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Quantum Foods, LLC, A Delaware Limited Liability Company v. Progressive Foods

November 14, 2012

QUANTUM FOODS, LLC, A DELAWARE LIMITED LIABILITY COMPANY, PLAINTIFF,
v.
PROGRESSIVE FOODS, INC., A FLORIDA CORPORATION D/B/A QUANTUM HOME DELIVERY, DEFENDANT. PROGRESSIVE FOODS, INC., A FLORIDA CORPORATION D/B/A QUANTUM HOME DELIVERY, COUNTER-PLAINTIFF,
v.
QUANTUM FOODS, LLC, A DELAWARE LIMITED LIABILITY COMPANY, COUNTER-DEFENDANT.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge:

MEMORANDUM OPINION AND ORDER

On February 24, 2012, Plaintiff Quantum Foods, LLC ("Quantum") filed a one-count breach of contract Complaint against Defendant Progressive Foods, Inc. ("Progressive") based on the Court's diversity jurisdiction. See 28 U.S.C. § 1332. On May 14, 2012, Progressive filed its Answer, Affirmative Defenses, and Counterclaims alleging tortious inference with prospective economic advantage, common law fraud, and, in the alternative, unjust enrichment. On July 16, 2012, Quantum filed a motion to dismiss Progressive's Counterclaims in tandem with a motion to strike Progressive's Affirmative Defense. For the following reasons, the Court denies Quantum's motion to dismiss, but grants Quantum's motion to strike Progressive's request for attorney's fees. The Court will address Quantum's motion to strike Progressive's Affirmative Defense in the context of Progressive's motion for leave to file a First Amended Answer, Affirmative Defense, and Counterclaims.*fn1

BACKGROUND

In its Complaint, Quantum alleges that it provides high-quality beef, pork and poultry products to leading restaurant chains, as well as to military and school food service channels.

(R. 1, Compl. ¶ 5.) Quantum also partners with retailers on private label food products, prepared meals, and deli items. (Id.) Progressive is a meat broker that purchases and resells meat products from Quantum to Progressive's customers, namely, food distributors throughout the United States. (Id. ¶ 6.) Quantum alleges that from July 2010 through August 2010, Progressive placed numerous orders with Quantum in Illinois for meat products to be resold to Progressive's customers. (Id. ¶ 7.) Further, Quantum maintains that from July 2010 through August 2010, it filled Progressive's orders and shipped all meat products to the locations directed by Progressive from Quantum's warehouse in Bolingbrook, Illinois. (Id. ¶ 9.) Upon shipment of each order, Quantum provided invoices to Progressive for payment upon receipt. (Id. ¶ 10.) Quantum contends that it has demanded payment for the balance of all outstanding amounts owed by Progressive, yet Progressive has breached its agreement with Quantum by failing to pay for the products it ordered. (Id. ¶¶ 11, 12.) Further, Quantum asserts that Progressive's outstanding balance for products purchased from Quantum is $158,922.96. (Id. ¶ 13.)

LEGAL STANDARDS

A Rule 12(b)(6) motion challenges the sufficiency of the complaint. See Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). Under Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule 8(a)(2) must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L.Ed.2d 929 (2007) (citation omitted). Under the federal notice pleading standards, a plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Put differently, a "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570). "In evaluating the sufficiency of the complaint, [courts] view it in the light most favorable to the plaintiff, taking as true all well-pleaded factual allegations and making all possible inferences from the allegations in the plaintiff's favor." AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011).

Rule 9(b) governs whether a fraud claim has been alleged with sufficient particularity under the federal standards. See Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 446 (7th Cir. 2011). Specifically, Rule 9(b) requires a pleading to state with particularity the circumstances constituting the alleged fraud. See Fed.R.Civ.P. 9(b); Pirelli, 631 F.3d at 441-42. This "ordinarily requires describing the 'who, what, when, where, and how" of the fraud, although the exact level of particularity that is required will necessarily differ based on the facts of the case." AnchorBank, 649 F.3d at 615 (citation omitted). "Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally."

McCauley v. City of Chicago, 671 F.3d 611, 622 (7th Cir. 2011). "In this context, 'generally' means as a conclusion, without specifying underlying facts that would support the inference." Id. at 622-23.

I. Tortious Interference with Prospective Economic Advantage

Quantum first challenges the sufficiency of Progressive's tortious interference with business expectancy counterclaim, also known as tortious interference with prospective economic advantage. Under Illinois law,*fn2 "to prevail on a claim for tortious interference with a prospective economic advantage, a plaintiff must prove: (1) his reasonable expectation of entering into a valid business relationship; (2) the defendant's knowledge of the plaintiff's expectancy; (3) purposeful interference by the defendant that prevents the plaintiff's legitimate expectancy from ripening into a valid business relationship; and (4) damages to the plaintiff resulting from such interference." Fellhauer v. City of Geneva, 142 Ill.2d 495, 511--12, 154

Ill.Dec. 649, 568 N.E.2d 870 (Ill. 1991); Chicago's Pizza, Inc. v. Chicago's Pizza Franchise Ltd., USA, 384 Ill.App.3d 849, 862, 323 Ill.Dec. 507, 893 N.E.2d 981 (1st Dist. 2008) ("This tort recognizes that a person's business relationships constitute a property interest and, as such, are entitled to protection from unjustified tampering by another.").

In its Counterclaim, Progressive alleges that it has had a 15-year history of developing a market for Quantum's meat products by securing new clients and developing business for Quantum's home delivery business. (Countercl. ¶¶ 13-14.) Progressive further asserts that Quantum was aware of Progressive's client lists and that Quantum directly contacted Progressive's clients. (Id. ¶ 65.) In addition, Progressive maintains that Quantum -- by and through its agents -- intentionally interfered with Progressive's relationship with its clients by making knowingly false statements regarding Progressive's business practices, including that Progressive was misrepresenting its pricing structure. (Id. ¶¶ 62, 64, 66-68.) Further, Progressive alleges that as a result of Quantum's accusations that Progressive misrepresented its pricing structure and practiced business in a deceptive manner, several of Progressive's customers ceased doing business with Progressive and transferred their accounts to Quantum. (Id. ¶ 73.) Based on these allegations and the federal notice pleading standards, Progressive's allegations raise a right to relief above a speculative level because these facts, taken as true, "raise a reasonable expectation that discovery will reveal evidence" supporting its tortious interference claims. See Twombly, 550 U.S. at 556.

Nevertheless, Quantum argues that Progressive has not sufficiently alleged that it has a reasonable expectation of entering into a future business relationship with its present or former clients, and thus Progressive cannot withstand the present motion to dismiss. See Business Sys. Eng'g, Inc. v. International Bus. Mach. Corp., 520 F.Supp.2d 1012, 1022 (N.D. Ill. 2007) ("'reasonable expectation' requires more than the hope or opportunity of a future business relationship."); MPC Containment Sys., Ltd. v. Moreland, No. 05 C 6973, 2008 WL 2875007, at *15 (N.D. Ill. July 23, 2008) ("To demonstrate a reasonable business expectancy, a plaintiff need not prove that a contractual relationship existed with a third party, but it must show 'more than a mere hope' of future business dealings'") (citation omitted). Progressive, however, has not only alleged that it has client lists and a "track record" with its customers, but that certain customers were interested in staying with ...


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