NEXES GROUP, LLC v. TELRITE CORPORATION, INC.
3:05-cv-00216
S.D. Ind.Dec 7, 2010Background
- Pow ers sues on behalf of Icenet and Nexes for breach of the Agreement and nonpayment for services, seeking over $2.9 million plus $250,000 in additional damages.
- Icenet merged into Nexes in December 2004, with Nexes surviving as the LLC; Powers is alleged to be authorized to wind up their affairs.
- Telrite moving to dismiss argues Powers is not the real party in interest and the complaint fails to state a claim; Nexes is asserted as the real party.
- The court has diversity jurisdiction; Icenet/Nexes are citizens of Delaware, Indiana, Wisconsin, and Florida; Powers is a California citizen; Telrite is a Georgia citizen.
- Indiana law governs breach claims because the contract provides Indiana governing law; Section 8.3 allegedly blocks assignment while Section 8.5 contemplates successors and assigns.
- The court denies Telrite’s motion to dismiss in part, allows caption to reflect Nexes as plaintiff, and notes the need to determine in the caption who the real party is.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Real party in interest capacity | Powers is authorized to sue on behalf of Nexes/Icenet. | Nexes is the real party; Powers lacks capacity to sue. | Indiana law governs capacity; Powers authorized; Nexes may enforce. |
| Statutory authorization to sue for LLCs | Powers is authorized under Indiana statutes to wind up and sue for the LLCs. | Only Nexes, as the surviving LLC, may sue a claim by the LLCs. | Powers plausibly authorized; caption amendment appropriate to Nexes as plaintiff. |
| Choice of law for breach of contract | Indiana law governs the contract; breach elements satisfied. | Section 8.3 restricts assignment, undermining enforceability. | Indiana law governs; breach claim can proceed; ambiguity between 8.3 and 8.5 supports Nexes' enforceability. |
| Effect of Section 8.3 vs 8.5 on enforceability | 8.3 renders 8.5's language on successors meaningful; Nexes may enforce. | 8.3 prevents third parties from enforcing; no enforceable rights by Nexes. | 8.3 renders 8.5 ambiguous; plausible that Nexes can enforce; claim survives. |
| Rule 12(b)(6) adequacy | Complaint states a breach and damages on behalf of Icenet/Nexes. | No valid party in interest; no enforceable contract rights. | Complaint states a viable breach claim and capacity to sue; dismissal denied. |
Key Cases Cited
- Cosgrove v. Bartolotta, 150 F.3d 729 (7th Cir. 1998) (LLC citizenship treated for diversity; capacity considerations)
- Wise v. Wachovia Sec., LLC, 450 F.3d 265 (7th Cir. 2006) (LLC versus corporate treatment; capacity and Rule 17 analysis)
- Henson v. CSC Credit Services, 29 F.3d 280 (7th Cir. 1994) (judicial notice and consideration of public records on motion to dismiss)
- Orthodontic Affiliates, P.C. v. Long, 841 N.E.2d 219 (Ind. Ct. App. 2006) (contract interpretation to avoid meaningless language; enforceability context)
- Allen v. Great American Reserve Ins. Co., 766 N.E.2d 1157 (Ind. 2002) (choice of law and governing contractual provisions)
- Collins v. McKinney, 871 N.E.2d 363 (Ind. Ct. App. 2007) (contract claim elements and damages foundations)