Monex Financial Servs. v. Nova Information Systems

• Decision Date: 21 September 2009
• Docket Number: No. 07 Civ. 5837(WHP).,07 Civ. 5837(WHP).
• Parties: MONEX FINANCIAL SERVICES LTD., and Planet Payment, Inc., Plaintiffs, v. NOVA INFORMATION SYSTEMS, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

657 F.Supp.2d 447

MONEX FINANCIAL SERVICES LTD., and Planet Payment, Inc., Plaintiffs, v. NOVA INFORMATION SYSTEMS, INC., Defendant.

No. 07 Civ. 5837(WHP).

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

September 21, 2009.

COPYRIGHT MATERIAL OMITTED

Richard L. Crisona, Esq., Abelman Frayne & Schwab, New York, NY, for Plaintiffs.

Charles E. Dorkey, III, Esq., McKenna Long & Aldridge, New York, NY, for Defendant.

MEMORANDUM & ORDER

WILLIAM H. PAULEY III, District Judge:

Plaintiffs Monex Financial Services Ltd. ("Monex") and Planet Payment, Inc. ("Planet Payment" and collectively, "Plaintiffs") bring this action against Defendant Nova Information Systems, Inc. ("Nova") for breach of contract. Plaintiffs allege that contrary to their agreement, Nova failed to (1) use reasonable efforts to help Plaintiffs secure certain business and (2) continue certain revenue-share payments to Plaintiffs. Nova moves for summary judgment on both claims and Plaintiffs move for summary judgment on the second claim. For the following reasons, Nova's motion for summary judgment is granted in part and denied in part and Plaintiffs' motion for partial summary judgment is denied.

BACKGROUND

I. The Parties

Monex and Planet Payment offer multi-currency credit card processing services, including Dynamic Currency Conversion ("DCC"). (Plaintiffs' Rule 56.1 Statement dated Feb. 27, 2009 ("Pls. 56.1 Stmt.") ¶ 1.) DCC is a process by which credit card purchases made by a cardholder traveling abroad are converted at the point of sale into the cardholder's home currency. (Nova's Rule 56.1 Statement dated Feb. 27, 2009 ("Nova 56.1 Stmt.") ¶ 4; Pls. 56.1 Stmt. ¶ 2.) Thus, through a real time conversion, the consumer is billed in its home currency and the merchant is paid in local currency. (Pls. 56.1 Stmt. ¶ 2.) For this service, the consumer pays a fee of 3% of the face amount of the transaction. (Pls. 56.1 Stmt. ¶ 2.) The fee is usually divided among the merchant, the DCC processor and the merchant's credit card processor. (Pls. 56.1 Stmt. ¶ 2.) Nova, which known today as Elavon, Inc., provides integrated payment processing services for credit card transactions to merchants and financial institutions. (Pls. 56.1 Stmt. ¶ 17.)

II. The Teaming Agreement

On December 10, 2001, Planet Payment, Monex, Planet Monex, Inc., and Global Card Services, Inc. ("GCS") executed the "Planet Monex, Inc. Teaming Agreement with Global Card Services, Inc." (the "Teaming Agreement"). (Nova 56.1 Stmt. ¶ 1; Pls. 56.1 Stmt. ¶ 3.) GCS, now owned by Nova, provides a "Gateway" that facilitates the delivery of credit card transactions from a merchant to a credit card processor. (Nova 56.1 Stmt. ¶ 5; Pls. 56.1 Stmt. ¶ 19.) The "Purpose" section of the Teaming Agreement provides: "The parties shall work together to develop the systems necessary to enable DCC services to be provided to their respective clients. The parties wish to work together to provide DCC services to GCS Merchants and so that Planet Payment can use and sell the White Label Products to provide any portion of the [Planet Payment Solution] including processing of DCC services to Planet Payment Merchants." (Pls. 56.1 Stmt. ¶ 4.) Thus, the Teaming Agreement envisions two principal areas of cooperation: (1) between Planet Payment and GCS to supply Planet Payment DCC services to GCS customers; and (2) GCS's provision and operation of unbranded (or "White Label") Gateway services to Planet Payment for Planet Payment's re-sale to its customers under its own brand. (Declaration of Alan F. Kaufman dated Feb. 27, 2009 ("Kaufman Decl.") Ex. A: Teaming Agreement at 1.) As part of the Teaming Agreement, GCS agreed to modify its Gateway software to enable Planet Payment to process DCC transactions for merchants using GCS's Gateway. (Teaming Agreement at 2.)

The Teaming Agreement provided that net revenue from the DCC operations would be split evenly between the parties for merchants using the GCS Gateway who chose Planet Payment as their DCC provider. (Teaming Agreement at 3.) Planet Payment also agreed to pay GCS 0.1% of the dollar volume of DCC services Planet Payment provided to its customers on the "White Label Products." (Teaming Agreement at 3.) The "Revenue Share" provision of the Teaming Agreement also provided that the parties would share revenue from customers where one or the other was excluded. (Teaming Agreement at 3.) Specifically, the Teaming Agreement provided, "for all DCC business signed by Planet Payment with GCS Merchants . . . that excludes GCS, GCS shall receive 50% of the DCC revenue derived by Planet Payment[, and] . . . if GCS signed business for DCC that excludes Planet Payment then GCS shall pay Planet Payment 50% of the DCC revenue derived by GCS." (Teaming Agreement at 3.) However, this revenue share for business that excluded one party included a provision that "if Planet Payment is excluded . . . because Planet Payment can not offer the merchant a specific solution requested . . ., or Planet Payment after a reasonable period can not, in the merchant's sole discretion, adequately address creditworthiness or other significant economic concerns raised by the merchant, then Planet Payment shall not be entitled to 50% of the DCC revenue derived by GCS from [that] merchant." (Teaming Agreement at 3.)

The "Term" provision of the Teaming Agreement provides:

The initial term of [the Teaming Agreement] shall be 5 years with regard to new business and the parties shall continue to process transactions for merchants whose business is procured under [the Teaming Agreement] after the initial term of this [Teaming Agreement], upon the terms and conditions set forth in [the Teaming Agreement] as long as the merchant continues to use the GCS or White Label Products.

(Teaming Agreement at 3.)

The Teaming Agreement also provides that "[i]n the event that a GCS Merchant or prospective merchant desires to use another DCC solution and after reasonable effort on GCS' part such merchant cannot be convinced to utilize the [Planet Payment] Solution, GCS shall be free to support such merchant subject to the revenue share as set forth above." (Teaming Agreement at 4.) Additionally, the parties agreed to "formulate a sales plan" and "use reasonable efforts to assist the other in selling and fulfilling the services contemplated hereunder." (Teaming Agreement at 5.)

III. Princess

Princess Cruise Lines ("Princess") has been a client of GCS since at least 1996. (Nova 56.1 Stmt. ¶ 21.) In September 2002, Plaintiffs began to solicit Princess for the provision of DCC services. (Plaintiffs' Disputed 56.1 Statement dated Mar. 20, 2009 ("Pls. Disputed 56.1 Stmt.") ¶ 21.) After Plaintiffs signed a non-disclosure agreement with Princess, they engaged in discussions. (Pls. Disputed 56.1 Stmt. ¶ 22.) However, Princess never entered into an agreement with Plaintiffs. (Nova 56.1 Stmt. ¶¶ 22-24.) Instead, Princess chose Dynamic Currency Conversion, Inc. ("DCCI") as its DCC provider and entered into a contract with DCCI on December 31, 2003. (Nova 56.1 Stmt. ¶ 25.) The parties dispute whether GCS made any efforts to promote Plaintiffs' DCC services to Princess. (Pls. Disputed 56.1 Stmt. ¶ 23; Nova's Counterstatement to Plaintiffs' Disputed 56.1 Stmt. dated Mar. 30, 2009 ("Nova Disputed 56.1 Stmt.") ¶ 23.) The parties also dispute whether GCS was working with DCCI on a competing DCC solution for Princess at the same time Plaintiffs were trying to sign Princess's business. (Pls. Disputed 56.1 Stmt. ¶ 28; Nova Disputed 56.1 Stmt. ¶ 28.)

After DCCI and GCS began providing DCC services to Princess, GCS initially refused to pay Plaintiffs a 50% share of the revenue. (Nova 56.1 Stmt. ¶ 28.) Following an exchange of letters and emails that included threats of legal action by Plaintiffs against GCS, the parties executed a letter dated July 21, 2005 (the "July 2005 Letter") agreeing to bank routing instructions, and GCS and its parent company began paying the revenue share. (Nova 56.1 Stmt. ¶ 29; Kaufman Decl. Ex. U: Letter from Mark Silverman to Frank Murphy dated Apr. 30, 2004; Ex. V: Letter from Mark Silverman to Frank Murphy and Philip Beck dated July 15, 2005; Ex. Y: Letter from Frank Murphy to Mark Silverman dated Mar. 30, 2004; Letter from Frank Murphy to Mark Silverman dated May 26, 2004.) The July 2005 Letter is addressed to Ron Nation of First Horizon Merchant Services, Inc. ("First Horizon") and Mark Silverman of GCS, and is signed by Philip D. Beck on behalf of Planet Payment, Frank Murphy on behalf of Monex, and both Murphy and Beck on behalf of Planet Monex, Inc. (Kaufman Decl. Ex. AA: July 2005 Letter.) The July 2005 Letter only provides bank routing instructions for Planet Payment's account, and states:

By their signature hereto Planet [Payment], Monex, and [Planet Monex, Inc.] have agreed that GCS and/or First Horizon Merchant Services, Inc. on behalf of GCS is hereby irrevocably authorized and requested to make payment of all amounts now due, or due hereafter from GCS under the [Teaming Agreement], to the above account in Planet [Payment]'s name. Planet [Payment] has agreed to remit Monex's share within three business days of receipt.

(July 2005 Letter.) The parties dispute whether the July 2005 Letter settled the dispute or represented GCS's capitulation regarding the revenue share requirement. The July 2005 Letter does not answer this question because it is bereft of any other terms. (Nova 56.1 Stmt. ¶ 29; Pls. Disputed 56.1 Stmt. Response ¶ 29.)

IV. Acquisition of GCS by Nova

In August 2007, First Horizon Merchant Services, Inc. ("First Horizon") acquired GCS as a wholly-owned subsidiary. (Pls. 56.1 Stmt. ¶ 17.) On January 31, 2006, First Horizon's parent company entered into a Merchant Asset Purchase Agreement (the "MAPA") with Nova to sell First Horizon's assets, including GCS, to Nova. (Pls. 56.1 Stmt. ¶ 18; Nova 56.1 Stmt. ¶ 30.) The effective date of the MAPA was March 1, 2006. (Nova 56.1 Stmt. ¶ 30....