Opinion ID: 757331
Heading Depth: 3
Heading Rank: 1

Heading: Claim against Shure

Text: 11 In Count I of his Second Amended Complaint, Kaplan alleged that Shure had breached certain warranties and representations contained in the land sale contract. Although he was not a party to the contract, Kaplan asserted two reasons why he could sue Shure for breach of contract: first, that he was in privity of contract with RBK, and second, that he was an intended third-party beneficiary under the contract. In his opening brief on appeal, Kaplan only presented arguments with respect to his privity of contract theory and has therefore waived any challenge to the district court's findings on his third-party beneficiary claim. 2 See Ricci v. Arlington Heights, Illinois, 116 F.3d 288, 292 (7th Cir.1997), cert. granted, --- U.S. ----, 118 S.Ct. 679, 139 L.Ed.2d 627, and cert. dismissed, --- U.S. ----, 118 S.Ct. 1693, 140 L.Ed.2d 789 (1998) (argument not raised in brief is waived). Accordingly, we will examine only whether Kaplan was in privity with RBK. 12 In the agreement with RBK, Shure made a number of representations and warranties regarding the land. These included warranties: 1) that Shure had good, marketable and insurable title to the land; 2) that as of the closing, there would be no obligations or liabilities of any kind for which the purchaser would be liable, including tort liabilities; and 3) that the land was not used by the seller, or to the seller's knowledge, for the production or storage of any hazardous substance; that the land was not used as a landfill or waste dump; and that the land did not contain any hazardous substances or wastes, as defined by applicable state and federal environmental laws. See Second Amended Complaint, Exh. A pp 9(A)(2), (7), and (12). According to the complaint, hazardous waste is present on the land, leaving Shure in default of its representations. 13 In the event that any of Shure's representations or warranties were violated, the contract contained a remedy clause. The clause stated, in relevant part: 14 If Seller should breach any such covenant, condition, representation or warranty and the same is discovered following the Closing, Purchaser shall be entitled to collect money damages from Seller or enforce any other right or remedy available at law or equity. 15 Id. p 21(A). The agreement also contemplated that RBK might dispose of the land at some point, specifying that [t]his Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Id. p 28. It is this last clause which Kaplan asserts gives him a right to sue Shure under the agreement. 16 Under Illinois law, a cause of action based on a contract may only be brought by a party to that contract or someone in privity with a party. White Hen Pantry, Inc. v. Cha, 214 Ill.App.3d 627, 158 Ill.Dec. 310, 574 N.E.2d 104, 109 (1991). 3 Privity of contract is the mutual or successive relationship to the same rights of property. Collins Co., Ltd. v. Carboline Co., 125 Ill.2d 498, 127 Ill.Dec. 5, 532 N.E.2d 834, 839 (1988) (emphasis in original) (citations omitted). Such a relationship can arise by operation of law, by descent, or by voluntary or involuntary transfer. Id. Additionally, privity accompanies a valid assignment of a contract because it puts the assignee in the shoes of the assignor--since the assignor was in privity with the other contracting party, the assignee is as well. Id. 532 N.E.2d at 839-40. 17 The district court dismissed Kaplan's claim against Shure because he had not alleged that he is in privity with RBK. See Memorandum Opinion of July 17, 1996 at 10. Specifically, it stated that [n]othing in Kaplan's Complaint indicates any relationship between him and RBK that might be construed as privity of contract. Id. The court upheld its decision on Kaplan's motion to reconsider, reaffirming that Kaplan has not alleged any facts to show that he 'succeeds' to RBK's rights under the Contract. See Memorandum Opinion of September 13, 1996 at 4. After Kaplan had filed his Second Amended Complaint (and Shure again moved to dismiss), the district court refused to consider Kaplan's arguments regarding privity, finding that he had not been given leave to reassert his claim and that, in any event, he had failed to allege anything new. See Memorandum Opinion of February 14, 1997 at 5. Finding that the district court misapplied the standard on a motion to dismiss, we reverse. 18 In the Second Amended Complaint, Kaplan asserts that the land is the sole asset of the Trust and that RBK assigned its entire interest as sole beneficiary of the Trust to Kaplan. In addition, Kaplan states that the Trust is the successor purchaser of the land from RBK, and that he holds the entire beneficial interest in the Trust. See Second Amended Complaint pp 83 and 84. Taking these allegations in a light most favorable to Kaplan, we cannot agree with the district court's decision to dismiss Kaplan's claim. The district court repeatedly stated that Kaplan failed to allege any facts showing that he was in privity with RBK. However, facts need not be pled with specificity under our notice-pleading system. See Fed.R.Civ.P. 8(a)(2) (requiring only a short and plain statement of the claim showing that the pleader is entitled to relief); Jackson v. Marion County, 66 F.3d 151, 154 (7th Cir.1995) (plaintiff need not plead facts; can plead conclusions as long as they give the defendant at least minimal notice of the claim.). The fact that Kaplan did not plead facts showing that he was in privity with RBK, therefore, does not bar his claim as a matter of law; as long as he put Shure on notice of the nature of his claim, his case can proceed. 19 While his allegations with respect to privity are relatively thin, we do not believe that they are fatally so. Kaplan's assertions put Shure on notice that he is claiming to be in privity of contract with RBK--the fact that he did not say this outright is of little consequence. In addition, we cannot say at this time that Kaplan could prove no set of facts consistent with his allegations which would entitle him to relief. As previously noted, this case involves an Illinois land trust. Such trusts are characterized by four distinctive features: 20 First, both the legal and equitable title to the res are vested in the trustee, not the beneficiary. Land trusts vest the usual attributes of ownership-the rights of possession and management of the property, as well as the rights to rents and proceeds from the property--in the beneficiary or beneficiaries. Second, this beneficial interest, the bundle of beneficiaries' rights and privileges, is not characterized as a real estate interest, but as a personal property interest. Third, the trustee has no duties or powers other than to execute deeds and mortgages or otherwise to deal with the property as directed by the holder of the power of direction.... Fourth, in land trusts, the power of direction, which is a property interest separable from the beneficial interest, provides the possessor with the ability to direct the trustee in the manner in which he is to deal with the property. 21 Estate of Bowgren v. Commissioner of Internal Revenue, 105 F.3d 1156, 1160-61 (7th Cir.1997) (citations and footnotes omitted). Kaplan alleges that RBK assigned its whole interest in the Trust to him; this assignment would seem to have included RBK's rights in the land purchase agreement. Additionally, as beneficiary of the Trust, Kaplan may well have succeeded to RBK's rights in the agreement by virtue of the flow-through nature of the Trust. The dismissal of his claims at this stage of the litigation was erroneous. 22 Since we find that Kaplan's complaint sufficiently informs Shure of the nature of the claim against it and that Kaplan's claim does not, at this stage, fail as a matter of law, we must reverse the district court's dismissal of Kaplan's claim against Shure.