Romans v. Orange Pelican, LLC

1

FRANK ROMANS Plaintiff, v. ORANGE PELICAN, LLC, Defendant.

No. 1:22-cv-4169

United States District Court, N.D. Illinois, Eastern Division

December 19, 2022

FRANK ROMANS

Jeffery M. Heftman

Steven H. Leech

Ryan F. Manion

GOZDECKI, DEL GIUDICE, AMERICUS, FARKAS & BROCATO LLP

Attorneys for Plaintiff

PLAINTIFF'S RULE 12(C) MOTION FOR JUDGMENT ON THE PLEADINGS AND RULE 12(F) MOTION TO STRIKE AFFIRMATIVE DEFENSES

MARVIN E. ASPEN, JUDGE

NOW COMES the Plaintiff, Frank Romans (“Romans”), by and through his attorneys, Gozdecki, Del Giudice, Americus Farkas & Brocato LLP, and for his Motion for Judgment on the Pleadings under Federal Rule of Civil Procedure 12(c) and Motion to Strike under Federal Rule of Civil Procedure 12(f) hereby states:

INTRODUCTION

Defendant, Orange Pelican, LLC (“Orange Pelican”) admits in its Answer and Affirmative Defenses (Dkt. No. 33) that it is a signatory to the promissory notes attached to the Verified Complaint, that Romans funded those promissory notes, and that it has failed to pay Romans under the terms of those notes. (See Dkt. No. 33, ¶¶ 10-15, 20-25; Dkt. No. 1, ¶¶ 10-15, 20-25; see also Dkt. No. 31, Exs. 1 & 2 thereto; Dkt. No. 32.) Accordingly, there is no genuine issue of material fact that, inter alia:

1. Romans and Orange Pelican entered into valid contracts, namely the promissory notes;

2. Romans performed his obligation to fund the promissory notes;

3. Orange Pelican breached its obligations under the promissory notes; and

4. Romans has suffered damages flowing from Orange Pelican's breaches.

See Matthews v. Wis. Energy Corp., 534 F.3d 547, 553 (7th Cir. 2008) (citing Nw. Motor Car, Inc. v. Pope, 51 Wis.2d 292, 296, 187 N.W.2d 200 (1971)) (detailing elements of breach of contract under Wisconsin law).

Rather than deny material allegations that would impede entry of judgment at this early juncture, Orange Pelican offers three affirmative defenses. As those affirmative defenses are deficient as a matter of law, they should be stricken. This Court has already determined that Orange Pelican's objection to personal jurisdiction is meritless, rendering its first affirmative defense legally deficient. Similarly, Orange Pelican's assertion that its performance of the promissory notes is excused by the doctrine of frustration is unavailing, because alleged inability to procure medical grade imports cited by Orange Pelican is not the subject of, or even referenced in, the promissory notes, which are unambiguous on their face. Accordingly, Orange Pelican's claimed inability to resell the medical grade imports is not so severe as to not be within the risks Orange Pelican took in contracting with Romans. Finally, the Court should strike Orange Pelican's affirmative defense of commercial impracticability because that defense comes from, and is relevant to, cases for the sale of goods under the Uniform Commercial Code-not cases dealing with the breach of a promissory note.

Therefore, Romans respectfully requests that this Court grant judgment on the pleadings in his favor and against Orange Pelican. Romans also respectfully requests that this Court enter a judgment striking Orange Pelican's affirmative defenses.

BACKGROUND FACTS

In April 2021, Romans loaned Orange Pelican $2,000,000.00. (Dkt. No. 1, ¶¶ 10-13; Dkt. No. 33, ¶¶ 10-13.) Romans and Orange Pelican signed a promissory note with a maturity date of April 7, 2022 (the “April Promissory Note”). (Dkt. No. 1, ¶¶ 10-13; Dkt. No. 33, ¶¶ 10-13; see also Dkt. No. 31, Exs. 1 & 2 thereto; Dkt. No. 32.) The April Promissory Note provides that interest accrues at 15% per annum, required Orange Pelican to make quarterly interest payments of $75,000 during the one (1) year term of the loan, and to repay the outstanding principal upon maturity. (Dkt. No. 1, ¶¶ 10-13; Dkt. No. 33, ¶¶ 10-13; see also Dkt. No. 31, Exs. 1 & 2 thereto; Dkt. No. 32.) Romans performed under the April Promissory Note by lending $2,000,000.00 to Orange Pelican. (Dkt. No. 1, ¶ 13; Dkt. No. 33, ¶ 13.)

In May 2021, Romans loaned Orange Pelican an additional $1,500,000.00, and Romans and Orange Pelican signed another promissory note for that amount with a maturity date of May 25, 2022 (the “May Promissory Note,” and together with the April Promissory Note, the “Notes”). (Dkt. No. 1, ¶¶ 20-23; Dkt. No. 33, ¶¶ 20-23; see also Dkt. No. 31, Exs. 1 & 2 thereto; Dkt. No. 32.) The May Promissory Note states that interest accrues at 20% per annum, required Orange Pelican to make quarterly interest payments of $75,000 during the one (1) year term of the loan, and to repay the outstanding principal upon maturity. (Dkt. No. 1, ¶¶ 20-23; Dkt. No. 33, ¶¶ 2023; see also Dkt. No. 31, Exs. 1 & 2 thereto; Dkt. No. 32.) Romans performed under the May Promissory Note by lending $1,500,000.00 to Orange Pelican. (Dkt. No. 1, ¶ 23; Dkt. No. 33, ¶ 23.)

Both Notes have matured, and despite written demand for payment in full, Orange Pelican admits that it has made no payments under the Notes. (Dkt. No. 1, ¶¶ 14-15, 24-25; Dkt. No. 33, ¶¶ 14-15, 24-25; see also Dkt. No. 31, Exs. 1 & 2 thereto; Dkt. No. 32.) Accordingly, Orange Pelican has breached the Notes by failing to pay Romans the $3,500,000.00 that he is owed in principle under the Notes and accrued interest.

LEGAL STANDARD

In a motion for judgment on the pleadings, the Court considers the pleadings alone, which consist of the complaint, the answer, and any written instruments attached as exhibits. FED. R. CIV. P. 12(c); N. Indiana Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998). If a plaintiff moves for judgment on the pleadings, “the motion should not be granted unless it appears beyond doubt that the non-moving party cannot prove facts sufficient to support his position.” Hous. Auth. Risk Retention Grp., Inc. v. Chicago Hous. Auth., 378 F.3d 596, 600 (7th Cir. 2004) (internal quotation marks omitted).

Federal Rule of Civil Procedure 12(f) governs motions to strike affirmative defenses. Under that Rule, this Court may strike “any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” FED. R. CIV. P. 12(f). Affirmative defenses will be stricken “when they are insufficient on the face of the pleadings.” Williams v. Jader Fuel Co., 944 F.2d 1388, 1400 (7th Cir. 1991). In a diversity case, such as this, the legal and factual sufficiency of an affirmative defense is examined by reference to state law. Id. Motions to strike should be granted when “it appears to a certainty that plaintiffs would succeed despite any state of the facts which could be proved in support of the defense.'” Id. Further, “[i]t is appropriate for the court to strike affirmative defenses that add unnecessary clutter to a case.” Davis v. Elite Mortg. Servs., 592 F.Supp.2d 1052, 1058 (N.D. Ill. 2009) (citing Heller Fin. v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir. 1989)).

Courts therefore use a three-part test that is applied to affirmative defenses subject to a motion to strike:

(1) [T]he matter must be properly pleaded as an affirmative defense; (2) the matter must be adequately pleaded under the requirements of Federal Rules of Civil Procedure 8 and 9; and (3) the matter must withstand a Rule 12(b)(6) challenge-in other words, if it is impossible for defendants to prove a set of facts in support of the affirmative defense that would defeat the complaint, the matter must be stricken as legally insufficient.

Davis, 592 F.Supp.2d at 1058 (citing Heller, 883 F.2d at 1294). As to the first part of the test, “the basic concept of an affirmative defense is an admission of the facts alleged in the complaint, coupled with the assertion of some other reason defendant is not liable.” ADM Investor Servs., Inc. v. Collins, No. 05 C 1823, 2006 WL 224095, *2 (N.D. Ill. Jan. 26, 2006) (quoting Instituto Nacional de Comercializacion Agricola v. Cont'l Ill. Nat'l Bank & Trust Co., 576 F.Supp. 985, 988 (N.D. Ill. 1989)) (emphasis in original).

ARGUMENT

A. This Court Should Enter Judgment on The Pleadings for Romans

The facts of this case demonstrate Romans is entitled to judgment on the pleadings. To prove a claim for breach of contract, Romans must prove “a valid contract that the defendant breached and damages flowing from that breach.” Matthews v. Wis. Energy Corp., 534 F.3d 547, 553 (7th Cir. 2008) (citing Nw. Motor Car, Inc. v. Pope, 51 Wis.2d 292, 296, 187 N.W.2d 200 (1971)). Here, the Notes constitute valid contracts because there is a documented offer, acceptance, and consideration. See Piaskoski & Assocs. v. Ricciardi, 2004 WI.App. 152, ¶ 7, 275 Wis.2d 650, 686 N.W.2d 675. (Dkt. No. 1, ¶¶ 10-16, 20-26; Dkt. No. 33, ¶¶ 10-16, 20-26; see also Dkt. No. 31, Exs. 1 & 2 thereto; Dkt. No. 32.) An offer and acceptance exist when there is mutual assent among the parties, and consideration exists if it is evident that the parties intend to be bound. See Gustafson v. Physicians Ins. Co. of Wis., Inc., 223 Wis.2d 164, 173, 558 N.W.2d 363 (Ct. App. 1998).

The Notes here are signed and demonstrate that Romans offered to loan Orange Pelican a total of $3,500,000 in exchange for Orange Pelican repaying the Notes by the maturity date with interest. (Dkt. No. 1, ¶¶ 10-16, 20-26; Dkt. No 33, ¶¶ 10-16, 20-26; see also Dkt. No. 31, Exs. 1 & 2 thereto; Dkt. No. 32.) Indeed, Orange Pelican admits that Romans performed his obligations under the Notes by loaning Orange Pelican a combined $3,500,000.00 under the Notes. (Dkt. No. 1, ¶¶ 13, 23; Dkt. No. 33, ¶¶ 13, 23; see also Dkt. No. 31, Exs. 1 & 2 thereto; Dkt. No. 32.) Orange Pelican seeks to generally deny the allegation that Romans fully performed under the Note but having specifically admitted that Romans performed on his obligation to loan the...