Tibco Software Inc. v. Mediamath, Inc. ( 2019 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
TIBCO SOFTWARE INC.,
Plaintiff,
C.A. No. NI8C-07-066 CLS
Vv.
MEDIAMATH, INC.,
Defendant.
Date Submitted: April 5, 2019
Date Decided: July 10, 2019
Upon Defendant Mediamath, Inc.’s
Motion for Judgment on the Pleadings
Denied.
Josiah R. Wolcott, Esquire, Connolly Gallagher LLP, Newark, Delaware, Attorneys
for Plaintiff.
Matthew P. Ward, Esquire, Nicholas T. Verna, Esquire, Womble Bond Dickinson
(US) LLP, Wilmington, Delaware, Usher Winslett, Esquire, Of Counsel (pro hac
vice), Winslett Studnicky McCormick & Bomser LLP, New York, New York,
Attorneys for Defendant.
Scott, J.
This action arises out of a claim for breach of contract. Plaintiff Tibco
Software Inc., (“Tibco”) filed a complaint with this Court on July 9, 2018, alleging
that Defendant Mediamath, Inc., (‘MMI’) breached a Master Service Agreement
(“Agreement”) in failing to pay for services rendered.
Background
In August 2014, MMI and Intel Services entered into the Agreement, wherein
Intel Services agreed to provide certain information, technology, products, services
and support to MMI for an established fee. On the same date, MMI and Intel
Services executed an Order Form for such services, which provides an end date of
December 31, 2017.! In September 2015, Tibco acquired the assets of Mashery -
including the Agreement - from Intel Corporation.
Between August 2014 and December 2017, Intel Services, during its relevant
time period, and Tibco provided services under the Agreement to MMI as specified
on the Order Form. The Agreement provides that MMI “must pay all fees as
specified on the Order Form, but if not specified then within 30 days of receipt of an
invoice.”” The following line states that the Agreement “contemplates one or more
' See Ex. A of Pl.’s Am. Compl. (July 12, 2018) (“This agreement provides [MMI]
access to Intel’s proprietary application programming interface management
software service (Mashery Service) for [MMI]’s use with its application programing
interface (Customer API) as specified on an order form (Order Form). . . .”)
hereinafter, “Agreement”.
* Agreement § 3.
Order Forms for the Mashery Service, which Order Forms are governed by the terms
of this agreement.”’ Additionally, the Order Form provides that “[a]ll payments are
due on a net 30 basis and are subject to a 1.5% late fee.”
On January 9, 2018, Tibco sent an invoice to MMI in the amount of
$321,187.46 (“Invoice”). Thirty days later, on February 8, 2018, MMI had not paid
the Invoice. Thereafter, on February 12, 2018, Tibco sent a demand letter to MMI
requesting payment. At present, the Invoice remains unpaid.
Parties’ Contentions
Tibco alleges that it has been damaged by MMI’s failure to pay the Invoice in
accordance with the terms of either the Work Order or the Agreement. Tibco
contends that such failure to pay entitles it to compensation in the amount of the
unpaid Invoice plus pre- and post-judgment interest accruing at the contractual rate
of 1.5% per month as of February 8, 2017, as well as costs and other such relief the
Court deems just.
In its answer, MMI asserted a counterclaim seeking a declaratory judgement
that the Agreement caps MMI’s liability at zero dollars. Specifically, MMI refers to
a provision in the Agreement that provides “neither party’s aggregate liability arising
out of or related to this agreement (whether through indemnification, in contract, tort
or otherwise) will exceed the actual amount paid by [MMI] within the 12 months
3 Td.
preceding the event that gave rise to the liability.” Both parties agree that the “event
that gave rise to the liability” is the non-payment of the Invoice allegedly due on
February 8, 2018. But MMI reasons that because “the actual amount paid by [MMI]
within the 12 months preceding” that date is zero dollars, it cannot be held liable for
the Invoice amount. MMI moves for judgment on the pleadings on the same
grounds.
Tibco opposes the motion for several reasons. First, Tibco argues that without
the benefit of discovery, MMI’s request for judgment on the pleadings based on the
limitation of liability provision in the Agreement should be denied at this early stage.
Next, Tibco claims that the liability limitation provision is unenforceable under
Delaware law as an unreasonable provision that leads to an absurd result. Tibco
additionally submits that to interpret the liability limitation provision as a bar against
recovery based on a breach by the party invoking the clause runs contrary to
Delaware’s objective theory of interpreting contracts. Tibco’s final argument
challenges MMI’s understanding of the liability limitation provision as conflicting
with the Agreement’s overall scheme or plan and thus contends that the provision
should not apply to MMI’s payment obligations under the Agreement.
+ Agreement § 7(B).
Standard of Review
The standard for a motion for judgment on the pleadings is “almost identical”
to the standard for a motion to dismiss.” In reviewing such a motion, the Court must
accept all well pleaded facts in the complaint as true and construe all reasonable
inferences in favor of the non-moving party.° A motion for judgment on the
pleadings may only be granted where there are no disputed facts and the moving
party is entitled to judgment as a matter of law.’
Discussion
A contractual provision that purports to relieve a party from liability for
damages resulting from his own negligence is disfavored under Delaware law.* It is
generally understood that “contract language will not suffice to relieve a contracting
party of its failure to satisfy legal obligations unless the contract language makes it
crystal clear and unequivocal that the parties specifically contemplated that the
contracting party would be relieved of its own defaults.”
> Blanco v. AMVAC Chem. Corp., 2012 WL 3194412, at *6 (Del. Super. Ct. Aug. 8,
2012) (citing Ross Holding and Mgmt. Co. v. Advance Realty Group, LLC, 2010
WL 1838608, at *5 (Del.Ch. Apr. 28, 2010)).
6 Doe v. Bradley, 2011 WL 290829, at *3 (Del. Super. Ct. Jan. 21, 2011).
7 O'Leary v. Telecom Res. Serv., LLC, 2011 WL 379300, at *3 (Del. Super. Ct. Jan.
14, 2011).
8 Delmarva Power & Light Co. v. ABB Power T & D Co., Inc., 2002 WL 840564, at
*6 (Del. Super. Ct. Apr. 30, 2002) (citing J. A. Jones Const. Co. v. City of Dover,
372 A.2d 540, 556 (Del. Super. Ct. 1977)).
9 J. A. Jones Const., 372 A.2d at 552 (“The Delaware cases which have found
contractual language sufficient to protect a party against a claim based on its own
negligence have all specifically referred to negligence of the protected party.
5
The at-issue liability limitation provision of the Agreement, titled “Total limit
on liability,” reads as follows, in relevant part:
[Nleither party’s aggregate liability arising out of or related to this
agreement (whether through indemnification, in contract, tort or
otherwise) will exceed the actual amount paid by Customer within the
12 months preceding the event that gave rise to the liability.'°
Clear and unambiguous contractual language is given its ordinary and usual
meaning.'! An ambiguity exists “when the provisions in controversy are reasonably
or fairly susceptible of different interpretations or may have two or more different
meanings.”!” An unreasonable interpretation is one that “produces an absurd result
or one that no reasonable person would have accepted when entering the contract.”!
The Court finds MMI’s proffered interpretation unreasonable. Despite
admitting that it has not paid the $321,187.46 owed under the Invoice, MMI asks the
Court to construe the aforementioned provision as limiting Tibco’s recovery to zero
dollars. Surely no reasonable party would conclude that a failure to pay fees owed
under an enforceable contract can be the same basis used to avoid responsibility for
the same fees. Fundamental to the concept of contractual limitation of liability is
Conversely, contractual provisions which purport to give protection generally
against liability or which even protect against negligence generally have been held
not to meet the test for protection from a claim based on one's own negligence.”)
'0 Agreement § 7(B).
'! Rhone-Poulenc Basic Chem. Co. v. American Motorists Ins. Co., 616 A.2d 1192,
1195 (Del. 1992).
'2 Id. (emphasis added).
'3 Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1160 (Del. 2010).
6
the presumption that there will be good faith effort by the contracting party to
perform its contractual obligations.'* For the liability limitation provision to relieve
a MMI from the results of its own alleged negligence, it must expressly show an
intent to do so. It does not. To find otherwise would produce an absurd result.
Under the facts of this case, the proper interpretation of the Agreement’s
liability limitation provision remains an issue of material fact.
Conclusion
For the forgoing reasons, Mediamath’s Motion for Judgment on the Pleadings
is DENIED.
IT IS SO ORDERED.
Judge Calvin L. Scott, Jr.
147. A. Jones Const., 372 A.2d at 549.