Van Rhee et al v. Micucci et al

Filing 75

ORDER. Signed by the Honorable Manish S. Shah on 6/30/2015: Defendants Jay Crowley, Realty Partners LLC, and Keller Williams Realty, Inc.'s motion to dismiss 44 is denied as moot. Defendants Joseph and Elizabeth Micucci's motion to dismiss 47 is granted in-part, and denied in-part as moot. Count III is dismissed as to the Micuccis. Counts IV and V are dismissed as to all defendants. [For further detail see attached order.] Notices mailed by Judicial Staff. (psm, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JAMES VAN RHEE and TAMARA VAN
RHEE,
No. 14 CV 9248

Plaintiffs,
v.

Judge Manish S. Shah

JOSEPH MICUCCI, et al.,
Defendants.
ORDER
Defendants Jay Crowley, Realty Partners LLC, and Keller Williams Realty,
Inc.’s motion to dismiss [44] is denied as moot. Defendants Joseph and Elizabeth
Micucci’s motion to dismiss [47] is granted in-part, and denied in-part as moot.
Count III is dismissed as to the Micuccis. Counts IV and V are dismissed as to all
defendants.
STATEMENT
Plaintiffs James and Tamara Van Rhee claim defendants Joseph and
Elizabeth Micucci knowingly sold them a house without disclosing that it was prone
to flooding. Plaintiffs further allege that defendants Jay Crowley, Realty Partners
LLC, and Keller Williams Realty, Inc. (“the Realtor Defendants”) all served as the
Micuccis’ real estate agents for the transaction, and all knew the house experienced
flooding. The First Amended Complaint alleges claims for fraud, negligent
misrepresentation, consumer fraud, civil conspiracy, and negligent infliction of
emotional distress.1
The Realtor Defendants moved to dismiss plaintiffs’ negligent infliction of
emotional distress claim (Count V) for failure to state a claim. [44]. The Micuccis
moved to dismiss plaintiffs’ claims for consumer fraud (Count III), civil conspiracy
(Count IV), and negligent infliction of emotional distress (Count V), for failure to
Subject matter jurisdiction arises under 28 U.S.C. § 1332 as there is complete diversity of
citizenship and the amount in controversy exceeds $75,000. Plaintiffs are citizens of
Connecticut. The Micuccis and Crowley are citizens of Illinois. The members of Realty
Partners LLC are citizens of Illinois. Keller Williams, Inc. was incorporated—and is
principally located—in Texas.
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state a claim. [47]. Plaintiffs responded to both motions by moving to voluntarily
dismiss Count III as to the Micuccis and Count V as to all defendants. [62] ¶¶ 1–2.
Because I grant these new motions from plaintiffs, the Realtor Defendants’ motion is
denied as moot and the Micuccis’ motion is denied in-part as moot.
All that remains, therefore, is the Micuccis’ motion under Rule 12(b)(6) to
dismiss plaintiffs’ civil conspiracy claim (Count IV).2 Plaintiffs allege the Micuccis
and the Realtor Defendants conspired to prevent plaintiffs from discovering that the
house had flooded, and that they furthered this conspiracy by (1) hiding photographs
that showed changes to the house, (2) hiding a dam the Micuccis used to keep water
out of the house, (3) generally keeping silent about the prior floods, (4) submitting
false disclosures, and (5) listing the house for sale without disclosing the prior floods.
The Micuccis say Count IV should be dismissed because the First Amended
Complaint alleges that the Realtor Defendants were the Micuccis’ agents. Under
Illinois law, a principal and her agent cannot conspire together because the acts of
the agent constitute the acts of the principal. Alpha School Bus Co., Inc. v. Wagner,
391 Ill.App.3d 722, 738 (1st Dist. 2009). Plaintiffs, by contrast, say their specific
allegations—that the Realtor Defendants were plaintiffs’ “real estate agents”—do not
require the conclusion that a legal principal-agent relationship existed between the
two. Instead, plaintiffs believe their allegations reasonably support the theory that
the Realtor Defendants were independent contractors. The Micuccis rebut this
argument, however, with citation to the Illinois Real Estate License Act, which
states:
Licensees shall be considered to be representing the consumer they are
working with as a designated agent for the consumer unless: (1) there is
a written agreement between the sponsoring broker and the consumer
providing that there is a different relationship; or (2) the licensee is
performing only ministerial acts on behalf of the consumer.

“A motion under Rule 12(b)(6) tests whether the complaint states a claim on which relief
may be granted.” Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012). Under Rule 8(a)(2),
a complaint must include “a short and plain statement of the claim showing that the pleader
is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule 8(a)(2)
must “give the defendant fair notice of what the claim is and the grounds upon which it
rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quotation omitted). In
reviewing the sufficiency of a complaint, a court accepts the well-pleaded facts as true. Alam
v. Miller Brewing Co., 709 F.3d 662, 665-66 (7th Cir. 2013).
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225 ILCS 454/15-10 (emphasis added). “Designated agent,” in turn, describes a
licensee who acts as a client’s “legal agent[].” 225 ILCS 454/15-50; see also
Blocklinger v. Schlegel, 58 Ill.App.3d 324, 327 (3d Dist. 1978) (“Before a fiduciary
duty arises it must be proven that a realtor has been employed by someone and that
he is therefore an agent for them.”). Nothing in the complaint suggests the Micuccis
had a written agreement with a sponsoring broker providing for a different
relationship, or that the Realtor Defendants performed only ministerial acts on
behalf of the Micuccis. Accordingly, when the Realtor Defendants served as the
Micuccis’ real estate agents, their principal-agent relationships prevented them from
forming a conspiracy.3
In the alternative, plaintiffs argue that an exception to this Illinois rule
applies here. “The exception to this rule is where the interests of a[n] . . . agent
diverge from the interests of the . . . principal and the agent at the time of the
conspiracy is acting beyond the scope of his authority or for his own benefit, rather
than that of the principal.” Bilut v. Northwestern University, 296 Ill.App.3d 42, 49
(1st Dist. 1998).4 Plaintiffs claim this exception applies here because—given the
commissions and fees the Realtor Defendants would receive upon the house’s
sale—they “had self-interested motives to join the conspiracy, and were therefore not
merely directed by the Micuccis.” [62] ¶ 10. This argument misses the mark,
however, because the First Amended Complaint does not support any inference that
the interests of the Micuccis and the Realtor Defendants diverged in the least, or that
they acted outside their scopes as agents. Just as the Realtor Defendants benefitted
from the conspiracy through commissions and fees, so too did the sellers benefit
Plaintiffs argue that “even if the First Amended Complaint does allege that the Micuccis
were the principals in a principal-agent relationship, this is a conclusion of law that is not
taken as true on a motion to dismiss. The agency relationship was not a fact. There is a set of
facts consistent with the allegations of the First Amended Complaint that support a finding
of civil conspiracy.” [62] ¶ 7. I disagree. By alleging that each of the Realtor Defendants
served as an Illinois real estate agent to the Micuccis, [41] ¶¶ 10–12, plaintiffs necessarily
pleaded themselves out of court on Count IV because Illinois law imposes agency onto such
relationships. See 225 ILCS 454/15-10.
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Plaintiffs cite Wisniewski v. Asset Acceptance Capital Corp., 2009 WL 212155 at *7 (N.D.
Ill. 2009), which frames the exception as “where individual agents act out of self-interest.”
While this phrasing may suggest it suffices for an agent to benefit from a conspiracy for the
exception to apply, Wisniewski as a whole reveals that this reference to “self-interest”
actually denotes the more narrow set of circumstances in which the agent’s interests diverge
from the principal’s. Plaintiffs’ other cited case, Mehl v. Navistar Internationl Corp., 670
F.Supp 239, 241 (N.D. Ill. 1987), contains language from the treatise Fletcher Cyclopedia
that is consistent with the broader version of the exception, but that authority is far less
persuasive on the subject of Illinois law than the Illinois decision Bilut.
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through an inflated sales price. Therefore, on Count IV, the Micuccis’ motion is
granted.
ENTER:
Date: 6/30/15

Manish S. Shah
U.S. District Judge

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