1 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Symbria, Inc. et al.,

Plaintiffs, 

v.

John Callen, et al., 

Defendants.

Case No. 20-cv-4084

Judge Mary M. Rowland

MEMORANDUM OPINION AND ORDER

This case comes before the Court on multiple pending motions. Plaintiffs move 

to strike the various Defendants’ affirmative defenses [495]; [497]; [499]; [501]. 

Plaintiffs also move to strike Defendants Dilmas’ and Chicago Rehab’s counterclaims 

[493] and to dismiss Defendant UMHS’ counterclaims [491]. In addition, Plaintiffs 

move for leave to file a fourth amended complaint [542]. For the reasons explained 

below, this Court grants Plaintiffs leave to file a fourth amended complaint [542], 

grants Plaintiffs’ motion to strike Dilmas’ and Chicago Rehab’s counterclaims [493], 

and grants Plaintiffs’ motion to dismiss UMHS’ counterclaims [491]. In light of the 

fourth amended complaint, this Court denies without prejudice Plaintiffs’ motions to 

strike the Defendants’ affirmative defenses [495]; [497]; [499]; [501].

I. Background 

The Court presumes familiarity with its motion to dismiss opinion [402] and 

thus briefly only revisits the procedural history and facts in this case. Plaintiffs 

Symbria, Inc., Symbria Rehab, Inc., Alliance Rehab of Connecticut, LLC, Alliance 

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Rehab HVA, LLC, GreatBanc Trust Company, and the Symbria, Inc. Employee Stock 

Ownership Trust claim that their former corporate officers and employees formed a 

venture to compete against them in the field of rehabilitation and wellness services 

to senior living and skilled nursing facilities. They brought a sixteen-count third 

amended complaint alleging that Defendants violated a host of federal and state laws. 

Specifically, the third amended complaint brought the following claims: violation of 

the federal Defend Trade Secrets Act on behalf of Symbria, Symbria Rehab, Alliance 

Connecticut, and Alliance HVA against all Defendants (Count I); violation of the 

Illinois Trade Secrets Act by Symbria, Symbria Rehab, Alliance Connecticut, and 

Alliance HVA against all Defendants (Count II); breach of the SPA by Symbria, 

GreatBanc, and the Symbria ESOP trust against UMHS (Count III); breach of 

employment contract by Symbria, Symbria Rehab, Alliance Connecticut, and Alliance 

HVA against Callen (Count IV); breach of contract by Symbia Rehab against Dilmas 

(Count V); breach of fiduciary duty by Symbria Rehab against Dilmas (Count VI); 

tortious interference with the SPA by Symbria against Callen and the MedRehab 

Entities (Count VII); aiding and abetting Dilmas’ breach of fiduciary duty by Symbria 

Rehab against Callen, the MedRehab Entities, and UMHS (Count VIII); tortious 

interference with prospective business expectancy by Symbria Rehab, Alliance 

Connecticut, and Alliance HVA against Callen and the MedRehab Entities (Count 

IX); breach of fiduciary duty by Symbria Rehab against Callen (Count X); tortious 

interference with the Symbria Rehab-Dilmas Employment contract by Symbria 

Rehab against Callen, the MedRehab Entities, and UMHS (Count XI); copyright 

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infringement by Symbria against all Defendants (Count XII); breach of contract by 

Symbria Rehab against Irvine (Count XIII); tortious interference with the Symbria 

Rehab-Irvine employment contract by Symbria Rehab against Callen, the MedRehab 

Entities, and UMHS (Count XIV); breach of fiduciary duty by Symbria Rehab against 

Irvine (Count XV); and aiding and abetting Irvine’s breach of fiduciary duty by 

Symbria Rehab against Callen, the MedRehab Entities, and UMHS (Count XVI). 

[164] ¶¶ 191–346.

After Defendants moved to dismiss, the Court denied their motions in large 

part. As a result of the rulings, the Court struck Plaintiffs’ request for statutory 

damages and attorney fees in Count XII, Plaintiffs’ claim for copyright infringement; 

dismissed Counts V (breach of contract against Dilmas), VIII (aiding and abetting 

Dilmas’ breach of fiduciary duty by Symbria Rehab against Callen, the MedRehab 

Entities, and UMHS), and XVI (aiding and abetting Irvine’s breach of fiduciary duty 

by Symbria Rehab against Callen, the MedRehab Entities, and UMHS) with 

prejudice. Because Plaintiffs settled with Irvine during the pendency of the motions 

to dismiss, the Court also dismissed Counts XIII and XVI with prejudice.

After the Court’s ruling, the various Defendants filed their answers and 

affirmative defenses; some Defendants also filed counterclaims. In response, 

Plaintiffs have moved to strike their affirmative defenses. See [495] (motion to strike 

UMHS’ affirmative defenses); [497] (motion to strike Chicago Rehab’s affirmative 

defenses); [499] (motion to strike Callen and the MedRehab Defendants’ affirmative 

defenses); [501] (motion to strike Dilmas’ affirmative defenses). Plaintiffs have also 

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moved to strike Dilmas and Chicago Rehab’s counterclaims [493], and to dismiss 

UMHS’ counterclaims [491]. Additionally, after moving to strike and dismiss 

Defendants’ pleadings, Plaintiffs moved for leave to amend their complaint [542]. 

These motions are all ripe for consideration.1 This Court rules as follows below. 

II. Plaintiffs’ Motion for Leave to File Fourth Amended Complaint 

The Court first considers Plaintiffs’ motion for leave to file a fourth amended 

complaint [542]. 

Federal Rule of Civil Procedure 15(a)(2) provides that courts “should freely give 

leave” to amend pleadings “when justice so requires.” See also Ass’n of Am. Physicians 

& Surgeons, Inc. v. Am. Bd. of Med. Specialties, 15 F.4th 831, 835 (7th Cir. 2021) 

(noting that Rule 15(a)(2) takes a “liberal approach to granting leave to amend”) 

(quoting Haywood v. Massage Envy Franchising, LLC, 887 F.3d 329, 335 (7th Cir. 

2018)). Courts may, however, deny leave to amend “where there is a good reason to 

do so: ‘futility, undue delay, prejudice, or bad faith.’” R3 Composites Corp. v. G&S 

Sales Corp., 960 F.3d 935, 946 (7th Cir. 2020) (quoting Kreg Therapeutics, Inc. v. 

VitalGo, Inc., 919 F.3d 405, 417 (7th Cir. 2019)). Ultimately, the “decision to grant or 

deny a motion to file an amended pleading is a matter purely within the sound 

discretion of the district court.” Soltys v. Costello, 520 F.3d 737, 743 (7th Cir. 2008) 

(quoting Brunt v. Serv. Emps. Int’l Union, 284 F.3d 715, 720 (7th Cir. 2002)). 

Plaintiffs’ proposed fourth amended complaint makes several deletions and 

additions. Plaintiffs propose deleting the counts this Court dismissed in its motion to 

1 Even more recently, UMHS moved for leave to file a third-party complaint [591]. That motion is not 

yet briefed, so the Court will reserve ruling.

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dismiss order and the allegations pertinent to the Defendant with whom Plaintiffs 

have settled, Christine Irvine. Defendants do not oppose these deletions. They do, 

however, oppose Plaintiffs’ proposed additions of: (1) Joint & Neuro Chicago as a new 

party; (2) four new claims against the MedRehab Entities and UMHS—two revised

tortious interference with contract claims based on alleged interference with Dilmas’ 

and Irvine’s at-will employment contracts (proposed Counts IX and XI) and new 

claims for tortious interference with Callen’s severance agreement (proposed Count 

XII) and for abetting Callen’s breach of fiduciary duty (proposed Count XIII); and (3) 

additional alter ego allegations. See [542-1] ¶¶ 184–93, 279–91, 314–21, 322–29, 330–

39. Defendants do not argue futility. Instead, they urge this Court to deny the 

proposed additions based on prejudice and undue delay. For the following reasons, 

this Court will allow amendment.

Defendants argue that Plaintiffs delayed in adding Joint & Neuro Chicago as 

a party because they could have discovered at the outset of the litigation that it was 

a separate party from another named Defendant, Joint & Neuro, through public 

records available through the Illinois Secretary of State’s office. Defendant also points 

to various documents it produced during discovery in 2020 and early 2021 that 

demonstrated Joint & Neuro Chicago was a separate entity. But Plaintiffs represent 

that it was not until February 2022, through additional discovery, that they realized 

this fact. This Court has no reason to doubt the veracity of Plaintiffs’ representations, 

particularly given the similarities in the names between the two entities. Thus, this 

Court does not find that Plaintiffs unduly delayed in requesting amendment to add 

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Joint & Neuro Chicago. Even if Plaintiffs delayed, delay by “itself is normally an 

insufficient reason to deny a motion for leave to amend.” Dubicz v. Commonwealth

Edison Co., 377 F.3d 787, 793 (7th Cir. 2004). Rather, the “underlying concern is 

the prejudice to the defendant rather than simple passage of time.” Empress Casino

Joliet Corp. v. Balmoral Racing Club, Inc., 831 F.3d 815, 832 (7th Cir. 2016) (quoting

McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674, 687 (7th Cir. 2014)). Defendants 

here articulate no specific prejudice from the addition of Joint & Neuro Chicago. They 

instead argue that the claims Plaintiffs intend to assert against Joint & Neuro 

Chicago—trade secret misappropriation, copyright infringement, tortious 

interference, and aiding and abetting breaches of fiduciary duty—appear to have 

“occurred long before Joint & Neuro Chicago was even formed on October 18, 2019.” 

[556] at 7. If true, Joint & Neuro Chicago may ultimately be found not liable. This is 

an argument Defendants are free to raise on summary judgment or at trial, but it 

does not establish prejudice in the context of a motion to amend a pleading.

This Court will also allow Plaintiffs to add its new proposed tortious 

interference with contract claims based on contracts with Dilmas and Irvine. The 

Court dismissed Plaintiffs’ prior breach of contract claim against Dilmas because they 

alleged no viable employment contract based on an employee handbook. [402] at 44. 

Plaintiffs seek leave to add these new claims (proposed Counts IX and XI) in response 

to this Court’s motion to dismiss opinion. They explain that these new proposed 

tortious interference claims are designed to address the fact that this Court dismissed 

Dilmas’ and Irvine’s breach of contract claims; specifically, these proposed claims are 

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based on a new theory of breach of contract—namely, that some Defendants tortiously 

interfered with Dilmas and Irvine’s at-will employment contracts and with Dilmas’ 

resignation agreement. [542] at 6. 

Again, Defendants do not argue futility, but rather delay and prejudice. But 

there is no delay because Plaintiffs moved to cure their allegations only a few months 

after this Court issued its motion to dismiss opinion. [402]; [542]. The Seventh Circuit 

has emphasized that leave to amend “is especially advisable when such permission is 

sought after the dismissal of the first complaint” because a plaintiff should be “given 

every opportunity to cure a formal defect in his pleading.” Runnion ex rel. Runnion v.

Girl Scouts of Greater Chi. & Nw. Ind., 786 F.3d 510, 519 (7th Cir. 2015) (quoting 

Barry Aviation Inc. v. Land O'Lakes Mun. Airport Comm’n, 377 F.3d 682, 687 (7th 

Cir. 2004)). Moreover, Defendants do not articulate any specific prejudice resulting 

from allowing the amendment.

Plaintiff’s proposed additional claims of tortious interference with Callen’s 

severance agreement and aiding and abetting Callen’s breach of his fiduciary duty 

present a slightly closer call. Plaintiffs do not identify any new discovery that gives 

rise to these claims, nor do they argue that these new claims are designed to address 

this Court’s motion to dismiss opinion. Rather, as Defendants argue, Plaintiffs could 

have brought these claims earlier, as they are derivative of claims that Plaintiffs 

already alleged in the third amended complaint—breach of Callen’s severance 

agreement and breach of fiduciary duty against Callen. Nonetheless, this Court again 

heeds the Seventh Circuit’s admonition that, given Rule 15’s liberal amendment 

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standard, delay by “itself is normally an insufficient reason to deny a motion 

for leave to amend,” Dubicz, 377 F.3d at 793, and evaluates whether Defendants 

demonstrate prejudice. Defendants argue generally that they would have to 

undertake additional discovery due to the widening of the scope of the allegations in 

this case. [556] at 7. But Plaintiffs counter that they will not seek additional written 

discovery. [560] at 4. Further, this Court does not believe that discovery will greatly 

expand by allowing amendment. As stated above, these two new claims are derivative 

of the original claims against Callen. And all of the claims in the proposed fourth 

amended complaint are directed at the same general conduct—Defendants’ alleged 

pilfering of employees and data following a bad business break-up. Thus, much of the 

discovery conducted to date will be relevant to these new claims. Defendants also 

claim prejudice from the potential additional cost of moving to dismiss these claims. 

[556] at 7. This argument strikes the Court as disingenuous, as Defendants do not 

object to the amendment based on futility. 

Finally, this Court will also allow Plaintiffs to add new alter ego allegations. 

Plaintiffs represent that the new allegations derive from facts recently learned in 

discovery and that they will not seek additional written discovery from Defendants 

targeted at these allegations. [542] at 6; [540] at 4. Again, Defendants show neither 

undue delay nor prejudice. Thus, amendment is appropriate.

For these reasons, this Court grants Plaintiffs’ motion for leave to file their 

fourth amended complaint [542]. In light of the new amendment, Plaintiffs’ motions 

to strike Defendants’ affirmative defenses [495]; [497]; [499]; [501] are denied without 

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prejudice, as Defendants may wish to revise their affirmative defenses in response to 

the new allegations. 

III. Plaintiffs’ Motion to Strike Dilmas’ and Chicago Rehab’s 

Counterclaims 

This Court next considers Plaintiffs’ motion to strike Dilmas’ and Chicago 

Rehab’s Counterclaims. [473]. 

Among other claims, Plaintiffs assert violations of the Illinois Trade Secrets 

Act (ITSA) and copyright infringement against these Defendants. [175] ¶¶ 250, 296. 

Dilmas asserts a single counterclaim against Plaintiffs, alleging that to “the extent 

Dilmas prevails on Plaintiffs’ or Symbria’s claim for copyright infringement, Dilmas 

is entitled to recover his attorneys’ fees and costs as a ‘prevailing party’ pursuant 

to 17 U.S.C. § 505.” [446] at 81. Similarly, Chicago Rehab’s counterclaim seeks 

prevailing party fees should it prevail on the ITSA and/or Copyright claims. [470] at 

130–31.

Plaintiffs move to strike these counterclaims, arguing that they are not 

properly pled as counterclaims and “add nothing new to the dispute” because this 

Court already is tasked with determining the parties’ entitlement to fees and costs 

under the two Acts as part of Plaintiffs’ claims. [494] at 5. This Court agrees. The 

Copyright Act permits this Court to “allow the recovery of full costs” and “reasonable 

attorney’s fee” to the “prevailing party” regardless of whether the defendant has 

asserted a counterclaim. 17 U.S.C. § 505; Malibu Media, LLC v. Redacted, 705 F. 

App'x 402, 407 (6th Cir. 2017) (affirming the district court’s dismissal of a 

counterclaim requesting attorney’s fees to the prevailing party in a copyright 

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infringement action). The ITSA allows this Court to award reasonable attorney’s fees 

“to the prevailing party” if it finds a “claim of misappropriation is made in bad faith,” 

a “motion to terminate an injunction is made or resisted in bad faith,” or “willful and 

malicious misappropriation exists.” 765 Ill. Comp. Stat. 1065/5. The ITSA, like the 

Copyright Act, does not condition prevailing party fees on the defendant’s assertion 

of a counterclaim. See id. These counterclaims thus are redundant of Plaintiffs’ 

affirmative Copyright Act and ITSA claims.

Defendants argue that the counterclaims seek to preserve their right to recover 

fees and costs in the event that Plaintiffs voluntarily dismiss their claims before an 

adjudication on the merits. [523] at 6. As another court has explained, dismissing 

counterclaims in copyright suits can be “problematic” as “doing so gives the plaintiff 

unilateral control over whether the court reaches the merits of the case because the 

plaintiff can voluntarily dismiss the claims at any time.” Square One Ent. Inc. v.

Partnerships & Unincorporated Associations Identified in Schedule “A”, No. 20 C 

5685, 2021 WL 1253450, at *2 (N.D. Ill. Apr. 5, 2021). This “gives the plaintiff undue 

leverage in settlement negotiations if an agreement regarding validity of the 

copyright, or a judgment or acknowledgement regarding the defendant’s conduct, is 

important to the defendant.” Id. This is the very logic employed in Malibu Media, 

LLC v. Khan, the case Defendants primarily rely upon. No. 18 C 3028, 2019 WL 

1382082, at *2 (N.D. Ill. Mar. 27, 2019). There, the court declined to dismiss the 

defendant’s declaratory judgment counterclaim for non-infringement, explaining that 

there “is tremendous pressure for a defendant to settle, even if the case is meritless” 

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and that the counterclaim “will offer protection should [the defendant] choose to 

challenge [the plaintiff]’s case on the merits instead of submitting to settlement.” Id.

Here, in contrast to Khan, Defendants do not bring declaratory judgment 

actions of non-infringement or non-misappropriation. Their “counterclaims” instead 

simply deny the veracity of Plaintiffs’ allegations and request fees to the extent they 

prevail. See [446] at 81; [470] at 131. Thus, Defendants add nothing new in their 

counterclaims; they simply “state the opposite of the complaint.” LKQ Corp. v.

Rutledge, No. 21 C 3022, 2022 WL 1720590, at *6 (N.D. Ill. May 27, 2022) (quotation 

omitted). Moreover, the concerns animating Khan are not present here. Khan is one 

of many lawsuits brought by Malibu Media, a distributor of pornographic videos, 

which follow a similar procedural pattern: 

plaintiff sues numerous John Does in a single action for using 

BitTorrent to pirate the movie; plaintiff subpoenas the ISPs to obtain 

the identities of these Does; if successful, plaintiff will send out demand 

letters to the Does; because of embarrassment, many Does will send 

back a nuisance-value check to the plaintiff. The cost to the plaintiff: a 

single filing fee, a bit of discovery, and stamps. The rewards: potentially 

hundreds of thousands of dollars. Rarely do these cases reach the merits.

Malibu Media, LLC v. Doe, No. C 15-04441 WHA, 2016 WL 3383758, at *2 (N.D. Cal. 

June 20, 2016) (quoting Malibu Media, LLC v. John Does 1 through 10, 12-3632, 2012

WL 53832304, at *3–4 (C.D. Cal. June 27, 2012)). Inherent in these cases is the 

“potential for abuse” because defendants feel pressure to settle even meritless cases 

due to their potential damages exposure coupled with the taboo nature of the subject 

matter. Id. at *3. Accordingly, it makes sense to allow defendants in these cases to 

assert counterclaims seeking prevailing party costs and fees, permitting the 

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defendant (who is typically unrepresented) to seek adjudication on the merits and 

clear his or her name if Malibu Media seeks to voluntarily dismiss its own claims. See 

id.; see also Khan, 2019 WL 1382082, at *1. In contrast, here, there is not the potential 

for abuse discussed in the above cases. There is no indication that Plaintiffs brought 

this case to extort a quick settlement. Rather, this case has remained ongoing for 

years and Plaintiffs have defeated motions to dismiss their ITSA and Copyright Act 

claims. Plaintiffs appear intent on seeing their claims through to an adjudication on 

the merits, barring a mutually agreeable settlement among the parties. Thus, this 

Court finds it unnecessary to allow Defendants to assert their “counterclaims” for the 

purpose of preventing an abuse of process.

The Federal Rules of Civil Procedure offer another layer of protection to 

Defendants. That is, if Plaintiffs voluntarily dismissed the case, they must do so 

under Rule 41(a)(2), which provides that an “action may be dismissed at the plaintiff’s 

request only by court order, on terms that the court considers proper.” Rule 41(a)(2)

allows this Court to condition a voluntary dismissal on whatever terms and 

conditions it “deems necessary to offset possible prejudice defendant may otherwise 

suffer from plaintiff dismissing his complaint with prejudice.” Marlow v. Winston & 

Strawn, 19 F.3d 300, 303 (7th Cir. 1994). Pursuant to that rule, voluntary dismissals 

without prejudice “are usually granted only if the plaintiff pays expenses incurred by 

the defendant in defending the suit up to that point” to “offset the possible prejudice 

defendant may otherwise suffer from plaintiff dismissing his complaint without 

prejudice.” Babcock v. McDaniel, 148 F.3d 797, 799 (7th Cir. 1998) (quotation 

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omitted). Thus, Rule 41(a)(2) provides a mechanism under which Defendants can 

seek their fees and costs should Plaintiffs voluntarily dismiss the claims without 

prejudice. Additionally, it is well-established that a voluntary dismissal with 

prejudice under Rule 41(a)(2) “makes the defendant the prevailing party for purposes 

of an award of attorney’s fees under § 505.” Mostly Memories, Inc. v. For Your Ease

Only, Inc., 526 F.3d 1093, 1099 (7th Cir. 2008). “This is no less true when a case is 

dismissed because the plaintiff ‘threw in the towel’—that is, where the dismissal is 

on the plaintiff’s own motion.” Id. (quoting Riviera Distributors, Inc. v. Jones, 517 

F.3d 926, 928 (7th Cir. 2008)). 

For the foregoing reasons, this Court grants Plaintiffs’ motion to strike Dilmas 

and Chicago Rehab’s counterclaims [473]. Those counterclaims, appearing in [446] 

and [470], are hereby stricken.

IV. Plaintiffs’ Motion to Dismiss UMHS’ Counterclaims 

This Court next considers Plaintiffs’ motion to dismiss UMHS’ counterclaims 

[491]. In its counterclaims, UMHS asserts claims for breach of contract (Count I) and 

indemnification (Count II). Both counts are directed at all Plaintiffs, defined as 

Symbria, Symbria Rehab, Alliance Connecticut, Alliance HVA, GreatBanc, and 

Symbria ESOP Trust. [467] at 138. A smaller subset of the Plaintiffs—Symbria, 

Symbria Rehab, Alliance Connecticut, and Alliance HVA—are referred to as 

“Symbria and Affiliates” in the collective. Id. 

UMHS asserts that on October 31, 2015, it entered into a stock purchase 

agreement (SPA) with other sellers and Symbria, identified as the Company in the 

SPA. [467] at 137. Pursuant to the SPA, UMHS sold its stock in Symbria for certain 

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consideration. Id. at 138. Article 4.3(w) of the SPA states as follows: “Solvency. The 

Company [Symbria] will be able to pay its debts incurred in the ordinary course of 

business after giving effect to the financing incurred by the Company in connection 

with the transaction.” Id. at 139. Article 4.3(x) provides:

No Material Omission. The representations and warranties of the 

Company in this Agreement, and all representations, warranties, and 

statements of the Company Group contained in any schedule, financial 

statement, exhibit, list or document delivered pursuant to this 

Agreement do not omit to state a material fact necessary in order to 

make the representations, warranties and statements misleading.

Id. UMHS alleges that Plaintiffs “have financial statements and disclosure 

statements that would indicate solvency or lack of solvency” but “failed to provide 

supporting financial documentation to support Plaintiffs solvency to UMHS.” Id.

UMHS asserts that this constitutes a breach of the SPA. Id.

UMHS also alleges that Plaintiffs breached Article 5.9(b) of the SPA, which 

provides in pertinent part:

Post-Closing Covenants. The Company will use its best efforts to have 

the Management Group commit to renew the terms of their respective 

employment agreements on an annual or longer basis after the fifth 

anniversary of the Closing, until the Subordinated Notes and Warrants 

are no longer outstanding.

Id. at 140. John Callen is a member of the Management Group. Id. According to 

UMHS, on January 12, 2017, Symbria terminated Callen’s employment in violation 

of Article 5.9(b) of the SPA. Id.

In support of its indemnification counterclaim in Count II, UMHS alleges that 

the ESOP Trustee has express indemnification obligations to UMHS under the SPA. 

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Id. at 141. The SPA provides as follows, with regard to Symbria and Affiliates’ 

breaches of the SPA:

The ESOP Trustee, solely in its capacity as ESOP Trustee, shall 

indemnify, defend, and hold harmless, to the extent permitted by 

ERISA, each of Sellers and the Company against and from all Damages 

sustained or incurred by Sellers or the Company resulting from or 

arising out of tort by virtue of (a) any inaccuracy in or breach of the 

representations and warranties made by the ESOP Trust in this

Agreement or in any Transition Document for the benefit of Sellers to 

the Company, or (b) the ESOP Trust’s breach of any of the ESOP Trust’s 

covenants or agreements contained in this Agreement or in any 

Transaction Document for the benefit of Sellers.

Id. UMHS claims it is entitled to a defense and indemnification in this matter 

pursuant to the SPA regarding the claims Plaintiffs brought against it for tortious 

interference with contract, copyright infringement, and breach of contract. Id. UMHS 

alleges that Plaintiffs have failed to fulfill the obligations, resulting in a breach of the 

SPA with UMHS. Id.

Plaintiffs move to dismiss both counts under Rule 12(b)(6). [491]. To survive a 

motion to dismiss under Rule 12(b)(6), the claim “must provide enough factual 

information to state a claim to relief that is plausible on its face and raise a right to 

relief above the speculative level.” Haywood v. Massage Envy Franchising, LLC, 887 

F.3d 329, 333 (7th Cir. 2018) (quoting Camasta v. Jos. A. Bank Clothiers, Inc., 761 

F.3d 732, 736 (7th Cir. 2014)); see also Fed. R. Civ. P. 8(a)(2) (requiring a complaint 

to contain a “short and plain statement of the claim showing that the pleader is 

entitled to relief”). A court deciding a Rule 12(b)(6) motion accepts the well-pleaded 

factual allegations as true and draws all reasonable inferences in the pleading party’s

favor. Lax v. Mayorkas, 20 F.4th 1178, 1181 (7th Cir. 2021).

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Starting with Count I, the breach of contract claim, Plaintiffs argue that 

UMHS fails to state any claim for breach of the SPA against any Plaintiff. [492] at 3. 

This Court agrees that UMHS does not plausibly plead breaches of Section 4.3 or 5.9

against any Plaintiff. UMHS alleges that Plaintiffs are in breach of Sections 4.3(w) 

and (x) because they currently possess documents regarding the financial solvency of 

Symbria, but refuse to turn those documents over to UMHS. But Sections 4.3(w) and 

(x) concern representations and warranties regarding Symbria’s solvency and the 

completeness of documentation in connection with the 2015 transaction, not 

continuing promises regarding solvency or documentation in the future. See [162-1] 

at 38. Indeed, Section 4.3(w) contains a covenant by Symbria that it “will be able to 

pay its debts . . . after giving effect to the financing [it incurs] in connection with the 

Transaction.” Id. And Section 4.3(x) promises that the representations and 

warranties Symbria has given pursuant to the Agreement do not make omissions of 

material fact. Id. The plain language of these covenants2 concern the adequacy of 

Symbria’s representations about its solvency at the time of the transaction. They do 

not concern promises by Symbria to maintain solvency in the future nor to provide 

supporting documentation to UMHS of its solvency. Thus, it is not plausible for 

UMHS to allege that Plaintiffs have breached Section 4.3 by not handing over current

2 Because the parties raise no conflict of law dispute, the Court applies Illinois law to UMHS’ 

counterclaims. See Bd. of Forensic, 922 F.3d 827; Santa’s Best Craft, LLC v. St. Paul Fire & Marine

Ins. Co., 611 F.3d 339, 345 (7th Cir. 2010) (applying forum law where no party raised a conflict of law 

issue). Under Illinois law, courts “give effect to the plain and ordinary meaning of unambiguous” 

contract language. AFM Mattress Co., LLC v. Motorists Com. Mut. Ins. Co., 37 F.4th 440, 443 (7th Cir. 

2022).

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financial statements and disclosure statements that support their solvency. Contra

[467] at 139.

Nor does UMHS plausibly allege that any Plaintiff breached Section 5.9(b), 

which concerns Symbria’s post-closing covenant to “use its best efforts to have the 

Management Group [including Callen] commit to renew the terms of their respective 

employment agreements on an annual or longer basis after the fifth anniversary of 

the Closing. . . .” [162-1] at 43 (emphasis added). The plain language of this provision 

contemplates Symbria using its best efforts to engage Callen to renew his 

employment, but only once Callen’s agreement was due for renewal five years after 

the transaction closed. Here, Symbria could not have breached Section 5.9(b) because 

the SPA closed on October 31, 2015, [162-1] at 2; [175] ¶ 32, and Callen was 

terminated in July 2017, well before the fifth anniversary of the closing, [467] at 140.

Symbria’s contractual obligation to exercise best efforts to retain Callen thus was 

never even triggered under Section 5.9(b).

Recognizing these pleading deficiencies, UMHS raises an entirely new theory 

in its response brief. UMHS argues that under the SPA, UMHS sold its stock in 

exchange for subordinated promissory notes, warrants, and other promises. [519] at 

4. According to UMHS, Symbria breached the SPA by failing to pay the subordinated 

promissory notes as required. Id. This theory of breach of contract appears nowhere 

in UMHS’ counterclaim, however, and UMHS cannot use his response brief to amend 

his deficient claim. See Pirelli Armstrong Tire Corp. Retiree Med. Benefits Tr. v. 

Walgreen Co., 631 F.3d 436, 448 (7th Cir. 2011) (noting the “axiomatic rule that a 

Case: 1:20-cv-04084 Document #: 603 Filed: 11/14/22 Page 17 of 19 PageID #:20305
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plaintiff may not amend his complaint in his response brief”); see also, e.g., Maroon 

Soc’y v. Unison Consulting Inc., No. 19 C 05117, 2020 WL 5076688, at *12 (N.D. Ill. 

Aug. 26, 2020) (“Maroon cannot amend its pleading by way of response brief.”). 

Accordingly, UMHS has failed to plead a cognizable breach of contract counterclaim. 

Its breach of contract counterclaim in Count I is dismissed.

The indemnification counterclaim in Count II is similarly deficient. UMHS 

bases its indemnification counterclaim on Section 7.2(a) of the SPA, which obligates 

the ESOP trustee to indemnify and defend UMHS from damages “result[ing] from or 

arising out of tort by virtue of (a) any inaccuracy in or breach of the representations 

and warranties made by the ESOP Trust in this Agreement or in any Transition 

Document for the benefit of Sellers to the Company,” or “(b) the ESOP Trust’s breach

of any of the ESOP Trust’s covenants or agreements contained in this Agreement or 

in any Transaction Document for the benefit of Sellers.” [162-1] at 48 (emphasis 

added). By its plain language, the SPA requires a breach of some kind by the ESOP 

Trust for the ESOP trust’s indemnification obligations to arise. Id. UMHS’ 

counterclaims do not, however, allege any such breach by the ESOP Trust. See 

generally [467]. UMHS does not address this deficiency in its response. It instead 

argues, contrary to the plain language of the indemnification provision, that “the 

ESOP Trustee could be liable to UMHS in tort for inaccuracies or breaches of 

representations Symbria made in the ESOP Transaction documents.” [519] at 6–7. 

Section 7.2(a), as discussed, does not contemplate indemnification for Symbria’s 

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breaches, but rather for the ESOP Trust’s own breaches. Thus, UMHS fails to plead 

a plausible indemnification counterclaim under the SPA. Count II is also dismissed.

IV. Conclusion

For the reasons explained above, this Court grants Plaintiffs’ motion for leave 

to file a fourth amended complaint [542], grants Plaintiffs’ motion to strike Dilmas’ 

and Chicago Rehab’s counterclaims [493], and grants Plaintiffs’ motion to dismiss 

UMHS’ counterclaims [491]. In light of the foregoing, this Court denies with prejudice 

Plaintiffs’ motions to strike the Defendants’ affirmative defenses [495]; [497]; [499]; 

[501]. Plaintiffs are directed to file the fourth amended complaint as a separate docket 

entry by November 17, 2022. Defendants shall answer by December 15, 2022. UMHS 

may file an amended counterclaim by December 15, 2022.

Dated: November 14, 2022

E N T E R:

MARY M. ROWLAND

United States District Judge

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