Court Opinion

ID: 9941616
Source: CourtListenerOpinion
Date Created: 2024-02-16 17:01:41.82026+00
Date Added: 2024-06-11T13:46:48.944850
License: Public Domain

UNITED STATES DISTRICT COURT
                           FOR THE DISTRICT OF COLUMBIA

MATEK INCORPORATED,                              :
                                                 :
       Plaintiff,                                :      Civil Action No.:      23-01847 (RC)
                                                 :
       v.                                        :      Re Document No.:       8
                                                 :
INTERNATIONAL BUSINESS                           :
MACHINES CORPORATION,                            :
                                                 :
       Defendant.                                :

                                 MEMORANDUM OPINION

                        GRANTING DEFENDANT’S MOTION TO DISMISS

                                     I. INTRODUCTION

       Matek Incorporated (“Matek”) sued International Business Machines Corporation, more

commonly known as IBM, in the District of Columbia Superior Court for breach of contract. See

Notice of Removal at 1, ECF No. 1; Compl. at ¶¶ 1, 19–28, ECF No. 1-2. IBM removed the case

to this Court from D.C. Superior Court and subsequently filed a motion to dismiss Matek’s case

for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). See Notice of

Removal; Mem. Supp. Def.’s Mot. to Dismiss (“Mot.”) at 6, ECF No. 8-1. Before the Court are

IBM’s Motion to Dismiss, Matek’s response in opposition to IBM’s motion (“Opp.”), ECF No.

11, and IBM’s reply in support of its motion (“Reply”), ECF No. 12. For the reasons explained

below, the Court grants IBM’s motion to dismiss because Matek has failed to state a claim upon

which relief can be granted.

                                      II. BACKGROUND

       The story of this case involves three entities: Matek, IBM, and Howard University

(“Howard” or “the University”). See Compl. at ¶¶ 6–8; Statement of Work at 1, ECF No. 1-2.
Matek is a small Maryland corporation that provides telecommunication and information

technology services in the Washington, D.C. metropolitan area. See Compl. at ¶¶ 6–8; Opp. at 1.

IBM is a multinational technology corporation that specializes in an array of technology products

and services. See Compl. at ¶¶ 6–8. Howard University is a prestigious university located in the

District of Columbia. See Opp. at 1.

       In 2017, IBM began to negotiate a contract with Howard University to provide the

University with telecommunication services. See Compl. at ¶ 7. To furnish Howard’s

telecommunication requirements, IBM sought subcontractors to assist with the Howard

University project. Id. at ¶ 6. One of those subcontractors was Matek. Id. at ¶ 6. Matek and

IBM entered into a “Supplier Relationship Agreement” whereby Matek agreed to provide certain

telecommunication services to IBM’s customer, here the University. Id. at ¶ 8; Opp. at 2. After

IBM and Matek entered into the Supplier Relationship Agreement, they executed another

document called the “Statement of Work,” which incorporated the terms and conditions of the

Supplier Relationship Agreement and explained the scope of Matek’s work on the Howard

University project. See Compl. at ¶¶ 8, 13; Statement of Work at 1. Generally speaking, the

Statement of Work governed the relationship between Matek and Howard, see Statement of

Work at 1, 2, 23 (“This Agreement is entered solely between and may be enforced only by

Customer [Howard] and Supplier [Matek].”), whereas the Supplier Relationship Agreement

primarily governed the relationship between Matek and IBM, see Supplier Relationship

Agreement at 1, ECF No. 1-2. 1

       1
       The Court refers to the combined Statement of Work and Supplier Relationship
Agreement as “the Agreement.”

                                               2
        As the astute reader may have surmised, the relationship between Matek and IBM soured.

IBM terminated the Agreement without cause and refused to pay Matek for further services. See

Compl. at ¶ 17. As a result, Matek brought this suit against IBM for breach of contract. See

generally Compl. IBM now moves to dismiss. See generally Mot.

                                     III. LEGAL STANDARD

        To survive a motion to dismiss, a plaintiff must “state a claim upon which relief can be

granted.” Fed. R. Civ. P. 12(b)(6). The plaintiff’s complaint “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 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A

plaintiff's factual allegations, therefore, “must be enough to raise a right to relief above the

speculative level, on the assumption that all the allegations in the complaint are true (even if

doubtful in fact).” Twombly, 550 U.S. at 555 (citations omitted). “A claim crosses from

conceivable to plausible when it contains factual allegations that, if proved, would ‘allow[ ] the

court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’”

Banneker Ventures, LLC v. Graham, 798 F.3d 1119, 1129 (D.C. Cir. 2015) (quoting Iqbal, 556

U.S. at 678). A court need not accept a plaintiff's legal conclusions as true, see Iqbal, 556 U.S.

at 678, nor must a court presume the veracity of legal conclusions that are couched as factual

allegations, see Twombly, 550 U.S. at 555. “In determining whether a complaint fails to state a

claim, the court may consider only the facts alleged in the complaint, any documents either

attached to or incorporated in the complaint, and matters of which [the court] may take judicial

notice.” Palakuru v. Renaud, 521 F. Supp. 3d 46, 49 (D.D.C. 2021) (cleaned up); English v.

D.C., 717 F.3d 968, 971 (D.C. Cir. 2013) (explaining that the Court “may consider attachments

                                                    3
to the complaint as well as the allegations contained in the complaint itself” when deciding a

motion to dismiss).

                                         IV. ANALYSIS

       The single count in Matek’s complaint alleges breach of contract. See Compl. at ¶ 19–

28. 2 “To survive a motion to dismiss a breach of contract claim under New York law, the

Complaint must allege facts which show ‘the existence of a contract, the plaintiff’s performance

pursuant to that contract, the defendants’ breach of their obligations pursuant to the contract, and

damages resulting from that breach[.]’” Heidi Aviation, LLC v. Jetcraft Corp., 573 F. Supp. 3d

182, 193 (D.D.C. 2021) (quoting Elisa Dreier Reporting Corp. v. Glob. Naps Networks, Inc., 921

N.Y.S.2d 329, 333 (N.Y. App. Div. 2011)). Contract interpretation is “generally [a] matter[ ] of

law and therefore [is] suitable for disposition on a motion to dismiss.” PB Ams. Inc. v. Cont'l

Cas. Co., 690 F. Supp. 2d 242, 247 (S.D.N.Y. 2010) (quoting Citadel Equity Fund, Ltd. v.

Aquila, Inc., 371 F. Supp. 2d 510, 516 (S.D.N.Y. 2005)); see also Alexander & Alexander Servs.,

Inc. v. These Certain Underwriters at Lloyd's, London, England, 136 F.3d 82, 86 (2d Cir. 1998)

(“Under New York law the initial interpretation of a contract is a matter of law for the court to

decide[.]” (internal quotation marks and citation omitted)). When a contract's language is “clear

and unambiguous, a court may dismiss a breach of contract claim on a Rule 12(b)(6) motion to

dismiss.” Maniolos v. United States, 741 F. Supp. 2d 555, 567 (S.D.N.Y. 2010).

       2
         The parties agree that their contract is governed by New York law. See Mot. at 4; Opp.
at 7; Reply at 3; see also Supplier Relationship Agreement at 2, (“Except as otherwise set forth
in SOW or in Participation Attachment, if any, the parties agree to: i) the application of the laws
of the State of New York for all Agreements executed by International Business Machines
Corporation.”).

                                                 4
                                A. Termination Without Cause

       Matek alleges that IBM breached their contract by “terminating the [parties’] Agreement

without cause and before Deliverables and Services were completed on the Howard Project, and

failing to pay Plaintiff in violation of the terms of the Agreement.” Compl. at ¶ 26; see also

Opp. at 7. IBM asserts that Matek’s complaint fails to state a claim because the Agreement

between IBM and Matek clearly and unambiguously authorized IBM to terminate the Agreement

with Matek without cause. See Mot. at 6; Reply at 1. Therefore, IBM says, Matek has not and

cannot allege a breach of contract claim. See Mot. at 6.

       Under New York law, “[i]t is well settled that a contract is to be construed in accordance

with the parties’ intent, which is generally discerned from the four corners of the document itself.

Consequently, ‘a written agreement that is complete, clear and unambiguous on its face must be

enforced according to the plain meaning of its terms.’” MHR Cap. Partners LP v. Presstek, Inc.,

912 N.E.2d 43, 47 (N.Y. 2009) (quoting Greenfield v. Philles Records, 780 N.E.2d 166, 170

(N.Y. 2002)). Moreover, New York courts enforce only the contractual terms bargained for and

assented to by the parties and courts “may not by construction add or excise terms, nor distort the

meaning of those used and thereby ‘make a new contract for the parties under the guise of

interpreting the writing.’” Reiss v. Fin. Performance Corp., 764 N.E.2d 958, 961 (N.Y. 2001)

(quoting Schmidt v. Magnetic Head Corp., 468 N.Y.S.2d 649, 654 (N.Y. App. Div. 1983)).

Accordingly, the Court examines the plain meaning of the text within the four corners of the

parties’ Agreement to determine whether IBM’s without-cause termination breached the

Agreement.

                                                 5
       As explained above, two related documents comprise the relevant Agreement 3 in this

case: (1) the “Supplier Relationship Agreement” and (2) the “Statement of Work.” See Compl.

at ¶ 8. Both the Supplier Relationship Agreement and the Statement of Work contain provisions

governing the circumstances under which the Agreement may be terminated. IBM argues that

the Supplier Relationship Agreement explicitly and unambiguously authorized it to terminate the

Agreement with Matek without cause. See Mot. at 2. That assertion is accurate: the Supplier

Relationship Agreement states that “IBM may, upon written notice to Supplier, terminate a

[Statement of Work] . . . ii) without cause, in each case with termination effective on the date set

forth in the notice.” Supplier Relationship Agreement at 2. And the Supplier Relationship

Agreement further authorized IBM to terminate the Supplier Relationship Agreement itself

without cause if there was no Statement of Work in place. Id. Thus, the plain unambiguous

terms of the Agreement permitted IBM to terminate the Agreement—both the Statement of

Work and the Supplier Relationship Agreement—without cause. See Elsaeidy v. Guarino, 767

N.Y.S.2d 889, 890 (N.Y. App. Div. 2003) (“Since the unconditional cancellation clause

permitted the defendants to cancel the contract for any reason, the cancellation was authorized by

the parties’ contract and did not constitute an actionable breach.”).

       Nevertheless, Matek argues that granting IBM’s motion to dismiss would be

inappropriate because the language of the Agreement is ambiguous with respect to the

termination provision given an alleged inconsistency between the Supplier Relationship

       3
          “Under New York law . . . documents must be read together, even though they were
executed on different dates and were not all between the same parties, if the documents formed
part of a single transaction and were designed to effectuate the same purpose.” Bank of New
York v. F.D.I.C., 453 F. Supp. 2d 82, 99 (D.D.C. 2006), aff'd, 508 F.3d 1 (D.C. Cir. 2007)
(cleaned up). Here, the Statement of Work explicitly incorporates the Supplier Relationship
Agreement.

                                                 6
Agreement and the Statement of Work. See Opp. at 6–7 (conceding that IBM’s arguments

“might be valid but for the fact that the SOW and the SRA are fraught and replete with

inconsistencies, conflicts and discrepancies.”). Specifically, Matek argues that the Statement of

Work prohibited IBM from terminating it without cause. The Court disagrees.

       In support of its contention, Matek directs the Court’s attention to the termination

provision of the Statement of Work. See Opp. at 7. But the termination clause in the Statement

of Work does not avail Matek. See Elletson v. Bonded Insulation Co. Inc., 708 N.Y.S.2d 511,

513 (N.Y. App. Div. 2000) (“[A]mbiguity [does not] exist where one party’s view strains the

contract language beyond its reasonable and ordinary meaning.” (cleaned up)). First off, by its

own terms, the termination clause in the Statement of Work restricts the circumstances under

which Howard—not IBM—could terminate the Agreement with Matek. The Statement of

Work’s termination clause is titled “Termination by Howard.” See Statement of Work at 24

(emphasis added). The heading of a provision provides helpful clues to the meaning of that

provision, see Huisha-Huisha v. Mayorkas, 27 F.4th 718, 727 (D.C. Cir. 2022) (“The title and

headings are permissible indicators of meaning.” (internal quotation marks and citation

omitted)), and here the heading cues the reader that only Howard—not IBM—was restricted by

the provision. Additionally, the substantive text of the provision states that “Howard may

terminate this Agreement . . . .” See Statement of Work at 24 (emphasis added). Accordingly,

the plain meaning interpretation of the text of the termination clause in the Statement of Work is

that the termination clause restricts only the way that Howard may terminate the Agreement with

Matek. By contrast, the part of the Agreement relevant to understanding the circumstances under

which IBM may terminate the Agreement is found in the Supplier Relationship Agreement. See

Supplier Relationship Agreement at 2.

                                                7
        Moreover, the alleged inconsistency between the Supplier Relationship Agreement and

Statement of Work is illusory when the Agreement is read in its entirety—as the Agreement

must be interpreted. See W. W. W. Assocs., Inc. v. Giancontieri, 566 N.E.2d 639, 642 (N.Y.

1990); see also Gary Friedrich Enter., LLC v. Marvel Characters, Inc., 716 F.3d 302, 313 (2d

Cir. 2013) (explaining that, when interpreting a contract under New York law, courts must “not

consider particular phrases in isolation, but rather interpret them in light of the parties’ intent as

manifested by the contract as a whole”); Proyecfin de Venezuela, S.A. v. Banco Indus. de

Venezuela, S.A., 760 F.2d 390, 395–96 (2d Cir. 1985) (explaining “basic tenet of contract law”

that “where two seemingly conflicting contract provisions reasonably can be reconciled, a court

is required to do so and to give both effect”). This is so because the Statement of Work “adopts

and incorporates by reference the terms and conditions of [the] Supplier Relationship

Agreement.” See Compl. at ¶ 20; Statement of Work at 1. And, as explained above, the Supplier

Relationship Agreement explicitly permits IBM to terminate the Agreement with Matek “without

cause.” See Supplier Relationship Agreement at 2. It is not inconsistent or ambiguous for two

distinct entities governed by the same contract to be authorized to terminate the Agreement under

different circumstances. C.f. Bode & Grenier, LLP v. Knight, 808 F.3d 852, 862 (D.C. Cir.

2015) (explaining that a subcontract does “not [necessarily] incorporate the prime contract’s

dispute clause” (cleaned up)). And indeed, the Statement of Work more broadly governs only

the relationship between Howard and Matek and does not affect IBM’s rights under the Supplier

Relationship Agreement. See Statement of Work at 1, 2, 15, 23 (“This Agreement is entered

solely between and may be enforced only by Customer [Howard] and Supplier [Matek].”).

Because there is no ambiguity with respect to the Agreement—and the Agreement explicitly

provides that IBM may terminate the Agreement with Matek without cause—the Court

                                                   8
concludes that Matek has failed to state a claim for breach of contract. Accordingly, the Court

grants IBM’s motion to dismiss for failure to state a claim.

                               B. Two-Year Limitations Period

       Even, assuming arguendo, that there were some ambiguity concerning whether IBM was

entitled to terminate the Agreement without cause, the Court also concludes that Matek’s claim

is barred by a contractual two-year limitations period. See Supplier Relationship Agreement at

2–3 (“Neither party will bring a legal action arising out of or related to this Agreement more than

two years after the cause of action arose.”); Mot. at 9; Reply at 5. Matek states that IBM

breached “in April of 2020,” Compl. at ¶ 15; Opp. at 4, but Matek brought this suit in March of

2023, see generally Compl. at ¶ 15—more than two years after the cause of action arose.

Accordingly, Matek’s claim is time-barred by the Agreement.

       Matek argues that the two-year limitations period provision in the Supplier Relationship

Agreement is inconsistent with the Statement of Work and therefore that the limitations period

should not be applied because it is ambiguous. See Opp. at 6 (“[IBM’s] claims might be valid

but for the fact that the SOW and the SRA are fraught and replete with inconsistencies, conflicts

and discrepancies.”). The inconsistency arises, Matek says, because the Statement of Work

states that Matek “may pursue any and all remedies . . . available at Law and in equity” and,

under New York law, a claimant has six years to pursue a contract claim. See Opp. at 7;

Statement of Work at 23.

       But there is no inconsistency here. Under New York law “[t]he parties to a contract may

agree to limit the period of time within which an action must be commenced to a period shorter

than that provided by the applicable statute of limitations.” John v. State Farm Mut. Auto. Ins.

Co., 983 N.Y.S.2d 883, 884 (N.Y. App. Div. 2014) (citation omitted); Krohn v. Felix Indus.,

                                                 9
Inc., 641 N.Y.S.2d 77, 78 (N.Y. App. Div. 1996) (“It is well settled that parties to a contract may

agree to limit the period in which an action must be commenced to a shorter time than that

otherwise provided by the applicable Statute of Limitations.”). “Where the party against whom

an abbreviated Statute of Limitations is sought to be enforced has demonstrated no duress, fraud

or misrepresentation in regard to his agreement to the shortened period, it must be assumed that

the term was voluntarily agreed to.” Felix Indus., 641 N.Y.S.2d at 78 (citations omitted). Here,

the parties explicitly agreed to a shorter limitations period in the Supplier Relationship

Agreement. See Supplier Relationship Agreement at 2 (“Neither party will bring a legal action

arising out of or related to this Agreement more than two years after the cause of action arose.”);

see also Nerey v. Greenpoint Mortg. Funding, Inc., 40 N.Y.S.3d 510, 513 (N.Y. App. Div. 2016)

(“A party who executes a contract is presumed to know its contents and to assent to them.”).

       Matek argues that it had “no opportunity to review either the SRA or the SOW” and that

IBM required Matek to review and execute the Statement of Work within three days. Opp. at 2.

While “duress” may undermine a contractual limitations period, Matek does not demonstrate

duress and its argument is unpersuasive. In its opposition brief, Matek argues that it had no

opportunity to review the Agreement but it does not state that it was coerced into signing the

Agreement. 4 See Barker v. Conley, 195 N.E. 677, 679 (N.Y. 1935) (Where “[n]o duress [is]

       4
          This argument appears only in Matek’s brief in opposition to IBM’s motion to dismiss
and does not appear on the face of the complaint. See BEG Invs., LLC v. Alberti, 85 F. Supp. 3d
13, 34 (D.D.C. 2015) (“[T]he Court cannot consider facts alleged in the briefing when ruling on
a Motion to Dismiss. It is axiomatic that a complaint may not be amended by the briefs in
opposition to a motion to dismiss.” (internal quotation marks and citation omitted)). Rather, the
complaint states that “Prior to June 27, 2017 [the date on which the Supplier Relationship
Agreement was signed], IBM and Matek met regularly to plan on how best to service the
Univ[]er[s]ity’s contractual needs.” Compl. ¶¶ 7, 8 (emphasis added). Presumably, during these
regular meetings, Matek could have reviewed or discussed IBM’s contract terms. “A party who
signs a document without any valid excuse for having failed to read it is conclusively bound by
its terms.” Shklovskiy v. Khan, 709 N.Y.S.2d 208, 209 (N.Y. App. Div. 2000).

                                                 10
shown . . . the plaintiff's ignorance of what he was signing is immaterial unless he was deceived

in doing so.”); Foundry Cap. Sarl v. Int'l Value Advisers, LLC, 947 N.Y.S.2d 98, 99 (N.Y. App.

Div. 2012) (“[A] party cannot claim that it was compelled to execute an agreement under duress

while simultaneously accepting the benefits of the agreement.”). Nor does Matek state how long

it had to read the seven-page-long Supplier Relationship Agreement—the document in which the

limitations language appears. And New York courts have held that a “[p]laintiffs’ contention

that they were unaware of [a] contractual limitations clause because of the length of the

[contract] is insufficient to raise a factual issue as to the applicability of the contractual

limitations period.” Beekman Regent Condo. Ass'n v. Greater New York Mut. Ins. Co., 845

N.Y.S.2d 38, 39 (N.Y. App. Div. 2007). Moreover, New York courts have held that two-year

contractual limitations periods are reasonable. See id. at 39. Accordingly, the Court concludes

that the parties validly shortened the statutory limitations period in favor of a contractual two-

year limitations period. Because Matek brought its claim more than two years after the alleged

breach, its claim is barred by the plain text of the Agreement. 5

                                         V. CONCLUSION

        For the foregoing reasons, IBM’s Motion to Dismiss (ECF No. 8) is GRANTED. An

order consistent with this Memorandum Opinion is separately and contemporaneously issued.

Dated: February 16, 2024                                              RUDOLPH CONTRERAS
                                                                      United States District Judge

        5
         IBM also argues that the language affording Matek “any and all remedies they may
have available at Law and in equity” appears only in the “Dispute Resolution” provision of the
Statement of Work, which applies only to disputes between Matek and Howard, not Matek and
IBM. See Reply at 2, 6. It also argues that the Statement of Work “says nothing about
timeliness.” Id. While the Court agrees, it need not address these issues in further depth
because, as explained in Part IV.A, supra, the contract is not ambiguous with respect to the
termination clause.

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