Dempsey v. Nathan et al

Filing 41

MEMORANDUM Opinion and Order. We grant all Defendants' motions to dismiss Counts III, IV, VII and XI for lack of subject-matter jurisdiction. In addition, we grant Defendants' motions to dismiss Count I against the City, Nathan, and RTC for failure to state a claim. Defendants' motions to dismiss all other counts are denied. Accordingly, Count I against Detective Peluso;Count VIII against the City; Counts II, VI, IX and X against RTC; and Counts II and VI against Nathan remain. It is so ordered. Status hearing remains set for 10/23/14 at 10:30 a.m. Signed by the Honorable Marvin E. Aspen on 9/30/2014. Notice mailed by judge's staff (ntf, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
GREGORY DEMPSEY

)
)
)
)
)
)
)
)
)

Plaintiff,
v.
RICHARD NATHAN, et al.,
Defendants.

No. 14 CV 812
Hon. Marvin E. Aspen

MEMORANDUM OPINION AND ORDER
MARVIN E. ASPEN, District Judge:
Plaintiff Gregory Dempsey (“Dempsey” or “Plaintiff”), filed an eleven-count complaint
alleging various state and federal law claims against Defendants Richard Nathan (“Nathan”),
RTC Industries, Inc. (“RTC”), the City of Rolling Meadows (“the City”), and Detective Anthony
Peluso of the Rolling Meadows Police Department (“Detective Peluso”). Plaintiff alleges
violations of 42 U.S.C. § 1983 against all defendants, as well as state law tort claims of false
arrest, malicious prosecution and conversion against Nathan and RTC, and breach of contract
and unjust enrichment against RTC. Plaintiff also seeks indemnification from the City for
damages arising out of Detective Peluso’s actions.
Presently before us are two motions to dismiss Plaintiff’s Third Amended Complaint
(“amended complaint”). Both motions were filed pursuant to Federal Rule of Civil Procedure
12(b)(6), the first by Nathan and RTC (the “Nathan Defendants”), and the second by the City and
Detective Peluso (the “City Defendants”). All Defendants also challenge Plaintiff’s standing to
bring claims related to his former residence and personal property. For the reasons stated below,
we grant both motions in part and deny both motions in part.
1

BACKGROUND
The following facts are drawn from Plaintiff’s amended complaint and are accepted as
true for the purposes of these Rule 12(b)(6) motions. From 2008 through 2011 Dempsey worked
with a two-person startup company to develop a product intended to prevent soccer goals from
tipping over and injuring players. (Am. Compl. ¶¶ 8–10.) In May 2011, Dempsey and RTC
entered into a proposed partnership/joint venture agreement to further develop and promote the
product. (Id. ¶ 14.) The parties also drafted a “term sheet,” which they agreed would form the
basis of the future formal joint venture agreement. (Id. ¶¶ 16–17.) Sometime before executing
the formal agreement, Dempsey began working at RTC; his employment continued through the
end of January 2012. (Id. ¶¶ 16, 26, 30; Opp’n to Nathan Defs. MTD at 8.) Nathan Defendants
paid Dempsey for the first few months of his work, but then stopped paying him in the fall of
2011. (Am. Compl. ¶ 20.) After that time, he did not receive any compensation from RTC for
his work. (Id.; Opp’n to Nathan Defs. MTD at 8.) In January 2012, Nathan presented Dempsey
with a formal joint venture agreement that was vastly different from the term sheet the parties
had agreed to the previous May. (Am. Compl. ¶ 23.) Dempsey refused to agree to the modified
terms and left RTC at the end of January. (Id. ¶¶ 28–30.)
On February 6, 2012, Nathan told Detective Peluso of the Rolling Meadows Police
Department that Dempsey had stolen RTC property. (Id. ¶ 31.) On February 27, 2012,
Detective Peluso, without a warrant, searched Dempsey’s former home and garage. (Id. ¶¶ 35–
36.) While Detective Peluso was in the home, Nathan sent a truck and two RTC employees to
the property to assist with the search. (Id. ¶¶ 38–39.) Detective Peluso permitted the RTC
employees to search the home and take approximately thirty-two boxes of Dempsey’s property
back to RTC’s office, without making any effort to inventory or photograph the items removed.

2

(Id. ¶¶ 40–43, 67.) On March 7, 2012, Nathan authorized Detective Peluso to sign a criminal
complaint on his behalf, alleging that Dempsey had stolen two pieces of RTC property.
(Id. ¶ 45.) Thereafter, Dempsey was arrested and prosecuted. Dempsey maintains that he was
never in unauthorized possession of RTC property, (id. ¶ 47), and that Defendants knew the
charges against him were false, (id. ¶¶ 46, 49). In August 2012, a jury found Dempsey not guilty
on all charges. (Id. ¶¶ 59, 63.)
Based on the facts above, Plaintiff filed a third amended complaint on December 23,
2013 in the Circuit Court of Cook County. On February 5, 2014, Defendants removed the case
to federal court. Defendants now move to dismiss the third amended complaint in its entirety.
In his oppositions to Defendants’ motions to dismiss, Plaintiff withdrew his civil conspiracy
claim, thus Count V is dismissed. (Opp’n to Nathan Defs. MTD at 8; Opp’n to City Defs. MTD
at 8.) We address the remaining counts in turn.
MERITS
I.

Standing
Plaintiff brings four federal and state law claims that are related to Defendants’ conduct

towards his former residence and personal property: Count III (§ 1983 Illegal Search); Count IV
(§ 1983 Illegal Seizure); Count VII (Conversion); and Count XI (Unjust Enrichment). In support
of these claims, Plaintiff alleges that Defendants illegally searched his home and seized property
from his garage in violation of his Fourth Amendment rights. (Am. Compl. ¶¶ 35–43, 64–69,
85–92.) He also alleges that Nathan Defendants’ wrongfully converted the property removed
from Plaintiff’s garage for their own use, and that they were thereby unjustly enriched.
(Id. ¶¶ 108–17, 135–40.) Defendants argue that these claims should be dismissed because
Plaintiff had lost all interest in the property at issue before the search and seizure occurred. (City
Defs. MTD at 4–9; Nathan Defs. MTD at 12–15, 18–19.) Although not consistently framed as
3

such, Defendants’ arguments are factual challenges to Plaintiff’s standing and to our subjectmatter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). See Apex Digital Inc. v.
Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009). Because our first duty in every suit is
to determine whether we have subject-matter jurisdiction, we must resolve these challenges at
the outset. Johnson v. Wattenbarger, 361 F.3d 991, 992 (7th Cir. 2004).
There are two types of challenges to standing: facial and factual. Facial challenges
require the court to only look at the four-corners of the complaint to determine whether the
plaintiff alleged a basis for subject-matter jurisdiction. Apex, 572 F.3d at 443. Factual
challenges, however, permit the district court to “look beyond the jurisdictional allegations of the
complaint and view whatever evidence has been submitted on the issue to determine whether in
fact subject matter jurisdiction exists.” Id. at 444 (quoting Evers v. Astrue, 536 F.3d 651, 656–57
(7th Cir. 2008)). On a factual challenge, when a defendant presents evidence that calls a
plaintiff’s standing into question “‘[t]he presumption of correctness that we accord to a
complaint’s allegations falls away,’ and the plaintiff bears the burden of coming forward with
competent proof that standing exists.” Id. (quoting Commodity Trend Serv., Inc. v. Commodity
Futures Trading Comm’n, 149 F.3d 679, 685 (7th Cir. 1998)). Here, Defendants’ standing
challenges are factual and thus we will consider evidence outside the pleadings to resolve the
issues. See McGreal v. AT&T Corp., 892 F. Supp. 2d 996, 1007 (N.D. Ill. 2012) (considering
evidence outside the pleading and finding that plaintiff did not have standing to bring Fourth
Amendment claims on motion to dismiss); Triumph Packaging Grp. v. Ward, 877 F. Supp. 2d
629, 639 (N.D. Ill. 2012) (considering evidence outside the pleading to dismiss plaintiff’s
conversion claim for lack of standing).

4

To find Article III standing, “(1) a plaintiff must have suffered an ‘injury in fact:’ an
invasion of a legally protected interest which is concrete and particularized, and actual and
imminent; (2) there must be a causal connection between the injury and the conduct complained
of; and (3) it must be likely that the injury will be redressed by a favorable decision.” Swanson v.
City of Chetek, 719 F.3d 780, 783 (7th Cir. 2013) (citing Lujan v. Defenders of Wildlife, 504 U.S.
555, 560–61, 112 S. Ct. 2130, 2136 (1992)). In addition, a plaintiff has standing to bring Fourth
Amendment search and seizure claims only if he “had a legitimate expectation of privacy” in the
property at issue. United States v. Carlisle, 614 F.3d 750, 756 (7th Cir. 2010) (quoting Rakas v.
Illinois, 439 U.S. 128, 143, 99 S. Ct. 421, 430 (1978)). Important in this case, a plaintiff
typically cannot establish “injury in fact” where it is clear that he does not have an interest in the
property that underlies his claims. See Matter of FedPak Sys., Inc., 80 F.3d 207, 213 (7th Cir.
1996) (finding that plaintiff lacked standing to seek a clarification order from the court because it
“no longer owns any intellectual property rights” in the subject property); Duggan v. Terzakis,
275 F. Supp. 2d 968, 972 (N.D. Ill. 2003) (finding that plaintiffs who did not have a property
interest did not have standing to bring state law claims); see also United States v. 8402 W. 132nd
St., Palos Park, Ill., 103 F. Supp. 2d 1040, 1042 (N.D. Ill. 2000) (“A court’s consideration of a
claimant’s interest in property is merely a proxy for examining injury in fact.”). Likewise,
whether the plaintiff had a property or possessory interest in the property at issue is of critical
importance to the “legitimate expectation of privacy” inquiry. Rakas, 439 U.S. at 148, 99 S. Ct.
at 433.
In support of their motion to dismiss, Defendants produced evidence that as of
February 18, 2012—nine days before the search and seizure at issue—Plaintiff had lost legal and
possessory interest in the real and personal property at issue in this case. (City Defs. MTD at 6–

5

8; Nathan Defs. MTD at 13–14.) Specifically, Defendants attached to their motions documents
filed with the Circuit Court of DuPage County in the foreclosure proceeding U.S. Bank National
Ass’n as Trustees v. Gregory S. Dempsey et. al., No. 10 CH 1164: a Sheriff’s Report of Sale and
Distribution, an Agreed Motion for Possession and attachments, and an Order Confirming Sale
(Order Approving) and Order of Possession. (City Defs. MTD, Exs. 2, 3, 6; Nathan Defs. MTD,
Ex. F.) These court filings show that Plaintiff’s former residence was sold to a third party at a
public auction on January 26, 2012, that Plaintiff agreed to surrender possession of the real
property on or before February 12, 2012, and that Plaintiff released all rights to his personal
property in the garage after February 17, 2012. (Id.) This evidence is credible and calls into
question whether Plaintiff had any legitimate interest in the property on or after February 27,
2012, when the search and seizure occurred. See United States v. Curlin, 638 F.3d 562, 565 (7th
Cir. 2011) (finding no expectation of privacy where defendant was evicted from residence two
weeks before the alleged search). By offering reliable evidence that Plaintiff did not have an
interest in the disputed property, Defendants sufficiently supported their factual challenge to
Plaintiff’s standing. Thus, the burden shifts to Plaintiff to come forward with proof that standing
exists. Apex, 572 F.3d at 444.
In his opposition, Plaintiff concedes that he lost ownership of the residence before
February 27, 2012 and does not dispute the authenticity of the foreclosure documents attached to
Defendants’ motions. Instead, he defends his interest in the property by arguing that the
subsequent owner agreed that he could continue to store his personal property in the garage
through the end of February. (Opp’n to City Defs. MTD at 6.) But, assuming for the moment
that such an agreement would be sufficient to confer a property or privacy interest, Plaintiff did
not produce any evidence to support the existence of the alleged agreement. Particularly because

6

the Surrender of Possession agreement, which is signed by Plaintiff, states “[a]ny extension of
the Vacate Date must be approved by OWNER in writing prior to the Vacate Date,” we would
expect to see written proof if such an agreement in fact existed. (City Defs. MTD, Ex. 3
(emphasis added).) We find that Plaintiff has not met his “burden of coming forward with
competent proof that standing exists” for the claims related to his former residence and personal
property. Apex, 572 F.3d at 444. Therefore, we dismiss Counts III, IV, VII, and XI for lack of
subject-matter jurisdiction. See Wiegel v. Stork Craft Mfg., Inc., 891 F. Supp. 2d 941, 943 (N.D.
Ill. 2012) (dismissing unjust enrichment claim for lack of standing where plaintiff failed to
establish she suffered injury as a result of defendants conduct); McGreal, 892 F. Supp. 2d at
1007 (dismissing § 1983 claims for lack of standing); Triumph, 877 F. Supp. 2d at 639
(dismissing conversion claim for lack of standing).
II.

Rule 12(b)(6) failure to state a claim
Defendants move to dismiss all other counts for failure to state a claim for which relief

can be granted. A motion to dismiss under Rule 12(b)(6) is meant to test the sufficiency of the
complaint, not to decide the merits of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520
(7th Cir. 1990). To survive a motion to dismiss, the complaint must contain a “short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
Specifically, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct.
1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 540 U.S. 544, 555, 127 S. Ct. 1955, 1964–
65 (2007)). The plausibility standard “is not akin to a ‘probability requirement,’ but it asks for
more than a sheer possibility that a defendant has acted unlawfully.” Id. Thus, while a
complaint need not give “detailed factual allegations,” it must provide more than “labels and
conclusions, and a formulaic recitation of the elements of a cause of action.” Twombly, 540 U.S.
7

at 545, 127 S. Ct. at 1964–65; Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618–19
(7th Cir. 2007). The statement must be sufficient to provide the defendant with “fair notice” of
the claim and its basis. Twombly, 540 U.S. at 545, 127 S. Ct. at 1964 (quoting Conley v. Gibson,
355 U.S. 41, 47, 78 S. Ct. 99, 102 (1957)); Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir.
2008). In evaluating a motion to dismiss, we must accept all well-pleaded allegations in the
complaint as true and draw all reasonable inferences in the plaintiff’s favor. Thompson v. Ill.
Dep’t of Prof’l Reg., 300 F.3d 750, 753 (7th Cir. 2002).
A. False Arrest (Counts I and II)
Plaintiff seeks to hold all Defendants liable under 42 U.S.C. § 1983 for false arrest
(Count I). In the alternative, Plaintiff claims that Nathan Defendants are liable for false arrest
under Illinois state tort law (Count II).
1. City of Rolling Meadows
We will first address Plaintiff’s false arrest claim against the City. To state a claim under
42 U.S.C. § 1983, a plaintiff must allege that: (1) the defendant deprived the plaintiff of a
constitutional right, and (2) the defendant acted under color of state law. J.H. ex rel. Higgin v.
Johnson, 346 F.3d 788, 791 (7th Cir. 2003) (citing Reed v. City of Chi., 77 F.3d 1049, 1051
(7th Cir. 1996)). In Monell v. Department of Social Services of the City of New York, the
Supreme Court held that a local government cannot be liable under § 1983 for an injury caused
solely by its employees or agents. 436 U.S. 658, 694, 98 S. Ct. 2018, 2037 (1978). Therefore, to
state a § 1983 claim against a municipality, the plaintiff must allege that the constitutional injury
was caused by the municipality’s policies or customs. Id. at 694, 98 S. Ct. at 2037–38; Estate of
Sims v. Cty. of Bureau, 506 F.3d 509, 514 (7th Cir. 2007). There are three ways that a plaintiff
can show an official policy or custom: “(1) an express policy that causes a constitutional

8

deprivation when enforced; (2) a widespread practice that is so permanent and well-settled that it
constitutes a custom or practice; or (3) an allegation that the constitutional injury was caused by
a person with final policymaking authority.” Estate, 506 F.3d at 515 (citing Lewis v. City of
Chi., 496 F.3d 645, 656 (7th Cir. 2007)). Here, the City argues that Plaintiff failed to state a
claim for municipal liability because the complaint is devoid of any allegation that the City had a
policy or custom that led to the false arrest. (City Defs. MTD at 4.) We agree. Although
Plaintiff makes some attempt to claim that the City’s policies caused the alleged illegal search
and seizure, neither the amended complaint nor Plaintiff’s opposition assert that a City policy or
custom caused his arrest. Accordingly, we find that Plaintiff failed to state a Monell claim for
false arrest and dismiss Count I against the City.
2. Detective Peluso
Next, we turn to Plaintiff’s false arrest claim against Detective Peluso. The amended
complaint does not specify whether Plaintiff is suing Detective Peluso in his official or
individual capacity. This inquiry is important because “[w]hen an officer is sued in his official
capacity, a plaintiff must satisfy the standard set forth in Monell.” Eckert v. City of Chi.,
No. 08 C 7397, 2009 WL 1409707, at *4 (N.D. Ill. May 20, 2009) (citing Grieveson v. Anderson,
538 F.3d 763, 771–73 (7th Cir. 2008)). In other words, an officer can be liable for a § 1983
violation in his official capacity only if he acted pursuant to an official policy or custom. On the
other hand, an individual capacity claim requires only “a showing of personal involvement in the
alleged constitutional deprivation by the government actor.” Aleman v. Dart, No. 08 CV 6322,
2010 WL 502755, at *7 (N.D. Ill. Feb. 9, 2010) (citing Gentry v. Duckworth, 65 F.3d 555, 561
(7th Cir. 1995)). Since we previously found that Plaintiff failed to state a Monell claim for false

9

arrest, Plaintiff may only proceed against Detective Peluso if he sufficiently alleges an individual
capacity claim.
Detective Peluso argues that Plaintiff’s false arrest claim should be dismissed because the
amended complaint itself establishes that he had probable cause for the arrest. (City Defs. MTD
at 12–15.) A false arrest claim requires proof that an arrest was made without probable cause.
Brooks v. City of Chi., 564 F.3d 830, 832 (7th Cir. 2009) (citing Askew v. City of Chi., 440 F.3d
894, 895 (7th Cir. 2006)). Therefore, if Detective Peluso had probable cause for the arrest, then
Plaintiff’s false arrest claim would be barred. See Gibbs v. Lomas, 755 F.3d 529, 537 (7th Cir.
2014) (explaining that probable cause is an absolute defense to a false arrest claim). Probable
cause exists “if at the time of the arrest, the facts and circumstances within the officer’s
knowledge . . . are sufficient to warrant a prudent person, or one of reasonable caution, in
believing, in the circumstances shown, that the suspect has committed, is committing, or is about
to commit an offense.” Thayer v. Chiczewski, 705 F.3d 237, 246 (7th Cir. 2013) (quoting
Gonzalez v. City of Elgin, 578 F.3d 526, 537 (7th Cir. 2009)). Detective Peluso asserts that when
a reasonably credible witness reports that a suspect has committed a crime, an officer has
sufficient probable cause to arrest the suspect. (City Defs. MTD at 13.) In this case, Detective
Peluso argues, it is clear that he had probable cause to arrest Plaintiff because the amended
complaint concedes that the arrest was a direct result of Nathan’s statements. (Id. at 14.) While
Detective Peluso is correct that incriminating statements by a witness can provide probable
cause, an officer cannot reasonably rely on those statements if he knows that they are false. See
Lawson v. Veruchi, 637 F.3d 699, 704 (7th Cir. 2011) (“Submitting a knowingly false statement
precludes reliance on an arrest warrant.”); Olson v. Tyler, 771 F.2d 277, 281 (7th Cir. 1985) (“If
an officer submitted an affidavit that contained statements he knew to be false or would have

10

known were false had he not recklessly disregarded the truth and no accurate information
sufficient to constitute probable cause attended the false statements, not only is his conduct the
active cause of the illegal arrest, but he cannot be said to have acted in an objectively reasonable
manner.”)
The amended complaint alleges that Detective Peluso signed the criminal complaint that
led to his arrest, and that all Defendants—including Detective Peluso—knew the criminal
charges were false. (Am. Compl. ¶¶ 45, 49.) Because Plaintiff alleges that Detective Peluso
knew the charges were false, Plaintiff did not plead himself out of his false arrest claim.1
Construing the allegations in a light most favorable to Plaintiff, we find that the amended
complaint sufficiently states a § 1983 claim for false arrest against Detective Pelsuo in his
individual capacity. Accordingly, we deny Detective Peluso’s motion to dismiss Count I.
3. Nathan and RTC
Plaintiff brings false arrest claims against Nathan Defendants under both federal and state
law. We will address the federal claim first. Nathan Defendants, who are private citizens, argue
that Plaintiff failed to state a § 1983 claim for false arrest because he did not allege that they
acted under color of law. (Nathan Defs. MTD at 6–7.) A private citizen cannot be sued under
§ 1983 unless he acts under color of law by “becom[ing] a public officer pro tem or conspir[ing]
with a public employee to deprive a person of his constitutional rights.” Wilson v. Price, 624
F.3d 389, 394 (7th Cir. 2010) (citing Proffitt v. Ridgway, 279 F.3d 503, 507 (7th Cir. 2002)). In
his opposition, Plaintiff withdrew the claim that Nathan Defendants conspired with City
Defendants to deprive him of his Fourth Amendment rights. (Opp’n to Nathan Defs. MTD at 8;
1

Defendants ask us to rely on an affidavit by Detective Peluso to find that he had a good faith
basis for the arrest, but we will not consider evidence outside the pleadings on a Rule
12(b)(6) challenge. See Fed. R. Civ. P. 12(d); Tri-Gen Inc. v. Int’l Union of Operating
Engineers, Local 150, AFL-CIO, 433 F.3d 1024, 1029 (7th Cir. 2006).
11

Opp’n to City Defs. MTD at 8.) Therefore, to state a § 1983 claim, Plaintiff must allege that
Nathan Defendants became public officers pro tem.
A private citizen acts as a public officer pro tem when he takes on a public function, such
as when the police deputize private citizens in an emergency situation to help them enforce the
law. Proffitt, 279 F.3d at 507–08; Patterson v. Burge, No. 03 C 4433, 2010 WL 3894433, at *4
(N.D. Ill. Sept. 27, 2010). Here, the amended complaint does not allege that Nathan himself
arrested Plaintiff or that the police authorized him to do so. Instead, Plaintiff alleges that Nathan
authorized Detective Peluso to sign the criminal complaint that led to Plaintiff’s arrest. (Am.
Compl. ¶ 45.) But filing a criminal complaint is not a public function. Indeed, “[a] private
citizen does not become a policeman by complaining to a policeman.” Proffitt, 279 F.3d at 508.
Moreover, Plaintiff’s opposition—which argues that Nathan Defendants assumed pro tem status
during the alleged search and seizure—likewise fails to articulate how the Nathan Defendants
became private citizens pro tem in relation to his arrest. Accordingly, we grant the Nathan
Defendants’ motion to dismiss Count I.
Next, we turn to Plaintiff’s common law false arrest claim. Nathan Defendants raise
three separate arguments in support of their motion to dismiss Count II. First, they argue that the
claim is barred because probable cause existed for the arrest. (Nathan Defs. MTD at 7–9.) Since
the elements of false arrest under Illinois law are essentially the same as under § 1983, our
previous conclusion that Plaintiff sufficiently alleged lack of probable cause is also applicable
here. See Padilla v. City of Chi., 932 F. Supp. 2d 907, 921 (N.D. Ill. 2013).
Nathan Defendants’ second challenge to this claim is similar to their first, but even less
persuasive. Defendants argue that false arrest and malicious prosecution claims are precluded,
apparently in all cases, where the plaintiff was arrested pursuant to a complaint. (Nathan Defs.

12

MTD at 9.) But when a complaint is based on information that the defendants know is false—as
Plaintiff alleges in this case—defendants are not shielded from liability. Guzell v. Hiller,
223 F.3d 518, 519–20 (7th Cir. 2000) (“Police are entitled to base an arrest on a citizen
complaint . . . without investigating the truthfulness of the complaint, unless—this turns out to be
an important qualification—they have reason to believe it’s fishy.” (citing Rodgers v. Lincoln
Towing Serv., Inc., 771 F.2d 194, 200 (7th Cir. 1985))); see Bennett v. Holman, No. 95 C 2472,
1997 WL 158333, at *1 (N.D. Ill. Mar. 31, 1997) (rejecting defendants’ argument that a signed
complaint provided probable cause where plaintiff alleged that defendants knew plaintiff was
innocent). In fact, an arrest based on an intentionally false complaint is precisely the type of
conduct that could lead to a successful false arrest claim.
Finally, Nathan Defendants argue that Count II should be dismissed because Plaintiff’s
arrest was not based solely on the information they provided to Detective Peluso. (Nathan Defs.
MTD at 9–12.) In addition to lack of probable cause, to state a claim for false arrest against a
private party, a plaintiff must further plead that the private defendant “participated” in making
the arrest. Hegwood v. City of Berwyn, No. 09 C 7344, 2010 WL 5232281, at *4 (N.D. Ill. Dec.
16, 2010) (citing Odorizzi v. A.O. Smith Corp., 452 F.2d 229, 231–32 (7th Cir. 1971)). Contrary
to Nathan Defendants’ contention, a plaintiff can show participation by alleging either that the
defendant “directed an officer to arrest the plaintiff” or that that defendant “procured the arrest
by supplying information that was the sole basis of the arrest.” Schmidt v. City of Lockport, Ill.,
67 F. Supp. 2d 938, 946 (N.D. Ill. 1999) (quoting Odorizzi, 452 F.2d at 231); see Carey v. KWay, Inc., 312 Ill. App. 3d 666, 670, 728 N.E.2d 743, 748 (1st Dist. 2000) (affirming summary
judgment against plaintiff where there was no evidence that defendant was the “sole source of
the information” or that he “requested” that plaintiff be arrested).

13

Here, Plaintiff alleges both that Nathan Defendants directed Detective Peluso to sign the
criminal complaint that led to his arrest, and that his arrest was based solely on information
provided by Defendants. Specifically, Plaintiff’s amended complaint alleges that Nathan
“directed and authorized” Detective Peluso to sign a criminal complaint on his behalf, “thereby
leading to Plaintiff’s arrest.” (Am. Compl. ¶ 45.) He further alleges that Nathan knew the
information he provided Detective Peluso was false, (id. ¶¶ 46, 79), that “Defendants were acting
intentionally, willfully and wantonly and in furtherance of the interests of Defendant, RTC
Industries, Inc.,” (id. ¶ 80), that the criminal complaint “was based solely on the false
information provided to Detective Peluso by Nathan,” (id. ¶ 48), and that Defendants therefore
lacked probable cause for his arrest, (id. ¶ 79). These allegations are sufficient to state a claim
for common law false arrest against Nathan Defendants.
Defendants nonetheless urge us to consider Detective Peluso’s police report, which is not
cited in or attached to Plaintiff’s operative amended complaint, to find as a factual matter that the
arrest and prosecution were not based solely on Nathan’s statements. (Nathan Defs. MTD at 10–
12.) The first problem with Defendants’ argument is that they ignore the fact that a plaintiff may
also state a claim for false arrest by alleging that a private citizen “directed” the arrest. See
Schmidt, 67 F. Supp. 2d at 946 (“The law in Illinois and in this circuit therefore holds that a
defendant may be liable for false arrest, even if he is not the arresting officer’s sole source of
information, if he ‘go[es] beyond providing the information leading to the arrest and actually
request[s] and obtain[s] the arrest.’” (quoting Doe v. City of Chi., 39 F. Supp. 2d 1106, 1114
(N.D. Ill. 1999))). In light of the fact-specific nature of this inquiry, we concluded above that
Plaintiff sufficiently alleged a claim for false arrest on this basis. See Gvozden v. Mill Run
Tours, Inc., No. 10 CV 4595, 2011 WL 1118704, at *5 (N.D. Ill. Mar. 28, 2011).

14

Defendants’ argument also fails because the police report is not part of the pleadings and
thus we cannot consider it on a Rule 12(b)(6) motion. In this circuit, “[d]ocuments that a
defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred
to in the plaintiff’s complaint and are central to her claim.” Venture Assocs. Corp. v. Zenith
Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993). Defendants argue that we can consider the
police report as part of the pleadings because Plaintiff quoted from it in his original complaint.
(Nathan Defs. MTD at 5–6.) The Seventh Circuit has explained, however, that an amended
complaint supersedes all earlier pleadings, and statements and allegations in the earlier pleadings
are not considered judicial admissions. 188 LLC v. Trinity Indus., Inc., 300 F.3d 730, 736
(7th Cir. 2002) (“An amended pleading ordinarily supersedes the prior pleading. The prior
pleading is in effect withdrawn as to all matters not restated in the amended pleading and
becomes functus officio.” (quoting Nisbet v. Van Tuyl, 224 F.2d 66, 71 (7th Cir. 1955))); see,
e.g., Vincent v. Williams, 279 Ill. App. 3d 1, 6, 664 N.E.2d 650, 654 (1st Dist. 1996) (finding the
trial court erred by taking judicial notice of a police report attached to the plaintiff’s prior
complaint on motion to dismiss). Since Plaintiff’s operative complaint does not refer to the
police report, we will not consider it as part of the pleadings. Therefore, based on the amended
complaint alone, we deny Nathan Defendants’ motion to dismiss Count II.
B. Malicious Prosecution (Count VI)
Plaintiff also alleges a common law claim for malicious prosecution against the Nathan
Defendants. The elements of malicious prosecution under Illinois law are: “(1) commencement
of criminal proceedings by the defendants; (2) termination of that matter in favor of the plaintiff;
(3) the absence of probable cause for the proceedings; (4) the presence of malice; and
(5) resulting damages.” Gonzalez v. City of Elgin, 578 F.3d 526, 541 (7th Cir. 2009) (citing
Swick v. Liautaud, 169 Ill.2d 504, 511, 662 N.E.2d 1238, 1242 (Ill. 1996)); see Swearnigen–El v.
15

Cook County Sheriff’s Dept., 602 F.3d 852, 863 (7th Cir. 2010). Nathan Defendants argue that
Plaintiff’s malicious prosecution claim should be dismissed on the same basis it sought to
dismiss the common law false arrest claim: Defendants had probable cause for the prosecution;
the prosecution was conducted pursuant to a complaint; and the prosecution was not solely based
on information provided by the Nathan Defendants. These arguments fail at this stage for the
same reasons discussed above.
Plaintiff alleges that Nathan Defendants maliciously instituted charges against him for the
alleged theft of RTC property knowing those charges were false. (Am. Compl. ¶¶ 100–101,
106). He further states that Nathan Defendants’ statements to Detective Peluso were the “sole
basis of the prosecution,” that no probable cause existed, and that he was ultimately found not
guilty at trial. (Id. ¶¶ 50, 63, 102, 105). As a result, Plaintiff also claims that he suffered
damages. (Id. ¶¶ 103, 107.) Plaintiff’s allegations are sufficient to state a claim for malicious
prosecution under the liberal notice pleading standards. Thus, we deny Nathan Defendants’
motion to dismiss Count VI.
C. Indemnification (Count VIII)
Having dismissed Counts I, III, IV, and V against the City, the only remaining claim
against it is indemnification for judgments arising out of Detective Peluso’s conduct. Plaintiff
brings its indemnification claim under the Illinois Tort Immunity Act, 745 ILCS 10/9-102, which
directs municipalities to pay compensatory damage judgments for torts committed by their
employees while acting within the scope of their employment. The City argues that Plaintiff
cannot bring a cause of action pursuant to Section 9-102 until after judgment is obtained against
the employee. (City Defs. MTD at 20–21.) To the contrary, the Seventh Circuit has held that
plaintiffs need not wait until after a judgment is final to proceed under Section 9-102. Wilson v.

16

City of Chi., 120 F.3d 681, 685 (7th Cir. 1997). Indeed, “courts in this district routinely [allow]
plaintiffs to file Section 9-102 indemnity claims prior to the finding of municipal liability.”
Williams v. City of Chi., No. 11 C 1105, 2014 WL 3787422, at *6 (N.D. Ill. July 30, 2014)
(citing Sassak v. City of Park Ridge, 431 F. Supp. 2d 810, 822–23 (N.D. Ill. 2006)).
Accordingly, we deny the City’s motion to dismiss Plaintiff’s indemnification claim.
D. Breach of Contract (Count IX)
In addition to Plaintiff’s civil rights claims, his amended complaint states breach of
contract (Count IX) and unjust enrichment (Count X) claims against RTC related to an alleged
employment agreement between the parties. We address the breach of contract claim first.
Plaintiff alleges that RTC breached the parties’ employment contract by failing to
compensate him for five to six months of work. RTC argues that this claim must be dismissed
because Plaintiff has not sufficiently pled the existence of a contract or the nature of the breach.
A claim for breach of contract under Illinois law requires the Plaintiff to establish: “(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.” Ass’n Benefit Servs., Inc. v. Caremark RX,
Inc., 493 F.3d 841, 849 (7th Cir. 2007) (quoting MC Baldwin Fin. Co. v. DiMaggio, Rosario &
Veraja, LLC, 364 Ill. App. 3d 6, 14, 845 N.E.2d 22, 30 (1st Dist. 2006)). In his amended
complaint, Plaintiff alleges that in May 2011 he accepted a proposed partnership/joint venture
agreement with RTC, which was founded on an agreed “term sheet.” (Am. Compl. ¶¶ 14, 17.)
RTC argues that this term sheet cannot be the basis for the alleged employment contract because
it does not contain any employment terms and expressly denies being a binding contract.
(Nathan Defs. MTD at 17.) In his opposition, Plaintiff confirms that the term sheet is not the
root of the alleged employment contract. (Opp’n to Nathan Defs. MTD at 8.) Instead, Plaintiff’s

17

claim is that the term sheet was to be the basis for the future joint venture agreement, and in
return for his tentative acceptance of that proposed agreement the Nathan Defendants
“offered . . . employment for Dempsey whereby he could utilize RTC resources to develop the
[soccer goal] product.” (Am. Compl. ¶ 15.) Plaintiff further alleges that thereafter “Dempsey
began working at RTC” and RTC began to pay him. (Id. ¶ 16; Opp’n to Nathan Defs. MTD at
8.) These facts sufficiently plead offer, acceptance, and consideration for an employment
contract separate from the term sheet.
Next, Plaintiff claims that starting in the fall of 2011 through January 2012, RTC stopped
paying him despite the fact that he “continued to report to work every day” and “diligently
continued working on the products and the goals of the joint venture.” (Am. Compl. ¶¶ 20–21;
see Opp’n to Nathan Defs. MTD at 8 (“The unpaid period constitutes the breach.”).) These
allegations are sufficient to plead performance by Plaintiff and breach by RTC.
Finally, although Plaintiff does not detail every term of the contract, at this stage he is
only required to plead the “bare essentials” needed to show that he is entitled to relief and to put
RTC on fair notice of his claim. Martin v. Wal-Mart Stores, Inc., No. 07 C 3458, 2007 WL
3231414, at *3 (N.D. Ill. Oct. 26, 2007); Tibor Mach. Prods., Inc. v. Freudenberg-NOK Gen.
P’ship, 967 F. Supp. 1006, 1011 (N.D. Ill. 1997). Here, we can infer the terms that are critical to
Plaintiff’s breach claim: RTC agreed to pay Plaintiff wages each month in exchange for his work
on the products and goals of the proposed joint venture.
Moreover, we find RTC’s efforts to claim ignorance of the employment contract fail in
light of its own allegations in a complaint that it filed against Dempsey in a separate matter. (See
2nd Am. Compl., RTC Indus., Inc. v. Gregory S. Dempsey et. al., No. 12 CH 05329 (Cir. Ct.
Cook Cnty, May 23, 2012) (attached to Nathan Defendants’ motion to dismiss as Exhibit D).) In

18

RTC’s complaint, which it attached to its motion to dismiss in this case, RTC alleged that
“Dempsey signed a Freelancer Agreement with RTC in May of 2011” and that “Dempsey
worked for RTC from May 2011 through January 2012 working on the Soccer Goal Securement
Device for RTC.” (Id.) RTC attached a version of the Freelancer Agreement to its complaint.
The contract clearly states that RTC agreed to compensate Dempsey in consideration for his
agreement to the terms therein. (Id.) And although neither the contract nor Plaintiff’s amended
complaint specify the wage amount, RTC does not deny that it paid Dempsey for the first few
months, so it must be aware of the agreed monthly wages.
For the reasons discussed above, we conclude that Plaintiff adequately pled breach of
contract under the notice pleading standard and we deny RTC’s motion to dismiss Count IX.
E. Unjust Enrichment (Count X)
Finally, Plaintiff alleges that RTC was unjustly enriched based on the same facts as his
breach of contract claim. RTC incorrectly argues that, because Plaintiff alleges an express
contract, Plaintiff cannot also bring an unjust enrichment claim. (Nathan Defs. MTD Reply at
11–12.) But the cases that RTC itself cites make clear that parties may plead unjust enrichment
and breach of contract as alternative theories of recovery. See Cohen v. Am. Sec. Ins. Co., 735
F.3d 601, 615 (7th Cir. 2013); Sadler v. Retail Props. of Am., Inc., No. 12 C 6433, 2014 WL
2598804, at *20 (N.D. Ill. June 10, 2014). It is true that a plaintiff cannot include allegations
regarding an express contract in his unjust enrichment count, or pursue an unjust enrichment
theory where there is no dispute that an express contract governs the parties’ relationship, but
Dempsey does neither. Cohen, 735 F.3d at 615. Since RTC disputes the existence of a contract
entitling him to compensation, Plaintiff argues that if we find no express contract existed, then he
is still entitled to recover lost wages based on an unjust enrichment theory. (See Opp’n to

19

Nathan Defs. MTD at 9.) Illinois law clearly permits this type of alternate pleading. Cohen, 735
F.3d at 615 (quoting Guinn v. Hoskins Chevrolet, 361 Ill. App. 3d 575, 604, 836 N.E.2d 681, 704
(1st Dist. 2005)).
In addition, RTC argues that Plaintiff’s unjust enrichment claim should be dismissed
because he did not sufficiently plead that he was entitled to compensation from RTC. (Nathan
Defs. MTD at 18.) We disagree. “To state a cause of action based on a theory of unjust
enrichment, a plaintiff must allege that the defendant has unjustly retained a benefit to the
plaintiff’s detriment, and that defendant’s retention of the benefit violates the fundamental
principles of justice, equity, and good conscience.” Apollo Real Estate Inv. Fund, IV, L.P. v.
Gelber, 398 Ill. App. 3d 773, 787, 935 N.E.2d 949, 962 (1st Dist. 2009). As we discussed in
Count IX, Plaintiff sufficiently alleged an agreement whereby RTC employed him to work on
the soccer goal product in exchange for compensation. Plaintiff further alleges that he worked
for RTC from May 2011 through the end of January 2012, but RTC did not pay him after
October 2011. (Am. Compl. ¶¶ 26, 30, 129; Opp’n to Nathan Defs. MTD at 8.) Plaintiff claims
that, as a result, Defendant unjustly retained the unpaid wages to his detriment and in violation of
fundamental principles of justice, equity and good conscience. (Am. Compl. ¶¶ 131–33.) These
allegations sufficiently state a claim for unjust enrichment under Illinois law. Thus, we deny
RTC’s motion to dismiss Count X.

20

CONCLUSION
For the reasons discussed above, we grant all Defendants’ motions to dismiss Counts III,
IV, VII and XI for lack of subject-matter jurisdiction. In addition, we grant Defendants’ motions
to dismiss Count I against the City, Nathan, and RTC for failure to state a claim. Defendants’
motions to dismiss all other counts are denied. Accordingly, Count I against Detective Peluso;
Count VIII against the City; Counts II, VI, IX and X against RTC; and Counts II and VI against
Nathan remain. It is so ordered.

____________________________________
Marvin E. Aspen
United States District Judge

Dated: Chicago, Illinois
September 30, 2014

21