OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
Before the Court is Defendant’s motion to dismiss (Docket Entry # 3). The Court heard oral argument on this motion on April 5, 2002. Upon consideration of the motion, the submissions of the parties, and the applicable law, the Court will GRANT IN PART and DENY IN PART the motion to dismiss. Specifically, the Court will DISMISS Count III for promissory estop-pel; all other counts remain.
I. BACKGROUND
A. Factual Background
This is a dispute surrounding the forma-, tion/execution/performance of an alleged contract regarding the provision of media services (i.e., an internet website at www.DetroitTigers.com) to the Detroit Tigers baseball team. The case was filed here on the basis of diversity jurisdiction, 28 U.S.C. § 1332.
In January of 2000, Plaintiff, Detroit Tigers, Inc., and Defendant, Ignite Sports Media, LLC, entered into negotiations for the operation of the Tigers’ official website 1 for the 2000 baseball season. These oral negotiations were reduced to writing in February of 2000, in a document entitled “Letter of Intent” (“LOI”), dated February 22, 2000 but signed by the parties on March 1, 2000. 2 (The LOI is attached to the Complaint at Exh. A.) The basic provisions of the LOI provide that Defendant will produce, maintain and host the website for Plaintiff, in exchange for a 50/50 share of the net profits of the site. Defendant would be responsible for its costs, and would guarantee a specific fee to Plaintiff per year (i.e., $600,000 for 2000, etc.). The document provided that the LOI itself was not - a binding contract: “Except for the matters set forth in this paragraph this LOI does not create a legal, binding obligation on either party, but merely represents the present intentions of the parties-.” (LOI, Exh. A to Compl., at page 5.) It further provided:
Neither party shall have any liability to the other based on failure to ultimately consummate the transaction envisioned herein. The performance of either party prior to execution of formal contract of any of the obligations- which may be included in a contract between the parties when negotiations are completed shall not be considered as evidence of intent by either party to be bound by this LOI other than as set forth in this paragraph above.
(Id. at 5.)
Thereafter, the parties negotiated and drafted a written contract, entitled “Interactive Media Services Agreement Between Ignite Sports Media, LLC and [Detroit Tigers, Inc.].”
(See
Compl. Exh. B, hereinafter “MSA”.) The M.S.A. § is an unpa-ginated 26 page document, in black-line draft form, outlining the terms of the parties’ business relationship. Its basic provisions are similar, but not identical to the basic provisions found in the LOI. Defen
The agreement required the approval of the Office of the Commissioner of Major League Baseball (“MLB”), per the LOI. (LOI, Exh. A to Compl.; at 3.) At the end of negotiations, Defendant Ignite sent the M.S.A. § to MLB for approval. (Compl. at ¶¶ 13, 17, 18, 23, 29.) In anticipation of approval from MLB, the parties commenced performance of the agreement (i.e., Defendant, inter alia, hosted the website). (Compl. at ¶¶ 14, 16.) MLB approved the M.S.A. § on July 5, 2000. (Compl. at ¶ 17, also see first page of Exh. B.)
Despite hosting the website for the entire 2000 season, Defendant never signed the MSA. (Compl. at ¶ 23, see also signature page 26 of Exh. B.) It appears Plaintiff has not signed it either. (Id., Exh. B at 26.) Defendant also allegedly never paid the $600,000 annual fee. (Id. at ¶ 25, 30.)
B. Procedural Background
Plaintiff filed its complaint in this Court on August 1, 2001. The Complaint contains four Counts: Count I — Breach of Contract; Count II — Breach of Contract (Implied-Promise); Count III — Promissory Estoppel; Count IV (misnumbered V) — Unjust Enrichment.
In lieu of answering the Complaint, Defendant filed the instant motion to dismiss on September 7, 2001. The Court set the motion for oral argument on December 19, 2001. However, on December 11, 2001, the Court issued an Order to Show Cause. 4 That Order required the parties to explain to the Court why their briefs rely on Illinois, rather than Michigan law, because the briefs had failed to set forth a conflicts of laws analysis. The parties responded to the Order as required, on December 20, 2001 and January 3, 2002. Thereafter a new notice was sent to the parties setting the oral argument for April 5, 2002.
II. ANALYSIS
A. Standard of Review of Rule 12(b)(6) Motion
Defendant filed the instant motion to dismiss pursuant to FED. R. CIV. P. 12(b)(6). A Rule 12(b)(6) motion alleges that a complaint has failed to state a claim upon which relief can be granted. In evaluating such a motion, the court construes the complaint in the light most favorable to the plaintiff, accepts all factual allegations
The purpose of a 12(b)(6) motion is “to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true.”
Mayer v. Mylod,
Rule 8 expressly allows for alternative pleading:
A party may set forth two or more statements of a claim ... alternatively or hypothetically, either in one count ... or in separate counts .... When two or more statements are made in the alternative and one of them if made independently would be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative statements. A party may also' state as many separate claims ... as the party has regardless of consistency ....
Fed.R.Civ.P. 8(e)(2). In other words, a pleading does not become insufficient by reason of a party having made alternative, or even contradictory, claims.'
See Rowe v. Cleveland Pneumatic Co.,
The Court finds, based on the analysis below, that Plaintiffs Complaint is not subject to dismissal in its entirety. Defendant’s attempt to argue otherwise is unavailing. Plaintiff has pleaded in the alternative; either there is an express contract between the parties (Count I — Breach of Contract), or else Plaintiff is entitled to a quasi-contractual remedy (Counts II, III, or IV, for Breach of Implied Contract, Promissory Estoppel, and/or Unjust Enrichment, respectively). For these reasons, granting dismissal of the entire Complaint is not a proper disposition in the instant case. For the reasons set forth below, Count III for promissory estoppel is DISMISSED; the rest of the Counts survive the instant motion.
B. Conñicts of Laws Analysis
Federal courts sitting in diversity apply the conflict of law rules of the forum state.
See Klaxon Co. v. Stentor Electric Mfg. Co.,
Michigan has adopted the approach taken in the Restatement (Second) of Conflict of Laws.
Johnson,
(1) The law of the state chosen by the parties to govern fheir contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.
(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by ah explicit provision in their agreement directed to that issue, unless either
(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties choice, or
(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in,the determination of the particular issue and which, under the rule of s 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.
(3) ,In the absence of a contrary indication of intention, the reference is to the local law of the state of the chosen law.
Restatement 2d of Conflicts, § 187. By its terms, this section applies when the parties have chosen the state to govern the contract.
In the instant case, although the M.S.A. § includes a choice of law provision providing for the application of Illinois law,' the M.S.A. § is not signed by, either party. The central dispute in this case is whether a contract existed at all. Given these circumstances, the Court should find that the parties have not agreed to a contractual choice of law provision.
See R & D Distributors v. Health-Mor Industries, Inc., supra,
The Restatement also has an alternate section, entitled “Law Governing in Absence of Effective Choice by the Parties,” which provides:
(1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6.
(2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to- an issue include:
(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the contract, and
(e) the domicile, residence, nationality, place of incorporation and place of business of the parties.
These contacts are to be evaluated according to their relative importance with respect to the particular issue.
(3) If the place of negotiating the contract and the plac§ of performance are in the same state, the local law of this state will usually be applied, except asotherwise provided in §§ 189-199 and 203.
Restatement 2d of Conflicts, § 188.
In
Sipes,
the court undertook the above analysis to determine whether to apply Michigan or Colorado law to the alleged contracts at issue.
Sipes,
In the instant case, a review of the above-noted factors leads to the application of Illinois law. The most compelling allegation is that the transaction at issue (hosting of the website) was to be performed in Illinois, at Defendant’s place of business. Most of the requirements of the alleged agreement were to be performed in Illinois. Defendant’s Illinois attorneys drafted the LOI and the MSA. The parties do not allege where the negotiations took place. The only connection to Michigan is that it is Plaintiffs principal place of business. Plaintiff has not supplied any evidence that Michigan would have a greater interest in having its law applied to the instant dispute than would Illinois.
Therefore, the Court finds, on the basis of these undisputed facts, that a “rational reason” exists for the application of Illinois law.
C. Analysis of the Separate Counts
1. Count I — Breach of Contract
a. Statute of Frauds Does Not Apply
Preliminarily, the Court notes that the alleged contract at issue falls outside of Illinois’ statute of frauds. Illinois’ statute of fraud provides, in relevant part:
No action shall be brought ... upon any agreement that is- not to be performed within the space of one year from the making thereof, unless the promise or agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith.
740 ILL. COMP; STAT. ANN. 80/1. Because the transaction at issue in this case was performed in less than a year (i;e., from at the earliest, January of 2000, to at the latest October of 2000), it falls outside of the statute of frauds.
See Sinclair v. Sullivan Chevrolet Co.,
The parties have both discussed
Consolidated Bearings Co. v. Ehret-Krohn Corp.,
6. Elements of Breach of Contract
Under Illinois law, in order to plead a cause of action for breach of contract, the plaintiff must allege the existence of a valid contract, that plaintiff performed its obligations, that defendant breached the
Mutuality of agreement is “the mutual assent by the parties to its terms.” Id. The Restatement (Second) of Contracts provides:
Conduct as Manifestation of Assent
(1) The manifestation of assent may be made wholly or partly by .written or spoken words or by other acts or. by failure to act.
(2) The conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents.
(3) The conduct of a party may manifest assent even though he does not in fact assent. In such cases a resulting contract may be voidable because of fraud, duress, mistake, or other invalidating cause.
Restatement 2d Contracts, § 19. It is the objective manifestation of assent that is determinative, not the subjective intention of the party.
See, e.g., In re Mount Calvary Baptist Church,
A signature on the contract is not a
per se
prerequisite to enforcement.
See Lynge v. Kunstmann,
The real question is, absent language in the contract, what was the intention of the parties as to whether there was a binding contract ... ? Ordinarily one of the acts forming part of the execution of a written contract is the signing of it. However, a signature is not always essential to the binding force of an agreement. Whether a writing constitutes a binding contract, even though it is not signed, or whether the signing of the instrument is a condition precedent to its becoming a binding contract usually depends upon the intention of the parties. The object of a signature is to show mutuality or assent, but these facts may be shown in other ways, as, for example, by acts or conduct of the parties.
The law is- clear in Illinois that where the parties reduce the agreement to writing and its signature by them is a condition precedent to its completion, no contract will exist until that is done. It has been held that questions of intent are particularly inappropriate for summary judgment.
Lynge,
In the instant case, Plaintiff has pleaded facts which, if proven, would entitle it to relief on its breach of contract claim. Plaintiff alleges that although the M.S.A. § was never signed, Defendant manifested it assent to, and its intent to be bound by, the M.S.A. § by: (1) sending the M.S.A. § to the MLB for approval, and (2) behaving as if there were a contract in force, by creating and hosting the website, which is the subject of the MSA. These
Defendant argues that the lack of the signature is fatal, because the LOI contemplated “execution” of a formal contract as a prerequisite to contractual obligations. Defendant is generally correct that if a preexisting contract between the parties makes signature of a formal agreement a condition precedent to the formation of a contract, then the absence of the signature will prevent enforcement of the contract.
See, e.g., Bennett & Kahnweiler, Inc. v. American Nat’l Bank & Trust Co. of Chicago,
Rather, the LOI contemplates “consummation.” Consummation could be accomplished, under Illinois law, by Defendant’s “acts or conduct.” Lynge, supra. Nothing in' the LOI counteracts this. Furthermore, the limiting language in (3), supra, prevents Plaintiff from suing to enforce the LOI as a written contract, not from suing to enforce a resulting agreement. Plaintiff is not suing to enforce the LOI as the written contract; Plaintiff is suing to enforce the MSA. Plaintiffs mention of the LOI in its allegations for breach of contract is not fatal to its claim. The existence of the LOI does not prevent Plaintiff from being able to enforce the MSA.
Based on the above analysis, the Court DENIES Defendant’s motion to dismiss Count I for breach of contract. Plaintiff has properly pleaded this cause of action, and has alleged facts which, if proven, would entitle Plaintiff to recover on a breach of express contract theory. 6
As noted above, Plaintiff is permitted to plead alternative theories of recovery under Rule 8. Plaintiffs implied-in-fact contract theory is alternative to its breach' of express contract. The fact that Plaintiff references the MSA/LOI in the breach of implied-in-fact contract claim does not make it inherently defective. It is true that once the existence of an express contract is established, either by the parties’ admissions or by judicial finding, quasi-contractual remedies are unavailable.
7
See, e.g., Prentice v. UDC Advisory Servs. Inc.,
271 IlI.App.3d 505, 512,
Under Illinois law, an implied-in-fact contract is one which imposes contractual terms by reason of the parties’ promissory expressions, inferred from the facts, circumstances, and expressions that the parties intend to be bound.
See U.S. Fidelity & Guar. Co. v. Continental Casualty Co.,
The only difference between an express contract and a contract implied in fact is that in the former the parties arrive at their agreement by words, either oral or written, while in the latter,‘'their agreement is arrived at by a consideration of their acts and conduct. Thus, a contract implied in fact arises not by express agreement but, rather, by a promissory expression which may be inferred from the facts and circumstances which show an intent to be bound.
On the other hand, a contract implied in law exists from an implication of law that arises from facts and circumstances independent of an agreement or consent of the parties; the intention of the parties is entirely disregarded. A contract implied in law is not a contract at all and is sometimes referred to as a quasi contract or constructive contract, and, historically, there being nothing else available, courts have allowed the action of assumpsit as a basis for recovery. The term quantum meruit means literally “as much as he deserves” and is an expression that describes the extent of liability on a contract implied in law; it is predicated on the reasonable value of services performed. Recovery is founded on the implied promise of the recipient of services or materials to pay for something which he has received that is of value to him.
... [I]t is clear that Century 21 adequately alleged acts and conduct of both parties which gave rise to the implication that a contract did exist. Thus, wereject the Bank’s argument that a contract implied in fact was not pleaded.
Id.
at 548,
Plaintiffs allegations for an implied-in-fact contract are that, regardless of any LOI or MSA, Defendant provided website hosting for Plaintiff for the 2000 baseball season. Plaintiff licensed its trademarks, logos, etc., for this purpose. Thus, both parties acted as if a contract was in place. The terms of that contract are to be determined at a later date, with or without reference to the MSA/LOI; however, an agreement must have existed between the parties because the parties, as is evident from the facts and circumstances of the existence of this sophisticated commercial transaction, intended to contract with each other. Plaintiff is simply arguing that if the M.S.A. § is not the express contract governing the parties, the Court may still find the parties were acting as if a contract existed, and thus, the Court (or the jury) must determine what its terms were. Plaintiff goes on to allege that one of the terms is payment to Plaintiff of $600,000. That Defendant disputes this term is immaterial to the current motion. That Defendant subjectively believes it did not manifest any intent to be bound, “meeting of the minds,” etc., is similarly irrelevant to the instant motion.
For these reasons, the Court concludes that Plaintiff has properly pleaded, in the alternative, a cause of action for breach of an implied-in-fact contract claim; the Court therefore DENIES Defendant’s motion to dismiss this count.
3. Count III — Promissory Estoppel
This is the only count of the complaint which is subject to dismissal.
As explained in
Prentice v. UDC Advisory Servs. Inc.,
[P]romissory estoppel is a method to enforce promises that do not meet the requirements of consideration. It is not intended to give a party to a negotiated commercial bargain a second bite at the apple in the event it fails to prove breach of contract.
Id.
at 512,
In the instant case, Plaintiff has alleged the existence of consideration within the promissory estoppel claim: Plaintiff refrained from contracting with any other company for its website hosting for 2000 in exchange for Defendant’s agreement to pay the $600,000 fee while hosting the website.
{See
Compl. ¶¶ 38, 40.) This exchange of promises constitutes consideration. Furthermore, the LOI specifically obligated Plaintiff not to negotiate/contract with another company for its website host
The Tigers will not negotiate with any other party for any internet services or arrangements during the period between the signing of this LOI and execution of a binding contract.... Except for matters set forth in this paragraph this LOI does not create a legal, binding obligation on either party ....
(LOI, Exh. A to Compl., at 4-5.)
Therefore, because Plaintiff alleges consideration, and because Plaintiffs detrimental reliance was something it was already contractually bound to refrain from doing, Plaintiffs promissory estoppel claim is defective as a matter of law. The Court DISMISSES this claim.
4. Count IV— Unjust Enrichment
Unjust enrichment is an equitable remedy. Under Illinois law, the elements of an unjust enrichment claim are: “the defendant unjustly retained a benefit to the plaintiffs detriment and that the defendant’s retention of that benefit violates fundamental principles of justice, equity, and good conscience.”
B & B Land Acquisition Inc. v. Mandell,
Plaintiff has properly pleaded this count in the alternative. Plaintiff alleges that even if there is no express contract, and even if the Court determines that there was no implied-in-fact contract, Plaintiff still licensed its trademarks, logos, etc. to Defendant and has not received any remuneration for that. Plaintiff alleges that it has suffered because Defendant has not compensated Plaintiff for the use of Plaintiffs “tangible and intangible property.” (ComplA 44.) This count is not subject to dismissal; the Court will therefore DENY Defendant’s motion to dismiss this claim.
III. CONCLUSION
In conclusion, Plaintiff has sufficiently alleged either (1) the M.S.A. § is the express contract between the parties, and Defendant has manifested assent to it by sending it to the MLB for approval, and performing under it; or (2) there is no express agreement, but because the parties acted as if there was an agreement in operation, then there was an implied-in-fact contract; or (3) if there was no express contract, and no implied contract, then Defendant was unjustly enriched by hosting Plaintiffs website without paying Plaintiff for the licensing of its trademarks, logos, etc., and should be required to remit the unjust enrichment to Plaintiff. While Plaintiff will not be able, ultimately, to recover on more than one of these theories, at the present stage of the litigation, Plaintiff does not have to pick the theory on which it wishes to proceed. Plaintiff has sufficiently alleged Counts I, II, and IV.
For the reasons stated above, the Court therefore GRANTS IN PART and DENIES IN PART the motion: specifically, Count III for promissory estoppel is DISMISSED. All other Counts survive the instant motion.
SO ORDERED.
Notes
. The current website, run by Sun Microsys-tems, includes statistics, news, schedules, merchandise, pictures, etc.
. The document stated that it "will remain in effect until 5:00 PM ... on February 28, 2000, unless both parties agree to extend the expiration.” It is unclear why it apparently was not signed until two days later. (2000 was a leap year.) However, this is immaterial to the instant motion.
. Adjusted gross revenue, as defined on page 1 of the MSA, means “Gross Revenue less all expenses incurred by Ignite in connection with the Web Site other than Expenses and the Annual Fee.” (MSA, Exh. B at 1.) Expenses are defined as Defendant’s costs in producing/hosting the website (cap of $400,000, mentioned supra), and the annual fee is the $600,000 mentioned supra. (Id. at 1-2.)
. That Order to Show Cause, due to the Court’s analysis of the conflict of laws issue herein, is hereby SET ASIDE.
. The parties are apparently under the assumption that this Court will determine, in this motion, whether the M.S.A. § is enforceable as a matter of law. However, that is inappropriate for a motion to dismiss under Rule 12(b)(6). The question is not whether Plaintiff would ultimately prevail in providing evidence that Defendant objectively manifested assent to the MSA; the question is whether Plaintiff has sufficiently alleged facts which, if proven, would permit recovery. The question of whether the M.S.A. § equals the contract, is left for another day.
This also means that the Court cannot, at this point, transfer the case to Illinois based on the forum selection clause in the MSA. The Court cannot decide, without any evidence before it, that the parties agreed to the forum selection clause, separate from the unsigned MSA.
Similarly, this is not the appropriate time to be determining what the terms of any alleged agreement were. There is no evidence before the Court to make this determination. Defendant’s assertion that the parties did not agree on the essential terms, such as price, would be a ground for a summary judgment motion, once the parties have proceeded through discovery. However, Rule 12 requires the Court
. • All other cases cited by Defendant similarly hold that if it is undisputed (both parties agree) that a contract exists, the quasi-contractual remedies are unavailable as a matter of law. Those cases are not beneficial to Defendant's current position in this case.