JLW-TW CORP v MERCHANT CAPITAL, LLC et al

Filing 69

ENTRY ON MOTIONS TO DISMISS: For the reasons set forth above, the motion to dismiss filed by Defendant Merchant Capital, LLC (Dkt. No. 15), and the motion to dismiss filed by the remaining Defendants (Dkt. No. 44) are both GRANTED. The c laims against Defendant Merchant Capital, LLC, and the defamation claims against the remaining Defendants are DISMISSED WITHOUT PREJUDICE. If the Plaintiff believes it can, in good faith, remedy the deficiencies discussed herein by fili ng a second amended complaint, it may do so within 14 days of the date of this Entry. The failure to timely file a second amended complaint will result in the dismissal of the claims in question being with prejudice ***SEE ENTRY FOR ADDITIONAL INFORMATION***. Signed by Judge William T. Lawrence on 4/14/2016. (DW)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
JLW-TW CORP d/b/a SUNTAN SUPPLY,
Plaintiff,
vs.
MERCHANT CAPITAL, LLC, et al.,
Defendants.

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) CAUSE NO. 1:15-cv-1656-WTL-DML
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ENTRY ON MOTIONS TO DISMISS
This cause is before the Court on two motions to dismiss the Amended Complaint in this
case, one filed by Defendant Merchant Capital, LLC (Dkt. No. 15), and the other filed by the
remaining Defendants (Dkt. No. 44). Both motions are fully briefed, and the Court, being duly
advised, GRANTS both motions for the reasons and to the extent set forth below.
MOTION BY DEFENDANT MERCHANT CAPITAL, LLC
Defendant Merchant Capital, LLC, (“Merchant”) moved to dismiss the Amended
Complaint on several grounds, all but one of which was rendered moot by the transfer of this
case from the United States District Court for the Northern District of Ohio to this district.
Remaining to be resolved by this Court is Merchant’s argument that the claims asserted against
Merchant in the Amended Complaint are subject to dismissal pursuant to Federal Rule of Civil
Procedure 12(b)(b) for failure to state a claim for which relief may be granted.
In reviewing a motion pursuant to Rule 12(b)(6), the Court “must accept all well pled
facts as true and draw all permissible inferences in favor of the plaintiff,” Agnew v. National
Collegiate Athletic Ass’n, 683 F.3d 328, 334 (7th Cir. 2012), and determine whether the
complaint provides the defendant with “fair notice of what the . . . claim is and the grounds upon

which it rests.” Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009) (quoting Erickson v. Pardus,
551 U.S. 89, 93 (2007)) (omission in original). In addition, the complaint must “contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.”
Agnew, 683 F.3d at 334 (citations omitted). “‘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.’” Roberts v. City of Chicago, ____ F.3d _____ (7th Cir. Mar.
31, 2016) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “The complaint must do more
than recite the elements of a cause of action in a conclusory fashion.” Id.
On its face, the Amended Complaint clearly states plausible claims against Merchant.
The Amended Complaint lumps all of the Defendants together and alleges that “the Defendants”
took certain actions. Ordinarily the fact that Merchant denies taking any of those actions would
be irrelevant in the context of a Rule 12(b)(6) motion, as the sufficiency of a complaint is
measured by the facts as alleged, not as they actually exist. However, in its brief in response to
Merchant’s motion to dismiss, the Plaintiff makes it clear that it does not actually mean what it
says in its Amended Complaint with regard to Merchants. It does not, apparently, actually
believe that Merchant itself took the actions alleged, but rather that the other Defendants did and
that Merchant is liable for the actions of the other Defendants “as the managing agent
entity/parent company of its subsidiaries under a theory of ‘piercing the corporate veil.’” Dkt.
No. 19 at 2.
The problem with this is two-fold. First, that is not consistent with the actual language of
the Amended Complaint, which unequivocally alleges that the Defendants (all of them) took
certain actions. Second, there are no facts pled in the Amended Complaint that demonstrate a
plausible basis for piercing the corporate veil. Quite simply, the Plaintiff does not distinguish

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between the Defendants in any way other than to state that Merchant is the “managing entity of”
Defendant New Sunshine, LLC, which, in turn, is the “parent company” of the remaining
Defendants. It hardly needs to be said that simply being the “managing entity” of another entity
is not sufficient to establish a plausible basis for piercing the corporate veil. Without more—
given the position taken by the Plaintiff in its response brief—the Amended Complaint fails to
satisfy the pleading requirement with regard to Merchant, and Merchant’s motion to dismiss
pursuant to Rule 12(b)(6) is GRANTED.
MOTION BY REMAINING DEFENDANTS
The remaining Defendants move to dismiss the Plaintiff’s Sixth Cause of Action, which
is a claim for defamation, on the ground that it fails to satisfy the pleading standard. The
Defendants point to the Indiana pleading standard for a defamation claim, which is not the
applicable standard in this court. Cf. Muzikowski v. Paramount Pictures Corp., 322 F.3d 918,
926 (7th Cir. 2003) (holding that the Illinois pleading rule for defamation claims “of course does
not apply in a federal court”; rather, a federal plaintiff “is entitled to the usual rules for notice
pleading established by Rule 8”). That said, the Court agrees that the facts relating to the
Plaintiff’s defamation claim are too sketchy to satisfy the federal pleading standard. See
Airborne Beepers & Video, Inc. v. AT & T Mobility LLC, 499 F.3d 663, 667 (7th Cir. 2007)
(“[A]t some point the factual detail in a complaint may be so sketchy that the complaint does not
provide the type of notice of the claim to which the defendant is entitled under Rule 8.”). Here
the Plaintiff fails to distinguish between the Defendants and identify which ones made what sorts
of defamatory statements to whom. While it is not necessary for the Plaintiff to identify each
alleged defamatory statement verbatim, it is at least necessary for each Defendant to be put on
notice whether it, specifically, is accused of making defamatory statements and to whom the

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statements were allegedly made. Accordingly, the motion to dismiss the Plaintiff’s defamation
claim is GRANTED.
CONCLUSION
For the reasons set forth above, the motion to dismiss filed by Defendant Merchant
Capital, LLC (Dkt. No. 15), and the motion to dismiss filed by the remaining Defendants (Dkt.
No. 44) are both GRANTED. The claims against Defendant Merchant Capital, LLC, and the
defamation claims against the remaining Defendants are DISMISSED WITHOUT
PREJUDICE. If the Plaintiff believes it can, in good faith, remedy the deficiencies discussed
herein by filing a second amended complaint, it may do so within 14 days of the date of this
Entry. The failure to timely file a second amended complaint will result in the dismissal of the
claims in question being with prejudice.
SO ORDERED: 4/14/16
_______________________________
Hon. William T. Lawrence, Judge
United States District Court
Southern District of Indiana

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