SHERIDAN, District Judge.
This matter comes before the Court on Plaintiff New Skies Satellites, B.V.'s ("New Skies" or "Plaintiff") Motion to Dismiss Defendant Home2US Communications, Inc.'s ("Home2US" or "Defendant") Counterclaim pursuant to FED. R. CIV. P. 12(b) (6) and/or FED. R. CIV. P. 9(b) and to Strike Defendant's Jury Demand (ECF No. 12). In its Complaint, Plaintiff alleges that Defendant defaulted under the terms of a satellite service agreement by failing to make timely and full payment of monthly service charges. Defendant now counterclaims that Plaintiff breached the contract and perpetrated fraud by failing to provide satellite service in accordance with the terms of the agreement. The Court decides this matter without oral argument pursuant to FED. R. CIV. P. 78(b). For the reasons set forth herein, Plaintiff's Motion to Dismiss Defendant's Counterclaim and Strike Defendant's Jury Demand is granted.
Plaintiff New Skies Satellites, B.V. ("New Skies") is a corporation organized
On or about March 4, 2004, Home2US entered into a Ku-Band Multiple Channel per Carrier ("MCPC") Global Service Agreement ("Global Service Agreement" or "GSA") with New Skies' predecessor-in-interest SES Americom, Inc. ("SES Americom" or "SES") to broadcast its television signals through SES-operated satellites to domestic service providers and end-users in North and South America. (Compl. at ¶ 6; Countercl. at ¶ 3). Over the next several years, as permitted under the terms of the GSA, Home2US entered into several Individual Service Description ("ISDs") agreements through which it obtained additional satellite transponder services.
In October 2007, however, the SES-operated satellite through which Home2US was broadcasting its television signals, identified as AMC-4, "began having technical issues[.]" (Id. at ¶ 7). According to the Defendant, "[b]etween 2008 and 2010, AMC-4 suffered a series of technical failures which in turn prevented Home2US from providing its content to its customers in an acceptable manner[.]" (Id.). As a result of these alleged failures, Home2US was forced to temporarily "migrate its services to [another satellite identified as] AMC-2 ... [which was] used as an emergency spare back-up for AMC-4." (Id.). According to the Defendant, SES Americom was "aware of these satellite failures and its consequential interruption of service to Home2US" and both parties "were engaged in regular communication[s] in an effort to address the problems." (Id. at ¶ 8). In response to the technical issues involving AMC-4, SES Americom transitioned Home2US to a new satellite identified as SES-1. According to Home2US, the transition to "SES-1 resulted in significantly more service interruptions ... [,] a smaller geographical area of coverage[,]... [and] and inferior link budget" compared to the service that had been provided using the AMC-4 satellite. (Id. at ¶ 9).
On or about December 23, 2009, SES Americom notified Home2US that effective January 1, 2010, it was assigning its interest in Home2US's obligations to New Skies. Under that assignment, the terms
On or about June 9, 2010, after Home2US had demanded that New Skies take measures to address the issues arising from the transition to the SES-1 satellite, the two companies entered into an agreement whereby New Skies agreed to provide $1 million in "credits" to Home2US as "transition assistance[.]" (Countercl. at ¶ 15). According to the Defendant, one month later, on July 8, 2010, New Skies "attempted to force Home2US to sign a new one-sided agreement in which New Skies would avoid all liability[.]" (Id. at ¶ 17). Around this time, New Skies also allegedly contacted two customers with whom Home2US was negotiating contract renewals (BVN and The California Channel).
The Plaintiff presents a different version of the factual history for this time period. According to the Plaintiff, Home2US "defaulted under the terms of the Home2US Agreements when it failed to tender timely and full payment of the required monthly service charges starting in July 2010." (Compl. at ¶ 15). In an effort to "resolve Home2US's defaults and permit the continuation of service going forward, New Skies worked with Home2US to address the outstanding arrears and also permitted the termination of certain ISDs." (Id. at ¶ 16). According to the Plaintiff, "because New Skies was hopeful that Home2US would cure its arrears" New Skies also entered into a new ISD with Home2US in December 2011. (Id. at ¶ 17).
Between September 2011 and April 2012, Home2US made certain payments under the Home2US Agreements, however, according to the Plaintiff, Home2US "did not completely cure its default." (Id. at ¶ 18). After April 2012, Home2US made no additional payments. (Id. at ¶ 19). On September 4, 2012, New Skies sent a letter to Home2US advising the company that it remained in default and that $1,463,663.33 remained outstanding and overdue for services that New Skies had provided from July 2010 through September 2012. (Id. at ¶ 20). New Skies further advised Home2US that if full payment on all amounts due was not received within ten days of the date of the letter, New Skies would "exercise its rights to terminate the Home2US Agreements." (Id.). Failing to receive full payment by the deadline, New Skies terminated the Home2US Agreements by letter dated September 24, 2012. (Id. at ¶ 21).
On January 10, 2013, Plaintiff filed a two count Complaint in the United States District Court for the District of New Jersey. In Count One, Plaintiff asserts a breach of contract claim against Home2US. Specifically, Plaintiff contends that "Home2US is liable to New Skies for breaching the Home2US Agreements in the amount of at least $1,463,663.33 as of September 24, 2012, plus interest and attorneys' fees, for all charges that were due and owing as of the date of termination." (Id. at ¶ 23). In Count Two, Plaintiff alleges that "[u]pon termination, Home2US is liable ... for the Termination Liability as defined in the Home2US Agreements [in] the approximate amount of $927,350.00[.]" (Id. at ¶ 26) Specifically, Plaintiff contends that Defendant is liable for the "net present value amount of monthly payments due for the remaining term of the Home2US Agreements plus late charges and interest[.]" (Id.).
On March 28, 2013, Defendant filed an Answer and Counterclaim to Plaintiff's Complaint. In Counterclaim One, Defendant
A motion to dismiss a counterclaim is properly evaluated under the familiar Rule 12(b)(6) standard. RBC Bank (USA) v. Petrozzini, 2012 WL 1965370, at *2, 2012 U.S. Dist. LEXIS 75845, at *2 (D.N.J. May 31, 2012); Malibu Media, LLC v. Lee, 2013 WL 2252650, at *3, 2013 U.S. Dist. LEXIS 72218, at *3 (D.N.J. May 22, 2013). FED. R. CIV. P. 12(b)(6) provides for the dismissal of a counterclaim if the counterclaimant "fail[s] to state a claim upon which relief can be granted[.]" When deciding a motion to dismiss pursuant to FED. R. CIV. P. 12(b)(6), courts are required to "accept all factual allegations as true, construe the [counterclaim] in the light most favorable to the [counterclaimant], and determine whether, under any reasonable reading of the [counterclaim], the [counterclaimant] may be entitled to relief." Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir.2008) (internal citation and quotations omitted). In other words, "a [counterclaim] must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "The inquiry is not whether [a counterclaimant] will ultimately prevail in a trial on the merits, but whether [he or she] should be afforded an opportunity to offer evidence in support of [his or her] claims." In re Rockefeller Ctr. Props., Inc., 311 F.3d 198, 215 (3d Cir. 2002). The Supreme Court has clarified, however, that "the tenet that a court must accept as true all of the allegations contained in a [counterclaim] is inapplicable to legal conclusions." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Furthermore, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955).
To determine whether a counterclaim is plausible on its face, courts conduct a three-part analysis. Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir.2010). First, the court must "tak[e] note of the elements a [counterclaimant] must plead to state a claim." Id. (quoting Iqbal, 556 U.S. at 675, 129 S.Ct. 1937). Second, the court should identify allegations that, "because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 131 (quoting Iqbal, 556 U.S. at 680, 129 S.Ct. 1937). Finally, "where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief." Id. (quoting Iqbal, 556 U.S. at 680, 129 S.Ct. 1937). This plausibility determination is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. A counterclaim cannot survive where a court can only infer that a claim is merely possible rather than plausible. Id.
In Counterclaim One, Home2US alleges that New Skies breached the terms of the Global Service Agreement by refusing to declare AMC-4 a "Satellite Failure"
Plaintiff relies on several of the allegations made in Defendant's Counterclaim to support its contention that Defendant's breach of contract claim is time-barred. For example, Defendant states that "SES and New Skies failed to provide satellite services to Home2US when Home2US was assigned to satellite AMC-4, AMC-2 and after it was transitioned to SES-1." (Id. at ¶ 21) (emphasis added). Furthermore, Defendant states that "[o]n or about July 8, 2010, it became clear to Home2US that New Skies was unreasonably refusing to declare AMC-4 a `Satellite Failure' in an effort to avoid liability[.]" (Id. at ¶ 17). Based on these allegations, New Skies contends that any potential claims belonging to Home2US began to accrue as early as 2008 (when Home2US was first transferred to AMC-2) and as late as 2010 (when it became clear to Home2US that New Skies refused to declare AMC-4 a "Satellite Failure."). (Pl.'s Br. in Supp. of Mot. to Dismiss ("Pl.'s Br.") at 6-7). Plaintiff contends that because Defendant's Counterclaim was not filed until March 28, 2013, more than two years after either date of accrual, Home2US's claims are time-barred.
In opposition, Home2US argues that dismissal of its counterclaim based upon the two-year limitations period included in the GSA would be improper because the parties were still engaged in negotiations to resolve the technical issues up until, at least, August of 2012. (Def.'s Br. in Opp. to Pl.'s Mot. to Dismiss ("Def.'s Opp. Br.") at 1). According to the Defendant, the two-year limitations period should be equitably tolled and New Skies should be "equitably estopped from arguing [that] the statute of limitations clause is applicable when [New Skies] continued to negotiate with [Home2US] in order to facilitate its expiration." (Id. at 2). The Court will first consider the validity of the GSA's limitations provision and then address whether the negotiations between the parties entitle the Defendant to equitable tolling of the limitations period.
It is well settled that parties may contractually limit the time for bringing claims, despite a statute of limitations to the contrary. In Order of United Comm. Travelers of Am. v. Wolfe, 331 U.S. 586, 608, 67 S.Ct. 1355, 91 L.Ed. 1687 (1947), the Supreme Court held that "it is well established that, in the absence of a controlling statute to the contrary, a provision in a contract may validly limit, between the parties, the time for bringing an action on such contract to a period less than that prescribed in the general statute of limitations, provided that the shorter period itself shall be a reasonable period." New Jersey courts have come to a similar conclusion. In Eagle Fire Prot. Corp. v. First Indem. of Am. Ins. Co., 145 N.J. 345, 354, 678 A.2d 699 (N.J. 1996), the New Jersey Supreme Court held that a one year statute of limitations included in a surety bond, which limited New Jersey's six-year statute of limitations for bringing contract claims, was valid. The Court stated that "[c]ontract provisions limiting the time parties may bring suit have been held to be enforceable, if reasonable." Eagle Fire Prot. Corp., 145 N.J. at 354, 678 A.2d 699; see also A.J. Tenwood Assoc. v. Orange Senior Citizens Housing Co., 200 N.J.Super. 515, 523, 491 A.2d 1280 (App.Div. 1985), cert. denied, 101 N.J. 325, 501 A.2d 976 (N.J.1985) (noting that "[a]lthough the statutory limitation in this State for actions in contract is six years, N.J.S.A. 2A:14-1, such limitation may be waived by express agreement of the parties."). Accordingly, the Court finds that the GSA provision limiting the time for bringing an
Having determined that the GSA provision is valid, the Court must now consider whether the contractual two-year limitations period should be tolled due to the ongoing negotiations between the parties. Home2US argues that the Court should toll the two-year statute of limitations from 2008, when the technical issues with the AMC-4 satellite first arose, until August 2012, when negotiations between the parties to address these ongoing technical issues concluded. Under certain circumstances, negotiations between a claimant and a prospective defendant can provide a basis for tolling a statute of limitations. See W.V. Pangborne & Co., Inc. v. N.J. Dep't of Transp., 116 N.J. 543, 556, 562 A.2d 222 (N.J.1989) ("Courts have determined that through the process of negotiating, a defendant can intentionally lull a plaintiff into believing litigation is not necessary; a defendant in those circumstances may not take advantage of the protracted negotiations to have the statute of limitations run against the plaintiff's claim."). However, mere negotiations, without more, are insufficient to invoke equitable tolling. Home2US must allege and prove that SES Americom or New Skies engaged in inequitable conduct to lull Home2US into forgoing suit within the limitations period in order to be entitled to equitable tolling for the period from 2008 until 2012. See id. at 553, 562 A.2d 222 (observing that "equitable estoppel has been used to prevent a defendant from asserting the statute of limitations when the defendant engages in conduct that is calculated to mislead the plaintiff into believing that it is unnecessary to seek civil redress."); see also Eagle Fire Prot. Corp. v. First Indem. of Am. Ins. Co., 280 N.J.Super. 430, 441, 655 A.2d 939 (App.Div.1995) ("The tolling of a contractual or statutory limitation due to conduct, requires some type of unconscionable conduct on the part of the [defendant] and not just mere negotiations or discussions."), rev'd on other grounds, 145 N.J. 345, 678 A.2d 699 (N.J.1996).
While this Court is obligated to accept Defendant's well-pleaded allegations as true for purposes of Plaintiff's Motion to Dismiss, the Court will not accept bald assertions, unsupported conclusions, unwarranted references, or sweeping legal conclusions cast in the form of factual allegations. See Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937. On the contrary, Home2US is obligated to set forth "factual content that allows the court to draw the reasonable inference that [New Skies] is liable for the misconduct alleged." Santiago, 629 F.3d at 128 (citation omitted). While detailed factual allegations are not necessary to survive a Rule 12(b)(6) motion, Defendant's "obligation to provide the grounds of [its] entitlement to relief requires more than labels[,] ... conclusions, and a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Instead, Home2US must provide enough factual allegations "to raise a right to relief above the speculative level." Id. Here, the Court finds that Home2US fails to set forth any factual allegations to show that SES Americom or New Skies engaged in any inequitable conduct calculated to lull Home2US into forgoing suit within the limitations period. Rather, Home2US's allegations describe little more than "mere negotiations or discussions." As such, Home2US has failed to plead and prove that it is entitled to equitable tolling. Accordingly, the Court finds that Defendant's First Counterclaim is barred by the two-year limitations period provided for in
While the Court finds that Defendant's breach of contract counterclaim is barred by the GSA limitations provision, the Court will dismiss that claim without prejudice to afford Home2US an opportunity to prove its entitlement to equitable tolling. The policy embodied in the Federal Rules of Civil Procedure favors discovery in learning whether any evidence exists to demonstrate inequitable conduct on the part of SES Americom or New Skies. See Caldwell Trucking PRP Group v. Spaulding Composites, Co., 890 F.Supp. 1247, 1252 (D.N.J.1995) ("Since the long-established federal policy of civil litigation is to decide cases on the proofs, district courts generally disfavor Rule 12(b)(6) motions."). Discovery relating to the limitations issue shall be limited to facts surrounding the negotiations with SES Americom or New Skies that allegedly lulled Home2US into forgoing suit. Should Defendant wish to proceed with its breach of contract claim after such discovery, Defendant may file an Amended Counterclaim clearly identifying the inequitable conduct that forms the basis of its equitable tolling argument.
In Counterclaim Two, Home2US alleges that New Skies breached the implied warranty of fitness for a particular purpose by "fail[ing] to provide satellite services to Home2US as required when Home2US was assigned to satellite AMC-4, AMC-2 and after it was transitioned to SES-1." (Countercl. at ¶¶ 27-28). Plaintiff argues that Defendant's Second Counterclaim should be dismissed for two reasons. First, Plaintiff contends that the breach of implied warranties claim is barred by the two-year limitations period imposed by the Global Service Agreement. Second, Plaintiff contends that the counterclaim must fail because the New Jersey Uniform Commercial Code ("NJ U.C.C.") does not apply to contracts for services. The Court will address both of these arguments in turn.
Home2US's claim for breach of implied warranties is based on the same factual allegations giving rise to its breach of contract claim in Counterclaim One. Having already determined that the breach of contract claim is barred by the two-year limitations period imposed by the Global Service Agreement, the Court finds that Defendant's Second Counterclaim is also time-barred.
In addition to being barred by the limitations period set forth in the Global Service Agreement, the Court finds that the contract between Home2US and New Skies was a services contract not subject to the implied warranties of the NJ U.C.C. The Third Circuit has clearly stated that "[t]he commercial warranty provisions found in Article Two of the U.C.C. apply only to `transactions in goods[.]'" Paramount Aviation Corp. v. Gruppo Agusta, 288 F.3d 67, 72 (3d Cir.2002) (citing N.J.S.A. 12A:2-102). Moreover, the implied warranty of fitness for a particular purpose, which is a cause of action arising under the NJ U.C.C. provides that such a warranty is implied only "[w]here the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods[.]" N.J.S.A. 12A:2-315 (emphasis added). The term "goods" is defined in the NJ
Here, the record indicates that the agreement between Home2US and New Skies was for services. As an initial matter, the agreement itself is called a "Global Service Agreement." (Countercl. at ¶ 1, Ex. A). The language used throughout the Agreement indicates that it is a contract for services and does not refer in any way to a transaction in "goods." For example, Section One of the contract, entitled "Service," provides:
Home2US's own characterization of the contract between it and New Skies also supports the conclusion that any contract between the two was a services contract. For example, Home2US states in its Counterclaim that New Skies "was to provide Home2US Satellite transponder and platform services." (Countercl. at ¶ 1). Home2US describes its business as "acquiring the rights to foreign television programs and/or channels from television broadcast operators as well as content producers to re-distribute them via satellite and other delivery methods to their intended target audiences in North [and] South America[]." (Id. at ¶ 3). Even within its Second Counterclaim, Home2US states that "[it] relied on the assurances, experience and knowledge of SES and New Skies that it would be provided ... services in an efficient manner" and "SES and New Skies failed to provide satellite services[.]" (Id. at ¶¶ 25, 27). Because Home2US's Second Counterclaim is based on a contract for services, the U.C.C. does not govern and no claim for breach of the implied warranty of fitness for a particular purpose can stand. Moreover, the Global Service Agreement expressly prohibits such claims between the parties. Article 8 of the Agreement explicitly states: "No warranties, expressed, implied, or statutory, including any warranty of merchantability or fitness for a particular purpose, apply to the Service or the equipment and facilities used to provide the Service." (Id. at ¶ 1, Ex. A, Attach. A, art. 8). Accordingly, the Court will dismiss Defendant's Second Counterclaim with prejudice.
In Counterclaim Three, Defendant asserts an independent cause of action for "lost profits." Specifically, Defendant contends that "[a]s a direct and proximate result of the failure to provide service by SES and New Skies, Home2US lost customers, opportunities for growth, and potential customers, resulting in damages and lost profits." (Id. at ¶ 32). Plaintiff argues that Home2US's Third Counterclaim for "lost profits" must be dismissed because "it is a remedy and not a valid, independent cause of action." (Pl.'s Br. at 11). The Court agrees with Plaintiff that no cause of action for lost profits exists and that this is simply a measure of damages that may be available under one of Defendant's other theories of liabilities. As this Court has previously explained:
Given this distinction, the Court will dismiss Defendant's Third Counterclaim with prejudice while recognizing that doing so does not proscribe Defendant from later asserting a lost profits theory of damages should it wish to proceed on those counterclaims which the Court is dismissing without prejudice. The Court notes, however, that Defendant's likelihood of recovery is dubious based on Article 8 of the Global Service Agreement which states that "SES Americom ... will not be liable for ... loss of actual or anticipated revenues or profits, [or] loss of business, customers or good will[.]" (Countercl. at ¶ 1, Ex. A, Attach. A, art. 8).
In Counterclaim Four, Defendant asserts a claim of common law fraud against New Skies.
In its Opposition, Home2US more clearly identifies the allegedly fraudulent actions by New Skies giving rise to its fraud claim. Specifically, Home2US contends that New Skies committed fraud by: (1) knowingly misrepresenting its intent to declare a satellite a "Satellite Failure" under certain circumstances; (2) knowingly misrepresenting that its satellites would meet the requirements of Home2US's business; and (3) knowingly misrepresenting that Home2US would receive a $1,000,000 credit for services provided. (Id. at 5-8). All three of these alleged events occurred more than two years prior to Defendant's filing of its Counterclaim. As the Court has already determined that the two-year limitations period imposed by the Global Service Agreement is both reasonable and valid, the Court finds that Defendant's Fourth Counterclaim is also time-barred.
In addition, after accepting the allegations in the Counterclaim as true and construing the facts in the light most favorable to the Defendant, the Court finds that Home2US has failed to sufficiently
In Counterclaim Five, Defendant asserts a tortious interference with prospective economic advantage claim against New Skies. In describing the alleged conduct giving rise to its claim, Defendant states that New Skies interfered with Home2US's prospective economic advantage by: (1) being "responsible for the technical difficulties" associated with the satellites; (2) "enter[ing] ... a field of service they had never done before[]"; and (3) "engaging [Home2US's] existing clients to steal existing and viable future business." (Countercl. at ¶ 39). Plaintiff argues that Defendant's Fifth Counterclaim should be dismissed because the claim is barred by the Global Service Agreement's two-year limitations period and because Defendant has failed to plead sufficient facts to establish a prima facie case for tortious interference.
Defendant's Counterclaim indicates that Home2US's tortious interference claim is based on New Skies allegedly contacting two of Home2US's customers with whom it was negotiating contract renewals in or about July 2010. (Id. at ¶ 18). Because Plaintiff did not file its Counterclaim until March 28, 2013, more than two years after the allegedly tortious conduct undertaken by the Plaintiff, the Court finds that Defendant's Fifth Counterclaim is barred by the two-year limitations provision in the Global Service Agreement.
In addition, the Court agrees with Plaintiff's argument that Defendant has failed to establish a prima facie case
New Skies also moves to strike Home2US's jury demand pursuant to a provision of the Global Service Agreement entered into by the parties. Article 11 of the Global Service Agreement provides, in relevant part: "Each of the Parties hereby irrevocably waives (and agrees not to assert) the right to trial by jury[.]" (Countercl. at ¶ 1, Ex. A, Attach. A, art. 11). Where, as here, a federal action is premised upon diversity jurisdiction, the right to a jury trial in federal court presents a question of federal law. Simler v. Conner, 372 U.S. 221, 222, 83 S.Ct. 609, 9 L.Ed.2d 691 (1963); In re City of Phila. Litig., 158 F.3d 723, 726 (3d Cir.1998). "Although the right to a jury trial is guaranteed by the Seventh Amendment to the United States Constitution, like all constitutional rights it can be waived by the parties." In re City of Phila. Litig., 158 F.3d at 726. To be valid, a contractual waiver of the right to a jury must be voluntary and knowing. First Union Nat'l Bank v. United States, 164 F.Supp.2d 660, 663 (E.D.Pa.2001). The following factors guide a court's determination of whether a contractual provision waiving the right to a jury is valid: "(1) there was no gross disparity in bargaining power between the parties, (2) the parties are sophisticated business entities,
For the reasons set forth above, Plaintiff's Motion to Dismiss Defendant's Counterclaim is granted and Plaintiff's Motion to Strike Defendant's Jury Demand is granted. An appropriate Order follows.
