Elemica Inc. v. ecMarket Inc.
| Decision Date | 28 March 2023 |
| Docket Number | 1:21-cv-00893-SB |
| Parties | ELEMICA INC. Plaintiff, v. ECMARKET INC., d/b/a Conexiom Inc. Defendant. |
| Court | U.S. District Court — District of Delaware |
John David Simmons, Keith A. Jones, PANITCH SCHWARZE BELISARIO & NADEL LLP, Wilmington, Delaware. Counsel for Plaintiff.
Steven L. Caponi, Matthew B. Goeller, Megan E. O'Connor, K&L GATES LLP, Wilmington, Delaware; Richard A. Saldinger LANDSMAN SALDINGER CARROLL, PLLC, Chicago, Illinois. Counsel for Defendant.
Business can be messy. Contracts get written ambiguously. Colleagues become competitors and make caustic comments about each other.
Just so here. Elemica and ecMarket's business relationship soured, and Elemica sued. ecMarket's counterclaims stemming from that spoiled union, are mostly viable.
So I grant in part and deny in part Elemica's motion to dismiss them. And though Elemica objects to a statement ecMarket made in its counterclaim, it fails to explain why it is prejudiced by that statement. Thus, I deny Elemica's motion to strike.
Elemica provides supply-chain-management services. Countercl., D.I. 39 ¶¶ 1011. To do so, it needed software to automate its customers' data. Id. ¶¶ 9, 11-12. So it contracted with ecMarket, a supply-chain software developer. Id. ecMarket's software created templates that would convert the customers' data into Elemica's preferred format. Id. ¶¶ 11-12, 19. The parties extended their contract five times. Id. ¶¶ 13-18.
After the fifth extension, Elemica asked ecMarket for a discount on 1,300 customer templates. Id. ¶ 19. Those templates were not in use, so Elemica did not want to pay for them. Id. ecMarket gave Elemica two options. Id. ¶¶ 20-21. First, the dormant templates could stay on Elemica's network, but Elemica would pay less for them over time. Id. ¶ 21. Second, ecMarket could wipe the templates off Elemica's network for a one-time, $65,000 fee. Id. By email, Elemica chose the first option. Id. ¶ 22. So the parties drew up an agreement. Id. ¶ 23.
Per that agreement, ecMarket would “apply a [monthly] credit” to Elemica's bill over the next three years. D.I. 39-1 Ex. B. That credit equaled “P x F x 1,300.” Id. P was “the percentage applicable to the Quarter in which the month” fell, as stated in a corresponding table. Id. And F was “the CONEXIOM Fees that would have been payable at the end of the month before the application of the [c]redit.” Id.
Things went according to plan, for a time. But after about a year, Elemica decided to remove the 1,300 dormant templates from its network itself. Id. ¶ 24. Unaware, ecMarket continued to discount Elemica for 1,300 active templates throughout the rest of the deal. Id. ¶¶ 25-26.
Meanwhile, the parties' relationship was fraying in other ways. With the agreement's end date on the horizon, ecMarket “solicit[ed] a current Elemica customer and offer[ed] that customer the opportunity to continue to use [ecMarket's services] after the [agreement's] expiration.” Id. ¶¶ 30, 32. .)
Elemica did not take kindly to ecMarket's solicitations. It sued ecMarket for allegedly using its confidential information to poach customers. Id. ¶ 27; see also D.I. 1. And Elemica's CEO sent an email-with the complaint attached-to all its customers. D.I. 39 ¶ 33; see also D.I. 39-1 Ex. C. In the email, the CEO accused ecMarket of “act[ing] in such an unethical way by sending false and misleading claims to a customer” and “inappropriately contacting [the customers'] employees.” D.I. 39-1 Ex. C.
I later let Elemica amend its complaint to add allegations and a deceptive-tradepractices claim. D.I. 31, at 3-5; D.I. 33. In its answer to the amended complaint, ecMarket counterclaims for breach of contract and defamation per se. D.I. 39 ¶¶ 3548. It says Elemica breached the parties' agreement to discount the 1,300 dormant templates. Id. ¶ 39. And it claims that Elemica's CEO defamed it. Id. ¶ 42. In making its defamation counterclaim, ecMarket says that Elemica “decided ... to ... tortiously interfere with [a] prospective business opportunity for ecMarket” by emailing customers. D.I. 39 ¶ 32. Elemica has moved to dismiss the counterclaims and strike the tortious-interference statement. D.I. 43.
I ask whether ecMarket's allegations “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted).
A plaintiff pleading breach of contract must show (1) that a contract existed, (2) that the defendant “breach[ed] ... an obligation imposed by that contract,” and (3) resulting damages. VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003). Delaware law requires me to read the contract as a whole and “enforce the plain meaning of [its] clear and unambiguous language.” Manti Holdings, LLC v. Authentix Acquisition Co., 261 A.3d 1199, 1208 (Del. 2021) (Montgomery-Reeves, J.). Language is unambiguous when it can be read in only one reasonable way. See Id. But if a term can be reasonably read in multiple ways, and is thus ambiguous, I cannot dismiss the breach claim. Zweigenhaft v. PharMerica Corp., 2020 WL 5258345, at *1 (D. Del. Sept. 3, 2020) (citing VLIW Tech., 840 A.2d at 615). That is because a fact-finder must resolve ambiguous terms. See GMG Cap. Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 783-84 (Del. 2012); Ram Const. Co. v. Am. States Ins. Co., 749 F.2d 1049, 1052 (3d Cir. 1984).
The parties' discount agreement was ambiguous, although the action is not where the parties think. Recall the agreed-upon credit: “P x F x 1,300.” As defined, it was to equal a given percentage times the payable “CONEXIOM Fees” times “1,300.” D.I. 39-1 Ex. B. ecMarket insists that “1,300” refers to the 1,300 “specific, dormant” customer templates on Elemica's network. D.I. 45, at 2, 9-10. For its part, Elemica claims that “1,300” is simply an “Arabic number in a formula with other defined variables” and “is not subject to different interpretations.” D.I. 48, at 4.
Elemica is right. 1,300 is indeed just a constant number, not a variable. Its value cannot change. It simply acts as a multiplier for P (the given percentage) and F (“CONEXIOM Fees”).
But F, one of the two terms 1,300 multiplies, is ambiguous. The agreement defined F as “the CONEXIOM Fees that would have been payable at the end of the month before the application of the [c]redit.” D.I. 39-1 Ex. B. The capital letters suggest a defined term, but “CONEXIOM Fees” appears nowhere else. Indeed, the term was not defined or even used by the parties' original contract, which the discount agreement incorporated. See D.I. 13; D.I. 39-1 Ex. B. Instead, the original contract contemplated “Production Service Fees,” which were to “be calculated each month according to [a corresponding table] for the number of unique [customer] relationships in production.” D.I. 13, at 6-7. Because “CONEXIOM Fees” were to be multiplied by 1,300, presumably they refer to per-unit fees, rather than a total. Yet it is unclear whether those fees are per specific template, like the “1,300 specific, dormant” customer templates on Elemica's network, customer relationship, as contemplated by the original contract, or some other unit entirely. D.I. 39 ¶¶ 19-24. Compare D.I. 39-1 Ex. B., with D.I. 13, at 6-7.
I cannot tell. But at the motion-to-dismiss stage, I do not need to. See Zweigenhaft, 2020 WL 5258345, at *1. I can reasonably read “CONEXIOM Fees” to refer to the price of the 1,300 unused templates. Under that reasonable reading, ecMarket plausibly pleads that Elemica breached the parties' agreement by getting a discount on templates for which it was supposed to pay full price. D.I. 39 ¶ 39. And that breach allegedly cost ecMarket at least $130,000. Id. ¶ 40. Because the parties' agreement was ambiguous, ecMarket's breach claim survives.
ecMarket also alleges defamation. Under Delaware law, then, it must plead that Elemica (1) “made a defamatory statement” (2) about it (3) that was published, and (4) a “third party would understand the character of the communication as defamatory.” Doe v. Cahill, 884 A.2d 451, 463 (Del. 2005) (en banc) (citing Read v. Carpenter, 1995 WL 945544, at *2 (Del. Super. Ct. June 8, 1995)). A defamatory statement is one that “tends ... to harm [one's] reputation,” thus “lower[ing] him in the estimation of the community” or “deter[ring others] from associating or dealing with him.” Cousins v. Goodier, 283 A.3d 1140, 1148 (Del. 2022) (en banc) (internal quotation marks omitted).
According to ecMarket, Elemica's CEO defamed it when he emailed his customers and attached Elemica's grievance. D.I. 39 ¶¶ 33-34, 45-46. But pointing generally to the grievance is too vague. See Grubbs v. Univ. of Del. Police Dep't, 174 F.Supp.3d 839, 861 (D. Del. 2016) ( defamation claims when plaintiff did not “identify the exact comments” at issue). Perhaps sensing its error, ecMarket points to specific statements from the grievance in its response brief. D.I. 45, at 6. But because those statements were not alleged in its defamation counterclaim, I cannot consider them. See Pennsylvania ex rel. Zimmerman v. PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988). So I dismiss without prejudice ecMarket's counterclaim to the extent that it is based on statements that Elemica made in its grievance.
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