4:20-cv-01255
E.D. Mo.Apr 22, 2021Background
- ERB and Quintessa entered a Marketing Agreement in April 2020 under which ERB pre-funded a marketing account with $50,000; Quintessa provided lead-generation and tracked contacts in a read-only Google document accessible to ERB.
- Quintessa allegedly failed to prequalify potential clients for insurance, signed up unqualified ‘‘plaintiffs,’’ and continued using the old retainer form after ERB provided a revised form addressing insurance issues.
- ERB alleges about 22 cases were unqualified for insurance, that Quintessa ignored requests to disengage those leads, and that Quintessa billed ERB for 111 leads while ERB had engaged 82.
- ERB notified Quintessa of a material breach on July 17, 2020; Quintessa canceled ERB’s account on July 23, 2020, and litigation followed (both parties filed suit in different forums; the actions were later consolidated in the E.D. Mo.).
- Quintessa moved to transfer/stay the case, to dismiss ERB’s fraud count under Missouri’s economic loss doctrine, and ERB sought a protective order over certain client and accounting materials.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Motion to stay/transfer | ERB opposed transfer; case consolidated in E.D. Mo. | Quintessa moved to transfer to W.D. Okla. | Denied as moot after consolidation. |
| Motion to dismiss Count 2 (fraud) under Missouri economic loss doctrine | ERB contends fraud claims arise from conduct separate from the contract and include damages outside the contract. | Quintessa argues the economic loss doctrine bars ERB’s fraud claim as contractual economic loss. | Denied — on the complaint face defendant failed to show the doctrine bars the fraud claim; Eighth Circuit authority (Dunne) counsels against extending the doctrine to non-UCC fraud claims. |
| Motion for protective order (sequencing/privilege) | ERB seeks sequencing—Quintessa must disclose basis for allegations before ERB produces communications and client materials; ERB invokes confidentiality/privilege. | Quintessa opposes conditioning discovery on preliminary disclosures. | Denied without prejudice; sequencing not warranted on ERB’s denial alone and privilege disputes are governed by Rule 26(b)(5). |
Key Cases Cited
- Retro Television Network, Inc. v. Luken Communications, LLC, 696 F.3d 766 (8th Cir. 2012) (pleading standard: accept allegations as true on a Rule 12(b)(6) motion)
- Dannix Painting, LLC v. Sherwin-Williams Co., 732 F.3d 902 (8th Cir. 2013) (economic loss doctrine arose in UCC context and limits tort claims that alter contractually allocated risks)
- Dunne v. Resource Converting, LLC, 991 F.3d 931 (8th Cir. 2021) (refused to extend Missouri economic loss doctrine to bar non-UCC fraud/misrepresentation claims)
- O'Neal v. Stifel, Nicolaus & Co., Inc., 996 S.W.2d 700 (Mo. Ct. App. 1999) (fraud allowed only when arising from acts separate and distinct from contract)
- Autry Morlan Chevrolet Cadillac, Inc. v. RJF Agencies, Inc., 332 S.W.3d 184 (Mo. Ct. App. 2010) (defines Missouri economic loss doctrine barring tort recovery for contractual economic losses)
- Vogt v. State Farm Life Insurance Co., 963 F.3d 753 (8th Cir. 2020) (limits application of economic loss doctrine to its traditional moorings)
- Roberts v. American Intern., Inc., 883 F. Supp. 499 (E.D. Cal. 1995) (district court may order sequencing of discovery under Rule 26(c) for good cause)