N.Y. Internet Co. v. Jobdiva Inc. (In re N.Y. Internet Co.)
| Decision Date | 13 April 2018 |
| Docket Number | Case No. 17-10326 (SHL),Adv. Proc. No. 17-01045 (SHL) |
| Parties | In re: THE NEW YORK INTERNET CO., INC. Debtor. THE NEW YORK INTERNET CO., INC. Plaintiff, v. JOBDIVA INCORPORATED, Defendant. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
APPEARANCES:
CHARLES E. BOULBOL, PC
Counsel for The New York Internet Co., Inc.
26 Broadway, 17th Floor
New York, NY 10004
By: Charles E. Boulbol, Esq.
Counsel for JobDiva Inc.
450 Seventh Avenue, 33rd Floor
New York, NY 10123
By: Howard I. Elman, Esq.
Yelena Rapoport, Esq.
Before the Court is the motion filed by JobDiva Inc. (the "Defendant" or "JobDiva") seeking dismissal of the complaint filed by The New York Internet Company, Inc. (the "Plaintiff" or "NYI"). See generally Defendant's Memorandum of Law in Support of Its Motion to Dismiss the Complaint (the "Motion") [ECF No. 1-19].1 For the reasons stated below, the Court grants the Motion in part and denies the Motion in part.
Plaintiff is in the business of providing various internet-related services to third parties and operates a data center located at 100 William Street, New York, New York 10038 (the "Data Center"). Complaint ¶ 3 [ECF No. 1-2].
On November 18, 2011, NYI and JobDiva entered into a Server Colocation Agreement (the "SCA") (Complaint Ex. A) [ECF No. 1-3] pursuant to which NYI agreed to provide, and JobDiva agreed to pay for, server colocation services for an initial term commencing on October 25, 2011 and continuing through October 24, 2013 ("Initial Term").2 SCA at 1, § 4.01. By its terms, the SCA automatically renewed for successive one-year periods unless either party exercised its right to terminate on at least 90 days' notice before the expiration of the then-current term. Id. § 4.01. Importantly, the SCA provided that it could "be modified only by a written agreement of modification signed by all of the parties hereto." Id. § 8.08 (emphasis added).
The SCA set forth general terms governing the parties' transactions, including confidentiality obligations (see id. Art. V), indemnification obligations (see id. § 7.01), and the governing law—that of New York (see id. § 8.01). But the SCA did not contain a specific list ofservices or quantity of space to be provided by NYI, or prices for such items; rather, it contemplated that the parties would enter into separate agreements in the form of service orders for specific services. See id. §§ 2.01(c), 2.04. The SCA provided that NYI had a right to terminate any service order and that service orders could expire or terminate by their own terms. See id. § 2.03. The SCA stated that, at JobDiva's request, NYI could also provide other services in connection with installing, maintaining, or disconnecting JobDiva's equipment, at the rates and under the terms set forth in separate service orders. See id. § 2.01(c). The SCA further provided that the initial set-up fees, monthly capacity rates, and colocation rates were set by a service order dated October 31, 2011 (the "October 2011 Order") (Complaint Ex. B) [ECF No. 1-4], which was incorporated explicitly into the SCA. See SCA § 3.01.
Between October 2011 and April 2016, NYI and JobDiva entered into more than a dozen service orders, pursuant to which NYI agreed to provide colocation services to JobDiva in exchange for both stand-alone and monthly recurring charges. See Complaint ¶¶ 4-8; id. Exs. B-E [ECF Nos. 1-4, 1-5, 1-6, 1-7]; Affidavit of Charbel Rouhana in Support of Defendant's Motion to Dismiss the Complaint ("Charbel Affidavit") Ex. 3 [ECF No. 1-23].3 Each service order contained its own duration provisions. For example, the October 2011 Order required acceptance by JobDiva of a "2 Year Contract" (October 2011 Order at 1-2), while another service order dated October 30, 2013 required a "36 Month Contract" (the "October 2013 Order") (Complaint Ex. C at 1-2). Several other service orders were designated as "Co-Terminus" with the SCA (see, e.g., Charbel Affidavit Ex. 3 at 7, 9, 10); some carried a "Month to Month Term" (see, e.g., Complaint Ex. E at 1, 4, 7); and still others included no specific termbut merely provided for "Non Recurring Charges" or "Monthly Recurring Charges" (see, e.g., id. Ex. E at 19-21). None of the service orders were signed by a representative of NYI; instead, all were signed by only a representative of JobDiva, or by no one at all. See Complaint Exs. B-E.
In 2014, NYI sought to amend the SCA with a service order form that proposed to extend the SCA from September 25, 2014 through September 24, 2017 (the "Purported 2014 Addendum") (Complaint Ex. D) [ECF No. 1-6]. JobDiva's Vice President of Technology signed the Purported 2014 Addendum on November 20, 2014, but NYI itself never signed the document. Id. In July 2016, after approximately two years of the three-year extension contemplated by the Purported 2014 Addendum, JobDiva notified NYI in writing that JobDiva was terminating the SCA as of October 24, 2016 (the "Termination Letter") (Complaint Ex. F) [ECF No. 1-8]. A few days later, NYI sent JobDiva a letter objecting to JobDiva's termination notice, and stating that Defendant had no right to terminate the SCA prior to September 24, 2017. Complaint Ex. G [ECF No. 1-9]. On October 16, November 16, and December 16, 2016, NYI submitted invoices to JobDiva in accordance with the terms of the SCA, each seeking payment of monthly recurring charges in the amount of $92,118.50 (the "Invoices") (Complaint Exs. H, J, K) [ECF Nos. 1-10, 1-12, 1-13].
During the month of October 2016, JobDiva attempted to remove all of its equipment from the Data Center (Complaint ¶ 14), but JobDiva alleges that NYI would not allow it to complete the task until February 2017 (Motion at 6). The parties disagree on whether JobDiva paid the associated disconnection, removal services, and freight elevator charges. Compare Complaint ¶ 14 (), with Motion at 6-7 nn. 2, 3 ().
On December 21, 2016, NYI commenced an action against JobDiva in the Supreme Court of New York, County of New York. See The New York Internet Co., Inc. v. JobDiva, Inc., Index No. 656678/2016 (Sup. Ct. N.Y. Cnty.); see also Complaint. In the Complaint, NYI argues that its Purported 2014 Addendum extended the SCA through September 24, 2017, and that the Termination Letter and subsequent removal of Defendant's equipment from the Data Center in October 2016 constituted a breach and anticipatory repudiation of the SCA and Purported 2014 Addendum. See Complaint ¶¶ 4-25. Under its first cause of action for breach of contract, Plaintiff seeks damages of $280,855.50 plus interest, which is the sum of the Invoices issued October through December 2016.4 See Complaint ¶ 17, at 5. Plaintiff's second cause of action for anticipatory repudiation seeks $1,017,803.50 in monthly recurring charges for the months of November 2016 through September 2017. See id. ¶¶ 23-25, at 5.
NYI filed for Chapter 11 relief in this Court on February 14, 2017, two months after filing the Complaint in New York State Court. See Voluntary Petition [Case No. 17-10326, ECF No. 1]. A few days later, JobDiva filed its Motion to dismiss the State Court action arguing that the SCA was not validly extended by the Purported 2014 Addendum. See Motion at 2, 8-10. JobDiva's Motion further contends that, even if validly extended, the SCA did not itself establish any specific payment obligations for services or use of the Data Center, and all service orders were either terminated by the Termination Letter or expired on their own terms. See id. at 2-3, 9, 10-13. NYI removed the State Court action to this Court a little more than a month later and the Motion to dismiss came with it. See The New York Internet Co., Inc. v. JobDiva, Inc. Case No. 1:17-cv-02002 (S.D.N.Y.). The Court held a hearing on the Motion on October 5, 2017.
"It is well settled that when a case has been removed to this Court from the state court, federal [procedural] law is applied as though the action was originally commenced here." Leadsinger, Inc. v. Cole, 2006 WL 2266312, at *10 (S.D.N.Y. Aug. 4, 2006) (quoting Rabbi Jacob Joseph School v. Province of Mendoza, 342 F. Supp. 2d 124, 127 (E.D.N.Y. 2004)) (alteration in original); see Fed. R. Civ. P. 81(c)(1) (); G.G.G. Pizza, Inc. v. Domino's Pizza, Inc., 67 F. Supp. 2d 99, 101-02 (E.D.N.Y. 1999) ( ) (quoting 14C Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 3738, at 390-91 (1998)) (first omission in original).
While Defendant filed this Motion under Rule 3211(a)(7) of the New York Civil Practice Law and Rules, the Court considers it as a motion to dismiss for failure "to state a cause of action" under Federal Rule of Civil Procedure 12(b)(6).5 See Fed. R. Civ. P. 12(b)(6) (); Perry v. Safeco, 2017 WL 655172, at *1 n. 2 (E.D. Va. Feb. 16, 2017) (); see also Rubeor v. Town of Wright, 191 F. Supp. 3d 198, 203 n. 2 (N.D.N.Y. 2016) () (citations omitted); Pena v. City of Rio Grande City, 879 F.3d 613, 617 (5th...
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