Resource Title Agency v. Morreale Real Estate Ser.

• Decision Date: 20 April 2004
• Docket Number: No. 1:03 CV 2516.,1:03 CV 2516.
• Citation: 314 F.Supp.2d 763
• Parties: RESOURCE TITLE AGENCY, INC., et al., Plaintiffs, v. MORREALE REAL ESTATE SERVICES, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

314 F.Supp.2d 763

RESOURCE TITLE AGENCY, INC., et al., Plaintiffs, v. MORREALE REAL ESTATE SERVICES, INC., et al., Defendants.

No. 1:03 CV 2516.

United States District Court, N.D. Ohio, Eastern Division.

April 20, 2004.

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David M. Cuppage, Climaco Lefkowitz Peca Wilcox & Garofoli, Cleveland, OH, for Plaintiffs.

Robert G. Schuler, Eve M. Ellinger, Timothy T. Tullis, Kegler, Brown, Hill & Ritter, Columbus, OH, for Morreale Real Estate Services, Inc., defendant.

Eric B. Levasseur, Steven A. Goldfarb, Hahn, Loeser & Parks, Cleveland, OH, for Cendant Mobility Services Corporation, defendant.

Anthony F. Stringer, Christopher S. Williams, Calfee, Halter & Griswold, Cleveland, OH, Eve M. Ellinger, Timothy T. Tullis, Kegler, Brown, Hill & Ritter, Columbus, OH, for Morreale Mack & Terry, D.C., defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS

WELLS, District Judge.

Before the Court is defendant Cendant Mobility Services Corporation's ("Cendant") motion to dismiss plaintiffs' complaint, pursuant to Fed.R.Civ.P. 12(b)(6), for their failure to state a claim. (Docket # 16).¹ Plaintiffs Resource Title Agency, Inc. ("RTAI") and Resource Title Agency of Michigan, Inc. ("RTAI-Michigan") (referred to as "the Resource Title Agencies" or "the Agencies") have filed a brief in opposition. (Docket # 19). Cendant also filed a reply. (Docket # 22).

For the reasons set forth below, defendant Cendant's motion is denied as to all of the Resource Title Agencies' claims against Cendant, but the Agencies are ordered to plead their fraud claims with greater specificity.

I. THE RESOURCE TITLE AGENCIES' COMPLAINT²

Sharing the same ownership and corporate offices, plaintiffs RTAI and RTAI-Michigan are independent full service title agencies which coordinate real estate and financial transactions with third parties. (Am. Compl. at ¶¶ 1-3). Defendant Cendant is a leading provider of global management and workforce development solutions, assisting corporations, the military and member organizations with job related transfers and individually motivated relocation. (Am. Compl. at ¶ 5). Cendant manages a network of local suppliers, or "local closing teams," which perform real estate closing functions. (Am. Compl. at ¶ 5).

From approximately 1984 through 1998, the Resource Title Agencies provided real estate closing services to Cendant, including on-the-ground support, management of title searches, and facilitating local closings of transactions, through Cendant's "attorney closing network." (Am. Compl. at ¶ 8). While Cendant would request such services from the Resource Title Agencies, the Agencies would not actually be compensated for these services until after the particular real estate transaction closed. (Am. Compl. at ¶¶ 12-13).³ Cendant assured the Agencies that they would be the designated title agencies to close the transactions and would be compensated at closing and also agreed to pay them cancellation charges for services provided in transactions which were cancelled prior to closing. (Am. Compl. at ¶¶ 8 and 12).

In late 1998, the Agencies were notified by Cendant that they were going to be replaced by defendant Morreale, Mack & Terry ("MM & T") and, subsequently, Morreale Real Estate Services, Inc. ("Morreale"). (Am. Compl. at ¶ 9).⁴ While Cendant stopped sending new orders to the Resource Title Agencies, the Agencies continued to process closings and equity transactions from the then-current inventory according to the instructions of Cendant and MM & T. (Am. Compl. at ¶ 10). In or about January 1999, MM & T, and subsequently Morreale, began outsourcing title work to the Agencies on behalf of and for the benefit of Cendant. (Am. Compl. at ¶ 14). MM & T and Morreale both instructed the Resource Title Agencies to bill for the preliminary exam and commitment at the time the commitment was created and agreed to pay cancellation fees for services provided on files which were cancelled. (Am. Compl. at ¶ 14).

On or about 15 February 2000, both RTAI and RTAI-Michigan and Morreale entered into Service Pact Agreements, containing Service Pact Guidelines for Cendant Mobility Services Corporation/Morreale Real Estate Services. Inc. ("the Agreements"). (Am. Compl. at ¶¶ 15-16, Exs. A and B). Pursuant to the Agreements, the Resource Title Agencies were hired by Morreale to provide local team closing services in all aspects of real estate closings. (Am. Compl. at ¶ ¶ 15-16, Exs. A and B). The Agreements provided that all correspondence and communications must be conducted through Morreale and that the Agencies were not to contact the client (i.e.Cendant).⁵ (Am. Compl. at ¶¶ 15-16, Exs. A and B). The Agreements also provided that "[a]fter agreement has been reached, fees charged by [the Agencies] will be standard on all files," that all fees will be collected at closing, and that cancellation charges will be negotiated at the point of cancellation. (Am. Compl. at ¶¶ 15-16, Exs. A and B). Ultimately, Morreale and the Resource Title Agencies agreed, pursuant to the Agreements, that if any files were cancelled prior to closing, RTAI-Michigan and RTAI would receive $600 and $700, respectively, for services performed prior to cancellation. (Am. Compl. at ¶ 20). While the Resource Title Agencies were prohibited from contacting Cendant during the course of the Agreements, Cendant continued to contact the Agencies directly to request services and to inquire as to the status of various real estate transactions. (Am. Compl. at ¶ 17).

During the parties' course of dealing, the Resource Title Agencies inquired directly with MM & T and/or Morreale about the status of various files so they could collect payment for services rendered. (Am. Compl. at ¶ 21). While defendants MM & T and Morreale failed and refused to provide accurate and timely information as to the status of files, they reassured the Agencies that invoices would be paid when these files closed. (Am. Compl. at ¶ 22). In or about December 2001, the Agencies were advised by defendants that the files the Agencies were inquiring about were cancelled and that defendants would not pay for cancelled files. (Am. Compl. at ¶ 23). The Resource Title Agencies claim that many of these allegedly cancelled files were actually closed by third-party providers. (Am. Compl. at ¶ 24). At all times, defendants Cendant, MM & T, and Morreale failed and refused to pay cancellation charges on files cancelled and to pay for services requested in files eventually closed by third-party providers. (Am. Compl. at ¶ 27).

Based on this alleged factual context, the Resource Title Agencies allege, in their amended complaint, four different causes of action against defendant Cendant: 1) Breach of Contract (Counts Three and Four); 2) Unjust Enrichment (Counts Seven and Eight); 3) Fraud (Counts Eleven and Twelve); and, 4) Promissory Estoppel (Count Thirteen).⁶ (Docket # 6). All four causes of action relate to Cendant's purported failure to pay for real estate services rendered by the Agencies with respect to files which were cancelled or closed by other companies.

II. MOTION TO DISMISS STANDARD

In considering a motion to dismiss under Rule 12(b)(6), the Court must construe the complaint liberally in the plaintiff's favor and accept all of plaintiff's factual allegations as true. Lillard v. Shelby Cty. Bd. of Educ., 76 F.3d 716, 724 (6th Cir.1996). The Court's task is necessarily a limited one, as "the issue is not whether a [party] will ultimately prevail but whether the [party] is entitled to offer evidence to support the claims." Miller v. Currie, 50 F.3d 373, 377 (6th Cir.1995) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). Indeed, a Rule 12(b)(6) motion to dismiss will be granted "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Sistrunk v. City of Strongsville, 99 F.3d 194, 197 (6th Cir.1996) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984)); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) (holding dismissal to be appropriate only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief). If, however, the complaint fails to contain "either direct or inferential allegations respecting all the material elements" necessary to sustain recovery under some viable legal theory, it will be dismissed pursuant to Rule 12(b)(6). Glassner v. R.J. Reynolds Tobacco Co., 223 F.3d 343, 346 (6th Cir.2000) (quoting Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir.1988)).

III. LAW AND ANALYSIS

A. Breach of Contract

In their breach of contract claims, the Resource Title Agencies contend that Cendant breached both a verbal agreement and, as a third-party beneficiary, the terms of the Service Pact Agreement entered into by the Agencies and defendant Morreale. The Agencies' amended complaint actually contemplates two separate time periods, pre-1999 and post-1999, during which they provided services for the benefit of Cendant. After a brief discussion of Ohio contract law, the Court separately considers the purported verbal agreements and Service Pact Agreement.

1. Ohio Contract Law

To prove a breach of contract under Ohio law, the following elements must be established: 1) the existence of a valid contract; 2) performance by the plaintiff; 3) breach by the defendant; and 4) damage or loss to the plaintiff. Samadder v. DMF of Ohio, Inc., 154 Ohio App.3d 770, 778, 798 N.E.2d 1141 (2003); Doner v. Snapp, 98 Ohio App.3d 597, 600, 649 N.E.2d 42 (1994); Thomas v. Publishers Clearing House, Inc., 29 Fed. Appx. 319, 322 (6th Cir.2002). As an enforceable contract is one of the basic prerequisites of a breach of contract claim, Garofalo v. Chicago Title Ins. Co., 104 Ohio App.3d 95, 108, 661 N.E.2d 218 (1995), a...