21 F. Supp. 3d 376
D. Del.2014Background
- IWT and SciQuest entered a 2008 referral and resale agreement under which SciQuest would sell IWT software and use MLSA for clients, including UCHC and MUSC.
- UCHC and MUSC each had five- and seven-year MLSAs that would run through 2013 and 2017 respectively.
- The parties terminated the referral and resale agreement by mutual consent in 2011; SciQuest then amended MLSAs with UCHC and MUSC and moved them to SciQuest’s own product, reducing IWT royalties.
- IWT filed suit in October 2012 alleging breach of contract, anticipatory repudiation, implied covenant breach, and NC UDTPA violation.
- SciQuest moved for judgment on the pleadings (Rule 12(c)), contending Section 11.3 survives termination only to the extent specified, and that MLSA amendments post-termination were not blocked by IWT’s consent rights.
- The court held the agreement is unambiguous, counts I–III are suitable for judgment on the pleadings, and determined SciQuest did not violate Section 11.3(d)(iii) by transitioning clients to SciQuest’s software.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Survival of rights to amend MLSAs post-termination | IWT argues Section 11.3(d) creates a continuing post-termination obligation | SciQuest argues these rights do not survive; 11.3(c) lists surviving rights | Rights to Amend MLSAs do not survive termination per expressio unius est exclusio alteri-us |
| Scope of license obligations after termination | Obligations continue and SciQuest must ensure clients fulfill them | Obligations are limited to those surviving termination under 11.3(d) | License obligations are those accruing under MLSA; termination may alter obligations |
| Whether SciQuest violated 11.3(d)(iii) by transitioning clients to its own software | SciQuest failed to use commercially reasonable efforts to ensure client license obligations were fulfilled | Transition did not violate 11.3(d)(iii) given surviving obligations and post-termination amendment rights | Court finds no violation; 11.3(d)(iii) allows modifications and does not bar transition |
| Whether NC UDTPA claim can be resolved on pleadings | SciQuest engaged in unfair or deceptive trade practices | Disputed material facts preclude ruling on pleading | Denied for Count IV; factual disputes remain |
Key Cases Cited
- Root v. Allstate Ins. Co., 272 N.C. 580, 158 S.E.2d 829 (N.C.1968) (contract interpretation where language is clear)
- Moseley v. WAM, Inc., 167 N.C.App. 594, 606 S.E.2d 140 (N.C.App.2004) (principle of avoiding superfluous contract language)
- Charlotte Union Bus Station v. C.I.R., 209 F.2d 586, 589-90 (4th Cir.1954) (expressio unius est exclusio alteri-us doctrine)
- Smith Barney, Inc. v. Critical Health Sys. of N.C., Inc., 212 F.3d 858 (4th Cir.2000) (interpretation of surviving rights after termination)