Maxcess, Inc. v. Lucent Technologies, Inc.

Decision Date27 December 2005
Docket NumberNo. 05-10636.,05-10636.
Citation433 F.3d 1337
PartiesMAXCESS, INC., Plaintiff-Appellant, v. LUCENT TECHNOLOGIES, INC., Defendant-Appellant, Copper Mountain Networks, Inc., Defendant.
CourtU.S. Court of Appeals — Eleventh Circuit

Fritz J. Scheller, Barry A. Cohen, Kevin J. Darken, Cohen Jayson & Foster, P.A., Christopher P. Jayson, Barry A. Cohen, P.A., Tampa, FL, for Maxcess, Inc.

William E. Adams, Jr., David M. Wells, McGuire, Woods, Battle & Booth, LLP, Jacksonville, FL, for Defendants.

Appeal from the United States District Court for the Middle District of Florida.

Before CARNES, HULL and PRYOR, Circuit Judges.

PER CURIAM:

Plaintiff Maxcess, Inc. ("Maxcess") appeals the district court's dismissal of its lawsuit against Defendants Lucent Technologies, Inc. ("Lucent") and Copper Mountain Networks, Inc. ("Copper Mountain"). After review and oral argument, we affirm.

I. BACKGROUND

In 1998, Maxcess was formed for the purpose of providing local and long-distance telecommunications services via voice over internet. That same year, Lucent and Cooper Mountain developed PathStar, which according to Lucent was "a revolutionary new class of product designed specifically to enable network operators to offer low-cost, reliable local and long-distance voice and data services over IP networks including the Internet."

In 1999, Lucent and Maxcess entered into negotiations regarding PathStar. In February 2000, Lucent and Maxcess entered into a Purchase Agreement for the sale of multiple PathStar systems, certain software licenses, and installation and technical-support services. The Purchase Agreement provided, in part, that Maxcess "SHALL GIVE LUCENT PROMPT WRITTEN NOTICE OF ANY CLAIM. ANY ACTION OR PROCEEDING AGAINST LUCENT MUST BE BROUGHT WITHIN TWENTY-FOUR (24) MONTHS AFTER THE CAUSE OF ACTION ACCRUES."

As things turned out, the only "revolutionary" aspect of PathStar was its colossal failure. For example, Lucent claimed that the PathStar system could handle 7,000 simultaneous calls. However, in reality, the system could handle only 131 to 336 simultaneous calls.

In early 2001, Lucent informed Maxcess that it was discontinuing the PathStar system and would no longer provide Maxcess with support services. In early May 2001, Maxcess ceased doing business and terminated all its employees.

On February 19, 2004, Maxcess filed suit in the Middle District of Florida.1 According to Maxcess's Second Amended Complaint, Lucent engaged in: (1) fraudulent or intentional misrepresentation; (2) negligent misrepresentation; (3) false advertising; (4) fraudulent concealment; (5) fraudulent inducement; (6) violations of Florida's Deceptive and Unfair Trade Practices Act ("FDUTPA"); (7) a conspiracy to defraud; (8) a conspiracy to commit fraudulent inducement; and (9) a conspiracy to commit a violation of FDUTPA. As noted by the district court, Maxcess does not "deny that more than two years have passed since its claims accrued."

The district court dismissed Maxcess's complaint with prejudice because it was (1) filed after the 24-month limitation period contained in the Purchase Agreement, and (2) barred by Florida's economic-loss rule.

Maxcess appeals.

II. DISCUSSION

On appeal, Maxcess argues that the district court erroneously: (1) determined that Florida's economic loss doctrine barred Maxcess's fraud claims;2 (2) concluded that, in any event, all of Maxcess's claims were barred by the limitations period contained in the Purchase Agreement; and (3) considered the Purchase Agreement when considering Lucent's motion to dismiss.3 For the following reasons, we conclude that the district court properly granted Lucent's motion to dismiss.

In this case, the Purchase Agreement between Lucent and Maxcess clearly provides for a two-year limitations period in which Maxcess must bring any and all actions. It is undisputed that all of Maxcess's claims accrued no later than May 2001, and that more than two years passed before Maxcess filed its complaint in federal court. Thus, if the two-year limitations period in the contract is enforceable, Maxcess's federal complaint is untimely and the district court properly dismissed the complaint.

The Purchase Agreement between Lucent and Maxcess contained a choice of law provision designating that the Purchase Agreement would be governed by New York law. Specifically, the Purchase Agreement stated that "[t]he construction and interpretation of, and the rights and obligations of the parties pursuant to this Agreement, shall be governed by the laws of the State of New York."

In New York, "[p]arties to a contract may agree to limit the period of time within which an action must be commenced to a shorter period than that provided by the applicable Statute of Limitations." Incorporated Village of Saltaire v. Zagata, 280 A.D.2d 547, 547, 720 N.Y.S.2d 200 (N.Y.App.Div.2001); see also Certified Fence Corp. v. Felix Indus., Inc., 260 A.D.2d 338, 339, 687 N.Y.S.2d 682 (N.Y.App.Div.1999); Kozemko v. Griffith Oil Co., 256 A.D.2d 1199, 1200, 682 N.Y.S.2d 503 (N.Y.App.Div.1998).

Maxcess stresses that this Court should refuse to apply this axiom of New York law because Florida law does not permit contracting parties to shorten the limitations period. See Fla. Stat. § 95.03 ("Any provision in a contract fixing the period of time within which an action arising out of the contract may be begun at a time less than that provided by the applicable statute of limitations is void."). However, under Florida law, courts will enforce "choice-of-law provisions unless the law of the chosen forum contravenes strong public policy." Mazzoni Farms, Inc. v. E.I. DuPont de Nemours & Co., 761 So.2d 306, 311 (Fla.2000) (citations omitted); see Burroughs Corp. v. Suntogs of Miami, Inc., 472 So.2d 1166, 1167-69 (Fla.1985).

In Burroughs, the Florida Supreme Court determined that a "contractual provision shortening the period of time for filing a suit was not contrary to a strong public policy." 472 So.2d at 1169; see Mazzoni Farms, 761 So.2d at 313 (addressing an agreement that released the defendant from all claims, including fraud claims, and stating that "[w]hile we both recognize and reaffirm Florida's policy disfavoring fraudulent conduct, we are mindful of the rigorous standard employed in determining whether to invalidate choice-of-law provisions. Accordingly, we hold that enforcement of the choice-of-law provision is not so obnoxious to Florida public policy as to render it unenforceable."). Because the two-year limitations period in the Purchase Agreement between Lucent and Maxcess does not violate strong public policy in Florida and is perfectly legitimate and enforceable under New York law, Maxcess was required to file any action within two years. See John J. Kassner & Co. v. City of N.Y., 46 N.Y.2d 544, 415 N.Y.S.2d 785, 389 N.E.2d 99, 103 (1979) ("The parties may cut back on the Statute of Limitations by agreeing that any suit must be commenced within a shorter period than is prescribed by law. Such an agreement does not conflict with public policy but, in fact, more effectively secures the end sought to be attained by the statute of limitations.") (internal citations omitted). Because Maxcess failed to do so, its lawsuit was untimely, and the district court correctly dismissed the suit with prejudice.

In an attempt to persuade this Court to the contrary, Maxcess argues: (1) the shortened contractual limitations period "is unenforceable because the entire [Purchase] Agreement was fraudulently induced"; (2) the shortened contractual period "must be understood to apply only to claims arising out of this contract or the use or performance of any product, licensed materials or services, and not to the pre-contractual fraudulent inducement claims"; and (3) the choice-of-law provision "does not apply to Maxcess's claims."

With regard to Maxcess's claim that the shortened contractual limitations period is unenforceable, we recognize that Maxcess argues that if the Purchase Agreement was fraudulently induced and, thus, void, then there is no contractual statute of limitations to be enforced. According to Maxcess, its fraud claims cannot be barred by a contract that is void. However, we reject this argument.

New York law provides that the shortened limitations period in a contract is enforceable "absent a showing of fraud, duress or misrepresentation" with respect to the actual shortened limitations period. See Kozemko, 256 A.D.2d at 1200, 682 N.Y.S.2d 503 (determining that a shortened contractual limitations period "was not unreasonable and that plaintiffs have failed to demonstrate any fraud, duress or misrepresentation regarding the agreement to shorten the period of limitations")4 ; see also Zagata, 280 A.D.2d at 548, 720 N.Y.S.2d 200 ("Where the party against which an abbreviated Statute of Limitations is sought to be enforced does not demonstrate duress, fraud or misrepresentation in regard to its agreement to the shortened period, it is assumed that the term was voluntarily agreed to.") (citations omitted); Snyder v. Gallagher Truck Ctr., Inc., 89 A.D.2d 705, 706, 453 N.Y.S.2d 826 (N.Y.App.Div.1982) ("Plaintiff has demonstrated no duress, fraud or misrepresentation in regard to his agreement to the shortened period and it must, therefore, be assumed that the term was agreed to voluntarily."). However, Maxcess fails to even allege that Lucent engaged in any particular fraud with respect to either the choice-of-law provision or the shortened limitations period. Consequently, its claim that the shortened contractual limitations period is unenforceable due to Lucent's alleged pre-contractual fraud is without merit.5

As for Maxcess's argument that the shortened contractual period does not apply to its "pre-contractual fraudulent inducement claims," the Purchase Agreement clearly states that "ANY ACTION OR PROCEEDING AGAINST LUCENT MUST BE BROUGHT WITHIN TWENTY-FOUR (24) MONTHS AFTER...

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