274 F. Supp. 3d 787
N.D. Ill.2017Background
- Landale Signs contracted with Runnion Equipment to buy a truck-mounted crane for $87,625; communications during negotiation occurred by e-mail.
- Plaintiff wired the purchase price pursuant to wiring instructions that appeared to come from Runnion; the funds instead went to an unknown third party (John Doe), and Runnion never received payment.
- Plaintiff alleges John Doe intercepted Runnion’s communications by accessing Runnion’s computer systems and used that information to impersonate Runnion and divert funds.
- During negotiations Runnion’s president told Landale’s president about prior e-mail interception and possible interference with his e-mail account.
- Plaintiff pleaded negligence, negligent misrepresentation, breach of fiduciary duty, and breach of contract (express and implied); the court previously dismissed the negligence claim with prejudice and allowed repleading of contract claims; plaintiff moved for reconsideration of the negligence dismissal and Runnion moved to dismiss the Third Amended Complaint.
- The court denied plaintiff’s Rule 60(b) motion for reconsideration and denied Runnion’s motion to dismiss the breach of express and implied contract claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Illinois recognizes a tort duty to safeguard another party’s confidential information (negligence) | Landale contends Runnion owed a duty to protect its sensitive information given prior notice of interceptions and representations during negotiations | Runnion argues Illinois law does not recognize such a tort duty and Cooney controls to reject it | Court declined to revisit prior ruling: Illinois law (as interpreted by Illinois appellate decisions) does not impose that duty; plaintiff’s motion for reconsideration denied |
| Whether Landale’s failure to pay (wiring to John Doe) defeats its breach of contract claims | Landale says its nonperformance was caused by Runnion’s breach (wrongful prevention doctrine) because parties agreed Runnion would safeguard sensitive information | Runnion argues plaintiff must have performed and cannot recover after failing to pay; also challenges specificity of alleged contract term | Court found allegations adequate to invoke wrongful prevention doctrine; plaintiff plausibly alleged Runnion agreed to safeguard information, so performance element survives at this stage |
| Whether plaintiff adequately alleged a written contractual provision or must attach the contract | Landale argues federal notice pleading suffices and factual allegations allow inference the sales contract included confidentiality obligations discussed in negotiations | Runnion contends plaintiff must identify the breached written provision or attach the contract | Court held federal pleading standards apply; plaintiff’s factual allegations plausibly support that confidentiality obligations were part of the contract |
| Whether plaintiff stated an implied covenant/good faith claim and alleged meeting of the minds for implied contract | Landale alleges a mutual intent to safeguard information and that Runnion agreed to do so during negotiations | Runnion argues there is no independent cause of action for implied duty and that plaintiff fails to plead a meeting of the minds or parol-evidence obstacles | Court noted Illinois does not recognize an independent cause of action for breach of implied covenant but uses it to construe contract; found plaintiff’s new allegations plausibly allege a meeting of the minds and denied dismissal |
Key Cases Cited
- Yeftich v. Navistar, Inc., 722 F.3d 911 (7th Cir. 2013) (facial plausibility standard for Rule 12(b)(6))
- Long v. Shorebank Dev. Corp., 182 F.3d 548 (7th Cir. 1999) (construe complaint in plaintiff’s favor at motion to dismiss)
- Williamson v. Curran, 714 F.3d 432 (7th Cir. 2013) (limits on materials considered on Rule 12(b)(6))
- ADT Sec. Servs., Inc. v. Lisle-Woodridge Fire Prot. Dist., 672 F.3d 492 (7th Cir. 2012) (federal courts look to state supreme court decisions first for state-law duties)
- Pisciotta v. Old Nat. Bancorp, 499 F.3d 629 (7th Cir. 2007) (Illinois appellate decisions are accorded great weight when predicting state law)
- Cooney v. Chicago Pub. Schs., 407 Ill. App. 3d 358 (Ill. App. Ct.) (refusing to recognize a new tort duty to safeguard another’s private information)
- Lewis v. CITGO Petroleum Corp., 561 F.3d 698 (7th Cir. 2009) (elements of negligence under Illinois law)
- Veath v. Specialty Grains, Inc., 190 Ill. App. 3d 787 (Ill. App. Ct.) (plaintiff must perform obligations to recover on a contract)
- Cummings v. Beaton & Assocs., Inc., 249 Ill. App. 3d 287 (Ill. App. Ct.) (wrongful prevention doctrine: one who prevents performance cannot insist on nonperformance)
- Spadoni v. United Airlines, Inc., 47 N.E.3d 1152 (Ill. App. Ct.) (Illinois does not recognize an independent cause of action for breach of implied duty of good faith and fair dealing)