Siegel v. Hershinow et al
MEMORANDUM Opinion and Order: For the reasons stated in the accompanying Memorandum Opinion and Order, Defendants' Motion to Dismiss 21 is granted. This matter is dismissed in its entirety without prejudice to Plaintiff refiling this matter in an appropriate state court. Ruling set for 10/17/16 is stricken and no appearance is necessary. See Order for further details. Signed by the Honorable James B. Zagel on 9/21/2016. Mailed notice(ep, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
DR. ROBERT J. SIEGEL,
No. 16 C 4803
Judge James B. Zagel
LESTER L. HERSHINOW and
MEMORANDUM OPINION AND ORDER
Plaintiff Robert Siegel alleges breach of contract under Illinois law against Defendant
Lester Hershinow and tortious interference with contract under Illinois law against Defendant
Amy Weiss. Both claims arise out of an agreement Siegel signed to provide a down payment for
Hershinow’s purchase of a home in 1979. Before me is Defendants’ Motion to Dismiss
Plaintiff’s Amended Complaint for lack of subject matter jurisdiction pursuant to Federal Rule of
Civil Procedure 12(b)(1) for failure to meet the jurisdictional amount in controversy required by
28 U.S.C § 1332(a). For the following reasons, Defendants’ motion is granted.
The following facts are taken from the Plaintiff’s Amended Complaint. Plaintiff Robert
Siegel was at all pertinent times and is a resident of Florida. On February 1, 1979, he entered in
an agreement (“the 1979 Agreement”) with his sister Vicki Hershinow and Vicki’s husband
Lester Hershinow. The Hershinows were looking for help purchasing a home in Vernon Hills,
Illinois. Pursuant to the agreement, Siegel would contribute $20,000 to cover the down payment
for the purchase. Half of that sum was denoted as an investment in the new property, and the
other half was denoted as a loan. The $10,000 loan was paid back in full while the investment
entitled Siegel to 40% of the net proceeds of the property in the event of a sale. Thirty-six years
after signing the agreement, Siegel had the agreement recorded with the Lake County Recorder
of Deeds in October 2015.
On December 21, 2015, Lester Hershinow conveyed the property to a purchaser for the
sum of $185,000. Siegel has sought a portion of the sale proceeds, pursuant to the 1979
Agreement, but Hershinow has not made any payment.
Lester Hershinow resides in a nursing home, and his wife Vicki has passed away.
Lester’s daughter, Defendant Amy Weiss, manages his finances. On September 21, 2015, Siegel
emailed Weiss to inform her of the 1979 Agreement. Weiss retained a law firm to review the
agreement, and the law firm informed Siegel by letter that Weiss would not be providing him
with any sale proceeds. In the letter, submitted by Siegel with the Amended Complaint, Weiss’s
attorney gave two explanations for why Weiss would not honor the 1979 Agreement. First, the
attorney argued that the agreement is unenforceable as the statute of limitations had run. Second,
Weiss’s attorney asserted that honoring the contract might jeopardize Hershinow’s Medicaid
benefits. He argued that a payment to Siegel would be considered a “transfer without value” that
might prevent Lester Hershinow from qualifying for Medicaid. The attorney noted that
Hershinow is ill and in need of full-time medical care.
Siegel filed a complaint on April 29, 2016. He alleged that Hershinow had breached the
contract, and Weiss tortiously interfered with that contractual relationship. After Defendants
moved to dismiss the initial complaint on the basis of lack of jurisdiction, Siegel filed an
Amended Complaint on July 19, 2016.
Defendants moved to dismiss the Amended Complaint on August 8, 2016. Defendant
Amy Weiss attached the closing statement from the sale of the Vernon Hills home to
Defendants’ Motion to Dismiss. According to this statement, after various costs were deducted
from the $185,000 purchase price of the home, the net proceeds of the sale amounted to
Rule 12(b)(1) requires dismissal of claims over which the federal court lacks subject
matter jurisdiction. Fed. R. Civ. P. 12(b)(1). Jurisdiction based on diversity exists if the amount
in controversy exceeds $75,000, and the suit is between citizens of different states. See 28 U.S.C.
When the jurisdictional threshold is uncontested, the Court will accept the plaintiff’s
good faith allegation of the amount in controversy unless it “appears to a legal certainty that the
claim is really for less than the jurisdictional amount.” McMillian v. Sheraton Chicago Hotel &
Towers, 567 F.3d 839, 844 (7th Cir. 2009). But when the defendant challenges the plaintiff’s
allegation of the amount in controversy, as is the case here, the plaintiff “must support its
assertion with competent proof” and must “prove the jurisdictional facts by a preponderance of
the evidence.” Id.
If the defendant raises a “facial attack” against the complaint, arguing that the plaintiff
has not sufficiently alleged a basis for subject matter jurisdiction, the Court is required only to
look at the allegations in the complaint when considering a Rule 12(b)(1) motion. See Apex
Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443–44 (7th Cir. 2009). If the defendant
raises a “factual attack” against the complaint, arguing that the complaint is formally sufficient,
but there is in fact no subject matter jurisdiction, the Court may properly look beyond the
jurisdictional allegations of the complaint and view whatever evidence has been submitted on the
issue to determine whether subject matter jurisdiction exists. Id. at 444.
The Defendants bring a factual attack on the Amended Complaint, challenging whether
Siegel’s claim exceeds $75,000. Siegel makes two arguments for the factual sufficiency of his
complaint. First, he argues that his claim for contract damages is worth more than $75,000.
Second, he argues that even if the claim for contract damages does not meet the jurisdictional
minimum, his claim for punitive damages brings the amount in controversy above $75,000. I
consider both these arguments in turn.
I. Contract Damages
Even though Siegel alleges both breach of contract and tortious interference with
contract, Illinois law only permits Siegel to recover the sum owed under the contract on one of
these claims. See Douglas Theater Corp. v. Chicago Title & Trust Co., 288 Ill. App. 3d 880,
886–87 (1997) (holding that once a breach of contract had been remedied by specific
performance, the plaintiff could not recover on a tortious interference claim predicated on the
same breach of contract because recovering twice on the same contract would constitute a
As noted above, Siegel bears the burden of establishing the value of the contract claim
beyond the preponderance of the evidence at this stage in the litigation, and the Court may look
to evidence beyond the pleadings in considering the claim’s value. McMillian, 567 F.3d at 844.
Siegel must “do more than point to the theoretical availability of certain categories of damages.”
Id. To provide the Court with “competent proof” in support of his amount in controversy
assertion, Siegel must provide some facts or evidence to meet his burden rather than purely
speculative assertions. Scott v. Bender, 893 F. Supp. 2d 963, 973 (N.D. Ill. 2012).
Under 1979 Agreement, Siegel is entitled to “40% of the net proceeds” of the sale of the
property. The agreement notes that the net proceeds are determined “after all costs of the sale,
the mortgage and taxes have been paid.” The Vernon Hills home sold for a purchase price of
$185,000. Even before the costs are deducted from this sum, Siegel would only be entitled to
40% of that price: $74,000. This is insufficient to get Siegel’s case into federal court. After the
costs of the sale are deducted from the purchase price, the net proceeds amount to $156,883.86,
bringing Siegel’s recovery under the contract down to $62,753.54, also below the jurisdictional
threshold required for diversity jurisdiction under 28 U.S.C. § 1332(a).
To get around the fact that 40% of the sale proceeds would not meet the jurisdictional
requirement, Siegel argues that the contract claim could be worth more, once the parties engage
in discovery, and he can “evaluate the accuracy of Defendant’s calculation, gauge whether the
sale was conducted at arm’s length, and determine whether any additional consideration was
exchanged.” But Siegel has not filed any affidavits or supporting materials that suggest that the
closing statement submitted by Defendants is inaccurate, that there was any sort of prior
relationship between the sellers and the buyers, or that any additional consideration passed from
the buyers to Defendants. Siegel’s assertion that these additional factors may have been at work
in the transaction is wholly unsupported by any submitted facts. It is mere speculation. When the
jurisdictional amount is challenged, speculation does not suffice. Siegel needs to provide
competent proof of his claim’s value, rather than just the possibility that the value could increase
if new facts arise during discovery. He has failed to put forward such proof, thus he cannot
establish diversity jurisdiction on his contract claim alone.
II. Punitive Damages
Next, Siegel argues that even if the damages under the contract are worth less than
$75,000, his claim for punitive damages against Weiss for her interference with the contract
brings his claim above the jurisdictional minimum. In his Amended Complaint, Siegel requests
punitive damages in excess of $15,000.
When considering a request for punitive damages, the Court must be suspicious of
requests that “attempt to circumvent the amount in controversy requirement for diversity
jurisdiction by seeking excessive and unrealistic punitive damages.” Smith v. Am. General Life
and Acc. Ins. Co., Inc., 337 F.3d 888, 893 (7th Cir. 2003). Where punitive damages are relied
upon to satisfy the amount in controversy requirement, the Court makes a two-step inquiry. First,
the Court must determine whether punitive damages are recoverable under the applicable law.
See LM Ins. Corp. v. Spaulding Enters. Inc., 533 F.3d 542, 551 (7th Cir. 2008). If the punitive
damages are available, then subject matter jurisdiction exists unless it is “legally certain” that the
plaintiff will be unable to recover the jurisdictional amount. Id. In cases where the defendants
contest punitive damage allegations, courts “require the plaintiff to support its claim with
competent proof, lest fanciful claims for punitive damages end up defeating the statute’s
requirement of a particular amount in controversy.” Del Vecchio v. Conseco, Inc., 230 F.3d 974,
979 (7th Cir. 2000).
Siegel’s tortious interference claim easily meets the first element of this test. Under
Illinois law, punitive damages may be awarded when tortious interference with contract is
“committed with fraud, actual malice, deliberate violence or oppression, or when the defendant
acts willfully, or with such gross negligence to indicate a wanton disregard for the rights of
others.” Cress v. Recreation Servs., Inc., 341 Ill. App. 3d 149, 182 (2003) (citing Kelsay v.
Motorola, Inc., 74 Ill. 2d 172, 186 (1978)). But a court can only award punitive damages if the
defendant’s misconduct is “above and beyond the conduct needed for the basis of the action.”
Kritzen v. Flender Corp., 226 Ill. App. 3d 541, 554 (1992). The conduct must involve “some
element of outrage similar to that usually found in a crime.” Loitz v. Remington Arms Co., 138
Ill. 2d 404, 415 (1990).
Having found that punitive damages are available under Illinois law for a claim for
tortious interference with contract, I next consider whether Siegel would be able to obtain these
damages, given the allegations in his complaint and the additional facts before the court. To
determine the availability of these damages, the Court considers what elements are required for
Sigel to win his claim for tortious interference and then looks to see if there are allegations or
evidence of misconduct beyond these basic elements. To state a claim for tortious interference
under Illinois law, a plaintiff must plead “(1) the existence of a valid and enforceable contract
between the plaintiff and another; (2) the defendant’s awareness of the contractual relationship
between the plaintiff and another; (3) the defendant’s intentional and unjustifiable inducement of
a breach of the contract; (4) a breach of contract by the other caused by the defendant’s wrongful
acts; and (5) damage to the plaintiff.” Cress, 341 Ill. App. 3d at 175.
Weiss argues that he has properly alleged a claim for punitive damages because he has
alleged that Weiss “acted willfully in advising her father to breach the Agreement with Dr.
Siegel, without regard for Dr. Siegel’s rights.” But this allegation is identical to a third element
required for the underlying tort. It establishes Weiss’s intentionality in interfering with the
agreement. There is nothing in either the Amended Complaint or the attached exhibits that
alleges any outrageous behavior or any behavior similar to criminal conduct.
Siegel has submitted the letter from Weiss’s attorney, but this letter contains nothing
outrageous. In it, Weiss’s attorney states his arguments about why the statute of limitations may
have run or why Hershinow’s Medicaid benefits might be at risk, but there is nothing fraudulent
in the letter or anything showing wanton disregard for Siegel’s rights. It may well be that the
letter shows Weiss intended to violate Siegel’s right to payment under the contract. But this goes
to one of the basic elements of the tort, rather than something extra required for punitive
damages. I find that Siegel has failed to provide the Court with competent proof that his claim
merits an award of punitive damages.
Because Siegel’s contract claim is worth less than $75,000 and punitive damages are
unavailable under Illinois law when Siegel has failed to allege any outrageous conduct, his
Amended Complaint does not allege that the amount in controversy exceeds $75,000. This Court
does not have jurisdiction over Siegel’s case, and Defendants’ Motion to Dismiss is granted. The
dismissal shall be without prejudice to the refiling of Siegel’s claims in an appropriate state
James B. Zagel
United States District Judge
DATE: September 21, 2016
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