1 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

AL MAHA TRADING & CONTRACTING ) 

HOLDING COMPANY, a Saudi Arabian ) 

limited liability company, ) 

 ) 

Plaintiff, ) 

 ) 

 v. ) No. 12 C 1920 

 ) 

W.S. DARLEY & CO., an Illinois corporation, ) 

PETER DARLEY, and PAUL DARLEY, ) 

 ) 

 Defendants. ) 

 ) 

 ) 

 

MEMORANDUM OPINION AND ORDER 

JAMES F. HOLDERMAN, District Judge: 

 On November 12, 2013, Plaintiff Al Maha Trading & Contracting Holding Company 

(“Al Maha”) filed a six-count Amended Complaint (Dkt. No. 51, “Am. Compl.” or “Amended 

Complaint”) against Defendants W.S. Darley & Co. (“Darley”), Peter Darley, and Paul Darley 

(Peter and Paul Darley collectively referred to as the “Individual Defendants,” and with Darley 

the “Defendants”). In the Amended Complaint’s first three counts, Al Maha purports to allege 

common law fraud and conspiracy (Count I), violation of the Illinois Consumer Fraud Act 

(Count II), and inducement and participation in breach of fiduciary duty (Count III) against the 

Defendants. (Id. ¶¶ 56-68.) 

 These three purported claims arise out of Al Maha’s allegations that Defendants provided 

Al Maha inflated invoices for fire trucks and equipment as part of a “bribery-kickback” scheme. 

(Id.) According to Al Maha, Defendants agreed to pay Al Maha’s Project Manager and Fire 
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Chief, Christopher Gale (“Gale”), if he ensured that Al Maha purchased fire trucks and 

equipment from Darley. (Id.) 

 Before the court are two motions filed by Defendants, Defendants’ “Joint Rule 12(b)(6) 

Motion to Dismiss Counts I-III of Plaintiff’s Amended Complaint” (Dkt. No. 73, “Defs’ Mot.” or 

the “Motion to Dismiss”), and “Joint Rule 11 Motion for Sanctions” (Dkt. No. 70, “Rule 11 

Mot.” or “Rule 11 Motion”). Plaintiff Al Maha filed a motion to strike, or in the alternative for 

leave to file a surreply (Dkt. Nos. 98, 104), which the court took under advisement (Dkt. Nos. 

103, 107). 

 Because each of these pending motions arise out of a common nucleus of facts, the court 

will analyze them together. As a preliminary matter, the court grants Al Maha leave to file both 

surreplies. For the reasons set forth below, this court denies both Defendants’ Motion to Dismiss 

and Joint Rule 11 Motion for Sanctions in their entirety. 

BACKGROUND 

Procedural History 

On March 16, 2012, Al Maha filed its initial Complaint asserting 12 claims against 

Darley. (Dkt. No. 1.) These claims chiefly alleged that Darley had breached the implied 

warranty of fitness for a particular purpose, by selling Al Maha six fire trucks that could not 

operate in Saudi Arabia. (Id.) Al Maha also asserted claims based on Darley’s alleged failure to 

disclose these facts. (Id.) On July 23, 2012, Darley moved to dismiss Al Maha’s initial 

complaint in its entirety. (Dkt. No. 15.) The court dismissed several of Al Maha’s claims but 

allowed others to remain pending. (Dkt. No. 27 at 1.) 

 At an October 22, 2013 status conference, the court granted Al Maha leave to file a new 

pleading. (Dkt. No. 47.) Again, on November 12, 2013, Al Maha filed its Amended Complaint 
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(Dkt. No. 51), asserting in Counts I-III claims for common law fraud and conspiracy, violation of 

the Illinois Consumer Fraud Act, and inducement and participation in breach of fiduciary duty, 

respectively. (Id. ¶¶ 56-68.) Al Maha added two additional defendants to Counts I-III, namely 

Paul Darley, Darley’s President and Chief Executive Officer, and Peter Darley, Darley’s 

Executive Vice President and Chief Operating Officer. (Id. ¶ 6.) Counts I-III, again, revolve 

around the allegations that Defendants provided inflated invoices to Al Maha to cover the cost of 

bribing Al Maha’s employee Gale to steer business to Darley. (Id. ¶¶ 56-68.) 

 On January 17, 2014, Defendants moved to dismiss Counts I-III of the Amended 

Complaint, (Dkt. No. 73), and this motion was initially fully-briefed on March 27, 2014, (Dkt. 

No. 97, the “Reply”). However, Al Maha moved to strike alleged new arguments in Defendants’ 

Reply, or, in the alternative, for leave to file a surreply. (Dkt. No. 104). As a result, the Motion 

to Dismiss was not fully briefed until April 15, 2014. (Dkt. No. 107.) 

 On January 13, 2014, Defendants moved, pursuant to Rule 11 of the Fed. R. Civ. Pro., 

for an order imposing sanctions also based on the Amended Complaints allegations of a briberykickback scheme. (Dkt. No. 70.) This motion was initially fully-briefed on March 13, 2014. 

(Dkt. No. 95, “Rule 11 Reply”.) However, again, Al Maha moved to strike alleged new 

arguments in the Rule 11 Reply, (Dkt. No. 98), resulting in the Rule 11 Motion not being fully 

briefed until April 2, 2014, (Dkt. No. 102). 

Al Maha’s May 2008 Factual Allegations 

Al Maha is organized under the laws of the Kingdom of Saudi Arabia with its principal 

place of business in Al Khobar, Saudi Arabia. (Am. Compl. ¶ 4.) Since about 1982, Al Maha 

has “provid[ed] manpower services in the fields of Fire and Rescue to customers exclusively in 

Saudi Arabia, principally in the fields of marine, aviation and industrial activities.” (Id. ¶10.) 
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From July 2007, Gale was Al Maha’s contractual employee, holding the position of Fire 

Chief, Project Manager, and later Executive Project Manager. (Am. Compl. ¶19.) Gale’s 

Employment Contracts prohibited him from “directly or indirectly engag[ing] in any other 

employment, service or business as long as he is employed by [Al Maha].” (Id.) Gale reported 

to Khalid Al-Qahtani (“Al-Qahtani”), Al Maha’s CEO, and to Sulaiman Al Enizi (“Al Enizi”), 

Al Maha’s Vice President. (Id. ¶ 20.) Gale was responsible for recommending to Al Maha fire 

truck and equipment sellers. (Id. ¶ 21.) 

 On February 26, 2008, Gale made his first contact with Darley, in an email to Individual 

Defendants, stating that he was seeking to lease fire trucks for Al Maha. (Id. ¶ 23; see also Dkt. 

No. 91, “Pl’s Resp.”, Ex. 3.) The text of this email was specifically addressed to “Paul”. (Pl’s 

Resp., Ex. 3.) 

 From February 26, 2008 to late May 2008, Paul Darley directly sent or received ten 

emails to or from Gale relating to Al Maha’s potential purchase of fire trucks and equipment. 

(Pl’s Resp., Exs. 3-4, 8.) On May 1, 2008, Peter Darley sent an email to Gale, copying Paul 

Darley, and attaching Darley’s initial pro forma price quotes to Al Maha for fire trucks and 

equipment. (Am. Compl. ¶ 25; Pl’s Resp. Exs. 5-6.) 

 Gale did not attempt to negotiate a price reduction from Darley and did not seek bids 

from Darley’s competitors. (Am. Compl. ¶ 29.) Instead, on May 20, 2008, Gale sent Paul and 

Peter Darley an email requesting that Darley alter its pro forma invoices to reflect new, higher

price quotes to Al Maha for the fire trucks and equipment. (Id. ¶ 29; Pl’s Resp. Ex. 8.) Gale 

stated, “Here is the pricing list that we would like to have indicated on the pro-forma quotations 

per the commission fee.” (Pl’s Resp., Ex. 8.) The text of the email was again specifically 

addressed to “Paul”. (Id.) 
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 On May 21, 2008, Peter Darley emailed Gale and another Darley employee, copying Paul 

Darley. (Am. Compl. ¶ 30; Pl’s Resp. Exs. 8-10.) In this email, Peter Darley provided Gale the 

new invoices as requested, adopted the higher prices Gale sought in his May 20, 2008 email, and 

even highlighted the original, lower quotes in a side-by-side comparison with the new prices. 

(Id.) 

 Al Maha relied upon Darley’s representations in its May 21, 2008 invoices for fire trucks 

and equipment. (Am. Compl. ¶ 35.) Neither Gale nor Defendants disclosed to Al Maha that 

Darley’s price quotes had been increased to pay Gale a “commission”, nearly five times his 

annual salary. (Id.) Gale advised Al-Qahtani about the desirability of making its purchases from 

Darley, (Id. ¶ 22), and Al-Qahtani approved payment of Darley’s price quotes based on Gale’s 

recommendation, (Pl’s Resp. at 13). Between July 2008 and March 2009, Al Maha paid Darley 

$2,931,000.00 for the fire trucks and $1,434, 000.00 for the equipment. (Am. Compl. ¶ 34; Pl’s 

Resp., Ex. 11.) 

Requested Inferences from the May 2008 Allegations 

 Al Maha argues that there are several key, reasonable inferences that must be drawn from 

the above emails. First, even though the emails do not specifically state that the commission 

would be paid to Gale, (Pl’s Resp., Ex. 8), it would be inconsistent with typical business 

practices for Darley as the seller to pay a commission to Al Maha the buyer, (Pl’s Resp. at 6, 9). 

Such a commission would come out of Al Maha’s own payment to Darley for the fire trucks and 

equipment. (Id.) Instead, Al Maha argues a reasonable inference is that Gale intended, and the 

Individual Defendants understood that Gale was soliciting a payment for himself. (Id. at 6-7.) 

 Additionally, Al Maha argues comparing Darley’s original price quotes with Gale’s 

requested price list shows that Gale’s prices were $470,000 higher, making it reasonable to infer 
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that difference was the payment Gale anticipated. (Am. Compl. ¶¶ 25, 27, 29; Pl’s Resp. Exs. 6, 

8-10.) According to Al Maha, the fact that Gale’s proposed price list did not separately break 

out this commission also supports the inference that Gale intended and the Individual Defendants 

understood that Gale’s payment would not be disclosed to Al Maha. (Pl’s Resp. at 7.) 

 Al Maha believes that various facts support the inference that Darley intended to 

influence Gale through its payment. Individual Defendants, in spite of their business experience, 

failed to question Gale on whether Al Maha authorized the payment, ignoring various warning 

signs to the contrary. (Id. at 10.) Gale requested payment after receiving Darley’s initial price 

quotes, and that amount was added to Al Maha’s purchase price. (Id. at 11.) The substantial 

amount of this payment, $470,000, itself supports the inference it was intended to influence Gale. 

(Id. at 11.) 

 Al Maha also points to various facts to support the inferences Paul Darley knew Gale was 

asking Darley to inflate its invoices, pay Gale these excess funds, and conceal this plan from Al 

Maha. Al Maha argues that Paul Darley was Darley’s point person for negotiating various 

aspects of the purchase with Gale. (Id. at 11; see also id. Exs. 3-4, 8.) Additionally, Paul Darley 

was copied on Peter Darley’s email attaching Darley’s original quotes, and in response Gale 

specifically sent his email requesting that the quotes increase to Paul Darley. (Id. at 11; see also 

id. at Ex. 8.) Finally, Paul Darley was copied on Peter Darley’s email to Gale were the former 

agreed to increase the invoices and also pay a commission. (Id. Exs. 8-10.) 

 Al Maha believes it is unlikely Peter Darley would have acted unilaterally in approving 

the payment to Gale, considering (1) Gale’s initial request for payment was sent to Paul Darley 

and (2) Peter Darley copied Paul Darley on his response email. (Id.) Rather, Al Maha believes 
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Paul Darley gave either explicit or implicit consent to Peter Darley when he allegedly approved 

payment to Gale. (Id.) 

Al Maha’s Factual Allegations from November 2008 to March 2009 

 On November 5, 2008, immediately after Al Maha made payment on one of the fire 

trucks, Gale sent an email to Peter Darley, requesting “the first wire transfer of $75,000 against 

the fire truck in Dubai.” (Am. Compl. ¶ 36; Pl’s Resp., Ex. 12.) Gale gave wiring instructions to 

a personal bank account in Bahrain. (Id.) Peter Darley immediately authorized payment to 

Gale’s account, and Darley wired payment that same day. (Id.; see also Pl’s Resp., Ex. 13.) 

 In late November, Peter Darley was concerned that Al Maha’s payments to Darley were 

slowing down. (Am. Compl. ¶ 37; Pl’s Resp. Ex. 14.) Peter Darley suspected that Gale’s 

immediate supervisor, Al Enizi, was the cause. (Id.) On November 20, 2008, Peter Darley 

emailed Gale, stating: “I also ask that you resolve what is needed with Sulaiman [Al Enizi] and 

provide me with a united direction for commission payments as this may also be part of the 

reason for the delay on your end.” (Id.) 

 In a January 5, 2009 email to Peter Darley, Gale indicated that he and Al Enizi had 

agreed to split the payment 50/50. (Id. ¶ 39; Pl’s Resp., Ex. 15.) On March 3, 2009, Peter 

Darley sent an email to Gale stating: “we red [sic] final pay today so send me final breakdown 

and agreed upon wire info with sulamain [Al Enizi].” (Am. Compl. ¶ 43; Pl’s Resp. Ex. 18.) 

Gale promptly emailed Peter Darley with wiring instructions for his and Al Enizi’s bank 

accounts in Bahrain. (Id.) On March 6, 2009, Peter Darley sent an email to Darley’s CFO 

authorizing wire transfers to Gale and Al Enizi’s bank accounts in Bahrain for $166,873 each. 

(Id.) These wire transfers were sent on March 9, 2009. (Am. Compl. ¶ 43; Pl’s Resp., Ex. 19.) 
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 Immediately after receiving the March 9, 2009 payment, Gale resigned from Al Maha, 

and Al Enizi resigned shortly thereafter. (Am. Compl. ¶ 44.) 

Al Maha’s Requested Inferences from Nov. 2008 to Mar. 2009 Allegations 

 Al Maha believes the fact Gale requested payment for himself and Al Enizi, which Peter 

Darley approved without hesitation, confirms that Gale and Peter Darley understood that the 

commission referred to in the May 20 and 21, 2008 emails would be paid if Al Maha purchased 

the fire trucks. (Pl’s Resp. 13.) According to Al Maha, it is a reasonable to infer that Darley’s 

payments to Gale were a payoff for influencing Al Maha to purchase the fire trucks at an inflated 

price. (Id.) The fact these payments were made to Gale’s personal bank account in Bahrain 

further demonstrates that they were not disclosed to Al Maha. (Id. at 14.) 

 Al Maha argues that in Peter Darley’s November 20, 2008 email he was inviting Al Enizi 

to request a bribe to expedite payment of Al Maha’s purchase of fire trucks and equipment. (Id.) 

Additionally, based on Gale’s January 5, 2009 email to Peter Darley, Al Maha believes it is 

reasonable to infer that Al Enizi agreed to accept 50 percent of Darley’s agreed payment to Gale, 

in exchange for expediting payment to Darley. (Id.) According to Al Maha, the fact that the 

payments were made to Al Enizi’s personal bank account in Bahrain further demonstrates that 

they were not disclosed or consented to by Al Maha. (Id.) 

LEGAL STANDARDS 

Motions to Dismiss Rule 12(b)(6) Legal Standard 

 Under the Federal Rules of Civil Procedure, when deciding a Rule 12(b)(6) motion, the 

court “construe[s] the . . . [c]omplaint in the light most favorable to Plaintiff, accepting as true all 

well-pleaded facts and drawing all possible inferences in his favor.” Cole v. Milwaukee Area 

Tech. Coll. Dist., 634 F.3d 901, 903 (7th Cir. 2011). A complaint need contain only “a short and 
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plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 

8(a)(2). 

 However, the complaint must “give the defendant fair notice of what the . . . claim is and 

the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting 

Conley v. Gibson, 355 U.S. 41, 47 (1957)). Though “detailed factual allegations” are not 

required, “labels and conclusions, and a formulaic recitation of the elements of a cause of action 

will not do.” Twombly, 550 U.S. at 555. 

 The complaint must “include sufficient facts ‘to state a claim for relief that is plausible on 

its face.’” Cole, 634 F.3d at 903. “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 

Rule 11 Legal Standard 

Federal Rule of Civil Procedure 11 requires an attorney to undertake a reasonable inquiry 

before filing court papers and prohibits attorneys from filing pleadings that are filed for an 

improper purpose, are not warranted by existing law or a non-frivolous argument for the 

extension of existing law, or do not have evidentiary support. See Cuna Mut. Life Ins Soc’y. v. 

Off. Prof’l Emps. Int’l Union, Local 39, 443 F.3d 556, 560-61 (7th Cir. 2006). 

 Specifically, Rule 11(b) provides, in pertinent part, that by presenting a pleading to the 

court, the attorney filing the pleading certifies to the best of the person’s knowledge, 

information, and belief, formed after a reasonable inquiry, that: 

 (2) the claims, defenses, and other legal contentions are warranted by existing law or 

 by a nonfrivolous argument for extending, modifying, or reversing existing law or 

 for establishing new law; 
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 (3) the factual contentions have evidentiary support or, if specifically so identified, 

 will likely have evidentiary support after a reasonable opportunity for further 

 investigation or discovery; 

Non-compliance with Rule 11(b) subjects the attorney and parties filing the offending pleadings 

to sanctions under Rule 11(c). 

ANALYSIS 

1. Fraudulent Misrepresentation, Concealment or Conspiracy (Count I) 

Count I is titled “Common Law Fraud and Conspiracy” and asserted against all 

Defendants. In this count, Al Maha alleges that Darley, “with the consent and authorization of 

Peter Darley and Paul Darely,” submitted revised pro forma invoices to Al Maha, containing 

false statements of material fact by (1) “marking up the invoices with fraudulent sums to cover 

bribe payments to Gale” and (2) “failing to disclose, under circumstances giving rise to a duty to 

disclose, that Darley agreed to make bribe-kickback payments to Gale as a quid pro quo for 

persuading Al Maha to purchase the fire trucks and equipment from Darley”. (Am. Compl. ¶ 

57.)

a. Fraudulent Misrepresentation

According to the Illinois Supreme Court, fraudulent misrepresentation under Illinois law 

generally requires (1) a false statement of material fact; (2) defendant’s knowledge that the 

statement was false; (3) defendants’ intent that the statement induced the plaintiff to act; (4) 

plaintiff’s reliance upon the truth of the statement; and (5) plaintiff suffered damages as a result 

of relying on the statement. See, e.g., Connick v. Suzuki Motor Co. Ltd., 675 N.E.2d 584, 591 

(Ill. 1996). 

 In Al Maha’s Motion to Dismiss Response (Dkt. No. 91), Al Maha summarizes its 

fraudulent misrepresentation claim as follows. Al Maha alleges that “Darley’s May 21, 2008 pro 
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formas for the fire trucks and equipment contained false statements of material fact.” (Id. at 18.) 

The pro formas “did not reflect Darley’s price quotes for the goods”, rather they “reflected the 

price fixed by Gale and Defendants, which also included the undisclosed, purported third party 

payment to Gale.” (Id.) 

 In their Motion to Dismiss (Dkt. No. 91), Defendants set out two major arguments 

against Al Maha’s fraudulent misrepresentation claim. First, Defendants argue that the 

submission of an invoice by a merchant to a prospective customer, even if inflated, cannot 

support a claim for fraud, because it is axiomatic that a merchant can propose any sales price it 

desires. (Def’s Mot. at 10.) Second, Defendants argue that Al Maha has “severely 

mischaracterized the emails” it relies on to support its “bribery-kickback” scheme. (Id.) 

 Defendants’ argument that they were free to quote Darley any price, even in the alleged 

circumstances, has been expressly rejected by a district court in this district. In Overland Bond 

& Inv. Corp. v. Mahoney, No. 82-2283, 1984 WL 3997 (N.D. Ill. July 30, 1984) (McGarr, J.), 

defendant sellers had inflated their invoices to pay a kickback to the buyer’s employee. Id. at *6. 

They then proceeded to argue that their invoices were not fraudulent, because they did not 

contain any misrepresentation. Id. 

 In a well-reasoned opinion, then Chief Judge Frank McGarr held that because 

“defendants issued sales tickets and invoices for automobiles sold to [plaintiff] which contained 

inflated purchase prices”, “[c]learly, defendant’s issuance of these invoices constituted a 

misrepresentation.” Id. The “invoices contained false information because they did not reflect 

the price bid for the cars at auction”, “rather, they reflected the price fixed by the defendants 

after the auction which included an amount paid to [an employee] as a kickback.” Id. 
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 This court is persuaded by the reasoning in Overland Bond, and rejects Defendants’ first 

argument. It would make little sense to allow Defendants to rely on the general maxim that 

sellers are free to quote whatever price they desire, in the specific circumstances alleged here, 

namely a bribery-kickback scheme between a seller and a buyer’s employee. To rule otherwise 

would essentially lead to the holding that an invoice, intentionally inflated by a seller to pay a 

bribe to the buyer’s employee, does not contain a misrepresentation. Instead this court finds, at 

this stage of the litigation, that Al Maha has satisfied the false statement requirement of 

fraudulent misrepresentation, by alleging that the pro formas contained, but did not disclose, an 

inflated price fixed as a result of an undisclosed side agreement between Defendants and Gale. 

See supra at 3-5. 

 This court also rejects Defendants’ second argument that Al Maha has “severely 

mischaracterized” the emails and various other documents Al Maha cites in support of its 

fraudulent misrepresentation claim. At this point in the litigation, the court must accept Al 

Maha’s allegations as true and not consider any characterizations to the contrary. All of the 

following are reasonable interpretations of the exhibits relating to this claim. 

 On May 20, 2008, Gale sent an email to Paul and Peter Darley stating, “Here is the 

pricing list that we would like to have indicated on the pro-forma quotations per the commission 

fee.” (Pl’s Resp., Ex. 8.) The pricing list Gale requested listed new, higher price quotes to Al 

Maha for the fire trucks and equipment. (Id.) In response, Peter Darley provided Gale new 

invoices, adopted Gale’s requested higher prices, and even highlighted the lower original quote 

in a side-by-side comparison. (Pl’s Resp., Ex. 8-10.) 

 On November 5, 2008, after Al Maha made payment on one of the fire trucks, Gale 

sent an email to Peter Darley, requesting “the first wire transfer of $75,000 against the fire truck 
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in Dubai.” (Pl’s Resp., Ex. 12.) Gale gave wiring instructions to a personal bank account in 

Bahrain, Peter Darley immediately authorized payment to Gale’s account, and Darley wired 

payment that same day. (Pl’s Resp., Exs. 12-13.) 

 In late November, Peter Darley suspected that Gale’s immediate supervisor, Al Enizi, 

was causing payments to Darley to slow down. (Pl’s Resp., Ex. 14.) And, on November 20, 

2008, Peter Darley emailed Gale, asking that he “provide [Peter Darley] with a united direction 

for commission payments”. (Id.) In a January 5, 2009 email to Peter Darley, Gale indicated that 

he and Al Enizi had agreed to split the payment 50/50. (Pl’s Resp., Ex. 15.) 

 After Peter Darley asked Gale for wiring information, (Pl’s Resp. Ex. 18), Gale promptly 

emailed him with wiring instructions for Gale and Al Enizi’s bank accounts in Bahrain. (Id.) On 

March 6, 2009, Peter Darley sent an email to Darley’s CFO authorizing wire transfers to Gale 

and Al Enizi’s bank accounts in Bahrain for $166,873 each. (Id.) 

 Defendants’ only response to this probative evidence is to offer the court an implausible, 

benign interpretation of these documents, arguing that the emails merely indicate that Darley 

agreed to pay a “commission”, not a bribe. (Def’s Mot. at 11-12.) However, when deciding a 

Rule 12(b)(6) motion, this court is required to construe the complaint in a light most favorable to 

plaintiff and draw all reasonable inferences on plaintiff’s behalf. Cole, 634 F.3d at 903. 

 The above documents appear to demonstrate that Al Maha’s fraudulent misrepresentation 

claim is plausible when the inferences therefrom are drawn in Al Maha’s favor. The documents 

show Gale asking Darley to raise prices at the same time as he requested a “commission”, Darley 

providing Gale with revised invoices containing a higher prices, and Darley making payments to 

Gale and his supervisor’s personal bank accounts in Bahrain. It would be contrary to the above 

standard for this court, confronted with such facts at the motion to dismiss stage, to ignore the 
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inference that Defendants inflated their invoices, misrepresented their pricing to Al Maha, and in 

turn bribed Gale for his purchasing influence at Al Maha. The court declines to find, at this stage 

in the litigation, in favor of the inference that Darley, a seller, agreed to make a commission 

payment to Al Maha, its customer, which was routed through two employees’ personal bank 

accounts in Bahrain.1 

b. Fraudulent Omission

A claim for fraudulent omission requires the alleging of “meeting the elements of 

fraudulent misrepresentation” and additionally alleging “that the defendant intentionally omitted 

or concealed a material fact that it was under a duty to disclose to the plaintiff”. Wigod v. Wells 

Fargo Bank, N.A., 673 F.3d 547, 571 (7th Cir. 2012). 

 In Al Maha’s Motion to Dismiss Response (Dkt. No. 91), Al Maha summarizes its 

fraudulent omission claim as follows. “Darley intentionally omitted and concealed material facts 

in its May 21, 2008 pro formas”, “[s]pecifically, Darley . . . omitted the material facts that the 

purported price quotes included hidden purported third party payments to Gale, Al Maha’s 

employee, if Al Maha purchased the goods from Darley.” (Id. at 19.) 

 Defendants set out two major arguments against Al Maha’s fraudulent omission claim. 

First, Defendants argue that they had no duty to disclose the component prices of the price 

Darley quoted Al Maha, including the commission payment. (Def’s Mot. at 12-13.) 

Additionally, in Reply (Dkt. No. 97), Defendants argue that Al Maha has not alleged that Gale 

concealed his commission from Al Maha. (Id. at 7.) 

 

1

 In Reply (Dkt. No. 97), Defendants offer the additional argument that Al Maha’s fraudulent misrepresentation 

claim should be dismissed, because Darley “plainly disclosed the commission payment to Al Maha.” (Id. at 8-9.) 

This argument rests on documents merely showing that Darley disclosed the commission to Gale—i.e., the person 

Darley was allegedly bribing by inflating the invoices. 
15 

 Arguments as Defendants first argument have previously been rejected in this district. In 

In re: Salem Mills, Inc. v. Wisconsin Tool and Stamping Co., 881 F.Supp. 1109 (N.D. Ill. 1995) 

(Castillo, J.), corporate officers of a seller, who made an undisclosed payment to the buyer’s 

employee in connection with a purchase, were liable for fraudulent omission. Id. at 1114. In this 

well-reasoned opinion, now Chief Judge Castillo held that the officers’ “failure to disclose the 

fact that they had agreed to make and in fact made payments to [buyer’s employee] constitutes a 

false statement of material fact,” because “[s]ilence, accompanied by an act of concealment or 

the suppression of material facts, constitutes a false statement.” Id. 

 Similarly here, Individual Defendants Paul and Peter Darley received an email from Gale 

asking Darley to raise prices at the same time that Gale requested a “commission.” The 

Individual Defendants then provided Gale with revised invoices containing higher prices without 

explicitly breaking out the “commission” for Al Maha’s benefit. Darley finally made payments 

to Gale and his supervisor’s personal bank accounts in Bahrain. Frankly, this conduct supports 

the inference of fraud. 

 The court at this juncture is not required to reach the ultimate question of fact. When 

deciding a Rule 12(b)(6) motion, this court is bound to construe the complaint in a light most 

favorable to plaintiff and draw all reasonable inferences on plaintiff’s behalf. Cole, 634 F.3d at 

903. The court consequently refuses to find, as Defendants would have us do, that Defendants 

were making and approving payments to Gale’s Bahrain bank account, all the while assuming 

Gale had disclosed his “commission” to Al Maha. 

 The court holds that Al Maha’s fraudulent omission claim is sufficiently alleged to 

proceed, because Al Maha is entitled to the inference that Gale sought a payment for himself, 

which he did not disclose to Al Maha, and the Defendants understood and consented to this 
16 

course of conduct. The fact that Gale’s proposed price list did not separately break out this 

commission supports the inference that Gale’s payment would not be disclosed to Al Maha. The 

Individual Defendants’ failure, despite their business experience, to question Gale on whether Al 

Maha authorized the payment further supports this inference. 

c. Civil Conspiracy

 According to the Illinois Supreme Court, the elements of civil conspiracy under Illinois 

law are (1) a combination of two or more persons, (2) for the purpose of accomplishing either an 

unlawful purpose or a lawful purpose by unlawful means in a concerted action, and (3) in 

furtherance of which one of the conspirators committed an overt tortious or unlawful act. Fritz v. 

Johnston, 807 N.E.2d 461, 470 (Ill. 2004). 

 Al Maha alleges that Darley conspired with Gale to accomplish by concerted action the 

lawful act of selling fire trucks and equipment to Al Maha by unlawful means, namely, bribery 

and fraud. (Pl’s Resp. at 22.) Additionally, Al Maha has alleged that Paul Darley and Peter 

Darley participated in Darley’s unlawful means of bribery and fraud. (Id.) 

 In response, Defendants set forth several arguments why Al Maha’s conspiracy claim 

must fail as a matter of law. First, Defendants argue that Al Maha’s has not alleged an 

independent cause of action underlying its conspiracy claim. (Def’s Mot. at 14.) Next, 

Defendants argue that Al Maha cannot allege a civil conspiracy against the Individual 

Defendants under the intra-corporate conspiracy doctrine, because a corporation and its directors 

are legally incapable of conspiring with each other. (Id.) Finally, Defendants argue that it is 

legally impossible for the Individual Defendants to be liable as co-conspirators, because a 

corporation can only act through the conduct of its agents. (Id. at 16.) 
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 As previously discussed, Defendants are incorrect that Al Maha has not alleged an 

independent cause of action underlying its conspiracy claim. This court has already found that 

Al Maha has alleged both fraudulent misrepresentation and omission. Supra at §§ I.a, I.b. 

Additionally, this court is persuaded that Al Maha’s bribery allegations, whether based on 

Illinois’ criminal bribery statute or the common law, sufficiently plead unlawful acts capable of 

underlying the conspiracy claim. See Fritz, 807 N.E.2d at 470-71 (holding allegation of filing 

false police report in violation of Illinois criminal statute “satisfies the third element [of civil 

conspiracy], the actual commission of an overt unlawful act by one of the conspirators.”); see 

also Williams Elec. Games, Inc. v. Garrity, 366 F.3d 569, 576-77 (7th Cir. 2004) (recognizing a 

common law claim for commercial bribery as an intentional tort). 

 The court also disagrees with Defendants’ theory that Individual Defendants cannot be 

liable for civil conspiracy due to the intra-corporate conspiracy doctrine. Simply put, Al Maha 

has not alleged that Individual Defendants were conspiring with Darley, rather Al Maha alleges 

that they were conspiring with Gale as a third-party. 

 The court, additionally, rejects Defendants’ contention that Individual Defendants cannot 

be held liable, because a corporation can only act through the conduct of its agents. In North 

Shore Medical Center, Ltd. v. Evanston Hospital Corp., No. 92-6533, 1996 WL 435192, at *3 

(N.D. Ill. July 31, 1996) (Grady, J.), the court held that although corporate officers cannot be 

liable as co-conspirators in a conspiracy between the corporation and a third-party, based on 

agency principles, corporate officers are liable as participants in a corporation’s tortious conduct 

of entering the conspiracy with a third-party to defraud a plaintiff. The court reasoned, to hold 

otherwise, would not be “consistent with the well-established rule that corporate officers are 

liable for any torts of the corporation in which they have participated.” Id. Here, just as in North 
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Shore, Individual Defendants are not potentially liable as co-conspirators, but rather as 

participants in Darley’s tortious conduct of entering in a bribery-fraud conspiracy with Gale. 

d. Paul Darley’s Potential Liability

 Under Illinois law, a corporate officer is liable for a corporation’s torts if they 

“participated in the conduct giving rise to that liability.” Itofca, Inc. v. Hellhake, 8 F.3d 1202, 

1204 (7th Cir. 1993). As discussed above, Al Maha brings all the claims at issue, including 

Count I, against both Darley and Paul and Peter Darley. 

 Defendants argue that Counts I through III should be dismissed against Paul Darley. 

(Def’s Mot. at 20-22.) Defendants contend that mere knowledge, or passive acquiescence, to a 

corporation’s alleged wrongdoing is not enough to hold a corporate director liable. (Id.) Rather, 

Al Maha must show active involvement on the part of Paul Darley, a showing Defendants 

contend Al Maha has failed to do. (Id.) 

 Because Al Maha has sufficiently alleged that Paul Darley was actively involved in the 

bribery-kickback scheme at the heart of Counts I through III, Defendants’ motion to dismiss 

cannot be granted on that point. As discussed above, from February 26, 2008 to late May 2008, 

Paul Darley directly sent or received ten emails to or from Gale relating to Al Maha’s potential 

purchase of fire trucks and equipment. (Pl’s Resp., Exs. 3-4, 8.) Such correspondence supports 

the inference that Paul Darley was far from a passive participant in Darley’s interactions with 

Gale, but rather Darley’s point person for its dealings with Gale. 

 This active involvement on Paul Darley’s part continued in the series of emails at the 

heart of this matter. On May 1, 2008, Peter Darley emailed Gale, copied Paul Darley, and 

attached Darley’s initial pro forma price quotes to Al Maha for fire trucks and equipment. (Am. 

Compl. ¶ 25; Pl’s Resp. Exs. 5-6.) On May 20, 2008, Gale sent his request for higher price 
19 

quotes and payment to both Paul and Peter Darley, specifically addressing his email to “Paul”. 

(Am. Compl. ¶ 29; Pl’s Resp. Ex. 8.) When Peter Darley emailed Gale to agree to his demands, 

Peter Darley copied Paul Darley. (Am. Compl. ¶ 30; Pl’s Resp. Exs. 8-10.) 

 The court agrees with Al Maha that, given the above correspondence, it is highly unlikely 

that Paul Darley simply was ignored these emails, especially when Gale addressed some of them 

to Paul Darley. Not only do the emails portray Paul Darley acting as Darley’s point person for 

its dealings with Gale, but the emails also depict Paul Darley being informed of every important 

step in hatching the alleged bribery-kickback scheme. 

 Al Maha is entitled to the plausible inference at the motion to dismiss stage, that Peter 

Darley, as Executive Vice President and Chief Operating Officer, would have discussed Gale’s 

request with Paul Darley, as Chief Executive Officer. Additionally, Al Maha is also entitled to 

the plausible inference that Peter Darley sought Paul Darley’s consent to engage in the alleged 

bribery-kickback scheme, as opposed to acting unilaterally. 

2. Violation of the Illinois Consumer Fraud Act (Count II) 

 Al Maha alleges in Count II of its Amended Complaint (Dkt. No. 51) that “[t]he 

fraudulent acts of each of the Defendants violated the Illinois Consumer Fraud and Deceptive 

Business Practices Act (“Consumer Fraud Act”), 815 ILCS 505/1 et seq., because the fraud 

occurred in the course of conduct involving trade or commerce.” (Am. Compl. ¶ 63.) 

 Determining whether a nonresident plaintiff, such as Al Maha may bring an Illinois 

Consumer Fraud Act (“ICFA”) claim is a fact specific inquiry. Crichton v. Golden Rule Ins. Co., 

576 F.3d 392, 396 (7th Cir. 2009). The courts consider a number of factors including: (1) the 

claimant’s residence; (2) the defendant’s place of business; (3) the location of the relevant item 

that was the subject of the disputed transaction; (4) the location of the claimant’s contacts with 
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the defendant; (5) where the contracts at issue were executed; (6) the contracts choice-of-law 

provisions; (7) where the alleged deceptive statements were made; (8) where payments for 

services were to be sent; and (9) where complaints were to be directed. Haught v. Motorola 

Mobility, Inc., No. 12-2515, 2012 WL 3643831, at *3 (N.D. Ill. Aug. 23, 2012) (Kendall, J.) 

 Defendants argue primarily that Al Maha may not bring a ICFA claim against them, 

because the disputed transaction did not occur primarily and substantially in Illinois. (Def’s Mot. 

at 17-18.) Additionally, Defendants argue that Al Maha has failed to allege a deceptive or unfair 

practice as the ICFA requires. (Id.) 

 This court finds that Al Maha has alleged enough facts to support an ICFA claim. 

Though Al Maha is a resident of Saudi Arabia, Defendant’s place of business is in Illinois. (Am. 

Compl. ¶ 1.) Al Maha’s contacts with Darley, through Gale, were made in Illinois. (See Pl’s 

Resp., Exs. 3-6, 8-10.) Darley’s allegedly deceptive pro formas were prepared in and issued 

from Illinois. (See Pl’s Resp., Exs. 8-10.) Defendants’ payments to Gale and Al Enizi were sent 

from Darley’s bank in Illinois. (See Pl’s Resp., Exs. 13, 19.) Al Maha’s payments for the fire 

trucks and equipment were also sent to Darley in Illinois. (See Pl’s Resp., Ex. 11.) 

 As discussed in Part I above, Al Maha has alleged that Defendants engaged in a deceptive 

bribery-kickback scheme, whereby Defendants created fraudulent, inflated invoices for Al Maha 

and concealed their fraud, to bribe Gale for his purchasing influence.2

 

 

 

2 Defendants are correct that Al Maha may not support its ICFA claim with allegations this court 

would have disallowed in its prior order had they not been raised in reply. Al Maha has not 

adequately alleged Defendants violated the ICFA by Defendants’ failure to disclose that the fire 

trucks would not be operable in Saudi Arabia and had excessive mileage. (Pl’s Resp. at 24-25.) 

As this court previously noted “[c]ommon sense suggests that it would be absurd for Darley to 

intentionally sell Al Maha fire trucks that it knew were inoperable in Saudi Arabia.” (Dkt. No. 

27, Mar. 27, 2013 Order, at 25.) The court finds the additional evidence Al Maha directs this 

court to unpersuasive. (Pl’s Resp. at 24-25 & n.9, 10.) 
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3. Inducement of Fiduciary Breach (Count III)

Under Illinois law, tortious inducement of breach of fiduciary duty requires a plaintiff to 

prove that: (1) the defendant colluded with a fiduciary in committing a breach; (2) the defendant 

knowingly colluded in or induced the breach; and (3) the defendant knowingly accepted the 

benefits from that breach. Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 508-09 (7th 

Cir. 2007). 

 Al Maha alleges that Gale breached his fiduciary duties by accepting bribes from Darley, 

“steer[ing] contracts for the purchase of fire trucks and equipment to Darley, [] not seeking 

competitive bids, [] conspiring with Defendants to increase Al Maha’s cost of the contracts by 

the amounts of the bribes”. (Am. Compl. ¶ 66.) In turn, Al Maha alleges that the Defendants 

“induced [these] breaches by Gale.” (Id. ¶ 67.) 

 Defendants argue that Count III should be dismissed on two bases. First, according to 

Defendants, Al Maha has failed to sufficiently plead that Defendants agreed to pay a “bribekickback” to Gale, inflated invoices to Al Maha, and concealed this arrangement. (Def’s Mot. at 

19-20.) Again, as discussed above in Section I, this court finds all of these allegations 

sufficiently pled. Second, Defendants claim that they could not have induced Gale’s breach, 

because, as Al Maha admits, Gale solicited the alleged bribe. (Id.) Under Illinois law, 

Defendants inducement of fiduciary breach does not require that a defendant initially purpose the 

breach. Borsellino, 477 F.3d at 508-09. Instead, it is enough for Al Maha to allege Defendants 

knowingly colluded in Gale’s fiduciary breach. 

4. Defendants’ Rule 11 Motion 

Defendants’ Joint Rule 11 Motion for Sanctions (Dkt. No. 70) is premised on two 

arguments. According to Defendants, Al Maha and its counsel mischaracterized the May 2008 
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emails to plead their bribery-kickback scheme theory. (Id. at 6-8.) As discussed in Part I of this 

opinion, at the motion to dismiss stage, this court does not believe Al Maha has mischaracterized 

these emails. Instead, the court finds the May 2008 emails plausibly support the inference that 

the bribery-kickback scheme Al Maha alleges occurred. 

 Defendants next seek Rule 11 sanctions based on their argument that Al Maha had no 

basis to assert Counts I through III against Paul Darley. (Id. at 9-10.) As discussed in Part I 

Section d of this opinion, not only was Paul Darley the Darley company’s point person for 

interacting with Gale, but also he was completely informed as the bribery-kickback scheme was 

formulated. In light of these facts, and others, the court refuses to extend to Defendants, at the 

current procedural posture, the inference that Paul Darley was a mere passive bystander in the 

alleged bribery-kickback scheme. 

CONCLUSION 

 For the reasons set forth above, Defendants’ “Joint Rule 12(b)(6) Motion to Dismiss 

Counts I-III of Plaintiff’s Amended Complaint” (Dkt. No. 73) is denied in its entirety. Count I of 

the Amended Complaint (Dkt. No. 51.) plausibly alleges a bribery-kickback scheme among Gale 

and Defendants, and these allegations support Al Maha’s claims for fraudulent misrepresentation 

and omission, and bribery conspiracy. Count II states an Illinois Consumer Fraud Act claim, 

because Al Maha’s allegations indicate that the bribery-kickback scheme occurred primarily and 

substantially in Illinois. Count III alleges an inducement of fiduciary breach claim against 

Defendants, also based on the plausibly alleged bribery-kickback scheme. 

 Defendants’ “Joint Rule 11 Motion for Sanctions” (Dkt. No. 70) is also denied for the 

reasons stated in this opinion. Plaintiffs’ motions for leave to file a surreply (Dkt. Nos. 98, 104) 

are granted. The parties are strongly encouraged to discuss settlement and meet with Magistrate 
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Judge Finnegan on 6/4/14 at 8:00 a.m. The case is set for a report on status before this court at 

9:00 a.m. on 6/10/14. 

 ENTER: 

 _______________________________ 

 JAMES F. HOLDERMAN 

 United States District Judge 

Date: June 2, 2014