Cypress Creek Intermediaries, Inc. v. Westport Insurance Corporation

Background

Cypress Creek Intermediaries, Inc. (CCI), described in the opinion as a broker, sued Westport Insurance Corporation over a fee that CCI claimed it earned by helping connect Westport with TMS, Re, Inc., in connection with a possible acquisition. CCI asserted claims for breach of contract, unjust enrichment, quantum meruit, breach of the covenant of good faith and fair dealing, fraud, and violation of Massachusetts General Laws Chapter 93A, a statute concerning unfair or deceptive business practices.

CCI alleged that it introduced TMS to Westport and helped facilitate discussions. Westport signed a proposed confidentiality and representative agreement stating that CCI was recognized as the representative for negotiations involving TMS and a possible transaction. The agreement, however, was not signed by TMS and therefore did not become effective under its terms. CCI later emailed Westport stating that it expected a facilitation fee of 1% to 2% of certain premiums if a partnership was completed. TMS objected to CCI’s involvement, and Westport later questioned whether CCI had been engaged to provide services.

Westport moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint plausibly states a claim for relief. The court considered the complaint and documents attached to it, accepting well-pleaded factual allegations as true but also considering attached documents that contradicted those allegations.

Court’s Analysis

Breach of contract. The court dismissed Count I. Under New York law, an enforceable contract generally requires an offer, acceptance, consideration, mutual assent, and an intent to be bound. The court concluded that the proposed agreement was not effective because TMS never signed it. It also did not establish that Westport agreed to pay CCI a fee or set out other essential terms of a fee agreement. The court further concluded that CCI’s September 30 email describing the anticipated fee was rejected by Westport shortly afterward. Because the court found no valid contract, it did not decide the parties’ arguments about New York’s Statute of Frauds.

Unjust enrichment and quantum meruit. The court denied the motion as to Counts II and III. Unjust enrichment is a claim seeking recovery for a benefit allegedly retained unfairly, while quantum meruit seeks the reasonable value of services provided. Although the court found no enforceable contract, it held that CCI plausibly alleged that Westport agreed to work with CCI as a facilitator, took steps to explore a possible acquisition, and understood that CCI expected compensation. The court also concluded at this stage that the claims were not barred by the Statute of Frauds or improperly duplicative of the contract claim.

Good faith and fair dealing. The court dismissed Count IV. It explained that the duty of good faith and fair dealing arises from a contract. Because CCI had not plausibly alleged an enforceable fee agreement, the court concluded that no such duty existed for this claim.

Fraud. The court dismissed Count VI. CCI identified alleged misrepresentations about Westport’s interest in acquiring TMS and about Westport’s relationship with CCI. But the court found that CCI did not plausibly allege that it relied on those statements, that they induced CCI to take a particular action, or that CCI suffered resulting losses in the manner required for a fraud claim.

Massachusetts Chapter 93A. The court dismissed Count V. Section 11 of Chapter 93A requires the allegedly unfair or deceptive conduct to have occurred primarily and substantially in Massachusetts. The court found that CCI did not allege that Westport’s conduct occurred in Massachusetts. The choice-of-law provision in the unsigned agreement did not establish where the alleged conduct occurred, and the complaint and exhibits did not provide a plausible factual basis for the Chapter 93A claim.

Disposition

Judge Edgardo Ramos granted Westport’s motion to dismiss in part and denied it in part. Counts I, IV, V, and VI were dismissed. The motion was denied as to Counts II and III. The court also denied CCI’s request for oral argument as moot and directed the parties to appear for a telephone status conference. The opinion does not state that the dismissed claims were dismissed with or without prejudice.