Cognitive Edge PTE Ltd. v. Code Genesys, LLC

MEMORANDUM AND ORDER

Indira Talwani United States District Judge.

Following a bench trial in this action between Plaintiff Cognitive Edge Pte Ltd. (“Cognitive Edge”) and Defendants Code Genesys, LLC (“Code Genesys”), Spryng.io Anthrocomplexity, LLC, Spryng.io, LLC, and Spryng.io EU Ltd. (collectively “Defendants”), the court found Defendants breached the Parties' Settlement Agreement and the implied covenant of good faith and fair dealing, see Findings of Fact and Conclusions of Law (“Findings & Conclusions”) 21, 24 [#84], but that Plaintiff failed to prove its Chapter 93A and Lanham Act claims, id. 26-29. The court awarded Plaintiff $133, 792.92 in damages and fees and allowed Plaintiff, as the prevailing party, to file a motion under Federal Rule of Civil Procedure 54(d)(2) to seek recovery of additional attorneys' fees. Id. at 34-35.

Now before the court are the Parties' post-trial motions. For the reasons that follow, Plaintiff's Motion for Attorneys' Fees [#87] is DENIED without prejudice, Defendants' Motion

to Amend and Direct Entry of a New Judgment [#92] is ALLOWED in part and DENIED in part, and Defendants' Motion to Stay Execution on the Judgment and Any Proceeding to Enforce the Judgment Pending the Resolution of All Post-Trial Motions and Appeal [#95] is DENIED.

I. Background

The court's Findings of Fact and Conclusions of Law [#84] sets forth the details of the Parties' dispute.

II. Motion to Amend Judgment

Defendants argue that Cognitive Edge did not have legally cognizable damages and failed to prove Defendants breached the non-disparagement provision; thus, Defendants argue, Cognitive Edge's breach of contract and breach of the implied covenant of good faith and fair dealing claims fail and judgment should enter for Defendants. Mem. in Support Mot. Amend 11-12; 14-16 [#93].^[1]

A. Legal Standard

“[I]t is very difficult to prevail on a Rule 59(e) motion. The general rule in [the First Circuit] is that the moving party must ‘either clearly establish a manifest error of law or must present newly discovered evidence.'” Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 7 n.2 (1st Cir. 2005) (quoting Pomerleau v. W. Springfield Pub. Sch., 362 F.3d 143, 146 n.2 (1st Cir. 2004)); see also Kansky v. Coca-Cola Bottling Co. of New Eng., 492 F.3d 54, 60 (1st Cir. 2007). “[A] party may not utilize these motions to assert new theories not raised at trial [and] the decision to grant or deny a motion to amend lies with the discretion of the court.” Rockland Trust

Co. v. Computer Associated Intern., Inc., Civ. Action No. 95-11683-DPW, 2008 WL 3824791, at *2 (D. Mass. Aug. 1, 2008) (citing Dash v. Chicago Ins., Co., No. 00-11911-DPW, 2004 WL 2337021, at *1 (D. Mass. Oct. 18, 2004); Sequa Corp. v. GBJ Corp., 156 F.3d 136, 143 (2d Cir. 1998)).

B. Defendants' Request for Entry of Judgment in Their Favor

Because Defendants have not proffered newly discovered evidence, to prevail on their Rule 59(e) motion they must establish a manifest error of law. Defendants argue there were two such errors: (1) the conclusion the non-disparagement provision was breached; and (2) the conclusion Plaintiff proved legally cognizable damages. The court addresses these in turn.

1. Breach of the Non-Disparagement Provision

The court found Defendants made false and disparaging statements about Plaintiff in various communications by implying Defendants prevailed on the merits in the prior lawsuit and had “full ownership of and rights over the technologies and other capabilities embodied in the Spring.io Platform” and that this breached the Settlement Agreement's non-disparagement provision. Mem. in Support Mot. Amend 14-19 [#93].^[2] The court reached this conclusion after finding that the Settlement Agreement language was unambiguous and should be given its plain meaning, and should not be construed, as Defendants argued in their post-trial brief, as requiring proof of the tort of defamation or commercial disparagement. Findings & Conclusions 14-16

[#84]. As the court explained, “[n]othing in the contract language suggests that the contractually prohibited conduct is that which would also amount to a tort.” Id. at 15. Defendants' Memorandum in Support of Motion to Amend [#93], which repeats Defendants' earlier arguments, does not demonstrate the court's prior conclusions are manifest errors of law.

2. Legally Cognizable Damages

The court found the legal fees Plaintiff incurred in an effort to mitigate the impact of Defendants' breach of contract satisfied the damages element of the breach of contract claim. Findings & Conclusions 20-21 [#84] (citing Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 484-85, 583 N.E.2d 806 (1991) (quoting Restatement, Contracts § 336(2)) (“‘Damages are recoverable for special losses incurred in a reasonable effort, whether successful or not, to avoid harm that the defendant had reason to foresee as a probable result of his breach when the contract was made.'”)). The court explained that:

Plaintiff's legal fees incurred in contacting Defendants' counsel and having the original website modified and in obtaining the temporary restraining order and preliminary injunction were reasonable post-breach expenditures made in mitigating the breach. This harm is sufficient to sustain the breach of contract claim where the Defendants' defaming and disparaging statements were the type of statements that would likely lead to loss of good will, and Plaintiffs' efforts to mitigate that loss by seeking to have the statements removed from public view were in keeping with its duty to mitigate.

Id. at 21; see also id. at 33 (“the court . . . finds that Plaintiff's legal fees incurred in contacting Defendants' counsel and having the original website modified and in obtaining the temporary restraining order and preliminary injunction were reasonable post-breach expenditures made in mitigating the breach and are awarded as damages”); 34 (“the court has determined that those fees incurred through November 7, 2019, when the preliminary injunction was entered, were the result of the breach of the non-disparagement provision of the contract”).

Cases Defendants cite do not lend support to their argument that Cognitive Edge did not prove legally cognizable damages but instead stand for the proposition (discussed below) that

courts will not assess the award of attorneys' fees under a prevailing party clause until there is a prevailing party. See e.g., Formulatrix, Inc. v. Rigaku Automation, Inc., 344 F.Supp.3d 410, 432 (D. Mass. 2018); Doucot v. IDS Scheer, Inc., 734 F.Supp.2d 172, 191 (D. Mass. 2010). Accordingly, to the extent that Defendants' argument is directed to vacating the court's damages finding in the Findings of Fact and Conclusions of Law [#84], the argument fails. The court will, however, correct the judgment to award damages based on the fees incurred prior to the court's November 7, 2019 Order granting Plaintiff's motion for a preliminary injunction, and will address prevailing party attorneys' fees separately under Rule 54(d)(2).

II. Defendants' Motion for Attorneys' Fees and Plaintiff's Request to Reduce the Amount of Fees

Cognitive Edge has requested additional attorneys' fees in the amount of $50, 782.40 for its trial preparation, trial, and post-trial briefing, under Federal Rule of Civil Procedure 54(d)(2). Mem. in Support Mot. Fees [#88]. Defendants oppose these fees and argue further that the fees previously awarded must be significantly reduced. Opp'n to Mot. Fees 6 [#94]; Mem. in Support Mot. Amend 17 [#93]. Cognitive Edge responds that Defendants have waived their challenge to the fees already awarded by not raising it earlier.

A. Legal Standard

Federal Rule of Civil Procedure 54(d)(2)(A) provides that “[c]laims for attorneys' fees and related non-taxable expenses shall be made by motion unless the substantive law governing the action provides for the recovery of such fees as an element of damages to be proved at trial.” The Committee Note explains further that Rule 54(d) does not “apply to fees recoverable as an element of damages, as when sought under the terms of a contract; such damages typically are to be claimed in a pleading and may involve issues to be resolved by a jury.” Rockland Tr. Co., 2008 WL 3824791, at *5 (citing Fed.R.Civ.P. 54(d)(2)(A), Advisory Committee Notes, 1993

Amendments). In making this distinction, “courts have differentiated between claims for attorney's fees based on ‘prevailing party' contractual provisions, ” which are considered collateral and may be sought pursuant to a Rule 54(d)(2) motion, and claims for attorneys' fees based on breaches of contract, where “a party's claim for attorney's fees is analogous to contractual damages and should be proven at trial.” Id. at *5-6; see also Pride Hyundai, Inc. v. Chrysler Fin. Co., LLC, 355 F.Supp.2d 600, 602...