Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

De Lage Landen Financial Services, Inc. v. Viewpoint Computer Animation

April 1, 2009


The opinion of the court was delivered by: Baylson, J.


Presently before this Court is Third Party Defendant and Defendant on the Counterclaim 3Com Corporation's (hereinafter "3Com") Motion to Dismiss the Amended Counterclaim of Defendant Viewpoint Computer Animation, Inc. (hereinafter "Viewpoint" or "Defendant") for failure to state a claim under Fed. R. Civ. P. 12(b)(6). This dispute arises from a series of contracts entered into by Plaintiff De Lage Landen Financial Services (hereinafter "DLL" or "Plaintiff"), Viewpoint, and third parties Capital 4, Inc. (hereinafter "Capital 4") and 3Com for the provision of telephone services and equipment. For the following reasons, this Court will deny in part and grant in part, with leave to amend.

I. Factual Background

A. Allegations Relevant to All Parties

The facts of this case were previously outlined in some detail in the Memorandum and Order of this Court, (Doc. No. 40), which granted in part and denied in part DLL's motion to dismiss Viewpoint's Counterclaim. See De Lage Landen Fin. Servs. v. Viewpoint Computer Animation, Inc., 2009 WL 678635, at *1-4 (E.D. Pa. March 11, 2009). Therefore this Court will only review the specific facts relevant to 3Com's Motion at issue here. In summary, DLL initially sued Viewpoint for breach of a "Rental Agreement,"*fn1 entered into between August and October 2005 by DLL and Viewpoint, under which DLL allegedly agreed to lease telephone equipment to Viewpoint. (Compl. ¶¶ 6, 18; Countercl. ¶ 92-93). Before entering into the Rental Agreement, Viewpoint contracted for the provision of telephone services with Capital 4 pursuant to a "Customer Agreement." (Compl. ¶ 9). Viewpoint alleges that these Agreements were part of a program called the Power of $Zero, which provided telecommunication services at a fixed rate for a number of years. (Countercl. ¶¶ 55(a)).

Under those Agreements, Viewpoint only made payments to DLL, which would then "pass through" part of the payments to Capital 4 for the services Capital 4 provided to Viewpoint. (Compl. ¶¶ 10-11). Viewpoint alleges that Capital 4 did not itself provide the telecommunications services but instead contracted with licensed service providers through Public Access Service Agreements. (Countercl. ¶¶ 54(h); 86(l)).

However, by letter dated September 15, 2007, Capital 4 informed its customers that it could no longer meet its obligations under the Customer Agreement, including the provision of telecommunications services. (Countercl. ¶ 128; Ex. 16). Viewpoint then stopped making any payments to DLL. (Compl. ¶ 14). Viewpoint alleges that the letter "effectively canceled Defendants' obligations under the contract . . . 'for good cause'-telephone services would no longer be provided by Capital 4 Inc., or the 'Power of $Zero Partnership.'" (Countercl. ¶ 130). DLL sued for breach of contract and unjust enrichment, asserting that Viewpoint was obligated to make its payments to DLL despite the loss of services provided by Capital 4. (Compl. ¶¶ 17-20).

In response to DLL's Complaint, Viewpoint filed an Amended Answer, Affirmative Defenses, Amended Counterclaim, and Third Party Complaint (hereinafter "Counterclaim") (Doc. No. 14) and joined Capital 4 and 3Com as parties to the litigation. Viewpoint's central allegation is that its Rental Agreement with DLL was only one of a complex series of contracts between itself and the Power of $Zero Partnership (hereinafter "Partnership"), which is comprised of DLL, Capital 4, and 3Com. Based on both the language of the Customer Agreement and on the relationships and contracts among members of the Partnership, Viewpoint argues that its obligation to pay DLL was extinguished when the Partnership stopped providing telecommunications services.*fn2 Viewpoint also asserts that members of the Partnership made fraudulent misrepresentations regarding the relationship of the Customer and Rental Agreements and Viewpoint's obligations under these contracts. (Countercl. ¶¶ 218-235).

The Customer Agreement between Viewpoint and Capital 4 expressly incorporated an eBrochure found on the Power of $Zero website titled "How does the 3Com Power of $Zero Solution Work?" (Countercl. ¶¶ 70-72; Ex. 1 pp. 4-7). Viewpoint alleges that the eBrochure more specifically describes the Power of $Zero Program (hereinafter "Program") and the Partnership. (Countercl. ¶¶ 70-72). One provision of the eBrochure relevant to the instant Motion described termination of the Customer Agreement by the customer as follows:

¶ 32: Can I cancel the 3Com Power of $Zero Customer Agreement in its entirety?

Yes. You have the option to cancel the Agreement at any time. If We fail to perform and good cause ("Good Cause") exists. You may cancel the 3Com Power of $Zero Customer Agreement. . . . .

¶ 34: What happens to my obligation under the Funding Agreement if the 3Com Power of Zero Customer Agreement is terminated for Good Cause?

If the Agreement is properly terminated for Good Cause, You grant Us Power of Attorney to pay, on a monthly basis, on Your behalf, damages in an amount sufficient to satisfy and discharge Your remaining payment obligations to any third-party funding source that has advanced funds under a Funding Agreement. We will pay these damages, even though You are not making Monthly Payments to Us.

(Countercl. Ex. 1 p. 6).

B. Allegations Concerning 3Com

Viewpoint claims that 3Com manufactures, wholesales, or delivers telephone systems targeted to be used by small businesses. (Countercl. ¶ 47). One of 3Com's alleged roles in the Power of $Zero Partnership was to provide new telephone equipment to Partnership customers if they chose the free equipment option. (Countercl. ¶ 54(d)). Viewpoint claims that on January 31, 2005, Capital 4 entered into a "Strategic Alliance Agreement" with 3Com, under which Capital 4 would promote and exclusively use 3Com communication equipment in the Program, and 3Com would assist Capital 4 in marketing and selling the Program. (Countercl. ¶ 59-60; Ex. 5).*fn3 Viewpoint asserts that 3Com and Capital 4 entered into additional contracts that furthered their involvement in the alleged Partnership and imposed on 3Com certain responsibilities with respect to Program customers. For the purposes of this Motion, three of these contracts are particularly important and are more fully described below.

1. Operations Agreement

First, on November 10, 2006, Capital 4 and 3Com entered into an "Operations Agreement." (Countercl. Ex. 3). The Operations Agreement outlined the parties' rights and obligations related to the Program. This Agreement included a provision entitled the "Go Dark Solution," which addressed the possibility of Capital 4 being unable to honor its contractual obligations. The provision first states Capital 4's obligation to "make commercially reasonable efforts" to fulfill its obligations under the Customer Agreements "[i]n order to further protect the POZ Program by preventing the interruption, temporary suspension or cancellation of services provided by Public Access Assets Service*fn4 providers to POZ Customers." (Countercl. Ex. 3 p. 10). However if Capital 4 is unable to meet the Customer Agreement obligations, the Operations Agreement contemplates the following:

¶ 4.3.3 3Com and Capital 4 shall cooperate with one another to implement the following actions immediately following commercially reasonable indications: (i) of Capital 4's intent to declare itself insolvent; or (ii) that Capital 4 is otherwise temporarily unable to honor its obligations under the existing POZTM Customer Agreements . . .

(d) 3Com shall assume all of the obligations of any and all Public Access Assets Service Agreements entered into by Capital 4 in connection with 3Com Power of $Zero Customer Agreements. . . .

(Countercl. Ex. 3 p. 12). Therefore, Viewpoint asserts that under the Operations Agreement, 3Com was obligated to assume the Public Access Service Agreements entered into by Capital 4 to provide telecommunications services to its customers if Capital 4 was unable to honor its obligations under those service agreements.As a result, Viewpoint alleges that it was a third party beneficiary of the Operations Agreement. (Countercl. ¶ 121).

Notably, the Operations Agreement contained a non-assignability clause as well as an inurement clause. (Countercl. Ex. 3 p. 14 ¶ 7.1). Furthermore, the Operations Agreement provided for mutual indemnification and limited liability between the parties to the Agreement. (Countercl. Ex. 3 p. 13 ¶¶ 5.1, 5.2). The Operations Agreement contained a New York choice-of-law clause. (Countercl. Ex. 3 p. 14 ¶ ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.