Next Millennium Telecom Co. v. Am. Signal Corp.
| Decision Date | 20 July 2020 |
| Docket Number | Case No. 20-CV-178-JPS |
| Citation | 473 F.Supp.3d 875 |
| Parties | NEXT MILLENNIUM TELECOM CO., Plaintiff, v. AMERICAN SIGNAL CORPORATION, Defendant. |
| Court | U.S. District Court — Eastern District of Wisconsin |
Timothy D. Edwards, Edwards Law Group LLC, Madison, WI, Mohamed Zaher, Advanta Law PLC, Southfield, MI, for Plaintiff.
Patrick M. Harvey, Husch Blackwell LLP, Milwaukee, WI, for Defendant.
On February 5, 2020, Plaintiff, Next Millennium Telecom Company, filed this action pursuant to 28 U.S.C. § 1332, claiming that Defendant, American Signal Corporation, breached its contract with Plaintiff when it delivered several shipments of sub-par sirens. (Docket #1). On April 1, 2020, Defendant filed a motion to dismiss, and on April 21, 2020, Plaintiff timely filed an amended complaint. (Docket #7, #11). On May 5, 2020, Defendant filed a second motion to dismiss. (Docket #12). That motion is now fully briefed, and includes a contested motion for leave to file a sur-reply. (Docket #18). For the reasons explained below, the Court will grant the motion to dismiss in part and dismiss the second, fourth, and fifth claims of the amended complaint. The first motion to dismiss, as well as the motion for leave to file a sur-reply, will be denied as moot.
Federal Rule of Civil Procedure 12(b) provides for dismissal of complaints which, among other things, fail to state a viable claim for relief. Fed. R. Civ. P. 12(b)(6). To state a claim, a complaint must provide "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). In other words, the complaint must give "fair notice of what the ... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The allegations must "plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level[.]" Kubiak v. City of Chi. , 810 F.3d 476, 480 (7th Cir. 2016) (citation omitted). Plausibility requires "more than a sheer possibility that a defendant has acted unlawfully." Olson v. Champaign Cty. , 784 F.3d 1093, 1099 (7th Cir. 2015) (citations and quotations omitted). In reviewing the complaint, the Court is required to "accept as true all of the well-pleaded facts in the complaint and draw all reasonable inferences in favor of the plaintiff." Kubiak , 810 F.3d at 480–81. However, the Court "need not accept as true legal conclusions, or threadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Brooks v. Ross , 578 F.3d 574, 581 (7th Cir. 2009) (citations and quotations omitted).
Plaintiff is a Saudi Arabian information and technology company that contracted with the Saudi government to purchase and implement a mass emergency alert system for Saudi Arabia's Eastern Province. Defendant is a Wisconsin-based company that manufactures a mass alarm system called "NexGen." At some point, Plaintiff and Defendant began negotiations regarding the sale of mass alarm systems for use by the Saudi government. Defendant prepared a proposal, in which it offered to sell Plaintiff state-of-the-art siren systems and provide technical installation support to Plaintiff.
In January 2015, employees from the plaintiff company and agents of the Saudi Ministry of Civil Defense went to Milwaukee, Wisconsin to "ensure the legitimacy of [Defendant's] proposal and to verify that Defendant's emergency alert/mass notification siren system met all the specifications and requirements of the Saudi Arabian government." (Docket #11 ¶ 10). During this visit, Defendant made the following representations to Plaintiff and the Saudi Ministry of Civil Defense:
On April 16, 2015, after the visit to Milwaukee, Defendant entered into "A Memorandum of Understanding on Supplying [sic] of (690) electronic omnidirectional early warning sirens and (12) control points system for the eastern province" ("the MOU") with Plaintiff. (Docket #11-1). The MOU purports to be an "agreement" to carry out the supply and instillation of 690 sirens on the Eastern Province of Saudi Arabia. Id. at 1–2. The parties "agree[d]" that the MOU's purpose was "to stimulate and support upgrade, supply, and associated activities in accordance with the following scope of collaboration." Id. at 2. The "scope" explained that:
The MOU provides for the terms of payment and delivery. Id. at 6. It also includes a timespan for the duration of the agreement, as well as termination procedures, explaining that termination would "commence upon signature by both parties and shall remain in force for [a] period of (2) years." Id. at 6. The MOU refers to the NEXTEL purchase order (hereinafter, "the purchase order") throughout, and does not claim to be the final iteration of any agreement. Notwithstanding a section regarding intellectual property rights,2 the MOU does not contain any language indicating that the parties foresaw an additional written agreement.
The MOU seems to be a contract; however, toward the end of the agreement, the MOU contains language that renders it somewhat ambiguous. Under "compensation," the MOU states that Id. Underneath this is a choice-of-law provision and a choice of venue provision for the "Agreement." Id. Finally, the agreement states, Id. at 8.
The purchase order,3 which is referenced throughout the MOU, contains the following information: a description of the items to be shipped (including model and unit numbers); the quantity of the items to be shipped; and the price of the items to be shipped. (Docket #15-1 at 2). The date on the purchase order reads:
This could be April 3, 2015, or March 4, 2015, depending on which date format the contract drafter followed. Additionally, it is possible that the first integer might be a 1, rendering the purchase order date either January 3, 2015 or March 1, 2015. In any scenario, however, the purchase order was made at least several days before the first party signed the MOU, on April 7, 2015.
In June 2015, Plaintiff received the first shipment of sirens from Defendant. The shipment was incomplete because it was "shipped without the accompanying control systems and related software packages," as provided for under the MOU. (Docket #11-1 ¶ 24).
In September 2015, Plaintiff received another shipment that was also incomplete, this time because it did not include necessary remote terminal unit ("RTU") controls. Id. ¶ 25. These RTU controls were not shipped until January 2016. Defendant also failed to provide "required on-site factory support training" that the MOU contemplated. Id. ¶ 26.
After receiving these shipments, Plaintiff's engineers inspected the sirens and determined that they "had never been properly tested nor placed for use in the field"; that the RTU control systems were not compatible with the sirens; that the RTU controls were deficient; and that the entire system required a missing component called NEXGEN CSC-960, which was not delivered "due to change in the original design." Id. ¶¶ 28–30. Moreover, once the sirens were installed, they "failed to emit sufficient sound so as to effectively alert those located within the respective geographic target areas." Id. ¶ 33.
Plaintiff alleges that "at all times relevant" it repeatedly demanded that Defendant either refund the payments, compensate for necessary repairs and replacements, or make repairs under the warranty. Id. ¶¶ 37, 42. Plaintiff brings claims for breach of contract under the MOU, unjust enrichment, breach of express and implied warranties, fraudulent inducement, and rescission. Each of these claims will be analyzed in turn.
3.1 Count One – Breach of Contract
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