Haertle v Brennan Investment Group LLC et al

Filing 12

ORDER signed by Judge Rudolph T. Randa on 4/28/2015 DENYING 8 Motion to Dismiss for Failure to State a Claim. (cc: all counsel) (cb)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
ERIC C. HAERTLE,
Plaintiff,
-vs-

Case No. 14-C-1347

BRENNAN INVESTMENT GROUP, LLC,
and BIG ACQUISITIONS LLC,
Defendants.
DECISION AND ORDER
Eric Haertle, once an officer of the Triad Group, positioned himself
to purchase Triad’s assets out of bankruptcy. Haertle alleges that Brennan
Investment Group, LLC, reneged on its promise to provide financing for the
purchase. Haertle brings a total of eight claims under state law, including
breach of contract, breach of the covenant of good faith and fair dealing,
and promissory estoppel. The defendants, Brennan and BIG Acquisitions
LLC, move to dismiss for failure to state a claim. For the reasons that
follow, this motion is denied.
When considering a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), the Court construes the complaint in the light most
favorable to the nonmoving party, accepts all well-pleaded facts as true,
and draws all inferences in the nonmoving party’s favor. Reynolds v. CB

Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010). At the same time,
Federal Rule of Civil Procedure 8(a)(2) “demands more than an unadorned,
the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). “To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at
570). A claim is plausible if the plaintiff “pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for
the misconduct alleged.” Id. The plaintiff “must give enough details about
the subject-matter of the case to present a story that holds together.”
Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010). “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Iqbal at 678.
Brennan argues that Haertle’s breach of contract claim should be
dismissed because the terms of the contract are not detailed in the
complaint. The complaint lists several conditions set forth in the parties’
Financing Agreement, in particular, that Brennan would provide $8.5
million to close the Bankruptcy Sale Transaction, that Brennan would
have legal title to the Hartland Real Property, and that Brennan would
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lease it back to Haertle on a 10-year term at an initial rate of $3.25 per
square foot, “absolute net,” with 3% annual rent increases and an option to
purchase at the end of the fifth year for $11.3 million. ¶¶ 17(a)-(h). This is
certainly enough detail to state an actionable claim.
Brennan also alleges that its performance under the contract was
excused because Haertle did not meet all of the conditions precedent for the
funding. The complaint alleges that a lawyer for Brennan “stated in a
voicemail message that Brennan would not provide Haertle with financing.
The sole reason given was that Brennan wanted to bid directly for the Sale
Assets. Brennan’s bidding directly for the Sale Assets would put it in
competition with Haertle for them.” Complaint, ¶ 24. In other words, the
thrust of the complaint is that Brennan frustrated Haertle’s performance
under the contract. That, in itself, is a breach of contract. Swaback v. Am.
Info. Tech. Corp., 103 F.3d 535, 542 (7th Cir. 1996) (“It is basic contract law
that a party who prevents the occurrence of a condition precedent may not
stand on that condition’s non-occurrence to refuse to perform his part of the
contract”).
The next three claims are for breach of the duty of good faith and
fair dealing; breach of the implied promise to refrain from hindering or
obstructing performance of contract; and repudiation of contract. Brennan
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argues that these claims should be dismissed because they are subsumed
within the breach of contract claim. Haertle argues that it is acceptable to
plead them separately. This is a semantic, not substantive, distinction. The
claims, such as they are, will not be dismissed, and the Court will not
waste time and resources by forcing Haertle to re-formulate his complaint
to say what he has already said, only in a different format. Fed. R. Civ. P. 1
(Rules should be construed to “secure the just, speedy, and inexpensive
determination of every action”).
Haertle’s fifth claim is for promissory estoppel, and his sixth claim is
for tortious interference with contract. These claims are pleaded in the
alternative, so they survive Brennan’s motion to dismiss. Fed. R. Civ. P.
8(d)(2), (3).
Haertle’s seventh claim is for punitive damages. Brennan argues
that punitive damages are unavailable for a breach of contract claim.
However, punitive damages can be awarded in contract interference cases.
Brew City Redevelopment Group, LLC v. The Ferchill Group, 714 N.W.2d
582, 593 (Wis. Ct. App. 2006).
Finally, Haertle’s last claim is to pierce the corporate veil of the
second defendant, BIG Acquisitions. Haertle alleges that BIG Acquisitions
was organized, controlled and conducted so that it had no separate
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existence of its own and was the mere instrumentality of Brennan. Haertle
also alleges that BIG Acquisitions had insufficient capital to finance an
$8.5 million transaction. ¶ 66(b) (BIG Acquisitions had less than $10,000 in
assets at time of contracting). Undercapitalization is grounds to disregard
the corporate veil. Consumer’s Co-op of Walworth Cnty. v. Olson, 419
N.W.2d 211, 216 (Wis. 1988); Fiumetto v. Garrett Enters., Inc., 749 N.E.2d
992, 1005 (Ill. Ct. App. 2001) (“The capitalization of a corporation is a
major factor in assessing whether a legitimate separate corporate entity
existed”).
NOW, THEREFORE, BASED ON THE FOREGOING, IT IS
HEREBY ORDERED THAT the defendants’ motion to dismiss [ECF No.
8] is DENIED.
Dated at Milwaukee, Wisconsin, this 28th day of April, 2015.
BY THE COURT:
__________________________
HON. RUDOLPH T. RANDA
U.S. District Judge

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