Artistic Framing, Inc. v. Hospitality Resources Inc. et al

Filing 63

WRITTEN Opinion:HRIs motion to dismiss AFIs First Amended Complaint 54 is denied in its entirety.Mailed notice(rth, )

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge

Sharon J. Coleman

CASE NUMBER

12 C 6997

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

DATE

5/23/2013

Artistic Framing, Inc vs. Hospitality Resources, Inc., et al.

DOCKET ENTRY TEXT

HRI’s motion to dismiss AFI’s First Amended Complaint [54] is denied in its entirety.

O[ For further details see text below.]

Notices mailed by Judicial staff.

STATEMENT
Introduction
Defendants Hospitality Resources, Inc., (“HRI”) and M. Daniel Mills (“Mills”) move to dismiss Artistic
Framing, Inc.’s (“AFI”) First Amended Complaint for breach of contract (Count I) and specific performance
(Count II). AFI’s original complaint was previously dismissed without prejudice by this Court for failure to
state a claim pursuant to Fed. R. Civ. P. 12(b)(6).
For purposes of this instant motion, this Court assumes familiarity with the facts of this case which may be
found in this Court’s previous order, Artistic Framing, Inc. v. Hospitality Res., Inc., No. 12-cv-6997, 2013
U.S. Dist. LEXIS 11118 (N.D. Ill. Jan. 24, 2013). After this Court dismissed AFI’s original complaint, AFI
filed a First Amended Complaint in an effort to cure defects in its complaint. AFI’s First Amended
Complaint alleges breach of contract and seeks specific performance of HRI’s obligations. For the following
reasons, HRI’s motion to dismiss is denied in its entirety.
Discussion
1. Breach of Contract
As an initial matter, HRI argues that AFI’s First Amended Complaint should be dismissed as confusing
because it fails to distinguish between the defendants. AFI argues that Mills guaranteed full performance and
payment from HRI to AFI of all sums under the agreement and as such is responsible for HRI’s breach. HRI
does not dispute the fact that Mills guaranteed its performance, but instead argues that the complaint must
specifically delineate the alleged wrongdoing of each distinct defendant. HRI’s argument is unpersuasive. In
light of AFI’s claim that Mills guaranteed HRI’s obligations under the contract, the allegation that Mills is
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STATEMENT
responsible for HRI’s breach as guarantor is sufficient to properly distinguish between the defendants where
the defendants’ liabilities overlap.
Next, HRI argues that AFI fails to establish all the necessary elements for a breach of contract claim. Under
Illinois law, “the elements of a breach of contract cause of action are (1) offer and acceptance, (2)
consideration, (3) definite and certain terms, (4) performance by the plaintiff of all required conditions, (5)
breach, and (6) damages.” Bogie v. PAWS Chi., No. 12 C 5887, 2012 U.S. Dist. LEXIS 163482, at *6 (N.D.
Ill. Nov. 15, 2012). While HRI states that AFI fails to plead all the requisite elements for a breach of contract
claim, HRI only argues that AFI fails to plead one specific element: that AFI performed all required
conditions of the contract.
HRI argues that AFI’s statement that it fulfilled all its duties under the contract without more “factual
enhancements” is insufficient to state a claim for breach of contract. However, while AFI must offer more
than conclusions or a “formulaic recitation of the elements of the cause of action,” AFI need not allege
“detailed factual allegations.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Here, AFI alleges that
it completely performed all its obligations under the agreement, a copy of which is attached to the complaint.
The contract sets out AFI’s obligations under the contract which included providing HRI with framed
pictures, molding, and mirrors, maintaining AFI’s current framing price list, and purchasing prints and
moldings for HRI and its customers. AFI’s claim that it performed all its obligations under the agreement
taken together with its actual obligations listed in the contract is sufficient to allege performance by AFI of
all required conditions.
Accordingly, HRI’s motion to dismiss AFI’s breach of contract claim is denied.
2. Specific Performance
HRI argues that AFI’s claim for specific performance should be dismissed because it is not an independent
cause of action and because this Court already found that an adequate remedy at law exists. AFI argues that
Count II of its First Amended Complaint seeks specific performance for HRI’s alleged breach of contract,
while Count I seeks damages for HRI’s alleged breach.
First, HRI argues that Count II must be dismissed because specific performance is not an independent cause
of action. This Court notes that while HRI is correct, that specific performance is not an independent cause
of action, this Court accepts AFI’s explanation. LaSalle Nat’l Bank v. Metro. Life Ins. Co., 18 F.3d 1371,
1376 (7th Cir. 1994). AFI’s request for specific performance as a form of equitable relief is permissible. See
Lagen v. United Cont’l Holdings, Inc., No. 12 C 4056, 2013 U.S. Dist. LEXIS 13371, at *16-17 (N.D. Ill.
Jan. 31, 2013) (allowing a request for specific performance to survive a motion to dismiss where plaintiff
clarified that it sought the equitable remedy of specific performance for its breach of contract claim).
Accordingly, AFI’s complaint contains only one cause of action for breach of contract and seeks relief in the
form of damages and specific performance.
Next, HRI argues that AFI’s request for specific performance should be dismissed because this Court already
found that monetary damages are an adequate remedy at law. As an initial matter, this Court notes that while
its previous order held that a breach of contract claim would provide an adequate legal remedy for any loss
profits incurred, this finding was limited solely to the issue of loss profits within the context of a claim for an
accounting. AFI presently alleges not only that it suffered loss profits, but that the parties’ contract created a
proprietary right in a joint customer base that the parties developed together. Specifically, AFI alleges that
the contract provides a restrictive covenant provision which states that the parties were not allowed to sell
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STATEMENT
products to a particular jointly-developed client, Six Continents Hotel, for four years following the
termination of the agreement. (Compl. at ¶ 25). Accordingly, this Court’s prior ruling that a breach of
contract claim would provide an adequate remedy for any loss profits within the context of a substantive
accounting claim, is inapplicable to AFI’s allegation that it has suffered losses beyond monetary damages and
loss profits for breach of contract.
Having clarified that this Court’s previous order did not find that monetary damages sufficiently addressed
AFI’s present breach of contract allegations, this Court next addresses whether AFI properly alleges that it is
entitled to specific performance. To properly request specific performance, a plaintiff must allege: “(1) the
existence of a valid, binding, and enforceable contract; (2) plaintiff has complied with the terms of his
contract or is ready, willing, and able to perform his part of the contract; and (3) defendant failed or refused
to perform his part of the contract.” AT&T Capital Servs. v. Shore Fin. Servs., No. 09 CV 1360, 2010 U.S.
Dist. LEXIS 65501, at *50-51 (N.D. Ill. June 30, 2010) (internal quotations omitted). Additionally, specific
performance generally will not be granted where there is an adequate remedy at law. Am. Nat’l Bank & Trust
Co. v. Allmerica Fin. Life Ins. & Annuity Co., No. 02 C 5251, 2003 U.S. Dist. LEXIS 6706, at *13-14 (N.D.
Ill. Apr. 17, 2003).
Here, AFI’s First Amended Complaint alleges facts that, when accepted as true, properly request the remedy
of specific performance. AFI incorporates in its claim for specific performance the allegations of a valid,
binding, and enforceable contract. (Compl. at ¶¶ 8, 22). AFI also incorporates its own compliance with that
contract (by providing HRI with framed pictures, molding, and mirrors). Additionally, AFI alleges HRI’s
failure to perform its part of the contract by failing to have their customers place orders directly with AFI,
failing to give AFI customer down payments, failing to abide by the exclusivity provisions of the agreement,
and failing to provide AFI access to their books and records for audit purposes. (Compl. at ¶¶ 12, 16, 17).
AFI also alleges that there is no adequate remedy at law for HRI diverting jointly developed customers away
from AFI to other vendors and depriving AFI of its customer base. AFI sufficiently alleges a request for
specific performance.
Accordingly, HRI’s motion to dismiss AFI’s request for specific performance is denied. AFI’s request for
specific performance as a form of equitable relief is permissible.
Conclusion
HRI’s motion to dismiss AFI’s First Amended Complaint is denied in its entirety.

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