Superior Services, Inc. v. Universal Warranty Corp. et al

Filing 35

MEMORANDUM AND ORDER that the defendants' motions to dismiss (Filing No. 17 in Case No. 15-v-396; Filing No. 17 in Case No. 15-cv-398; Filing No. 17 in Case No. 15-cv-400; Filing No. 17 in Case No. 15-cv-401; and Filing No. 17 in Case No. 15- v-402) are denied. The defendants' motions to strike (Filing No. 31 in Case No. 15-v-396; Filing No. 31 in Case No. 15-cv-398; Filing No. 31 in Case No. 15-cv-400; Filing No. 31 in Case No. 15-cv-401; and Filing No. 31 in Case No. 15-v-402) are denied as moot. The defendants shall file a responsive pleading within 14 days of the date of this order. Ordered by Senior Judge Joseph F. Bataillon. (ADB)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
SUPERIOR SERVICES, INC.,
Plaintiff,

8:15CV396

vs.
UNIVERSAL WARRANTY CORP., and
ALLY INSURANCE HOLDINGS, INC.,
Defendants.

ACI DEVELOPMENT CORPORATION,
Plaintiff,

8:15CV398

vs.
UNIVERSAL WARRANTY CORP., MIC
GENERAL INSURANCE CORP., and ALLY
INSURANCE HOLDINGS, INC.,
Defendants.

M.S.E. DISTRIBUTING, INC.,
Plaintiff,

8:15CV400

vs.
UNIVERSAL WARRANTY CORP., and
ALLY INSURANCE HOLDINGS, INC.,
Defendants.

THOMAS HANLON, d/b/a Dealer Direct,
Plaintiff,
vs.
UNIVERSAL WARRANTY CORP., and

8:15CV401

ALLY INSURANCE HOLDINGS, INC.,
Defendants.

AUTOMOTIVE DEVELOPMENT
SERVICES, INC.,
Plaintiff,

8:15CV402

vs.
MEMORANDUM AND ORDER
UNIVERSAL WARRANTY CORP., and
ALLY INSURANCE HOLDINGS, INC.,
Defendants.

This matter is before the court on the defendants' motions to dismiss, Filings No.
17 in Superior Services, Inc. v. Universal Warranty Corp. and Ally Insurance Holdings,
Inc., No. 15-v-396 ("Superior Servs." case); ACI Development Corp. v. Universal
Warranty Corp., Mic General Insurance Corp., and Ally Insurance Holdings, Inc., No.
15-cv-398 ("ACI" ); M.S.E. Distributing Inc. v. Universal Warranty Corp. and Ally
Insurance Holdings, Inc., No. 15-cv-400 ("MSE"); Hanlon v. Universal Warranty Corp.
and Ally Insurance Holdings, Inc., No. 15-cv-401 ("Hanlon"); and Automotive
Development Servs., Inc. v. Universal Warranty Corp. and Ally Insurance Holdings,
Inc., No. 15-v-402 ("ADS"), and on the defendants' motions to strike the plaintiffs'

2

evidence in opposition to the motions to dismiss, Filings No. 31 in each abovecaptioned case.1
These are actions for breach of contract, fraudulent concealment, negligent
misrepresentation, tortious interference with a contract, unjust enrichment, and breach
of the covenant of good faith and fair dealing in connection with representation
agreements for service contracts for motor vehicles. This court has jurisdiction based
on diversity of citizenship under 28 U.S.C. § 1332. The actions were removed from state
court and have been consolidated for pretrial management and discovery. See Filing
No. 16.
I.

BACKGROUND

In their detailed sixteen-page complaints, the plaintiffs allege they are
independent sales agents who offer motor vehicle service contracts (“VSCs”), and GAP
contracts to new and used motor vehicle dealers for resale to the dealers’ customers. 2
VSCs provide protection against mechanical breakdown and pay the cost of covered
repairs, and GAP contracts provide protection in the event a vehicle is totaled or stolen,
and the actual cash value of the vehicle is less than the outstanding balance on the
lease or financing agreement. See Filing No. 1-1, Notice of Removal, Ex. 1, Complaint
at 3. Defendant Universal Warranty Corp., a wholly owned subsidiary of defendant Ally

1

The court has not relied on any of the evidence submitted by the plaintiffs in opposition to the
motions to dismiss, accordingly the motions to strike the evidence will be denied as moot.
2

The court will generally cite to the complaint in the lead action, the Superior Servs. Case, No.
8:15-cv-396. The complaints filed in the other cases contain allegations identical in substance for the
most part.

3

Insurance Holdings, Inc. (hereinafter, collectively, “defendant” or “UWC”) issues,
administers and markets such service contracts.3 Id.
The plaintiffs allege that during the relevant period, they offered VSCs and GAP
contracts, branded “VehicleOne” contracts, to motor vehicle dealers on behalf of
defendant UWC. Id. at 3. The plaintiffs sold these VSCs pursuant to agreements with
UWC known as the “VehicleOne Program Representative Agreement” and the
"VehicleOne Primary GAP Representative Agreement" (hereinafter, collectively, "Rep
Agreements"). Id., Ex. A.4 Under the Rep Agreements, the plaintiffs were required—at
their own expense—to solicit motor vehicle dealers to carry VehicleOne VSCs and to
train dealers how to sell them to consumers. Id.
The plaintiffs allege they were independent agents, not employees. Id. at 4.
They state they had relationships with most of the dealers before they began selling the
defendants' contracts. Id. They allege that their primary value to UWC was their ability
to convince their existing dealer networks to carry UWC products in place of whatever
products the dealer carried previously. Id.

3

The defendant entities are identified in the pleadings as follows: Defendant UWC is a Michigan
corporation that transacts business in Nebraska, serving as the third-party administrator for vehicle
service and warranty contracts. Defendant AIly Insurance Holdings, Inc. (“AIHI”) is a Delaware
corporation that transacts business in Nebraska, marketing vehicle service contracts (“VSCs”) and other
financial services products to motor vehicle dealers. Defendant AIHI is a wholly-owned subsidiary of Ally
Financial Inc. Ally Financial Inc. was formerly named GMAC, Inc. (“GMAC”). General Motors Corporation
started GMAC and later sold a majority share of the company. See Filing No. 1-1, Complaint at 1-2; see
also Filing No. 13, Corporate Disclosure Statement. Defendant MIC General Insurance Corp. was an Ally
affiliate issuing contracts in Florida, and is a named defendant only in the ACI case, serving the same role
as UWC. See ACI, No. 15-cv-398, Filing No. 1-1, Complaint.
4

The complaints in each case identify and refer to both agreements, and allege that they are
"largely duplicative," but only one of those documents is attached to each plaintiff’s complaint. See, e.g.,
Filing No. 1-1, Complaint at 9 n.2. Defendant UWC does not dispute the contention that the terms of the
agreements are duplicative and has provided a complete set of contracts for all parties. See Filing No.
19, Index of Evid., Declaration of Donald Buckner, Exs. A-J.

4

Plaintiffs were compensated for their efforts on a pure commission basis in the
form of a representative fee for each contract sold by the dealer to a consumer. Id.
They allege they were paid only if they successfully solicited the dealer to sell
VehicleOne VSCs or GAP contracts and the dealer successfully sold and continued to
sell these contracts. Id. The plaintiffs further allege defendants did not reimburse them
for their expenses or compensate them for the business risk they took. Id. Paragraph
7(b) of the VehicleOne Program Representative Agreement and ¶ 8(b) of the
VehicleOne Primary Gap Agreement provide that the representative fee will be paid
only in respect to those service contracts or debt waiver forms for which UWC has
received the Dealer Cost, provided that the representative "is currently servicing such
Dealer account on behalf of [the defendant]." See Filing No. 19, Index of Evid.,
Declaration of Donald Buckner, Ex. A, VehicleOne Program Representative Agreement
at 2, VehicleOne Primary Gap Representative Agreement at 2.
The plaintiffs allege that they had a reasonable expectation of payment both in
the near and long term. Id. at 5. They also allege that defendants assured them that
they would continue to pay the plaintiffs commissions for VSCs and GAP sold through
the independent agents’ customers in the event that it terminated the VehicleOne
Program Agreement. Id. They identify specific statements to that effect by UWC's
Senior Vice President of Sales in April 2013. Id. at 7.
They also allege that at the same time the plaintiffs were soliciting dealerships to
carry UWC’s products, UWC’s corporate parent, Ally Insurance Holdings, Inc. ("Ally")
was utilizing a direct sales force to solicit dealerships to carry similar products known as
the GM Protection Plan. Id. at 5. Thereafter, GM decided to offer, and in fact began
5

offering, its own VSCs to GM dealers, bringing them into direct competition with Ally. Id.
at 6. GM then decided, effective November 2016, not to renew AIly's right to use GM’s
name and trademark in marketing VSCs. Id.
Plaintiffs allege Ally then developed a plan to gain control of the business and
business relationships then being overseen by defendant UWC’s independent agents.
Id. Plaintiffs contend that Ally asked UWC to approach agents that were responsible for
the highest volume of UWC business and convince them to execute a “Core
Representative Addendum to VehicleOne Program Representative Agreement” (“Core
Addendum”). Id.; see e.g., id., Ex. B, Core Addendum. The Core Addendum is an
amendment and supplement to the Rep Agreements. Id. at 1. The plaintiffs, other than
ACI, each executed the Core Addendum on various dates in March and April 2013. Id.
at 3; see also MSE, No. 8:15-cv-400, Filing No. 1-1, Complaint, Ex. C, Core Addendum
at 3; Hanlon, No. 15-cv-401, Filing No. 1-1, Complaint, Ex. C, Core Addendum at 3;
ADS, No. 8:15-cv-00402, Filing No. 1-1, Complaint, Ex. C at 3. Plaintiff ACI did not sign
the Core Addendum. ACI, No. 8:15-cv-398, Filing No. 1-1, Complaint at 7.
The Core Addendum imposed restrictions on the independence of independent
agents, including prohibiting the “Core” agents from “offer[ing] any [vehicle service
contract] or GAP programs other than VehicleOne]” without the consent of the Ally
account executives on accounts where Ally or UWC provided the dealers leads or
assigned agents to specific contracts. Id. at 7. The plaintiffs also assert that UWC
established minimum annual revenue thresholds that were so aggressive that they only
could be met if agents marketed UWC products exclusively. Id.

6

The version of the Core Addendum attached to the Hanlon and MSE complaints
"[i]n the event of termination under this section 3(b),5 Representative shall not

states:

be entitled to any Representative Fees on VehicleOne sales made by Assigned Dealers
after the effective date of termination of this Core Addendum." See MSE, No. 8:15-cv400, Filing No. 1-1, Complaint, Ex. C, Core Addendum (dated April 4, 2013) at 3;
Hanlon, No. 15-cv-401, Filing No. 1-1, Complaint, Ex. C, Core Addendum (undated) at
3. That language is not included in the Core Addendum attached to the ADS and
Superior complaints.

ADS, No. 15-cv-402, Filing No. 1-1, Complaint, Ex. C, Core

Addendum (dated April 23, 2013) at 3; Superior, No. 15-cv-396, Filing No. 1-1,
Complaint, Ex. B., Core Addendum (dated April 22, 2016) at 3.
Further, the plaintiffs allege in their complaints that defendants induced the
agents to sign the Core Addendum by promising an annual bonus, a profit-sharing
arrangement, greater access to Ally's resources and financial structures, and a strong
foundation for a long-term relationship with the Ally family of companies. Id. at 8. They
allege UWC urged the independent agents to work closely with Ally’s direct sales team
and to introduce direct sales team members to their customer contacts, so that when

5

Section 3(b) states:

This Core Addendum shall terminate immediately and without notice in the event of: i)
termination of either of the Agreements, ii) malfeasance on the part of the
Representative, iii) a material change in control of any party, iv) the insolvency of any
party, v) the institution of bankruptcy or similar proceedings by or against any party under
the laws of any jurisdiction, or vi) the making by any party of an assignment for the
benefit of creditors.
Superior, No. 15-cv-396, Filing No. 1-1, Complaint, Ex. B, Core Addendum at 3.

7

Ally terminated the independent agents, Ally would be in a better position to retain
business. Id.
The plaintiffs allege that on or about April 29, 2015, defendant UWC notified the
plaintiffs it was terminating the Rep Agreement and the Core Addendum, effective July
1, 2015. Id. at 9; see id., Ex. C. They allege that by that time, the plaintiffs’ marketing
efforts had created a vast network of dealers tethered to UWC and its products and
states that to this day dealers continue to sell UWC products and generate profits for
UWC. Id. Plaintiffs allege that in spite of express assurances that it would do so, UWC
refuses to pay the plaintiffs commissions on the sales. Id. at 10.
In its motions to dismiss, the defendants argue plaintiffs' claim for breach of
contract fails to state a plausible claim because the claim is for post-termination
commissions, and the contract expressly states that no such commissions are payable.
Defendants also argue that the plaintiffs' complaint fails to state a claim for fraud with
the requisite particularity required under the Fed. R. Civ. P. 9, and that the plaintiffs'
claim for fraudulent concealment should be dismissed because plaintiffs cannot
establish the necessary elements of their claim. They argue that the plaintiffs' negligent
misrepresentation claim should be dismissed for the same reasons. They further argue
that plaintiffs' claim for tortious interference is subject to dismissal because the
defendants' acts were permitted by the contract and were therefore not unjustified or
wrongful. Also, they argue it is appropriate to dismiss the plaintiffs' unjust enrichment
claim because the plaintiffs cannot simultaneously pursue breach of contract and unjust
enrichment on the facts alleged. Last, defendants argue that the plaintiffs' claim for

8

breach of the duty of good faith and fair dealing should be dismissed because the acts
of the defendants were permitted by the contract.
II.

LAW

Under the Federal Rules, a complaint must contain “a short and plain statement
of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 556 n.3. (2007). “Specific facts are not
necessary; the statement need only ‘give the defendant fair notice of what the . . . claim
is and the grounds upon which it rests.’” Erickson v. Pardus, 551 U.S. 89, 93 (2007)
(quoting Twombly, 550 U.S. at 555). In order to survive a motion to dismiss under Fed.
R. Civ. P. 12(b)(6), the plaintiff’s obligation to provide the grounds for his entitlement to
relief necessitates that the complaint contain “more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S.
at 555.
Determining whether a complaint states a plausible claim for relief is “a contextspecific task” that requires the court “to draw on its judicial experience and common
sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Although legal conclusions “can
provide the framework of a complaint, they must be supported by factual allegations.”
Id. Courts follow a “two-pronged approach” to evaluate Rule 12(b)(6) challenges. Id.
First, a court divides the allegations between factual and legal allegations; factual
allegations should be accepted as true, but legal allegations should be disregarded. Id.
Second, the factual allegations must be parsed for facial plausibility. Id. “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.” Id. at
9

678.

The court must find “enough factual matter (taken as true) to suggest” that

“discovery will reveal evidence” of the elements of the claim. Twombly, 550 U.S. at 556;
see also Doe v. Board of Regents of Univ. of Neb., 788 N.W.2d 264, 278 (Neb. 2010)
(holding that "to prevail against a motion to dismiss for failure to state a claim, a plaintiff
must allege sufficient facts, accepted as true, to state a claim to relief that is plausible
on its face").
“If, on a motion under Rule 12(b)(6) . . . , matters outside the pleadings are
presented to and not excluded by the court, the motion must be treated as one for
summary judgment under [Federal] Rule [of Civil Procedure] 56.” Fed. R. Civ. P. 12(d).
“Rule 12(b)(6) motions are not automatically converted into motions for summary
judgment simply because one party submits additional matters in support of or [in]
opposition to the motion.” Gorog v. Best Buy Co., 760 F.3d 787, 791 (8th Cir. 2014). A
district court does not convert a motion to dismiss into a motion for summary judgment
when, for example, it does not rely upon matters outside the pleadings in granting the
motion. Id.
“Though matters outside the pleading may not be considered in deciding a Rule
12 motion to dismiss, documents necessarily embraced by the complaint are not
matters outside the pleading.” Ashanti v. City of Golden Valley, 666 F.3d 1148, 1151
(8th Cir. 2012) (quoting Enervations, Inc. v. Minnesota Mining & Mfg. Co., 380 F.3d
1066, 1069 (8th Cir. 2004)). Where the claims relate to a written contract that is part of
the record in the case, the court considers the language of the contract when reviewing
the sufficiency of the complaint. Gorog, 760 F.3d at 792. “[T]he contracts upon which
[a] claim rests . . . are evidently embraced by the pleadings.” Mattes v. ABC Plastics,
10

Inc., 323 F.3d 695, 697 n. 4 (8th Cir. 2003); see also Stahl v. United States Dep't of
Agric., 327 F.3d 697, 700 (8th Cir. 2003) (“In a case involving a contract, the court may
examine the contract documents in deciding a motion to dismiss.”).
Under Nebraska law, a party seeking recovery for breach of contract must prove:
the existence of a promise, its breach, damage, and compliance with any conditions
precedent that activate the opposing party's duty. See Henriksen v. Jim's Body Shop,
643 N.W.2d 652, 658 (Neb. 2002). The party must further prove its damages were
proximately caused by the breach. Union Ins. Co. v. Land and Sky, Inc., 568 N.W.2d
908, 911 (Neb. 1997). A court examining, as a matter of law, whether a contract is
ambiguous must look to the whole contract, not just a portion. Husen v. Husen, 487
N.W.2d 269, 272 (Neb. 1992) (“A contract must be construed as a whole and, if
possible, effect must be given to every part thereof.”). At the pleading stage, a plaintiff
who fails to point to an identifiable contractual promise that the defendants did not honor
has not alleged a contract claim that plausibly entitles him to relief. Doe, 788 N.W.2d at
295; cf. Doe v. Bd. of Regents of Univ. of Nebraska, 809 N.W.2d 263, 270 (Neb. 2012)
(allowing action identifying specific contract and obligation allegedly breached to
proceed).
Whether a contract is ambiguous is a question of law. David Fiala, Ltd. v.
Harrison, 860 N.W.2d 391, 397 (Neb. 2015). A contract is ambiguous when a word,
phrase, or provision in the contract has, or is susceptible of, at least two reasonable but
conflicting interpretations or meanings. Id. When a court has determined that ambiguity
exists in a document, an interpretative meaning for the ambiguous word, phrase, or
provision in the document is a question of fact for the fact finder. Id. If a contract is
11

ambiguous, the meaning of the contract is a question of fact and a court may consider
extrinsic evidence to determine the meaning of the contract. Id. Although the language
of a document may be clear and unambiguous, a latent ambiguity exists when collateral
facts make the meaning of the contract uncertain. Plambeck v. Union Pacific R.R. Co.,
509 NW2d 17, 20 (Neb. 1993); see Union Nat. Bank of Little Rock v. Federal Nat.
Mortg. Ass’n, 860 F.2d 847 (8th Cir. 1988) (parol evidence rule will not bar evidence of
subsequent modifications to an agreement nor when the agreement is incomplete or
ambiguous).
Under the Federal Rules, a party alleging fraud must state with particularity the
circumstances constituting fraud. Fed. R. Civ. P. 9(b). The rule is interpreted in harmony
with the principles of notice pleading, and to satisfy it, the complaint must allege such
matters as the time, place, and contents of false representations, as well as the identity
of the person making the misrepresentation and what was obtained or given up thereby.
Drobnak v. Andersen Corp., 561 F.3d 778, 783 (8th Cir. 2009).

Essentially, the

complaint must plead the who, what, where, when, and how of the alleged fraud. Id.
Because this higher degree of notice is intended to enable the defendant to respond
specifically and quickly to potentially damaging allegations, conclusory allegations that a
defendant's conduct was fraudulent and deceptive are not sufficient to satisfy the rule.
Id. Allegations pleaded on information and belief usually do not meet Rule 9(b)'s
particularity requirement, except when the facts constituting the fraud are peculiarly
within the opposing party's knowledge. Id. at 783-84 (stating that the rule is satisfied if
the allegations are accompanied by a statement of facts on which the belief is founded).

12

However, the scienter element of fraud need only be alleged generally. Fed. R. Civ. P.
9(b).
In order to prove fraud or misrepresentation under Nebraska law, plaintiffs must
prove: (1) that a representation was made; (2) that the representation was false; (3)
that when made, the representation was known to be false or made recklessly without
knowledge of its truth and as a positive assertion; (4) that it was made with the intention
that the plaintiff should rely upon it; (5) that the plaintiff did so rely; and (6) that he or she
suffered damage as a result.

Freeman v. Hoffman La Roche, Inc., 618 N.W.2d 827,

844-45 (Neb. 2000). False representations must be the proximate cause of the damage
before a party may recover. Huffman v. Poore, 569 N.W.2d 549, 560 (Neb. Ct. App.
1997).
To state a claim for negligent misrepresentation, a plaintiff must plead the same
elements as for a fraud claim, with the exception of the defendant’s mental state. Lucky
7, LLC v. THT Realty LLC, 775 N.W.2d 671, 675 (Neb. 2009). Liability for negligent
misrepresentation is based upon the failure of the actor to exercise reasonable care or
competence in supplying correct information. Gibb v. Citicorp Mortgage, Inc., 518
N.W.2d 910, 920 (1994) (adopting Restatement (Second) Torts § 552 to specifically
enumerate the elements of a negligent misrepresentation claim). One of the elements
of a cause of action for negligent misrepresentation is justifiable reliance on the part of
the plaintiff. Washington Mut. Bank, FA v. Advanced Clearing, Inc., 679 N.W.2d 207,
210 (Neb. 2004). Whether a party's reliance upon a misrepresentation was reasonable
is a question of fact. Nebraska Nutrients, Inc. v. Shepherd, 626 N.W.2d 472, 496 (Neb.
2001). Negligent misrepresentation is a subspecies of fraud, and a party must state
13

with particularity the circumstances constituting fraud. Farr v. Designer Phosphate &
Premix Int'l., Inc., 570 N.W.2d 320, 326 (Neb. 1997); see Fed. R. Civ. P. 9(b).
To succeed on a claim for tortious interference with a business relationship or
expectancy, a plaintiff must prove (1) the existence of a valid business relationship or
expectancy, (2) knowledge by the interferer of the relationship or expectancy, (3) an
unjustified intentional act of interference on the part of the interferer, (4) proof that the
interference caused the harm sustained, and (5) damage to the party whose
relationship or expectancy was disrupted. Professional Mgmt. Midwest, Inc. v. Lund
Co., 826 N.W.2d 225, 235 (Neb. 2012).
The elements of unjust enrichment are that the defendant received money; the
defendant retained possession of the money; and in justice and fairness, the defendant
ought to pay the money to the plaintiff. See Kanne v. Visa U.S.A., 723 N.W.2d 293, 302
(Neb. 2006).

A party may plead unjust enrichment as an alternative theory to its

express contract theory. Professional Recruiters, Inc. v. Oliver, 456 N.W.2d 103, 107
(Neb. 1990).
The implied covenant of good faith and fair dealing exists in every contract and
requires that none of the parties to the contract do anything which will injure the right of
another party to receive the benefit of the contract. Coffey v. Planet Grp., Inc., 845
N.W.2d 255, 263 (Neb. 2014). The nature and extent of an implied covenant of good
faith and fair dealing are measured in a particular contract by the justifiable expectations
of the parties. Id. Where one party acts arbitrarily, capriciously, or unreasonably, that
conduct exceeds the justifiable expectations of the second party. Id.

14

The question of

a party's good faith in the performance of a contract is a question of fact. RSUI Indem.
Co. v. Bacon, 810 N.W.2d 666, 674 (Neb. 2011).
III.

DISCUSSION

The court finds the defendants' motions to dismiss should be denied.

The

plaintiffs' complaints, together with the documents attached to and referred to in the
complaints, adequately allege that the parties had a contractual relationship.

The

plaintiffs assert the defendants improperly terminated the agreements and failed to pay
sums allegedly due under the agreements. They have adequately alleged a promise,
its breach, damage, and compliance with conditions precedent and have outlined facts,
taken as true, to suggest that discovery will reveal evidence of the elements of the
breach of contract claims.
The court rejects the defendants’ argument, at this stage of the proceedings, that
the contracts unambiguously establish that defendants have no obligation to pay posttermination commissions. Read in their entirety and as amended by the core addenda,
the contractual documents are at least ambiguous, if not inconsistent. The agreements
can be reasonably interpreted to impose a post-termination commission obligation. The
provision that UWC removed from its later Core Addendum contracts state fairly
straightforwardly that UWC will not pay commissions for “sales made by Assigned
Dealers” post-termination, which implies that commissions for sales made by dealers
who were not “Assigned Dealers” would continue. Further, the reasons for termination
differ between the Rep Agreements and the Core Addenda. The construction of the
contract should await further development of the record.

15

The court also finds the plaintiffs have alleged fraud and negligent
misrepresentation with sufficient particularity to withstand a motion to dismiss. They
have set out the who, what and where of the alleged misstatements and have plausibly
alleged that they relied on the statements. Whether such reliance is reasonable is a
question of fact. The plaintiffs' complaints allege facts from which the court can infer
that the statements were made knowingly or at least with reckless disregard as to their
truth or falsity. Accordingly, plaintiffs have adequately stated claims for fraudulent or
negligent misrepresentation.
Although a plaintiff may not be allowed to recover for both breach of an express
contract and unjust enrichment, he is allowed to assert both at the pleading stage. The
allegations of the complaints adequately allege unjust enrichment. Also, the allegations
of the complaint, taken as true, support a breach of the implied covenant of good faith
and fair dealing. The plaintiffs have alleged that they have been deprived of their
reasonable expectations. Accordingly,
IT IS ORDERED that:
1.

The defendants' motions to dismiss (Filing No. 17 in Case No. 15-v396; Filing No. 17 in Case No. 15-cv-398; Filing No. 17 in Case No.
15-cv-400; Filing No. 17 in Case No. 15-cv-401; and Filing No. 17
in Case No. 15-v-402) are denied.

2.

The defendants' motions to strike (Filing No. 31 in Case No. 15-v396; Filing No. 31 in Case No. 15-cv-398; Filing No. 31 in Case No.
15-cv-400; Filing No. 31 in Case No. 15-cv-401; and Filing No. 31
in Case No. 15-v-402) are denied as moot.
16

3.

The defendants shall file a responsive pleading within 14 days of the date
of this order.
DATED this 20th day of May, 2016
BY THE COURT:

s/ Joseph F. Bataillon
Senior United States District Judge

17