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Dmi Partners Inc. v. Byron Udell & Associates, Inc.

United States District Court, N.D. Illinois, Eastern Division

July 27, 2015

DMI PARTNERS INC., a Florida corporation, Plaintiff,
v.
BYRON UDELL & ASSOCIATES, INC. d/b/a ACCUQUOTE, an Illinois corporation, Defendant.

MEMORANDUM OPINION AND ORDER

SHARON JOHNSON COLEMAN, District Judge.

Before the Court are two motions: DMi Partners Inc.'s ("DMi") motion for judgment on the pleadings [13] and Byron Udell & Associates, Inc. d/b/a/ AccuQuote's ("AccuQuote") motion to strike affirmative defenses [24]. For the reasons that follow, DMi's motion is granted and AccuQuote's motion is denied as moot.

Background

AccuQuote is an insurance company that uses internet advertising to market its insurance products. On October 24, 2012, AccuQuote and DMi entered into a contractual agreement (the "Agreement") under which DMi conducted online marketing and generated leads that AccuQuote sought to sell its insurance products. Between December 2012 and January 2014, DMi provided lead generation services. On March 4, 2014, DMi sent a letter to AccuQuote terminating the Agreement due to AccuQuote's alleged material breach of the Agreement. AccuQuote denies that it breached the agreement and maintained that DMi is still required to adhere to the Agreement's duties to defend, hold harmless, and indemnify AccuQuote.

The Agreement provides that DMi was required to deliver leads. (Dkt. 1, Exh. A at Section 4.) It also includes the following limitation of liability: "No action, suit or proceeding shall be brought against DMi more than one year after the date of service. The foregoing limitations of liability are independent of any remedies hereunder and apply regardless of whether any remedy fails of its essential purpose." ( Id. at Section 6.) The Agreement provides that each party agrees to indemnify, defend, and hold harmless the other party in connection with any breach of the Agreement, or any claim arising due to a party or its third party affiliates, networks, or subsidiaries' negligence in violating any laws or regulations related to the method and manner of lead generation or delivery. ( Id. at Section 7.) The Agreement sets "conditions precedent" to the duty to indemnify, including notice, which, according to the Agreement, the failure to provide notice does not affect the party's right to be indemnified. ( Id. at Section 8.) The other two "conditions precedent" require the party seeking indemnification to seek prior written approval before making any agreement to settle, compromise, admit, or acknowledge the validity of any third party action, and finally requires the parties to "extend reasonable cooperation in connection with the defense of any third-party action[.]" ( Id. )

Third-party litigation was filed against AccuQuote in California ("California litigation") on November 4, 2014, which alleged that AccuQuote violated certain California state anti-spam laws. On November 25, 2014, AccuQuote sent a letter to DMi alleging that any liability it may have in the California litigation arises out of DMi's lead generation services and that pursuant to the Agreement, AccuQuote demanded that DMi defend, hold harmless, and indemnify AccuQuote in the California litigation. (Dkt. 1, ΒΆ 15.)

DMi Partners Inc. ("DMi") filed a complaint on December 8, 2014 alleging that Byron Udell & Associates, Inc. d/b/a/ AccuQuote ("AccuQuote") breached the Agreement by failing to pay DMi for services allegedly rendered in November 2013, as evidenced by an invoice covering November 1 through November 30, 2013. DMi also seeks a declaration that AccuQuote's alleged breach of the contract excuses DMi from its obligations under the agreement, including DMi's duty to defend and indemnify, that DMi has no further obligations to AccuQuote under the agreement, and that AccuQuote is contractually time-barred from seeking to uphold DMi's duty to defend, hold harmless, and indemnify AccuQuote in an underlying suit filed against AccuQuote in California ("California litigation").

AccuQuote filed its answer, affirmative defenses, and counterclaim on January 26, 2015. (Dkt. 10.) In its counterclaim, AccuQuote seeks a declaration from this Court that DMi is required to defend, hold harmless, and indemnify AccuQuote for all claims, damages, losses and expenses arising out of the California litigation. DMi moves for judgment on the pleadings arguing that AccuQuote's counterclaim is untimely.

Legal Standard

A party may move for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rule of Civil Procedure after a complaint and answer have been filed. See Fed.R.Civ.P. 12(c). The pleadings include the complaint, the answer, and any written instruments attached as exhibits. Fed.R.Civ.P. 10(c); Northern Ind. Gun & Outdoor Shows v. City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998). Courts review motions brought pursuant to Rule 12(c) under the same standard as a motion to dismiss under Rule 12(b). Lodholtz v. York Risk Servs. Group, 778 F.3d 635, 639 (7th Cir. 2015). Thus, a complaint must be dismissed if the allegations do not state a facially plausible claim that raises the right to relief above the speculative level. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). As with Rule 12(b)(6) motions, courts must view the facts alleged in the light most favorable to the non-moving party. Emergency Servs. Billing Corp. v. Allstate Ins. Co., 668 F.3d 459, 464 (7th Cir. 2012). While a complaint or counterclaim need not anticipate and overcome affirmative defenses, such as the statute of limitations, Cancer Found., Inc. v. Cerberus Capital Mgmt., LP, 559 F.3d 671, 674 (7th Cir. 2009), "if a plaintiff alleges facts sufficient to establish a statute of limitations defense, the district court may dismiss the complaint on that ground." O'Gorman v. City of Chicago, 777 F.d 885, 889 (7th Cir. 2015).

An affirmative defense is an admission of the facts alleged in the complaint, coupled with an assertion of some other reason that the defendant is not liable. See, e.g., Bobbitt v. Victorian House, Inc., 532 F.Supp. 734, 736 (N.D. Ill.1982) (Shadur, J.). Pursuant to Rule 12(f), the court "may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). Affirmative defenses are subject to the pleading requirements of the Federal Rules of Civil Procedure and therefore they must set forth a "short and plain statement" of the material elements of the defense asserted and not merely bare recitations of the elements. Fed.R.Civ.P. Rule 8; see also Reis Robotics USA, Inc. v. Concept Indus., Inc., 462 F.Supp.2d 897, 904 (N.D. Ill. 2006) (Castillo, J.). Affirmative defenses must also contain sufficient factual material that, when taken as true, state a defense that is plausible on its face. Twombly, 550 U.S. at 570.

Discussion

1. Motion for Judgment on the Pleadings

DMi argues in its motion for judgment on the pleadings that it provided the underlying lead generation services to AccuQuote during the month of November 2013 and that therefore, the applicable "Date of Service giving rise to AccuQuote's counterclaim for indemnification was November 30, 2013 at the latest." (Dkt. 14, at 5). AccuQuote responds that DMi's motion should be denied because DMi incorrectly applies the ...


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