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Cinglevue International Pty, Ltd. v. Exo Platform NA, LLC

United States District Court, N.D. New York

July 10, 2014

CINGLEVUE INTERNATIONAL PTY, LTD., Plaintiff,
v.
EXO PLATFORM NA, LLC, Defendant.

RICHARD J. OPARIL, ESQ., Squire, Patton Law Firm, Washington, DC, for the Plaintiff.

KYLE C. BISCEGLIE, ESQ., MASON A. BARNEY, ESQ., Olshan, Frome Law Firm, New York, NY, for the Defendant.

MEMORANDUM-DECISION AND ORDER

GARY L. SHARPE, Chief District Judge.

I. Introduction

Plaintiff CingleVue International Pty Ltd. commenced this diversity action against defendant eXo Platform NA, LLC, alleging New York common law causes of action for fraud, rescission, and breach of the implied covenants of good faith and fair dealing, as well as a claim pursuant to California's unfair competition and false advertising law.[1] ( See generally Am. Compl., Dkt. No. 11.) eXo filed a pre-answer motion, pursuant to Fed.R.Civ.P. 12(b)(6), seeking dismissal of all of CingleVue's claims. (Dkt. No. 14.) For the reasons that follow, the motion to dismiss is granted.

II. Background[2]

This dispute arises out of a business transaction between

CingleVue, a technology company that provides software systems integration services to its clients, (Am. Compl. ¶ 6), and eXo, which provides online platforms and services for managing web-based content and related services, ( id. ¶ 8). At some time in 2011, the portal technology being used by CingleVue at the time became unable to meet all of CingleVue's technical requirements, so CingleVue sought out a new social collaboration platform from eXo. ( Id. ¶ 9.) The eXo platform was marketed and advertised as capable of integration with certain technologies and services that were used by CingleVue. ( Id. ¶ 10.) Additionally, in October 2011, CingleVue communicated its specific requirements to eXo representatives, who expressed their willingness to provide CingleVue with eXo's platform product, and indicated that their product could meet CingleVue's requirements. ( Id. ¶¶ 11-12.)

Ultimately, the parties entered into a partnership agreement, executed on November 17, 2011, under which CingleVue paid eXo approximately $125, 000 in exchange for a license from eXo to install and use eXo's platform (hereinafter "the product") on CingleVue computers. ( Id. ¶¶ 9, 14; Dkt. No. 11, Attach. 1 at 49-62.)[3] That same day, eXo provided the product to CingleVue. (Am. Compl. ¶ 17.a.) The agreement permitted CingleVue to incorporate eXo's software into CingleVue's applications, thus creating a bundled product, and CingleVue could sublicense and distribute eXo's product only as part of this bundle. ( Id. ¶ 15.) As a term of the agreement, the parties agreed that eXo disclaimed certain warranties, including "warranties of merchantability, title, non-infringement, quiet enjoyment, accuracy of data, system integration, course of performance or fitness for a particular purpose." (Dkt. No. 11, Attach. 1 at 50.) Additionally, the agreement provided that CingleVue was receiving the product "as is, " and eXo did not "guarantee or warrant that the use of the product will be uninterrupted or error free." ( Id. ) Further, the agreement stated that "[n]o claim or action, regardless of form, arising out of this [a]greement... may be brought by either party more than one (1) year after the cause of action has accrued." ( Id. at 52.)

Beginning in November 2011, shortly after receiving the product, CingleVue experienced difficulties with integrating the product into a bundle; CingleVue alleges that the product as provided by eXo was "woefully inadequate for the tasks for which CingleVue licensed the [p]roduct." ( Id. ¶¶ 16-17.) CingleVue reported these issues to eXo, and upon learning of these problems, eXo suggested that CingleVue agree to purchase an upgraded product from eXo; CingleVue alleges that "eXo represented that the [u]pgraded [p]roduct would resolve the problems and deficiencies in the [p]roduct and allow CingleVue to use the [u]pgraded [p]roduct for the intended purpose." ( Id. ¶ 19.) The parties subsequently entered into an amended partnership agreement on January 26, 2012, with all terms of the original agreement remaining the same except for the addition of the upgraded product. ( Id. ¶ 20; Dkt. No. 1, Attach. 1 at 80.)

The upgraded product "was still woefully inadequate" for CingleVue's purposes, and throughout 2012, beginning in February 2012, CingleVue communicated several issues to eXo regarding the upgraded product's failures. (Am. Compl. ¶ 22.) CingleVue representatives communicated with eXo support teams "at least twenty times by telephone and e-mail messages" during September and October 2012, but the parties were unable to determine a solution. ( Id. ¶¶ 23, 25-26.) CingleVue alleges that these problems caused it to "delay[its] contractual delivery of its solution to an independent school system customer." ( Id. ¶ 27.)

On November 30, 2012, CingleVue requested a refund of all fees paid to eXo. ( Id. ¶ 28.) CingleVue asserts that eXo "knew or should have known of the true... limitations of the [p]roduct and [u]pgraded [p]roduct, " and did not disclose these limitations to CingleVue before the partnership agreement was signed, and that CingleVue would not have entered into the agreement had it been aware of the limitations of the product and the upgraded product. ( Id. ¶ 29.) Ultimately, CingleVue commenced this action against eXo by filing a complaint on July 10, 2013. (Compl., Dkt. No. 1.) In response to eXo's pre-answer motion to dismiss the complaint, (Dkt. No. 7), CingleVue filed an amended complaint, asserting four causes of action, including fraud, rescission, breach of the implied covenants of good faith and fair dealing, and a claim pursuant to California's unfair competition and false advertising laws, ( see generally Am. Compl.).

III. Standard of Review

The standard of review under Fed.R.Civ.P. 12(b)(6) is well settled and will not be repeated here. For a full discussion of the standard, the court refers the parties to its prior decision in Ellis v. Cohen & ...


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