Got Docs, LLC v. Kingsbridge Holdings, Inc.

MEMORANDUM OPINION AND ORDER

Ronald A. Guzmán, United States District Judge

For the reasons stated below, IQL Riggig, LLC (f/k/a Riveria MCS, LLC), Edward Gibson, and Tarang Gupta's motion for judgment on the pleadings as to Counts I and III of the counterclaim by Frank Mendicina and AMF6 Solutions is denied, and Kingsbridge's motion to dismiss Counts 13 (conversion) and 17 (civil conspiracy) [120] of the second amended complaint is granted.

STATEMENT

The Court assumes familiarity with the facts and the Court's prior orders.

A. Motion for Judgment on the Pleadings

Counterclaim defendants IQL Riggig, LLC (f/k/a Riveria MCS, LLC), Edward Gibson, and Tarang Gupta (collectively, “Riveria”) move for judgment on the pleadings as to Counts I and III of the counterclaim by Frank Mendicina and AMF6 Solutions (collectively, “Mendicina”).

A motion for judgment on the pleadings under Federal Rule of Civil Procedure (“Rule”) 12(c) is governed by the same standards as a motion to dismiss under Rule 12(b)(6). Federated Mut. Ins. Co. v. Coyle Mech. Supply Inc., 983 F.3d 307, 313 (7th Cir. 2020) (“The only difference between a motion for judgment on the pleadings and a motion to dismiss is timing; the standard is the same.”). Thus, to survive a motion for judgment on the pleadings, the challenged pleading must “contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

In Count I of the counterclaim, Mendicina seeks a declaratory judgment regarding the parties' rights and legal relationship under the Got Docs operating agreement (“Operating Agreement”). Riveria argues that Count I fails because (1) it repackages Mendicina's affirmative defense as a claim and thus serves no purpose; and (2) declaratory judgment and

2

injunctive relief are remedies, not stand-alone claims. Mendicina clarifies in its response that Count I of the counterclaim is broader in scope than the affirmative defense. Specifically, both Count I of the counterclaim and the second defense assert that Riveria forfeited its 60% ownership interest in Got Docs and that AMF6 now owns 100% of Got Docs and Mendicina is the sole manager of Got Docs. However, Count I further states that if Riveria did not forfeit its 60% ownership interest, then AMF6 remains a 40% owner of Got Docs. The second defense, however, is based on the premise that AMF6 is 100% owner of Got Docs. Moreover, while the second defense can result only in the dismissal of Got Docs' claims in this case, Mendicina asserts that Count I seeks broader relief in that it asks the Court to enjoin Riveria, Gibson, and Gupta from taking any actions on behalf of Got Docs, not just prosecuting the instant lawsuit. Because the second defense and Count I of the counterclaim do not entirely overlap, the Court sees no basis to dismiss Count I of the counterclaim as duplicative of the second defense. See Sarkis' Cafe, Inc. v. Sarks in the Park, LLC, 55 F.Supp.3d 1034, 1039 (N.D. Ill. 2014) (“Because Defendant's counterclaim seeking a cancellation of Plaintiff's mark based upon fraud may potentially afford Defendant different or additional relief than a finding of invalidity alone, the claim is not duplicative of Defendant's trademark invalidity defense.”).

Riveria's second contention-that Count I must be dismissed because declaratory judgment and injunctive relief are remedies, not stand-alone claims-also fails. Parties routinely invoke the Declaratory Judgment Act to clarify the parties' rights and obligations in a contract. Auto-Owners Ins. Co. v. Osborn Homes, Inc., No. 14-CV-1308-SMY-PMF, 2015 WL 5118128, at *2 (S.D. Ill. Aug. 28, 2015) (“A request to construe the language of a contract to apprise the parties of their legal rights falls within the scope of the Declaratory Judgment Act.”). “[I]f issuing a declaratory judgment ‘will clarify and settle the legal relations at issue and afford parties relief from insecurity and uncertainty, the declaratory judgment action is usually heard.'” Id. at 1038 (citation omitted). Riveria also argues that Mendicina's request for declaratory judgment “serves no useful purpose and is redundant of the substantive litigation.” The Court has the discretion to entertain a request for declaratory judgment, and it chooses to do so here; the Court will make a determination on the request for declaratory relief at the time it decides the substantive claims before it. See In re JPMorgan Chase Bank Home Equity Line of Credit Litig., 794 F.Supp.2d 859, 877 (N.D. Ill. 2011) (“The decision to entertain a declaratory judgment action lies within the discretion of the district court and is not precluded by the availability of another form of relief.”) (citations omitted).

In Count III of the Counterclaim, Mendicina alleges breach of contract, gross negligence, and willful misconduct. Riveria initially argues that this claim is a “misnamed claim for tortious breach of an implied fiduciary duty, ” which is subject to a three-year statute of limitations and, therefore, time-barred under Nevada law. See Nev. Rev. Stat. § 11.190(3). In its response to the motion for judgment on the pleadings, however, Mendicina characterizes the claim as one for “breach of the[] contractual obligations under the Got Docs operating agreement to act in good faith and deal fairly and to avoid gross negligence and willful misconduct.” (Defs.' Br. Opp'n, Dkt. # 259, at 8.)

The Operating Agreement states that it is governed by Nevada law. However, “as to procedural matters, the law of the forum controls, and in Illinois, ‘[s]tatutes of limitations are procedural, merely fixing the time in which the remedy for a wrong may be sought, and do not

3

alter substantive rights.'” NewSpin Sports, LLC v. Arrow Elecs., Inc., 910 F.3d 293, 300 (7th Cir. 2018) (citation omitted). The Illinois statute of limitations for breach of contract is ten years. 735 ILCS 5/13-206. But “Illinois law includes a borrowing statute that prevents litigants from pursuing claims in Illinois courts that would have been barred by the statute of limitations in the state where the claim accrued.” Art Akiane LLC v. Art & SoulWorks LLC, No. 19 C 2952, 2021 WL 4206786, at *5 (N.D. Ill. Sept. 16, 2021) (citing 735 ILCS 5/13-210). The only law the parties discuss in the breach-of-contract context other than Illinois is Nevada's, so the Court assumes for purposes of this motion that the claim accrued in Nevada, which has a six-year statute of limitations for breach-of-contract claims. See Nev. Rev. Stat. § 11.190.1(b). According to Mendicina, because the counterclaim's...