Ciber Glob., LLC v. SAP Am., Inc.

CIBER GLOBAL, LLC Plaintiff, v. SAP AMERICA, INC., Defendant.

CIVIL ACTION NO. 19-5884

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

March 25, 2021

PAPPERT, J.

MEMORANDUM

Plaintiff Ciber Global, LLC (f/k/a HTC Global Ventures, LLC) ("Ciber") and Defendant SAP America, Inc. ("SAP") filed cross motions for summary judgment. Ciber asserts claims against SAP for breach of contract, account stated and unjust enrichment, seeking to recover funds SAP allegedly owed non-parties CIBER, Inc., CIBER International, LLC, and CIBER Consulting. Incorporated ("Debtors") when Ciber purchased certain assets in Debtors' bankruptcy proceeding. SAP contends Ciber's breach of contract and unjust enrichment claims fail as a matter of law and that it has a valid setoff defense barring Ciber's right to recover any amounts SAP owed to Debtors. The Court grants and denies each motion in part.

I

Debtors were SAP's customers, licensing its software, purchasing its cloud and information technology professional services and reselling certain SAP software and services. (SAP Statement of Material Facts, ECF 33-2, ¶ 2.) Debtors owed SAP approximately $9,370,624.13 for its services when they commenced a voluntary Chapter 11 bankruptcy proceeding in the United States Bankruptcy Court for the District of Delaware on April 9, 2017. (Id. ¶ 22; Ciber Statement of Undisputed Material Facts, ECF 32-2, ¶ 4.) Debtors' bankruptcy petition identified SAP as their largest unsecured creditor. (ECF 33-2, ¶ 7.)

The relationship between SAP and Debtors also ran in the other direction, with SAP as Debtors' customer under a separate Consulting Services Agreement governed by Pennsylvania law. (Id. ¶ 3; see also ECF 32-2, ¶¶ 4, 6.) Before filing their bankruptcy petition, Debtors issued invoices to SAP for $606,462.50 and, after the bankruptcy filing, they billed SAP an additional $375,535. (ECF 33-2, ¶ 36; see also Ciber's Response to SAP Statement of Material Facts, ECF 36-1, ¶ 36.) In total, Debtors charged SAP $981,997.50. (ECF 32-2, ¶ 8.) SAP acknowledges it has not paid $973,197.50 of that amount. (Id. ¶ 10.)

On April 10, 2017, Debtors filed a motion seeking to sell substantially all their assets in the Chapter 11 proceeding. (ECF 33-2, ¶ 8.) On May 12, 2017, they filed a proposed order that would approve the motion and the sale of their assets to a successful auction bidder. (Id. ¶ 10.) Paragraph 20 of the initial proposed order stated:

[f]or purposes of clarification, no provision of this Sale Order or the Asset Purchase Agreement shall authorize the Debtors to: (a) sell, transfer or assign to the Purchaser any software or proprietary information ("Software" licensed to any Debtor by SAP America, Inc. or its affiliates ("SAP") in violation of applicable law (within the meaning of 11 U.S.C. § 365(c)(1)(A)) that prohibits the sale, transfer or assignment thereof to the Purchaser without the consent of SAP; or (b) use the Software or any Software-related services provided by SAP for the benefit of the Purchaser or any other third party, in each case, to the extent prohibited by the agreements governing such Software or Software-related services. Notwithstanding anything in this Sale Order or the Asset Purchase Agreement to the contrary, SAP shall retain the right to assert for defensive purposes only all defenses, including setoff or recoupment, against any Accounts Receivable that may be owed by SAP to any Debtor.

(Id. ¶ 11 (emphasis added).)

Ciber was the successful bidder at the bankruptcy auction and entered into an Asset Purchase Agreement with Debtors on May 17, 2017. (ECF 32-2 ¶ 13; ECF 33-2 ¶ 12.) In paragraph 1.1 of the Asset Purchase Agreement, Debtors agreed

to sell, transfer, assign, convey and deliver to [Ciber], and [Ciber] shall purchase, acquire, assume and accept from [Debtors] all of [Debtors'] rights, title and interest in, to and under, as of the Closing (in each case, free and clear of any and all Encumbrances or Claims, other than Permitted Encumbrances), all assets, properties, and rights related to or used in the Business, other than the Excluded Assets, whether tangible and intangible, real, personal and mixed, whether now owned or hereafter acquired by Seller of its Subsidiaries, whether or not specifically referred to herein or in any instrument of conveyance delivered pursuant hereto, including the following, but in each case excluding the Excluded Assets (collectively the "Purchased Assets") . . . .

(ECF 32-2, ¶ 14.) Paragraph 1.1(c) includes within the Purchased Assets "all trade and non-trade accounts receivable . . . of Seller related to the Business" (the "Accounts Receivable"). (Asset Purchase Agreement (Excerpts), ECF 32-9, ¶ 1.1(c).) Although the Purchased Assets include specific "Assigned Contracts," the Asset Purchase Agreement does not identify any contract between any of Debtors and SAP. (Id. ¶ 1.1(b) and Schedule 1.1(b).)

Ciber also agreed it would assume only certain "Assumed Liabilities" from Debtors and would not assume other "Excluded Liabilities." (Id. ¶ 1.4.) Excluded Liabilities include "all Liabilities arising under the accounts payable that are owed to the parties set forth on Schedule 1.4(a)." (Id. ¶ 1.4.) Schedule 1.4(a) lists a $3,343,128 liability to SAP America, Inc. (Id. Schedule 1.4(a).) Excluded liabilities also include

all Liabilities related to Claims, commercial disputes, actions, suits, arbitrations, litigation matters, proceedings or investigations (in each case whether involving private parties, authorities, or otherwise) involving, against, or affecting any Purchased Asset, the Business, Seller . . . or assets or properties of Seller, whether commenced, filed, initiated, or threatened before or after the Closing and whether related to facts, events, orcircumstances arising or occurring before or after the Closing, including the matters set forth on Schedule 1.4(q)[.]

(Id. ¶ 1.4(q).) The "Excluded Litigation and Other Disputes" listed in Schedule 1.4(q) includes "[a]ny pending or threatened dispute with or claims made by SAP." (Id., Schedule 1.4(q), ¶ 12.) "Notwithstanding any provision in [the Asset Purchase] Agreement to the contrary," Ciber also agreed it would not assume

any other Liabilities of [Debtors] of whatever nature (whether arising prior to, at the time of, or subsequent to Closing), whether absolute, accrued, contingent or otherwise, whether due or to become due and whether or not known or unknown or currently existing or hereafter arising or matured or unmatured, direct or indirect . . . .

(Id. ¶ 1.4.)

On May 18, 2017, Debtors filed a revised proposed sale order showing certain changes to the language of the initial proposed sale order but leaving unchanged paragraph 20's final sentence which permitted SAP to retain the right to assert all defenses - including setoff - against any Accounts Receivable owed by SAP to any debtor, "for defensive purposes only." (ECF 33-2 ¶¶ 12-13.) The following day, the Bankruptcy Court approved Debtors' sale of certain assets to Ciber. (Id. ¶ 22.) Paragraph S of the Bankruptcy Court's Sale Order states that,

Pursuant to the terms and conditions of the Asset Purchase Agreement and this Sale Order, the Debtors may sell the Purchased Assets free and clear of all liens, interest, liabilities, obligations, Excluded Liabilities, claims, demands, guarantees, suits, defenses, credits, allowances, options, rights, restrictions, limitations, contractual commitments, causes of action, choses in action, charges, rights of first refusal, rights to set off, recoupment, rebate, chargeback, credit or return, Encumbrances . . . and similar restrictions (other than . . . the Assumed Liabilities) of any kind or nature whether known or unknown, legal or equitable, matured or unmatured, contingent or non-contingent, liquidated or unliquidated, asserted or unasserted, whether arising prior to or subsequent to the commencement of the Debtors' chapter 11 cases, whether imposed by agreement, understanding, law, equity or otherwise (collectively the "Interests"),including, without limitation, (a) those interests that purport to give to any party a right or option to effect a setoff against . . . the Debtors' interests in the Purchased Assets, or any similar rights, if any, . . . [,and] (c) those Interests that are Excluded Liabilities as set forth in the Asset Purchase Agreement . . . .

(Sale Order, ECF 32-10, ¶ S; see also ECF 32-2, ¶ 23.) The Sale Order also states that Ciber did not assume "any liability or obligation of any of the Debtors/and or their estates, other than the Assumed Liabilities, with respect to the Purchased Assets . . . ." (ECF 32-10, ¶ 21.) Paragraph HH of the Sale Order provides that the Order's terms "shall not modify the terms of the Asset Purchase Agreement." (Id. ¶ HH.)

Debtors' transfer of Purchased Assets to Ciber pursuant to the Sale Order and the Asset Purchase Agreement purported to vest Ciber "with all legal, equitable, and beneficial right, title and interest of the Debtors to the Purchased Assets free and clear of all Interests of any kind or nature whatsoever . . . ." (Id. ¶ GG.) However, consistent with the initial proposed sale order, the executed Sale Order also included the final sentence of Paragraph 20 which purported to retain SAP's right to assert setoff "for defensive purposes only," "[n]otwithstanding anything in th[e] Sale Order or the Asset Purchase Agreement to the contrary . . . ." (Id. ¶ 20; see also ECF 32-2, ¶ 27; ECF 33-2, ¶ 16.) The sale closed on June 8, 2017 (ECF 32-2, ¶ 29.)

On July 13, 2017, SAP filed a Proof of Claim in the Bankruptcy Court for $10,795,235.14 against CIBER, Inc. relating to a Software License Agreement between them. (Id. ¶ 30.) On August 28, 2017, Debtors filed an amended Schedule E/F for CIBER, Inc. scheduling SAP as having a "disputed non-priority unsecured claim in the amount of $3,343,127.96." (Id. ¶ 31.)

On September 11, 2017, Ciber emailed SAP, asking that it pay the amounts...