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295 F. Supp. 3d 1163
D. Colo.
2018
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Background

  • 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)
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Case Details

Case Name: Re/Max, LLC v. Quicken Loans Inc.
Court Name: District Court, D. Colorado
Date Published: Mar 20, 2018
Citations: 295 F. Supp. 3d 1163; Civil Action No. 16–cv–02357–PAB–MJW
Docket Number: Civil Action No. 16–cv–02357–PAB–MJW
Court Abbreviation: D. Colo.
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    Re/Max, LLC v. Quicken Loans Inc., 295 F. Supp. 3d 1163