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Ion Wave Technologies, Inc. v. Sciquest, Inc.

United States District Court, District of Delaware

February 26, 2014

ION WAVE TECHNOLOGIES, INC., Plaintiff,
v.
SCIQUEST, INC., Defendant

Robert A. Penza, Esq. and Christopher M. Coggins, Esq., Wilmington, Delaware and Graham L.W. Day, Esq., St. Louis, Missouri, Attorneys for the Plaintiff.

Michael Busenkell, Esq., Wilmington, Delaware and Lawrence H. Kunin, Esq., Atlanta, Georgia, Attorneys for the Defendant.

MEMORANDUM OPINION

ANDREWS, TO/DISTRICT, JUDGE.

Before the Court are the defendant's motion for judgment on the pleadings (D.I. 17) and the related briefing (D.I. 18, 20, 22). For the reasons discussed, SciQuest, Inc.'s motion is granted in part and denied in part.

BACKGROUND

In 2008, Ion Wave Technologies, Inc. ("IWT") and SciQuest, Inc. entered into a referral and resale agreement whereby SciQuest would sell IWT's software. (D.I. 1 at 2, ¶¶ 6-7). The agreement stated that SciQuest would use its standard Master License and Services Agreement ("MLSA") when providing its clients with IWT software. (Id., ¶ 8). Among the clients were the University of Connecticut Health Center ("UCHC") and the Medical University of South Carolina ("MUSC"). (Id. at 3, ¶ 13). UCHC entered into a five-year MLSA with SciQuest, which was to end in 2013. (Id., ¶ 14). MUSC had a seven-year MLSA, which was to end in 2017. (Id at 5, ¶ 23).

The parties terminated the referral and resale agreement by mutual consent in 2011. (Id. at 4, ¶18; D.I. 18, p. 1). After the termination, SciQuest amended the MLSAs with two of its customers, UCHC and MUSC, and transitioned them off of the IWT software to SciQuest's own product, which deprived IWT of royalties. (D.I. 1 at 4, 6, ¶¶ 21, 30; D.I. 18, p. 1). In October 2012, IWT filed this suit against SciQuest for (i) breach of contract, (ii) anticipatory repudiation, (iii) breach of the implied covenant of good faith and fair dealing, and (iv) violation of the North Carolina Unfair and Deceptive Trade Practices Act. (D.I. 1 at 11, ¶¶ A-D). As a result of the Rule 16 conference and mediation, the parties identified early resolution of a discrete contract interpretation issue as being helpful. (D.I. 18, p. 1, n. 1).

SciQuest filed a motion for judgment on the pleadings under FED. R. Ov. P. Rule 12(c). (D.I. 17). SciQuest argues that the provision of the agreement that required SciQuest to get IWT's permission to amend MLS As with clients did not survive the termination of the agreement under Section 11.3, which established the rights and responsibilities of the parties in case of termination. (D.I. 1-1 at 15-16, § 11.3; D.I. 18, pp. 1-2). IWT argues that SciQuest had "a continuing post-termination obligation" arising from Section 11.3(d), which says that SciQuest must "fulfill its reporting and payment obligations" and that it must "use commercially reasonable efforts to ensure that SciQuest customers of the IWT Sourcing Solution fulfill their license agreement obligations with respect to the IWT Sourcing Solutions." (D.I. 1-1 at 15-16, § 11.3(d); D.I. 20 at 4-5).

DISCUSSION

A. Legal Standard

A Rule 12(c) motion for judgment on the pleadings is reviewed under the same standard as a Rule 12(b)(6) motion to dismiss when the Rule 12(c) motion alleges that the plaintiff failed to state a claim upon which relief can be granted. See Turbe v. Gov't of the Virgin Islands, 938 F.2d 427, 428 (3d Cir. 1991); Revell v. PortAuth., 598 F.3d 128, 134 (3d Cir. 2010). The court must accept the factual allegations in the complaint and take them in the light most favorable to the plaintiff. See Erickson v. Pardus, 551 U.S. 89, 94 (2007); Christopher v. Harbury, 536 U.S. 403, 406 (2009). "When there are well-ple[d] factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). The court must "draw on its judicial experience and common sense" to make the determination. See id.

B. Decision

SciQuest's request for judgment on the pleadings requires this Court to interpret the IWT-SciQuest agreement as a question of law. The agreement states that it is to be interpreted under North Carolina law. (D.I. 1-1 at 18, § 12.17).

The IWT-SciQuest agreement is unambiguous, in my view. In addition, there are no identified disputes of fact for Counts I-III. Therefore, those counts are appropriate for resolution on the pleadings. SeeRoot v. Allstate Ins. Co., 158 S.E.2d 829, 832 ( N.C. 1968) ("It is awell-recognized principle of construction that when the language of a contract is clear and unambiguous, the court must ...


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