Tarau v. Coltea et al
MEMORANDUM and Order Signed by the Honorable Joan B. Gottschall on 2/2/2017. Mailed notice(mjc, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
LUCIAN COLTEA and AURICA COLTEA,
Case No. 15-CV-03545
Judge Joan B. Gottschall
MEMORANDUM AND ORDER
In his complaint, Plaintiff Adrian Tarau (“Tarau”) alleges that Lucian and Aurica Coltea
(“the Colteas”) breached an agreement signed August 27, 2007, to sell a Romanian castle and
pay him twenty-five percent of the proceeds (“the 2007 Agreement”). (See Compl. ¶¶ 7–12 &
Ex. A, ECF No. 1.) Lucian Coltea (“Coltea”) has filed a counterclaim for his attorney’s fees for
defending this action, alleging that by filing this lawsuit, Tarau breached a May 2005 settlement
agreement (“the 2005 Settlement Agreement”) which provides for the recovery of fees. (See
ECF No. 42 ¶¶ 9–11. & Ex. 2.)
Two motions filed by Tarau are before the court: a motion to dismiss Coltea’s
counterclaim for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and a
motion to strike the Colteas’ four affirmative defenses pleaded in their amended answer. The
question of what, if any, effect the 2007 Agreement had on the 2005 Settlement Agreement
looms large over these proceedings, but the court cannot answer it at this stage because the
authenticity and validity of the 2007 Agreement attached to the pleadings remain in dispute.
Accordingly, the court denies the motion to dismiss and grants in part the motion to strike certain
defenses the court finds to be redundant.
In his counterclaim, Coltea alleges that he and Tarau formed a business partnership in or
around 1999. (ECF No. 42 ¶ 3.) Tarau allegedly sued Coltea in the Circuit Court of Cook
County, Illinois, in or around March 2005 alleging that Coltea did not distribute income and
profits from some properties bought and sold by the partnership, including the castle. (See id. ¶¶
5–9.) The parties settled in May 2005, according to the counterclaim.
Tarau sues on an agreement allegedly “entered into” on August 27, 2007. (Compl. ¶ 7,
ECF No. 1.) The agreement allegedly required Tarau to contribute fifty percent of the castle’s
purchase price and required Coltea to sell it for no less than two million Euros. (Id. ¶¶ 8–9.)
Again allegedly, Coltea then had to pay Tarau twenty-five percent of the sale price within ten
days of the sale. (Id. ¶ 11.) Tarau further pleads that the 2007 Agreement stated “this
Agreement cancels any prior written or oral agreements.” (Id. ¶ 12.)
In their amended answer, the Colteas deny, among other things, Tarau’s allegation that he
paid fifty percent of the castle’s purchase price in accordance with the 2007 Agreement. (Defs.’
Am. Ans. ¶ 13 ECF No. 41.) The Colteas plead four affirmative defenses:
1. The  agreement is barred by a settlement agreement
entered into in May 2005.
2. Plaintiff did not contribute 50% of the purchase price.
3. The agreement fails for want of consideration. Any obligations
or credits due Plaintiff for monies paid toward the purchase of the
castle at issue were released and extinguished under the May 2005
4. The agreement fails for failure of consideration. Any obligations
or credits due Plaintiff for monies paid toward the purchase of the
castle at issue were released and extinguished under the May 2005
(Id. at 6.)
II. MOTION TO DISMISS COUNTERCLAIM
The court applies the same standard to a Rule 12(b)(6) motion to dismiss a counterclaim
as it does on a motion to dismiss a complaint. See, e.g., Villareal v. El Chile, Inc., 601 F. Supp.
2d 1011, 1014 (N.D. Ill. 2009). To survive a Rule 12(b)(6) motion to dismiss, a pleading must
"state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678,
(2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, (2007)); Katz-Crank v. Haskett,
843 F.3d 641, 646 (7th Cir. 2016) (quoting Tombly, supra). A complaint satisfies this standard
when its factual allegations "raise a right to relief above the speculative level." Twombly, 550
U.S. at 555-56; see also Atkins v. City of Chi., 631 F.3d 823, 832 (7th Cir. 2011) (“[T]he
complaint taken as a whole must establish a nonnegligible probability that the claim is valid,
though it need not be so great a probability as such terms as ‘preponderance of the evidence’
connote.”); Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010) ("[P]laintiff must give
enough details about the subject-matter of the case to present a story that holds together."). When
deciding a motion to dismiss under Rule 12(b)(6), the court takes all facts alleged by the pleader
as true and draws all reasonable inferences from those facts in the pleader’s favor, although
conclusory allegations that merely recite the elements of a claim are not entitled to this
presumption of truth. Katz-Crank, 843 F.3d at 646 (citing Iqbal, 556 U.S. at 662, 663); Virnich v.
Vorwald, 664 F.3d 206, 212 (7th Cir. 2011).
A. Rule 54(d) Does Not Bar The Counterclaim
Tarau argues that Coltea’s counterclaim must be dismissed because he has to proceed, if
at all, under Federal Rule of Civil Procedure 54(d). That rule provides that “[a] claim for
attorney's fees and related nontaxable expenses must be made by motion unless the substantive
law requires those fees to be proved at trial as an element of damages.” Fed. R. Civ. P.
According to Coltea’s counterclaim, the 2005 Settlement provides that “[i]n the event of
such a dispute, the prevailing party will be entitled to recover from the other party reasonable
expenses, attorney’s fees, and costs.” (ECF No. 42 ¶ 11 (allegedly quoting agreement).) Where
a contract provides for an award of attorney’s fees to a prevailing party, the court ordinarily
should wait until the conclusion of the litigation to determine who the prevailing party is. See
First Commodity Traders, Inc. v. Heinold Commodities, Inc., 766 F.2d 1007, 1013–15 (7th Cir.
1985) (considering district court’s award of costs under contract allowing the “prevailing party”
to recover fees after the district court disposed of the case on its merits); AA Sales & Assocs., Inc.
v. JT&T Prods. Corp., No. 98 C 7954, 2001 WL 641498, at *1–2 (N.D. Ill. June 4, 2001)
(awarding fees under contract’s fee-shifting clause after conclusion of suit). In addition, under
Illinois law, “the existence of a contractual provision obligating one party to pay attorney fees
does not relieve the other of its burden to establish the reasonableness of the amount requested.”
Chamberlain Mfg. Corp. v. Maremont Corp., 1995 WL 769782, at *8 (N.D. Ill. Dec. 29, 1995)
(quoting Kaiser v. MEPC Am. Props., Inc., 518 N.E.2d 424, 428 (Ill. App. Ct. 1987)). A final
reasonableness determination and award cannot be made until litigation on the merits concludes
and all claimed fees can be assessed for reasonableness. See AA Sales & Assocs., 2001 WL
641498, at *3–5 (reducing fees requested under contract as partially unreasonable); Chamberlain
Mfg., 1995 WL 769782, at *8–9 (analyzing fee petition and reducing certain categories of time
spent after trial).
That final adjudication of Coltea’s counterclaim may have to await the adjudication of
other claims does not resolve the question of whether the claim should be dismissed, however.
This may be, at most, a timing problem. The court can use its inherent powers to manage its
docket and to order separate trials to address sequencing problems, see Fed. R. Civ. P. 42(b).
The parties have not addressed whether Illinois law allows any portion of Coltea’s
counterclaim to be tried to a jury. Tarau cites cases holding that the fee-shifting provision of the
Fair Debt Collection Practices Act, 15 U.S.C. § 1692(a)(3), does not create an independent claim
for attorney’s fees. See, e.g., Young v. Reuben, 1:04 CV 0113 SEB VSS, 2005 WL 1484671, at
*1 (S.D. Ind. June 21, 2005). Those cases are inapposite, however, because this is a diversity
action in which the parties assert Illinois contract law applies, and under Illinois law, whether a
party is a prevailing party under a contractual fee-shifting provision “is a mixed question of fact
and law, or stated differently, an application of the legal standard (“substantially prevailing”
[used in the particular contract]) to the facts.” Tax Track Sys. Corp. v. New Investor World, Inc.,
478 F.3d 783, 788–89 (7th Cir. 2007). A judge may sit as the fact finder on that question. See,
e.g., id. at 789. Tarau cites no case, however, under Illinois law holding that a jury may not
decide those questions, and the fact that a differing standard of review may apply depending on
who sits as fact finder at least suggests that the question may be properly put to a jury in an
appropriate case. See id. (citing Mayer v. Gary Partners & Co., Ltd., 29 F.3d 330, 334 (7th Cir.
1994)) (qualifying standard of review determination in terms of who sits as fact finder: “In a
diversity suit when the judge acts as a fact finder (as he does in deciding whether a party
substantially prevailed), the federal standard of review applies.”).
Indeed, applying Illinois contract law, the Seventh Circuit has affirmed at least one jury
award of attorney’s fees on a counterclaim for breach of a contract that included a fee-shifting
provision. Pa. Truck Lines, Inc. v. Solar Equity Corp., 882 F.2d 221, 227–28 (7th Cir. 1989)
(rejecting argument that jury’s award of fees should be reduced due to alleged inconsistency in
damages and fee awards). Tarau offers no contrary authority, and the court therefore concludes
Rule 54(d) does not preclude Coltea’s counterclaim.
B. The Court Cannot Determine The Effect Of The 2007 Settlement Agreement Because
Its Authenticity And Validity Are Disputed
“Under Illinois law, a breach of contract claim has four elements: (1) the existence of a
valid and enforceable contract; (2) performance by the plaintiff; (3) a breach of contract by the
defendant; and (4) resultant injury to the plaintiff.” Haywood v. Chi. Hous. Auth., --- F.Supp.3d ---, No. 15 C 8317, 2016 WL 5405052, at *12 (N.D. Ill. Sept. 28, 2016) (other citation omitted)
(quoting Hess v. Bresney, 784 F.3d 1154, 1158–59 (7th Cir. 2015); accord. Chandler v. Sw.
Jeep-Eagle, Inc., 162 F.R.D. 302, 311 (N.D. Ill. 1995). According to Tarau, the Colteas cannot
show a breach of the 2005 Settlement Agreement because the 2007 Agreement voided it. (Mot.
to Dismiss 5–7.) The Colteas respond that the court cannot resolve this issue at the Rule 12(b)(6)
stage because it calls for the resolution of disputed facts. The court agrees.
As a general rule, the court must limit its inquiry on a Rule 12(b)(6) motion “to the
factual allegations contained within the four corners of the complaint.” Vazquez v. Cent. States
Joint Bd., 547 F. Supp. 2d 833, 850 (N.D. Ill. 2008) (quoting Sotelo v. DirectRevenue, LLC, 384
F. Supp. 2d 1219, 1236 (N.D. Ill. 2005)). If the court considers material outside the complaint, it
must ordinarily convert the Rule 12(b)(6) motion to one for summary judgment. See Fed. R.
Civ. P. 12(d). Nonetheless, “[d]ocuments that a defendant attaches to a motion to dismiss are
considered part of the pleadings if they are referred to in the [pleading] and are central to her
claim.” Venture Assoc. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993).
The 2007 Agreement may be central to the parties’ claims and so can be considered.
The Colteas did not attach a copy of it to their counterclaim, but a purported copy appears as an
exhibit to Tarau’s complaint. (ECF No. 1 Ex. A.) Coltea pleads in his counterclaim that Tarau
alleges that the 2007 Agreement exists (¶ 13), so the question becomes whether it is central to
Coltea’s counterclaim. A review of the pleadings and the parties’ filings shows that the 2005
and 2007 agreements can be fairly characterized as “constitut[ing] the core of the parties’
contractual relationship.” Venture Assocs., 987 F.2d at 432 (holding district court may consider
documents referred to in the complaint that fall into this category).
Even if the 2007 Agreement can be considered, and the court need not decide the
question definitively, the Colteas dispute its validity. Again, the Colteas deny in their answer
that the parties “entered into” the 2007 Agreement. (Defs.’ Am. Ans. ¶¶ 7–8.) Coltea pleads in
his counterclaim that Tarau alleges that the 2007 Agreement exists, but Coltea does not admit
that it does. (See Countercl. ¶ 13.) It is not entirely clear precisely what facts about the
formation of the 2007 Agreement the Colteas dispute, but given the Colteas’ answer, their denial
may include a challenge to the authenticity of the attached contract as well as facts going to the
enforceability of the 2007 Settlement Agreement. The court cannot resolve those disputes at the
Rule 12(b)(6) stage by determining the 2007 Agreement’s effect as if it were fully operative.1
Though the court does not reach the question, Tarau bears the burden to prove his theory of the 2007 Agreement.
Tarau relies on Cincinnati Ins. Co. v. Leighton, 403 F.3d 879, 887–90 (7th Cir. 2005), in which a contract operated
as a novation that superseded a prior agreement. As that court explained, under Illinois law, “[t]he four elements of
a novation, which the party establishing the defense must prove by a preponderance of the evidence, are: ‘ a
previous, valid obligation;  a subsequent agreement of all the parties to the new contract;  the extinguishment
of the old contract; and  the validity of the new contract.’” Id. at 887 (quoting Phillips & Arnold, Inc. v.
Frederick J. Borgsmiller, Inc., 462 N.E.2d 924, 928 (Ill. App. Ct. 1984)).
See Chi. Faucet Shoppe, Inc. v. Nestle Waters N. Am. Inc., 24 F. Supp. 3d 750, 764 (N.D. Ill.
2014) (citing Tierney v. Vahle, 304 F.3d 734, 738–39 (7th Cir. 2002)) (refusing to consider
contract attached to Rule 12(b)(6) motion papers, stating that consideration “would be
appropriate only if it is ‘concededly authentic’ and ‘central to the plaintiff's claim’”); Lagen v.
United Cont’l Holdings, Inc., 920 F. Supp. 2d 912, 917 (N.D. Ill. 2013) (citing Rosenblum v.
Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir. 2002)) (considering contracts attached to
complaint but finding that “does not however, mean that the Court is required to adopt
Defendant's allegations regarding the effect of such documents” and declining to adopt
III. MOTION TO STRIKE AFFIRMATIVE DEFENSES
Tarau also moves pursuant to Rule 12(f)(2) to strike the Colteas’ four affirmative
defenses. Rule 12(f) permits the court to “strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). The rule
affords the court “considerable discretion.” Delta Consulting Grp., Inc. v. R. Randle Const., Inc.,
554 F.3d 1133, 1141 (7th Cir. 2009) (citing Talbot v. Robert Matthews Distrib. Co., 961 F.2d
654, 665 (7th Cir. 1992)).
First, Tarau argues that the defenses should be stricken to the extent they deny that the
2007 Agreement voided the 2005 Settlement Agreement. (See Mot. to Strike 7–9.) For the
reasons already stated, the court cannot determine what, if any, effect the 2007 Agreement had
on the 2005 Settlement Agreement, and so this argument fails.
Some of the Colteas’ defenses are redundant, however. The third and fourth affirmative
defenses both plead that the 2007 Agreement failed for “want” (defense three) or “failure”
(defense four) of consideration. (Defs.’ Am. Ans. at 6.) One failure of consideration defense
suffices, and the Colteas do not explain the need for two. Also, the second affirmative defense
repeats the Coltea’s denial of the allegation that Tarau did not contribute fifty percent of the
purchase prices, as the 2007 Agreement allegedly required. Because “[i]t is improper to assert
something as an affirmative defense that is nothing more than a denial of an allegation contained
in the complaint,” the court strikes the second affirmative defense as redundant. Rivertree
Landing LLC v. Murphy, 246 F.R.D. 667, 667 (N.D. Ill. 2007) (citing Instituto Nacional de
Comercializacion Agricola (Indeca) v. Cont'l Ill. Nat'l Bank & Trust Co., 576 F. Supp. 985, 989
(N.D. Ill. 1983)).
Tarau also attacks all four defenses under the Rule 12(b)(6) standard, stating that the
Colteas fail to plead facts in support of their defenses. Coltea’s factual allegations supporting his
first affirmative defense—that the 2005 Settlement Agreement bars the claim—can be found in
his separately filed counterclaim. Coltea should have pleaded his counterclaim in his answer.
See Fed. R. Civ. P. 13(a) (“A pleading must state as a counterclaim . . . .” (emphasis added)); id.
R. 13(e); id. R. 7(a) (listing answer among pleadings but not allowing a separate counterclaim as
a pleading)). Tarau articulates no way in which he has been prejudiced by the use of separate
documents, however. His briefing instead reflects an understanding of Coltea’s position.2
Accordingly, the court sees no point in striking this defense. See Rivertree Landing, 246 F.R.D.
at 668 (denying motion to strike, in part, because “plaintiff fail[ed] to identify how it [wa]s
prejudiced by these affirmative defenses”).
In support of the affirmative defense of lack of consideration, the Colteas allege that Tarau never paid the fifty
percent of the castle’s purchase price as the 2007 Agreement allegedly required. The Colteas’ inclusion of that
denial among their affirmative defenses may have been redundant, but the allegation it repeats gives the plaintiff fair
notice of the factual basis of the defense. See Rivertree Landing, 246 F.R.D. at 668 (“[a]ffirmative defenses . . .
must contain a short and plain statement upon which relief may be granted” (citing Heller Fin., Inc. v. Midwhey
Powder Co., Inc., 883 F.2d 1286, 1294 (7th Cir. 1989))).
For the reasons given above, Tarau’s motion to dismiss Coltea’s counterclaim (ECF No.
45) is denied. Tarau’s motion to strike (ECF No. 44) is granted in part and denied in part.
Defendants’ second and fourth affirmative defenses pleaded in their amended answer (ECF No.
41 at 6) are stricken under Rule 12(f).
Date: February 2, 2017
Joan B. Gottschall
United States District Judge
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