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CON-WAY TRANSPORTATION, SERVICES, INC. v. REGSCAN

October 6, 2005.

CON-WAY TRANSPORTATION, SERVICES, INC., Plaintiff,
v.
REGSCAN, INC., Defendant.



The opinion of the court was delivered by: JOHN JONES, District Judge

MEMORANDUM AND ORDER

THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:

Currently pending before the Court is Defendant RegScan, Inc.'s ("RegScan" or "Defendant") Motion for Summary Judgment. (Rec. Doc. 81) ("the Motion").

  This Court has diversity jurisdiction over the instant action pursuant to 28 U.S.C. ยง 1332 (2005).

  For the following reasons, we will deny the Motion in part and grant the Motion in part.

  PROCEDURAL HISTORY AND STATEMENT OF RELEVANT FACTS:

  This action is between Plaintiff Con-Way Transportation Services, Inc. ("Plaintiff" or "Conway"), a Michigan-based subsidiary of CNF, Inc., a California corporation and Defendant RegScan, Inc., a Pennsylvania corporation. In May of 2000, the parties entered into a Licensing Agreement (the "Agreement") pursuant to which Defendant was to modify a computer software program ("the software") created by Plaintiff. The essence of the software was to facilitate regulatory compliance of trucking companies dealing in hazardous material transport.

  In March 3, 2003, Plaintiff filed a complaint (doc. 1) against Defendant with this Court, alleging breach of contract (Counts I and II), Misuse of Proprietary Information (Count III) and Unjust Enrichment (Count V). Plaintiff also demanded an Accounting from Defendant to determine its damages (Count IV). (Rec. Doc. 1). In a companion state court action, Defendant sought declaratory relief as to the invalidity of the Agreement, alleging that Plaintiff failed to provide and/or misrepresented the software Defendant was to modify. On January 1, 2004, this Court entered an Order (doc. 46) staying the instant action until resolution of the companion state action. On August 6, 2004, Judge Anderson of the Lycoming County Court of Common Pleas found against Defendant on all claims of misrepresentation and contract invalidity. (Rec. Doc. 51).

  At the heart of this action is Defendant's allegation that Plaintiff's software was "useless," forcing Defendant to develop a different computer software program from "scratch." (Rec. Doc. 82 at 1-2). Defendant seeks to avoid performance under the Agreement on the grounds of non-occurrence of a condition precedent to Defendant's performance. Defendant alleges that the existence of viable, modifiable software was a condition precedent to its performance of software development and payment of licensing fees to Plaintiff. It is Defendant's contention that since the software was "useless" and unmodifiable, it was impossible for Defendant to perform under the Agreement. Further, Defendant alleges that it became aware of the software's defects only after signing the Agreement with Plaintiff.

  In strong contrast, Plaintiff alleges that Defendant possessed the software prior to signing agreement and is therefore charged with the knowledge of the software's components. Although Plaintiff admits that the software was not ready for "field use" when provided to Defendant, Plaintiff denies Defendant's allegations that the software did not perform as represented or required. Moreover, Plaintiff alleges that the parties performed under the Agreement for a year and a half before Defendant stopped paying licensing fees to Plaintiff in February of 2002.

  Both Defendant and Plaintiff have fully briefed the Motion and it is therefore ripe for our review.

  STANDARD OF REVIEW:

  Summary judgment is appropriate if "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." FED .R. CIV. .P. 56(c); see also Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir. 1990). The party moving for summary judgment bears the burden of showing "there is no genuine issue for trial." Young v. Quinlan, 960 F.2d 351, 357 (3d Cir. 1992). Summary judgment should not be granted when there is a disagreement about the facts or the proper inferences which a fact finder could draw from them. See Peterson v. Lehigh Valley Dist. Council, 676 F.2d 81, 84 (3d Cir. 1982).

  Initially, the moving party has a burden of demonstrating the absence of a genuine issue of material fact. Celotex Corporation v. Catrett, 477 U.S. 317, 323 (1986). This may be met by the moving party pointing out to the court that there is an absence of evidence to support an essential element as to ...


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