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Vatidis v. Trimble, Inc.

United States District Court, D. Delaware

July 16, 2019

STEVE VATIDIS, in his capacity as Principal Shareholder, Plaintiff/Counterclaim Defendant,
v.
TRIMBLE, INC., Defendant/Counterclaim Plaintiff.

          Todd C. Schiltz, Drinker Biddle & Reath LLP, Wilmington, DE 19801; Paul R. Mastrocola, Andrea L. Martin, Michael A. DeIulis, Burns & Levinson LLP, Boston, MA; Scott R. Haiber, Hogan Lovells, U.S. LLP, Baltimore, MD; Pieter Van Tol, Hogan Lovells U.S. LLP, New York, NY - attorneys for Plaintiff

          Joel Friedlander, Christopher M. Foulds, Christopher P. Quinn, Friedlander & Gorris P.A.; Teresa H. Michaud, Baker & McKenzie LLP, Los Angeles, CA - attorneys for Defendant July 16, 2019 Wilmington, Delaware

          MEMORANDUM OPINION

          NOREIKA, U.S. DISTRICT JUDGE

         This action arises out of an acquisition by defendant Trimble, Inc. (“Trimble”) of a collection of software companies (collectively, the “Target Companies”) from plaintiff Steve Vatidis (“Vatidis”), the principal shareholder of each of those companies, pursuant to a Share Purchase Agreement (“SPA”). Vatidis alleges that Trimble has breached its obligations under the SPA (Count I), breached the implied covenant of good faith and fair dealing (Count II), and failed to timely object to a Claim Notice thereby entitling Vatidis to receive the indemnification amount set forth in that Claim Notice (Count III). (D.I. 1 ¶¶ 74-89).

         Currently pending before the Court is Vatidis's Motion for Judgment on the Pleadings as to Count III of the Complaint. (D.I. 14). The Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332. For the following reasons, the Motion for Judgment on the Pleadings is DENIED.

         I. BACKGROUND

         A. Relevant Terms of the SPA

          On July 29, 2014, the parties entered into the SPA under which Trimble agreed to purchase the Target Companies from the shareholders of those companies (the “Shareholders”). (D.I. 1 ¶ 5). The SPA identifies Vatidis as the “Principal Shareholder, ” which makes him the authorized representative of all Shareholders. (D.I. 19 at § 10.1). The transaction closed on August 15, 2014. (D.I. 1 ¶ 6).

         Article 8 of the SPA governs indemnification. (D.I. 19). Section 8.1 sets out the conditions under which the Shareholders are required to indemnify Trimble, while Section 8.2 identifies the conditions under which Trimble is required to indemnify the Shareholders. (Id. at §§ 8.1-8.2). Section 8.3 sets out the procedure for making an indemnification claim. Specifically, a party seeking indemnity under Article 8 (“the Indemnified Party”) must give written notice (hereinafter, “the Claim Notice”) to the other party (“the Indemnifying Party”) containing: (i) a description and estimated amount of any Losses incurred or reasonably expected to be incurred, (ii) a reasonable explanation for the basis of the indemnification claim, and (iii) a demand for payment of the Losses. (Id. at § 8.3(a)).

         Within 30 days of delivery of the Claim Notice, the Indemnifying Party must provide a written response either agreeing to or disputing that the Indemnified Party is entitled to the Losses described in the Claim Notice. (Id. at § 8.3(b)). If the Indemnifying Party disputes the claim, the written response (“an Objection Notice”) must set forth “in reasonable detail” each disputed item, the basis for the dispute, and a certification that all disputes are made in good faith. (Id. at § 8.3(b)(ii)). If the Indemnifying Party fails to deliver an Objection Notice within 30 days of delivery of the Claim Notice, “then the Indemnifying Party will be deemed to have irrevocably accepted the Claim Notice and the Indemnifying Party will be deemed to have irrevocably agreed to pay the Losses at issue in the Claim Notice.” (Id. at § 8.3(c)).

         B. The Vatidis Claim Notice

         On October 2, 2017, Vatidis sent a Claim Notice to Trimble pursuant to Section 8.3(a) of the SPA. (D.I. 1 ¶ 62). Therein, Vatidis asserted that Trimble was in breach of the SPA for, inter alia: (i) refusing or failing to negotiate in good faith a resolution of a third-party claim made against the Target Companies by the software company Uniface, (ii) excluding Vatidis from discussions concerning the claim made by Uniface, and (iii) entering into a settlement agreement with Uniface without Vatidis's prior written consent. (Id. ¶ 63). The Claim Notice included a description and estimate of the amount of Losses incurred as of that date. (D.I. 1, Ex. 3).

         Vatidis alleges that Trimble failed to provide an Objection Notice within 30 days, as required by Section 8.3(b) of the SPA. (D.I. 1 ¶ 65). Vatidis further alleges that, as a result, Trimble is deemed under Section 8.3(c) to have irrevocably accepted the Claim Notice and irrevocably agreed to pay the Losses at issue therein. (Id. at ¶ 66).

         II. STAND ...


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