Int'l Techs. Mktg., Inc. v. Verint Sys., Ltd.

• Decision Date: 27 January 2016
• Docket Number: 1:15-cv-2457-GHW
• Citation: 157 F.Supp.3d 352
• Parties: International Technologies Marketing, Inc., Plaintiff, v. Verint Systems, Ltd., Defendant.
• Court: U.S. District Court — Southern District of New York

157 F.Supp.3d 352

International Technologies Marketing, Inc., Plaintiff,

v.Verint Systems, Ltd., Defendant.

1:15-cv-2457-GHW

United States District Court, S.D. New York.

Signed January 27, 2016

Arthur Rene Hollyer, A. Rene Holler, Esq, New York, NY, for Plaintiff.

Howard Ian Elman, Matalon Shweky Elman P.L.L.C., New York, NY, for Defendant.

MEMORANDUM OPINION AND ORDER

GREGORY H. WOODS

, District Judge

I. INTRODUCTION

In late 2006, plaintiff International Technologies Marketing, Inc. (“ITM”) agreed to assist defendant Verint Systems, Ltd. (“Verint”) in its efforts to acquire a Brazilian company, Suntech. ITM had initially identified Suntech as a potential customer for Verint's telecommunications products, but Verint quickly shifted its focus towards an acquisition instead. According to the terms of the contract entered into between ITM and Verint, ITM was to use best commercial efforts to assist Verint in acquiring Suntech, but was only to be compensated if Verint completed the purchase. The contract expired in February 2007, but ITM maintained its role facilitating negotiations between the two sides through September of that same year. Although Verint and Suntech got close to reaching a deal at various points in time, a deal was not reached, and—as far as ITM was aware—any potential acquisition was off.

Nearly four years later, Verint acquired Suntech. ITM now brings suit, alleging that Verint breached the parties' contract because it eventually acquired Suntech without compensating ITM. ITM also brings additional state law claims based on similar allegations. Because the complaint fails to plausibly allege that Verint had any obligation to pay ITM for an acquisition that occurred nearly four years after the parties' contract expired, and for the further reasons outlined below, defendant's motion to dismiss is GRANTED.

II. BACKGROUND¹

ITM is a small company founded in February 2004 that provides consulting and business development services. Am. Compl. ¶¶ 1, 16. ITM bills itself as a having an expertise in security products and technology used by law enforcement and intelligence agencies, with a particular knowledge of the Brazilian market. Id. ¶ 15. ITM's business involved brokering relationships between large foreign companies in the security/technology sector with existing Brazilian companies, thereby allowing the foreign companies to overcome local barriers that would otherwise hinder their entry into the Brazilian market. Id. ¶¶ 16–17.

In the summer of 2004, ITM identified Verint, an Israeli vendor that sells telecommunications monitoring systems to law enforcement agencies, as a potential business partner for breaking into the Brazilian market. Id. ¶¶ 2, 17. Verint was not unaware of the potential for selling its products in Brazil—it had previously sold its equipment to the Brazilian federal police—but its local reputation had been damaged when that equipment failed to conform to local standards. Id. ¶¶ 19, 24–25. Despite that setback, Verint expressed an interest in continuing to sell its product in Brazil. After further talks, Verint agreed to allow ITM to develop cooperation programs with local Brazilian companies who would be willing to customize and resell Verint's products in Brazil. Id. ¶¶ 18–21.

The first Brazilian company that ITM approached on behalf of Verint was Digitro, a Brazilian company that sold telecommunications equipment to the Brazilian federal police. Id. ¶ 22. In order to memorialize the parties' obligations regarding that undertaking, ITM and Verint entered into a written agreement on February 22, 2006 (the “Initial Agreement”). Id. ; Initial Agreement, Dkt. No. 41-2. Under the terms of the contract, ITM agreed to make an introduction and recommend Verint to Digitro, as well as to assist in negotiations between the two companies. Initial Agreement § 1.2. In return, ITM was entitled to a 5% commission from Verint's sales to Digitro, for the duration of the Initial Agreement plus six months. Id. Appendix A § 1. The scope of ITM's payments was expressly limited to the 5% commission, referred to as a “finder's fee” in the contract. Specifically, the Initial Agreement provided that ITM would “[b]ear all the expenses incurred by it in the performance of [its] obligations ... and work at its own risk.” Id. § 2.1. Moreover, the agreement stated that, aside from the finder's fee, “[n]o other payment or reimbursement will be due or payable to [ITM],” and “[i]n no event will [Verint] be liable to [ITM] for any business expenses, loss of profits, or incidental, indirect or consequential damages.” Id. § 7. The Initial Agreement expressly expired after twelve months,² and thus was effective until February 21, 2007. Id. § 8.

Later that same year, ITM also identified Suntech as another potential prospect for Verint to develop a business relationship. Am. Compl. ¶¶ 27–30. Suntech, like Digitro, is a Brazilian company in the telecommunications security field. Id. ¶ 27. In order to extend the Initial Agreement to cover sales to Suntech, the parties executed a short, one-page amendment to the agreement on September 11, 2006 (the “September Amendment”). Id. ¶ 31; September Amendment, Dkt. No. 41-3. The amendment was limited in scope, and only modified “certain terms of the [Initial Agreement].” September Amendment. Specifically, ITM agreed to assist Verint in establishing a business relationship with Suntech, in return for a 5% commission from Verint's sales to Suntech. Id. § 2. Aside from that new provision, the September Amendment provided that “all terms and conditions of the [Initial Agreement] will continue to apply to the parties.” Id. § 3.

Shortly after executing the September Amendment, Verint became interested in potentially acquiring Suntech outright, rather than simply selling products to it. Id. ¶¶ 32–33, 36, 38. ITM agreed to assist Verint in the contemplated acquisition, and both parties agreed that a new written agreement was needed to cover ITM's expanded responsibilities, although one was not signed for several months. Id. ¶¶ 32–34, 44. Nevertheless, ITM began gathering information and meeting with Suntech, with the goal of facilitating an acquisition. Id. ¶ 34. Over the course of the next few months, ITM expended considerable effort towards this goal, which included setting up meetings between the parties, persuading Suntech to accept an acquisition, and facilitating negotiations and attempting to “close the gap” between the parties' respective positions. Id. ¶¶ 33, 36–39, 46, 70. These efforts seemed to culminate in December 2006, when Verint executives presented Suntech with a letter of intent and term sheet for the proposed acquisition. ¶¶ 40–41.

As a deal appeared close to fruition, Verint and ITM again agreed to amend their existing agreement to cover the contemplated acquisition, which the parties executed on December 20, 2006 (the “December Amendment”). Id. ¶ 44; December Amendment, Dkt. No. 41-4. As with the September Amendment, the December Amendment was a short one-page amendment that only modified “certain terms” of the prior agreements. December Amendment. The agreement required ITM to use its “best commercial efforts to assist and support [Verint] in its activities regarding the purchase (shares or assets) of Suntech[.]” December Amendment § 2. In return, the agreement provided that “[i]n the event that [Verint] complete the Purchase of Suntech, [ITM] shall be entitled” to 4% of Verint's payment to Suntech at the purchase closing, and 3% of any payments subsequent to closing.³ Id. This compensation was to be “in lieu of any other compensation otherwise set forth” in the prior agreements. Id. Aside from these added provisions, the December Amendment expressly provided that “[e]xcept as specifically included herein, all terms and conditions of the [Initial Agreement] will continue to apply between the parties.” Id. § 3.

Negotiations between Verint and Suntech continued into 2007. After several exchanges of proposals and counter proposals, the parties reached agreement on essentially all major terms in January 2007. Am. Compl. ¶¶ 45–47. However, a term sheet was not signed at that time. Id. ¶ 48. Unbeknownst to ITM, Verint began focusing its efforts on acquiring an unrelated company outside of Brazil, Witness Systems, which was much larger in size than Suntech. Id. On February 4, 2007, Verint announced the acquisition of Witness Systems, and shortly thereafter informed ITM that the Suntech acquisition was “off.” Id. ¶¶ 48–50.

Over the next several months, Verint and Suntech discussed the possibility of resuming their negotiations, notwithstanding the earlier representation that the acquisition was “off.” Id. ¶¶ 54–55. ITM was not involved in these initial discussions, but was later informed by Suntech of Verint's renewed interest. Id. ¶ 56. ITM then again resumed its role facilitating negotiations between the parties, which continued through the summer of 2007. Id. ¶¶ 56–63. During that time, ITM played a critical role in keeping the negotiations alive. Id. ¶ 60. But despite the renewed discussions and assurances that it was negotiating in good faith, Verint continued to hesitate over the acquisition. Id. ¶¶ 62–64. In early September 2007, Verint indicated that “the sides were not close to a deal.” Id. ¶ 66. Finally, on September 10, 2007, Verint “represented concretely that the Suntech acquisition was off.” Id. ITM maintained periodic contact with Verint after that time, but was never involved in any further negotiations between Verint and Suntech, and as far as it was aware, the deal was effectively off. Id. ¶¶ 66–69. Thus, despite spending approximately $350,000 in trying to broker an agreement, no deal was consummated, and Verint did not receive any payments for its efforts. Id. ¶ 76.

In August 2011—nearly four years later—Verint acquired Suntech. Id. ¶ 71. Under the terms of that acquisition, Verint paid Suntech $10.9 million at closing and $23 million in post-closing payments....