CarProof Corporation v. HyperQuest Inc. et al
Filing
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MEMORANDUM OPINION Signed by the Honorable Samuel Der-Yeghiayan on 1/26/2016: Denying Defendants' partial motion to dismiss 14 . Mailed notice (mw, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CARPROOF CORPORATION,
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Plaintiff,
v.
HYPERQUEST, INC., et al.,
Defendants.
No. 15 C 7385
MEMORANDUM OPINION
SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Defendants’ partial motion to dismiss. For
the reasons stated below, the partial motion to dismiss is denied.
BACKGROUND
Plaintiff Carproof Corporation (Carproof) allegedly sells detailed vehiclehistory reports to automobile sellers and buyers. Defendant Hyperquest, Inc.
(Hyperquest) allegedly provides software and services related to automobileinsurance estimates for accident damages incurred by motor vehicles. Defendant
Solera Holdings, Inc. (Solera) is allegedly the parent company of Hyperquest. Solera
is also allegedly the parent company of Defendants Audatex Holdings, LLC,
Audatex Holdings, Inc., Audatex North America, Inc., and Audatex Canada
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Holdings, Inc. (collectively referred to as “Audatex”). Audatex allegedly provides
information and services for the automobile claims processing industry in
competition with Carproof. In July 2014, Carproof allegedly entered into an
agreement (Agreement) with Hyperquest, under which Hyperquest was obligated to
provide Carproof with estimatics data in return for a fee.
According to Carproof, within days after executing the Agreement, Solera and
Audatex began interfering with the Agreement by instructing Hyperquest not to
contact Carproof and to turn off the data feed to Carproof. Hyperquest has allegedly
asserted that the Agreement is invalid and has failed to provide the services required
under the terms of the Agreement. Carproof contends that Solera and Audatex have
interfered with the Agreement because they believe that Hyperquest should have
bargained for more favorable terms. Carproof includes in its complaint a breach of
contract claim brought against Hyperquest (Count I), and tortious interference with
contract claims brought against Audatex and Solera (Count II). Defendants move to
dismiss the claims in Count II.
LEGAL STANDARD
In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil
Procedure 12(b)(6) (Rule 12(b)(6)), the court must draw all reasonable inferences
that favor the plaintiff, construe the allegations of the complaint in the light most
favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in
the complaint. Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 622 (7th
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Cir. 2012); Thompson v. Ill. Dep’t of Prof’l Regulation, 300 F.3d 750, 753 (7th Cir.
2002). A plaintiff is required to include allegations in the complaint that “plausibly
suggest that the plaintiff has a right to relief, raising that possibility above a
‘speculative level’” and “if they do not, the plaintiff pleads itself out of court.”
E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir.
2007)(quoting in part Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007));
see also Morgan Stanley Dean Witter, Inc., 673 F.3d at 622 (stating that “[t]o survive
a motion to dismiss, the complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face,” and that “[a] claim has
facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct
alleged”)(quoting Ashcroft v. Iqbal, 556 U.S. 662 (2009))(internal quotations
omitted).
DISCUSSION
Defendants argue that Carproof has failed to allege sufficient facts to state a
valid tortious interference with contract claim. For a tortious interference with
contract claim brought under Illinois law, a plaintiff must establish: (1) “that he had a
valid and enforceable contract,” (2) that the defendant “was aware of the contractual
relationship,” (3) that the defendant “intentionally and without justification induced”
the contracting party “to breach the contract,” (4) that “the subsequent breach was
caused by” the defendant, and (5) that the plaintiff “sustained damages.” Nation v.
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Am. Capital, Ltd., 682 F.3d 648, 651 (7th Cir. 2012). Defendants argue that under
Illinois law parent and affiliate companies are privileged to interfere with the
relationships of corporate affiliates when it is not in their economic interest to do so
as long as there is no malicious or unjustified conduct. Defendants contend that their
privileged conduct cannot be found to be wrongful or without justification and thus
cannot support a valid tortious interference with contract claim. Carproof correctly
points out that Defendants have not cited any controlling precedent or Illinois state
law on point to support their assertions that parent and affiliated companies engage in
privileged conduct when they interfere with business relationships of a company. In
addition, even if this court were to recognize such a privilege, whether or not
Defendants engaged in privileged conduct would involve a factual inquiry beyond
the pleadings. Defendants cite various cases that provide that conduct is privileged
when, for example, contractual relations threaten a present economic interest with
another subsidiary, and when the parent company has acted in good faith to protect a
valid business interest. (Mem. Dis. 5-6). While Defendants may present such
arguments as a defense in the instant action, such determinations cannot be made
based upon the allegations in the complaint and it is premature to make such a
determination at this juncture. Ennenga v. Starns, 677 F.3d 766, 773 (7th Cir.
2012)(indicating that for a Rule 12(b)(6) motion, a court must restrict its inquiry to
the pleadings unless a limited exception is applicable).
It is evident from the Second Circuit case Boulevard Associates v. Sovereign
Hotels, Inc., 72 F.3d 1029 (2d Cir. 1995), which Defendants themselves rely upon,
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that it is premature to assess the merits of their defense. (Mem. Dis. 6). In
Boulevard, the district court did not dismiss the action based on the pleadings. In
fact, the case needed to proceed to trial before the district court could resolve the
factual issues. Id. at 1032-33, 35. Similarly, in the Third Circuit case Green v.
Interstate United Mgmt. Servs. Corp., 748 F.2d 827 (3d Cir. 1984), which
Defendants rely upon, the case proceeded to a jury trial. Id. at 830. The court in
Green also listed certain factors that should be examined for a tortious interference
with contract claim that involves a factual inquiry beyond the pleadings. Id. at 83132. Defendants seek to draw certain inferences from allegations in the pleadings in
their favor, which is improper at this juncture, and the allegations in the complaint do
not on their face establish that Defendants have a meritorious defense. Thus, even if
this court recognized the privilege proposed by Defendants, it is premature at this
juncture to resolve such a defense based upon the pleadings. At the summary
judgment stage, Defendants will need to point to sufficient evidence to support their
defense to obtain a judgment as a matter of law. Therefore, the motion to dismiss the
tortious interference with contract claims is denied.
CONCLUSION
Based on the foregoing analysis, Defendants’ partial motion to dismiss is
denied.
___________________________________
Samuel Der-Yeghiayan
United States District Court Judge
Dated: January 26, 2016
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