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Quandry Solutions Inc. v. VeriFone Inc.

April 13, 2009

QUANDRY SOLUTIONS INC. D/B/A QSI CONSULTING, PLAINTIFF,
v.
VERIFONE INC., VERIFONE TRANSPORTATION SYSTEMS INC. D/B/A TAXITRONIC, AND AMOS TAMAM, DEFENDANTS.



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

MEMORANDUM

I. INTRODUCTION

This case arises from the breach of an alleged oral contract between plaintiff Quandry Solutions, Inc. d/b/a QSI Consulting ("QSI") and TAXiTRONiC, Inc. ("TaxiTronic"). On December 8, 2006, QSI filed a ten count Complaint against VeriFone Transportation Systems, Inc. d/b/a/ TAXiTRONiC (successor company to TaxiTronic),*fn1 Amos Tamam (CEO and shareholder of TaxiTronic), and Verifone, Inc. (majority shareholder of TaxiTronic), which was removed by defendants to this Court on January 9, 2007. By Order dated March 1, 2007, the Court dismissed Counts Two through Nine of plaintiff's Complaint. Plaintiff's remaining claims are as follows:

* Count One: Breach of contract claim against defendants TaxiTronic and Tamam;

* Count Ten: Breach of implied covenant of good faith and unjust enrichment claim against defendants TaxiTronic, Tamam, and Verifone, Inc.

Defendants, in the Motion for Summary Judgment presently before the Court, now seek dismissal of these two remaining counts.

II. BACKGROUND

A. Facts

Plaintiff QSI is a Philadelphia based company which provides organizational and technological consulting services to corporate clients. TaxiTronic is a New York based corporation which specializes in taxicab fleet management. Prior to October 2005, TaxiTronic was wholly owned by Amos Tamam and Mark Altman.*fn2 On October 19, 2005, Tamam and Altman sold 19.9 % of their shares to VeriFone, Inc., a multinational corporation which manufactures electronic payment systems. VeriFone, Inc. subsequently acquired an additional 43.34% of TaxiTronic to become the majority shareholder. Tamam has, at all times relevant to this action, served as the CEO of TaxiTronic.

1. Philadelphia Parking Authority Request for Proposals for Taxicab Project

On or about October 25, 2004, the Philadelphia Parking Authority ("PPA") issued a Request for Proposals ("RFP") on a PPA project to upgrade the technology used by taxicabs in the Philadelphia metropolitan area ("Taxicab Project"). (RFP, Ex. 7 to Defs.' Mot., at TT114.) The RFP set a December 15, 2004 deadline for proposals, which was later extended to January 2005. (Id.; Schiotis Dep. 18 (Nov. 30, 2007).)

The RFP "strongly encourage[d] the meaningful and substantial participation" of Disadvantaged Business Enterprises ("DBEs")*fn3 and instructed bidders to "actively seek qualified [DBEs] to participate in [the] Request for Proposals." (RFP at TT119.) In addition to encouraging DBE participation, the RFP set goal ranges for participation. (Id.) For "[t]raining, software technology, value added resellers," the RFP suggested 15%-20% M-DBE participation, 10%-15% W-DBE participation, and "Best Effort" DS-DBE participation. For "[i]nstallation of [h]ardware into taxicabs and PPA headquarters," the RFP suggested 20%-25% M-DBE participation, 8%-16% W-DBE participation, and "Best Effort" participation. The RFP did not, however, mandate DBE participation or state that bidders with DBE participation would be selected over bidders without DBE participation on that ground. (Id.) James Ney, the director of the PPA's Taxicab and Limousine Division, confirmed that DBE participation was a "goal" and not a "requirement" at his deposition. (Ney Dep. 13-14, 57-58 (Feb. 14, 2008).)

The RFP required each bidder to submit one of two alternative forms-either a "Solicitation for Participation" form listing the DBEs approached by the bidder or a "Request for Waiver" form. (RFP at TT119.) The RFP also contained the following warning to potential bidders: "Failure to submit a completed Solicitation For Participation Form or a Request for a Waiver may result in the rejection of your proposal." (Id.) Although the RFP did not require bidders to submit written subcontracts as part of their proposals, it notified bidders that written contracts would be required before the successful bidder could claim payment for work performed by any DBE participants. (Id.)

At Appendix C, the RFP listed the names and contact information of companies that had already expressed an interest in the Taxicab Project. TaxiTronic was one of eighteen companies on the list. (RFP at TT136.)

2. QSI - TaxiTronic Communications Between October 25, 2004 and January 5, 2005

In late 2004, TaxiTronic prepared its bid for the Taxicab Project. William Schiotis, a TaxiTronic employee,*fn4 was responsible for preparing TaxiTronic's bid and coordinating the company's efforts to obtain the PPA contract. (Schiotis Dep. 10-11; Defs.' Mot. 5.) According to Schiotis, "numerous" DBEs contacted TaxiTronic during the proposal-development stage about collaborating on the Taxicab Project. On instructions from Tamam, Schiotis did "due diligence" on two possible DBE participants, one of which was QSI. (Schiotis Dep. 13-15; Tamam Dep. 32.) Schiotis made contact with James Jones, the CEO of QSI, and reported his initial assessment-that "QSI Consulting had the abilities and previous experience with working in the City of Philadelphia in these types of integrations of automation"-to Tamam who authorized further discussions. (Schiotis Dep. 15.)

On or about November 16, 2004, QSI and TaxiTronic entered into a Confidentiality and Nondisclosure Agreement ("NDA"), signed by James Jones for QSI and William Schiotis for TaxiTronic. The purpose of the NDA was to facilitate the exchange of confidential information "in connection with the possible establishment of a business relationship." (NDA, Ex. G to Pl.'s Resp., at 1.) The NDA further stated that "[i]t is understood that this Agreement does not obligate either Party to enter into any further agreements or to proceed with the [Taxicab] Project or any other possible relationship or other transaction." (NDA ¶ 4.) When asked at his deposition to name who drafted the NDA, Jones stated, "[It] looks like one of my documents, my Non-Disclosure Agreements." (Jones Dep. 74.) Jones also confirmed that the fax headers on the NDA suggest that it was sent to TaxiTronic on November 17, 2004 and sent from TaxiTronic on November 19, 2004. (Jones Dep. 74; NDA.)

The discussions between QSI and TaxiTronic began sometime in or around November 2004 and continued into 2005. Variously participating in the discussions, which took place by telephone, in person, and by email, were Tamam, Schiotis, Jones, and several QSI employees. (Jones Dep. 50-51, 60-61, 65, 77-78; Schiotis Dep. 15-16; Tamam Dep. 32-33.) Neither party states, with any specificity, what was said during these discussions. The parties agree, however, that they discussed (1) a TaxiTronic - QSI partnership with regard to the Taxicab Project and (2) the RFP's goal ranges for M-DBE participation in the Taxicab Project. (Jones Dep. 50-51; Schiotis Dep. 15-17; Tamam Dep. 39.) As a result of the discussions during this time period, TaxiTronic included information about QSI in its bid for the Taxicab Project. (Jones Dep. 64; Schiotis Dep. 17-18.)

3. Submission and Promotion of TaxiTronic Bid to PPA -- January 5, 2005 to September 27, 2005

On or about January 6, 2005, TaxiTronic submitted its bid to the PPA. (TaxiTronic Proposal to Furnish and Install Upgraded Technologies in Philadelphia Cabs ("TaxiTronic Proposal"), Ex. 10 to Defs.' Mot., at Attach. B..) The total bid amount for TaxiTronic's proposal was $1,525,300. (TaxiTronic Proposal 44.) According to Jones, QSI did not participate in the drafting of the TaxiTronic bid. (Jones Dep. 100-01.)

Per the instructions of the RFP, TaxiTronic included a Solicitation for Participation and Commitment Form ("SPC Form") with its bid. (TaxiTronic Proposal at Attach. B.) The SPC Form listed a single DBE-QSI-and reported QSI's "Type of Work or Materials" to be "Software Development, Implementation, Service, and Training." (Id.) The form set the level of QSI's participation at fifteen percent (15%) of the total bid which amounted to $240,000. (Id.)

Aside from the SPC Form, QSI is not mentioned in TaxiTronic's bid to the PPA. At some point after submission, however, TaxiTronic responded to several vendor-specific questions posed by the PPA, one of which concerned the status of the TaxiTronic-QSI relationship. (Vendor Specific Question Responses, Ex. K to Pl.'s Resp.) The question and response are as follows:

Q: What is the status of your relationship with an MBE/DBE? What is the function of this subcontractor in the project?

A: Our subcontractor, QSI, is currently a Philadelphia certified MBE, and has performed similar functions for other agencies within the City of Philadelphia. Further, recently QSI received their SBA 8(a) certification which will be valid though 2014. We have an agreement with QSI to provide augmented software development, training, customization, testing, and implementation services for our proposed system. Upon contract award, TAXiTRONiC will enter into an agreement w/the subcontractor for these services.

(Id.)

Following the submission of TaxiTronic's bid to the PPA, TaxiTronic and QSI continued to communicate with each other and with the PPA. (Jones Dep. 102-03.) On June 28, 2005, TaxiTronic presented "a demonstration of the Taxitronic system for the [PPA]," at which Jones was present as the "stated minority business enterprise" to explain "[t]he support services that he would be rendering [and] what his previous experience in the Philadelphia environment was." (Schiotis Dep. 25-26.) According to Jones, QSI also participated in several other meetings with the PPA and "contacted people . . . on the [PPA] selection panel to try to help to persuade them in understanding that Taxitronic would be the best fit for [the Taxicab Project.]" (Jones at 102, 122, 128-29, 132.)

4. PPA's Conditional Award to TaxiTronic & Termination of TaxiTronicQSI Relationship

On September 27, 2005, the PPA conditionally awarded the Taxicab Project to TaxiTronic, contingent on successful negotiation of a final contract between TaxiTronic and the PPA. (Letter from Serena Blanco, PPA Manager of Contract Administration, to Amos Tamam (Sept. 27, 2005), Ex. 13 to Defs.' Mot.) After TaxiTronic received the conditional award, Tamam "wanted [Jones's] proposal for what [QSI was] going to do and how much [it was] going to cost." (Schiotis Dep. 42-43.) According to Schiotos, Tamam was "pushing very hard . . . for numbers from [Jones]." (Id. at 42.) Around the same time, Schiotis shifted his workload to a different TaxiTronic project and stopped participating in the conversations between TaxiTronic and QSI. (Id. at 44.) Soon thereafter, he left TaxiTronic. (Schiotis Dep. 45-46; Tamam Dep. 26.)

QSI submitted an "Implementation Plan" to TaxiTronic on October 31, 2005. (QSI Consulting's Implementation Plan -- TAXiTRONiC-PPA Taxi Technology Project ("Implementation Plan"), Ex. 14 to Defs.' Mot., at 2.) The executive summary of the plan states:

QSI Consulting Services is pleased to present TAXiTRONiC with this implementation plan and budget estimate for QSI services for the planned TAXiTRONiC Philadelphia Parking Authority project. This document is a written confirmation of QSI's current understanding of your requirements and outlines our approach in partnering with TAXiTRONiC. This budget and planning estimate is valid for 30 days from the date of this proposal. (Id. at 2, 3.) The Implementation Plan addresses three primary topics-project management (pages 5-8), information technology (pages 9-10), and training (pages 11-12). (Id. at 5-12.) QSI's cost proposal for its services amounted to $1.9 million. (Id. at 16.)

According to Tamam, the Implementation Plan was "[o]ut of range and out of any business sense" because the price quoted by QSI for its portion of the project ($1.9M) was more than the bid amount for the whole project ($1.5M). (Tamam Dep. 43-44.) Tamam spoke with Jones over the telephone and told Jones that TaxiTronic could not accept QSI's Implementation Plan. Tamam instead offered Jones a subcontracted position as the field project manager for the Taxicab Project with a salary of approximately $70,000 or $80,000. (Tamam Dep. 44-45, 97; Jones Dep. 173-75.) Jones declined Tamam's offer. (Tamam Dep. 45; Jones Dep. 174.) At this point, in November 2005, QSI's involvement with the Taxicab Project ended. (Tamam Dep. 97; Jones Dep. 83, 174.)

TaxiTronic and the PPA signed a final agreement on January 31, 2006. (Taxicab System Agreement, Ex. 1 to Defs.' Mot., at 1, 39.) At the time the contract was executed, the PPA was aware that QSI, TaxiTronic's purported minority business partner, was no longer involved in the Taxicab Project. (Ney Dep. 62.)

B. Procedural History

Plaintiff filed its Complaint against TaxiTronic, Tamam, and Verifone, Inc. on December 8, 2006 in the Court of Common Pleas, Philadelphia County. Defendants removed the case to this Court on January 9, 2007 pursuant to 28 U.S.C. § 1332 and 28 U.S.C. § 1441(a)-(b). By Memorandum and Order dated March 1, 2007, the Court dismissed Counts Two through Nine of plaintiff's Complaint. All Counts other than Count Seven were dismissed with prejudice, and plaintiff did not seek to file an Amended Complaint with regard to Count Seven.

On April 11, 2008, defendants filed the instant Motion for Summary Judgment seeking the dismissal of plaintiff's remaining claims, Counts One and Ten of the Complaint. In the motion, defendants argue that plaintiff has failed to adduce sufficient evidence (1) that defendants Tamam and Verifone, Inc. should be held personally liable for any alleged contract between TaxiTronic and QSI; (2) that TaxiTronic and QSI formed an oral subcontract with regard to the Taxicab Project; (3) that TaxiTronic and QSI formed an oral teaming agreement with regard to the Taxicab Project; and (4) that any of the defendants were unjustly enriched at plaintiff's expense.

On December 11, 2008, the parties having fully briefed the pending motion for summary judgment and following unsuccessful settlement negotiations before Chief Magistrate Judge Thomas J. Rueter, plaintiff sought leave to amend its Complaint to more specifically aver the existence of a teaming agreement. Defendants opposed plaintiff's motion to amend but agreed that plaintiff's Complaint could be construed as alleging facts in support of a teaming agreement. By Order dated January 5, 2009, the Court denied plaintiff's motion for leave, noting those paragraphs of the ...


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