Opinion ID: 1694101
Heading Depth: 2
Heading Rank: 3

Heading: Improper Renewal of Maintenance Agreements

Text: Finally, Bentley contends that Intergraph repeatedly renewed CRP maintenance agreements for its own account contrary to the express prohibition against such renewals in the APA. Bentley faults Intergraph for renewing agreements for which quotes had been issued before the APA closing and for its handling of the evergreen contracts in Europe. Bentley states in its brief to this Court that Intergraph admitted in its answers to interrogatories that it renewed more than 675 agreements after the APA closing. Further analysis of Intergraph's maintenance data shows, Bentley says, that after the closing Intergraph renewed 329 agreements in the United States, representing over 14% of the 2,287 maintenance agreements in place, and renewed 1,794 agreements outside the United States, representing 40.4% of the 4,436 maintenance agreements in place. After Bentley discovered that Intergraph was renewing agreements for its own account, Intergraph made arrangements to repay Bentley the revenue Intergraph had collected from those agreements. John Carter acknowledged in an e-mail exchange with David Nation in May 2001 that Intergraph had renewed agreements after the APA closing. He stated: To the issue of stopping the renewal and/or billing `beyond the expiration dates of the contracts', I believe that for the most part this matter is being addressed, particularly for the United States  although there is certainly some room for improvement. As for our subsidiaries, there does appear to be some level of noncompliance  which is most likely cause [sic] by confusion on their part as to fully understanding the details of the [APA]. I am in the process of `reeducating' each of the Company's major regional leaders, and as necessary, with the individual Intergraph country manager. We reject Intergraph's attempt to justify its renewal of agreements based upon outstanding quotes and its delay in resolving the issues presented by the evergreen contracts. Our review of the record supports Bentley's contention that Intergraph renewed a significant number of agreements despite Bentley's complaints about that activity. Most of those renewals were based upon Intergraph's self-serving interpretation of the APA concerning what Intergraph perceived as its right to renew agreements for which quotes had been issued. Intergraph also created problems for Bentley's renewal efforts with the evergreen contracts. Intergraph had an obligation to inform Bentley of all CRP maintenance agreements the term of which extended beyond the APA year. All of the evergreen contracts should have been listed; none were. When Bentley began complaining about the changing renewal dates on those contracts in the updated TM schedules, Intergraph began to take action to terminate the contracts so that they could be transitioned to Bentley. However, in many cases, Intergraph simply terminated the evergreen contracts without providing Bentley with the information necessary to allow Bentley to pursue the renewal of the contracts in time to forestall any gaps in maintenance coverage. Intergraph's activities in this regard were more pronounced in its foreign subsidiaries where, in the words of Intergraph's chief executive officer, those responsible for complying with the APA disapproved of the APA and feigned misunderstanding rather than taking the appropriate steps to comply with it. See Part IV of this opinion for further discussion of the issues concerning outstanding quotes and the evergreen contracts.