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Inteliquent, Inc. v. Free Conferencing Corp.

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

May 23, 2018

FREE CONFERENCING CORP., et al., Defendants.


          John Robert Blakey United States District Judge.

         This case involves a complex telecommunications dispute between, among others, Plaintiff Inteliquent and Defendants Free Conferencing, HD Tandem, and Carrier X. Free Conferencing, HD Tandem, and Carrier X filed a third amended counterclaim in February 2018, asserting five counts against Inteliquent and Matthew Carter, formerly Inteliquent's President and Chief Executive Officer. [336]. Inteliquent moved to dismiss two of the counts. [350]. For the reasons explained below, this Court grants Inteliquent's motion.

         This Court presumes familiarity with, and incorporates by reference, its prior opinion partially granting Inteliquent's motion to dismiss the second amended counterclaim. [168]. Thus, this opinion omits a background section.

         I. Legal Standard

         A counterclaim must meet the same standard as a complaint to survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). See Cozzi Iron & Metal, Inc. v. U.S. Office Equip., Inc., 250 F.3d 570, 574 (7th Cir. 2001). Thus, a counterclaim must provide a “short and plain statement of the claim” showing that the pleader merits relief, Fed.R.Civ.P. 8(a)(2), so the defendant has “fair notice” of the claim “and the grounds upon which it rests, ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A counterclaim must also contain “sufficient factual matter” to state a facially plausible claim-one that “allows the court to draw the reasonable inference” that the defendant committed the alleged misconduct. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). This plausibility standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013).

         In evaluating a counterclaim on a Rule 12(b)(6) motion, this Court accepts all well-pleaded allegations as true and draws all reasonable inferences in the counterclaimant's favor. Iqbal, 556 U.S. at 678. This Court does not, however, accept legal conclusions as true. Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009). On a motion to dismiss, this Court may consider the counterclaim itself, documents attached to the counterclaim, documents central to the counterclaim and to which the counterclaim refers, and information properly subject to judicial notice. See Williamson, 714 F.3d at 436.

         II. Analysis

         A. Count II: Unjust Enrichment

         Count II claims that Inteliquent unjustly enriched itself by accepting HD Tandem's voice termination services without paying for them. [336] ¶¶ 141-46. Inteliquent argues that this claim fails because an express contract governed its relationship with HD Tandem. [351] at 4-5.

         Under Illinois law, an unjust enrichment claim fails when “the claim rests on the breach of an express contract.” Shaw v. Hyatt Int'l Corp., 461 F.3d 899, 902 (7th Cir. 2006) (citing Guinn v. Hoskins Chevrolet, 826 N.E.2d 681, 704 (Ill. 2005)). Even if the claimant pleads unjust enrichment in the alternative, the claim “necessarily fails” if the parties do not dispute the existence and validity of a contract between them. Hickman v. Wells Fargo Bank N.A., 683 F.Supp.2d 779, 797 (N.D. Ill. 2010) (applying Illinois law and dismissing a similar claim with prejudice).

         Here, Inteliquent and HD Tandem agree that a valid, enforceable contract- the Master Services Agreement (MSA)-governed how HD Tandem provided voice termination services to Inteliquent. See [315-1] at 412 (MSA attached to Inteliquent's third amended complaint as an exhibit); [336] ¶ 36 n.1 (the third amended counterclaim directs this Court to Inteliquent's MSA exhibit). Because the parties had a valid, enforceable contract, this Court dismisses Count II with prejudice. See Hickman, 683 F.Supp.2d at 797.

         B. Count V: Fraudulent Concealment

         Count V claims that, during a February 2016 meeting of senior managers from Inteliquent and Free Conferencing, Inteliquent concealed certain information about “fraudulent routing” that it used to slow down Free Conferencing's network. [336] ¶¶ 167-74. Inteliquent allegedly concealed this information despite knowing that Free Conferencing expected, pursuant to the parties' Master Addendum, that Inteliquent would cooperate to discover the source of the routing issues plaguing Free Conferencing's network. Id. Inteliquent argues that this claim fails because Inteliquent had no duty to disclose that information, and the alleged wrongdoing falls within the counterclaim for breach of contract. [351] at 6-7.

         To state a claim for fraudulent concealment under Illinois law, a claimant must allege, among other things, that a party concealed a material fact while under a duty to disclose that fact to the claimant. See Connick v. Suzuki Motor Co., Ltd., 675 N.E.2d 584, 593 (Ill. 1996). Ordinarily, such a duty arises from a fiduciary or “special trust” relationship between the parties. See Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 570 (7th Cir. 2012). Illinois courts also recognize, however, that silence during a business transaction-when accompanied by deceptive conduct or suppression of material facts-creates a duty to disclose. See Henderson Square Condo. Ass'n v. LAB Townhomes, L.L.C., 1 ...

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