North Carolina Farm Bureau Mutual Insurance Co. v. Clear Technology, Inc.
5:12-cv-00111
E.D.N.C.Sep 18, 2013Background
- This case involves a software license dispute over Order No. 2 for Clear Tech's Tranzax software between NC Farm and Clear Tech/Versata.
- Master Agreement (Mar 31, 2003) granted a perpetual license with separate optional maintenance and support payments.
- Order No. 2 priced at $300,000 for a perpetual license plus $20,000 monthly for maintenance; NC Farm paid the monthly fee but disputed its character.
- Versata acquired Clear Tech in 2008; communications in Aug 2011 indicated subscription/support would expire and license could be terminated for nonpayment.
- NC Farm sought declaratory relief and return of fees paid after maintenance ceased; court deemed the contract ambiguous and engaged extrinsic evidence.
- Court granted NC Farm summary judgment on ownership of perpetual license and entitlement to $500,000 plus pre-judgment interest; denied defendants' summary judgment and resolved other motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Order No. 2 ambiguous under Colorado law? | NC Farm argues ambiguity exists between license and maintenance. | Versata argues Order No. 2 unambiguously treats $20,000 as a license fee. | Order No. 2 is ambiguous. |
| Is NC Farm entitled to summary judgment establishing a perpetual license with maintenance not required? | NC Farm contends it acquired a perpetual license for $300,000 and maintenance payments are for optional services. | Defendants contend contract language supports ongoing license or maintenance terms as intended. | Yes, NC Farm granted summary judgment on perpetual license and nonpayment of maintenance. |
| What damages or relief should NC Farm obtain? | NC Farm seeks recovery of $500,000 for the 25 months of paid maintenance since Aug 2011. | Defendants dispute damages scope and basis. | NC Farm awarded $500,000 plus pre-judgment interest. |
| Are the evidentiary and supplemental filings properly considered? | NC Farm argues certain declarations are inadmissible expert testimony. | Defendants sought leave to supplement the record with the Smyth declaration. | Certain evidence struck; leave to supplement granted. |
Key Cases Cited
- Cheyenne Mountain Sch. Dist. No. 12 v. Thompson, 861 P.2d 711 (Colo. 1993) (ambiguity may permit extrinsic evidence; parol evidence to explain intent of contract; interpreted against drafter)
- Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 1310 (Colo. 1984) (integrated contract interpreted as a whole; give effect to mutual intent)
- Green Shoe Mfg. Co. v. Farber, 712 P.2d 1014 (Colo. 1986) (ambiguous terms construed against drafter)
- Forrest Creek Associates, Ltd. v. McLean Sav. and Loan Ass'n, 831 F.2d 1238 (4th Cir. 1987) (expert testimony not generally admissible to interpret contracts)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard; burden shifting)