Where a plaintiff has alleged tortious interference, civil conspiracy, violation of Michigan Uniform Trade Secrets Act, unjust enrichment and statutory and common-law conversion, the defendant’s motion for summary disposition should be allowed in part and denied in part.
“CPR Investments, Inc. (‘CPR’) is a registered investment advisory firm based in Michigan. Discipline Wealth Solutions, Inc. (‘DWS’) is also a registered investment advisory firm, based out of South Carolina. Joseph Petry is a non-party individual who began working for CPR in May 2020. CPR alleges that Petry disseminated over one thousand pages of confidential information in violation of both a Shareholder Agreement and Investment Adviser Representative (‘IAR’) Agreement (First Amended Complaint [‘FAC’], ¶14). …
“… In this matter, CPR alleges tortious interference with the contracts of nine IARs, tortious interference with the Shareholder Agreement between Petry and CPR, tortious interference with business expectancy as it relates to nine IARs, tortious interference with business expectancy as it relates to CPR’s money manager and AXOS, civil conspiracy, violation of Michigan Uniform Trade Secrets Act, unjust enrichment, statutory and common law conversion, and two distinct requests for declaratory relief. …
“Defendant’s main argument in support of dismissal of the entire FAC is that Plaintiff has no private right of action for violations of SEC Regulations. Plaintiff concedes this point and argues that its claims are not premised on those violations alone. While there is no private right of action under the SEC Regulations, that does not mean that the actions taken that led to those violations cannot support state court claims. As alleged, DWS worked with Petry to take CPR’s confidential information and use it for its own benefit. While those actions may constitute violations of SEC Regulations, they may also support separate and distinct state law claims. …
“CPR’s factual allegations, taken as true, are sufficient to state a claim for tortious interference with contract. Defendant’s Motion for Summary Disposition as to Counts I and II is denied. …
“DWS argues that because the IARs have contracts with CPR, there cannot be a claim for tortious interference with business expectancy. …
“CPR is entitled to plead in the alternative at this stage in the proceeding, and all elements of the cause of action have been pled. However, both parties agree that there are express contracts between the parties. Because the FAC is limited to the contracts themselves, summary disposition as to Count III is appropriate under (C)(8). The appropriate claim is tortious interference with contracts, which is plead in Count I. Accordingly, DWS’s Motion is granted as to Count III, which is dismissed. …
“Because CPR has stated claims for tortious interference under (C)(8), the claim for civil conspiracy is also stated. Accordingly, accepting all allegations as true, DWS’ Motion is denied as to Count V. …
“DWS argues that CPR has failed to allege that the information taken was a trade secret, under Michigan law. DWS argues that the information was merely customer names.
“CPR alleges that the information taken was financial information and source-of-supply information that can constitute trade secrets under Wysong Corp v MI Indus, 412 F Supp 2d 612, 627 (2005). CPR alleged that Petry compiled over 1,000 pages of account-level financial data, including account numbers, values, account custodians, fees charged, and fees paid (FAC, ¶14, including n4). CPR also alleged that DWS uses and benefits from that information (FAC, ¶15). Finally, CPR alleges that the IAR agreements defined the information as confidential and specifically protected its use and dissemination (FAC, ¶¶31-33, including footnotes). These factual allegations will be tested through discovery.
“Accepting the allegations as true, CPR has stated a claim for misappropriation of trade secrets under (C)(8). DWS’s Motion is denied as to Count VI. …
“A claim for unjust enrichment requires receipt of a benefit by the defendant from the plaintiff, and an inequity to the plaintiff because of defendant’s retention of the benefit. …
“… The first element of unjust enrichment requires a benefit by the defendant from the plaintiff. … CPR has not alleged that benefit.
“DWS’s Motion as to Count VII is granted and Count VII for unjust enrichment is dismissed. …
“Accepting the allegations as true, CPR has failed to plead a claim for conversion where the property at issue is intangible property not subject to conversion.
“DWS’s Motion for Summary Disposition as to Count VIII for conversion is dismissed under MCR 2.116(C)(8). …
“IT IS HEREBY ORDERED that Defendant’s Motion for Summary Disposition under MCR 2.116(C)(8) is GRANTED as to Counts III for Tortious Interference with Business Relationship or Expectancy with IARs, Count VII for Unjust Enrichment, Count VIII for Conversion, Count IX for Declaratory Relief relating to the contracts and Count X for Declaratory Relief relating to arbitration.
“IT IS HEREBY FURTHER ORDERED that Defendant’s Motion for Summary Disposition as to Counts I, II, IV, V and VI under MCR 2.116(C)(8) is denied.”