United States District Court, D. Colorado
A. BRIMMER UNITED STATES DISTRICT JUDGE.
matter is before the Court on RE/MAX, LLC'S and Motto
Franchising, LLC's Motion to Dismiss Counterclaims
[Docket No. 61]. The Court has jurisdiction under 28 U.S.C.
RE/MAX, LLC (“RE/MAX”) is a real estate franchise
company that has a network of franchisee real estate agents.
Docket No. 56 at 16, ¶ 11. Defendant Quicken Loans Inc.
(“Quicken Loans”) is a mortgage lender.
Id. at 16-17, ¶ 12. In early 2014, RE/MAX and
Quicken Loans entered into negotiations for a potential
marketing alliance. Id. at 17, ¶ 13. At that
time, plaintiff and defendant executed a NonDisclosure
Agreement (the “NDA”). Id. After further
negotiations, on July 9, 2015, RE/MAX and Quicken Loans
executed a Strategic Marketing Alliance Agreement (the
“Agreement”), which took effect on October 15,
2015. Id., ¶ 15. The Agreement required RE/MAX
to provide marketing services to Quicken Loans in exchange
for fees. Id., ¶ 16 and at 19, ¶ 22;
see also Docket No. 56-1 .
September 2015, after Quicken Loans had a third party perform
a valuation analysis of the Agreement, Quicken Loans told
RE/MAX that the Agreement was overvalued. Docket No. 56 at
18, ¶¶ 18-19. RE/MAX responded by making various
representations about the extent of marketing services it
would provide under the Agreement, such as statements about
the number of unique monthly visitors to RE/MAX's
website, and offered to provide additional services.
Id. On November 10, 2015, the parties executed the
First Amendment to Strategic Marketing Alliance Agreement
(the “Amendment”). Id. at 19, ¶ 23.
The Amendment requires RE/MAX to provide some of the
additional marketing services it offered to provide, such as
placing Quicken Loans' logos on RE/MAX's websites.
Docket No. 56-3 at 2, ¶¶ (j)-(k). Quicken Loans
claims that the representations that RE/MAX made before the
parties signed the Amendment were knowingly false and that
RE/MAX knew that it could not provide the additional services
it offered. Docket No. 56 at 18-19, ¶¶ 20-21.
Quicken Loans also claims that, during the course of
performance under the Agreement, it disclosed confidential
information and trade secrets to RE/MAX, but that RE/MAX
failed to provide the marketing services required by the
Agreement. Docket No. 56 at 20-21, ¶¶ 26, 30.
RE/MAX sent invoices to Quicken Loans for services provided
under the Agreement and Quicken Loans paid these invoices
through the April 2016 invoice. Id. at 6-7, ¶
15. On September 2, 2016, RE/MAX sent a letter to Quicken
Loans stating that it was in default under the Agreement for
failing to pay invoices. Id. at 7, ¶ 16.
parallel lawsuits followed. On September 7, 2016, Quicken
Loans filed a complaint against RE/MAX in the United States
District Court for the Eastern District of Michigan.
Quicken Loans Inc. v. RE/MAX, LLC, No.
2:16-cv-13233-DML-RSW, Docket No. 1 (E.D. Mich. Sept. 7,
2016). Twelve days later, RE/MAX filed this case. Docket No.
1. Both parties accuse the other of breaching the Agreement.
RE/MAX alleges that Quicken Loans failed to pay amounts due
under the Agreement. Docket No. 45 at 9, ¶ 29. Quicken
Loans alleges that RE/MAX failed to provide services as
required under the Agreement. Docket No. 56 at 29, ¶ 75.
October 25, 2016, RE/MAX launched Motto Mortgage, LLC
(“Motto”) as a new venture; Motto is a
wholly-owned subsidiary of RE/MAX. Docket No. 56 at 15,
¶ 7 and at 24, ¶ 41. Motto is a mortgage provider
that provides services similar to those provided by Quicken
Loans. See id. at 24-26, ¶¶ 42, 45.
Quicken Loans named Motto as a third-party defendant in its
counterclaims. Id. at 14-15, ¶ 3. Quicken Loans
alleges that individuals who received Quicken Loans'
confidential information and trade secrets while working at
RE/MAX became executives at Motto and that RE/MAX used
Quicken Loans' trade secrets in starting up Motto's
operations. Id. at 25-27, ¶¶ 43, 49.
October 31, 2016, the Eastern District of Michigan
transferred its case to this district pursuant to a mandatary
forum selection clause in the Agreement. Quicken Loans
Inc. v. RE/MAX, LLC, No. 16-cv-02696-PAB-NYW, Docket
Nos. 1, 17 (the “transferred case”). On February
2, 2017, Quicken Loans filed a motion to amend its complaint
in the transferred case, seeking to add claims for breach of
the NDA against RE/MAX, misappropriation of trade secrets
against RE/MAX, tortious interference with a contract against
Motto, and misappropriation of trade secrets against Motto.
Id., Docket No. 37. On April 10, 2017, Magistrate
Judge Nina Y. Wang recommended that the motion to amend be
granted in part and denied in part. Id., Docket No.
44 at 17-18. Specifically, she recommended that Quicken Loans
be permitted to add a claim for breach of the NDA, but that
the motion to amend be denied with respect to the other
2, 2017, the Court entered an order denying a motion to
dismiss this case filed by Quicken Loans and denying a motion
for consolidation filed by RE/MAX. Docket No. 53. Instead,
the Court administratively closed the transferred case.
Quicken Loans Inc. v. RE/MAX, LLC, No.
16-cv-02696-PAB-NYW, Docket No. 47. The Court acknowledged
Judge Wang's recommendation on Quicken Loans' motion
to amend in the transferred case, but did not rule on the
motion to amend. Docket No. 53 at 2 n.1.
16, 2017, Quicken Loans filed its answer and counterclaims.
Docket No. 56. Quicken Loans' counterclaims consist of
the same nine claims that it sought to bring in the
transferred case through its motion to amend, but with some
added allegations about its trade secrets. Compare
Docket No. 56 at 14-33 with Quicken Loans Inc. v. RE/MAX,
LLC, No. 16-cv-02696-PAB-NYW, Docket No. 37-1 at 2-18.
On June 6, 2017, RE/MAX and Motto (collectively,
“movants”) filed the present motion to dismiss.
Docket No. 61. They seek to dismiss Quicken Loans' second
counterclaim, for fraudulent inducement of the Amendment, as
well as Quicken Loans' sixth, seventh, eighth, and ninth
counterclaims, which are the same as the four claims that
Quicken Loans sought to add in the transferred case through
its motion to amend. Id. at 3.
STANDARD OF REVIEW
challenge the above-mentioned counterclaims for failure to
state a claim under Fed.R.Civ.P. 12(b)(6). “The
court's function on a Rule 12(b)(6) motion is not to
weigh potential evidence that the parties might present at
trial, but to assess whether the plaintiff's complaint
alone is legally sufficient to state a claim for which relief
may be granted.” Dubbs v. Head Start, Inc.,
336 F.3d 1194, 1201 (10th Cir. 2003) (quoting Sutton v.
Utah St. Sch. for the Deaf & Blind, 173 F.3d 1226,
1236 (10th Cir. 1999)). In doing so, the Court “must
accept all the well-pleaded allegations of the complaint as
true and must construe them in the light most favorable to
the plaintiff.” Alvarado v. KOB-TV, LLC, 493
F.3d 1210, 1215 (10th Cir. 2007). At the same time, however,
a court need not accept conclusory allegations. Moffett
v. Halliburton Energy Servs., Inc., 291 F.3d 1227, 1232
(10th Cir. 2002).
“[s]pecific 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) (per
curiam) (quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 555 (2007)) (omission marks omitted). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). The “plausibility” standard requires that
relief must plausibly follow from the facts alleged, not that
the facts themselves be plausible. Bryson v.
Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008).
Nonetheless, “where the well-pleaded facts do not
permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged - but it has not shown
- that the pleader is entitled to relief.”
Iqbal, 556 U.S. at 679 (internal quotation marks and
alteration marks omitted). Thus, even though modern rules of
pleading are somewhat forgiving, “a complaint still
must contain either direct or inferential allegations
respecting all the material elements necessary to sustain a
recovery under some viable legal theory.”
Bryson, 534 F.3d at 1286 (alteration marks omitted).
Fraudulent Inducement Against RE/MAX
argue that Quicken Loans' fraudulent inducement claim
must be dismissed for three reasons: (1) due to the economic
loss doctrine, (2) because Quicken Loans does not allege
damages resulting from the alleged misrepresentations
inducing the Amendment, and (3) because of the integration
clause in the Agreement. Docket No. 61 at 4-7.
Economic Loss Doctrine
the economic loss doctrine, ‘a party suffering only
economic loss from the breach of an express or implied
contractual duty may not assert a tort claim for such a
breach absent an independent duty of care under tort
law.'” Spring Creek Expl. & Prod. Co., LLC
v. Hess Bakken Investments II, LLC, --- F.3d ----, No.
17-1010, 2018 WL 989586, at *10 (10th Cir. Feb. 21, 2018)
(quoting Town of Alma v. AZCO Constr., Inc., 10 P.3d
1256, 1264 (Colo. 2000)). Courts must initially identify
“the source of the duties of the parties.”
Town of Alma, 10 P.3d at 1262. “Tort
obligations generally arise from duties imposed by law,
” while “[i]n contrast, contract obligations
arise from promises made between parties.” Id.
(“‘A breach of a duty which arises under the
provisions of a contract between the parties must be
redressed under contract, and a tort action will not
lie.'” (quoting Tommy L. Griffin Plumbing &
Heating Co. v. Jordan, Jones & Goulding, Inc., 463
S.E.2d 85, 88 (S.C. 1995))). As the Colorado Supreme Court
made clear, the focus should not be on the nature of the
loss, i.e., whether it is economic, but rather on the source
of the duty. Id. at 1262 n.8 (“[W]e believe
that a more accurate designation of what is commonly termed
the ‘economic loss rule' would be the
‘independent duty rule.'”). In order to avoid
the application of the economic loss rule, one must not only
identify an independent duty, but must also assert a tort
claim based on that independent duty.
Loans claims that its fraudulent inducement claim is not
barred by the economic loss rule because the
“fraudulent representations that RE/MAX made to Quicken
Loans were separate from the Agreement and Amendment [and]
were not memorialized in the Amendment.” Docket No. 71
at 12. The Court agrees in part. Under Colorado
law “[i]t is well established that in some
circumstances a claim of negligent misrepresentation based on
principles of tort law, independent of any principle of
contract law, may be available to a party to a
contract.” Keller v. A.O. Smith Harvestore Prod.,
Inc., 819 P.2d 69, 72 (Colo. 1991) (citations omitted).
This same principle applies to fraudulent misrepresentations.
See id. (citing Formento v. Encanto Bus.
Park, 744 P.2d 22, 26 (Ariz. App. 1987)). Accordingly, a
party's “misrepresentation of material facts prior
to the execution of an agreement may provide the basis for an
independent tort claim.” Id. Movants note
similarities in language between Quicken Loans' breach of
contract claim and its fraudulent inducement claim, but these
similarities do not necessarily show that the two claims
arise from the same duty. See Docket No. 61 at 5-6.
As the Colorado Supreme Court noted, misrepresentation claims
are “based not on principles of contractual obligation
but on principles of duty and reasonable conduct.”
Keller, 819 P.2d at 73 (citing Cosmopolitan
Homes, Inc. v. Weller, 663 P.2d 1041, 1043 (Colo.
1983)). Thus, a party's obligations not to use
misrepresentations to induce a contract are independent of
the party's obligations under the resulting contract.
Id.; Van Rees v. Unleaded Software, Inc.,
373 P.3d 603, 605 (Colo. 2016) (“[P]re-contractual
misrepresentations are distinct from the contract itself, and
may form the basis of an independent tort claim.”
(citing Keller, 819 P.2d at 72)). However,
“the purpose of the economic loss rule is to, among
other things, allow the parties to ‘reliably allocate
risks and costs during their bargaining [and] encourage the
parties to build the cost considerations into the contract
because they will not be able to recover economic damages ...