Corinthian Mortg. v. Choicepoint Precision Mark.
| Decision Date | 11 February 2008 |
| Docket Number | No. 1:07cv832 (JCC).,1:07cv832 (JCC). |
| Citation | 543 F.Supp.2d 497 |
| Parties | CORINTHIAN MORTGAGE CORP d/b/a Southbanc Mortgage, Plaintiff, v. CHOICEPOINT PRECISION MARKETING, LLC, Defendant. |
| Court | U.S. District Court — Eastern District of Virginia |
James Bennett Kinsel, Erin Lewis Roberts, Womble Carlyle Sandridge & Rice PLLC, Tysons Corner, VA, for Plaintiff.
Robert Armistead Angle, Amy Gwynn Marino, Troutman Sanders LLP, Richmond, Va, for Defendant.
This matter is before the Court on Defendant's Motion to Dismiss. For the following reasons, this Motion will be granted in part and denied in part.
This case arises out of a contractual agreement between Plaintiff Corinthian Mortgage Corporation, doing business as SouthBanc Mortgage ("SouthBanc") and its mailing list broker, Defendant Choice-Point Precision Marketing, LLC ("Choice-Point"). On or about January 23, 2002, SouthBanc and ChoicePoint entered into an agreement (the "Service Agreement") wherein ChoicePoint agreed to assist in developing a methodology for creating lists of names and individuals to whom South-Banc could mail targeted promotional materials. The parties also entered into a Confidentiality and Nondisclosure Agreement (the "Confidentiality Agreement"), which was incorporated into the Service Agreement, delineating the treatment of information. The Confidentiality Agreement designates as "Confidential Information" all material that "is clearly marked as proprietary, confidential or with other confidentiality notices when disclosed, or ... is identified as proprietary, confidential or with other confidentiality notices on disclosure." Am. Compl. Ex. 2, Confidentiality Agreement at ¶ 1.
Theresa Ritter ("Ms.Ritter") was a Vice President at SouthBanc and participated in communications regarding the criteria to be used in the SouthBanc name-selection methodology being developed by ChoicePoint. On or about June 30, 2003, SouthBanc terminated Ms. Ritter. South-Banc representatives met with Choice-Point representatives to advise them of concerns that Ms. Ritter was creating a competing company, and requested that ChoicePoint not allow Ms. Ritter or a new company founded by her to use South-Banc's criteria for selecting names. The parties signed a Confidentiality of Information Agreement (the "COI Agreement") on August 4, 2003, in which both parties agreed "[t]o take all steps reasonably available to them to ensure that ... nonpublic personal information obtained from the other parties with respect to customers and/or business affairs" would be kept "confidential at all times." Am. Compl. Ex. 3, COI Agreement. The COI Agreement defined confidential information as "any data or information other that is known to disclosing party, is competitively sensitive, and is not generally known to the public." Id. The Service Agreement, Confidentiality Agreement, and COI Agreement (collectively, the "Agreements") form the written basis of the contractual relationship between the parties.
In September, 2003, Ms. Ritter formed a competing company, Summit Financial LLC ("Summit"). She requested names from ChoicePoint on behalf of Summit in late August of 2003, using name selection criteria similar to SouthBanc's. Choice-Point provided the requested information to Summit and continued to supply names using that criteria through at least January 2005. ChoicePoint did not inform SouthBanc of, and even took actions to keep it from becoming aware of, their business relationship with Summit while continuing to process Summit's requests for names based on the criteria Ms. Ritter had obtained from SouthBanc.
On August 17, 2007, Plaintiff brought suit in the Eastern District of Virginia. It filed an amended complaint on November 28, 2007, alleging that Defendant violated the covenant of good faith and fair dealing (Count 1), violated Massachusetts' Unfair Trade Practices Act (Count 2), and breached the Contract between the parties (Count 3).
On January 11, 2008, Defendant filed a Motion to Dismiss. Plaintiff responded on January 29, 2008, and Defendant filed a Reply on February 5, 2008. This Motion is currently before the Court.
A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the complaint, see Randall v. United States, 30 F.3d 518, 522 (4th Cir.1994), and should be denied unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." De Sole v. United States, 947 F.2d 1169, 1177 (4th Cir.1991) (citations omitted); see also Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
In passing on a motion to dismiss, "the material allegations of the complaint are taken as admitted." Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S.Ct. 1843, 23 L.Ed.2d 404 (1969) (citations omitted). Moreover, "the complaint is to be liberally construed in favor of plaintiff." Id. In addition, a motion to dismiss must be assessed in light of Rule 8's liberal pleading standards, which require only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R.Civ.P. 8. Nevertheless, while Rule 8 does not require "detailed factual allegations," a plaintiff must still provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007) (citation omitted).
Defendant denies that it breached the relevant Agreement. Although it does not deny that it worked with Summit, allowing it to use information Plaintiff claims was proprietary, Defendant argues that their interactions did not violate any of the relevant Agreements.
Plaintiff alleges that Defendant committed three major breaches of their contract. First, Plaintiff claims that Defendant "fail[ed] to adequately investigate whether Theresa Ritter's orders on behalf of Summit utilized [Plaintiffs] proprietary criteria." Mem. in Opp. to Def.'s Mot. to Dismiss at 7. In addition, Plaintiff alleges that Defendant failed to tell Plaintiff of Ritter's actions and impermissibly used Plaintiffs "proprietary name selection criteria to fill orders submitted by Ritter to select names for Summit." Id.. Defendant asserts that the Agreement provides that information provided by Plaintiff would belong to Defendant and would not be proprietary information belonging to Plaintiff. Therefore, Defendant argues, even if it used search criteria for the new client that was identical to that provided by Plaintiff, it would not be in breach of the Agreement. In addition, Defendant argues that the Confidentiality Agreement required proprietary information be so marked, and since the information in question was not marked, Plaintiff cannot now claim that it is confidential.
The parties' fundamental disagreement is as to whether the name selection criteria is proprietary information. Plaintiff believes that under the Agreement it had "a reasonable expectation that its proprietary information, and in particular, its methodology for selecting the targets of its direct mail program, would be treated as confidential by [Defendant]," and thus that it did not need to be marked "confidential" during every interaction. Id. Defendant believes that its use of the search criteria in question was permissible under the Agreement, particularly because the information was not marked "confidential," and thus that its behavior did not breach the contract or misuse proprietary information. If the name selection criteria is confidential information under the Agreements, then Plaintiff has sufficiently alleged a statement of its claims of breach of contract to meet the Rule 8 standard. Fed.R.Civ.P. 8.
The parties have agreed that Massachusetts law will govern their dealings. That state's highest court has held that "[w]hen the words of a contract are clear they alone determine the meaning of the contract but, when a contract term is ambiguous, its import is ascertained from the parties' intent as manifested by the guaranty's terms and the circumstances surrounding its creation, such as relationship of the parties, actions of the parties and established business usages." Merrimack Valley Nat'l. Bank v. Baird, 372 Mass. 721, 723-724, 363 N.E.2d 688 (Mass.1977)(citing Zeo v. Loomis, 246 Mass. 366, 368, 141 N.E. 115 (1923)). Defendant argues that the Agreements are not ambiguous and that Plaintiff does not cite factual claims to support its allegations of breach. Plaintiff argues that the requirement that all confidential information be so marked can and has been modified by the conduct of the parties, noting that under Massachusetts law, "[m]utual agreement on modification of the requirement of a writing may, moreover, `be inferred from the conduct of the parties and from the attendant circumstances' of the instant case." First Pennsylvania Mortg. Trust v. Dorchester Sav. Bank, 395 Mass. 614, 481 N.E.2d 1132, 1139 (1985)(quoting Flynn v. Wallace, 359 Mass. 711, 270 N.E.2d 919, 922 (1971))...
Because the Agreements are silent as to the specific status of the name selection criteria and the parties conduct may have modified the requirement that all confidential information be so marked, the Court will find that Plaintiff has sufficiently asserted a claim which, if its understanding of the Agreement governs, may entitle it to relief on its breach of contract claim. Therefore, dismissal is not appropriate at this stage of the proceedings, and the Court will deny the Motion to Dismiss as to this claim.
Under Massachusetts law, "[a] covenant of good faith and fair dealing is implied in every contract." Speakman v. Allmerica Fin. Life Ins. & Annuity Co., 367 F.Supp.2d 122, 132 (D.Mass.2005)(citing Uno Restaurants, Inc. v....
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