PRECISELY SOFTWARE INCORPORATED v. LOQATE INC. ( 2022 )

1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 PRECISELY SOFTWARE Case No. 22-cv-00552-BLF INCORPORATED, 8 Plaintiff, ORDER DENYING MOTION TO 9 DISMISS v. 10 [Re: ECF No. 34] LOQATE INC., 11 Defendant. 12 13 This breach of contract action involves an alleged overpayment on a contract for which 14 Defendant payee has declined to reimburse. Plaintiff Precisely Software Incorporated (“Plaintiff”) 15 asserts two claims against Defendant Loqate Inc. (“Defendant”) for breach of contract and, in the 16 alternative, unjust enrichment. First Amended Compl. (“FAC”), ECF No. 31. Defendant has 17 moved to dismiss both claims under Federal Rule of Civil Procedure 12(b)(6) (“Motion”). Def. 18 Mot. Dismiss FAC, ECF No. 34. 19 For the reasons set forth below, the Court DENIES Defendant’s Motion. 20 I. BACKGROUND 21 In 2012, Plaintiff’s predecessor, Pitney Bowes Software Inc. (“Pitney Bowes”), entered 22 into a licensing agreement (the “Original Agreement”) in which Defendant granted Pitney Bowes 23 a license to integrate Defendant’s software and data into Pitney Bowes’ products. FAC ¶¶ 10-11. 24 On March 30, 2018, Pitney Bowes and Defendant amended the payment schedule for the Original 25 Agreement by replacing the previous schedule with “Addendum #3” (collectively with the 26 Original Agreement, the “Contract”), which reflected a “new commercial framework” for Pitney 27 Bowes’ continued licensing of Defendant’s software and data. FAC ¶¶ 13-15. Pursuant to Section 1 semi-unlimited “fixed fee” basis or an on-demand “per transaction fee” basis. FAC ¶ 17. 2 For its customer Kering Italia S.P.A. (“Kering”), Pitney Bowes allegedly opted to license 3 Defendant’s data on the fixed-fee basis, which involved an annual fee and was subject to an 4 annual transaction cap on Kering’s use of the data. Id. ¶ 18. Pitney Bowes paid the annual 5 $120,000 fee to Defendant in 2019 and 2020 (id. ¶¶ 20-21), but it also mistakenly paid “per- 6 transaction” fees to Defendant for Kering’s transactions for the same period, effectively resulting 7 in double payments under both the “fixed-fee” and “per-transaction fee” bases. Id. ¶¶ 18-19. 8 On April 1, 2021, Pitney Bowes assigned its interests in and rights and obligations under 9 the Original Agreement and Addendum #3 to the Plaintiff via an Assignment and Assumption 10 Agreement with Defendant’s consent. Id. ¶ 24. Around that time, Plaintiff discovered the 11 reporting error and unsuccessfully attempted to resolve the dispute with Defendant. Id. ¶¶ 25-26. 12 II. LEGAL STANDARD 13 “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a 14 claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” Conservation 15 Force v. Salazar, 646 F.3d 1240, 1241–42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 16 729, 732 (9th Cir. 2001)). When determining whether a claim has been stated, the Court accepts 17 as true all well-pled factual allegations and construes them in the light most favorable to the 18 plaintiff. Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the 19 Court need not “accept as true allegations that contradict matters properly subject to judicial 20 notice” or “allegations that are merely conclusory, unwarranted deductions of fact, or 21 unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) 22 (internal quotation marks and citations omitted). While a complaint need not contain detailed 23 factual allegations, it “must contain sufficient factual matter, accepted as true, to ‘state a claim to 24 relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 25 Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the 26 court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. 27 III. DISCUSSION 1 “per-transaction” fees that Plaintiff’s predecessor paid for licensing Defendant’s data. FAC ¶ 30. 2 In the alternative, Plaintiff also brings an equitable claim for quasi-contract relief and unjust 3 enrichment to the extent the Contract does not cover reimbursement of overpayment. Id. ¶ 33-36. 4 A. Breach of Contract 5 The elements for a breach of contract claim in California are: “(1) the contract, (2) 6 plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting 7 damages to plaintiff.” Coles v. Glaser, 2 Cal. App. 5th 384, 391 (2016). 8 The FAC alleges—and Defendant does not dispute—that Plaintiff’s predecessor entered 9 into the Original Agreement with Defendant on May 18, 2012, as well as Addendum #3 on March 10 30, 2018, thereby satisfying the first element. FAC ¶¶ 10, 13, 28. The FAC also alleges that 11 Pitney Bowes performed its obligations under the Contract by paying the annual $120,000 fixed- 12 fee and even paying for transactions that it had no obligations to pay, satisfying the second 13 element. Id. ¶¶ 18-21, 29. As to damages, the FAC specifies that, in 2019 and 2020, Pitney 14 Bowes paid Defendant an excess of $789,599.46 in “per-transaction” fees, which was in addition 15 to the $240,000 annual “fixed-fees” paid to Defendant for those two years. Id. ¶¶ 20-23. 16 Accordingly, Plaintiff has sufficiently specified money damages arising from Defendant’s alleged 17 breach, notwithstanding Defendant’s argument that Plaintiff may not be entitled to those amounts. 18 The primary issue that Defendant disputes is whether it breached the Contract. Mot. 4-6. 19 On this element, the FAC alleges that Defendant breached the Contract by “refusing to honor the 20 pricing terms set forth in Addendum #3 and refund the excess Royalties that were paid by 21 Precisely.” FAC ¶ 30. Specifically, Defendant is alleged to have accepted payments pursuant to 22 both the annual fixed-fee basis at Addendum #3, Section II(ii), and the per-transaction basis at 23 Addendum #3, Section II(iii), despite the alleged fact that “Pitney Bowes did not owe Defendant 24 any additional amounts beyond the annual Fair Cap Usage Fee that was paid.” Id. ¶¶ 18-19, 22. 25 At the pleading stage, this is sufficient to allege Defendant’s breach. Plaintiff is not required to 26 plead—as Defendant suggests—details unrelated to the alleged breach (e.g., the substance of the 27 software being licensed, the products that used the software, the customers’ use of Defendant’s 1 procedures for formally selecting a specific pricing model, see Mot. 5). At this stage, the Court 2 must accept as true all well-pled factual allegations and construe them in the light most favorable 3 to Plaintiff, see Reese, 643 F.3d at 690, including the allegation that Pitney Bowes elected to 4 license data only on the “fixed-fee” basis and not the “per-transaction” basis. FAC ¶ 18, 22. The 5 Court recognizes that Defendant may have strong arguments and evidence against this claim but, 6 at this early stage, the Court will allow the breach of contract claim to proceed. 7 Accordingly, the Court is satisfied that Plaintiff has sufficiently stated a claim for breach of 8 contract and DENIES Defendant’s motion to dismiss Plaintiff’s first claim. 9 B. Unjust Enrichment 10 In addition to its breach of contract claim, Plaintiff also asserts an equitable quasi-contract 11 unjust enrichment claim in the alternative. “When a plaintiff alleges unjust enrichment, a court 12 may construe the cause of action as a quasi-contract claim seeking restitution.” Astiana v. Hain 13 Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015) (quoting Rutherford Holdings, LLC v. 14 Plaza Del Rey, 223 Cal. App. 4th 221 (2014)). The elements for a claim of unjust enrichment 15 under California law are “receipt of a benefit and unjust retention of the benefit at the expense of 16 another.” Prakashpalan v. Engstrom, Lipscomb & Lack, 223 Cal. App. 4th 1105, 1132 (2014), as 17 modified on denial of reh’g (Feb. 27, 2014). 18 Here, the FAC has alleged that Defendant received a benefit, which was the excess “per- 19 transaction” fees Pitney Bowes mistakenly made in addition to its “fixed-fee” payments. FAC ¶ 20 34. Furthermore, the FAC alleges that Defendant was not owed the “per-transaction” payments 21 under the Contract, yet Defendant refused to reimburse Plaintiff for those amounts. Id. ¶ 25-26, 22 34-35. Accordingly, Plaintiff has alleged that Defendant is unjustly retaining those amounts. See 23 Supervalu, Inc. v. Wexford Underwriting Managers, Inc., 175 Cal. App. 4th 64, 78 (2009), as 24 modified (June 24, 2009) (“As a general rule, equitable concepts of unjust enrichment dictate that 25 when a payment is made based upon a mistake of fact, the payor is entitled to restitution unless the 26 payee has, in reliance on the payment, materially changed its position.”). 27 Defendant suggests that Plaintiff may not pursue its equitable quasi-contract claim because 1 However, Plaintiff has properly pled this equitable claim in the alternative, as it is entitled to do. 2 || See Fed. R. Civ. P. 8(d)(3) (“A party may state as many separate claims or defenses as it has, 3 regardless of consistency.”); Rojas v. Bosch Solar Energy Corp., 443 F. Supp. 3d 1060, 1080 4 |} (ND. Cal. 2020) (noting that “this Court has held that a claim for unjust enrichment may be 5 asserted under California law, and that such a claim is not subject to dismissal at the pleading 6 || stage even if duplicative of other claims”). Specifically, Plaintiff has properly pled that there are 7 no express provisions in the Contract governing the subject matter of reimbursements for 8 overpayments (FAC 4 33) and, therefore, there would be no adequate contractual remedy at law. 9 See Supervalu, 175 Cal. App. 4th at 78-79 (rejecting argument that existence of contract precludes 10 || quasi-contractual relief for mistaken payment). This satisfies Plaintiff's pleading burden, and 11 therefore, Defendant’s motion to dismiss Plaintiff's quasi-contract claim is DENIED. 12 || IV. ORDER 13 For the foregoing reasons, IT IS HEREBY ORDERED that Defendant’s motion to dismiss |) is DENIED. 3 15 Dated: September 19, 2022 16 Kom Ly heme! ETH LABSON FREEMAN 17 United States District Judge 18 19 20 21 22 23 24 25 26 27 28