Touch-N-Buy v. Girocheck Financial, Inc
2:15-cv-10863
E.D. Mich.Feb 5, 2018Background
- Touch-N-Buy (Plaintiff) contracted with GiroCheck (Defendant) under a July 13, 2012 IMR agreement for Plaintiff to solicit merchants and install Defendant's Check2Card system; the July Agreement governed and contained an express Florida choice-of-law clause.
- Check2Card was supposed to transfer check value directly and immediately to prepaid debit cards; Defendant marketed the product as instant and automatic.
- Plaintiff promoted, installed, and serviced systems at merchants (17 in the Midwest by Plaintiff, 29 in North Carolina by Intel Solutions—run by Plaintiff’s son); Plaintiff performed its contractual duties and incurred installation, training, commission, and service expenses.
- The Check2Card system often required "manual loads" and extensive troubleshooting; the court found the system did not reliably perform automatic real-time loads and Defendant conceded it failed to provide contractual realtime reporting, pay timely commissions, and provide required termination notice.
- Defendant ceased supporting Check2Card in mid-2013 and terminated the July Agreement in October 2014; Plaintiff sued for breach of contract and sought expectation, reliance, and reputational damages; Defendant counterclaimed for unpaid hardware (~$19,000).
- The court found Defendant materially breached the July Agreement, denied recovery for damages attributable to Intel Solutions (a non-party), awarded reliance damages of $40,390.45 plus interest to Plaintiff, and denied Defendant’s counterclaim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Defendant materially breached the July Agreement by failing to provide a functioning Check2Card system and contracted reporting | Defendant’s system failed to operate automatically and Defendant failed to provide realtime reporting and timely payments, constituting material breach | System worked as designed and declines show proper functioning; problems were market-based (low usage) | Court: Defendant materially breached; system did not reliably perform and Defendant failed to provide agreed reporting/timely payments and proper notice |
| Recoverability of expectation (lost-profit) damages for Check2Card business | Seeks large expectation damages (future commissions, set-up fees, lost kiosk revenue, reputational loss) | Damages speculative; Plaintiff’s profit estimates lack reasonable certainty and fail to show net profits | Court: Expectation damages (lost profits, reputational valuation) too speculative; only contractual set-up fee portion ($2,210) was non-speculative but main relief awarded as reliance damages |
| Recoverability of reliance (out‑of‑pocket) damages incurred promoting/implementing Check2Card | Seeks reliance damages for training, installation, commissions, service calls, indemnity payments | Defendant points to contract language stating Plaintiff bears its own costs and argues some expenses are not recoverable | Court: Plaintiff entitled to foreseeable reliance damages of $40,436.75 reduced by $46.30 received = $40,390.45 plus interest; costs were foreseeable and incurred in reliance on performance |
| Whether Plaintiff can recover damages suffered by Intel Solutions (non‑party) | Argues indemnity arrangements and that Defendant approved North Carolina placements justify recovery for Intel Solutions’ losses | Intel Solutions is not a party to the July Agreement; contract is clear and unambiguous limiting obligations to the parties | Court: Damages of Intel Solutions not recoverable from Defendant; non‑party losses are beyond contract and not contemplated as direct recoverable damages |
Key Cases Cited
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (choice-of-law rule applied by federal courts in diversity cases)
- Davis v. Sears, Roebuck & Co., 873 F.2d 888 (6th Cir.) (federal courts apply forum state choice-of-law rules)
- Knowles v. C.I.T. Corp., 346 So.2d 1042 (Fla. Dist. Ct. App.) (elements for breach of contract damages)
- Rollins, Inc. v. Butland, 951 So.2d 860 (Fla. Dist. Ct. App.) (contract damages principles)
- Friedman v. N.Y. Life Ins. Co., 985 So.2d 56 (Fla. Dist. Ct. App.) (contract claim standards)
- Atlanta Jet v. Liberty Aircraft Servs., LLC, 866 So.2d 148 (Fla. Dist. Ct. App.) (material breach definition)
- Beefy Trail, Inc. v. Beefy King Int’l., Inc., 267 So.2d 853 (Fla. Dist. Ct. App.) (reliance damages and restoration to pre-contract position)
- Katz Deli of Aventura, Inc. v. Waterways Plaza, LLC, 183 So.3d 374 (Fla. Dist. Ct. App.) (standards for foreseeability and certainty of lost profits)
- Lindon v. Dalton Hotel Corp., 49 So.3d 299 (Fla. Dist. Ct. App.) (expectation vs. reliance damages; measure of damages)
- Ernie Haire Ford, Inc. v. Ford Motor Co., 260 F.3d 1285 (contract interpretation; courts cannot rewrite unambiguous contracts)
- K-Mart Corp. v. St. Dept. of Transp., 636 So.2d 131 (Fla. Dist. Ct. App.) (third‑party beneficiary principle)
- Blumberg v. USAA Cas. Ins. Co., 790 So.2d 1061 (Fla.) (promissory estoppel requires clear and convincing evidence)