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SAM Auction Software, LLC v. International Auction Partners, Inc.

United States District Court, S.D. Ohio, Eastern Division

December 9, 2019

SAM AUCTION SOFTWARE, LLC, et al., Plaintiffs,
v.
INTERNATIONAL AUCTION PARTNERS, INC., Defendant

          Kimberly A. Jolson, Magistrate Judge

          OPINION AND ORDER

          EDMUND A. SARGUS, JR., UNITED-STATES DISTRICT JUDGE

         Currently pending before the Court is Defendant International Auction Partners, Inc., d/b/a Bidsquare's ("Bidsquare" or "Defendant") Motion for Partial Judgment on the Pleadings (ECF No. 6). Plaintiffs SAM Auction Software LLC and Bidpath, Incorporated, d/b/a SAM Auction Software (collectively "Plaintiffs" or "SAM") have responded (ECF No. 14), and Defendant replied (ECF No. 15). Accordingly, this matter is ripe for review. For the reasons stated herein, Defendant's Motion for Partial Judgment on the Pleadings (ECF No. 6) is GRANTED.

         I.

         On December 13, 2013, SAM and International Auction Partners, Inc. ("IAP"), a predecessor of Bidsquare, entered into the Software Platform Service Agreement (the "Service Agreement). (Compl. ¶ 9 [ECF No. 1]). The Service Agreement initially was for a one-year term, through December 31, 2014, and automatically renewed for additional one-year terms, through December 31, 2018. (Compl. ¶ 12). Pursuant to the Service Agreement, Defendant was to pay Plaintiffs $5, 000 per month for hosting the Online Venue Platform, as well as an additional fee for every auction that Bidsquare, or its predecessor, listed on the Online Venue Platform. (Fee Schedule [ECF No. 1-1, Ex. B, PAGEID # 14]). During this time, Bidsquare used the SAM online venue platform to conduct online auctions. (Compl. ¶ 9). By May 1, 2018, however, Bidsquare stopped using SAM's online venue platform and began to conduct its auction business on another platform service provider. (Id. ¶ 12). And on October 30, 2018, Defendant terminated the agreement, per the terms of the Service Agreement. (Id. ¶ 15).

         Plaintiffs allege that Defendant materially breached the Service Agreement in two ways: 1) Defendant failed to pay the $5, 000 per month service fee from June 2018 through December 2018; and 2) Defendant neglected to pay the "per auction" fees owed to Plaintiffs under the Service Agreement for auctions that Bidsquare conducted on other platforms from May 1, 2018 through December 31, 2018, totaling approximately $181, 000. (Compl. ¶¶ 12-14, 17-20).

         Plaintiff commenced this action on March 6, 2019, with the filing of a two-count Complaint against LAP for: 1) breach of written contract; and 2) "Money Owed on Account Against LAP". (See generally Compl.). Defendant has moved for partial judgment on the pleadings, pursuant to Rule 12(c) of the Federal Rules of Civil Procedures, asserting that Plaintiffs cannot, as a matter of law, collect the "per auction" fees for auctions conducted on other platforms. (See generally Mot. for on Pld. [ECF No. 6]). Plaintiff opposes Defendant's Motion, asserting that the parties' agreement implies exclusivity. (See Pl. Opp'n at 2-3 [ECF No. 14]). Defendant replied. (See generally Reply [ECF No. 15]). Accordingly, this matter is fully briefed and ripe for disposition.

         II.

         The Court reviews a Rule 12(c) motion for judgment on the pleadings in the same manner it would review a motion made under Federal Rule of Civil Procedure 12(b)(6). Vickers v. Fairfield Med. Ctr., 453 F.3d 757, 761 (6th Cir. 2006). Rule 12(b)(6) provides for dismissal of actions that fail to state a claim upon which relief can be granted. Generally, an action will be dismissed under this standard where "there is no law to support the claims they made." Stew Farm, Ltd. v. Nat. Res. Conservation Serv., 967 F.Supp.2d 1164, 1169 (S.D. Ohio 2013) (citing Ranch v. Day & Night Mfg. Corp., 576 F.2d 697, 702 (6th Cir. 1978)). The same holds where "the facts alleged are insufficient to state a claim." Id. Federal Rule of Civil Procedure 8(a)(2) requires "a short and plain statement of the claim showing that the pleader is entitled to relief." See also Bell Atl Corp. v. Twombly, 550 U.S. 544, 555 (2007). To meet this standard, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Id. at 570; Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (clarifying the plausibility standard articulated in Twombly).

         Several considerations inform whether a complaint meets the facial-plausibility standard. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. Further, the factual allegations of a pleading "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. A complaint will not, however, "suffice if it tenders 'naked assertion[s] devoid of 'further factual enhancement.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 555 U.S. at 557). Courts must construe the claim at issue in the light most favorable to the non-moving party, accept all factual allegations as true, and make reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008).

         III.

         Defendant moves for partial judgment on the pleadings and asserts that, as a matter of law, Plaintiffs are not entitled to the amount of damages they seek for the alleged breach of contract. (See Mot. for J. on Pld. at 1). Defendant submits that the plain language of the fully integrated contract forecloses the Plaintiffs from collecting the approximately $181, 000 "per-auction" fees they seek to collect, as neither the Service Agreement or the related License Agreement contain an exclusivity clause. (See Id. at 6).

         In diversity cases, a federal court is to apply the law of the forum state. See Poplar Creek Dev. Co. v. Chesapeake Appalachia, LLC, 636 F.3d 235, 240 (6th Cir. 2011) (citations omitted). To succeed on a breach of contract claim in Ohio, a plaintiff must demonstrate: 1) the existence of a contract; 2) performance by the plaintiff; 3) breach by the defendant; and 4) damages. See Bonds v. Univ. of Cincinnati Med. Ctr., No. 18-3509, ___ Fed.Appx. ___, 2019 WL 2323905, at *3 (6th Cir. Feb. 6, 2019) (citing Garofalo v. Chicago Title Ins. Co., 104 Ohio App.3d 95, 108, 661 N.E.2d 218 (Ohio App. May 23, 1995) ("Generally, a breach of contract occurs when a party demonstrates the existence of a binding contract or agreement; the nonbreaching party performed its contractual obligations; the other party failed to fulfill its contractual obligations without legal excuse; and the nonbreaching party suffered damages as a result of the breach.")).

         The only element currently disputed is the damages element. Plaintiff seeks to collect two forms of damages: 1) the monthly recurring flat fee; and 2) the variable fee for each auction held. (Compl. at ¶¶ 20, 23). Defendant, however, asserts that under the plain and unambiguous terms of the fully integrated contract, Plaintiffs are not entitled to the "per auction" fees for auctions conducted on other hosting platforms as the contract is silent on the issue of exclusivity. (See generally Mot. for J. on Pld.). Plaintiffs disagree and assert that certain terms of the contract are ambiguous and, when read in light most favorable to the Plaintiffs, support the conclusion that IAP contracted to exclusively use SAM to host online auctions. (See Pl. Opp'n at 3).

         "Under Ohio law, the interpretation of written contract terms, including the determination of whether those terms are ambiguous, is a matter of law for initial determination by the court." Savedoff v. Access Grp., Inc., 524 F.3d 754, 763 (6th Cir. 2008) (citing Parrett v. Am. Ship Bldg. Co., 990 F.2d 854, 858 (6th Cir. 1993) (applying Ohio law); Potti v. Duramed Pharm., Inc., 938 F.2d 641, 647 (6th Cir. 1991) (same)). "The role of courts in examining contracts is to ascertain the intent of the parties." City of St. Marys v. Agulaize Cty. Bd. of Comm'rs, 2007-Ohio-5026, at ¶ 18, 875 N.E.2d 561 (Ohio 2007) (citing Hamilton Ins. Servs., Inc. v. Nationwide Ins. Cos., $6 Ohio St. 3d 270, 714 N.E.2d 898 (Ohio 1999)). "The intent of the parties is presumed to reside in the language they choose to use in their agreement." Graham v. Drydock Coal Co., 76 Ohio St.3d 311, 313, 667 N.E.2d 949 (Ohio 1996). "Where the terms in a contract are not ambiguous, courts are constrained to apply the plain language of the contract." City of St. Marys, 2007-Ohio-5026, at ¶ 18. But "[e]xtrinsic evidence is admissible to ascertain the intent of the parties when the contract is unclear or ambiguous, or when circumstances surrounding the agreement give the plain language special meaning." Graham, 76 Ohio St.3d at 313-14 (citing Shifrin v. Forest City Enters., Inc., 64 Ohio St.3d 635, 638, 597 N.E.2d 499 (Ohio 1992)).

         A contract's language is ambiguous "only where its meaning cannot be determined from the four corners of the agreement or where the language is susceptible of two or more reasonable interpretations." Covington v. Lucia,151 Ohio App.3d 409, 414, 784 N.E.2d 186 (Ohio App. Jan. 23, 2008) (quoting Potti, 938 F.2d at 647) (internal quotation omitted). "[C]ourts may not use extrinsic evidence to create an ambiguity; rather, the ambiguity must be patent, i.e., apparent on the face of the contract." Id. (citing Schachner v. Blue Cross & Blue Shield of Ohio,77 F.3d 889, 893 (6th Cir. 1996)). When determining whether a contract's language is ambiguous, a court is to consider the entirety of the contract so to "give reasonable effect to every provision in the agreement." Stone v. Nat'l City Bank,106 Ohio App.3d 212, 221, 665 N.E.2d 746 (Ohio App. Sept. 5, 1995); see also Tri-State Grp., Inc. v. Ohio Edison Co.,151 Ohio App.3d 1, 9, 782 N.E.2d 1240 (Ohio App. Dec. 26, 2002). Common words in the contract "are to be given their plain and ordinary meaning unless manifest absurdity results or unless some other meaning is clearly intended from the face or overall contents of the instrument." Alexander v. Buckeye Pipe Line Co.,53 Ohio St. 2d 241, 245-46, 374 N.E.2d 146 (Ohio 1978). And if a "contract is silent, as opposed to ambiguous, with respect to a particular matter, ... 'it is not the function of courts in Ohio to ...


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