United States District Court, D. Delaware
Murphy, ECKERT SEAMANS CHERIN & MELLOTT, LLC, Wilmington,
DE, Gary Schildhorn and Heather Olson, ECKERT SEAMANS CHERIN
& MELLOTT, LLC, Philadelphia, PA Attorneys for Plaintiff
B. Blumenfeld and Michael J. Flynn, MORRIS, NICHOLS, ARSHT
& TUNNELL LLP, Wilmington, DE, Timothy B. Yoo, BIRD,
MARELLA, BOXER, WOLPERT, NESSIM, DROOKS, LINCENBERG, &
RHOW P.C., Los Angeles, CA, Attorneys for
U.S. District Judge
March 7, 2016, Livery Coach Solutions, L.L.C.
("Livery") filed a breach of contract suit against
Music Express/East, Inc. ("Music Express"). (D.I.
1) On May 9, 2016, Music Express answered Livery's
complaint and brought counterclaims of fraudulent inducement,
negligent misrepresentation, breach of contract, federal
unfair competition, violation of the Delaware Deceptive Trade
Practices Act, and revocation of acceptance against Livery,
Livery President David Hirsch ("Hirsch"), and
Livery Director of Support Jacob Bowman ("Bowman")
(collectively, the "Counterclaim-Defendants").
(D.I. 5) On May 31, 2016, Counterclaim-Defendants filed the
pending Motion to Dismiss, seeking to dismiss all but the
breach of contract counterclaims under Federal Rule of Civil
Procedure 12(b)(6). (D.I. 8)
Express provides chauffeured ground transportation in the
United States, servicing more than 600 rides on a daily
basis. (D.I. 5 (Counterclaims, hereinafter, "D.I.
5") at ¶ 11) Livery develops software solutions for
the limousine industry, such as limousine reservation,
billing, and dispatch management software. (D.I. 1 at ¶
9; D.I. 5 at ¶ 14-15) Livery offers two versions of its
software, the older "Classic" version and the newer
".Net" version, named respectively solely for
purposes of this motion. (D.I. 5 at ¶¶ 19-20, D.I.
9 at 5 n.1)
Express and Livery - through Hirsch and Bowman - began
conversations about Livery's software in February 2015.
(D.I. 5 at ¶¶ 15-16) The parties met frequently, as
often as twice a week, to discuss Music Express' software
needs and to view demonstrations of the Livery software.
(Id. at ¶ 17) Throughout these meetings, the
parties discussed the differences between Livery's two
software versions, which Livery maintained was
"primarily aesthetic." (D.I. 5 at ¶ 20)
Furthermore, during one software demonstration, Livery told
Music Express it was being shown the .Net version, but Music
Express maintains it was in fact shown the older Classic
version. (Id. at ¶ 19) Livery assured Music
Express that it would receive both versions of the software
and that it would be able to take the software
"live" by September 1, 2015. (Id. at
¶¶ 19, 21) Livery also provided Music Express with
a list of companies that were purportedly operating
Livery's software and encouraged Music Express to check
those references. (Id. at ¶ 22) Eventually, on
June 16, 2015, the parties entered into an End User Software
License Agreement and Software Maintenance Agreement
(collectively, the "Agreement"). (D.I 1 at
¶¶1, 6;D.I. 5 at ¶32)
parties agree that Livery delivered the software in August
2015, but Music Express alleges that (1) it only received the
.Net version, not the Classic version which it had been shown
and on which it had relied in entering the Agreement, and (2)
the .Net version was an untested beta version of the
software, containing programming bugs, and not operable as a
commercially viable solution. (D.I. 5 at ¶ 23, 34; D.I.
1 at ¶ 11) Music Express argues that Livery repeatedly
misrepresented the software capability throughout the
parties' meetings leading up to the Agreement. (D.I. 5 at
¶¶ 18-32) For example, in addition to
misrepresenting which version Music Express was shown and
which version it would receive, Livery represented that: its
software could integrate seamlessly with Music Express'
accounting/financial management software, Livery's system
would accommodate Music Express' account number
convention, an auto-billing feature was already operational
on Livery's software, and Livery would provide a team of
"17 programers" for technical support.
(Id. at ¶¶ 24, 26, 2730) Music Express
maintains that each of these representations induced it to
enter into the Agreement with Livery, but none of them turned
out to be true. (Id. at ¶¶ 24-32, 34)
Music Express claims that Livery pulled a "bait and
switch" by showing them the Classic version,
misrepresenting its capabilities, and thereafter delivering
the unworkable .Net version. (Id. at ¶¶
23, 34) Music Express was not able to take the software
"live" until September 6, 2015 and, even then, the
program operated too slowly and experienced numerous issues,
requiring 110 revisions between September 2015 and February
2016. (Id. at ¶¶ 34-38) These defects
resulted in, "among other things: (1) countess broken
customer invoices; (2) broken credit card files; and (3)
missing invoices altogether, " eroding Music
Express' customers' confidence and goodwill, and
requiring Music Express employees to work around-the-clock
for weeks to address the various software problems.
(Id. at ¶¶ 39-40) Further, Livery never
provided adequate technical support, in part because livery
support teams were "too busy re-writing the software for
the .Net platform." (Id. at ¶¶ 46-47)
Music Express thereafter requested the Classic version -
which it believed it had originally contracted to receive -
in place of the unworkable .Net version, but Livery refused
to provide it, stating that the two versions were
"foundationally incompatible" and could not be
switched. (Id. at ¶¶ 51-52)
February 2016, Music Express notified Livery that it was
terminating the Agreement, effective immediately, and that,
in any event, the agreement was not valid because it had been
improperly obtained. (Id. at ¶ 56) Music
Express only made two payments before terminating the
Agreement, leading Livery to sue for breach of contract on
March 7, 2016 (D.I. 1 at ¶¶ 14- 15), and Music
Express to countersue on May 9, 2016 (D.I. 5).
a motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) requires the Court to accept as true all material
allegations of the complaint. See Spruill v. Gillis,
372 F.3d 218, 223 (3d Cir. 2004). "The issue is not
whether a plaintiff will ultimately prevail but whether the
claimant is entitled to offer evidence to support the
claims." In re Burlington Coat Factory Sec.
Litig., 114 F.3d 1410, 1420 (3d Cir. 1997) (internal
quotation marks omitted). Thus, the Court may grant such a
motion to dismiss only if, after "accepting all
well-pleaded allegations in the complaint as true, and
viewing them in the light most favorable to plaintiff,
plaintiff is not entitled to relief." Maio v. Aetna,
Inc., 221 F.3d 472, 482 (3d Cir. 2000) (internal
quotation marks omitted).
"[t]o survive a motion to dismiss, a civil plaintiff
must allege facts that 'raise a right to relief above the
speculative level on the assumption that the allegations in
the complaint are true (even if doubtful in fact)."'
Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir.
2007) (quoting BellAtl. Corp. v. Twombty, 550 U.S.
544, 555 (2007)). A claim is facially plausible "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). At bottom, "[t]he complaint
must state enough facts to raise a reasonable expectation
that discovery will reveal evidence of [each] necessary
element" of a plaintiffs claim. Wilkerson v. New
Media Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d
Cir. 2008) (internal quotation marks omitted).
Court is not obligated to accept as true "bald
assertions, " Morse v. Lower Merion Sch.
Dist, 132 F.3d 902, 906 (3d Cir. 1997) (internal
quotation marks omitted), "unsupported conclusions and
unwarranted inferences, " Schuylkill Energy Res.,
Inc. v. Pennsylvania Power & Light Co., 113 F.3d
405, 417 (3d Cir. 1997), or allegations that are
"self-evidently false, " Nami v. Fauver,
82 F.3d 63, 69 (3d Cir. 1996).
Fraudulent Inducement and Negligent
Express' First and Second Claims for Relief allege
Fraudulent Inducement and Negligent Misrepresentation based
on Livery's various representations (made through Hirsch
and Bowman) leading up to the Agreement, that Livery knew
were false - or that Livery made recklessly without regard
for their truth - and that Music Express reasonably relied on
in ' executing the Agreement. (D.I. 5 at Â¶Â¶ 61-76)
Counterclaim-Defendants assert that ...