WD Encore Software, LLC v. The Software MacKiev Company
1:16-cv-11490
| D. Mass. | Aug 3, 2017Background
- WD Encore (buyer) acquired certain assets and licensing rights from Encore Software, Inc. (ESI) via a 2014 Asset Purchase Agreement and Assignment and Assumption Agreement; WD Encore became licensee under the Channel License Agreement covering Broderbund trademarks.
- MacKiev (defendant/counterclaimant) had a License and Distribution Agreement with Riverdeep/HMH giving MacKiev rights in the Schools Channel and previously developed Mac OS X versions of certain Broderbund titles.
- In 2012, ESI and MacKiev collaborated (after an NDA) on an update to The Print Shop; MacKiev alleges it performed significant development work (estimated value ~$484,000) and that ESI later published a product containing MacKiev’s contributions.
- WD Encore moved for partial summary judgment seeking (1) liability on its Lanham Act trademark claim and (2) dismissal of MacKiev’s quantum meruit/implied contract counterclaim. The court denied summary judgment on the trademark claim from the bench and took the quantum meruit issue under advisement.
- The central legal dispute for the quantum meruit counterclaim is whether WD Encore, as successor to ESI’s assets, can be held liable to MacKiev under Delaware successor-liability doctrines (assumption, de facto merger/continuation, or fraud) for work MacKiev provided to ESI.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether WD Encore is liable on MacKiev’s quantum meruit counterclaim via successor liability | WD Encore: purchaser did not assume liabilities beyond those expressly listed in the Asset Purchase Agreement; no exception applies so liability cannot be imputed | MacKiev: WD Encore assumed ESI’s obligations (expressly or impliedly) or is a successor (continuation/de facto merger/fraud), so it should pay for MacKiev’s services | Denied summary judgment to WD Encore; genuine issues of material fact exist on successor/continuation theory |
| Whether WD Encore expressly assumed liabilities to MacKiev under the Asset Purchase Agreement | Agreement’s Assumed Liabilities list does not mention MacKiev or the implied contract, so no express assumption | MacKiev contends assignment of the Channel License and related rights supports an assumption of burden | Court: no clear express assumption shown; plaintiff’s express-assumption argument prevails on the record but other successor theories remain live |
| Whether continuation/de facto merger or mere continuation exception applies under Delaware law | WD Encore: corporate identities, shareholders, directors differ; no mere continuation | MacKiev: overlapping personnel, location, and use of ESI documents create factual disputes on continuity | Court: factual disputes preclude summary judgment; triable issue on continuation/successor liability remains |
| Whether fraud exception applies to impose successor liability | WD Encore: no pleaded or proved fraud in the asset transfer | MacKiev: reserved right to assert fraud based on discovery; argues conduct may be pled as concealment | Court: fraud not established on present record but related factual issues tied to continuation theory keep claim alive |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden shifting principles)
- Mulloy v. Acushnet Co., 460 F.3d 141 (1st Cir. 2006) (summary judgment standard)
- Rogers v. Fair, 902 F.2d 140 (1st Cir. 1990) (moving party must show absence of evidence for nonmoving party)
- Seaboard Surety Co. v. Town of Greenfield, 370 F.3d 215 (1st Cir. 2004) (resolve disputes and inferences for nonmoving party)
- Salamon v. Terra, 394 Mass. 857 (Mass. 1985) (quantum meruit/unjust enrichment elements)
- Backman v. Smirnov, 751 F. Supp. 2d 304 (D. Mass. 2010) (articulating quantum meruit elements in Massachusetts)
- Taylor Woodrow Blitman Constr. Corp. v. Southfield Gardens Co., 534 F. Supp. 340 (D. Mass. 1982) (third-party unjust enrichment context)