769 F.Supp.3d 840
N.D. Ill.2025Background
- Five-Star AudioVisual contracted Unique Business Systems (UBS) for new business software, based on UBS’s representations that its R2 system was highly configurable and would meet Five-Star’s needs.
- UBS’s presentations and demonstrations allegedly overstated the product’s capabilities and omitted the extent and cost of necessary customizations.
- Five-Star paid UBS nearly $1 million but claims the software did not function as promised, leading to missed deadlines and eventual contract termination.
- Five-Star filed suit with claims including fraud, negligent misrepresentation, breach of contract, breach of warranty, unjust enrichment, and violations of Illinois and New York consumer protection statutes.
- UBS moved to dismiss all claims for failure to state a claim under Rule 12(b)(6).
- The case is at the motion to dismiss stage; all facts are taken in the light most favorable to Five-Star.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraud & Fraudulent Inducement | UBS made false pre-contract statements to induce Five-Star to contract; relied on them | Claims redundant of contract claim; not pled with particularity | Fraud claims sufficiently pled and distinct from contract claim; not dismissed |
| Negligent Misrepresentation | UBS negligently misrepresented capabilities; owed duty due to superior knowledge | Barred by Moorman economic loss doctrine; not "in business of supplying information" | Dismissed; UBS not an information supplier; no exception to economic loss doctrine applies |
| Breach of Contract | UBS failed to deliver, implement, and configure R2 as required by contract | Complaint lacks specificity—doesn’t cite exact contract terms | Dismissed without prejudice; plaintiff may amend to provide contractual detail |
| Breach of Good Faith and Fair Dealing | UBS’s withholding of information and non-performance destroyed Five-Star’s contract rights | Duplicative of contract claim if based on same conduct | Survives as to information withholding; dismissed if duplicative of contract claim |
| Breach of Express Warranty | UBS violated explicit contract warranties on performance and software conformity | No reliance or breach pled | Claim survives; sufficient allegations of reliance and breach |
| Unjust Enrichment | Alternative to contract claim; UBS unjustly retained fees | Cannot claim if contract exists | Survives as pled in the alternative |
| Illinois Consumer Fraud Act (ICFA) | UBS’s pre-contract misrepresentations were unfair/deceptive under ICFA | Duplicative of contract claim; not pled with specificity | Not duplicative; enough factual detail for claim to proceed |
| NY General Business Law § 349 | UBS’s conduct was deceptive under New York law | Pleading fails to allege acts occurred in New York | Dismissed without prejudice; may amend |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard for plausibility)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard for notice and plausibility)
- Tricontinental Indus., Ltd. v. PricewaterhouseCoopers, LLP, 475 F.3d 824 (elements of common-law fraud under Illinois law)
- Moorman Mfg. Co. v. National Tank Co., 435 N.E.2d 443 (economic loss doctrine in Illinois tort law)
- Dalton v. Educ. Testing Serv., 663 N.E.2d 289 (duty of good faith and fair dealing implied in contracts under New York law)
- CBS Inc. v. Ziff-Davis Publ’g Co., 553 N.E.2d 997 (reliance in New York warranty claims)
- Goshen v. Mutual Life Ins. Co. of N.Y., 774 N.E.2d 1190 (conduct must occur in New York for GBL § 349)