To properly allege fraud, “a plaintiff must at least plead with sufficient particularity facts
establishing the elements of fraud, including what misrepresentations were made, when they were
made, who made the misrepresentations and to whom they were made.” Board of Educ. v. A, C and
S, Inc., 546 N.E.2d 580, 594 (Ill. 1989) (emphasis added). StunFence directs us to “Paragraphs
14-18 and 124-134 of the Complaint” for the “core allegations concerning the scheme” to defraud.
Nowhere in those paragraphs, or elsewhere in the Complaint, does StunFence identify a single
individual who made any of the alleged misrepresentations of future conduct. Thus, StunFence has
failed to allege a scheme to defraud. See Doherty v. Kahn, 682 N.E.2d 163, 176 (Ill. App. Ct. 1997)
(“We do not believe that plaintiff has sufficiently pled facts to show the existence of a scheme.
Specifically, plaintiff fails to allege which defendant made the statements.”).

Further undermining an alleged scheme to defraud, StunFence alleges facts contradictory to
its contention that Gallagher never intended to make good on the alleged representations. StunFence
admits that Gallagher did not act contrary to the alleged representations until some time after the
parties executed the distribution agreement. Compl., §§28, 29, 36, 38. Initial compliance with
representations is contrary to the existence of an intent not to comply with them.

StunFence explains that Gallagher’s initial compliance with its alleged representations was
in furtherance of its scheme to lead StunFence along into developing a market and good will that
subsequently could be usurped. While it is entirely possible that this was Gallagher’s intention all
along, StunFence has failed to plead any specific facts establishing that there was an intent not to
perform at the time of the alleged representations. See Doherty, 682 N.E.2d at 176 (In affirming the
dismissal of a scheme to defraud claim, the Appellate Court of Illinois noted that “there are no facts

alleged that, at the time of the alleged representations, there was an intent not to perform them.”).

-4.


judgment dismissing their fraud claim pursuant to Rule 59(e) of the Federal Rules of Civil

Procedure.

LEGAL STANDARD

Rule 59(e) permits parties to file, within ten days of the entry of a judgment, a motion to alter
or amend the judgment. Motions for reconsideration under Rule 59(e) are designed to correct
manifest errors of law or fact or to present newly discovered evidence. Publishers Res., Inc. v.
Walker-Davis Publ’ns, Inc., 762 F.2d 557, 561 (7th Cir. 1985). Such motions do not give a party
the opportunity to rehash old arguments or to present new arguments "that could and should have
been presented to the district court prior to the judgment." Moro v. Shell Oil Co., 91 F.3d 872, 876
(7th Cir. 1996) (citing LB Credit Corp. v. Resolution Trust Corp., 49 F.3d 1263, 1267 (7th
Cir.1995)). Rather, a Rule 59(e) motion "must clearly establish either a manifest error of law or fact
or must present newly discovered evidence" in order to be successful. LB Credit Corp., 49 F.3d at
1267 (7th Cir.1986) (quoting Federal Deposit Ins. Corp. v. Meyer, 781 F.2d 1260, 1268 (7th
Cir.1986)). The decision of whether to grant or deny a Rule 59(e) motion "is entrusted to the sound

judgment of the district court." In re Prince, 85 F.3d 314, 324 (7th Cir. 1996).

DISCUSSION
StunFence’s motion for reconsideration raises two main arguments: (1) StunFence properly
alleged a scheme to defraud and (2) the allegations cited by the Court do not contradict such a

scheme. We reject both arguments.


All StunFence has offered are allegations of misrepresentations and a possible motive for making

them. Without requiring more, every claim for misrepresentation could also be a claim for fraud.

CONCLUSION
Based on the foregoing, StunFence’s motion to alter or amend the judgment dismissing

its fraudulent misrepresentation claim is denied.

Ch Ora P. Poeerer

Charles P. Kocoras
Chief Judge
United States District Court

Dated: _September 19, 2002


Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge Charles P. Kocoras than Assigned Judge
CASE NUMBER 01 C 9627 DATE 9/19/2002
CASE StunFence vs. Gallagher
TITLE
Lin the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]

DCC NET ENTRY:

(1) Oo Filed motion of { use listing in “Motion” box above.]
(2) o Brief in support of motion due
(3) Qo Answer brief to motion due. . Reply to answer brief due.
(4) Oo Ruling/Hearing on set for at :
(5) | Status hearing held and continued to 1/21/2003 at 9:30 A.M..
(6) a Pretrial conference[held/continued to] [set for/re-set for] on set for __at
(7) im} Trial[sct for/re-set for] on at
(8) Oo (Bench/Tury trial] [Hearing] held/continued to at
(9) a This casc is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
QFRCP4(m) OLocal Rule 41.1 CFRCP41(a)(1) OO FRCP41(a)(2).
ao) =» [Other docket entry] ENTER MEMORANDUM OPINION: StunFence’s motion (Doc 50-1) to
alter or amend judgment dismissing its fraudulent misrepresentation claim is denied. All fact discovery
to be completed by January 21, 2003.
dl) {For further detail see order attached to the original minute order.]
No notices required, advised in open court,
No notices required. number of hotices
Norices mailed by judge's staff,
Notified counsel by telephone.
o¥ | Docketing to mail notices.
Mail AQ450 form. cvete
Copy Nome fc jndge. yee
courtroom fe
SCT deputy’s am
initials 7
, Date/time received in
central Clerk's Office



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
DOEKETED
SEP 29 7002

STUNFENCE, INC. and ROBERT GILMOUR,
Plaintiffs,

vs. 01 C 9627
GALLAGHER SECURITY (USA), INC.; GALLAGHER
SECURITY (INT.) LIMITED; GALLAGHER GROUP
LIMITED; and GALLAGHER POWER FENCE, INC.,

Defendants.

MEMORANDUM OPINION

CHARLES P. KOCORAS, District Judge:
This matter comes before the court on Plaintiffs StunFence, Inc.’s and Robert Gilmour’s
Rule 59(e) motion for reconsideration’ of the judgment dismissing their fraudulent misrepresentation

claim. For the reasons set forth below, we deny the motion.

BACKGROUND
Plaintiff Robert Gilmour is a former employee of Defendant Gallagher Security (USA), Inc.,
a subsidiary of Defendants Gallagher Security International and Gallagher Group Limited
(collectively “Gallagher”). Gallagher initially engaged in direct sales in the United States, but in
mid-1999 decided to abandon that method in favor ofrelationships with independent distributors and

to attempt to market its fencing to correctional institutions. At that time, Gallagher terminated

‘A motion for reconsideration under Rule 59(e) is more accurately referred as a motion to

alter or amend.


Gilmour’s employment but gave him the option to continue dealing with Gallagher as a distributor,
operating in the portion of the northeast United States as far south as Tennessee and North Carolina
and as far west as the Mississippi River. He accepted, and the parties executed an agreement giving
Gilmour and his company, StunFence, Inc. (collectively “StunFence”), the exclusive right to
distribute Gallagher products within that area, the non-exclusive right to distribute in other parts of
the United States, and exclusive control over certain dealers and subdistributors, as well as other
things.

According to StunFence, over the ensuing two years, they built a market for non-lethal
electric fencing with correctional facilities and other commercial customers in the United States.
They attest that by late 1999, Gallagher was not living up to the terms of the agreement; at that time
Gallagher allegedly did business directly with subdistributors that StunFence believed were to deal
only with them. At around the same time, the parties began to have disagreements about
StunFence’s use of less expensive parts such as nuts, bolts, and brackets not manufactured by
Gallagher in Gallagher fences. StunFence also avers that Gallagher solicited customers within
StunFence’s exclusive distribution area from 2000 until the present time. Supply and invoicing also
presented numerous problems. The tension between the two parties escalated until November 2001,
when Gallagher terminated its distribution arrangement with StunFence.

Less than three weeks later, StunFence filed this action. StunFence’s first amended
complaint (the “Complaint”), alleges thirteen causes of action including fraudulent
misrepresentation. Gallagher moved to dismiss seven of the claims, including the fraud claim. We

granted their motion with respect to the fraud claim. StunFence now moves to alter or amend the