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Computer Support, Inc v. Rocking T

January 24, 2011


The opinion of the court was delivered by: Chief Judge Kane


Pending before the Court is a motion for summary judgment filed by Defendant Rocking T, Inc. ("Rocking T"). (Doc. No. 21.) Rocking T seeks judgment in its favor as to all six counts in the complaint filed by Plaintiff Computer Support, Inc. ("CSI"). (See Doc. No. 1, Ex. A.) CSI has concurred in the dismissal of its claims based on promissory estoppel (Count II), unjust enrichment (Count III), and tortious interference (Count IV). (See Doc. No. 21 at 3.) Therefore, those claims will be dismissed at the outset. CSI's remaining claims include breach of contract (Count I), intentional misrepresentation (Count V), and negligent misrepresentation (Count VI). The motion has been fully briefed and is ripe for disposition. Based on the Court's following analysis, Rocking T's motion for summary judgment will be granted as to the misrepresentation claims but denied as to the breach of contract claim.


Rocking T is a Texas trucking company operated by Richard Schilling. (Doc. No. 23 ¶ 1.) In addition to Rocking T, Schilling operates several small non-trucking companies. (Id. ¶ 4.) CSI is a Pennsylvania company which licenses software aimed at assisting transportation companies in their day-to-day operations. (Id. ¶ 2.) The software can accommodate multiple companies and consolidate financial statements from multiple companies into a single consolidated financial statement. (Doc. No. 22 at 3.) Fred Nichols is the owner and president of CSI. (Doc. No. 25 at 4.)

A. Initial Software Agreement

In late 2001, Schilling became aware of CSI and its software through Denis Cowley, who used it at Booker Transportation Services, a separate Texas trucking company of which Schilling was part owner. (Doc. No. 23 ¶¶ 5-6.) The parties dispute whether there were any interactions between CSI and Rocking T prior to the execution of the parties' License and Support Agreement (the "Agreement"), but they agree that CSI prepared and sent the Agreement to Rocking T and that the parties entered into it in December 2001. (Doc. No. 23 ¶ 10.) Pursuant to the Agreement, Rocking T paid CSI $19,750 for a license to use its software. (Doc. No. 25 at 1.) Rocking T also paid an annual fee to CSI for "continuing information, research, design, and technical support and advice." (Doc. No. 23 ¶ 11; Doc. No. 24 ¶ 11.) This annual support period for technical support historically began in July. (Doc. No. 22 at 4.) The Agreement provides that the "[l]icensee shall not duplicate, distribute, demonstrate to any third party, nor lend the Licensed Program Materials without the prior, written consent of [CSI], which consent, in the case of affiliates of [l]icensee, shall not be unreasonably withheld." (Doc. No. 25 at 2.) The Agreement further stated that: "No action, regardless of form, arising out of this Agreement may be brought by either party more than two years after [the] cause of action has arisen." (Doc. No. 24 ¶ 13.)

After entering into the Agreement, Rocking T added at least thirteen other commonly-owned companies to the CSI software. (Doc. No. 23 ¶ 17; Doc. No. 24 ¶ 17.) Although the additional companies were added from 2003 to 2006, Nichols did not become aware of them until March 2008. (Doc. No. 23 ¶ 17; Doc. No. 24 ¶ 17.) Rocking T states that it added the additional companies to the software pursuant to training provided by CSI employees on how to do so. (Doc. No. 23 ¶¶ 14-16.) However, CSI maintains that the training provided by its account managers was aimed at "setting up company divisions" and did not grant Rocking T "license to add thirteen additional companies to the [s]oftware without written authorization." (Doc. No. 24 ¶ 14.)

Nichols maintains that he was not aware of the addition of the companies to the software by Rocking T, but several other CSI employees appear to have had knowledge that the companies had been added. Mary Gould served as CSI's customer support representative. (Doc. No. 23 ¶ 21.) In that capacity, Gould has stated in an affidavit that she knew that Rocking added the additional companies to the software provided by CSI. (Id. ¶ 23.) Lisa Dingman, a part owner of CSI and its customer support manager, was responsible for managing Gould and "had responsibility for sales, collections, billings, preparing training manuals and negotiation contracts with clients." (Id. ¶ 24.) Nichols had delegated the responsibility of approving CSI's invoices to Dingman. (Id. ¶ 26.) Dingman was aware that Rocking T added additional "companies" to the software, but it is unclear to what extent she knew that they were separate companies and not merely subsidiaries or segmented divisions of Rocking T. (Doc. No. 24 ¶ 29.)

B. Disputes Over Billing Cycle and Additional Companies

In January 2008, CSI sent Rocking T an invoice for license and continuing support services. (Id. ¶ 30.) Because the parties disputed whether the billing cycle began in February or in July, Rocking T contested the February renewal. (See Doc. No. 23 ¶ 31.) In March 2008, Nichols became aware that Rocking T had shared the software with the other companies. (Doc. No. 24 ¶ 32.) As a result, CSI sent an invoice charging $197,500 to Rocking T demanding payment for additional licensing fees for those companies. (Id.) In response to the March 29, 2008 invoice, Raymond Brady, an individual who performed technology services for Rocking T and who was employed by one of the additional companies, sent an email on April 2, 2008, inquiring how the charges were calculated and indicating that there were "some test companies set up that we use for training purposes only." (Doc. No. 23 ¶ 34.)

In June 2008, the parties' disputes over the start of the billing cycle and fees for the additional companies remained unresolved. On June 30, 2008, Schilling contacted Nichols via email for the stated purpose of "resolv[ing] all issues" between the parties. (See Doc. No. 24, Ex. O at 7.) Nichols and Schilling then exchanged a number of emails from July 1 to July 8, 2008. In his first email response, Nichols asked Schilling to what issues he was referring. Nichols indicated that CSI "had extended terms almost 3 months and still ha[d] not received payment." (Id. at 6.) Additionally, Nichols stated that "[t]he number of users and companies need to get into contractual compliance and any past due fees addressed." (Id.)

In his second email, Schilling outlined that the two disputed issues were (1) the renewal dates for the annual support and (2) the billing sent for the additional companies. (Id. at 5-6.) Schilling stated that "Rocking T is the only company using [CSI's] trucking package. Other companies were set up with both your knowledge and assistance. Exceeding the allowable concurrent users has never been a problem." (Id. at 6.) Schilling further wrote:

I am willing to pay $7,000 to continue the service for Rocking T and settle all issues. In the spirit of settling, the other companies can easily be taken off CSI. Not saying I am in the wrong, I am trying to meet you half way [sic]. In this same spirit, you need to look at the erratic "annual billing" that was presented to us. (Id.) In response, Nichols sent Schilling an email which began: "Let's settle this." (Id. at 4.) Nichols wrote that the renewal dates for the Agreement should be from February 1, 2008, through January 31, 2009, and that the "current invoice should be for 2/1/07 through 1/31/08 . . . for $7,100."*fn1 (Id. at 5.) Nichols further indicated that "[b]illing sent for additional companies will be credited," and that "[o]ne company, Rocking T[,] would be established on [the software] and have 10 concurrent users." (Id.) Nichols also stated that "[o]n receipt of payment and obtaining access to your server we will revise trigger date to support periods." (Id.)

In his third email, Schilling asked whether the current invoice for $7,100 would be paying for February 1, 2008 through January 31, 2009. (Id. at 4.) Nichols responded that it would.*fn2 (Id.) Next, Schilling asked whether Nichols was "referring to the invoice" sent on March 29, 2008 for $197,500. (Id.) Nichols responded in the affirmative. (Id.) Third, Schilling asked how much time Rocking T would have to remove the other companies in light of the impending July 4 holiday. (Id.) Nichols' response was July 31, 2008. (Id.) Schilling additionally indicated that he did not "want any more surprises" and asked whether "this [would] clear everything up?" (Id.) Nichols again responded in the affirmative. (Id.)

On July 2, 2008, Rocking T issued a check for $7,100 to CSI. (Doc. No. 23 ¶ 47.) That same day, at 3:45 p.m., Schilling sent Nichols a fourth email: "Another question came up as to the additional companies. Can we simply stop using? The only time it would be used is to look at history if the need ever arises. Would be a lot easier and quicker for us." (Doc. No. 24, Ex. O at 3.) Nichols asked for clarification: "If these are test companies, why do you need access to history?" (Id.) Schilling sent Nichols a fifth email, asking what Nichols meant by "test companies." (Id.) In his response sent at 2:30 p.m. on July 7, 2008, Nichols stated:

If we are granted access to the server we will reset the trigger for Rocking T data. Raymond Brady has indicated to us the other companies were for "test" companies. Based on your input, this does not appear to be the case. The data associated with these companies will be deactivated. Section 4.4 of contract addresses terms for additional companies. The invoice for their respective license fees will not be credited. If you can shed any additional light on these companies, it would be appreciated. (Id. at 2-3.) Schilling responded with his sixth email at 4:48 p.m. on July 7, 2008:

Are you saying the $7,100 check does not settle all issues as we had agreed? If so, do not deposit the check and we will each draw our line in the sand. I have just now read the e-mail Raymond [Brady] sent you 4-2-08 and he said "We have made several changes to our database server over the last year and we also have some test companies setup [sic] that we use for training purposes only[.]" This is all true. I entered into the agreement with you under the assumption that all of these points of disagreement were to be settled and Rocking T would renew its license for another year. Let me know your intentions. (Id. at 2.) Nichols responded at 6:07 a.m. on July 8, 2008, by sending a list of additional companies that Rocking T had set up in the CSI software. Nichols stated: "Since you have processed data and want to continue to have access to that data it would appear that they are not 'test' companies as previously indicated. Each company has a valid federal tax id [sic]. Please explain?" (Id. at 1.)

Schilling responded that same day at 10:05 a.m.: "As I stated yesterday, if you aren't going to honor the settlement, do not deposit the check." (Id.) Nichols' final email response stated:

1. The check was received and deposited yesterday. Consequently we were given access to your ...

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