Management Registry, Inc. v. A.W. Companies, Inc.

Background

Management Registry, Inc. (MRI) sued A.W. Companies, Inc., Allan K. Brown, Wendy Brown, and Milan Batinich. MRI alleged that Allan Brown helped arrange the sale of several companies to MRI and then helped Wendy Brown take some of those businesses away from MRI. MRI also alleged that the defendants took customers, equipment, employees, and other information while creating A.W. as a competing company.

The parties moved for summary judgment on MRI’s claims and the defendants’ counterclaims. Summary judgment is a ruling entered without a trial when the evidence shows there is no genuine dispute over a fact that could affect the result and one side is entitled to judgment under the law. The court emphasized that it could not resolve disputed facts at this stage.

Rulings on MRI’s claims

- Conversion and civil theft: Both sides’ motions were denied. The evidence did not establish whether MRI or its client owned the computers, monitors, and related equipment allegedly taken for A.W., and ownership was required for these claims. - Common-law fraud: The defendants’ motion was granted as to the allegation that Allan Brown misrepresented whether he would receive a broker’s fee. MRI had not identified evidence that Brown made a false statement, and the alleged violation was treated as a contract issue rather than fraud. Both sides’ motions were denied as to the allegation that the Browns misrepresented Wendy Brown’s ownership of the Minnesota Businesses because disputed evidence concerned the Browns’ knowledge and intentions. - Unjust enrichment: The defendants’ motion was granted. The court held that MRI had adequate contract and tort remedies, making this equitable claim unavailable. - Breach of contract: MRI’s motion was granted as to Allan Brown. The court concluded that the record did not show MRI had permitted Brown to establish a separate competing company or encourage MRI’s employees and customers to leave. It ordered the defendants to pay the difference between the value of the promissory note when the alleged breach occurred and its value on May 2, 2018. The defendants’ motion was granted as to Batinich. The court held that Batinich’s noncompetition provision was overbroad under Illinois law and could not be separated from the rest of the contract because the contract treated the restrictions as essential. - Breach of duty of loyalty: The defendants’ motion was granted. MRI had not shown that Batinich’s alleged breach caused an injury. - Civil conspiracy: Both sides’ motions were denied because the underlying tort claims contained factual disputes. - Malicious injury: The defendants’ motion was granted. MRI relied on allegations in its complaint rather than admissible evidence showing specific facts for trial. - Business defamation: The defendants’ motion was granted. MRI did not present record evidence that the defendants made statements about MRI that harmed its business. - Deceptive Trade Practices Act claim: The defendants’ motion was granted. The court found that the statute provided only injunctive relief and that MRI had not shown a likelihood of future harm or established why the statute applied. - Tortious interference with contract: The defendants’ motion was denied. Although MRI had shown that contracts were canceled or dissolved around the time A.W. was created, factual disputes remained about who caused the breaches and whether any interference was justified. - Misappropriation of trade secrets: The defendants’ motion was denied. A factual dispute remained about whether MRI took reasonable steps to keep its information secret.

Rulings on the defendants’ counterclaims

- Breach of contract: MRI’s motion was denied. The court held that the statute of frauds did not resolve the claim because the alleged oral arrangement could have been performed within one year. The integration clause in the Stock Purchase Agreement also did not control because Wendy Brown was not a party to that agreement. - Tortious interference with prospective economic advantage: MRI’s motion was granted because the defendants had not produced evidence of damages. - Defamation: MRI’s motion was granted in part as to statements MRI made to an information-technology vendor. The court held that those statements were not about the defendants. The court did not grant summary judgment on the entire counterclaim because statements to an MRI employee were sufficient to establish the publication requirement. - Tortious interference with contract: MRI’s motion was denied. Evidence indicated that MRI knew A.W. was working with an entity identified as Altrua and with an information-technology vendor and attempted to disrupt those relationships. Whether MRI’s conduct was justified and whether the defendants could prove damages remained for further proceedings. - Fraudulent inducement: MRI’s motion was denied. The defendants presented evidence from which a jury could find that MRI assured Allan Brown it would sell the Minnesota Businesses to Wendy Brown, that Brown relied on those assurances in signing the Stock Purchase Agreement, and that he suffered damages. - Negligent misrepresentation: MRI’s motion was granted. The defendants did not present evidence that MRI supplied false information to them. - Unjust enrichment: MRI’s motion was granted. The court held that the alleged benefit came through contractual arrangements and that legal remedies were available.

Disposition

The order states that MRI’s motion for summary judgment was granted in part and denied in part. It was granted as to Allan Brown’s alleged breach of contract and counterclaims for tortious interference with prospective economic advantage, the defamation allegations concerning statements to the information-technology vendor, negligent misrepresentation, and unjust enrichment. It was denied as to all other claims.

The defendants’ motion for summary judgment was also granted in part and denied in part. It was granted as to the broker’s-fee portion of MRI’s fraud claim, Batinich’s alleged contract breach, and MRI’s claims for malicious injury, business defamation, deceptive trade practices, unjust enrichment, breach of the duty of loyalty, and the claims identified as Counts III, IV, V, VII, and IX in the order. It was denied as to all other claims.

Judge

Judge John R. Tunheim signed the order on September 30, 2022.