The Douglas Stewart Co. v. Hiqo Sols.

• Decision Date: 29 August 2022
• Docket Number: CV420-101
• Parties: THE DOUGLAS STEWART COMPANY, INC., Plaintiff, v. HIQO SOLUTIONS, INC., Defendant.
• Court: U.S. District Court — Southern District of Georgia

THE DOUGLAS STEWART COMPANY, INC., Plaintiff, v. HIQO SOLUTIONS, INC., Defendant.

No. CV420-101

United States District Court, S.D. Georgia, Savannah Division

August 29, 2022

ORDER

WILLIAM T. MOORE, UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF GEORGIA

Before the Court are Plaintiff The Douglas Stewart Company Inc.'s ("DSC") Motion for Partial Summary Judgment (Doc. 76), and Defendant HiQo Solutions, Inc.'s ("HiQo") Motion for Summary Judgment (Doc. 75). Also before the Court is HiQo's Motion to Exclude or Strike Plaintiff's Liability and Damages Expert. (Doc 82.) The parties' respective motions are opposed. (Docs. 86, 90, 92.) For the following reasons, HiQo's motion for summary judgment (Doc. 75) is GRANTED, and DSC's motion for partial summary judgment (Doc. 76) is DENIED. Additionally, HiQo's motion to exclude (Doc. 82) is DENIED AS MOOT.

BACKGROUND^[1]

I. INTRODUCTION

At the core of this case is a dispute about the scope of a contract HiQo entered to provide certain technology services to DSC and whether HiQo breached that contract. DSC markets itself as a distributor and business service provider that specializes in servicing education-focused and collegiate retailers throughout the United States and Canada.^[2] (Doc. 78 at ¶ 1; Doc. 93 at ¶ 1.) In 2016, DSC decided to update its website with the aim of improving the website's functionality and available features. (Doc. 78 at ¶ 5; Doc. 93 at ¶ 5.) Magento is an opensource e-commerce platform that DSC utilizes on its website.^[3] (Doc. 78 at ¶ 6; Doc. 93 at ¶ 6.) DSC's desired update included migrating the website from Magento 1 to Magento 2. (Doc. 78 at ¶ 6; Doc. 93 at ¶ 6.)

DSC engaged two third party companies-FarWell and Swarming Technology-to identify deficiencies in its former website. (Doc. 78 at ¶ 7; Doc. 93 at ¶ 7.) As part of this engagement, Swarming created a proposal for improving the performance, search capabilities, and design of DSC's website (the "Swarming Proposal"). (Doc. 78 at ¶ 8; Doc. 93 at ¶ 8.) DSC provided the Swarming Proposal to three software development service providers-Swarming, Acumium, and HiQo.^[4] (Doc. 78 at ¶ 9; Doc. 93 at ¶ 9.) DSC contends that it asked each company to quote a project that would upgrade DSC's website in accordance with the proposal; however, HiQo disputes that it ever intended to quote a project that met all the specifications set forth in the Swarming Proposal. (Doc. 78 at ¶ 10; Doc. 93 at ¶ 10.)

II. THE MASTER SERVICES AGREEMENT

In late November 2016, DSC and HiQo entered into a contract they refer to as the Master Services Agreement (the "MSA"). (Doc. 78 at ¶ 14; Doc. 93 at ¶ 14.) The MSA is a standard form contract that HiQo routinely uses with clients. (Doc. 75, Attach. 2 at ¶ 4; Doc. 8 9 at ¶ 4.) Pursuant to the MSA, HiQo agreed to provide "software and other development services for and on behalf of [DSC] as more particularly described in any Task Order or as otherwise agreed to by the Parties as evidenced or confirmed in writing." (Doc. 79, Attach. 6 at 3.) HiQo also agreed that all "Deliverables [would] be developed and delivered to [DSC] or its Clients in accordance and compliance with the Specifications, industry standards and all applicable laws, rules and regulations." (Id. at 5.) The MSA defined "Deliverables" as "the documents, code, Content, Software, websites and other materials and/or products to be developed or produced by HiQo for and on behalf of [DSC] . . . under and pursuant to this Agreement [.]" (Id. at 2.) The MSA also warranted that "the Deliverables [would] conform to the Specifications; and, [] all services provided by HiQo under and pursuant to [the MSA would] be performed and provided in a manner consistent with industry standards for the type of Services provided [.]" (Id. at 9.) The MSA defined "Specifications" as "the requirements for the design and development of the Deliverables hereunder, including, operational and functional capabilities and performance requirements as set forth in an applicable Task Order pursuant to [the MSA]." (Id. at 2.)

Under the MSA, DSC could contract for HiQo's services through one of four project models. (Id. at 4-5.) During their business relationship, the parties utilized the Project T&M and Team T&M models. (Doc. 75, Attach. 2 at ¶ 32; Doc. 89 at ¶ 32.) In relevant part, the Project T&M model is described in the MSA as follows:

HiQo will provide software development services under a Task Order where the project scope is fixed. HiQo will staff such project at HiQo's discretion and HiQo is under no obligation to maintain the initial team structure. A Task Order is required for each project and such Task Order must contain at least a period of performance and the hourly rates for each role. Team members will only work on tasks entered in Jira.^[5] All hours worked are billable subject to acceptance of a [DSC] project manager. HiQo will submit a weekly report of hours spent, any of which can be disapproved by [DSC] within five (5) business days. Any hours not disapproved with this five-day period will be deemed approved.

(Doc. 79, Attach. 6 at 4.) The Team T&M model is also outlined in the MSA:

HiQo will provide software development resources (staff) under a Task Order where the resources are fixed. [DSC] can book resources for any period of time between 14 days and one year, where the resource utilization needs to be at either 50% or 100% for all roles for the period of the engagement ... A Task Order is required for each team and such Task Order must contain at least a list of resources along with their booked period of performance and utilization . . . . Resources under such a TTM contract work managed in their tasking by [DSC] and HiQo shall not be responsible for the tasking of such resources

(Id.)

When finalizing the MSA, HiQo agreed to modify a provision in the contract allowing payments to be made in U.S. Dollars but did not agree to modification of a provision governing the venue for any legal dispute stemming from the contract. (Doc. 75, Attach. 2 at ¶¶ 10, 11; Doc. 89 at ¶¶ 10,11.) DSC did not object to or request modification of Section 7 of the MSA, entitled "Discretion in Performing Work and Target Dates," which states

HiQo shall have the right to determine the method, details, location, time and means of performing the work agreed to hereunder. [DSC] acknowledges and agrees that delays in developing software may occur, and that although HiQo will take all reasonable steps to mitigate and minimize any such delays, HiQo shall not be penalized or held accountable for failure to meet such target dates unless otherwise stipulated in a Task Order.

(Doc. 75, Attach. 2 at ¶ 12; Doc. 89 at ¶ 12; Doc. 79, Attach. 6 at 8.) The parties agree that no Task Order was ever signed by the parties that identified an agreed-upon or stipulated target date. (Doc. 75, Attach. 2 at ¶ 20; Doc. 89 at ¶ 20.) DSC also did not object to or request modification of Section 8 of the MSA, entitled "Acceptance and Corrections of Defects in Deliverables." (Doc. 75, Attach. 2 at ¶ 14; Doc. 89 at ¶ 14; Doc. 79, Attach. 6 at 8.) In relevant part, Section 8 states that "HiQo will perform testing and debugging of the Deliverables prior to their delivery to [DSC] and [DSC] understands that despite thorough testing bugs may occur." (Doc. 79, Attach. 6 at 8.)

Section 23 of the MSA, "Entire Agreement: No Waiver" sets forth the following:

This agreement, any Task Order signed pursuant to this Agreement, Exhibits or attachments thereto, constitute the entire agreement between the Parties concerning the subject matter hereof, superseding all prior negotiations and discussions. No waiver, amendment or modification of any provision of this Agreement or any Task Order shall be effective unless in writing and signed by both Parties.

(Doc. 79, Attach. 6 at 13.) The parties agree that no amendment or modification of the MSA was ever "in writing and signed by both parties." (Doc. 75, Attach. 2 at ¶ 30; Doc. 89 at ¶ 30.) The parties entered into and signed the MSA sometime around November 28, 2016. (Doc. 75, Attach. 2 at ¶¶ 15-17; Doc. 89 at ¶¶ 15-17; Doc. 79, Attach. 6 at 13.)

III. HIQO'S PROJECT APPROACH SUGGESTION

On December 8, 2016, HiQo provided DSC with a document entitled, "Douglas Stewart Magento Migration Project Approach Suggestion" (the "Project Approach Suggestion") that detailed a proposed plan to complete DSC's desired Magento migration project. (Doc. 79, Attach. 4 at 2, 5.) The Project Approach Suggestion included the following language under the heading "Estimation Approach":

Given the project size and scope, it is not feasible to give a precise estimation for each and every feature/improvement requested by the client. Any attempt at producing a 'total estimation for the whole project' will come down to merely a guess.

During the limited time spent on the initial investigation of the project, HiQo has identified the features for which it is possible to make a rough estimation. This estimation must not be considered a fixed-[price] bid, but should be used to get an idea of efforts/costs involved in implementing such a project.

(Id. at 6.) Below this section, the Project Approach Suggestion included a list of features for which HiQo provided estimations of an "assumed implementation approach." (Id. at 6-9.) The Project Approach Suggestion also included a list of features for which HiQo did not provide an estimate. (Id. at 9-10.) Preceding this list, under the heading "Not estimated features (out of scope)," the document included the following language:

The features below cannot be estimated at this point due to either the vague/incomplete requirements or the fact that HiQo did not have access to all the necessary assets (e.g. some parts of the

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