## United States Court of Appeals **For the Eighth Circuit**

___________________________
No. 20

- 2474

___________________________ Ascente Business Consulting, LLC, doing business as LIBERTYID

Plaintiff - Appellant

v.
DR myCommerce, doing business as eSellerate; Digital River, Inc.

Defendants - Appellees

____________ Appeal from United States District Court for the District of Minnesota

____________
Submitted: May 12, 2021

Filed: August 18, 202 1

____________ Before SMITH, Chief Judge, SHEPHERD and GRASZ, Circuit Judges.

____________ GRASZ, Circuit Judge.

Ascente Business Consulting, LLC hired DR myCommerce to build a web portal so that Ascente could sell its identity

- theft

- protection servic es to consumers. When the portal fell below Ascente’s expectations
, it s ued DR myCommerce and its parent company, Digital River, Inc. (collectively, “Digital River”) , for Minnesota-2- contract, fraud, and fraud

- adjacent claims. Ascente challenges the district court’s 1 futility

- based denial of its motion to amend some claims and the adverse grant of summary judgment on others. We affirm.

I. Background

Ascente hired D igital River to build a customer

- facing web portal. In May 2014, Ascente agreed to pay Digital River $73 per hour ($44,822 total) for its
services with a launch set for early October 2014
, as set out in the First Statement of Work

. But setbacks twice delayed the launch. In a Second Statement of Work
, Digital River split the remaining tasks into two phases, prioritizing pre- launch tasks over post

- launch ones.

Eventually, the portal launch ed on October 29, 2014. The same day, Travis Mills (Ascente’s P resident ) “agree [d] and acknowledge [d] ” that : (1) the portal “satisfie [ d] all requirements set forth in the Implementation Specifications ”; (2) Digital River “met its obligations with regard to the implementation of ” the portal ; and (3) Ascente “approved” the portal and its launch

.

Yet b y December 2014
, Ascente found problems with the portal

. For example, if a customer tried to creat e an account to buy the identi ty- theft

- protection services but exited before entering payment information, the customer could not ever buy the services on return visits unless Digital River stepped in to help. A nd eve n if a customer checked out, the portal “put [the customer’s] personal data at risk.” Ascente also learned that multiple po st

- launch tasks remained unfinished.

The next month, the parties planned to meet in Denver to discuss Digital River’s cost overruns. Before the meeting, Chad Johnson (Digital River) sent Ascente an agenda outlining “the current status of our partnership ,” stating :

1 The Honorable Joan N. Ericks e n, United States District Judge for the District of Minnesota, affirming the order of the Honorable Katherine Men en dez, United States Magistrate Judge for the District of Minnesota.-3- a. Contract Date: 5/22/14 (2 year) b. Site Live: 10/29/14 c. Digital River build hours YTD: 3180.25 @ $73 hr = $232,158.25 d. Ascente initial build fees invoiced: $44,8 22 (invoiced and scheduled for payment) e. Total orders YTD: 28 f. Total Gross Revenue YTD: $2950.90

Ex. 27, ECF No. 98

- 4 at 35.

At the Denver meeting, representatives from Ascente (Mills and two consultants, Bret Busse and Elizabeth Sipple) and Digit al River (Johnson and Rodney Salazar) discussed the portal’s status

. Tracking its agenda, Digital River explained that the portal’s build time (and thus, its fees) ran over the budget by $187,33 6. 25

. Ascente agreed to pay those fees. In exchange, Digital River agreed

to : (1) deliver the portal’s source code (the portal’s software in its computer

p rogramming language); and (2) complete the web

- portal

- specific services from the existing Statements of Work. The parties planned to ink those terms in a Software Development Agreement.

In February 2015, when Digital River sent its invoice, it excluded the hours worked and the hour ly rate. Digital River’s purposeful exclusion stemmed from a d ebate between Johnson and his colleague Jennifer Manwarren over a two

- dollar difference in the hourly rate . M anwarren stated that she used “wild math” to reverse engineer the invoice.

In July 2015 , the parties signed the Software Development Agreement. While the district court sealed that agreement, we describe relevant terms in a general way to give some context for the contrac t that Digital River allegedly breached.

Under th at agreement , Digital River needed to “develop S oftware and provide services .

. . (collectively, the ‘Services’)[.]” “Software” meant a “[c]ustomer

- facing-4- Web portal supporting an identity monitoring subscription service [.] ” The agreement listed Software as one of the “Deliverables” that Digital River needed to “deliver or otherw ise make available to [Ascente][ .]” In very similar terms, the parties twice equated the Software’s acceptance with Ascente’s receipt of the Software

.

Still within the Software Development Agreement, t he Scope

- of

- Services provision explained that t hrough the Software , af ter “ [c] ustomers enter[ed] the data they wish to have monitored[,]” the data would be “supplied to a third party identity monitoring service[.]” Another company would send emails. “ I n addition to” those duties, “the Scope of Services exp ressly include[d] the scope” from the earlier Statements of Work but “ relating to the Web Portal only.” But Digital River would have “no obligation to modify, fix, correct, update, enhance, or otherwise maintain the Software .”

Beyond that limitation , the parties agreed that Digital River would provide “ALL SOFTWARE, SERVICES AND WORK PRODUCT . . . ‘ AS IS [.] ’” And
, after generally “DISCLAIM[ING] ALL WARRANTIES,” the agreement expressly stated that Digital River:

MA KES NO WARRANTY OF ANY KI ND THAT THE SOFTWARE OR WORK PRODUCT, OR ANY PRODUCTS OR RESULTS OF THE USE THEREOF, WILL MEET [ASCENTE’S]

. . . REQUIREMENTS, OPERATE WITHOUT INTERRUPTION, ACHIEVE ANY INTENDED RESULT, BE COMPATIBLE OR WORK WITH ANY SOFTWARE, SYSTEM OR OTHER SERVICES, OR BE SECURE, ACCURATE, COMPLETE, FREE OF HARMFUL CODE OR ERROR FREE.

Ex. B, ECF No. 24 at 6.

In April 2016, Ascente finished paying Digital River. After Ascente spent months refus ing to accept the Software’s source code, Digital River delivered it via flash drive in November 2016. Fourteen months later, Ascente sued

.-5- At the pleading stage, the district court dismissed Ascente’s fraud and fraud

adjacent claim s but not the contract claim. Discovery revealed Digital River ’s i nternal communications about Ascente , the parties’ working relationship, and the portal

. 2 Based on those revelations, Ascente asked to amend its fraud
, fraudulent

inducement
, and reckless

- misrepresentation claims.

The m agistrate j udge c onsidered some internal Digital River emails as embraced by the pleadings. The m agistrate j udge concluded , and the district court agreed, that futility barred Ascente from amending everything e xcept one fraudulent

- inducement claim. But that claim did not survive summary judgment. Nor did Ascente’s contract claim.

II. Discussion

Now, Ascente asks us to reverse the leave

- to

- amend denial and the adverse grant of summary judgment.

A. Leave to Amend

Ordinarily we review leave

- to

- amend denials for an abuse of discretion, but we review legal conclusion s de novo. U.S. ex rel

. Raynor v. Nat’l Rural Utils. Coop. Fin., Corp ., 690 F.3d 951, 957 (8th Cir. 2012 ). A futility

- based leave denial “means the district court has reached the legal conclusion that [Ascente’s] amended complaint could not withstand a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure.” Munro v. Lucy Activewear, Inc. , 899 F.3d 585, 589 (8 th Cir. 2018) (quoting Cornelia I. Crowell GST Tr. v. Possis Med., Inc.
, 519 F.3d 778, 782 (8th Cir. 2008)). T ak ing Ascente’s allegations as true and constru ing

2 The emails showed that p re- launch, some Digital River employees saw the then

- existing software flaws as fatal. Employees also joked about and flouted post

launch tasks. And during the Denver meeting, Digital River’s employees (who did not attend the meeting) openly rooted for their company to cut ties with Ascente.-6- all reasonable inferences in its favor, we will reverse if it can show that its proposed amend ments could have saved its otherwise meritless claims. See i d.

Ascente asks us to reverse the district court’s futility

- based leave denials of its fraud and reckless

- misrepresentation claims

. Because Min nesota law treats even the fraud

- adjacent claims like fraud, we apply Rule 9(b)’s heightened pleading requirements to each claim

. See Trooien v. Mansour , 608 F.3d 1020, 1028 (8th Cir. 2010) (applying Minnesota law)

.

“In alleging fraud .

. . , a party must state with particularity the circumstances constituting fraud[.] Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b)

. For each claim, Ascente needed t o “ plead the ‘who, what, where, when, and how [.]’” Ambassador Press, Inc. v. Dust Image Tech. U.S., LLC , 949 F.3d 417, 421 (8th Cir. 2020) (quoting U.S. ex rel. Joshi v. St. Luke’s Hosp., Inc. , 441 F.3d 552, 556 (8th Cir. 2006)) ; see also
Trooien , 608 F.3d at 1028, 1030 ( noting a fraud claim must i nclude “such matters as the time, place [,] and contents of false representation s” (quoting Benne t t v. Berg
, 685 F.2d 1053, 1062 (8th Cir. 1982)) ). It did not. 3

More specifically, Ascente’s fraud claim need ed t o allege: (1) “ a false representation of a past or existing material fact susceptible of knowledge ” ; (2) “ made with knowledge of the falsity of the representation or made without knowing whether it was true or false ” ; (3) “ with the intention to induce action in reliance thereon ” ; (4) “ that the representation caused action in reliance thereon ” ; and (5) “ pecuniary damages as a result of the reliance.” U.S. Bank N.A. v. Cold Spring

3 We decline to review the underdeveloped reckless

- misrepresentation claim. See Dormani v. Target Corp. , 970 F.3d 910, 916 (8th Cir. 2020) (“To be reviewable, an issue must be presented in the brief with some specificity.” (quoting Me yers v. Starke , 420 F.3 d 738, 743 (8th Cir. 2005)) ) . Additionally, while Ascente’s opening brief asserts that the district court erred in denying leave to amend its fraudulent

inducement claim, Ascente only discussed that claim in the summary

- judgment
context.-7- Granite Co. , 802 N.W.2d 363, 373 (Minn. 2011). This appeal deals w ith the second elemen t— knowing misrepresentation

.

In terms of relevant facts, t he knowing

- misrepresentation analysis comes to an abrupt halt after the speaker makes the allegedly false statement. Put simply: we only look at what the alleged fraudster kne w when he or she made the misrepresentation

. See Martens v. Minn. Mining & Mfg. Co. , 616 N.W.2d 732, 747

– 48 ( Minn. 2000) (“ [T] he complaint is devoid of any specific claim that appellant ’ s statements were representations the appellant knew were false or had no intention of fulfilling at the time they were made. ”).

Ascente says that its proposed amendments adequately alleged three separate knowing misrepresentations

. We disagree.

1 . October 2014

First, Ascente says that its proposed amendments adequat ely alleged that on October 28 and 29 , 2014, Digital River committed fraud when Johnson and his colleague Corey Husfeldt told Ascente (via Busse) that the web portal was ready for commerce, fully functional, and met all of the requisite specifications. Bu t th ose amendments do not point to Johnson or Husfeldt. See Ambassador Press , 949 F.3d

at 421 ( noting fraud claims must “plead the ‘ who , what, where, when, and how’” (emphasis added) (quoting Joshi , 441 F.3d at 556) ).

Ascente asserts that it “ need only allege that [ Di gital River ] had the requisite knowledge [,] ” rather than Johnson or Husfeldt. Not so. “It is not sufficient to attribute alleged false statements to ‘defendants’ generally.” Trooien , 608 F.3d at 1030

.

Ascente also urges us to use general corporate

- law principles to cloak Johnson and Husfeldt in their colleagues’ statements . B ut Ascente waived that argument by-8- raising it for the first time on appeal

. 4 See, e .g. , St. Paul Fire & Marine Ins. Co. v. Compaq Comput. Corp.
, 539 F.3d 809, 824 (8th Cir. 2008) (argument not raised in the district court is waived ).

Ascente views its amendments as adequately alleg ing that Johnson and Husfeldt personally kn ew about the por tal’s shortcomings . This argument rises and falls with three email chains.

First, an October 3

– 6 Digital River email chain discusse d the company’s capability to meet the new deadline (October 29, 2014). Husfeldt ( with Johnson copied ) ask ed colleague Jerel Thompson to “provide feedback on 10/29[.]” Thompson confirm ed that “[a]s long as the planned resources

. . . do[n]’t change, we can meet Oct. 29th from a Development perspective.” Manwarren replied to ask if “that include[s] QA time or no t?” Ascente did not tell us where to find th at question’s response

.

Next, Husfeldt listed the pros and cons of two adjustment options and ask ed if one adjustment “allow[s] for October 29 th (including testing) to be the go live date?” Tracing the chain chronologically leads to two affirmative responses , one from Thompson and another from Matthew Kleinsasser.

Those email chains fit the timeframe (before the alleged misrepresentations). See Martens
, 616 N.W. 2d at 747 . And they involve Johnson and Husfeldt. But the emails say nothing about what those two knew about the portal’s readiness for commerce, its functionality, or whether it met the specifications.

For the October 2014 slice in time, Ascente’s only other knowing

misrepresentation allegations come from a December 2014 email chain. Ascente tries to use those emails to explain what Digital River (via Johnson or Husfeldt)

4 For the same re ason, Ascente cannot use this argument to revive its January 2015 allegations

.-9- knew two months earlier. 5 But because we can only look at what Johnson or Husfeldt knew when they made the allegedly false statement s , t he December 2014 emails do not help Ascente. See Martens
, 616 N.W. 2d at 747

.

For these reasons, Ascente failed to adequately allege that Johnson and Husfeldt made knowing misrepresentations in October 2014.

2

. January 2015

Next, Ascente says that it s proposed amendments adequately alleged that Digital River committed fraud at the Denver meeting in January 2015 by purportedly misrepre sen t ing its then

- present intentions. Specifically, Ascente points to when Digital River’s Johnson and Salazar agreed

— without intending

— to finish the company’s work and deliver a functional portal if Ascente paid Digital River another $187,336.25.

In support, Ascente reli es on Digital River’s post

- meeting actions, including the undisputed fact that it stopped development work after the Denver meeting. No record cite directs us to any pre

- meeting actions that would hint at Joh nson or Salaza r’s intent at the meeting

.

Asc ente also tries to marry D igital River ’s purportedly “clear financial motive” and the January 2015 misrepresentations

. Ascente ’s only case that involves a “co mpeting interest” does not equate a c onflict of interest with an adequately

5 The December 2, 2014
, email chain began when Sipple ( an Ascente consultant ) ask ed Husfeldt (Digital River) about test accounts for the portal

. Husfeldt forwarded that email t o his colleague Christine Roe for help r esponding to Sipple. In turn, Roe forwarded it to Thompson and both weighed in

. Dropping Thompson from the chain, Roe said that “the cleanup job [for reconciling accounts] wasn’t implemented.” But Roe “wasn’t aware of that” and said that it “ [m] ust have been a corner that was cut at the end. As far as [she] knew[,] [Thompson] had written it.”- 10 - allege d knowing misrepresentation

. See Damon v. Groteboer , 937 F. Supp. 2d 1048, 107 1–73 , 1090 (D. Minn. 2013) (denying summary judgment on fraud claim against realtors when facts could have supported an inference that realtor lacked intent to market a property b ecause doing so cut against his financial interest, he did not try to lease units, and he claimed to have shown the building many times ). At best,
Damon (a nonbinding district court case) suggests that a co mpet ing interest can present a factor in the know ing

- misrepresentation analysis —n ot t he only factor.

For these reasons, the January 2015 statements cannot save Ascente’s fraud claim. 3

. July 2015

Finally, Ascente contends that Digital River committed fraud in July 2015 by signing the S oftware Development Agreement without intending to perform it. In support, Ascente relies on the “mountain of unfinished work” and post

- execution emails. This argument fails for several reasons.

First, the So ftware Development Agreement expressly contemplated Digital River’s duty to finish its outstanding work. So, everyone (including Ascente) knew that Digital River had more work to do. And Ascente concedes that t he July 2015 misrepresentation turns on Digital River’s “intent not to perform,” not its capability to do so . Yet Ascente does not explain how the “mountain of unfinished work” translates into an intent not to perform an agreement to finish that exact work.

And se cond, Ascente cannot use emails that post

- date the Software Development Agreement to adequately allege that Digital River signed that agreement without intending to perform it. See Martens , 616 N.W.2d at 747. So, the July 2015 misrepresentation do es not help Ascente’s fraud claim.

Even when we drew all reasonable inferences in Ascente’s favor, its proposed amendments could not save its fraud claim. As a result, we agree with the district court’s futility holding.- 11 - B. Summary Judgment

Next, w e review de novo the grant of summary judgment to Digital River on Ascente’s breach of contract and fraudulent

- inducement claims. See Paskert v.
Kemna

- ASA Auto Plaza, Inc. , 950 F.3d 535, 538 (8th Cir. 2020) ; Fed. R. Civ. P. 56.

1 . Contract

Everyone agr ees that Minnesota law governs the Software Development Agreement and its incorporated Statements of Work. 6 On the contract claim, we only need to decide if Ascente raised a triable fact on the breach element.

The Minnesota Supreme Court’s “primary goal of contract interpretation is to determine and enforce the intent of the parties.” Motorsports Racing Plus, Inc. v. Arctic Cat Sales

, Inc ., 666 N.W.2d 320, 323 (Minn. 2003); accord Jensen v. Minn

. Dep ’t of Hum. Servs ., 897 F.3d 908, 913 (8th Cir. 2018) (applying Minnesota law). When parties use unambiguous words to express their intent, Minnesota courts give those words their plain meaning. Jensen , 897 F.3d at 913

. However, a contract becomes ambiguou s if its plain terms are “ reasonably susceptible to more than one construction [.] ” Id.

But “[i ] nterpretation of unambiguous contracts is a question of law for the court, as is the determination that a contract is ambiguous.” Staffing Specifix, Inc. v.
T

empWorks Mgmt. Servs., Inc ., 913 N.W.2d 687, 692 (Minn. 2018) ( holding trial court erred in allowing jury to decide “ whether the contracts at issue were ambiguous, rather than instructing the jury that the contracts were ambiguous”). “A

6 The parties’ contract arguments use common law and Uniform Commercial Code concepts, interchangeably. Although the Software Development Agreement involves both goods and services, we do not decide if common law or the UCC applies. See Vesta State Bank v. Indep. State Bank of Minn.
, 518 N.W.2d 850, 854 (Minn. 1994) (using the predominant

- purpose test for hybrid goods

- and

- services contracts).- 12 - contract’s terms are not ambiguous simply because the parties’ interpretations differ.” Id . If a court views a contract a s ambiguous, “it may admit . . . extrinsic evidence of the parties’ intent ” (anything beyond the contract’s four corners). Id

. “When extrinsic eviden ce has been admitted, the interpretation of ambiguous terms becomes a question of fact for the jury.” Id

.

At summary judgment, t he district court concluded that only three (of the six) purported breaches even implicated Digital River’s contractual duties

. But to the district court, no evidence raised a triable fact on whether Digital River breached its purported duties.

Now, Ascente’s two contract

- based challenges hinge on whether t he district court erred by reading the Software Development Agreement differently than Ascente’s expert, Jonathan Hochman

. As A scente sees it, we can only understand that agreement ’s “highly technical” terms by looking at extrinsic evidence

— namely, Hochman’s opinion.

Ascente’s expert

- based challenge skips several steps. See Staffing Specifi x , 913 N.W.2d at 692

– 93

. Hochman’s tes timony cannot answer the legal question of ambiguity. See S. Pine Helicopters, Inc. v. Phx

. Aviation Managers, Inc ., 320 F.3d 838, 841 (8th Cir. 2003) (expert testimony on legal matters is inadmissible)

. And d espite Ascente’s assertions otherwise, the district court’s Daubert decision on Hochman

— which limited his testimony to ecommerce software ’s development

— did not empower Hochman to declare the Software Development Agreem ent ambiguous. See Staffing Specifix
, 913 N.W.2d

. at 692.

Without any other substantive arguments, Ascente cannot convince us that the district court erred in dismissing the contract claim

.- 13 - 2

. Fraudulent Inducement

“[A]bsent the essential element of reliance, an action for fraud must fail.” Breezy Point Airport, Inc. v. First Fed. Sav. & Loan Ass’n of Brainerd , 179 N.W.2d 612, 615 (Minn. 1970). So, t o defeat summary judgment on its fraudulent

inducement claim, Ascente needed to raise a triable fact on its actual reliance

. See Hoyt Props., Inc. v. Prod. Res. Grp ., 736 N.W.2d 313, 321 (Minn. 2007) ; accord Popp Telecom, Inc. v. Am. Sharecom, Inc. , 361 F. 3d 482, 491

– 92 (8th Cir. 2004) (affirming adverse grant of summary judgment on Minnesota fraud claim when shareholders could not establish actual reliance)

.

Here, Ascente needed to show that a triable fact exist ed on whether it signed the Software Devel opment Agreement because it rel ied on Digital River’s representations about the cost

- overrun figure. See Hoyt , 736 N.W.2d at 321

. Ascente primarily looks to its president ’s d eposition excerpts for support. When asked why he agreed to pay Digital River $187,336.25

, Mills testified :

Because regardless of what our contract said, the agreement was made between people . P eople that agreed to form a partnership whom I believed were working ethically and on top of the table to continue that partnership in go od faith. I saw it as two professional organizations that were in a partnership together, and that there would be a bigger downside of me – for me not to pay my partner and keep them happy and going than there would be to try to get away with something. Digital River was my partner, and my values don’t allow me to even if contractually get away with something, do it.

Ex. 1, ECF No . 122

- 1 at 7

– 8. Mills also testified that he “ was willing to pay what they told me that – that would make our relationship wh ole and ongoing. I was willing to consider that. ”

For the district court, Mills’s testimony resolved actual reliance a gainst Ascente . I n its view, “[n]o reasonable jury could find that Ascente signed the- 14 - [Software Development Agreement] in reliance on [ Digital River’s ] representation of the amount of their cost overruns.” We agree.

The undisputed evidence speaks for itself. To preserve its business relationship with Digital River, Ascente “was willing to pay what [Digital River] told” Mills. Compar e Popp , 361 F.3d at 491

– 92 (upholding adverse grant of summary judgment when shareholders admitted that corporation’s pre

- merger activities did not induce them to sell their shares)
, with Hoyt , 736 N.W.2d at 321 (remanding for trial when lessor testified t hat he agreed to settle “ because he relied” on opposing counsel’s representations).

Ascente suggests that its “reliance is also confirmed by Johnson’s own emails,” because the Digital River employee “noted ”— to other Digital River employees —“ that if the invoice w [as] submitted with the wrong hourly rate, Ascent e ‘will likely question it.’” We have no idea how Digital River’s internal prediction about what Ascente might do tells us what Ascente actually did. And Ascente cites no authority to convince us that Minnesota courts decide the actual

- reliance element

— which looks at the alleged victim

— by examining what the alleged fraudster expected its victim to do.

Without raising a triable fact on its actual reliance, Ascente’s fraudulent

inducement claim fails. See Breezy Point
, 179 N.W.2d at 615. Consequently, we conclude that the district cour t properly grant ed summary judgment on that claim.

I II . Conclusion

For these reasons, we affirm the district court’s futility

- based leave denial and its grant of summary judgment to Digital River

.

______________________________