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Piano Gallery Madison, LLC v. Create Music, LLC

United States District Court, W.D. Wisconsin

July 19, 2018

PIANO GALLERY MADISON, LLC, Plaintiff,
v.
CREATE MUSIC, LLC, BENJAMIN GARBER, and DEBRA GALLA, Defendants. CREATE MUSIC, LLC, Counterclaim-Plaintiff,
v.
PIANO GALLERY MADISON, LLC, and GRANT BILLINGS, Counterclaim-Defendants.

          OPINION & ORDER

          JAMES D. PETERSON DISTRICT JUDGE

         Plaintiff Piano Gallery Madison, LLC, (PGM) operated Billings Piano Gallery in Madison, Wisconsin, until 2014. Then PGM's managing member, Grant Billings, moved to Florida and sold the business to defendant Create Music, LLC (CM). PGM filed suit against CM, CM's managing member, Benjamin Garber, and one of the business's employees, Debra Galla. It alleges that they failed to perform as they were required to by the asset purchase agreement executed by the parties. Defendants answered, and CM asserted counterclaims against PGM and Billings. Dkt. 17.

         Now PGM and Billings (whom the court will refer to collectively as PGM) move to dismiss several of CM's counterclaims under Federal Rule of Civil Procedure 12(b)(6). Dkt. 22. The court will grant PGM's motion and dismiss all of CM's counterclaims except the seven breach-of-contract claims against PGM alone.

         ALLEGATIONS OF FACT

         The court draws the following facts from defendants' pleading, Dkt. 17, and accepts them as true for the purpose of deciding PGM's motion. Zahn v. N. Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). The court recounted PGM's allegations in its February 6, 2018 order on defendants' motion to dismiss, Dkt. 16, and it will not repeat them here. But it will summarize those of CM's material allegations that differ from PGM's version of the events.

         In answering PGM's amended complaint, CM denies that it breached the terms of the asset purchase agreement, and it alleges that PGM failed to perform all of the conditions precedent to require CM's performance under the agreement.

         CM also alleges that PGM breached eight provisions of the agreement. First, section 1.2 of the agreement defines “purchased assets, ” that is, those assets that PGM agreed to sell to CM. Dkt. 5-1, at 2. PGM allegedly retained several of those assets.

         Second, section 1.2(f) defines the purchased assets to include the “limited right and license to use and do business under” PGM's service marks, and provides,

In the event that [PGM] determine that one or more of [CM's] uses of the marks is inconsistent with [PGM's] quality standards, or that the quality of any of the good or services with which the marks are used is not consistent with maintaining the goodwill inherent in the marks, [PGM] shall so notify [CM], and [CM] shall cease all such disapproved use of the marks.

Id. at 3. PGM allegedly revoked CM's use of the marks not because of a quality issue but because of a monetary dispute between the parties.

         Third, section 1.3(b) provides that the gross profits from the next sale of a Steinway D Concert Piano would be “immediately paid over to” PGM from CM's gross revenue of the sale. Id. at 4. The agreement specifies that the gross profit amount was to be determined by PGM and was “estimated to equal approximately $59, 972.” Id. CM alleges that PGM set the gross profit amount “based on an outdated price list, ” resulting in an “overcharge” of $2, 171. Dkt. 17, ¶ 93(c).

         Fourth, under section 2.1(e), CM was to assume “the fees and/or contract associated with hosting and maintaining the business website (www.billingspiano.com).” Dkt. 5-1, at 6. But PGM had already paid for a “multi-year agreement for hosting the website, ” and Garber “was not permitted to” assume control of the website. Dkt. 17, ¶ 93(d). Later, Billings took down the website.

         Fifth, under section 2.2(f), PGM retained “any liabilities of [PGM] not explicitly included in section 2.1.” Dkt. 5-1, at 6. CM alleges that it paid $1, 155.59 in property taxes on PGM's behalf and that PGM is liable for that amount, as property taxes are not explicitly included in section 2.1.

         Sixth, under section 4.2(c), PGM represented that “copies of the financial statements of [PGM] provided to [CM] present fairly, in all material respects, the financial position of” PGM. Id. at 9. CM alleges that other financial statements “suggest different numbers” ...


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