Ivey v. Transunion Rental Screening Solutions, Inc.

• Decision Date: 18 October 2021
• Docket Number: 1-20-0894
• Parties: Roger IVEY and Helix Strategies, LLC, a Limited Liability Company, Plaintiffs-Appellants, v. TRANSUNION RENTAL SCREENING SOLUTIONS, INC., Defendant-Appellee.
• Court: United States Appellate Court of Illinois

2021 IL App (1st) 200894

186 N.E.3d 1076

Roger IVEY and Helix Strategies, LLC, a Limited Liability Company, Plaintiffs-Appellants,

v.TRANSUNION RENTAL SCREENING SOLUTIONS, INC., Defendant-Appellee.

No. 1-20-0894

Appellate Court of Illinois, First District, First Division.

Opinion filed October 18, 2021

Michael I. Zweig, of Ferris, Thompson & Zweig, Ltd., of Chicago, and Jason R. Bendel, of Bendel Law Group, of Los Angeles, California, for appellants.

Christopher T. Sheean, Erica Bury, and Edward J. Keating, of Swanson, Martin & Bell, LLP, of Chicago, for appellee.

PRESIDING JUSTICE HYMAN delivered the judgment of the court, with opinion.

¶ 1 Roger Ivey formed Helix Strategies, LLC (Helix), to create and sell customizable lease forms, a product, according to Ivey, unavailable in the rental market. Defendant Transunion Rental Screening Solutions (TURSS) entered into a nonexclusive marketing agreement with Ivey to build a platform to sell the leases on its website. After delays of nearly five years, TURSS decided not to build the platform or sell Helix's leases. Ivey and Helix sued TURSS, alleging breach of contract, fraud, and promissory estoppel and seeking over $23 million damages. The trial court dismissed the fraud claim with prejudice, finding Helix could not establish (i) the elements of promissory fraud, including TURSS's intent to defraud; (ii) Helix's reasonable reliance; or (iii) proximate causation. The trial court also granted summary judgment for TURSS on the breach of contract claim, finding Helix's damages as too speculative.

¶ 2 After the trial court denied Helix's motion to reconsider and granted TURSS's motion for a final judgment, Helix appealed, arguing the trial court erred in (i) granting summary judgment on the breach of contract claim due to the speculative nature of the damages, (ii) denying nominal damages and attorney's fees, and (iii) dismissing the fraud claim.

¶ 3 We affirm. The trial court did not err in finding Helix's damages were too speculative as, under the new business rule, Helix could not present evidence estimating actual sales of its new, customizable leases. The trial court also did not err in declining to proceed to trial on nominal damages or in denying Helix's request for attorney's fees. Further, the trial court correctly dismissed the fraud claim where Helix failed to present facts showing TURSS acted with the intent to defraud.

¶ 4 I. BACKGROUND

¶ 5 Helix is a Colorado limited liability company formed to provide residential property management lease forms and related services to landlords and other property management companies. Ivey serves as its president and chief executive officer. TURSS is a Delaware corporation with offices in Illinois and a subsidiary of the credit reporting agency Transunion, LLC. TURSS provides consumer credit and background screening services to property management companies and landlords. TURSS developed two Internet platforms to offer its screening services: MySmartMove.com, a website directed at small portfolio landlords, and CreditRetriever, directed to larger, professional commercial customers.

¶ 6 In 2007, Ivey worked as the assistant vice president and property operations counsel of UDR, Inc., a publicly-traded real estate investment trust. At the time, only one meaningful electronic lease product for landlords existed: a "one size fits all" lease the National Apartment Association (NAA) made available to its dues-paying members. Recognizing a need, Ivey met with Michael Britti, vice president of TURSS, to discuss the possibility of TURSS building an online platform to sell a customizable, electronic lease form that Ivey would create. In September 2008, Ivey left UDR to form Helix, purportedly based on assurances from Britti that TURSS would build the online platform no later than mid-2009.

¶ 7 A. The Marketing Agreement

¶ 8 In March 2009, Helix and TURSS entered into a five-year marketing agreement that required TURSS to build an online platform for Helix's lease documents. TURSS would receive 35% of "all collected revenue (excluding any taxes) generated" from the sale of Helix's leases, and Helix would receive 65%.

¶ 9 The marketing agreement created no obligations of exclusivity, stating: "Nothing in this Agreement shall prevent Helix from independently marketing and selling its products to and through any and all third parties, including, without limitation, to TURSS’ Subscribers and competitors, without obligation to TURSS ***." Also, TURSS could partner with other vendors to provide similar forms to TURSS customers. The marketing agreement included this specific limitation of liability:

"In no event shall either party be liable for any consequential, incidental, indirect, special, or punitive damages incurred by the other party and arising out of the performance of this agreement including, but not limited to, loss of goodwill and lost profits or revenue, whether or not such loss or damage is based in contract, warranty, tort, negligence, strict liability, indemnity or otherwise, even if a party has been advised of the possibility of such damages. These limitations shall apply notwithstanding any failure of essential purpose of any limited remedy ***. TURSS shall not be liable for any and all claims arising out of or in connection with this agreement brought more than twelve (12) months after the cause of action has accrued. Except as otherwise set forth above, the parties’ (together with their respective parents’ and affiliates’) total liability under this agreement shall not exceed the aggregate amount of TURSS’ revenue share paid by Helix, under this agreement, during the twelve month (12) month [sic] period immediately preceding such claim. The foregoing limitations of liability shall not apply in the event and to the extent a party is harmed by the willful or intentional, wrongdoing of the other party." (Emphasis omitted).

¶ 10 B. Project Delays

¶ 11 Despite TURSS's repeated assurances that a platform for Helix's leases was in development, the project experienced extensive delays until shelved in 2014.

¶ 12 In August 2009, Britti left TURSS. His replacement, Mike Mauseth, regularly spoke with Ivey about TURSS's progress on the electronic platform. In September 2009, a TURSS business analyst told Ivey that TURSS would complete the platform by year's end. It did not.

¶ 13 In February 2010, Mauseth and other TURSS employees told Ivey that TURSS had not yet "allocated sufficient resources to complete the platform," but "was committed to building the platform and selling Helix services ***." TURSS later asserted, falsely Ivey contends, that the delays occurred because TURSS had to devote considerable time and resources to rebuilding its CreditRetriever and MySmartMove platforms due to stability problems.

¶ 14 In March 2010, TURSS agreed to amend the marketing agreement, extending it another five years from the date TURSS would offer the Helix lease documents for sale. The amendment added that TURSS anticipates that "the software platform(s) provided for in the Agreement and the Helix Services will be made available for purchase by TURSS’ Subscribers approximately in June 2010 (without making any specific guarantee regarding this date)." It also stated, "The extension of the Agreement will not be construed as an approval by Helix of unreasonable delays, if any, by TURSS in performance of the Agreement."

¶ 15 Ivey made numerous inquiries with TURSS in 2010 and 2011. Delays continued. Helix, meanwhile, worked on developing its product and marketing it to other companies. Helix entered into agreements with two other companies but made no sales.

¶ 16 On January 5, 2012, Ivey spoke with Mauseth and Timothy Martin from TURSS. Both reiterated TURSS's commitment but advised of delays into 2013. A few weeks later, Martin sent Ivey a follow-up letter, explaining that he had reviewed the marketing agreement and discussed the project with the TURSS team. "Based on that review," Martin wrote, "I am confident that TURSS is complying with its contractual obligations and acting in good faith and, to date, has spent significant time" developing the software platform, which continued to "be in the TURSS development queue, though other priorities, including system stability, have taken precedence. This extended timeframe has been reasonable. A system that includes forms but is not stable is not in anyone's interest."

¶ 17 After more delays, Ivey contacted TURSS in October 2014. The employees he reached knew nothing about the marketing agreement and, in an email exchange, stated, "no one is left at TURSS who was involved in the Helix project."

¶ 18 C. Procedural History

¶ 19 On July 20, 2015, Helix and Ivey filed a four-count complaint against TURSS. Count I, brought by Helix, alleged "willful and intentional’’ breach of contract. Counts II, III, and IV, brought by Ivey and Helix, alleged, respectively, fraud, negligent misrepresentation, and promissory estoppel. TURSS filed a motion for summary judgment on all counts. After a hearing, the trial court granted summary judgment for TURSS as to counts I, III, and IV. The court found, relevant here, that the "exception to the limitations period for willful or intentional wrongdoing doesn't apply to breach-of-contract actions," adding that, "the one-year limitations contained in paragraph 11 of the contract dooms the action for breach of contract" because based "on the evidence before the court, there is no genuine issue of material fact that, according to plaintiff's allegations, this cause of action for breach of contract accrued well before the one year Helix filed its complaint."

¶ 20 The court found count II, alleging fraud, inadequate as a matter of law because it did not specifically identify the facts underlying the claims. But rather than granting TURSS's motion for summary judgment, the trial court sua sponte struck the fraud claim and allowed Helix leave to replead. As to negligent misrepresentation, the trial...