295 F. Supp. 3d 1163
D. Colo.2018Background
- RE/MAX (franchisor) and Quicken Loans (mortgage lender) negotiated a marketing alliance, executed an Agreement (Oct. 2015) and a First Amendment (Nov. 2015) after pre-contract representations and a valuation review.
- Quicken Loans alleges RE/MAX made false pre-Amendment representations about web traffic, leads, and ability to embed Quicken Loans' branding, and that RE/MAX later failed to provide contracted services while using confidential information.
- RE/MAX launched Motto Mortgage (a RE/MAX subsidiary) after disputes arose; Quicken Loans alleges RE/MAX and former RE/MAX employees used Quicken Loans' confidential information to start Motto.
- Two related suits were filed (Michigan and Colorado); the Michigan case was transferred; Quicken Loans then asserted counterclaims in this case including fraudulent inducement of the Amendment, breach of an NDA, trade-secret misappropriation (against RE/MAX and Motto), and tortious interference (against Motto).
- RE/MAX and Motto moved to dismiss several counterclaims under Rule 12(b)(6); the Court evaluated economic-loss/economic-duty issues, pleading adequacy on damages and trade-secret specificity, and whether Motto knowingly interfered.
Issues
| Issue | Quicken Loans' Argument | RE/MAX / Motto's Argument | Held |
|---|---|---|---|
| Fraudulent inducement of the Amendment | Representations induced Quicken Loans to execute/maintain the Amendment and caused damages (continued costs) | Barred by economic loss rule; damages insufficient; integration clause bars fraud claims | Allowed to proceed except as to misrepresentations tied to web-service obligations memorialized in the Amendment (those are contract duties and barred by economic-loss rule) |
| Breach of NDA (disclosure to Motto) | RE/MAX used Quicken Loans' confidential information to develop Motto | Allegations are conclusory; no factual showing Motto used the information | Dismissed for failure to plead facts showing actual use/harm |
| Trade-secret misappropriation against RE/MAX | Quicken alleges specific trade-secret types and precautions; RE/MAX obtained secrets after misrepresentations | Pleading lacks allegation that disclosure occurred after the misrepresentations such that acquisition was by improper means | Dismissed as to RE/MAX for failure to allege acquisition by improper means |
| Trade-secret misappropriation and tortious interference against Motto | Motto employed former RE/MAX employees who had access and used the secrets to launch Motto; Motto intentionally interfered | Mere employment of former employees and conclusory allegations insufficient; Motto did not exist before the breach so cannot have knowingly induced breach | Both claims dismissed for failure to plead specific use/disclosure and intentional interference |
Key Cases Cited
- Dubbs v. Head Start, Inc., 336 F.3d 1194 (10th Cir. 2003) (Rule 12(b)(6) standard — accept well-pleaded allegations)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaint must plead factual content permitting reasonable inference of liability)
- Keller v. A.O. Smith Harvestore Prods., Inc., 819 P.2d 69 (Colo. 1991) (pre-contract misrepresentations can create an independent tort duty)
- Town of Alma v. AZCO Constr., Inc., 10 P.3d 1256 (Colo. 2000) (economic-loss/independent-duty framework)
- BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo. 2004) (policy reasons for economic-loss rule in commercial contexts)
- Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823 (10th Cir. 1993) (elements of trade-secret claim under Colorado law)
