United States District Court, E.D. Michigan, Southern Division
ORDER DENYING DEFENDANT'S MOTION TO
Victoria A. Roberts United States District Judge
is a telecommunications company looking to expand its digital
voice services. To further this goal BullsEye licensed
digital voice software from BroadSoft in 2006. This case
arises from a contractual dispute over BroadSoft's
ability to engage with BullsEye's end users.
alleges three counts: breach of contract, tortious
interference with contractual relations, and tortious
interference with economic expectancy. BroadSoft moves the
court to dismiss the three counts pursuant to Rule 12(b)(6).
BroadSoft argues the licensing agreement between the parties
does not prohibit solicitation of BullsEye's end users.
Oral argument was heard on July 23, 2018.
BullsEye fails to plead the required elements for Count I, it
provided sufficient factual information in its Response to
BroadSoft's Motion. The Court will allow an amended
complaint for Count I and deny Defendant's Motion to
Dismiss without prejudice. However, BullsEye does not
sufficiently allege facts to satisfy Count II; the Court
grants Defendant's Motion to Dismiss. In Count III,
BullsEye does set forth sufficient allegations.
for the reasons below, the Motion is denied without prejudice
for Count I, granted for Count II, and dismissed with
prejudice for Count III.
License Agreement between BullsEye and BroadSoft, attached to
the Amended Complaint, governs the parties' relationship.
The License Agreement does not explicitly bar BroadSoft from
selling directly to third parties, even BullsEye's own
2017 BullsEye met with Tractor Supply Company (TSC) to pitch
an expansion of TSC's digital voice services. BullsEye
has provided the majority of TSC's telecommunication
needs for the past nine years. At the meeting, TSC informed
BullsEye that BroadSoft also bid on its expansion project.
BullsEye wrote BroadSoft an August 2017 letter to express its
dismay at BroadSoft's alleged interference with its end
user. In reply, BroadSoft reminded BullsEye that the
Licensing Agreement did not prohibit its interactions with
after, TSC selected BroadSoft to provide it with digital
voice services. Further, TSC eventually transitioned almost
all of its business to BroadSoft. In response to
BullsEye's letter and TSC's actions, BroadSoft
offered a refund to compensate for BullsEye's loss of
business. However, BullsEye dismissed the offer as a
minuscule portion of the true damage it suffered and filed
this suit to recover damages.
License Agreement mandates that any breach of contract action
is governed by New York law. Michigan law applies to the two
tortious interference claims.
motion to dismiss under Fed.R.Civ.P. 12(b)(6) tests the legal
sufficiency of the complaint. RMI Titanium Co. v.
Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir.
1996). A court must “construe the complaint in the
light most favorable to the plaintiff, accept its allegations
as true, and draw all reasonable inferences in favor of the
plaintiff.” DirecTV, Inc. v. Treesh, 487 F.3d
471, 476 (6th Cir. 2007). A complaint must contain sufficient
factual matter to ‘state a claim to relief that is
plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A
claim is plausible on its face “when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citing
Twombly, 550 U.S. at 556).
Civ. P. 15(a)(2) allows a party to amend its pleading with
the court's leave. A court “should freely give
leave when justice so requires.”
Breach of Contract
sufficiently plead breach of contract under New York law, the
plaintiff must allege the existence of a contract,
plaintiff's performance of its obligation, breach of the
contract by defendant, and damage as a result. Campo v.
1st Nationwide Bank, 857 F.Supp. 264, 270
E.D.N.Y. 1994). In its Amended Complaint, BullsEye fails to
specify how BroadSoft breached; the Amended Complaint simply
alleges that BroadSoft “has breached its agreement with
BullsEye.” This is conclusory. And, BroadSoft's
interference - selling to BullsEye's end users - clearly
does not violate any express provision in the License
Agreement. Only in its Response to BroadSoft's Motion
does BullsEye allege a specific form of breach: breach of the
covenant of good faith.
covenant of good faith is inherent in all New York contracts.
Aventine Inv. Mgt. v. Canadian Imperial Bank of
Commerce, 697 N.Y.S.2d 128, 130 (1999); Dalton v.
Educ. Testing Serv., 639 N.Y.S.2d 977 (1995). A breach
of the covenant is “a theory of contractual breach
… rather than a separate cause of action, ” if
the two claims are ...