Dreampak, LLC v. Infodata Corp.
| Decision Date | 08 January 2019 |
| Docket Number | No. 1:18 C 3396,1:18 C 3396 |
| Parties | DREAMPAK, LLC, Plaintiff, v. INFODATA CORPORATION, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Hon. Marvin E. Aspen
Plaintiff DreamPak, LLC filed this lawsuit against Defendant InfoData Corporation alleging breach of contract (Count I), fraudulent concealment (Count II), and negligent misrepresentation (Count III). (Compl. (Dkt. No. 1) ¶¶ 55-80.) Before us is Defendant's motion to dismiss the complaint pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). (Mot. (Dkt. No. 13) at 2.) Defendant also moves to strike portions of the complaint pursuant to Rule 12(f). (Id.) For the reasons set forth below, we grant in part Defendant's motion to dismiss Count I for breaches of contract that occurred before May 11, 2017, and deny in part Defendant's motion for breaches after May 11, 2017; grant Defendant's motion to dismiss Counts II and III, without prejudice; and deny Defendant's motion to strike portions of the complaint.
For purposes of a motion to dismiss, we accept all well-pleaded factual allegations as true and draw all reasonable inferences in favor of the plaintiff. Katz-Crank v. Haskett, 843 F.3d 641, 646 (7th Cir. 2016). Plaintiff, a Virginia limited liability company, manufactures beverage enhancers, milk modifiers, and dietary supplements. (Compl. ¶ 1.) Defendant, an Illinois software sales and consulting company, is "an expert in the implementation of Enterprise Resource Planning ('ERP') software." (Id. ¶¶ 4, 10.) ERP software provides companies with an integrated technology solution to view and manage their core business functions. (Id. ¶¶ 10, 11.) In early 2015, Plaintiff sought to purchase and implement an ERP software system and received a referral to approach Defendant for the task. (Id. ¶¶ 14, 15.) Plaintiff "had a number of discussions with InfoData regarding the scope of the ERP project, DreamPak's goals and needs, and InfoData's qualifications and experience with ERP software systems and the Sage X3 system, in particular." (Id. ¶ 15.) Before contracting with Defendant, the parties met and Plaintiff "explicitly informed" Defendant of Plaintiff's required capabilities, most importantly a material requirements planning ("MRP") feature that would aid Plaintiff's production planning, scheduling, and inventory control. (Id. ¶¶ 16, 17.) Defendant assured Plaintiff repeatedly that it was "capable of implementing ERP software that met each of [Plaintiff's] stated needs." (Id. ¶ 18.) Based on Defendant's representations, Plaintiff agreed to purchase a Sage X3 ERP system from Defendant and to retain Defendant to implement the software. (Id. ¶ 19.)
The parties executed a Software Services Agreement ("SSA") on September 21, 2015. (Id. ¶ 20; SSA (Dkt. No. 1-1).) The SSA described Defendant's obligations to provide and implement an ERP system for Plaintiff with a series of agreed-upon "modules," such as customer service, quoting, forecasting, job orders, budgeting, and allergen tracking, among several others. (Compl. ¶ 22.) The SSA stated that estimated timelines for project completion and services rendered "are provided solely as a general guideline for the Client," but that Defendant would "furnish upon Client's written request a written status and progress report" and, also upon written request, would "notify the Client as soon as is practical, if it appears that the estimate with respect to the amount of services will be exceeded." (Id. ¶ 27.) Plaintiff ultimately paid$82,178.00 for the software package, including the software license fee, taxes, and ancillary charges. (Id. ¶ 24.) The SSA stipulated that no action arising from the agreement could be brought "more than one year after the cause of action has accrued." (SSA at 4.)
In addition, also under the SSA, Plaintiff agreed to purchase from Defendant a "consulting package for the implementation of the ERP software." (Compl. ¶ 25.) The package would consist of 55 days' worth (in aggregate hours) of "application consulting," to include "Sage X3 installation, project management, and training," for an additional $85,250.00 (ultimately $90,560.16 with all charges included). (Id. ¶¶ 25, 33.)1 The consulting agreement said Defendant would track all of its time assisting Plaintiff and would "provide [DreamPak] with a monthly summary, if requested, so that [DreamPak] can manage [its] consulting investment." (Id. ¶ 29; SSA at 3.) Plaintiff agreed to purchase the consulting based on Defendant's assurances that 55 days of time would be "sufficient to fully implement the Sage X3 Software" to Plaintiff's specifications. (Compl. ¶ 27.)
Despite Plaintiff's attempts to have Defendant put a project plan in writing, Defendant provided Plaintiff with no updates for months after the SSA was signed and asserted that it needed more information on Plaintiff's processes before producing a written project timeline. (Id. ¶ 30.) Defendant did eventually visit Plaintiff's premises to provide guidance on implementing and using the ERP system, and Defendant produced a proposed project plan and scope of work on March 29, 2016, which Plaintiff approved. (Id. ¶¶ 31, 32.) In September 2016, Plaintiff's Vice President of Operations, hearing no news, emailed Defendant's in-houseaccountant to request a status update, including days already worked and, going forward, a biweekly "breakdown" of "how many hours have been worked." (Id. ¶ 36.) Plaintiff received no response to its September missive. (Id. ¶ 37.) Plaintiff sent two follow-up email requests in November 2016, which were again met with silence, and another on February 15, 2017, which garnered a response the following day, February 16, 2017. (Id. ¶¶ 38, 39.) Defendant informed Plaintiff that, "after going through the hours," 61.5 hours of implementation time remained on the original 55-day consulting agreement. (Id. ¶ 39.) One month later, Defendant had done no additional work. (Id. ¶ 40.) Plaintiff's Vice President of Operations again asked for an update in early May. (Id. ¶ 41.) On May 19, 2017, Defendant responded that only 18.5 hours remained on Plaintiffs' pre-paid consulting package as of the end of April 2017, and that Defendant would update Plaintiff the following week with work completed during May. (Id. ¶ 42.)
On May 24, 2017, Defendant informed Plaintiff that it had exhausted the 55-day consulting package. (Id. ¶ 43.) Defendant estimated that an additional 19 consulting days would be required to finish the project as originally planned, at an approximate added cost of $36,000.00. (Id.) "[A]round this same time," Defendant "attempted to unilaterally change the scope of the project," advising Plaintiff that it would not implement certain ERP functionalities, including the MRP module, during "phase one" of the project. (Id. ¶¶ 44, 50.) Plaintiff alleges the executed SSA did not divide the project into phases and that the parties had never discussed staggering the implementation or delaying the installation of any required features to a later phase. (Id. ¶ 45.) Plaintiff objected to this unilateral change, as it had "agreed to purchase the software and associated consulting package precisely because Defendant promised to implement each of the modules identified in the [SSA]." (Id. ¶ 48.) Throughout May and June 2017, Plaintiff attempted to work with Defendant to salvage a plan to implement the ERP system thatincluded all components. (Id. ¶ 49.) On June 27, 2017, Defendant reiterated it would require 19 additional days of non-technical consulting work to complete "phase one." (Id. ¶ 50.) The new proposal did not specify which modules would be completed in "phase one" or deferred to a later "phase two." (Id. ¶ 50.) The parties continued to meet through September or October 2017 but did not agree on a plan, and Defendant ceased working on the project. (Id. ¶ 52.) As of the filing of this suit, Defendant had not fully implemented the Sage X3 ERP system, and Plaintiff could not use Defendant's ERP software for any purpose. (Id. ¶ 54.) Plaintiff instead licensed an alternative Sage ERP software package through another vendor, at an additional cost of $33,000. (Id.)
Plaintiff asserts claims for breach of contract, fraudulent concealment, and negligent misrepresentation, (id. ¶¶ 55-79), and seeks damages for lost profits, lost productivity, costs, and attorney's fees (id. ¶ 80).
"The purpose of the motion to dismiss is to test the sufficiency of the complaint, not decide the merits." Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990) (internal quotation marks omitted) (quoting Triad Assocs., Inc. v. Chi. Hous. Auth., 892 F.2d 583, 586 (7th Cir. 1989)). Dismissal pursuant to Rule 12(b)(6) is proper only if a complaint lacks enough facts "to state a claim [for] relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949-50 (2009) (internal quotations omitted) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007)); accord Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614, 618-19 (7th Cir. 2007). The plausibility standard "is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949(quoting Twombly, 550 U.S. at 555, 127 S. Ct. at 1964-65). That is, while the plaintiff need not plead "detailed factual allegations," the complaint must allege facts sufficient "to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S. Ct. at 1964-65. Again, we accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff. White v. Keely, 814 F.3d 883, 887-88 (7th Cir. 2016); Agnew v. Nat'l Collegiate Athletic Ass'n, 683 F.3d 328, 334 (7th Cir. 2012) (...
To continue reading
Request your trial