Tactician Corp. v. Subway Int'l

MEMORANDUM OF DECISION AND ORDER ON DEFENDANT'S MOTION TO DISMISS THE COMPLAINT PURSUANT TO FED. R. CIV. P. 12(b)(6)

Judith Gail Dein, United States Magistrate Judge

I. INTRODUCTION

This action arises out of a written agreement dated March 6, 2019 (the “Renewal Agreement”) under which the defendant, Subway International, Inc. (“Subway”), ^[1] agreed to renew an existing contract to purchase online software and data products from the plaintiff, Tactician Corporation (“Tactician”), for use in the United Kingdom, Germany, France and Australia. The crux of the parties' dispute is whether the Renewal Agreement required Subway to purchase Tactician's products for a three-year period or whether Subway was free to terminate the Agreement after making payments for two years. Tactician contends that the plain language of the Renewal Agreement established a three-year commitment for the

purchase and sale of the products, whereas Subway argues that references to a three-year commitment contained in the Agreement constituted a commitment to the prices at which Tactician agreed to sell its online software and data products to the defendant but has no bearing on the duration, or term, of the parties' contract. According to Subway, the term of the Renewal Agreement was governed by a separate Online License Agreement, which it claims was fully incorporated into and made a part of the Renewal Agreement. Pursuant to Sections 4 and 4.1 of that Agreement, “[t]he term of an annual license is one year from the purchase date.” Thus, Subway contends that its commitment to purchase online software and data from Tactician expired annually, and that it was entitled to cancel or terminate the Renewal Agreement after one or two years.

It is undisputed that Subway prepaid for Tactician's online software and data products for two years following its execution of the Renewal Agreement. However, on December 7, 2020, Subway notified the plaintiff that it would not be purchasing Tactician's products for a third year and that it was terminating the parties' arrangement pursuant to Sections 4 and 4.1 of the Agreement. Tactician objected and insisted that Subway remains responsible for payment of all amounts due for the third year of Renewal Agreement. After efforts by the parties' counsel failed to resolve the dispute, Tactician filed the instant lawsuit against Subway. By its Verified Complaint, Tactician has asserted claims against the defendant for breach of contract (Count One); breach of the implied covenant of good faith and fair dealing (Count Two); quantum meruit (Count Three); unjust enrichment (Count Four); fraud, deceit and misrepresentation (Count Five); and violation of Mass. Gen. Laws ch. 93A (“Chapter 93A”) (Count Six).

The matter is before the court on the “Defendant's Motion to Dismiss the Complaint Pursuant to Fed.R.Civ.P. 12(b)(6)” (Docket No. 6). By its motion, Subway argues that under the plain and unambiguous terms of the parties' Renewal Agreement, it was under no obligation to purchase Tactician's products for a third year. It further argues that all six Counts of the Verified Complaint should be dismissed because Tactician has failed to state a claim against it under any legal theory. For all the reasons detailed herein, the defendant's motion to dismiss is ALLOWED IN PART and DENIED IN PART. While this court finds that Tactician has failed to state a plausible claim for relief with respect to Counts Two, Five and Six, it concludes that ambiguities regarding the term of the parties' Renewal Agreement warrant the denial of Subway's motion with respect to the breach of contract claim alleged in Count One. This court also finds that the plaintiff is entitled to pursue its alternative claims for unjust enrichment and quantum meruit at this early stage in the litigation. Accordingly, Subway's motion is ALLOWED with respect to Counts Two, Five and Six but DENIED with respect to Count One, Three and Four of Tactician's Verified Complaint.

II. STATEMENT OF FACTS

When ruling on a motion to dismiss brought under Fed.R.Civ.P. 12(b)(6), the court must accept as true all well-pleaded facts and give the plaintiff the benefit of all reasonable inferences. See Cooperman v. Individual Inc., 171 F.3d 43, 46 (1st Cir. 1999). “Ordinarily, a court may not consider any documents that are outside of the complaint, or not expressly incorporated therein, unless the motion is converted into one for summary judgment.” Alt. Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001). “There is, however, a narrow exception ‘for documents the authenticity of which are not disputed by the

parties; for official public records; for documents central to plaintiffs' claim; or for documents sufficiently referred to in the complaint.'” Id. (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993)). Applying these standards to the instant case, the relevant facts are as follows.^[2]

The Parties' Renewal Agreement

On March 29, 2019, Subway executed a “Renewal Agreement” from Tactician dated

March 6, 2019. (Verified Complaint (Docket No. 12) (“Compl.”) ¶ 3 & Ex. A thereto). Pursuant to the Agreement, Tactician agreed to renew an existing contract for the sale of online software and data products to Subway, and Subway confirmed its “commitment to purchase, per configuration, prices, terms and conditions as outlined in [the] agreement.” (Compl., Ex. A). The prices, terms and conditions are described in the Renewal Agreement as follows:

Outlined in the attached schedules are the renewal cost of Tactician online software and data products for the United Kingdom (Schedule A); Germany (Schedule B); France (Schedule C); and Australia (Schedule D), according to the following terms and conditions:

• Three (3) year agreement commitment, prepaid annually, according to cost specified in the attached schedules.

• Effective Dated: April 1^st, 2019.

• Payment Terms: Net 30, invoiced on March 1 of each agreement year.

• All prices are expressed in Euros (€), unless specified otherwise. First year agreement is expressed in USD and invoiced on March 1, 2019.

• Number of Users: As specified in the attached schedules.

• Usage of Tactician's online products are governed by the Tactician Online License Agreement: http://www.tactician.com/online-license-agreement/

• International Data price commitment is for 3 years and non-refundable.

(Id. (emphasis added)). The attached schedules include, for each of the four countries listed in the Renewal Agreement, a list of products, the number of users corresponding to each product, the first year price expressed in U.S. dollars, the second year price expressed in euros, and the third year price expressed in euros. (Id.). They also include the total cost of the products for each of the three years. (Id.).

The Online License Agreement referenced in the sixth bullet point of the Renewal Agreement quoted above sets forth the terms and conditions under which online service subscribers can purchase “a limited, non-exclusive, non-transferable, license” to use Tactician's online map and report creation and analysis service (“Service”). (Farraher Decl., Ex. 1 ¶¶ 1, 3). As specified in that Agreement, Tactician requires “[a] separate subscription license ... for each unique user having access” to Tactician's Service. (Id. ¶ 2). Following payment of a subscription fee, Tactician grants the individual “Subscriber” a “Subscription”^[3] consisting of “access to the Service for the duration of the Subscription Period for purposes of creating an unlimited number of maps and reports.” (Id.). The “Subscription Period” is defined in Section 4 of the Online License Agreement, which provides in relevant part as follows:

4. TERM AND TERMINATION: The Term of the license granted herein shall be for the Subscription Period of one year. Subject to Section 4.1 you may terminate or cancel your Subscription at any time. Upon termination or expiration of the Subscription, Subscriber must discontinue all use of the Service ....

(Id. ¶ 4). Section 4.1 of the Agreement further provides:

4.1 TERMS OF ANNUAL SUBSCRIPTION PURCHASES: The term of an annual license is one year from the purchase date. An annual license is billed at the

time of purchase and is not automatically renewed at the end of the license term. You may terminate or cancel your Subscription for a full refund within 30 days of the purchase date. You understand and agree that cancellation of your Subscription and the refund as described above, are your sole rights and remedies with respect to any dispute with Tactician. Tactician reserves the right to discontinue providing the Service at any time.

(Id. ¶ 4.1).

Tactician asserts that “the clear and unambiguous language of the Renewal Agreement creates a three year commitment” and that “[t]he Online Agreement is referenced only to define and determine the way the products were to be used.” (Pl. Opp. Mem. (Docket No. 13) at 6 (emphasis in original)). In other words, Tactician asserts that the only provisions of the Online License Agreement that the parties adopted as part of the Renewal Agreement are those that address the manner in which its online products are used by an individual user, and that the one year period referenced in the Online Agreement does not relate to the overall terms governing Tactician's relationship with Subway. It also claims that it entered into a number of third-party agreements in reliance on Subway's commitment to comply with all three years of the Renewal Agreement, and that the third-party agreements were necessary for Tactician to perform its contractual obligations to...