Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_06-cv-06637/USCOURTS-cand-5_06-cv-06637-12/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition For Removal--Other Contract

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United States District Court

For the Northern District of California

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ORDER GRANTING IN PART AND DENYING IN PART IBM'S MOTIONS FOR SUMMARY JUDGMENT AND DENYING

CARDONET'S MOTION TO STRIKE

No. C-06-06637 RMW

TSF

United States District Court

For the Northern District of California

E-FILED on 4/7/08

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

CARDONET, INC.,

Plaintiff,

v.

IBM CORPORATION, et al.,

Defendants.

No. C-06-06637 RMW

ORDER GRANTING IN PART AND

DENYING IN PART IBM'S MOTIONS FOR

SUMMARY JUDGMENT AND DENYING

CARDONET'S MOTION TO STRIKE

[Re Docket Nos. 94, 99, 106]

Defendant IBM Corporation ("IBM") has filed two motions for summary judgment. The

first motion addresses which license agreement controls the parties' relationship, whether the

applicable agreement is susceptible to only one reasonable interpretation, and whether the

interpretation requires summary judgment in favor of IBM. The second motion addresses the legal

viability of various other claims made by the plaintiff Cardonet, Inc. ("Cardonet"). Cardonet

opposes both motions. Cardonet has also filed a motion to strike or continue the second motion for

summary judgment. The court has read the papers and considered the arguments of counsel. For the

reasons set forth below, the court grants in part and denies in part IBM's motions for summary

Case 5:06-cv-06637-RMW Document 139 Filed 04/07/08 Page 1 of 4
United States District Court

For the Northern District of California

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ORDER GRANTING IN PART AND DENYING IN PART IBM'S MOTIONS FOR SUMMARY JUDGMENT AND DENYING

CARDONET'S MOTION TO STRIKE

No. C-06-06637 RMW

TSF 2

judgment and denies Cardonet's motion to strike.

With respect to the breach of contract claim, the court finds the contracts sufficiently

ambiguous that they are reasonably susceptible to both parties' interpretations. Mellon Bank, N.A. v.

United Bank Corp. of N.Y., 31 F.3d 113, 115 (2d Cir. 1994). The meaning of the contract's SKU

limitation and the details of the 2006 service plan are therefore both questions of fact, and the

parties' intent will have to be discerned at the upcoming bench trial. Accord id. at 115-16.

IBM's motion for summary judgment is well-taken with respect to Cardonet's non-contract

claims. With respect to its claim for promissory estoppel, Cardonet conceded at the hearing that no

direct promises were made by IBM. The only "promise" Cardonet identified was the contract's

provision to meet to discuss whether IBM owed additional money for excess software usage. This

may enter into the breach of contract analysis at trial, but because it is a provision in a formal

contract, it cannot serve as the basis for a promissory estoppel claim.

Cardonet's claims for fraud and negligent misrepresentation arise from alleged facts relating

to the parties' license agreement. To the extent Cardonet's claims are based on IBM's failure to meet

to discuss usage, New York law is clear that "a cause of action for fraud does not arise when the

only alleged fraud relates to a breach of contract." Manshul Const. Corp. v. City of New York, 143

A.D.2d 333, 336 (N.Y. App. Div. 1988). To the extent Cardonet's claim are based on some other

false statement, Cardonet has not met is burden of production in opposing IBM's motion for

summary judgment.

Cardonet also alleges that IBM converted Cardonet's property by exceeding the usage limit

in the parties' license agreement. While New York broadly applies the tort of conversion to

intangible property, see Thyroff v. Nationwide Mutual Insurance Co., 8 N.Y.3d 283, 288-93 (2007),

a claim for conversion does not lie here. Fundamentally, conversion requires the "wrongful exercise

of dominion" over another's property. State v. Seventh Regiment Fund, Inc., 98 N.Y.2d 249, 260

(2002). This requires some deprivation of ownership. In Thyroff, the New York Court of Appeals

held that a claim of conversion could exist where a person took possession of another's computer

files, depriving the rightful owner of access to their data. 8 N.Y.3d at 292-93. Here, IBM did not

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ORDER GRANTING IN PART AND DENYING IN PART IBM'S MOTIONS FOR SUMMARY JUDGMENT AND DENYING

CARDONET'S MOTION TO STRIKE

No. C-06-06637 RMW

TSF 3

deprive Cardonet of Cardonet's software or Cardonet's data – it allegedly exceeded the usage limit in

a software license. While such activity can support a claim for a breach of the license agreement,

IBM has not wrongfully deprived Cardonet of Cardonet's property, hence there can be no claim for

conversion.

Lastly, Cardonet filed a motion to strike or continue IBM's second motion for summary

judgment because IBM's filing violates Civil Local Rule 7-2(b). Because Cardonet has not

demonstrated any prejudice arising from opposing an additional motion, the court declines to strike

the motion. See Burger v. Kuimelis, 325 F. Supp. 2d 1026, 1030-31 (N.D. Cal. 2004) (Walker, J.).

For the foregoing reasons, the court:

1. DENIES IBM's motions for summary judgment with respect to Cardonet's breach of

contract claim;

2. DENIES Cardonet's motion to strike IBM's second motion for summary judgment;

3. GRANTS IBM's motion for summary judgment with respect to Cardonet's

promissory estoppel claim;

4. GRANTS IBM's motion for summary judgment with respect to Cardonet's conversion

claim;

5 GRANTS IBM's motion for summary judgment with respect to Cardonet's fraud

claim; and

6. GRANTS IBM's motion for summary judgment with respect to Cardonet's negligent

misrepresentation claim.

DATED: 4/7/08

RONALD M. WHYTE

United States District Judge

Case 5:06-cv-06637-RMW Document 139 Filed 04/07/08 Page 3 of 4
United States District Court

For the Northern District of California

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ORDER GRANTING IN PART AND DENYING IN PART IBM'S MOTIONS FOR SUMMARY JUDGMENT AND DENYING

CARDONET'S MOTION TO STRIKE

No. C-06-06637 RMW

TSF 4

Notice of this document has been electronically sent to:

Counsel for Plaintiff:

Kenneth N. Frucht Kfrucht@aol.com 

Frederick J. Geonetta landglawyers@msn.com 

Thomas Marc Litton tmlitton@compuserve.com 

Counsel for Defendants:

Shon Morgan shonmorgan@quinnemanuel.com

Joseph Mel Paunovich joepaunovich@quinnemanuel.com 

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 4/7/08 TSF

Chambers of Judge Whyte

Case 5:06-cv-06637-RMW Document 139 Filed 04/07/08 Page 4 of 4