United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, UNITED STATES DISTRICT JUDGE
Inc. has sued Syncreon Technology (America), Inc., alleging
that Syncreon breached its contract to provide third-party
logistics services to Dyson. Dyson also alleges that Syncreon
committed fraud, fraudulent inducement, and conversion.
Syncreon has counterclaimed, alleging breach of contract,
unjust enrichment, and promissory estoppel. Both parties have
moved for summary judgment-Syncreon on all of Dyson's
claims, and Dyson on various aspects of Syncreon's
following facts are undisputed except where otherwise noted.
Dyson is an Illinois company that designs and manufactures
vacuum cleaners and other home goods. Rather than handle the
distribution of its inventory in-house, Dyson contracts with
third-party providers of logistics services. In 2016, it
decided to terminate its agreement with the company that had
previously served as its logistics provider. After issuing a
request for proposals, Dyson settled on Syncreon as its new
logistics provider. The two companies executed a master
services agreement in February 2017.
arrangement was short-lived. Both parties acknowledge that
the process of transitioning Dyson's business to Syncreon
was plagued with difficulties, though they disagree about
why. Among other problems, Dyson alleges that deliveries were
delayed and incorrectly shipped, customers were improperly
billed, and Syncreon's record-keeping and labeling were
deficient. In May 2017, Dyson began transferring some of its
business back to its previous logistics provider, and by July
it decided to terminate the agreement with Syncreon entirely.
companies discussed the possibility of entering a written
transition agreement, and Syncreon even drafted a proposed
agreement. Dyson alleges that, in an effort to coerce Dyson
into accepting the proposal, Syncreon refused to return some
of Dyson's inventory under the pretext of conducting a
full inventory analysis. Dyson ultimately rejected
Syncreon's proposal, however, and the parties never
executed a written contract to modify the master services
agreement or formally terminate their relationship.
commenced this suit in August 2017. It alleges that Syncreon
breached the master services agreement by committing serious
errors and failing to devote adequate resources to the
performance of its contractual obligations. Dyson also
alleges that Syncreon committed fraud by making false
statements about its capabilities to induce Dyson to enter
into the master services agreement and that Syncreon
converted Dyson's goods by refusing to return them after
the contract had terminated. Syncreon filed a counterclaim,
alleging breach of contract, unjust enrichment, and
has moved for summary judgment on all of Dyson's claims.
Dyson has also filed a motion for partial summary judgment on
counts 2 and 3 of the counterclaim (unjust enrichment and
promissory estoppel) and to bar certain categories of
damages. For the reasons stated below, the Court denies both
judgment is proper where there are no genuine issues of
material fact and the movant is entitled to judgment as a
matter of law." Richardson v. Chi. Transit
Auth., 926 F.3d 881, 886 (7th Cir. 2019) (internal
quotation marks omitted). In considering a motion for summary
judgment, the Court construes all facts and draws all
reasonable inferences "in favor of the party against
whom the motion under consideration was filed."
Id. The party opposing summary judgment must
"present specific facts establishing a material issue
for trial, and any inferences must rely on more than mere
speculation or conjecture." Giles v. Godinez,
914 F.3d 1040, 1048 (7th Cir. 2019).
Syncreon's motion for summary judgment
argues that it is entitled to summary judgment on Dyson's
claims for fraud and fraudulent inducement because the master
services agreement contains a "no-reliance" clause
that prevents Dyson from establishing that it justifiably
relied on Syncreon's alleged misrepresentations. Syncreon
also contends that the allegedly fraudulent statements are
expressions of opinion, not statements of material fact.
Finally, it argues that the fraud claims are barred because
they substantially overlap with Dyson's claim for breach
fraud claims under Illinois law require the plaintiff to show
that it justifiably relied on the defendant's
misrepresentations, a clause in a contract stating that the
parties did not rely on any representations or promises
outside the contract bars claims of fraud. ADM All.
Nutrition, Inc. v. SGA Pharm Lab, Inc., 877 F.3d 742,
749- 750 (7th Cir. 2017). Both the Seventh Circuit and the
Illinois Appellate Court have held that an integration
clause-i.e., a provision stating that the contract represents
the full and complete agreement of the parties-does not by
itself constitute a no-reliance clause for the purposes of
defeating a fraud claim. See Vigortone Ag Prods., Inc. v.
PM AG Prods., Inc., 316 F.3d 641, 644-45 (7th Cir.
2002); W.W. Vincent & Co. v. First Colony Life Ins.
Co., 351 Ill.App.3d 752, 760, 814 N.E.2d 960, 968 (2004)
("As a general rule, an integration clause will not
preclude a plaintiff from relying upon extrinsic evidence in
order to establish a cause of action for fraud.").
argues that the master services agreement contains a
no-reliance clause and that Syncreon is therefore entitled to
summary judgment on Dyson's fraud claims. In relevant
part, section 23.12.1 of the contract reads,
This Agreement, including all Exhibits, and Attachments,
hereunder, constitutes the entire agreement between the
parties in connection with the subject matter hereof and
supersedes all prior agreements, understandings,
negotiations, and discussions, whether oral or written,
between the parties.
Services Agreement, Def.'s Ex. 8, dkt. no. 153-9, §
23.12.1. Syncreon argues that the clause's reference to
"all prior . . . understandings" broadly disclaims
reliance on any extra-contractual representations and thus
makes section 23.12.1 a no-reliance clause.
argument is unavailing because section 23.12.1 does not
disclaim reliance. What differentiates a no-reliance clause
from an integration clause is that a no-reliance clause
specifically indicates that the parties have not
relied on any extra-contractual representations in
agreeing to the contract. See Vigortone, 316 F.3d at
645 (noting that the disputed contractual provision was
"a standard integration clause" because it
"contains no reference to reliance"); Mukite v.
Advocate Health & Hosps. Corp., No. 15 C 7604, 2016
WL 4036755, at *5 (N.D. Ill. July 28, 2016) (explaining that
a contract did not include a no-reliance clause because it
did not "warrant, represent, declare, or acknowledge
that the parties relied only on the representations set forth
in the Agreement"). No reference to reliance-or any
synonyms thereof-appears in section 23.12.1. And the use of
the word "understandings" does not meaningfully
differentiate the clause in this case from a standard
integration clause. As the Seventh Circuit explained in
Vigortone, the purpose of an integration clause is
to "prevent a party to a contract from basing a claim
of breach of contract on agreements or
understandings, whether oral or written, that the
parties had reached during the negotiations. . . ."
Vigortone, 316 F.3d at 644 (emphasis added). That is
precisely what section 23.12.1 does.
the provision of the master services agreement on which
Syncreon relies is solely an integration clause, it does not
preclude Dyson's fraud claims.
next argues that it is entitled to summary judgment because
the misrepresentations it allegedly made to Dyson are not
actionable as fraud. At the threshold, however, Syncreon
argues that Dyson is precluded from relying on any of
Syncreon's statements other than those specifically
alleged in Dyson's amended complaint. Syncreon rests its
argument on Federal Rule of Civil Procedure 9(b), which
requires that a party alleging fraud or mistake "must
state with particularity the circumstances constituting fraud
or mistake." It also points to the Seventh Circuit's
decision in Kennedy v. Venrock Associates, 348 F.3d
584 (7th Cir. 2003), in which the court noted that the
purpose of Rule 9(b) "is thwarted by the filing of a
stealth complaint in which allegations of fraud are avoided
only to be added later by way of brief or other filing."
Id. at 594.
Rule 9(b) is a rule of pleading, not a rule of evidence.
Cf. Cornielsen v. Infinium Capital Mgmt., LLC, 916
F.3d 589, 598 (7th Cir. 2019) (noting that "[h]eightened
pleading requirements apply to complaints alleging
fraud" and explaining that the reason for this rule is
that "[g]reater precomplaint investigation is warranted
in fraud cases"). Syncreon cites no cases applying Rule
9(b) to preclude consideration of allegedly fraudulent
statements at the summary judgment stage merely because they
were not specifically mentioned in the pleadings. Nor has
Syncreon alleged that the disclosure of these statements