Nations Lending Corp. v. Patille

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NATIONS LENDING CORPORATION, Plaintiff, v. CHRISTOPHER PATILLE, Defendant.

No. 1:22-cv-02102-PAB

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

August 23, 2023

MEMORANDUM OPINION & ORDER

PAMELA A. BARKER U.S. DISTRICT JUDGE

This case is before the Court on Plaintiff Nations Lending Corporation's (“NLC”) Motion to Dismiss Counterclaim filed on June 15, 2023. (Doc. No. 16.) Defendant Christopher Patille (“Patille”) filed a Brief in Opposition on July 17, 2023. (Doc. No. 18.) On July 31, 2023 NLC filed a Reply. (Doc. No. 20.)

For the following reasons, the Court GRANTS NLC's Motion to Dismiss.

I. Procedural History

On July 1, 2022, NLC filed a lawsuit against Patille in the Cuyahoga County Court of Common Pleas, alleging state law claims for breach of contract, promissory estoppel, and unjust enrichment, which arose from Patille's refusal to return a $200,000 sign-on bonus. (Doc. No. 1-2, ¶¶ 9-11.) On November 21, 2022, Patille removed the lawsuit to this Court on the basis of diversity jurisdiction. (Doc. No. 1.) On December 12, 2022, NLC filed a First Amended Complaint, in which it asserted the same three claims against Patille. (Doc. No. 4.)

On January 6, 2023, Patille filed a Motion to Dismiss for Failure to State a Claim and for Lack of Personal Jurisdiction. (Doc. No. 7.) On May 11, 2023, the Court denied Patille's Motion to Dismiss, concluding it has personal jurisdiction and that NLC's First Amended Complaint stated plausible claims for breach of contract and unjust enrichment. (Doc. No. 9.)

On May 25, 2023, Patille filed an Answer to NLC's First Amended Complaint and a Counterclaim for fraudulent/negligent misrepresentation (Count I), promissory estoppel (Count II), and tortious interference with a business relationship (Count III). (Doc. No. 12, ¶¶ 43-67.) On June 14, 2023, the Court held a Case Management Conference and set case deadlines. (Doc. Nos. 14, 15.) The following day, NLC filed the instant Motion to Dismiss Patille's Counterclaim. (Doc. No. 16.) On July 17, 2023, Patille filed a Brief in Opposition. (Doc. No. 18.) And on July 31, 2023, NLC filed a Reply. (Doc. No. 20.)

II. Factual Allegations

Patille sets forth the following factual allegations in his Counterclaim. (Doc. No. 12.) In January 2021, NLC began to “aggressively recruit[]” Patille to leave his then-employer and work for NLC. (Id. at ¶ 4.) In May and June 2021, Patille and NLC discussed and negotiated NLC opening a residential mortgage branch in Delaware that would focus on “new purchase” mortgages. (Id. at ¶ 5.) NLC's primary activity was to refinance loans and it had a limited new purchase mortgage department, in limited geographic areas. (Id. at ¶¶ 6, 8.) Patille's business was primarily new purchase mortgages, and NLC recruited Patille so that it could expand into that market and grow a new purchase department for NLC in the Delaware region. (Id. at ¶¶ 7, 8.) Patille advised NLC that he could recruit highly trained mortgage brokers to build the foundation of a team at NLC's proposed Delaware branch capable of handling a high volume of loan applications, and that he already had a large book of business, including referral resources of several real estate brokers who highly recommended him and his team for new purchase mortgages. (Id. at ¶¶ 9-10.) NLC “promised and materially represented” to Patille that it could and would provide him and his team with sufficient support for underwriting and ensuring loans for residential property purchases were properly funded within the time constrains required for purchase money mortgages. (Id. at ¶ 12.)

NLC provided Patille a pro forma document so that Patille could estimate his likely earnings. (Id. at ¶ 14.) NLC knew that for the pro forma to be accurate, it would need to provide Patille and his team the promised support. (Id.) Patille completed the pro forma and gave it to NLC. (Id. at ¶ 15.) Without the promises and material representations of sufficient support for underwriting and ensuring loans for residential property purchases were properly funded, Patille would have never considered employment with NLC, and but for these material representations, it would have been impossible for Patille and his team to service the residential property purchase loans. (Id. ¶¶ 16, 17.) On September 3, 2021, “[i]n material reliance of [sic] NLC's promises and representations, Patille executed NLC's employment agreement.” (Id. at ¶ 18; Ex. A.) Patille resigned from his position and recruited “numerous” highly qualified mortgage brokers and support staff to build the Delaware branch for NLC. (Id. at ¶ 20.)

The Employment Agreement provided that NLC would pay Patille a base salary and a commission for each “eligible loan” he “originated.” (Id. at ¶ 21; Ex. A.) It also provided that “Patille was to be paid an additional commission on any funded files from the Delaware branch, at a rate of 10 basis points.” (Id. at ¶ 22; Ex. A.)

On September 7, 2021, Patille began his employment with NLC as a “Producing Branch Manager.” (Id. at ¶ 23.) “By November 2021, it was clear that NLC did not have the systems, infrastructure, policies or procedures in place to service a new purchase lending practice with the number of loan officers in the Delaware branch.” (Id. at ¶ 25.) NLC made “little to no effort . . . to accommodate a new purchase practice and the then-existing pipeline of work.” (Id. at ¶ 26.) This caused the loan applications that Patille and his team sold to be “suspended” and caused “closings to be delayed.” (Id. at ¶ 27.) Many of those, at least 20, that were delayed ended up canceling their loan applications and taking their business elsewhere. (Id. at ¶ 27.)

In Patille's last three months of employment, he and his team lost at least 12 loans due to NLC's failures, which amounted to $3 million in lost sales and almost $100,000 in lost commissions. (Id. at ¶ 28.) NLC's failures also “resulted in threats and exposed Patille to claims of professional negligence.” (Id. at ¶ 31.) Additionally, Patille lost referral sources, including one real estate broker and his agency that provided 50 percent of Patille's referrals at the time. (Id. at ¶ 35.)

In all, “Patille lost over 70% of his book business, which equated to a loss of approximately $40 [million] in annual business,” and he suffered “irreparabl[e] damage[]” to his “excellent and inspiring reputation.” (Id. at ¶¶ 36, 38.)

On May 19, 2022, for these reasons, Patille resigned from NLC. (Id. at ¶ 41.)

III. Law and Analysis

NLC moves to dismiss Patille's counterclaims under Federal Rule of Civil Procedure 12(b)(6). First, NLC argues that Patille's counterclaim for promissory estoppel is barred due to the valid and enforceable Employment Agreement between the parties. (Doc. No. 16, p. 5.) Second, NLC contends that Patille's fraudulent/negligent misrepresentation counterclaim cannot be asserted in lieu of a breach of contract claim, and it is not plead with particularity as Federal Rule of Civil Procedure 9(b) requires. (Id. at p. 6.) Third and finally, NLC argues that Patille's tortious interference counterclaim is insufficiently plead, and NLC cannot interfere with its own business. (Id. at pp. 16, 18.)

The Court will address NLC's three arguments in order below.

A. Rule 12(b)(6) Standard

Under Rule 12(b)(6), the Court accepts Patille's factual allegations as true and construes the Counterclaim in the light most favorable to Patille. See Gunasekara v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009). To survive a motion to dismiss under this Rule, “a complaint must contain (1) ‘enough facts to state a claim to relief that is plausible,' (2) more than ‘a formulaic recitation of a cause of action's elements,' and (3) allegations that suggest a ‘right to relief above a speculative level.'” Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)).

The measure of a Rule 12(b)(6) challenge-whether a complaint raises a right to relief above the speculative level-“does not ‘require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.'” Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) (quoting Twombly, 550 U.S. at 555-56). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Deciding whether a complaint states a claim for relief that is plausible is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679.

Consequently, examination of a complaint for a plausible claim for relief is undertaken in conjunction with the “well-established principle that Federal Rule of Civil Procedure 8(a)(2) requires only a short and plain statement of the claim showing that the pleader is entitled to relief. Specific facts are not necessary; the statement need only give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Gunasekera, 551 F.3d at 466 (quoting Erickson v. Pardus, 551 U.S. 89, 93 (2007)) (internal quotation marks omitted). Nonetheless, while “Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, . . . it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Iqbal, 556 U.S. at 679.

B. Promissory Estoppel (Count II)

NLC argues that, under Ohio law, the existence of a written contract-the Employment Agreement-bars Patille's promissory estoppel claim. (Doc. No. 16, p. 5.) Moreover, NLC...