Superior Edge, Inc. v. Monsanto Co.
44 F. Supp. 3d 890
D. Minnesota2014Background
- SEI and Monsanto entered a Software Development and License Agreement in 2009 to develop SalesEdge-based software to enhance Monsanto’s sales execution.
- Development Plan defined deliverables, specifications, timetable, test procedures, and contributed milestones; Monsanto paid SEI exclusivity, development, and user fees.
- Monsanto repeatedly raised concerns about SEI’s ability to timely deliver the promised software and SEI restricted source-code review by Monsanto.
- Monsanto backed up development with SST after ongoing issues, and could not demonstrate the automated proposal capability at key 2011 meetings.
- Monsanto terminated SEI’s services in 2011; Monsanto paid roughly $6.7 million under the Agreement before termination.
- Monsanto asserted counterclaims for breach of the Agreement, money had and received, fraudulent and negligent inducement, conversion, and professional negligence; the court granted in part and denied in part SEI’s motion to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Counts II–VII are sufficiently pled under Rule 8/10 | SEI argues excessive incorporation by reference defeats notice. | Monsanto's counts are clearly numbered and coherent, satisfying Rule 8/10. | Counts II–VII survive; no dismissal for over-incorporation. |
| Whether money had and received can proceed alongside an express contract | Missouri law bars quasi-contract claims where an express contract exists. | Alternative pleading allowed; quasi-contract claims can coexist with breach of contract. | Money had and received may proceed in the alternative. |
| Whether fraudulent and negligent inducement claims survive economic loss doctrine and merger clause | Inducement claims are barred by the contract and merger clause; conduct relates to performance. | Some misrepresentations pertain to inducement independent of contract; discovery may reveal collateral misrepresentations. | Inducement claims survive to some extent; not barred at this stage. |
| Whether Monsanto can state a viable conversion claim for IP/source code | Monsanto cannot claim conversion of intangible ideas or absence of possession. | Ownership of IP was assigned to Monsanto; SEI possessed code and refused to relinquish. | Conversion claim viable; ownership/possession allegations are plausible at this stage. |
| Whether professional negligence claim against computer professionals is viable | Missouri/Minnesota allow professional negligence against computer professionals. | No recognized professional negligence claim against computer consultants; higher duty not imposed. | Professional negligence claim dismissed; not recognized against computer professionals under Missouri law. |
Key Cases Cited
- Iqbal v. United States, 556 U.S. 662 (U.S. 2009) (pleading must allege plausible claims, not mere conclusory statements)
- Twombly v. Bell Atlantic Corp., 550 U.S. 544 (U.S. 2007) (pleadings require more than mere labels and conclusions)
- Iowa Health Sys. v. Trinity Health Corp., 177 F. Supp. 2d 897 (N.D. Iowa 2001) (whether incorporation by reference is appropriate depends on clarity of claims)
- AKA Distrib. Co. v. Whirlpool Corp., 137 F.3d 1083 (8th Cir. 1998) (economic loss doctrine; misrepresentation collateral to contract allowed)
- Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13 (2d Cir. 1996) (fraud inducement; contract terms may limit liability, but extraneous misrepresentations may support fraud claims)
- Compass Bank v. Eager Rd. Assocs., LLC, 922 F. Supp. 2d 818 (E.D. Mo. 2013) (economic loss doctrine factors for inducement claims; independence of misrepresentation from contract)
- MeterLogic, Inc. v. Copier Solutions, Inc., 126 F. Supp. 2d 1346 (S.D. Fla. 2000) (distinguishes inducement involving collateral facts from mere promises of performance)
- Riley v. Lucas Lofts Investors, LLC, 412 S.W.3d 285 (Mo. Ct. App. 2013) (merger clause not dispositive for fraudulent inducement claims)
- Owen v. Gen. Motors Corp., 2006 WL 2808632 (W.D. Mo. 2006) (pleading in the alternative is allowed)
- JEP Enters., Inc. v. Wehrenberg, Inc., 42 S.W.3d 773 (Mo. Ct. App. 2001) (elements of conversion for property and possession)