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Bank of America v. Apollo Enterprise Solutions

November 1, 2010

BANK OF AMERICA, PLAINTIFF,
v.
APOLLO ENTERPRISE SOLUTIONS, LLC, APOLLO ENTERPRISE SOLUTIONS, INC., AND MORIAH PARTNERS, LLC, DEFENDANTS.



The opinion of the court was delivered by: Denise Cote, District Judge

OPINION AND ORDER

Bank of America ("the Bank") brings this action against Apollo Enterprise Solutions, LLC ("Apollo LLC"), Apollo Enterprise Solutions, Inc. ("Apollo Inc.") (collectively "Apollo"), and Moriah Partners, LLC ("Moriah") seeking various forms of relief against Apollo and alleging tortious interference with contract against Moriah. Moriah has moved to dismiss the complaint for lack of personal jurisdiction and failure to state a claim. For the following reasons, the motion is granted.

BACKGROUND

In April 2006, the Bank and Apollo LLC entered into an "Application Service Provider Agreement" ("the Agreement").*fn1 The Agreement grants the Bank a non-exclusive license to use Apollo's IDS software, which allows the Bank to accept online payments from its customers for certain financial services through several websites created for that purpose other than www.bankofamerica.com. Under the terms of the Agreement, Bank of America paid Apollo an up-front payment and agreed to pay monthly fees thereafter. The original term of the Agreement was two years, after which the Agreement would renew automatically for additional one-year periods unless the conditions for termination, which are hotly disputed by the Bank and Apollo, were met.

The Agreement was automatically renewed in April 2008 and April 2009.*fn2 In July 2009, Apollo notified the Bank that Moriah had invested $7.65 million dollars in Apollo. Joseph Konowiecki ("Konowiecki") and Adrian Gluck ("Gluck"), managing partners of Moriah, were made the Chairman and Chief Executive Officer, and the Executive Vice President, respectively, of Apollo. After this change in personnel, the invoices that Apollo sent to the Bank started to come from Apollo Inc. rather than Apollo LLC, although the Bank never received notice that Apollo LLC was no longer the party performing under the Agreement. Apollo LLC no longer exists.

In August 2009, the former President of Apollo visited the Bank with Gluck to introduce Gluck to the Bank's personnel. At that meeting, Gluck informed the Bank that he believed Apollo's compensation under the Agreement should be revisited. The Bank informed him of the procedure to follow to raise that issue. In January 2010, the Bank and Apollo agreed to an incremental increase to the monthly fee payable to Apollo.

On January 11, 2010, Konowiecki gave notice that Apollo wished to terminate the Agreement. In this notice, he acknowledged that Apollo did not have the express right to terminate the Agreement but, nonetheless, stated that the Agreement would expire on April 12, 2010, which was ninety days after notice was given. On February 5, 2010, Konowiecki wrote the Bank a letter in which he accused the Bank of materially breaching its obligations under the Agreement and informing the Bank that Apollo intended to terminate the Agreement effective March 31, 2010. The February 5 letter listed a series of alleged breaches and demanded unspecified compensation for the damages caused by those breaches. In April 2010 and the months that followed, Apollo sent the Bank "revised" invoices covering the period from July 2008 to June 2010. The Bank had already paid the invoiced amount of $13,425 for January 2010 when it received the revised invoice for January 2010 in the amount of $3.65 million. The revised invoices for each month between January and June 2010 sought between $2.39 and $3.65 million each.

The revised invoices reflect a calculation of the fees owed by the Bank based on the number of "web hits" received by the websites that used Apollo software to accept payments from the Bank's customers. A schedule incorporated into the Agreement ("Schedule C") states: "All quoted and priced elements assume up to 170,000 web hits per month. Costs to support volumes above this level shall be mutually agreed upon." The term "web hits" is undefined in the Agreement. In a price chart in Schedule C, the number of "hits to web site" is listed as "unlimited" for the IDS software.

The revised invoices were calculated based on a number of web hits in excess of 170,000 per month. According to the Bank, the definition of web hits used by Apollo in the revised invoices is not the same as the definition the parties understood the term to mean when they entered into the Agreement. Apollo has used the new definition to demand higher fees from the Bank. Additionally, Apollo had exclusive possession of the information regarding the number of web hits per month, but had never, in the four years between April 2006 and April 2010, informed the Bank that there were more than 170,000 monthly web hits. Nor did Apollo seek increased payments from the Bank until January 2010.

Bank of America filed its original complaint on July 28, 2010. On August 13, the plaintiff filed the FAC. On August 25, Moriah filed its motion to dismiss. The motion was fully submitted on September 20.

DISCUSSION

Moriah, a non-resident of New York,*fn3 argues that the Court lacks personal jurisdiction over it. The plaintiff argues that personal jurisdiction exists pursuant to New York's long-arm statute, or alternatively, because Moriah is Apollo's alter ego.

"In order to survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing that jurisdiction exists." Penguin Grp. (USA) Inc. v. American Buddha, 609 F.3d 30, 34-35 (2d Cir. 2010) (citation omitted). The plaintiff may make this showing through its "own affidavits and supporting materials, containing an averment of facts that, if credited, would suffice to establish jurisdiction over the defendant." S. New England Tel. Co. v. Global NAPs Inc., ___ F.3d ___, No. 08-4518-CV, 2010 WL 3325962, at *9 (2d Cir. Aug. 25, 2010) (citation omitted). "[W]here the issue [of personal jurisdiction] is addressed on affidavits, all allegations are construed in the light most favorable to the plaintiff ...


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