183 F.Supp.3d 84
D.D.C.2016Background
- In Dec. 2012, McBee acquired Gibraltar Associates’ assets; it hired Eric Bovim as employee and Thomas Pernice as an independent contractor through Modena Holding Corp. under an Independent Contractor Services Agreement (IC Agreement) dated Jan. 1, 2013.
- The IC Agreement required Modena to perform, inter alia, business development, client transitioning, cross-selling between McBee business units, and a specific minimum of 2 meaningful pitches per quarter for a particular unit; McBee agreed to an $80,166.67 monthly retainer for 18 months.
- McBee sent Modena a June 5, 2013 notice alleging failures: poor client transitions, minimal client pitches and business development (zero new revenue), and minimal cross-selling activity; McBee terminated the Agreement for cause on July 6, 2013.
- Pernice and Modena sued McBee earlier (claims for breach, fraud, etc.); this Court previously dismissed non-contract claims against McBee, leaving Modena’s breach claim.
- McBee counterclaimed for breach of the IC Agreement and alleged specific deficiencies mirroring the contract duties; Modena moved to dismiss McBee’s Counterclaim under Rule 12(b)(6).
- The Court denied Modena’s motion to dismiss, holding McBee adequately pleaded breach and may seek damages despite the termination-for-cause clause.
Issues
| Issue | Plaintiff's Argument (McBee) | Defendant's Argument (Modena) | Held |
|---|---|---|---|
| Whether Counterclaim adequately pleads breach of contract | McBee alleges Modena failed to perform contract duties (client transitions, business development, cross-selling) and received a failure-to-perform notice before termination | Modena contends McBee’s allegations of "minimal" performance actually admit satisfactory (if minimal) performance and the Counterclaim is too vague under Rule 8 | Court: pleadings suffice; allegations track contractual duties and give fair notice; ambiguity about performance level is a merits issue for later factfinding |
| Whether contract terms are sufficiently definite to evaluate breach at motion-to-dismiss stage | McBee points to specific duties in the IC Agreement and the June 5 notice identifying performance failures | Modena argues lack of clear performance metrics (except one pitch metric) renders breach impossible to assess now | Court: contract is ambiguous as to performance level (except the 2-pitches term); resolving intent/performance requires extrinsic evidence, so dismissal is inappropriate |
| Whether McBee pleaded facts with Rule 8 particularity | McBee says its pleading described the contract terms and nature of breach sufficiently to give fair notice | Modena claims the Counterclaim lacks details necessary to prepare a defense | Court: liberal pleading standard satisfied; detailed notice in the failure-to-perform letter and Counterclaim meets Rule 8 |
| Whether termination-for-cause provision bars damages or makes termination the exclusive remedy | McBee argues the Remedies section preserves other legal remedies and does not make termination the exclusive remedy | Modena contends termination for cause eliminates further remedies, including damages | Court: IC Agreement does not make termination an exclusive remedy; Remedies clause expressly preserves other legal and equitable remedies, so McBee may seek damages |
Key Cases Cited
- Francis v. Rehman, 110 A.3d 615 (D.C. 2015) (describing sufficiency standard for pleading breach of contract)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must state a plausible claim for relief)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not entitled to pleading-stage assumption of truth)
- Joyner v. Estate of Johnson, 36 A.3d 851 (D.C. 2012) (contract ambiguous if reasonably susceptible to different interpretations)
- Phenix-Georgetown, Inc. v. Charles H. Tompkins Co., 477 A.2d 215 (D.C. 1984) (contract remedies exclusive only if clearly expressed)
- Winmar Inc. v. Al Jazeera Int’l, 741 F. Supp. 2d 165 (D.D.C. 2010) (termination provision did not preclude common-law remedies)