Aceva Techs., LLC v. Tyson Foods, Inc.

Decision Date18 September 2013
Docket NumberNo. CV–12–923.,CV–12–923.
Citation429 S.W.3d 355,2013 Ark. App. 495
PartiesACEVA TECHNOLOGIES, LLC, and Sungard Avantgard, LLC, Appellants. v. TYSON FOODS, INC., Appellee.
CourtArkansas Court of Appeals

OPINION TEXT STARTS HERE

Wright, Lindsey & Jennings, LLP, by: Gary D. Marts, Jr.; and Blank Rome, LLP, by: Daniel E. Rhynhart and Inez R. McGowan, pro hac vice, for appellants.

Reece Moore Pendergraft, LLP, by: Timothy C. Hutchinson; and Brown & James, P.C., by: Steven H. Schwartz, pro hac vice, for appellee.

JOHN MAUZY PITTMAN, Judge.

Aceva Technologies, LLC, and Sungard Avantgard, LLC (collectively Aceva), bring an appeal from a jury verdict in the Washington County Circuit Court in favor of appellee, Tyson Foods, Inc. Aceva challenges several of the trial court's rulings, and Tyson brings a cross-appeal from its refusal to award prejudgment interest. We affirm on the direct appeal and reverse and remand on the cross-appeal.

In 2004, the parties entered into a Value Assessment Agreement (VAA), in which Aceva agreed to evaluate Tyson's credit department's processes and software needs for $30,000. Aceva advised Tyson that it would save about $2,000,000 by implementing Aceva's software. Following that recommendation, Tyson purchased Aceva's software and entered into a Software License Agreement (SLA) in February 2005, whereby Tyson paid Aceva a licensing fee of $400,000 and a first-year maintenance fee of $80,000. Tyson also agreed to pay approximately $170,000 for Aceva to customize and install the software in accordance with Tyson's needs. Aceva agreed to complete the work in twelve weeks, beginning in March 2005. The SLA contained the following limitation-of-liability clause:

a) Limitation: EXCEPT AS PROVIDED FOR IN THIS AGREEMENT, ACEVA'S AGGREGATE LIABILITY TO CUSTOMER IN ANY WAY RELATED TO THIS AGREEMENT, AND REGARDLESS OF WHETHER THE CLAIM FOR SUCH DAMAGES IS BASED IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, WILL NOT EXCEED THE LICENSE FEES RECEIVED BY ACEVA FROM CUSTOMER FOR THE AFFECTED SOFTWARE FOR THE 12 MONTH PERIOD PRECEDING THE OCCURRENCE OF SUCH LIABILITY.

b) No Consequential Damages. EXCEPT AS PROVIDED FOR IN THIS AGREEMENT NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES.

Aceva did not meet the twelve-week deadline. During the next year, Aceva billed Tyson almost $900,000 for license and maintenance fees and services; according to Tyson, the software never met its requirements and could not be used. Tyson notified Aceva of breach on April 11, 2006, and demanded cure by May 12, 2006; in the alternative, it demanded reimbursement for its out-of-pocket costs of $887,199.60. Aceva did not satisfy those demands.

Tyson sued Aceva in 2007, asserting breach of the VAA, the agreement to provide professional services, the SLA, express warranty, and implied warranties, and the implied covenant of good faith and fair dealing in the VAA and SLA; negligence in performing the VAA and professional services; promissory estoppel; unjust enrichment; negligent misrepresentation; deceptive trade practices; and fraud. Tyson notified Aceva that, pursuant to paragraph 10(f) of the SLA, the governing law would be that of Delaware. Aceva asserted various affirmative defenses, including Tyson's material breach; it also contended that the VAA and SLA had merged and that there was only one contract between the parties (the SLA). Aceva also brought a counterclaim against Tyson for breach of contract, promissory estoppel, and unjust enrichment.

Aceva moved for partial summary judgment to enforce the limitation-of-liability provision of the SLA. It also filed a motion in limine, asking the court to permit it to produce evidence of that provision and to preclude Tyson from introducing any evidence of damages in excess of $400,000. Aceva asked the court to instruct the jury that the limitation-of-liability clause applied to all of Tyson's claims (except the fraud claims, if they survived). In response, Tyson argued that all remedies under the Uniform Commercial Code were available if it could prove that the limited remedy failed of its essential purpose, and that whether a limited remedy failed of its essential purpose is a question of fact for the jury.1 It also argued that the VAA was a separate agreement, which contained no limitation-of-liability clause, and was not merged into the SLA.

The circuit court partially granted Aceva's motions in limine and for partial summary judgment, leaving the “failure-of-essential-purpose” question for the jury. The court stated that if that provision did not fail of its essential purpose, it applied to the SLA-related claims including negligence) but not to the VAA. The court dismissed several claims, leaving those for breach of the VAA, the SLA, and express warranty; negligence in performance of professional services; promissory estoppel; unjust enrichment; deceptive trade practices; and fraud for trial.

The case was tried before a jury. Tyson nonsuited its claim for breach of the VAA. During its case-in-chief, Tyson called witnesses who testified about Aceva's failure to perform adequately, using documentary evidence consisting of computer screen shots, emails, and software-generated reports. The court denied Aceva's motions for directed verdict based on the limitation-of-liability clause. Over Tyson's objection, the trial court permitted Aceva to present the testimony of Harit Nanavati, a software engineer with Aceva during the relevant time frame, who performed a live demonstration of the software using a computer server provided by Aceva. Tyson argued that it needed an opportunity to first inspect the computer server used by Nanavati in the demonstration to verify whether he was using the same software that Tyson had on its server. Aceva assured the trial court that the software was the same version that Tyson had, and the trial court permitted Nanavati to demonstrate that the software worked at that time. Tyson asked for a recess to inspect the software before conducting its cross-examination of Nanavati. The trial court denied Tyson's request for a recess. Nevertheless, after Nanavati had testified, during the presentation of the remainder of Aceva's case-in-chief, the circuit court allowed Tyson to inspect the computer. Kevin McManus, a management consultant, testified that the software worked properly.

Michael Mader, an IT employee of Tyson, testified on rebuttal that, based on his limited inspection of the Aceva server and software, there were significant differences between those files and the software files on Tyson's server. He stated that, although he could not identify the precise changes, “digital fingerprints” indicated that the software used by Aceva during the demonstration was an altered version of the Aceva software that had been installed on Tyson's servers. Mader testified that he set up a computer so that Regina Villines, Tyson's next witness on rebuttal, could remotely access Tyson's server and enable her to demonstrate the actual software that had been installed on Tyson's server. Villines then demonstrated the problems with the version of the Aceva software running on Tyson's system. During Aceva's cross-examination of Villines, it asked for a recess to permit McManus to inspect the version of the Aceva software installed on Tyson's server before Aceva finished asking questions of Villines. After the trial court denied this motion for a recess during Villines's testimony, Aceva decided not to ask her any further questions and stated that it had no further rebuttal witnesses. At that time, the testimony was completed.

About fifteen minutes later, Aceva asked to present McManus as a surrebuttal witness so that he could testify that the software on Tyson's server had an expired business calendar. The trial court denied this request and Aceva proffered McManus's testimony. In his proffered testimony, McManus acknowledged that months before trial, Aceva had been given a copy of the software on Tyson's server and that it had been given an opportunity to log onto Tyson's server to further review the software, but had declined because he saw no need to do so. McManus acknowledged that he had been aware of the business-calendar issue before trial.

The jury found that Aceva had breached the SLA, causing Tyson damages; that Aceva had not breached an express warranty to Tyson; that Aceva was negligent in performing the VAA, causing Tyson damages; that Aceva had not committed deceit; that Aceva had not violated the Arkansas Deceptive Trade Practices Act; that Tyson had not breached the SLA; and that the limitation-of-liability remedy in the SLA had failed of its essential purpose. The jury awarded damages of $512,000 to Tyson and no damages to Aceva. Tyson moved for prejudgment interest, attorney's fees, and costs. The circuit court entered judgment on the jury verdict and awarded attorney's fees of $300,000 to Tyson, plus $100,000 in costs. The court denied Tyson's request for prejudgment interest. Aceva then pursued this appeal and Tyson filed a cross-appeal from the order denying its motion for prejudgment interest.

In its first point on appeal, Aceva argues that the trial court abused its discretion in refusing to call a recess so that it could inspect Tyson's computer and software that was shown to the jury during rebuttal on the last day of trial. Aceva further asserts that after the record was closed, it discovered that Tyson had “rigged the software to fail by mis-configuring the business calendar setting,” and that when it sought to reopen the record to introduce this newly-discovered evidence, the circuit court refused to do so. 2 Aceva argues that it had no choice but to rest its case after the circuit court refused to give it any time in a recess to inspect the computer and software on the laptop computer that Villines had shown the jury while accessing the Aceva software running on Tyson's servers through a wireless...

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    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • 11 Julio 2017
    ...damages amount." Yazdianpour v. Safeblood Techs., Inc. , 779 F.3d 530, 540 (8th Cir. 2015) ; cf. Aceva Techs., LLC v. Tyson Foods, Inc. , 2013 Ark.App. 495, 429 S.W.3d 355, 365-66 (2013) (awarding prejudgment interest where the plaintiff recovered less than it sought, but it was clear how t......
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    ...which expenses should be awarded as damages and how the jury arrived at the total damages amount. See Aceva Tech., LLC v. Tyson Foods, Inc., 2013 Ark. App. 495, 429 S.W.3d 355, 366 (2013) (holding that awarding prejudgment interest was appropriate when it was clear that the jury awarded dam......
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    ...which expenses should be awarded as damages and how the jury arrived at the total damages amount. See Aceva Tech., LLC v. Tyson Foods, Inc., 2013 Ark. App. 495, 429 S.W.3d 355, 366 (2013) (holding that awarding prejudgment interest was appropriate when it was clear that the jury awarded dam......
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