NexTT Solutions, LLC v. XOS Technologies, Inc.
113 F. Supp. 3d 450
D. Mass.2015Background
- In 2009 NExTT licensed its NFL Scouting Program exclusively to StratBridge under a Technology License and Assignment Agreement; StratBridge agreed to pay NExTT 18.5% of RBP revenues and to use commercially reasonable efforts to solicit NFL teams.
- Section 7(d) of the License Agreement included a $2,000,000 “Minimum Revenue Share” and provided the royalty term would extend up to eight years if that minimum was not paid within the initial five-year term.
- NExTT alleges StratBridge paid only sporadic, insufficient royalties; in 2012 XOS acquired StratBridge’s relevant division and expressly assumed StratBridge’s obligations and began using the technology.
- NExTT claims XOS admitted royalties were owed (May 2013 email) but has largely failed to remit royalties; NExTT reports receiving only about $129,501 versus the $2,000,000 minimum.
- NExTT sued XOS (Feb. 2015) asserting breach of contract, anticipatory breach, breach of fiduciary duty, breach of the implied covenant, fraudulent inducement, Chapter 93A violation, and seeking declaratory relief and an accounting; XOS moved to dismiss under Rule 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract | XOS breached by failing to timely pay Revenue Share and failing to use commercially reasonable efforts | License claims do not guarantee a $2M payment separate from actual revenues; no breach pleaded | Denied — plaintiff pleaded sufficient facts for breach (failure to remit royalties and efforts) |
| Anticipatory breach | NExTT entitled to $2M minimum regardless of revenues; XOS repudiated obligation | Massachusetts largely doesn't recognize anticipatory repudiation; contract language shows $2M is not guaranteed | |
| Held: Denied — court finds ambiguity in Section 7(d) about whether $2M was guaranteed and declines to resolve repudiation at 12(b)(6) stage | |||
| Breach of fiduciary duty | Commercial relationship created trust, reliance and abuse sufficient to impose fiduciary duty | Relationship was ordinary commercial, not fiduciary | Denied — factual questions exist; cannot dismiss now |
| Implied covenant of good faith | XOS withheld royalties, depriving NExTT of contract benefits | Duty to use efforts expired; implied covenant limited by express contract terms | Denied — claim based on post-assumption failure to remit royalties survives |
| Fraudulent inducement | StratBridge made fraudulent pre-contract statements that induced agreement | XOS not responsible for StratBridge’s pre-contract misrepresentations | Allowed — allegations of misrepresentation relate to StratBridge, not XOS; dismissed against XOS |
| Chapter 93A (unfair practices) | XOS knowingly withheld royalties and exploited NExTT’s technology/relationships | This is merely a contract dispute, not an unfair practice | Denied — plausible 93A claim based on knowing withholding of royalties after assumption and an admission of owing royalties |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard: plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: legal conclusions not entitled to assumption of truth)
- K.G.M. Custom Homes, Inc. v. Prosky, 468 Mass. 247 (Massachusetts limits anticipatory repudiation doctrine)
- Coll v. PB Diagnostic Sys., Inc., 50 F.3d 1115 (contract interpretation and ambiguity principles)
- Indus. Gen. Corp. v. Sequoia Pac. Sys. Corp., 44 F.3d 40 (factors for imposing fiduciary duties in commercial settings)