Putzier v. Ace Hardware Corp.
50 F. Supp. 3d 964
N.D. Ill.2014Background
- Franchisees allege common law fraud, fraudulent inducement, and Illinois IFDA claims against Ace for Vision 21 disclosures and pro formas.
- Ace’s Vision 21 plan dictated mandated inventory, merchandising, and start-up costs for stores in multiple states.
- Franchisees received UFOCs and pro formas; plaintiffs allege figures were cherry-picked and inflated to entice investment.
- Stores opened in WA, TX, and CO; alleged misrepresentations occurred via headquarters in Illinois and in-state communications.
- IFDA claim arises from pre-sale conduct; the three-year repose period vs one-year discovery-based limitation is at issue.
- Court transferred from Florida to Illinois; Judge plans to decide on Ace’s Rule 12(b)(6) dismissal and Rule 9(b) standards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which state's law governs the fraud claims | Illinois nexus; Ace's HQ in IL. | Florida choice-of-law rules apply; multiple states involved. | Washington, Texas, and Colorado law apply to the common law fraud claims. |
| Are the IFDA claims time-barred | Discovery rule tolls; concealment tolling. | Three-year repose expires before filing; limited tolling by concealment. | IFDA Count I is untimely as to the three-year statute of repose; discovery rule tolling not established. |
| Are the common law fraud claims timely | Discovery rule tolling across WA, TX, CO; within statute after tolling. | Claims time-barred under each state’s statute of limitations if not tolled. | Discovery rule tolling applied; claims not time-barred at this stage. |
| Do Lorenz and Arvada Ace have standing to sue | Fraud claims belong to plaintiffs, not bankruptcy estate. | Pre-petition claims belong to bankruptcy estate; Lorenz/Arvada lack standing. | Bankruptcy trustee is the real party in interest; substitution may be allowed under Rule 17(a)(3) for Lorenz/Arvada. |
| Are Counts II and III pled with adequate specificity under Rule 9(b) | Specific misrepresentations and who said what are alleged. | Allegations are too vague; failure to identify sources, content, and timing. | Counts II and III dismissed without prejudice for lack of Rule 9(b) specificity; leave to amend granted. |
Key Cases Cited
- Ackerman v. Northwestern Mut. Life Ins. Co., 172 F.3d 467 (7th Cir.1999) (heightened pleading in fraud cases under Rule 9(b))
- Pirelli Armstrong Tire Corp. Retiree Med Benefits Trust v. Walgreens Co., 631 F.3d 436 (7th Cir.2011) (necessity of specificity in fraud pleadings)
- Beattie v. Coll. Ctr. of Finger Lakes Inc., 613 So.2d 52 (Fla. Dist. Ct. App.1992) (Restatement-based choice-of-law considerations (referenced standard))
- Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939 (7th Cir.2013) (Rule 9(b) specificity and conspicuous pleading requirements)
- Trumpet Vine Invs., N.V. v. Union Capital Partners I, Inc., 92 F.3d 1110 (11th Cir.1996) (Restatement §148 conflict-of-laws analysis (New York focus))
- Geinosky v. City of Chicago, 675 F.3d 743 (7th Cir.2012) (documents attached to motion to dismiss treated as pleadings)