and want(s] to find someone to blame for it.” Ackerman, 172 F.3d
at 469. Rather, these charges are “responsible and supported” such
that the heightened pleading requirement of Rule 9(b) has been
satisfied. Id.

Mr. Byczek also argues that because BEC and Boelter had a
contractual relationship, Boelter cannot also assert tort liabilty
against Mr. Byczek and BEC for fraud. In support, Mr. Byczek cites
Hi-Grade Cleaners, Inc. v. American Permac, Inc., 561 F. Supp. 643,
644 (N.D. Till. 1982) (Grady, J.), in which the court noted that
“when a defendant is already contractually bound to the plaintiff,
his assurance that he will perform in accordance with the contract
is simply a reiteration of his original promise. It creates no
additional liability in contract, let alone in tort.” While
Boelter and BEC did eventually enter into a contractual
relationship, Boelter is not alleging that BEC’s fraud was in
assuring that it would perform the contract. Boelter alleges that
Mr. Byczek made fraudulent misrepresentations about the financial
status of BEC in order to induce Boelter to enter into the contract
in the first place. (Countercl. | 27.) Thus, Hi~Grade Cleaners is
inapplicable. Indeed, as Boelter points out, a more analogous case
is Circle Group Internet, Inc. v. Fleishman-Hillard, Inc., 231 F.
Supp. 2d 801 (N.D. Ill. 2002) (Bucklo, J.), in which I allowed a
plaintiff to proceed with both a breach of contract claim and a

fraud claim against a public relations firm that had allegedly


claim that he had been offered a job by any other airline, or even
that he had interviewed or applied for such positions.” 144 F.3d
at 503. Here, in contrast, Boelter alleges that it reasonably
expected that it would have an opportunity to service Wendy’s as
part of its agreement to purchase BEC’s assets. (Countercl. 4 51.)
Indeed, Boelter alleges that it met with Wendy’s representatives to
discuss future business relationships. (Countercl. { 52.)
Additionally, Boelter alleges that Mr. Byczek was aware that
Boelter intended to service Wendy’s, (Countercl. {@ 52), that Mr.
Byczek “knowingly maligned Boelter Co.’s good name,” (Countercl. 4
53), and that Boelter was damaged by Mr. Byczek’s intentional
conduct (Countercl. 491 54, 55). Thus, although not required to do
so by federal pleading rules, Boelter has alleged each element of
tortious interference with prospective economic advantage. This is
sufficient for Mr. Byczek to understand the gravamen of Boelter’s
claim such that dismissal is unwarranted.
V. Counterclaims by Mr. Boelter Individually

Mr. Byczek argues that the counterclaims should be dismissed
to the extent they are asserted by Mr. Boelter individually. Mr.
Byczek notes that none of the counterclaims allege damage to Mr.
Boelter. This is not entirely true. While the counterclaims fail
to allege damage to Mr. Boelter in counts I, II, and IV, count III
alleges damage to Mr. Boelter individually as well as to The

Boelter Companies, Inc. (Countercl. 91 49.) However, count III is


II. Counterclaim Count II: Breach of Contract

Boelter alleges that BEC breached the contract by failing to
make various disclosures required by the contract and by failing to
provide Boelter with access to various documents as required by the
contract. Mr. Byczek argues that this count should be dismissed
because Boelter fails to allege facts establishing that Boelter
performed its own contractual obligations. While it is true that
a party claiming breach of contract must allege that it performed
all contractual conditions required of it, Redfield v. Cont’l Cas.
Corp., 818 F.2d 596, 610 (7th Cir. 1987), such allegations may be
made generally. Id. (citing Fed. R. Civ. P. 9(c)). Boelter has
made such a general allegation. (Countercl. @ 37) (“Boelter Co.
fully performed its obligations under the Agreement.”).

TIL. Counterclaim Count III: Breach of Contract
(Attorneys’ Fees)

Boelter also alleges that BEC breached the contract by failing
to honor clauses in the contract allegedly indemnifying Boelter
against expenses (including attorneys’ fees) incurred by it
resulting from any inaccuracy or breach of warranty by BEC, or from
any failure of BEC to perform any provision of the contract
required to be performed by BEC. Mr. Byczek again argues that this
count should be dismissed because Boelter has not performed its
obligations under the contract. As in counterclaim count If,

however, Boelter has generally alleged that it performed,


fraudulently misrepresented its credentials and ability in order to
induce plaintiff to enter into a contract with it.

Mr. Byczek asserts additional arguments in his reply brief.
First, he argues that the November 2000 financial report was not
the proximate cause of any damages to Boelter. Boelter, on the
other hand, alleges that it did suffer damage as a result of BEC’s
alleged misrepresentations. (Countercl. 7 34.) This is a factual
question, not to be decided on a motion to dismiss. Similarly, Mr.
Byczek’s argument that Boelter did its own due diligence into BEC’s
finances and thus did not rely on any representations of BEC is
also a factual question to be decided at a later stage. Mr. Byczek
also argues that any misrepresentations made by BEC or Mr. Byczek
were opinions, and that statements of opinion are not actionable as
fraud. The alleged misrepresentations here, however, that BEC had
a net worth of $900,000 and that the jobs in process were in good
financial condition are nothing like the statements of opinion held
inactionable in the case cited by Mr. Byczek. Cont’l Bank, N.A. v.
Meyer, 10 F.3d 1293, 1299-1300 (7th Cir. 1993) (statements that

a

thoroughbred horse breeding was “risk free,” that horses were of
the highest quality, and that partnership would be managed by
competent general partners were opinions). Because Boelter has

sufficiently alleged a claim of fraud, counterclaim count I

survives Mr. Byczek’s motion to dismiss.


A federal court sitting in diversity applies federal rules of
pleading. Beanstalk Group, Inc. v. AM Gen. Corp., 283 F.3d 856,
863 (7th Cir. 2002) (“Federal pleading rules ... govern even in
diversity suits.”). Under federal notice pleading requirements, a
counterclaim need only set out “a short and plain statement of the
claim that will provide the [counterclaim] defendant with fair
notice of the claim.” Scott v. City of Chicago, 195 F.3d 950, 951
(7th Cir. 1999) (citing Leatherman v. Tarrant County Narcotics
Intelligence and Coordination Unit, 507 U.S. 163, 168 (1993)). A
counterclaim need not spell out every element of a legal theory; it
need contain only enough to allow the counterclaim defendant to
understand “the gravamen” of the claim. Id. at 951-52. Here,
Boelter’s allegations meet this standard.

In Frederick, cited by Mr. Byczek, the Seventh Circuit found
that even under the liberal federal notice pleading rules, an
employee’s complaint of tortious interference with prospective
economic advantage was deficient because he failed to allege a
reasonable expectation of a business relationship. In that case,
the employee, an airline pilot, alleged that his employer took
action to have his medical certification revoked by the FAA,
preventing him from flying, in retaliation for his public
complaints about a plane’s safety record. The court found these
allegations insufficient because “[the pilot] alleges merely that

he wished to continue working as a commercial pilot. He does not


“Minute Order Fem (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Jud; ine 5 Sitti iO
irge Magistrate Judge Elaine B. Bucklo than Assigned Judge
CASE NUMBER 02 C 5185 pare | $/29/2003
CASE Byezek vs. The Boelter Companies, et al.
TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.]

MOTION:

DOCKET ENTRY:

(0) Oo Filed motion of { use listing in “Motion” box above.}

(2) QO Brief in support of motion due

(3) Qa Answer brief to motion due. . Reply to answer brief due___

(4) oa Ruling/Hearing ons set for att

(5) Oo Status hearing[held/continued to] {set for/re-set for]on ____set for __aat

(6) a Pretrial conference[held/continued to] {set for/re-set for]on___setfor__— ss at__
(7) Go Trial{set for/re-set for}on at

(8) o (Bench/Jury trial] [Hearing] held/continued to__— at

(9) jaa} This case is dismissed {with/without} prejudice and without costs(by/agreement/pursuant to]

QFRCP4(m) OLocal Rule 41.1 COFRCPAI(@\(1) OO FRCP4}(a)(2).

ao) [Other docket entry] Enter Memorandum Opinion and Order denying plaintiffs motion to dismiss
counterclaims to the extent the counterclaims are asserted by defendant The Boelter Companies, Inc. and
granting the motion to the extent they are asserted by defendant F. William Boelter individually.

(i) [For further detail see order attached to the original minute order.]

No notices required, advised in open court ,

No notices required.

| Notices maited by judge’s staff.

Notified counsel by telephone.

Docketing to mail notices.

Mail AO 450 form.

Copy to judge/magistrate judge. hay

al@ mailed natice
courtroom,

MPI deputy's
initials

Me)

Date/time received in 7
contrat Clerk's, Office {esting spar ina



a breach of contract claim that fails to allege that Mr. Boelter
was a party to, or a beneficiary of, the contract at issue. The
counterclaims are therefore dismissed to the extent they are
asserted by Mr. Boelter individually.
VI. Conclusion

Plaintiff's motion to dismiss counterclaims is DENIED to the
extent the counterclaims are asserted by defendant The Boelter
Companies, Inc., and GRANTED to the extent they are asserted by

defendant F. William Boelter individually.

ENTER /ORDER:
Kate Z bbashbe

Elaine E. Bucklo
United States District Judge

Dated: May aq 1 2003

10


(Countercl. § 45), which, as discussed above, is sufficient. Mr.
Byczek also argues that the contract clauses relied on by Boelter
were designed to protect Boelter from claims of third parties, not
from claims between BEC and Boelter. This is a factual question,
not appropriately addressed on a motion to dismiss.

IV. Counterclaim Count IV: Tortious Interference with

Prospective Economic Advantage

Boelter alleges that as part of the agreement with BEC,
Boelter would be given the opportunity to service Wendy’s, a former
customer of BEC. Boelter claims that Mr. Byczek destroyed
Boelter’s relationship with Wendy’s because BEC failed to pay
suppliers on Wendy’s jobs, exposing Wendy’s to claims by suppliers
and franchisees, and by maligning Boelter’s good name by
reinforcing and overstating the connection between Boelter and BEC.
Mr. Byczek argues that this count should be dismissed because
Boelter has failed to adequately allege the tort of interference
with prospective economic advantage. In Illinois, the elements of
that tort are (1) a reasonable expectation by plaintiff of entering
into a valid business relationship, (2) knowledge by defendant of
this expectancy, (3) intentional and unjustified interference by
defendant to prevent the expectancy from being fulfilled, and (4)
damages to the plaintiff caused by the interference. Frederick v.
Simmons Airlines, Inc., 144 F.3d 500, 502 (7th Cir. 1998) (citing

Anderson v. Vanden Dorpel, 667 N.E.2d 1296, 1299 (Ill. 1996)).


Cir. 1999). This is “to assure that the charge of fraud is
responsible and supported, rather than defamatory and
extortionate.” Id.

With these principles in mind, I find that Boelter has
sufficiently pleaded fraud in his counterclaim. Boelter alleges
that sometime prior to April 2001, BEC presented Boelter with a
November 30, 2000 financial report showing a $900,000 net worth,
even though Mr. Byczek was aware that BEC’s books and records did
not support such a valuation. (Countercl. G@ 10, 11.) Boelter
also alleges that Mr. Byczek was aware that BEC was on the verge of
insolvency and bankruptcy, but that in April 2001, he “began
engaging in a scheme to fraudulently misstate BEC’s financial
statements and the financial conditions of its jobs in process for
the purpose of deceiving Boelter Co. into thinking that BEC was a
viable company.” (Countercl. (1 14, 15.) For example, Boelter
alleges that in May 2001, Mr. Byczek stated that the jobs in
process were in good financial condition, while in reality, BEC was
forced to engage in what amounted essentially to a pyramid scheme,
using deposits from one customer to complete jobs for other
customers, thereby making BEC unable to complete the job of the
customer making the deposit without collecting deposits from yet
other customers. (Countercl. {" 12, 17, 19.) These are sufficient
allegations of fraud by Boelter. This is not a case where fraud

was “charged irresponsibly by [someone] who ha[(s}] suffered a loss


entitle it to relief.” N. Trust Co. v. Peters, 69 F.3d 123, 129
(7th Cir. 1995). In deciding the motion to dismiss, “[I] accept
all well pleaded facts alleged in the counterclaim as true and draw
all reasonable inferences in favor of the nonmoving party.” Id.
I. Counterclaim Count I: Fraud

Boelter claims that Mr. Byczek misrepresented the financial
condition of BEC, inducing Boelter, at great expense, to initiate
and plan for the purchase of BEC’s assets. Mr. Byczek moves to
dismiss counterclaim count I, arguing that Boelter has failed to
adequately state a cause of action for fraud. Complaints of fraud
are subject to the heightened pleading requirements of Fed. R. Civ.
P. 9(b) (“In all averments of fraud or mistake, the circumstances
constituting fraud or mistake shall be stated with
particularity.”). The Seventh Circuit reads this requirement to
mean that the pleader must plead “the who, what, when, and where of
the alleged fraud.” Uni*Quality, Inc. v. Infotronx, Inc., 974 F.2d
918, 923 (7th Cir. 1992). Thus, the pleader must state “the
identity of the person making the misrepresentation, the time,
place, and content of the misrepresentation, and the method by
which the misrepresentation was communicated.” Id. The heightened
pleading standard does not require adherence to blind formalism,
however. The purpose of the rule “is to force the plaintiff to do
more than the usual investigation before filing his complaint.”

Ackerman v. Northwestern Mut. Life Ins. Co., 172 F.3d 467, 469 (7th


cal

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JOHN L. BYCZEK,
Plaintiff,

ve

Noy Oy c 5185
ic

THE BOELTER COMPANIES, INC. and F.
WILLIAM BOELTER,

Defendants.

MEMORANDUM OPINION AND ORDER

Plaintiff John L. Byczek sued defendants The Boelter
Companies, Inc. and F. William Boelter (collectively “Boelter”
over an unconsummated asset purchase agreement between Boelter and
Byzcek Equipment Company (“BEC”), of which Mr. Byczek was the
president and sole shareholder. One count of the complaint was
brought by Mr. Byczek on his own behalf; all others were brought by
Mr. Byczek as assignee of BEC’s claims. Boelter asserts four
counterclaims against Mr. Byczek. Mr. Byczek moves to dismiss the
counterclaims. I deny the motion with respect to The Boelter
Companies, Inc., and grant the motion with respect to Mr. Boelter
individually.

The standard for deciding a motion to dismiss counterclaims is
the same as that for deciding a motion to dismiss a complaint.
Dismissal is warranted “only if the nonmoving party can prove no

set of facts consistent with its ... counterclaim that would