BUCHER AND CHRISTIAN CONSULTING, INC. v. NOVITEX ENTERPRISE SOLUTIONS, INC.
1:15-cv-00010
S.D. Ind.Sep 3, 2015Background
- BC forward (Bucher and Christian Consulting, Inc.) sued Novitex alleging third-party beneficiary breach of contract, unjust enrichment, and intentional misrepresentation arising from Novitex’s contract with the State of Indiana.
- Novitex moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing legal deficiencies and statute-of-limitations defenses. The district court referred the motion to a magistrate judge.
- The magistrate judge recommended granting Novitex’s motion and dismissing BC forward’s claims (Report & Recommendation).
- BC forward timely objected, reiterating that it plausibly qualifies as a third-party beneficiary and that Novitex breached by not using BC forward as a subcontractor. Novitex opposed the objections.
- The district court reviewed de novo, adopted the magistrate judge’s R&R in large part, and granted dismissal with prejudice for all claims except Count I (third-party beneficiary breach), which it dismissed without prejudice and allowed 14 days to amend or seek limited discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BC forward plausibly pleaded third-party beneficiary breach of contract | BC forward alleged it was intended beneficiary of Novitex–State contract and that Novitex failed to use it as a subcontractor | Novitex argued the complaint failed to allege facts showing intent to benefit BC forward and raised statute-of-limitations problems | Court dismissed the claim but without prejudice, allowing amendment to cure deficiencies |
| Whether unjust enrichment claim survives | BC forward argued in the alternative that Novitex was unjustly enriched | Novitex argued legal insufficiency and that contract remedies control | Court adopted R&R finding the claim deficient and dismissed it with prejudice |
| Whether intentional misrepresentation claim survives | BC forward asserted fraudulent inducement or misrepresentations tied to subcontracting opportunities | Novitex argued the pleadings lacked requisite factual specificity and were time-barred | Court adopted R&R dismissing the fraud claim with prejudice |
| Whether dismissal should be with prejudice or without prejudice for amendment | BC forward requested chance to amend and offered facts it could add about Novitex’s subcontractor selections | Novitex urged dismissal on the merits | Court exercised discretion to allow amendment only for third-party beneficiary claim; other claims dismissed with prejudice |
Key Cases Cited
- Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752 (7th Cir. 2009) (magistrate judge R&R procedure and district court de novo review)
- Johnson v. Zema Sys. Corp., 170 F.3d 734 (7th Cir. 1999) (failure to object to R&R waives appellate review)
- Alioto v. Town of Lisbon, 651 F.3d 715 (7th Cir. 2011) (plaintiff ordinarily may amend complaint once as of right after dismissal)
- Bausch v. Stryker Corp., 630 F.3d 546 (7th Cir. 2010) (leave to amend should be freely given under Rule 15)
- Foster v. DeLuca, 545 F.3d 582 (7th Cir. 2008) (dismissal of original complaint normally does not eliminate right to amend)
- Arreola v. Godinez, 546 F.3d 788 (7th Cir. 2008) (district court may deny leave to amend for undue delay, bad faith, repeated failures, prejudice, or futility)