cv-1170

ORDER & OPINION
This matter is before the Court on Defendant‟s Motion to Dismiss Plaintiff‟s
Second Amended Complaint for failure to state a claim upon which relief can be
granted, pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 19). Defendant
originally filed a Motion to Dismiss on October 11, 2012, to which Plaintiff
responded on October 28, 2012. (Doc. 13; Doc. 16). On March 20, 2013, the Court
sua sponte issued an Order for Plaintiff to properly establish diversity of
citizenship, so that the Court could satisfy itself that it had subject-matter
jurisdiction to hear the case. (Doc. 17). Plaintiff properly alleged citizenship in his
Second Amended Complaint, Defendant subsequently filed a Motion to Dismiss
Plaintiff‟s Second Amended Complaint, and Plaintiff filed a Response to Defendant‟s
Motion.1 (Doc. 18; Doc. 19; Doc. 20). For the reasons stated below, Defendant‟s

Defendant‟s Motion to Dismiss Plaintiff‟s Second Amended Complaint and
Plaintiff‟s Response simply reassert and reincorporate arguments from their prior
briefs; thus, the Court shall refer to Defendant‟s original Motion to Dismiss and
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Motion to Dismiss Plaintiff‟s Second Amended Complaint is granted in part and
denied in part and Defendant‟s Request for Oral Argument is denied.
I. LEGAL STANDARD
“In ruling on Rule 12(b)(6) motions, the court must treat all well-pleaded
allegations as true and draw all inferences in favor of the non-moving party.” In re
marchFIRST Inc., 589 F.3d 901, 904 (7th Cir. 2009) (citing Tamayo v. Blagojevich,
526 F.3d 1074, 1081 (7th Cir. 2008)). To survive a motion to dismiss under 12(b)(6),
a plaintiff‟s complaint must first “describe the claim in sufficient detail to give the
defendant „fair notice of what the . . . claim is and the grounds upon which it rests.‟”
EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 560-63 (2007)).

If the complaint

overcomes this first hurdle, it must next plead enough facts to “plausibly suggest
that the plaintiff has a right to relief . . . above a „speculative level.‟” Id. While
detailed factual allegations are not needed, a “formulaic recitation of a cause of
action‟s elements will not do.” Twombly, 550 U.S. at 545. Rather, “the complaint
must contain „enough facts to state a claim to relief that is plausible on its face.‟”
Bissessur v. Ind. Univ. Bd. of Trs., 581 F.3d 599, 602 (7th Cir. 2009) (quoting
Twombly, 550 U.S. at 557; Tamayo, 526 F.3d at 1084).

Memorandum, Plaintiff‟s original Response to Defendant‟s Motion to Dismiss, and
Plaintiff‟s Second Amended Complaint as the operative documents for its analysis.
(Doc. 13; Doc. 14; Doc. 16; Doc. 18).
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II. BACKGROUND2
Plaintiff, Ed Williams, is the former Chief Executive Officer of Firefly, a
corporation that produced special types of batteries for a wide variety of uses. (Doc.
18 at 2).

In 2009, Firefly required equity capital to continue its product

development and to satisfy growing customer and market demands for its product.
(Doc. 18 at 2). Plaintiff secured a commitment for funding from a large venture
capital fund, Trident Capital, following many months of negotiations in May 2009.
(Doc. 18 at 2). Trident Capital agreed to lead an investment group that would
invest up to a total of $18 million of equity in Firefly pursuant to terms set forth in
a term sheet that had an extended acceptance deadline of May 26, 2009. (Doc. 18 at
2).

The term sheet was styled as non-binding, but Trident Capital had made

representations of its commitment to Plaintiff. (Doc. 18 at 3). Pursuant to the
terms of the term sheet, Trident Capital required existing holders of preferred
Firefly stock to effectively relinquish their warrants for additional preferred Firefly
stock. (Doc. 18 at 3). Trident Capital also proposed changes to the Firefly Board
that would likely reduce the role of the company‟s existing largest shareholders, and
proposed a substantial liquidation preference for new preferred stock to be issued
under its facility, which would impact the liquidation rights of existing Firefly
preferred stockholders. (Doc. 18 at 3). Defendant Caterpillar, Inc. was a large
existing shareholder of Firefly. (Doc. 18 at 3).

The background facts are drawn from Plaintiff‟s Second Amended Complaint,
because the Court must treat all well-pleaded allegations in a complaint as true on
a Motion to Dismiss. See In re marchFIRST Inc., 589 F.3d at 904.
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Firefly‟s eight-member Board of Directors (the “Board”) at the time of
negotiations with Trident Capital included Mr. Siamak Mirhakimi, a senior
executive from Defendant Caterpillar, Inc. (Doc. 18 at 3). On May 26, 2009, the day
of the acceptance deadline from Trident Capital, the Board had a telephonic
meeting at which a quorum was present to accept Trident‟s term sheet and to
finalize the terms of Trident‟s equity investment. (Doc. 18 at 3). Mr. Mirhakimi
attended the Board meeting with Mr. Fanfu Li, a Caterpillar representative who
was not a member of the Firefly Board. (Doc. 18 at 4). Caterpillar executives
authorized Mr. Mirhakimi and Mr. Li to attend the Board meeting to make a
presentation and offer on its behalf regarding an equity investment by Caterpillar
in Firefly. (Doc. 18 at 4).
At the Board meeting, Mr. Mirhakimi told the Board that Caterpillar was
prepared to invest at least $5 million in equity capital in Firefly, and to lead a
round of equity investments that were effectively certain to generate more equity
for Firefly. (Doc. 18 at 3-4). Mr. Mirhakimi expressly stated that he had 100%
authorization from Caterpillar to invest at least $5 million in exchange for preferred
stock of Firefly. (Doc. 18 at 4). The specific terms of the offer communicated by Mr.
Mirhakimi and Mr. Li were that Caterpillar would invest $5 million, within two
weeks, in exchange for the precise number of preferred shares to which an investor
would be entitled based on a pre-money valuation of Firefly of $12 million. (Doc. 18
at 4). This was the arrangement previously agreed to by Trident Capital and would
equate to 20,434,231 shares of Series D Preferred Stock at price per share of
$0.24469. (Doc. 18 at 4). Moreover, under the Caterpillar deal, the preferred stock

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that Caterpillar would acquire would have no liquidation preference, and Firefly‟s
shareholders, such as Caterpillar, would not have to relinquish their existing
warrants for Firefly stock. (Doc. 18 at 5). Mr. Mirhakimi and Mr. Li indicated that
Caterpillar might also be willing to invest more than $5 million pending further
discussions, but that Caterpillar‟s offer to invest at least $5 million for the preferred
stock was not contingent on the outcome of any additional discussions and
negotiations. (Doc. 18 at 5).
Because the Firefly Board preferred the terms of Caterpillar‟s offer, it voted
to reject the Trident Capital equity investment and to proceed instead with the
Caterpillar investment.

(Doc. 18 at 6).

On or about June 2, 2009, Caterpillar

informed Firefly that it decided not to acquire the $5 million in Firefly preferred
stock and would not lead a round of equity investors in the company. (Doc. 18 at 6).
Firefly was unable to raise additional equity capital thereafter, and subsequently
filed for bankruptcy in March 2010. (Doc. 18 at 2, 6). The trustee of Firefly‟s
bankruptcy estate sold to Plaintiff all rights, claims, and causes of action that
Firefly possessed against Defendant by Bill of Sale dated October 17, 2011. (Doc. 18
at 6). Plaintiff subsequently filed the present action against Defendant, alleging
claims for Intentional Misprepresentation and for Anticipatory Breach of Contract.
(Doc. 18 at 6-10).

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III. DISCUSSION
A. Motion to Dismiss
1.

Intentional Misrepresentation

Plaintiff asserts a claim for Intentional Misrepresentation based on Mr.
Mirhakimi‟s statements that he had 100% authorization from Caterpillar to commit
to a $5 million investment in Firefly, when he knew at the time that he did not.
(Doc. 14 at 8). To sustain a claim for Intentional Mispresentation, Plaintiff must
allege the following: 1) a false statement of material fact; 2) made by a party who
knows or believes the statement to be false; 3) with the intent to induce another to
act; 4) action by the other in reliance on the statement‟s truth; and 5) injury to the
other resulting from that reliance. Smith v. Kurtzman, 531 N.E.2d 885, 889 (Ill.
App. Ct. 1988).

Defendant moves to dismiss Plaintiff‟s claim for Intentional

Misrepresentation because it argues that the party who allegedly made the false
statements was not Defendant, and that Plaintiff cannot link any such statements
to Defendant by mere virtue of the fact that they were made by employees of
Defendant. (Doc. 14 at 7, 10). Plaintiff alleges, however, that Defendant is liable
for Mr. Mirhakimi and Mr. Li‟s misrepresentations under an agency theory. (Doc.
18 at 8).

The Court rejects Plaintiff‟s assertions for the following reasons: 1)

Plaintiff‟s allegation of actual express authority conflict with his allegation of
intentional misrepresentation; and 2) Plaintiff did not sufficiently plead actual
implied authority or apparent authority to sustain the claim.
Under Illinois law, Defendant may be bound to the conduct or statements of
Mr. Mirhakimi and Mr. Li if they had the authority to act as Defendant‟s agents.

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See Curto v. Illini Manors, Inc., 940 N.E.2d 229, 232 (Ill. App. Ct. 2010) (applying
principles of agency law to determine whether spouse had the authority to enter
arbitration agreement on behalf of other spouse).

Agency can be established a

number of ways. “An agent‟s authority may be either actual or apparent, and actual
authority may be express or implied.” C.A.M. Afffiliates, Inc. v. First Am. Title Ins.
Co., 715 N.E.2d 778, 783 (Ill. App. Ct. 1999) (quoting First Am. Title Ins. Co. v. TCF
Bank, 676 N.E.2d 1003, 1008 (Ill. App. Ct. 1997)). Actual express authority exists
“when the principal explicitly grants the agent the authority to perform a particular
act.” Id. (quoting Lydon v. Eagle Food Ctrs., Inc., 696 N.E.2d 1211, 1215 (Ill. App.
Ct. 1998)). Even if the principal does not explicitly grant authority, it may still be
“implied by facts and circumstances and it may be proved by circumstantial
evidence.”

Wasleff v. Dever, 550 N.E.2d 1132, 1138 (Ill. App. Ct. 1990) (citing

Devers v. Prudential Prop. & Cas. Ins. Co., 408 N.E.2d 462, 465 (Ill App. Ct. 1980)).
In some cases, the principal can be bound if the agent appears to have authority,
even if no actual authority exists at all. Weil, Freiburg & Thomas, P.C. v. Sara Lee
Corp., 577 N.E.2d 1344, 1350 (Ill. App. Ct. 1991)) (“Apparent authority arises when
a principal creates, by its words or conduct, the reasonable impression in a third
party that the agent has the authority to perform a certain act on its behalf.”).
a. Actual Express Authority
In his Second Amended Complaint, Plaintiff alleges that “[Mr. Mirhakimi]
had both the actual authority from Caterpillar to make a presentation and proposal
at the May 26 board meeting with respect to an equity investment by Caterpillar in
Firefly, and the apparent authority to do so by virtue of his attendance at the

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meeting, and making of the presentation, with another Caterpillar representative
[Mr. Li].” (Doc. 18 at 8). Plaintiff also alleges that “[Mr. Mirhakimi] knew . . . that
he did not have 100% authorization from Caterpillar to commit to a $5 million
equity investment in Firefly,” but that he “made the foregoing statement with the
intent that the Firefly Board rely on it, and that the Board, in doing so, would reject
the Trident proposed investment.”

(Doc. 18 at 8).

The Court construes these

allegations to mean that Defendant authorized Mr. Mirhakimi and Mr. Li to attend
the Firefly Board meeting to make a presentation and proposal regarding a
potential investment by Defendant in Firefly. Mr. Mirhakimi and Mr. Li did not
have authorization, however, to commit to a $5 million equity investment and made
misrepresentations when they said that they had 100% authorization from
Defendant to do so. Plaintiff confirms this interpretation in his Response, where he
writes that “the alleged misrepresentation pertained not to whether Caterpillar
intended to make this investment, but to whether [Mr. Mirhakimi] possessed 100%
authority from Caterpillar to make the $5 million offer.” (Doc. 16 at 21).
Herein, however, is where the contradiction lies. If Mr. Mirhakimi and Mr.
Li had the actual express authority to attend the Firefly Board meeting and to
make a presentation and proposal on behalf of Defendant, but misrepresented that
they had 100% authority from Defendant to commit to a $5 million equity
investment, then they exceeded the scope of their express authority when they
made the misrepresentation. If so, Defendant should not be held liable for their
alleged fraud. For their statements to trace back to the Defendant and to impose
liability under an actual express authority theory, the Complaint must have

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pleaded that Defendant expressly authorized Mr. Mirhakimi and Mr. Li to bind
Defendant to the statements they made. Connick v. Suzuki Motor Co., Ltd., 675
N.E.2d 584, 592 (Ill. 1996) (finding that claim of fraud could not be attributed to
defendant when “plaintiffs ha[d] not alleged in their complaint that [defendant]
expressly gave authority to the individual dealers to bind them to statements made
regarding the [product‟s] safety”). If Defendant solely authorized Mr. Mirhakimi
and Mr. Li to make a presentation on its behalf but not to commit to any final
investment, then Defendant should not be held liable for statements made outside
the scope of the express authority it granted.
b. Actual Implied Authority
Although Defendant should not be held liable for statements made outside
the scope of Mr. Mirhakimi and Mr. Li‟s actual express authority, it could
potentially still be liable for the misrepresentations of Mr. Mirhakimi and Mr Li if
the statements were made within their actual implied authority. Under an actual
implied theory, Defendant may not have expressly authorized Mr. Mirhakimi and
Mr. Li to commit to an investment, but that authority could nonetheless be implied,
because “an agent has implied authority for the performance or transaction of
anything reasonably necessary to effective execution of his express authority.”
Advance Mortg. Corp. v. Concordia Mut. Life Ass’n, 481 N.E.2d 1025, 1029 (Ill. App.
Ct. 1985). Examples from which authority can be implied are through the agent‟s
position or through a prior course of dealing with the agent. See Patrick Eng’g, Inc.
v. City of Naperville, 976 N.E.2d 318, 329 (Ill. 2012) (“[I]mplied authority is actual
authority proved circumstantially by evidence of the agent‟s position.”) (construing

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Amcore Bank, N.A. v. Hahnaman-Albrecht, Inc., 759 N.E.2d 174, 181 (Ill. App. Ct.
2001)); Curto v. Illini Manors, Inc. 940 N.E.2d 229, 233 (Ill. App. Ct. 2010) (“Implied
authority may be established from the circumstances of a case based on prior course
of dealing of a similar nature between the alleged agent and principal or from a
previous agency relationship.”).
Here, the Court finds that Plaintiff has not sufficiently pleaded facts or
circumstances that would have given Mr. Mirhakimi or Mr. Li the implied authority
to commit to an investment despite it exceeding the scope of their express authority.
Plaintiff alleges that Mr. Mirhakimi was a senior executive at Defendant‟s
corporation, (Doc. 18 at 8), but that by itself is simply too vague to extract that he
had the implied authority to commit to investment deals as part of his job position.
Large corporations have a variety of senior executives with different authorities
implied in their positions, for example, a Head of Marketing would not necessarily
have the authority to finalize an acquisition, as a Director of Mergers and
Acquisitions would not have the authority to launch the corporation‟s new
advertising campaign. Plaintiff alleges that Mr. Li was also a representative for
Defendant whose role was to participate in the presentation of the proposal, (Doc.
18 at 8), but again, that by itself does not indicate that he had implied authority to
commit to any investment deals either. Furthermore, Plaintiff has not pleaded any
other facts that would lead one to believe that Mr. Mirhakimi had implied authority
to commit to an investment deal, such as evidence that Mr. Mirhakimi had entered
into similar deals on behalf of Defendant before. All that can be extracted from the
pleadings is that Mr. Mirhakimi and Mr. Li had the authority to make a

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presentation regarding a proposed investment, but that they misrepresented that
they had 100% authorization to commit to an investment. See Opp, 231 F.3d at
1065 (noting that plaintiff authorizing her husband to open the door and tender a
package to movers did not also give him the necessary authority to sign the bill of
lading, when she made no request for him to sign anything, or to make any
agreement regarding liability).

Thus, the Court finds that Plaintiff has not

sufficiently pleaded implied authority.
c. Apparent Authority
Finally, even in the absence of any actual authority, a principal may still be
liable for the fraud of its agents if the agent acts under the guise of apparent
authority. A & B Freight Line, Inc. v. Ryan, 576 N.E.2d 563, 568 (Ill. App. Ct. 1991)
(“It is inconsequential whether the agent acted according to his instructions if he
was acting within the scope of his apparent authority.”); see also Williams Elecs.
Games, Inc. v. Barry, 42 F. Supp. 2d 785, 796 (N.D. Ill. 1999), aff’d sub nom.
Williams Elecs. Games v. Garrity, 366 F.3d 569 (7th Cir. 2004) (“Liability is based
on the fact that the agent‟s position facilitates the consummation of the fraud, since
from the point of view of the third person the transaction seems regular on its face
and the agent appears to be acting in the ordinary course of business confided to
him.”). Under an apparent authority theory, it is irrelevant whether the agent had
actual authority, as long as the principal created a reasonable belief in the third
party that he did. Patrick Eng’g, Inc. v. City of Naperville, 976 N.E.2d 318, 329 (Ill.
2012) (“„Apparent authority . . . is the authority which the principal knowingly
permits the agent to assume, or the authority which the principal holds the agent

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out as possessing. It is the authority which a reasonably prudent person, exercising
diligence and discretion, in view of the principal‟s conduct, would naturally suppose
the agent to possess.‟”) (quoting Gilbert v. Sycamore Mun. Hosp., 622 N.E.2d 788,
795 (Ill. 1993)).
Thus, to determine whether apparent authority exists, the focus is on what
the Defendant did to reasonably lead Plaintiff to believe that Mr. Mirhakimi and
Mr. Li had the authority to commit to an investment deal even if they did not.
Here, the Court finds that Plaintiff did not sufficiently plead conduct or words from
the Defendant that would create the apparent authority that Mr. Mirhakimi and
Mr. Li had the ability to commit to investment deals on its behalf. In his Response,
Plaintiff argues that Defendant engaged in words that created the appearance of
apparent authority through its express agents, (Doc. 16 at 17), but that argument
shifts the focus onto what the agents said regarding their authorization rather than
what Defendant itself said to create that image.

Plaintiff further argues that

Defendant established apparent authority by its deeds of sending Mr. Mirhakimi
and Mr. Li to the Firefly Board meeting to make the investment presentation. (Doc.
16 at 17-18).

As discussed above, however, the Court does not find that Mr.

Mirhakimi and Mr. Li‟s attendance at the board meeting demonstrates enough
conduct by Defendant toward the Plaintiff for Plaintiff to believe that they had the
authority to commit to investment deals on Defendant‟s behalf. See Williams Elecs.
Games, Inc., 42 F. Supp. 2d at 796 (finding that the agents had apparent authority
in a case where it was clear that defendant placed the agents in a position to solicit
order from the plaintiff). While the question of authority and agency is one of fact,

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A & B Freight Line, 576 N.E.2d at 568, Plaintiff must still sufficiently plead the
grounds upon which an allegation of authority rests, and the Court finds that he
has not done so here.
Accordingly, because Plaintiff‟s allegations of actual express authority
inherently conflict with his claim for intentional misrepresentation, and because he
has not sufficiently pleaded actual implied authority or apparent authority to
sustain the claim, his claim for intentional mispresentation is dismissed.
2.

Anticipatory Breach of Contract

In addition to his claim for Intentional Misrepresentation, Plaintiff
alternatively pleads a claim for Anticipatory Breach of Contract. (Doc. 18 at 6-7).
Under Illinois law, “the doctrine of anticipatory repudiation requires a clear
manifestation of an intent not to perform the contract on the date of performance.”
In re Marriage of Olsen, 528 N.E.2d 684, 686 (Ill. 1988)). Presupposing this claim is
the notion that a contract was validly formed to begin with.

To form a valid

contract, there must be “offer and acceptance, consideration, and definite and
certain terms.” Van Der Molen v. Washington Mut. Fin., Inc., 835 N.E.2d 61, 69 (Ill.
App. Ct. 2005). Here, Defendant argues that Plaintiff failed to sufficiently plead the
existence of a valid contract, thus undercutting his claim for anticipatory breach of
contract, for two reasons: 1) Plaintiff failed to sufficiently plead how Mr. Mirhakimi
and Mr. Li had the authority to bind Defendant to a valid contract; and 2) assuming
that Mr. Mirhakimi and Mr. Li did have the authority to form a contract, the terms
of the alleged oral contract were not definite and certain enough to constitute an
enforceable contract. (Doc. 14 at 12-14).
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First, with regard to authority, Defendant argues that Plaintiff‟s admission
that Mr. Mirhakimi knew that he did not have 100% authorization from
[Defendant] to commit to a $5 million equity investment negates any allegation that
he was acting as Caterpillar‟s agent.

(Doc. 14 at 11).

Defendant, however,

erroneously inserts this allegation into Plaintiff‟s claim for Anticipatory Breach of
Contract, when Plaintiff actually alleged it under his claim for Intentional
Misrepresentation. Under Federal Rule of Civil Procedure 8(d)(2)-(3), a party may
set out two or more statements of a claim or defense alternatively or hypothetically,
and may also state as many separate claims or defenses it has, regardless of
consistency. Accordingly, the Court will assess the statements made under each
claim distinctly in making its determination, regardless of whether they raise
inconsistent arguments.
As previously discussed, “in an agency relationship, the principal can be
legally bound by action taken by the agent where the principal confers actual
authority on the agent.” United Legal Found. v. Pappas, 952 N.E.2d 100, 105 (Ill.
App. Ct. 2011).

Plaintiff alleges that “[Mr. Mirhakimi] and Mr. Li made [a]

presentation on behalf of Caterpillar regarding Caterpillar‟s intended investment in
Firefly.” (Doc. 18 at 4). Plaintiff further alleges that “Caterpillar executives . . .
authorized [Mr. Mirhakimi] and Mr. Li to attend the Board meeting and to make a
presentation regarding the equity investment by Caterpillar in Firefly.” (Doc. 18 at
4). Plaintiff finally alleges that “Mr. Mirhakimi was acting . . . as a representative
of Caterpillar for the purposes of making the investment presentation and offer.”

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(Doc. 18 at 4). The Court finds that, taken together, Plaintiff sufficiently pleads
actual express authority in these allegations.
Plaintiff‟s statements are unlike the examples Defendant cites to in its
Memorandum, where the court in Connick explained that an allegation that the
alleged agent misled Plaintiff

“at the direction” of the alleged principal was

insufficient to plead actual agency. (Doc. 14 at 7). Here, Plaintiff does not simply
assert that Mr. Mirhakimi acted “at the direction” of Defendant. Rather, Plaintiff
alleges that Caterpillar executives authorized Mr. Mirhakimi as its representative
to attend the Board meeting, to make an investment presentation, and to make an
offer. (Doc. 18 at 4). Because the Court must treat all well-pleaded allegations as
true in analyzing a Motion to Dismiss, at this stage in the pleadings, the Court
finds that Plaintiff‟s allegation sufficiently alleges actual express authority. The
issue of whether such authority actually existed must thus proceed as “a factual
question . . . [to] be determined by the trier of fact.” Granite Props. Ltd. P’ship v.
Granite Inv. Co., 581 N.E.2d 90, 92 (Ill. App. Ct. 1991).
As Plaintiff has sufficiently pleaded actual express authority to sustain his
claim under Anticipatory Breach of Contract, the next question is whether he has
sufficiently pleaded the existence of a valid contract. Defendant argues that he has
not, because the “Amended Complaint does not set forth the terms and conditions of
the alleged contractual relationship.”

(Doc. 14 at 13).

The Court disagrees.

Plaintiff sufficiently pleads the necessary elements of offer and acceptance,
consideration, and definite and certain terms.

Plaintiff pleads an offer from

Defendant to purchase shares of preferred stock in exchange for a $5 million equity

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investment, acceptance from Plaintiff to take Defendant‟s offer and to refuse
Trident Capital‟s offer, consideration of the equity for stock, and definite and
certain terms of the offer. Specifically, Plaintiff alleges that Mr. Mirhakimi and Mr.
Li offered to invest $5 million, within two weeks, in exchange for the number of
preferred shares to which an investor would be entitled based on a pre-money
valuation of Firefly of $12 million. (Doc. 18 at 4). This valuation equates to a deal
of 20,434,231 shares of Series D Preferred Stock at a price per share of $0.24469.
(Doc. 18 at 4). Plaintiff also alleges that the preferred stock that Defendant offered
would have no liquidating preference, Firefly‟s shareholders would not have to
relinquish their existing warrants for Firefly stock, and that the offer was not
contingent on any discussions for future investments. (Doc. 18 at 5).
Defendant argues that what Plaintiff alleges as a contract is simply a
proposal for the parties to enter into a definite agreement at some later date
because among other things, a term sheet was never provided. (Doc. 14 at 13-14).
This logic, however, ignores the “realistic awareness that the parties to contractual
negotiations often intend to be bound before all the details of their deal have been
worked out, in order to encourage a prompt start on performance of the contract.”
Glass v. Kemper Corp., 133 F.3d 999, 1002 (7th Cir. 1998); see also Borg-Warner
Corp. v. Anchor Coupling Co., 156 N.E.2d 513, 517 (Ill. 1958) (“A contract is not
rendered void because the parties thereto contract or agree to contract concerning
additional matter.”) Thus, whether certain elements were left for future discussion
do not negate that Plaintiff has sufficiently pleaded definite and certain terms.
Accordingly, Plaintiff‟s claim for Anticipatory Breach of Contract can proceed.

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B. Request for Oral Argument
Defendant filed a Request for Oral Argument on its Motion to Dismiss
pursuant to Local Rule 7.1(A)(2). (Doc. 13). A party desiring oral argument on a
motion may make such a request, but any motion “may, in the court‟s discretion, be
. . . determined upon the pleadings and the motion papers without benefit of oral
argument.” CDIL-LR 7.1(A)(1)(d). Here, the Court believes that the issues in this
matter have been sufficiently briefed by the parties, and therefore, oral argument is
not necessary. Thus, Defendant‟s Request for Oral Argument is DENIED.
IV. CONCLUSION
For the foregoing reasons, Defendant‟s Motions to Dismiss (Doc. 13; Doc. 19)
are DENIED in part and GRANTED in part, and Defendant‟s Request for Oral
Argument is DENIED.

This matter is REFERRED back to Magistrate Judge

Gorman for further pretrial proceedings with regard to the claim for Anticipatory
Breach of Contract. IT IS SO ORDERED.

Entered this 15th day of April, 2013.

s/ Joe B. McDade
JOE BILLY McDADE
United States Senior District Judge

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