Kay Brothers Enterprises, Inc. v. Provencal Construction Company et al
Filing
163
OPINION and Order. For the reasons stated in the accompanying Opinion and Order, the Court denies the motion to strike 157 , denies the cross motions for summary judgment [140,147,150] and denies Mifflin's motion to dismiss 121 . Signed by the Honorable Sara L. Ellis on 7/31/2018. Mailed notice(rj, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
KAY BROTHERS ENTERPRISES, INC.,
an Illinois Corporation,
)
)
)
Plaintiff,
)
)
v.
)
)
JOSEPH PARENTE, DAWN PARENTE,
)
PROVENCAL CONSTRUCTION
)
COMPANY, an ILLINOIS CORPORATION, )
RON VARI, R. VARI & ASSOCIATES, LLC, )
HAROLD LIESENFELT, and
)
MICHAEL CANDELA,
)
)
Defendants.
)
_______________________________________)
JOSEPH PARENTE and DAWN PARENTE, )
)
Third-Party Plaintiffs,
)
)
v.
)
)
ROBERT MIFFLIN, d/b/a
)
R.A. MIFFLIN ARCHITECTS,
)
)
Third-Party Defendant.
)
No. 16 C 387
Judge Sara L. Ellis
OPINION AND ORDER
This case arises out of a negotiation to build a stately home in Burr Ridge, Illinois, gone
awry. Plaintiff Kay Brothers Enterprises, Inc. (“KBEI”), alleges that Defendants Joseph and
Dawn Parente misappropriated architectural plans for which KBEI owns the copyright and
distributed them to Defendants Provencal Construction Company (“Provencal”), Harold
Liesenfelt, Michael Candela, Ron Vari, and R. Vari & Associates, LLC, to be used in the
construction of a custom home for the Parentes. KBEI brings claims for copyright infringement
against all defendants and a claim for Quantum Meruit against the Parentes. The Parentes
answered KBEI’s Second Amended Complaint (“SAC”) and filed a third-party complaint
naming KBEI’s architect Robert Mifflin d/b/a R.A. Mifflin Architects, alleging that Mifflin
breached his contract with the Parentes to modify architectural drawings for the Parentes to use
in the construction of their home by purporting to transfer ownership of the copyright in those
drawings to KBEI. The Parentes also allege that Mifflin violated the Illinois Consumer Fraud
and Deceptive Business Practices Act (“ICFA”), 815 Ill. Comp. Stat. 505/1 et seq., by failing to
disclose to the Parentes that he had assigned his ownership interest in the Plans to KBEI and that
he therefore lacked authority to enter into the agreement with the Parentes to modify those plans
for use in construction of their home.
Discovery has closed and the Parentes and KBEI now cross move for summary judgment
on the copyright claim. KBEI moves for partial summary judgment as to the Parentes’ liability
and the Parentes move for summary judgment arguing that they had an implied non-exclusive
license to use the revised Plans to build their home. Provencal and its principles Liesenfelt and
Candela also move for summary judgment on the copyright claim against them, arguing that if
the Court grants summary judgment in favor of the Parentes, their liability by extension is also
extinguished. Finally, Mifflin moves for the second time to dismiss the claims against him,
arguing that the ICFA claim is inadequately pleaded under Federal Rule of Civil Procedure 9(b),
that the Parentes have not adequately alleged standing to bring their ICFA claim, that the
Parentes do not allege that Mifflin engaged in a deceptive or unfair practice necessary to state an
ICFA claim, and that the Parentes do not allege damages sufficient to support their breach of
contract claim.
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Because there is a genuine dispute as to whether KBEI’s objective conduct demonstrated
intent to provide the Parentes with a non-exclusive license to use the Plans to build their home,
the Court denies all three motions for summary judgment. And, because the Court previously
found the Parentes’ ICFA claim adequately pleaded and they are not required to amend their
complaint after discovery, and because the Parentes otherwise adequately pleaded their ICFA
claim, the Court denies Mifflin’s motion to dismiss the ICFA claim. Additionally, the Court
denies Mifflin’s motion to dismiss the breach of contract claim because the Parentes adequately
alleged damages.
Finally, the Parentes also bring a motion to strike various portions of the declarations
KBEI submits in support of its Statement of Additional Disputed Facts (“SADF”). The Court
denies this motion because the challenged statements are not hearsay and are consistent with
prior deposition testimony.
BACKGROUND1
A.
The Parties
Defendants Joseph and Dawn Parente, husband and wife, are residents of Burr Ridge,
Illinois. The Parentes are the owners of a home located at 8734 Johnston Road, Burr Ridge,
Illinois (the “Johnston Residence”). Defendant Provencal Construction Company (“Provencal”)
is a construction company that built the Johnston Residence for the Parentes. Defendants
Candela and Liesenfelt are the sole shareholders of Provencal. Defendant Vari is a friend of
Joseph Parente and an architect. Vari is the principal of Defendant R. Vari & Associates, LLC.
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The facts in this section are derived from the parties’ Joint Statements of Undisputed Material Facts,
Docs. 142 & 148, and the Third-Party Complaint, Doc. 115. The Court includes in this background
section only those portions of the statements of fact that are appropriately presented, supported, and
relevant to resolution of the pending cross-motions for summary judgment and motion to dismiss. All
facts are taken in the light most favorable to the non-movant in each motion.
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Plaintiff KBEI is an Illinois corporation that constructs single-family homes, including
both custom and speculative homes. John Kajmowicz and Robert Kajmowicz are the sole
owners of KBEI. Third Party Defendant Mifflin is an architect. Mifflin owned R.A. Mifflin
Architects.
B.
The Original Plans
In 2002, at KBEI’s request, Mifflin prepared a set of architectural drawings for a singlefamily home to be constructed on a KBEI-owned lot at 6679 Lee Court, Burr Ridge, Illinois (the
“Original Plans”). On June 13, 2002, Mifflin executed an assignment of rights in the Original
Plans to KBEI. KBEI never constructed the residence depicted in the Original Plans.
In 2008, the Parentes acquired a vacant lot at 8734 Johnston Road adjacent to their
existing residence in Burr Ridge, Illinois. Sometime prior to 2009, the Parentes met with Bob
Kajmowicz, who showed the Parentes the Original Plans prepared by Mifflin. The Parentes
elected not to build a new residence at that time and their discussions with KBEI ceased without
any agreement to do business together.
C.
Modification of the Plans
In 2014, the Parentes elected to move forward with building a new residence on their
vacant lot on Johnston Road. In November 2014, KBEI and the Parentes met to review the
Original Plans and discuss modifications to conform the drawings to the 8734 Johnston Road lot
and to the Parentes’ personal taste. At Bob Kajmowicz’s invitation, Mifflin attended a
November 2014 meeting to discuss Mifflin making the Parentes’ requested modifications to the
Original Plans. This was the first time the Parentes met Mifflin. KBEI consented to Mifflin
making modifications to the Original Plans at the direction of the Parentes and did not require
that the Parentes sign a build-to-suit contract prior to Mifflin modifying the Original Plans.
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Mifflin prepared a letter agreement dated November 13, 2014 (the “Letter Agreement”),
proposing terms for the revisions of the Original Plans for the Parentes’ Johnston Residence.
The Letter Agreement required the Parentes to pay Mifflin $10,000 and provided for additional
services to be billed at an hourly rate. Mifflin sent a draft of the Letter Agreement to John
Kajmowicz for KBEI’s review and approval before transmitting the Letter Agreement to the
Parentes. John Kajmowicz instructed Mifflin to revise the Letter Agreement to denote that the
Original Plans were “owned by” KBEI. Mifflin did not make this change.
The Letter Agreement did not condition the Parentes’ use of the modified version of the
Original Plans (the “Modified Plans”) upon KBEI serving as their builder. The Letter
Agreement stated that “[t]he original plans were prepared for [KBEI] and designed for their lot at
6679 Lee Court, Burr Ridge.” Doc. 142-15. The Letter Agreement proposed that in
consideration of a “fixed fee” of $10,000, “[r]evisions will be completed, based on this existing
set of drawings in order for the proposed home to be constructed on a walk out lot (#69) in the
Highland Fields subdivision, Burr Ridge, owned by Mr. and Mrs. Joseph Parente.” Id.
On December 10, 2014, John Kajmowicz emailed the unsigned Letter Agreement to the
Parentes; this version also did not state that KBEI owned the Original Plans. Joseph Parente
believes he signed the Letter Agreement on December 9, 2014. Mifflin received a signed copy
of the Letter Agreement sometime in December 2014. The Parentes paid Mifflin $11,700 by
March 1, 2015, and made an additional, final payment of $500 in August 2015, completing
payment for Mifflin’s services pursuant to the terms of the Letter Agreement.
At some point, Bob Kajmowicz, on behalf of KBEI, delivered the Modified Plans to the
Parentes. KBEI never told Mifflin not to deliver copies of the Modified Plans to the Parentes.
On February 20, 2015, KBEI submitted the architectural plans, a building permit application, and
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$1,000.00 to the Village of Burr Ridge for the construction of the Johnston Residence. The
Parentes have never reimbursed KBEI the $1,000.00.
D.
Build-to-Suit Contract Negotiations
From February 2015 to July 2015, the Parentes and KBEI negotiated a build-to-suit
contract for the Johnston Resident. The negotiations produced at least five iterations of the
build-to-suit contract. On June 5, 2015, Joseph Parente’s attorney e-mailed an iteration of the
build-to-suit contract to Joseph Parente and John Kajmowicz, asking KBEI to sign and return the
contract. But KBEI did not sign because the parties were unable to agree upon a penalty clause
in the event of KBEI’s delayed performance, and negotiations deteriorated.
On July 7, 2015, John Kajmowicz e-mailed Joseph Parente stating, “Joe please be
advised that after emails and phone calls with no response. Kay Bros Ent. is no longer involved
in any of your current or future building efforts. Also be advised that the current plans you have
in your possession for 8734 Johnston Road, Burr Ridge, IL are the sole property of Kay Bros
Ent. and any use, alteration or reproduction of the (sic) these drawings and plans without consent
from Kay Bros Ent. is strictly prohibitive (sic) and will be strongly enforced. Feel free to call
and discuss.” Doc. 142-31.
On July 7, 2015, Joseph Parente responded to John Kajmowicz’s e-mail stating “Ok.”
On July 7, 2015, Joseph Parente responded to John Kajmowicz’s e-mail again stating “E-mail
got caught (sic) off . . . Ok, will call to discuss.” Doc. 142-31. Joseph Parente never called John
Kajmowicz or Bob Kajmowicz to discuss the issues raised in John Kajmowicz’s July 7, 2015 email.
6
E.
Village Approval and Construction with Another Builder
Before negotiations between KBEI and the Parentes formally collapsed, the Village of
Burr Ridge (the “Village”) approved the Modified Plans for the Johnston Residence, and on June
16, 2015, Joseph Parente paid the Village $17,019.20 for the building permit and performance
bond for the construction of the Johnston Residence. The Village provided the Parentes copies
of the Modified Plans on file at the Village.
On June 26, 2015, Vari, on behalf of Joseph Parente, e-mailed Mifflin requesting that he
forward copies of the Modified Plans for the Johnston Residence to him. On June 27, 2015,
Mifflin responded that he would not send copies of the plans to Vari because the Parentes were
not using KBEI to construct the Johnston Residence.
On July 7, 2015, Vari e-mailed Joseph Parente inquiring whether he should reach out to
Mifflin for an “engineers’s (sic) grading plan.” On July 7, 2015, Joseph Parente forwarded John
Kajmowicz’s July 7, 2015 e-mail to Vari. On July 7, 2015, Joseph Parente responded to Vari’s
e-mail regarding reaching out to Mifflin by saying “No.” Doc. 142-32.
On August 16, 2015, Mifflin e-mailed a copy of his invoice for modifications to the
Original Plans to Vari and asked, “Is anybody going to pay this?” Doc. 142-34. Vari forwarded
Mifflin’s e-mail to Joseph Parente. Joseph Parente responded to Vari by e-mail stating, “Sure if I
get release of ownership of prints . . . If not, no.” Id. On August 17, 2015, Vari e-mailed Mifflin
stating, “Hi Bob spoke to Joe he indicated that he would like a release from the Kay brothers
(sic) indicating that Joe now has ownership of the prints and he would be happy to pay the
balance.” Id. On August 19, 2015, Mifflin responded to Vari’s e-mail stating “The $500.00 is
the balance remaining for revisions as requested by Joseph Parente to existing Kay builder plans.
The changes are complete and a permit was issued. The final payment is due. As far as Joseph’s
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request for a release of the plans from the [KBEI], they are the property of [KBEI], I have
nothing to say about that. You should contact them regarding the rights to the plans.” Id.
Joseph and Dawn Parente never requested that KBEI grant them consent to freely copy,
distribute, or otherwise use the Original Plans or the Modified Plans. Joseph and Dawn Parente
took no action to obtain KBEI’s consent to use the Modified Plans in the construction of their
home with a homebuilder other than KBEI. Joseph and Dawn Parente never inquired whether
KBEI would object to their use of either set of plans with a homebuilder other than KBEI.
The Parentes eventually contracted with Provencal on September 11, 2015, to construct
the Johnston Residence using the Modified Plans. Provencal completed construction of the
Johnston Residence in June 2017. KBEI never received payment of any kind from Joseph and
Dawn Parente.
LEGAL STANDARD
Summary judgment obviates the need for a trial where there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56.
To determine whether a genuine issue of fact exists, the Court must pierce the pleadings and
assess the proof as presented in depositions, answers to interrogatories, admissions, and
affidavits that are part of the record. Fed. R. Civ. P. 56 & advisory committee’s notes. The party
seeking summary judgment bears the initial burden of proving that no genuine issue of material
fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265
(1986). In response, the non-moving party cannot rest on mere pleadings alone but must use the
evidentiary tools listed above to identify specific material facts that demonstrate a genuine issue
for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). Although a
bare contention that an issue of fact exists is insufficient to create a factual dispute, Bellaver v.
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Quanex Corp., 200 F.3d 485, 492 (7th Cir. 2000), the Court must construe all facts in a light
most favorable to the non-moving party and draw all reasonable inferences in that party’s favor.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not
its merits. Fed. R. Civ. P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir.
1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all wellpleaded facts in the plaintiff’s complaint and draws all reasonable inferences from those facts in
the plaintiff’s favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive
a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a
claim’s basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct.
1937, 173 L. Ed. 2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.
Ct. 1955, 167 L. Ed. 2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S. at 678.
Rule 9(b) requires a party alleging fraud to “state with particularity the circumstances
constituting fraud.” Fed. R. Civ. P. 9(b). This “ordinarily requires describing the ‘who, what,
when, where, and how’ of the fraud, although the exact level of particularity that is required will
necessarily differ based on the facts of the case. AnchorBank, 649 F.3d at 615 (citation omitted).
Rule 9(b) applies to “all averments of fraud, not claims of fraud.” Borsellino v. Goldman Sachs
Grp., Inc., 477 F.3d 502, 507 (7th Cir. 2007). “A claim that ‘sounds in fraud’—in other words,
one that is premised upon a course of fraudulent conduct—can implicate Rule 9(b)’s heightened
pleading requirements.” Id.
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ANALYSIS
I.
Motion to Strike
As an initial matter, the Court addresses the Parentes’ Motion to Strike portions of
declarations KBEI filed in support of its SADF. The Court’s summary judgment procedures
differ from Local Rule 56.1, in that this Court requires the parties to submit a joint statement of
undisputed facts. See Sweatt v. Union Pac. R.R. Co., 796 F.3d 701, 711–12 (7th Cir. 2015)
(affirming this Court’s summary judgment case management procedures). The party opposing
summary judgment may, however, submit additional facts it contends demonstrate a genuine
issue of material fact in its response, providing citations to supporting material. Id.; Judge Sara
L. Ellis, Case Procedures, Summary Judgment Practice, http://www.ilnd.uscourts.gov/judgeinfo.aspx?VyU/OurKKJRDT+FUM5tZmA==. These additional facts must be genuinely
disputed; the non-moving party may not use the response as an opportunity to sidestep the joint
process. See Judge Sara L. Ellis, Case Procedures, Summary Judgment Practice (“The parties
may not file—and the Court will not consider—separate statements of undisputed facts.”).
Here, KBEI has submitted the SADF along with its response to the Parentes’ Motion for
Summary Judgment. In support of the facts included in the SADF, KBEI attached sworn
declarations from John Kajmowicz, Robert Kajmowicz, and Robert Mifflin. The Parentes argue
that the Court should strike paragraph 6 of the Mifflin Declaration because it contradicts his prior
deposition testimony. The Parentes also ask the Court to strike paragraph 8 of the John
Kajmowicz Declaration, paragraph 7 of the Robert Kajmowicz Declaration, and paragraph 5 of
the Mifflin Declaration because they contain inadmissible hearsay.
A.
Paragraph 6 of the Mifflin Declaration
Paragraph 6 of the Mifflin Declaration states:
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6.
At one of the above-mentioned meetings, I presented
Joseph and Dawn Parente a proposal for architectural services for
the revisions to the Architectural Drawing. Joseph Parente signed
that proposal in my presence. I took possession of the copy of the
executed proposal. Neither John Kajmowicz nor Bob Kajmowicz
received a copy of the executed proposal at that meeting. I
provided John Kajmowicz a copy of the executed proposal in 2015
after he informed me KBEI was preparing to file a lawsuit against
Joseph Parente.
Doc. 145-1, Ex. C ¶ 6.
The Parentes argue that this paragraph contradicts his sworn deposition testimony and the
Court should, therefore, strike it. An affidavit that contradicts prior sworn testimony is subject to
being stricken unless the prior testimony was ambiguous, confusing, or the result of a memory
lapse. Cook v. O’Neill, 803 F.3d 296, 298 (7th Cir. 2015). But a party objecting to the motion to
strike must show that these causes for discrepancy are plausible. Russell v. Acme-Evans Co., 51
F.3d 64, 68 (7th Cir. 1995).
The relevant portions of Mifflin’s prior testimony state:
Q: Did you draft this letter, sir?
Mrs. Lynch: Exhibit 6?
Mr. Heftman: Yes.
A: Yes. Mm-hmm.
****
Q. Did you transmit this document to anyone?
A: Yeah, I assume I sent that probably to Kay Builders.
Q: Did you send it to Joseph Parente?
A: At the same time?
Q: At any time?
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A: I don’t recall how Mr. Parente received this document.
See Doc. 142-9, Deposition of Robert Mifflin, 46:1–9; 47:6–14. Mifflin also stated:
Q: Okay. Who transmitted the signed copy of Exhibit 6 to you?
A: I don’t recall.
Id. at 48:1–3.
The Parentes argue that these statements at Mifflin’s deposition contradict his statements
in the Mifflin Declaration because he previously professed that he does not recall how he came
to possess the signed version of the Letter Agreement and does not recall how Joseph Parente
came to possess the Letter Agreement. KBEI argues that these statements are not contradictory
at all, because in his original deposition he only testified that he did not know how Exhibit 6,
which is the executed version of the Letter Agreement, came into the Parentes’ possession,
whereas the declaration speaks to Mifflin’s presentation of the unsigned version of the Letter
Agreement to the Parentes. The original testimony on this point is ambiguous at best, but in the
context of the deposition it appears reasonable that Mifflin was only speaking about the executed
version and not the unexecuted version. Therefore, the Court denies the motion with respect to
the first two sentences of paragraph 6.
The Parentes also move to strike the third sentence, which states, “I took possession of
the copy of the executed proposal.” Doc. 145-1, Ex. C ¶ 6. The Parentes argue that this
contradicts Mifflin’s deposition testimony when, in response to the question, “Who transmitted
the signed copy of Exhibit 6 to you,” he stated, “I don’t recall.” Doc. 142-9, Deposition of
Robert Mifflin, 48:1–3. As KBEI points out, the deposition testimony specifically asks who
gave him the signed Letter Agreement, whereas the Mifflin Declaration states only that he took
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possession of it at the December 2014 meeting. These statements are not inconsistent and
therefore, the Court denies the motion to strike this portion of the Mifflin Declaration.
B.
Motion to Strike Hearsay Statements
The Parentes also move to strike several statements in the three declarations that they
argue are inadmissible hearsay. A court may not rely upon inadmissible hearsay when ruling on
summary judgment absent a showing from the party seeking to use the hearsay, that the evidence
could be readily replaced at trial with admissible evidence. Minor v. Ivy Tech State Coll., 174
F.3d 855, 856–57 (7th Cir. 1999).
The Parentes seek to strike paragraph 5 of the Mifflin Declaration, which states:
5.
At one of these meetings, I witnessed John and Bob
Kajmowicz inform Joseph and Dawn Parente that revisions to the
Architectural Drawings would be needed for [KBEI] to price the
cost of construction for the home. I also witnessed John and Bob
Kajmowicz inform Joseph and Dawn Parente that only KBEI can
build the home depicted on the Architectural Drawings because
they owned the same. Joseph and Dawn Parente acknowledged
John and Bob Kajmowicz’ statements.
Doc. 145-1, Ex. C ¶ 5.
This statement is not hearsay because it is not offered for the truth of the matter asserted.
In the SADF, this paragraph is cited in support of two disputed facts: that KBEI informed the
Parentes that the purpose of the modification of the Original Plans was to allow KBEI to price
construction and that the Kajmowiczes told the Parentes that only KBEI could build the home
depicted in the Modified Plans and that the Parentes acknowledged being told this. Mifflin’s
statement is not being used to prove that either of those things is true, only that they were said.
This is not hearsay.
The Parentes also seek to exclude paragraph 8 of the John Kajmowicz Declaration, which
states:
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8.
At my third meeting with the Parentes and at the time
KBEI agreed to allow Mifflin to make revisions to the
Architectural Drawings, I told Joseph and Dawn Parente that even
though Mifflin is revising the drawings, only KBEI can build the
home depicted in the Architectural Drawings. During the same
meeting, Bob Kay reiterated the substance of my statement to
Joseph and Dawn Parente. Joseph and Dawn Parente
acknowledged my statement and Bob Kay’s statement and
expressed their interested in having KBEI build the home depicted
in the Architectural Drawings for them.
Doc. 145-1, Ex. A ¶ 8.
The Parentes argue that the statement that “Bob Kay reiterated the substance of my
statement to Joseph and Dawn Parente” is inadmissible hearsay. Again, this is not being
advanced for the truth of the underlying statement that only KBEI can build the home in the
Plans, but for the fact that Bob Kajmowicz said as much.
The Parentes move to strike paragraph 7 of the Robert Kajmowicz Declaration, which
states:
7. At the time KBEI agreed to allow Mifflin to revise the
Architectural Drawings, I told Joseph and Dawn Parente that even
though Mifflin is revising the drawings, only KBEI can build the
home depicted in the Architectural Drawings. At the same
meeting, my brother John Kay made a similar statement to Joseph
and Dawn Parente. Joseph and Dawn Parente acknowledged my
statement and John Kay’s statement and expressed their interest in
having KBEI build the home depicted on the Architectural
Drawings for them.
Doc. 145-1, Ex. A ¶ 8.
This paragraph, which is substantially similar to paragraph 8 in the John Kajmowicz
Declaration, is also not hearsay. Therefore, the Court denies the motion to strike this paragraph
as well.
For the foregoing reasons, the Court denies the Parentes’ Motion to Strike.
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II.
Cross Motions for Summary Judgment
KBEI moves for partial summary judgment as to liability for copyright infringement
against the Parentes. The Parentes oppose this motion and move for summary judgment on the
copyright infringement claim arguing that KBEI granted them an implied non-exclusive license
to use the Modified Plans and therefore, they did not infringe KBEI’s copyright on the Plans.
To prove copyright infringement, a plaintiff must prove two things: “(1) ownership of a
valid copyright, and (2) copying of constituent elements of the work that are original.”
Muhammad-Ali v. Final Call, Inc., 832 F.3d 755, 760 (7th Cir. 2016) (citation omitted) (internal
quotation marks omitted). But “the existence of a license, exclusive or nonexclusive, creates an
affirmative defense to a claim of copyright infringement.” I.A.E., Inc. v. Shaver, 74 F.3d 768,
775 (7th Cir. 1996). The burden of proving the existence of such a license rests with the accused
infringer. Muhammad-Ali, 832 F.3d at 761.
The undisputed facts establish that KBEI owned the Plans and that the Parentes copied
the Plans. This is sufficient to prove copyright infringement. In their response to KBEI’s motion
for summary judgment, the Parentes do not address the two elements of infringement; instead,
they focus solely on their purported non-exclusive license. For the reasons stated below the
Court finds that there is a genuine dispute as to a material fact regarding the existence of the
implied non-exclusive license such that the Court must deny both KBEI and the Parentes’
motions for summary judgment.
A.
Implied Non-Exclusive License
An accused infringer can avoid liability for copyright infringement if he or she can prove
the existence of an implied non-exclusive license to make use of copyrighted material.
Muhammad-Ali, 832 F.3d at 761. An implied non-exclusive license is created when, “(1) a
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person (the licensee) requests the creation of a work, (2) the creator (the licensor) makes that
particular work and delivers it to the licensee who requested it, and (3) the licensor intends that
the licensee-requestor copy and distribute his work.” Shaver, 74 F.3d at 776. A party may grant
the license orally or even imply it from the party’s conduct. Id. at 775. “When the totality of the
parties’ conduct indicates an intent to grant such permission, the result is a legal nonexclusive
license.” Fox Controls, Inc. v. Honeywell, Inc., No. 02 C 346, 2005 WL 1705832, at *5 (N.D.
Ill. July 14, 2005) (quoting Lulirama Ltd., Inc. v. Axcess Broad. Servs., Inc., 128 F.3d 872, 879
(5th Cir. 1997)). And “[t]he relevant intent is the licensor’s objective intent at the time of the
creation and delivery” of the work. Joint Comm’n Res., Inc. v. Siskin Techs., Inc., No. 14 CV
1843, 2016 WL 5477515, at *4 (N.D. Ill. Sept. 29, 2016) (quoting Asset Mktg. Sys., Inc. v.
Gagnon, 542 F.3d 748, 756 (9th Cir. 2008)).
1.
The Parentes Requested Creation of the Modified Plans
The Parentes met with KBEI and Mifflin in late 2014 to discuss building their custom
home. However, the plans Mifflin had previously drawn for KBEI and that KBEI had shown to
the Parentes were not suitable for the topography of the lot, and the Parentes wanted to make
other modifications to those plans to suit their personal tastes. The Parentes asked Mifflin to
modify the plans, which he agreed to do.
KBEI argues that because the Parentes only requested modifications to already existing
plans, they do not satisfy this prong. However, the modified plans are themselves distinct
copyrighted plans that Mifflin created at the request of the Parentes. Although they are based on
the prior work, they are not the same thing as the prior work, but instead, are a derivative work.
17 U.S.C.A. § 101 (“A ‘derivative work’ is a work based upon one or more preexisting works.”).
Derivative works are copyrightable in their own right. See Schrock v. Learning Curve Int’l, Inc.,
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586 F.3d 513, 522 (7th Cir. 2009) (discussing copyrightability of derivative works). Therefore,
the Court finds that the request for modified plans satisfies this prong.
2.
Mifflin Modified the Plans and KBEI and Mifflin Delivered them to the
Parentes
There is no dispute that after signing the Letter Agreement, Mifflin modified the Original
Plans as requested by the Parentes to incorporate their personal preferences and to account for
the topographical requirements of the Parentes’ lot. However, KBEI asserts that it did not
deliver the Modified Plans to the Parentes, and rather, the Parentes had to obtain them from the
Village after KBEI filed the plans along with the permit request.
In the JSUF, the parties state that “Bob Kajmowicz on behalf of KBEI delivered the
modified architectural plans to the Parentes.” Doc. 142 ¶ 38. But KBEI now argues that they
never delivered permit ready plans to the Parentes and that the Parentes had to acquire those
directly from the Village. See SADF ¶ 11 (“Neither Robert Mifflin, John Kajmowicz, nor Robert
Kajmowicz ever provided a final, completed, permit-ready set of architectural drawings to
Joseph Parente.”). Setting aside the fact that the Court would have preferred KBEI to address the
distinction KBEI now attempts to draw between the plans it delivered and the permitted plans
during the drafting of the JSUF rather than through their supplemental statement of disputed
facts, the Court finds that it makes no difference. When KBEI submitted the architectural plans
to the Village for approval, fully aware that the Parentes would obtain those plans directly from
the Village when the Parentes paid the remaining balance on the permit, they effectively turned
them over to the Parentes.
The purpose of this prong of the implied license test is to establish that the work in
question was created and the licensee took possession of the work such that the licensee can
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make use of it in the intended manner. It is not to create an esoteric debate about what the
meaning of “delivery” is. The cases that KBEI cites in which delivery is truly at issue
demonstrate this. In Joint Commission Resources, the creator of the work (certain software
packages) never delivered the source code for several of the programs and only delivered the
executable code. 2016 WL 5477515, at *4. The court found that this created a factual dispute
about delivery because the claim in that case was based on the source code, not the executable
code, and there was a disputed factual question as to whether the delivery of the executable code
constituted delivery of the source code. Id. The important distinction between the two is that
delivery of the source code would allow the licensee to make any modifications to the software
and use it in any way it wishes, but it is unclear that the same could be said for the executable
code. Id. In this case, the Modified Plans are equivalent of the source code and there is no
analogue to the executable code.
In another case dealing with source code, the court applied a broad definition of delivery
holding that when the programmer stored source code on the licensee’s computer, the
programmer had delivered the source code, despite the fact that the licensee was unable to even
locate the source code on its system without the programmer’s assistance. Asset Mktg. Sys., Inc.
v. Gagnon, 542 F.3d 748, 756–57 (9th Cir. 2008). Similarly, in this case when KBEI tendered
the plans to the Village, knowing that the Parentes could obtain them directly from the Village,
they effectively delivered the plans.
According to the JSUF, Bob Kajmowicz delivered modified plans to the Parentes, and
under KBEI’s alternative version of events, the KBEI submitted the Plans to the Village and the
Parentes obtained the Plans when they paid the remaining balance of the permit fee. Under any
reasonable interpretation of both versions, KBEI delivered the plans to the Parentes.
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3.
KBEI’s Intent Regarding the Plans
Intent is the crux of this issue and “[t]he relevant intent is the licensor’s objective intent at
the time of the creation and delivery of the [copyrighted material] as manifested by the parties’
conduct.” Asset Marketing Systems, 542 F.3d at 756; see also Shaver, 74 F.3d at 777 (relevant
intent is not the parties’ subjective intent but the outward manifestation of their intent). When
evaluating the licensor’s objective intent, the Court should look at the totality of the parties’
conduct, including “(1) whether the parties were engaged in a short-term discrete transaction as
opposed to an ongoing relationship; (2) whether the creator utilized written contracts . . .
providing that copyrighted materials could only be used with the creator’s future involvement or
express permission; and (3) whether the creator’s conduct during the creation or delivery of the
copyrighted material indicated that use of the material without the creator’s involvement or
consent was permissible.” Id. This list is not exhaustive, but it provides a useful framework for
examining the issue of intent. John G. Danielson, Inc. v. Winchester-Conant Props., Inc., 322
F.3d 26, 41 (1st Cir. 2003).
Turning to the first factor, it appears clear that the parties were engaged in a short-term
discrete transaction as opposed to an ongoing relationship. KBEI and the Parentes first discussed
working together on building a home in or around 2008, but the Parentes decided not to use
KBEI at that time. In 2014, the Parentes came back to KBEI to discuss building the Johnston
Residence based on the plans KBEI had showed the Parentes during their prior discussion.
There is no indication that the Parentes were interested in engaging in any relationship with
KBEI beyond designing and building the Johnston Residence. This is different than the case of a
software engineer who works with a company over a number of years designing and servicing
software. See, e.g., Joint Comm’n Res., Inc., 2016 WL 5477515, at *4 (where software engineer
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provided technical services and developed software for a company over ten years, there was
evidence of an intention to remain involved perpetually). The fact that the Parentes paid for the
modifications to the Original Plans for only one contemplated transaction weighs in favor of
finding an implied license.
The second factor also favors finding the existence of an implied license. The only
written agreement relating to the plans in this case is the Letter Agreement between Mifflin and
the Parentes. The Letter Agreement does not include any requirement that the Parentes use
KBEI as their builder if they want to use the plans. In fact, the Letter Agreement states clearly
that the plans are being modified “in order for the proposed house to be constructed on [the
Parentes’ lot].” Doc. 142-15. It does not say, in order to allow KBEI to build the proposed
house or in order to allow KBEI to accurately price the construction of the proposed house. The
language broadly states that the parties are modifying the Original Plans in order to build the
house, without limitation on who is to construct it. However, KBEI is not a party to the Letter
Agreement, complicating the analysis. KBEI did have an opportunity to review and make edits
to the Letter Agreement before the parties signed it, and Joseph Parente ultimately signed it in
the presence of the Kajmowicz brothers without any objection from them. Therefore, it is
reasonable to infer that KBEI consented to Mifflin making the proposed revisions to the Original
Plans consistent with the terms of the Letter Agreement.
There is a dispute, however, about whether the Kajmowicz brothers told the Parentes that
they only would allow Mifflin to modify the Original Plans so long as KBEI built the home. The
Parentes state that the Kajmowiczes never made any such statement. If the Kajmowicz brothers
did expressly condition the revisions to the Original Plans on their serving as builders for the
20
home, then this would defeat a claim of implied license. There can be no implied license when
there is an express statement to the contrary.
Finally, the third factor is mixed. Both prior to and during the iterative back and forth
process of modification of the Plans, KBEI engaged in behavior both consistent and inconsistent
with the intention to grant an implied license. Prior to the modification of the plans, KBEI did
not require the Parentes to sign anything acknowledging KBEI’s ownership of the plans or
limiting use of the plans to work done by KBEI. Furthermore, KBEI permitted the Parentes to
directly engage Mifflin to modify the Original Plans, at substantial cost to the Parentes, without
explicitly including any limitations in the Letter Agreement. KBEI did not put anything in
writing regarding the use of the Modified Plans until after the relationship with the Parentes
broke down. On the other hand, KBEI proceeded in ways consistent with a belief that they
would be participating in an ongoing way. For example, KBEI paid for construction fencing to
be erected around the Johnston lot, paid for the lot to be surveyed, and prepared it for sanitation.
Additionally, KBEI submitted the plan to the Village for permitting.
Evaluating all of the objective circumstances together, the Court finds that it cannot grant
summary judgment in favor of either party. A reasonable jury could conclude that when KBEI
allowed the Parentes to pay $10,000 directly to Mifflin to modify the Plans, without first
securing a contract to do the construction or otherwise communicating or memorializing that
only KBEI could build the house based on the modified Plans, KBEI implicitly granted the
Parentes a license to use those plans to build their home. By treating the modification of the
Original Plans and the building of the home as two separate transactions, requiring separate
negotiations, KBEI created a scenario under which it is more than reasonable to conclude that the
Parentes’ right to make use of the fruits of the first transaction was not contingent upon the
21
consummation of a second, later transaction. Yet, a jury could equally reasonably conclude that
KBEI did orally instruct the Parentes that they must use KBEI to construct the home in order to
use the Modified Plans, and that KBEI’s outward behavior, including paying and filing for
permits, conducting survey work, and erecting construction fencing, all clearly indicate that
KBEI did not intend to grant a license to the Parentes. Given this material factual dispute,
summary judgment is not appropriate and the Court denies both KBEI’s and the Parentes’
motions. And because Provencal’s motion for summary judgment is entirely derivative of the
Parentes’ motion, the Court denies it as well.
III.
Mifflin’s Motion to Dismiss
Mifflin moves to dismiss the Parentes’ ICFA claim against him, arguing that they have
not adequately alleged a violation of ICFA because discovery between the parties is now
complete and, therefore, continuing to rely upon “information and belief” to support the
allegations in the Third Party Complaint is improper. Mifflin also argues that the Parentes have
not alleged that he engaged in an unfair practice or that they suffered any injury. Mifflin moves
to dismiss the breach of contract count as well, arguing that the Parentes have not adequately
alleged damages.
A.
ICFA Claim
Mifflin previously moved to dismiss the Parentes’ ICFA claim on the basis that it was
alleged in part on information and belief. The Court denied this motion because Mifflin’s
argument was entirely undeveloped and allegations based on information and belief are not per
se improper for ICFA claims. See Doc. 60 at 10. Mifflin resurrects this argument in his present
motion with a new gloss. He argues that because discovery is now complete, the Parentes cannot
continue to bring a claim based on information and belief. This is true; however, the proper
22
method for challenging a claim based on such an argument would be summary judgment, not a
motion to dismiss. Having already survived a motion to dismiss on an identical argument, the
Parentes are not obligated to go back and amend their complaint to add facts they have learned
through discovery in order to continue prosecuting their case. If Mifflin believes that the
Parentes’ ICFA claim lacks a factual basis now that discovery is closed, he is welcome to
challenge the claim through summary judgment.
Mifflin also asserts two new arguments for why the Court should dismiss the ICFA
claim: that the ICFA claim does not allege an unfair practice that causes substantial injury to
consumers and that the Parentes do not have standing. To state an ICFA claim, the Parentes
must plead (1) a deceptive or unfair act or practice by Mifflin, (2) Mifflin’s intent that the
Parentes rely on the deceptive or unfair practice, (3) the unfair or deceptive practice occurred in
the course of conduct involving trade or commerce, and (4) Mifflin’s unfair or deceptive practice
caused the Parentes actual damage. Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 574 (7th
Cir. 2012); Kim v. Carter’s Inc., 598 F.3d 362, 365 (7th Cir. 2010). ICFA plaintiffs may recover
for conduct that is either deceptive or unfair. Robinson v. Toyota Motor Credit Corp., 775
N.E.2d 951, 960, 201 Ill.2d 403, 266 Ill. Dec. 879 (2002); Siegel v. Shell Oil Co., 612 F.3d 932,
935 (7th Cir. 2010) (“A plaintiff may allege that conduct is unfair under ICFA without alleging
that the conduct is deceptive.”). A practice is deceptive if it “creates a likelihood of deception or
has the capacity to deceive.” Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 938 (7th Cir. 2001).
Here, the Parentes allege that Mifflin’s actions were deceptive. Specifically, they allege
that Mifflin did not tell them that he had transferred his interests in the Original Plans to KBEI
and that Mifflin did not tell KBEI that he gave the Parentes a non-exclusive license to use the
Modified Plans before transferring his rights in those to KBEI. They allege that Mifflin intended
23
that they rely upon these misrepresentations to get them to enter into the Letter Agreement with
him and that because of his misrepresentations they have suffered damages, including the cost of
defending the lawsuit against KBEI. These actions had the capacity to deceive to Parentes into
believing that when they entered into the agreement with Mifflin, they were going to receive
architectural drawings that they could use to build their home, regardless of the builder. This is
sufficient to state a claim under ICFA.
Finally, as to standing, the Parentes have alleged actual damages. They have alleged that
they entered into the Letter Agreement believing that Mifflin had the authority to prepare the
Modified Plans for them and grant them a non-exclusive license to use those plans. Because
Mifflin did not in fact have this authority, and the Original Plans belonged to KBEI, the Parentes
are now subject to the present copyright infringement suit because they used the plans to build
their home. Therefore, the Court denies the motion to dismiss the ICFA Claim.2
B.
Breach of Contract Claim
Mifflin also moves to dismiss the breach of contract claim arguing that the Parentes have
not adequately pleaded damages. Mifflin previously moved to dismiss this claim as well and the
Court denied that motion. But the present motion is on a different, though closely related basis.
Damages is an essential element of any contract claim. Westlake Fin. Grp., Inc. v. CDHDelnor Health Sys., 25 N.E.3d 1166, 1174, 2015 IL App (2d) 140589, 389 Ill. Dec. 140 (2015).
The level of specificity required at the motion to dismiss stage is not high: just a sufficient level
of detail to show that the claim is plausible and put the defendant on notice. Ashcroft v. Iqbal,
556 U.S. at 678. Here, the Parentes allege that they have suffered damages, including attorney’s
2
The Parentes also ask the Court to deny the motion because Mifflin previously brought a motion to
dismiss this claim. However, there is no bar to bringing successive motions to dismiss under Rule
12(b)(6). It is certainly inefficient and disfavored, but not impermissible.
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fees expended in defending the present case against KBEI. This type of damages is allowable
under Illinois law and is distinct from attorney’s fees sought by a prevailing party against the
other party within a lawsuit. See Nalivaika v. Murphy, 458 N.E.2d 995, 997, 120 Ill. App. 3d
773, 76 Ill. Dec. 341 (1983) (“Where the attorney fees sought by the plaintiff are those incurred
in actions with third parties brought about by a defendant’s misconduct, the litigation expenses
are merely a form of damages and are accordingly recoverable from the defendant.”). Therefore,
the Parentes have adequately alleged damages and the Court denies the motion to dismiss the
breach of contract claim.
CONCLUSION
For the foregoing reasons, the Court denies the motion to strike [157], denies the cross
motions for summary judgment [140,147,150] and denies Mifflin’s motion to dismiss [121].
Dated: July 31, 2018
______________________
SARA L. ELLIS
United States District Judge
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