United States Court of Appeals

For the Seventh Circuit

Chicago, Illinois 60604

Argued February 21, 2006

Decided December 18, 2006

Before

 Hon. WILLIAM J. BAUER, Circuit Judge

 Hon. MICHAEL S. KANNE, Circuit Judge

 Hon. ILANA DIAMOND ROVNER, Circuit Judge

No. 05-2517

ARGONAUT INSURANCE

COMPANY,

Plaintiff-Appellant,

v.

BROADSPIRE SERVICES, INC., 

Defendant-Appellee.

Appeal from the United States

District Court for the Northern

District of Illinois, Eastern Division

No. 05 CV 218

James B. Moran,

Judge.

O R D E R

Argonaut, an insurance company, sued Broadspire, a claims management

company, alleging that Broadspire violated its contractual obligation not to provide

services to Argonaut’s clients that choose not to renew their insurance contracts. 

The district court granted Broadspire’s motion to dismiss for failure to state a

claim. We now reverse and remand in order to permit discovery to go forward.

The contract in question was executed on January 23, 2003 by Argonaut,

Lumbermen’s Mutual Casualty Company and American Manufacturers Mutual

Insurance. Both Lumbermen’s and American Manufacturers were Kemper

Insurance companies. At the time, Broadspire was named NATLSCO and was a

subsidiary of Lumbermen’s. NATLSCO was not a signatory to the contract, only its

parent. 

UNPUBLISHED ORDER

Not to be cited per Circuit Rule 53
No. 05-2517 Page 2

Under the contract, Argonaut purchased the renewal rights to a collection of

insurance policies from the Kemper companies. The contract included a section

titled “NATLSCO” that obligated NATLSCO to provide claims services to various

Argonaut clients and imposed price controls for those services. The section also

required that “the Sellers” (referring to Lumbermen’s and American

Manufacturers) would not “provide NATLSCO Claim Services” to any Argonaut

clients that switched their coverage to competing carriers. Additionally, NATLSCO

was a signatory to a subsequent contract that defined its obligations to provide

claim services to another set of Argonaut’s clients. This later agreement was

referenced by the contract in question and was attached to it.

In July 2003, NATLSCO was sold to Platinum Equities LLC, which changed

NATLSCO’s name to Broadspire. In December 2004, one of Argonaut’s clients

chose not to renew its contract and instead contracted with a rival company. 

Broadspire, however, continued to provide claim services to the client. After

Broadspire refused to cease its services to the former client despite Argonaut’s

requests, Argonaut sued on January 13, 2005.

In its complaint Argonaut alleged that NATLSCO, and thus Broadspire, was

bound by the initial agreement signed by its parent. In the alternative, Argonaut

alleged that NATLSCO’s parent assigned its obligations to Broadspire or that

Broadspire assumed those obligations. 

The district court dismissed Argonaut’s complaint for failure to state a claim. 

It determined that the use of “the Sellers” made the contract plain on its face that

only Lumbermen’s and American Manufacturers were prohibited from providing

NATLSCO’s services to Argonaut’s former clients—NATLSCO was free to do as it

pleased once it was no longer under the control of its contractually-bound parent.

We review the district court’s grant of Broadspire’s motion to dismiss de

novo. County of McHenry v. Ins. Co. of the West, 438 F.3d 813, 817 (7th Cir. 2006);

Witzke v. Femal, 376 F.3d 744, 749 (7th Cir. 2004). We accept as true all wellpleaded factual allegations and make all possible inferences from those allegations

in favor of Argonaut. See County of McHenry, 438 F.3d at 817; Barnes v. Briley, 420

F.3d 673, 677 (7th Cir. 2005). We affirm only if it appears beyond a doubt that

Argonaut cannot prove any set of facts in support of its claim that would entitle it to

relief. See County of McHenry, 438 F.3d at 817; Cole v. U.S. Capital, Inc., 389 F.3d

719, 724 (7th Cir. 2004). The issue is not whether Argonaut will ultimately prevail

but whether it is entitled to offer evidence in support of its claims. See Cole, 389

F.3d at 724.

Here, if we take as true the allegations of Argonaut’s complaint, we cannot

conclude that Argonaut could not prove any set of supporting facts which would
No. 05-2517 Page 3

entitle it to relief. It has alleged that NATLSCO was bound by the initial

agreement, and neither the complaint nor the attached contract are clear on their

face as to whether NATLSCO was bound. Discovery might reveal that its parent

had the power to bind it in just such a way. Moreover, Argonaut has alleged facts

regarding NATLSCO’s behavior post-contract and Broadspire’s behavior postacquisition, and Argonaut claims that this behavior evinces either an original intent

to be bound or an adoption of the contract. Finally, Argonaut alleges that any

obligations of NATLSCO or its parent were assigned to Broadspire. Discovery

might bear out facts that would allow recovery on any of these theories.

We also note that the Federal Rules of Civil Procedure require only notice

pleading, and Argonaut has pleaded all that is necessary to be entitled to the

inferences afforded to complaints on motions to dismiss. See Hefferman v. Bass, 467

F.3d 596, 599 (7th Cir. 2006).

Argonaut is at least entitled to discovery on its allegations.

REVERSED AND REMANDED.