Uhlig, LLC v. PropLogix, LLC
| Docket Number | Civil Action 22-2475-KHV |
| Decision Date | 28 August 2023 |
| Parties | UHLIG, LLC d/b/a CONDOCERTSTM and WELCOMELINK®, Plaintiff, v. PROPLOGIX, LLC, Defendant. |
| Court | U.S. District Court — District of Kansas |
Uhlig LLC d/b/a CondoCertsTM and d/b/a WelcomeLink® brings suit against PropLogix, LLC, alleging breach of contract, unjust enrichment, fraud, tortious interference with business relationships and deceptive and unfair competition. Defendant brings counterclaims for tortious interference with business relationships, deceptive and unfair competition and declaratory relief. This matter is before the Court on plaintiff's Motion To Dismiss Counterclaims (Doc. #83) filed June 26, 2023. For reasons stated below, the Court overrules plaintiff's motion.
In ruling on a motion to dismiss under Rule 12(b)(6), Fed. R Civ. P., the Court assumes as true all well-pleaded factual allegations and determines whether they plausibly give rise to an entitlement to relief. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual matter to state a claim which is plausible-not merely conceivable-on its face. Id. at 679-80; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To determine whether a complaint states a plausible claim for relief, the Court draws on its judicial experience and common sense. Iqbal, 556 U.S. at 679.
The Court need not accept as true those allegations which state only legal conclusions. See Id. at 678. In bringing a counterclaim defendant makes a facially plausible claim when it pleads factual content from which the Court can reasonably infer that plaintiff is liable for the misconduct alleged. Id. However, defendant must show more than a sheer possibility that plaintiff has acted unlawfully-it is not enough to plead facts that are “merely consistent with” liability. Id. (quoting Twombly, 550 U.S. at 557). A pleading which offers labels and conclusions, a formulaic recitation of the elements of a cause of action, or naked assertions devoid of further factual enhancement will not stand. Id. Similarly, where the well-pleaded facts do not permit the Court to infer more than the mere possibility of misconduct, the complaint has alleged-but has not “shown”-that the pleader is entitled to relief. Id. at 679.
Highly summarized, PropLogix's counterclaim alleges as follows:
In common interest residential communities (“CICs”) such as homeowner associations, condominiums and co-ops, real property deeds may be encumbered by obligations to the CIC. When a property owner sells or refinances a property, the owner, buyer or lender often must obtain an “estoppel certificate,” which indicates any outstanding monetary obligation to the CIC. In Florida, within ten days of a request from the owner, mortgagee or designee of the owner or mortgagee, a CIC must provide an estoppel certificate. See Fla. Stat. § 720.30851, § 718.116(8).
Uhlig is a national provider of estoppel certificates for its clients, which include various CICs in Florida. Uhlig provides such certificates for its client's properties to parties such as property buyers, lenders and real estate due diligence service companies.
PropLogix is a real estate due diligence service company. As part of its services, it obtains estoppel certificates for customers including title agents, real estate attorneys, property owners and lenders. For years, PropLogix has used online platforms, including Uhlig's web sites, to obtain estoppel certificates. If PropLogix needs to obtain an estoppel certificate for a property in a CIC represented by Uhlig, PropLogix must use one of Uhlig's web sites to obtain the certificate.
When PropLogix obtains an estoppel certificate for a customer, it fronts the fee charged by Uhlig or other suppliers. PropLogix then charges its customer a fee, which includes its services to research the CIC and property management company and to obtain the estoppel certificate.
Beginning in November of 2022, based on the erroneous premise that PropLogix was improperly requesting CIC information from Uhlig web sites in order to “commercialize” that data, e.g., store, re-use, and resell the data to customers for a fee, Uhlig unjustifiably blocked PropLogix from ordering estoppel certificates from Uhlig. Defendant PropLogix, LLC's First Amended Answer To Plaintiff's Second Amended Complaint And Jury Demand, And Counterclaim (Doc. #76) filed June 14, 2023 (“Answer And Counterclaim”) at 19, 25.
PropLogix informed Uhlig that it requested estoppel certificates as the authorized designee of the property owner or mortgagee and that it did not up-charge the fee that Uhlig assesses PropLogix. Id. at 19. Even so, to obtain an estoppel certificate from Uhlig, PropLogix (but no other customers) now must complete an intake form which requires disclosure of confidential and proprietary information about its pricing. Id. at 20-21. The form states that PropLogix customers will be liable for any incorrect information that they provide on the form and that they must consent to Uhlig using their personal information. Id. at 21. Uhlig uses information from the form and its ability to unilaterally withhold estoppel certificates to prevent PropLogix from providing real estate due diligence services to its clients, to attempt to learn more about its pricing information and to either extract a payment from it or destroy its business. Id. at 20-21, 27.
After Uhlig imposed the intake form requirement, PropLogix began to request estoppel certificates directly from Uhlig clients. Uhlig instructed its clients not to respond to such requests so that PropLogix could only obtain estoppel certificates directly through Uhlig.
PropLogix customers expressed dissatisfaction with Uhlig's intake form. Many customers have advised PropLogix that if Uhlig must personally contact the seller to verify that PropLogix is an authorized designee, they will move their business to a competitor. Id. at 22. From November of 2022 until June of 2023, PropLogix has lost 11 customers and some $200,000 in revenue. Id.
On November 21, 2022, Uhlig filed suit against PropLogix, alleging breach of contract, unjust enrichment, fraud, tortious interference with business relationships and deceptive and unfair competition in violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), Fla. Stat. § 501.201 et seq. PropLogix brings counterclaims for tortious interference with business relationships, violations of FDUTPA and declaratory judgment.
Uhlig seeks to dismiss PropLogix's counterclaims for failure to state a claim on which relief can be granted. The Court addresses each claim in turn.
Uhlig argues that PropLogix has not stated a claim for tortious interference with the business relationships between PropLogix and its customers. Initially, the Court addresses what state law applies to PropLogix's claim. A federal court sitting in diversity applies the choice of law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). In tort cases, Kansas courts apply the law of the state where the wrong occurred, i.e. where the claimant suffered injury. Ling v. Jan's Liquors, 237 Kan. 629, 634, 703 P.2d 731, 735 (1985).
The parties do not dispute that PropLogix's alleged injuries occurred in Florida. In addition, PropLogix alleges that its injuries stem from its inability to obtain estoppel certificates which it is entitled to receive under Florida statute. For these reasons and because the parties have not argued that any other state's law potentially applies, the Court applies Florida law.
To state a claim for tortious interference with a business relationship under Florida law, the claimant must show (1) the existence of a business relationship or contract between claimant and a third party; (2) defendant knew of the business relationship or contract; (3) defendant intentionally and unjustifiably interfered with the business relationship or procured a breach of the contract; and (4) claimant sustained damage. Howard v. Murray, 184 So.3d 1155, 1166 (Fla. Dist. Ct. App. 2015). As to the third element, because a party cannot unjustifiably interfere with its own relationship, the claimant must show that the defendant is not a party to the business relationship or it has any beneficial or economic interest in, or control over, that relationship. Astro Tel, Inc. v. Verizon Fla., LLC, 979 F.Supp.2d 1284, 1300 (M.D. Fla. 2013); see Bridge Fin., Inc. v. J. Fischer & Assocs., Inc., 310 So.3d 45, 50 (Fla. Dist. Ct. App. 2020).
Uhlig argues that PropLogix's claim for tortious interference with a business relationship does not state a claim because (1) PropLogix has alleged facts which establish that Uhlig was part of the business relationship between PropLogix and its customers and (2) PropLogix has not alleged facts to establish that Uhlig's conduct was unjustified. As explained below, PropLogix has adequately pled a claim against Uhlig for tortious interference with a business relationship.
Uhlig argues that because PropLogix's counterclaim alleges facts which establish that Uhlig was part of the business relationship between PropLogix and its customers, Uhlig cannot be liable for tortious interference with that relationship. See Memorandum In Support Of Motion To Dismiss Counterclaims (Doc. #84) at 9. PropLogix argues that it has only alleged facts which establish that Uhlig was a provider of estoppel certificates, which is insufficient to establish that...
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