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Baird & Warner Residential Sales, Inc. v. Cendant Mobility Services

December 13, 2007


The opinion of the court was delivered by: Judge Joan H. Lefkow

Magistrate Judge Keys


This four-count complaint for breach of contract was removed from the Circuit Court of Cook County. Plaintiff, Baird & Warner Residential Sales, Inc. ("Baird & Warner"), complains that defendant, Cendant Mobility Services, Inc. ("Cendant"),*fn1 breached the parties' Strategic Alliance Agreement by, among other things, failing to follow through on a promise to give Baird & Warner a certain percentage of referrals of Cendant's business. Baird & Warner has now moved for partial summary judgment that Cendant is liable on two claims for breach of contract (Counts I and II of the amended complaint). Cendant has cross-moved, seeking judgment in its favor on Count III. The court has jurisdiction over this case pursuant to 28 U.S.C. § 1332 because Baird & Warner is an Illinois corporation with its principal place of business in Illinois; Cendant is a Delaware corporation with its principal place of business in Connecticut; and the amount in controversy exceeds $75,000. For the reasons that follow, Baird & Warner's motion [# 89] is denied and Cendant's motion [# 92] is granted.

I. Facts

Baird & Warner is a real estate brokerage company located in the Chicago area. Cendant's Local Rule 56.1(a)(3) statement of facts, Dkt. No. 93 ("Cendant's statement"), at ¶ 2. Cendant is a company that offers employee relocation and related services to corporate and government employers worldwide, including services related to buying and selling homes. Cendant's statement, at ¶ 5. In addition, Cendant provides services to affinity membership groups, such as credit unions, veterans' groups, automobile associations, and airline frequent flyer groups ("Affinity groups"). Cendant's statement, at ¶ 6. To facilitate these services, Cendant has maintained contractual relationships with a broad network of real estate brokerage firms, which provide various kinds of real estate services in contractually-specified geographic areas (the "Mobility Network"). Cendant's statement, at ¶ 9.

Cendant's predecessor, HFS Mobility Services, Inc. ("HFS"), and Baird & Warner entered into such a contractual relationship: the Strategic Alliance Agreement of October 8, 1997 ("the Agreement"). Cendant's statement, at ¶ 10; Baird & Warner's statement of uncontested facts, Dkt. No. 90 ("B&W's statement"), at ¶ 1. It includes the following relevant provision:

Section II: Appointment as a Supplier of Services to HFS Mobility: [Baird & Warner] is appointed a supplier of services to the various HFS Mobility divisions set forth below. [Baird & Warner] will receive 80% of all available transactions in its Territories as set forth in Exhibit 1 ("Territory"). Available business shall be defined as referrals of departure (RELO) and/or corporate home finding (Destination) transferees which have not been directed to another broker by an HFS Mobility Client.*fn2 HFS Mobility shall make its records regarding business within [Baird & Warner's] Territory available for audit by [Baird & Warner] during normal business hours, under supervision, and subject to 30 days notice.

Baird & Warner's motion, Ex. A, at page CM 001055. This section of the Agreement goes on to identify the five business divisions*fn3 for which Cendant was appointing Baird & Warner as a supplier of services. The divisions, which are listed as headings for descriptions of each of them, are called "HFS Relocation Services Listings," "Destination Service Referrals," "Mobility Network Broker-To-Broker Referrals," "Asset Services," and "Affinity Services." B&W's statement, at ¶ 3.*fn4

The description of the HFS Relocation Services Listings division includes the following: "HFS Relocation Services (RELO) purchases, from persons [e.g., employees] designated by its clients, residential properties which it then sells. [Baird & Warner] is hereby appointed as a listing broker for RELO."*fn5 Baird & Warner's motion, Ex. A, at page CM 001055. The paragraph describing the Destination Services Referrals division begins, "Destination Services (Destination) provides services to people desiring to sell a residence and/or to purchase a property, and has the capability of referring those people to professionals." Id.*fn6

Although not described in detail in the same portion of the Agreement, the parties agree that Affinity Services include real estate advisory, brokerage and financial services, which were offered to members of participating organizations at no cost, and were intended to be a resource for members' personal and individual needs. Cendant's statement, at ¶ 20. One of the common services offered to both Affinity clients and to corporate or government clients was to assist people with moving from one location to another by referring them to real estate brokers who could assist with such a move. Cendant's statement, at ¶ 8. Section II(E) of the Agreement describes Affinity Services simply as follows: "Affinity Services (Affinity) has the opportunity to market properties on behalf of clients' members. [Baird & Warner] is hereby appointed as a listing broker for Affinity, subject to Affinity performance criteria. [Baird & Warner] agrees to pay Affinity thirty percent (30%) of the gross referred function commission received by [Baird & Warner] due to each such referral." Baird & Warner's motion, Ex. A, at page CM 001056.

Under some of the agreements that Cendant negotiated with its major corporate clients, the clients required that their employees (also known as the "transferees") be given a choice of brokers, or allowed to make their own selections, whether or not their chosen broker was a member of the Mobility Network. Cendant's statement of additional facts, Dkt. No. 110 ("Cendant's additional statement"), at ¶ 16. These contract provisions are sometimes referred to as "employee choice provisions."

Cendant classified a transaction as "client directed" and excluded it from the calculation of "available business" pursuant to Section II of the Agreement (quoted on page 2, above) in all cases where the transferee's employer had a contract with an employee choice provision and the referral went to a broker other than Baird & Warner. Cendant's additional statement, at ¶¶ 17, 22; cf. B&W's statement, at ¶ 12. Cendant consultants working with the transferees did not systematically document the details of each particular employee's request for an alternative broker other than noting which broker ultimately received the referral. Cendant's additional statement, at ¶ 21.*fn7

Over the course of the Agreement, Cendant provided Baird & Warner with reports summarizing its compliance with the deliverable business guarantee. Out of a cumulative total of 4,814 transactions in Baird & Warner's territories, 832 were excluded from the universe of available ...

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