United States District Court, N.D. Indiana, Hammond Division
OPINION AND ORDER
LOZANO, JUDGE UNITED STATES DISTRICT COURT
matter is before the Court on: (1) Motion to Dismiss Counts
II and III of Complaint Pursuant to Rule 12(b)(6), filed by
The Leona Group on December 13, 2016 (DE #8); (2) Defendant
the School Board of the East Chicago Urban Enterprise
Academy's Motion to Dismiss Plaintiff's Complaint,
filed on December 13, 2016 (DE #9); and (3) Defendant Ben
Clement's Motion to Dismiss Counts I, III, and IV of
Plaintiff's Complaint Pursuant to Rule 12(b)(6), filed on
December 16, 2016 (DE #12). For the reasons set forth below,
the motions are GRANTED. The Complaint is
DISMISSED WITHOUT PREJUDICE.
Quality Schools (“AQS”) brought suit against The
Leona Group (“Leona”), the School Board of the
East Chicago Urban Enterprise Academy (“Board”),
and Ben Clement (“Clement”) in Lake County,
Indiana on March 30, 2016. AQS is an Educational Management
Organization (“EMO”). AQS entered into a contract
to operate the East Chicago Urban Enterprise Academy
(“Academy”), a charter school, from July 1, 2014
to June 30, 2016. The Academy received high academic ratings
under AQS's management. Despite those ratings, the Board
did not renew AQS's contract to manage the Academy.
Instead, the Board contracted with Leona to manage the
Academy. The complaint alleges that this was the result of
Clement and Leona interfering with AQS's business
relationship with the Board (Counts I and II). The complaint
further alleges that Clement conspired with both Leona (Count
III) and the Board (Count IV) to interfere with AQS's
business relationship with the Board. Lastly, the complaint
alleges that the Board breached its fiduciary duty to AQS
Defendant has filed a motion to dismiss the complaint. The
motions are fully briefed and ripe for adjudication.
Rule of Civil Procedure 12(b)(6) allows a complaint to be
dismissed if it fails to “state a claim upon which
relief can be granted.” Fed.R.Civ.P. 12(b)(6).
Allegations other than fraud and mistake are governed by the
pleading standard outlined in Federal Rule of Civil Procedure
8(a), which requires a “short and plain
statement” that the pleader is entitled to relief.
Maddox v. Love, 655 F.3d 709, 718 (7th Cir. 2011).
order to survive a Rule 12(b)(6) motion, the complaint
“must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 129 S.Ct.
1937, 1949 (2009)(quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). All well-pleaded
facts must be accepted as true, and all reasonable inferences
from those facts must be resolved in the plaintiff's
favor. Pugh v. Tribune Co., 521 F.3d 686, 692 (7th
Cir. 2008). However, pleadings consisting of no more than
mere conclusions are not entitled to the assumption of truth.
Iqbal, 556 U.S. at 678-79. This includes legal
conclusions couched as factual allegations, as well as
“[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements.”
Id. at 678 (citing Twombly, 550 U.S. at
Interference with a Business Relationship
complaint alleges that the Board's contract with AQS was
not renewed because Clement and Leona interfered with
AQS's business relationship with the Board (Counts I and
II). According to AQS, Clement was hired by the Board as an
educational consultant in late 2015. Previously, Clement
served on the board of a different charter school, the Thea
Bowman Leadership Academy (“TBLA”). In that role,
Clement was part of a decision to sever TBLA's
relationship with AQS in favor of its competitor, Leona.
Defendants argue that this claim must fail because there was
no business relationship to interfere with and, even if there
were, the complaint does not allege the illegal conduct
required for the claim to succeed.
elements of intentional interference with a business
relationship under Indiana law include: (1) the existence of
a valid business relationship; (2) The defendant's
knowledge of the existence of the relationship; (3)
intentional interference with the relationship; (4) the
absence of justification; and (5) damages resulting from the
interference. Harvest Life Ins. Co. v. Getche, 701
N.E.2d 871, 876 (Ind.Ct.App. 1998). Additionally, a plaintiff
need not show the existence of a valid contract where the
defendant illegally achieved its end. Id. See also
Johnson v. Hickman, 507 N.E.2d 1014, 1019 (Ind.Ct.App.
contract entered into by the Board and AQS expired on June
30, 2016. It did not contain a renewal provision. (DE #8-1 at
11-35). AQS has not alleged that the Board breached the
contract. Leona and Clement urge this Court to find that the
business relationship between AQS and the Board expired with
the contract, and there was therefore no business
relationship that they could have interfered with. See
Computers Unlimited, Inc. v. Midwest Data Systems, Inc.,
657 N.E.2d 165, 168 (Ind.Ct.App. 1995)(finding, under the
facts of that case, that no business relationship existed
after termination of the contract).
complaint does not allege facts from which it can be inferred
that a business relationship existed between AQS and the
Board outside of the relationship established by the
contract. Nonetheless, in its response brief, AQS suggests
that the business relationship between the Board and AQS was
more extensive than the single contract at issue here. AQS
alleges the relationship began eleven years prior to this
contract. (DE #19 at 8). That fact, however, is not in the
complaint, and will not be considered by this
if, as AQS alleges, its business relationship with the Board
extends beyond the contract, it must allege illegal conduct.
AQS's complaint alleges that Clement was not impartial
and favored a transfer to Leona. He further alleges that the
Board, as part of the proposal process, sought proprietary
information that was not relevant to the proposal process but
would have been relevant to a management transition. (DE #8-2
page 6). This amounts ...