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American Guardian Warranty Services, Inc. v. Automobile Protection Corporation, Inc.

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

November 19, 2019




         This case involves a car dealership, its exclusive provider of limited warranties (Plaintiff American Guardian Warranty Services), and the company that allegedly interfered with the relationship between the two (Defendant Automobile Protection Corporation). For the reasons stated herein, Defendant's Motion for Summary Judgment (Dkt. No. 184) is denied.

         I. BACKGROUND

         This lawsuit began in 2016, when Plaintiffs American Guardian Warranty Services, Inc. and American Guardian Funding Corporation (collectively, “American Guardian” or “AGW”) sued JCR-Wesley Chapel, LLC, Jesus Rosario, and Cynthia Rosario (collectively, “the Dealership Defendants”) for breach of contract. JCR-Wesley Chapel is a Florida limited liability company that, at the times relevant to this lawsuit, owned a car dealership. Jesus “Jay” Rosario is the owner of JCR-Wesley Chapel. Cynthia Rosario is Jesus's former spouse. (Subsequent references to “Rosario” in this opinion are to Jesus Rosario.)

         American Guardian provides financing and warranty servicers to car dealerships. This suit arose out of a series of contracts between American Guardian and the Dealership, in which American Guardian gave the Dealership a loan in exchange for the Dealership's promise to sell exclusively American Guardian contracts to its customers. The first contract was formalized on November 7, 2013, when the Dealership Defendants entered into a “Dealer Agreement” with American Guardian. (Pls.' Resp. to Def.'s Stmt. of Facts (“DSOF”) ¶¶ 2-3, Dkt. No. 189.) The Dealer Agreement provided that American Guardian would loan the Dealership $300, 000 in exchange for the Dealership selling exclusively American Guardian warranty products for five years. (Id.) On November 14, 2014, the Dealership and American Guardian entered into a “Dealer Agreement Funding Addendum, ” which extended the exclusive-sale period in exchange for an additional $1, 030, 601.15 loan. (DSOF ¶ 5.) The Dealership signed a third Addendum Agreement with American Guardian on December 15, 2015, for an additional $716, 357.52 loan. (Id. ¶ 6.) The Dealer Agreement and the following Addendums all contained the following language:

For a period of sixty (60) months from the effective date, Dealer agrees to provide substantially all vehicle service contracts, limited warranty, guaranteed asset protection[], certified ancillary product production through American Guardian Warranty Services, Inc. or its approved product providers. For purposes of this provision, substantially all shall mean [95%] of vehicle service contracts, limited warranty, guaranteed asset production[], certified ancillary product production produced by Dealer.

(Def.'s Resp. to Pls.' Stmt. of Add. Facts (“PSOAF”) ¶ 6, Dkt. No. 195.) Thus, the final 2015 agreement obligated the Dealership to sell American Guardian products until December 2020. (PSOAF ¶¶ 5-6, 11.)

         The dispute between the parties began brewing in early 2016. Rosario approached American Guardian for additional funding for the Dealership. (PSOAF ¶ 12.) Around the same time, in April 2016, representatives from Automobile Protection Corporation, Inc. (APCO) visited the Dealership. (PSOAF ¶¶ 15-16.) Like American Guardian, APCO is an automobile warranty provider that provides loans to car dealerships in exchange for exclusive sales agreements. Joey Falcon was the Dealership's general manager at the time. (PSOAF ¶ 11.) Falcon had reviewed the Dealership's contracts with American Guardian and understood that the exclusive sales term continued through December 2020. (Id.) Still, Falcon met with an APCO Vice President, Pete Lee, and APCO salesperson, Rob Mirra, and discussed how a loan advance from APCO could be helpful in funding additions to the Dealership. (PSOAF ¶ 16.)

         On April 30, 2016, Lee sent an email to Mirra stating, “I wanted to let you know that the loan for [the Dealership] is approved. We are working on loan agreements and should have them next week.” (PSOAF ¶ 18.) On May 3, 2016, APCO sent its rate quotes and books to the Dealership. (Id. ¶ 20.) On May 13, 2016, Mirra received a copy of the Dealer Agreement between the Dealership and American Guardian. (Id. ¶ 21.) Mirra circulated a copy of the contract to other APCO executives. (Id. ¶ 21.) On October 1, 2016, APCO entered into an exclusive contract with the Dealership to sell the same type of warranty products the Dealership was still obligated to sell for American Guardian. Soon after, American Guardian sued the Dealership Defendants for breach of contract.

         APCO was not originally a party to this suit. In their Second Amended Complaint, American Guardian added APCO as a defendant. (See Sec. Am. Compl., Dkt. No. 101.) American Guardian alleges that APCO intentionally induced the Dealership Defendants to breach their contract with American Guardian. American Guardian asserts two claims against APCO: tortious interference with an existing business relationship, and tortious interference with a contract.

         The Court has issued three prior rulings in this case. (See May 22, 2017, Mem. Op., Dkt. No. 55; June 5, 2018, Mem. Op, Dkt. No. 124; Oct. 24, 2018, Order, Dkt. No. 142.) In denying APCO's earlier motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court held as follows: (1) the Dealership Agreement is not unconscionable; (2) American Guardian pleaded each element of a claim for tortious interference with contract; and (3) American Guardian's claims are not barred by the lawful competition privilege. (See Oct. 24, 2018, Order.)

         In June 2019, the Dealership Defendants settled with American Guardian and were dismissed from this case. (See Minute Entry, Dkt. No. 173.) The case between American Guardian and APCO is set to begin a jury trial on March 2, 2020. APCO now moves for summary judgment, arguing that American Guardian has insufficient evidence to support a claim for tortious interference with contract or business relationship.

         II. STANDARD

         Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Levy v. Marion Cty. Sheriff, 940 F.3d 1002, 1008- 09 (7th Cir. 2019) (citing Fed R. Civ. P. 56(a)). The Court considers the entire evidentiary record and draws all reasonable inferences from that evidence in the light most favorable to the nonmovant. Horton v. Pobjecky, 883 F.3d 941, 948 (7th Cir. 2018). To defeat summary judgment, a nonmovant must produce more than a “mere scintilla of evidence” and come forward with “specific facts showing that there is a genuine issue for trial.” Johnson v. Advocate Health and Hosps. Corp., 892 F.3d 887, 894, 896 (7th Cir. 2018). Inferences supported only by speculation or conjecture will not suffice. Skiba v. Ill. Cent. R.R. Co., 884 F.3d 708, 721-22 (7th Cir. 2018). Summary judgment is warranted only if the evidence is such that a reasonable jury could not return a verdict for the nonmoving party. Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).


         Interference with contract and interference with business relations (sometimes called prospective economic advantage) are related torts. Int'l Mktg., Ltd. v. Archer-Daniels-Midland Co., Inc., 192 F.3d 724, 731 (7th Cir. 1999). In Illinois, the elements of a tortious interference with an existing contract claim are:

(1) the existence of a valid and enforceable contract between the plaintiff and another; (2) the defendant's awareness of this contractual relation; (3) the defendant's intentional and unjustified inducement of a breach of the contract; (4) a subsequent breach by the other, caused by the defendant's wrongful conduct; and (5) damages.

HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 545 N.E.2d 672, 676 (Ill. 1989); A-Abart Elec. Supply, Inc. v. Emerson Elec. Co., 956 F.2d 1399, 1404 (7th Cir. 1992). In a tortious inference with a business relationship or prospective economic advantage claim, the plaintiff must establish (1) the existence of a valid business relationship (not necessarily evidenced by an enforceable contract) or expectancy; (2) the knowledge of the relationship or expectancy on the part of the interferer; (3) an intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage to the party whose relationship or expectancy has been disrupted. Curtis 1000, Inc. v. Suess, 843 F.Supp. 441, 452 (C.D. Ill.), aff'd, 24 F.3d 941 (7th Cir. 1994).

         A. ...

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