Court Opinion

ID: 4378228
Source: CourtListenerOpinion
Date Created: 2019-03-18 22:02:36.267426+00
Date Added: 2024-06-11T14:49:39.663955
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SILVER MANAGEMENT GROUP,                   )
INC.,                                      )
                                           )
            Plaintiff,                     )
                                           )
      v.                                   )   C.A. No. 2018-0421-KSJM
                                           )
ADVISORENGINE INC.,                        )
                                           )
            Defendant.                     )

                           MEMORANDUM OPINION
                         Dated Submitted: December 18, 2018
                            Date Decided: March 18, 2019

Raymond J. DiCamillo, Jeffrey L. Moyer, Nicole K. Pedi, RICHARDS, LAYTON
& FINGER, P.A., Wilmington, Delaware; Attorneys for Plaintiff Silver Management
Group, Inc.
David J. Teklits, Coleen W. Hill, MORRIS, NICHOLS, ARSHT & TUNNELL LLP,
Wilmington, Delaware; Gene W. Lee, PERKINS COIE LLP, New York, New York;
Attorneys for Defendant AdvisorEngine Inc.

McCORMICK, V.C.
      In 2014, AdvisorEngine Inc. (“AdvisorEngine”) retained Silver Management

Group, Inc. (“Silver”) to develop backend software to power AdvisorEngine’s then-

planned wealth-management platform. In 2015, after the platform went live, the

parties entered into agreements granting AdvisorEngine the right to license Silver’s

software for a seven-year term. The agreements required AdvisorEngine to pay a

monthly license fee. The fee amount was a percentage of gross revenue derived

from sales of the suite of software products sold on AdvisorEngine’s wealth-

management platform. In December 2017, AdvisorEngine acquired a new software

product. That product was advertised and sold as part of a “unified” system with

AdvisorEngine’s suite of software products. Silver demanded that fees generated

from the sales of the new software product be included in the gross revenues used to

calculate Silver’s monthly license fee. AdvisorEngine refused.

      Meanwhile, in October 2016, Silver’s lead software developer accepted a

position working for AdvisorEngine. By May 2018, AdvisorEngine had created a

replacement for Silver’s backend software. AdvisorEngine, however, was only

permitted to terminate the licensing agreements before the seven-year term expired

if Silver materially breached the agreements. Opportunistically, AdvisorEngine

took the position that Silver’s dispute concerning the license fee calculation

constituted a material breach, purported to terminate the agreements on this basis,

and ceased using Silver’s software. This lawsuit ensued.

                                         1
      Silver asserts six causes of action, and AdvisorEngine asserts two

counterclaims. The parties cross-moved for partial summary judgment on five of

the eight total claims. AdvisorEngine is entitled to summary judgment on Count I,

which concerns the calculation of Silver’s license fee. The plain language of the

licensing agreement does not entitle Silver to fees derived from revenues generated

by the newly acquired software product.        Silver prevails the parties’ claims

concerning whether AdvisorEngine remains obligated under the agreements.

Silver’s motion on Count VI is granted—AdvisorEngine’s written termination was

ineffective because merely disputing the terms of the licensing agreement did not

constitute a material breach.    AdvisorEngine’s motion on Counterclaim II is

denied—AdvisorEngine’s unilateral decision to cease using Silver’s software did

not end AdvisorEngine’s obligation to pay license fees under the plain language of

the licensing agreements.

      The remaining claims turn on factual questions unsuited for summary

judgment.    Through Count II, Silver seeks to enforce contractual rights to

information. Through Count IV, Silver contends that AdvisorEngine breached non-

solicitation provisions of the licensing agreements by employing Silver’s software

developer. The record before the Court is limited. The parties have not produced

documents or taken depositions. To resolve the inherently factual issues raised in

Counts II and IV, further development of the record is desirable.

                                         2
I.        BACKGROUND
          The facts are drawn from the materials presented in support of the parties’

cross motions for summary judgment.

          A.    The Agreements
          AdvisorEngine was formed to develop and provide a wealth management

platform to third-party financial advisors and their clients.1               In early 2014,

AdvisorEngine’s corporate predecessor, Vanare LLC (“Vanare”), retained Silver to

code the backend software for AdvisorEngine’s planned wealth management

platform. 2 The initial version of this software went live in August 2014.3

          On July 16, 2015, the parties entered into a Master Agreement back-dated to

have an effective date of March 1, 2014.4 Also on July 16, 2015, the parties entered

into Schedule #3, which incorporates the terms and conditions of the Master

Agreement and has an effective date of March 1, 2014. 5 The Master Agreement and

Schedule #3 (the “Agreements”) granted to Vanare the right to license Silver’s

software.6

1
 C.A. No. 2018-0421-KSJM Docket (“Dkt.”) 36, Aff. of Richard Cancro (“Cancro 9/28/18
Aff.”) ¶ 3.
2
    Id. ¶ 7.
3
    Id. ¶ 9.
4
    See Dkt. 1, Silver’s Verified Compl. (“Compl.”) Ex. 1 (“Master Agr.”).
5
    See Compl. Ex. 2 (“Schedule #3”).
6
    Id.

                                              3
         A.     The License Fee Dispute
         The Agreements require AdvisorEngine to pay monthly license fees for

Silver’s software. Fees paid to Silver are to be based on a percentage of the gross

fees AdvisorEngine charges its customers for “Vanare Platform Services,” subject

to monthly minimums and maximums. 7 The Master Agreement defines “Vanare

Platform Services” as “the wealth management platform and related technology and

business operations services of Vanare and its wholly-owned subsidiary, NestEgg

Wealth, Inc.”8

                1.       The parties dispute the basis for calculating Silver’s license
                         fee.
         In December 2017, AdvisorEngine acquired a company called CRM Software

Inc., which does business as “Junxure,” and which provides customer relationship

management software to financial advisors.9            Junxure software has generated

significant fees for AdvisorEngine, Silver says. 10

         Silver argues that the Junxure software is part of the Vanare Platform

Services. 11 Silver contends that public disclosures made by AdvisorEngine reveal

7
    Schedule #3 Ex. A § 2.a.
8
    Master Agr. § 1.2.
9
    Cancro 9/28/18 Aff. ¶ 10.
10
     Compl. ¶ 43; Dkt. 38, Aff. of Nichole K. Pedi (“Pedi 10/2/18 Aff.”) Ex. H.
11
     Compl. ¶ 55; Pedi 10/2/18 Aff. Ex. H.

                                              4
that Junxure operates as part of a “unified” platform of “related” platform of

software.12

           AdvisorEngine did not include fees from the Junxure software in the gross

fees used to calculate Silver’s monthly license fee.13 The gross fees AdvisorEngine

used to generate Silver’s monthly license fee declined from $91,879 for July of 2015

to $37,164 for January of 2018. 14 The monthly license fees paid to Silver reduced

proportionately.

                 2.    Silver demands information from AdvisorEngine
                       concerning the fee dispute.
           On February 16, 2018, Silver requested client billing data and financial

statements from AdvisorEngine. 15 Silver’s stated purpose for the information was

to invoice AdvisorEngine for the January 2018 period. 16 As part of this request,

12
   Specifically, public disclosures describe the Junxure acquisition as part of an “end-
to-end” wealth management platform for financial advisors, Pedi 10/2/2018 Aff. Ex. D
at 72, and as a “unified” wealth management platform for the wealth advisor customers
of the “combined” and “integrated” businesses of AdvisorEngine and Junxure, id. Ex.
E. On its webpage, AdvisorEngine describes the “combination” between Junxure and
AdvisorEngine as: “[t]wo industry innovators. One smart platform.” Dkt. 39, Aff. of
Blake Henry (“Henry 10/2/18 Aff.”) Ex. 4 (alteration and emphasis added).
AdvisorEngine disputes that Junxure software is part of an “end-to-end” solution with
Silver’s software. Dkt. 36, Opening Br. in Supp. of Def. AdvisorEngine Inc.’s Mot. for
Partial Summ. J. (“Def.’s Opening Br.”) at 10.
13
     Pedi 10/2/18 Aff. Exs. G–J.
14
     Henry 10/2/18 Aff. ¶ 3.
15
     Pedi 10/2/18 Aff. Ex. G.
16
     Id.

                                           5
Silver sought Junxure client billing information.17 AdvisorEngine denied Silver’s

request on February 28, 2018, stating that Silver is not entitled to licensing fees

related to Junxure revenue. 18

           On March 13, 2018, Silver initiated the dispute resolution process set forth in

the Master Agreement. 19 The parties exchanged further communications and met in

person but failed to resolve their disputes. 20 The contractually-mandated dispute

resolution period ended after sixty days in May 2018. 21

                 3.     AdvisorEngine purports to terminate the Agreements based
                        on Silver’s demands concerning the fee calculation.
           In a May 14, 2018 letter, AdvisorEngine terminated the Agreements for cause

effective July 13, 2018.22 As “cause,” AdvisorEngine cited Silver’s demands that

AdvisorEngine include fees generated from Junxure software when calculating

Silver’s licensing fees. 23 Silver disputes that the May 14, 2018 letter was effective

in terminating the Agreements.

17
     Id.
18
     Id.
19
     Id. at Ex. H; Master Agr. § 15.1.
20
  See Dkt. 49, Opp’n Aff. of Richard Cancro (“Cancro 10/26/18 Aff.”) ¶¶ 15–16; Henry
10/2/18 Aff. ¶¶ 6–8; Dkt. 59, Aff. of Blake Henry (“Henry 11/9/18 Aff.”) ¶ 10; Pedi 10/2/18
Aff. Ex. I–J.
21
     Master Agr. § 15.1.
22
     Pedi 10/2/18 Aff. Ex. K.
23
     Id.

                                              6
         B.     The Non-Solicitation Dispute
         The Master Agreement prohibits the parties from soliciting each other’s

employees without prior written consent. 24           Patrick Arnold was Silver’s lead

software developer when Silver developed AdvisorEngine’s wealth management

software.25 In January 2016, Arnold and AdvisorEngine’s CEO discussed Arnold’s

desire to leave Silver. 26 Later, they met several times to discuss opportunities for

Arnold at AdvisorEngine.27 In October 2016, Arnold resigned from Silver and

started working for AdvisorEngine. 28 In 2017, AdvisorEngine began developing

software to replace the Silver backend software.29 AdvisorEngine alleges that it

began developing its own backend software “long before hiring Patrick Arnold, and

AdvisorEngine has not used any of Silver’s confidential information in developing

its own backend software.” 30

24
     Master Agr. § 17.16.
25
     Cancro 9/28/2018 Aff. ¶ 14; Dkt. 36, Aff. of Patrick Arnold (“Arnold Aff.”) ¶¶ 4–5.
26
     Cancro 9/28/2018 Aff. ¶ 15; Arnold Aff. ¶ 7.
27
     Cancro 9/28/2018 Aff. ¶ 16; Arnold Aff. ¶ 7.
28
     Cancro 9/28/2018 Aff. ¶ 16; Arnold Aff. ¶ 8.
29
     Cancro 9/28/2018 Aff. ¶ 13.
30
     Dkt. 61, Aff. of Richard Cancro (“Cancro 11/9/2018 Aff.”) ¶ 6.

                                              7
         AdvisorEngine has represented that it ceased using Silver’s software and

started using the replacement software in July 2018.31 Silver disputes this fact.32

         C.     The Litigation
         Silver commenced this litigation on June 8, 2018.33 The Verified Complaint

asserts six causes of action.34 The first five claims assert that AdvisorEngine

breached the Agreements by failing to pay Silver appropriate license fees

(Count I); 35 refusing to provide Silver customer billing data (Count II);36 misusing

Silver’s confidential information and reverse-engineering Silver’s licensed software

(Count III);37 soliciting Arnold in breach of the non-solicitation provision

(Count IV);38 and exceeding the scope of use of Silver’s software license

(Count V). 39         Additionally, Silver seeks a declaration that AdvisorEngine’s

termination was ineffective (Count VI).40

31
     Cancro 9/28/18 Aff. ¶ 13.
32
     Henry 10/2/18 Aff. ¶ 12.
33
     Dkt. 1.
34
     Compl. ¶¶ 50–141.
35
     Id. ¶¶ 50–66.
36
     Id. ¶¶ 67–83.
37
     Id. ¶¶ 84–100.
38
     Id. ¶¶ 101–112.
39
     Id. ¶¶ 113–123.
40
     Id. ¶¶ 124–141.

                                            8
         On September 11, 2018, AdvisorEngine answered and asserted two

counterclaims. 41        Counterclaim I seeks a declaration that Silver breached the

Agreements by failing to provide software that meets industry standards.42

Counterclaim II seeks a declaration that AdvisorEngine’s obligation to pay license

fees ceased in July 2018, when AdvisorEngine stopped using Silver’s software. 43

II.      ANALYSIS
         Silver has moved for summary judgment on Silver’s Counts I, II, and VI.44

AdvisorEngine has moved for summary judgment on Silver’s Counts I and IV and

AdvisorEngine’s Counterclaim II. 45 The motions collectively seek resolution of

Silver’s Counts I, II, IV and VI, and AdvisorEngine’s Counterclaim II.

         Under Court of Chancery Rule 56, summary judgment “shall be rendered

forthwith” if “there is no genuine issue as to any material fact and . . . the moving

party is entitled to a judgment as a matter of law.” 46 “[T]he court must view the

evidence in the light most favorable to the non-moving party.” 47 “Any application

41
     Dkt. 30, Def. AdvisorEngine’s Answer and Countercls.
42
     Id. ¶¶ 5–10 at pp. 45–47.
43
     Id. ¶¶ 11–13.
44
  Dkt. 33; Dkt. 34, Pl. Silver Mgmt. Gp., Inc.’s Opening Br. in Supp. of Its Mot. for Partial
Summ. J. (“Pl.’s Opening Br.”).
45
  Dkt. 35; Dkt. 36, Opening Br. in Supp. of Def. AdvisorEngine Inc.’s Mot. for Partial
Summ. J. (“Def.’s Opening Br.”) at 1.
46
     Ct. Ch. R. 56(c).
47
     Merrill v. Crothall-Am., Inc., 606 A.2d 96, 99 (Del. 1992) (citation omitted).

                                               9
for such a judgment must be denied if there is any reasonable hypothesis by which

the opposing party may recover, or if there is a dispute as to a material fact or the

inferences to be drawn therefrom.” 48

         “There is no ‘right’ to a summary judgment.” 49 When confronted with a Rule

56 motion, the court may, in its discretion, deny summary judgment if it decides

upon a preliminary examination of the facts presented that it is desirable to inquire

into and develop the facts more thoroughly at trial in order to clarify the law or its

application. 50

48
     Vanaman v. Milford Mem’l Hosp., Inc., 272 A.2d 718, 720 (Del. 1970).
49
  Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002) (quoting Anglin v. Bergold,
565 A.2d 279 (Del. 1989)).
50
   See Cerberus Int’l, Ltd. v. Apollo Mgmt., L.P., 794 A.2d 1141, 1150 (Del. 2002)
(reversing summary judgment holding where there was a triable issue of material fact and
commenting that “the trial court may . . . deny summary judgment in a case where there is
reason to believe that the better course would be to proceed to a full trial.”) (citation
omitted); Alexander Indus., Inc. v. Hill, 211 A.2d 917, 918–19 (Del. 1965) (holding that in
denying the defendant’s motion for summary judgment, the trial court “needed no more
reason than to conclude, upon preliminary examinations of the facts, that it found it
desirable to inquire thoroughly into all of the facts in order to clarify the application of the
law”); Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del. 1962) (reversing summary
judgment holding where a genuine issue of disputed fact remained unresolved and
observing that summary judgment will not be granted “if, upon an examination of all the
facts, it seems desirable to inquire thoroughly into them in order to clarify the application
of the law to the circumstances”) (citation omitted); In re Comverge, Inc. S’holders Litig.,
C.A. No. 7368-VCMR, at 10 ¶ 11 (Del. Ch. Oct. 31, 2016) (ORDER) (denying summary
judgment where “fuller development of the facts should serve to clarify the law or help the
Court determine its application to the case”).

                                              10
         A.     The License Fee Dispute

                1.      Silver’s Count I
         Silver’s Count I claims that AdvisorEngine breached the Agreements by

failing to include fees from the Junxure software when calculating Silver’s monthly

licensing fee.51 Silver and AdvisorEngine cross-move for summary judgment on

this Count, each arguing that the Agreements’ plain and unambiguous meaning

resolves in their favor. 52

         New York law governs this analysis under the Master Agreement’s choice of

law provision. 53 “In interpreting contract language, New York contract law instructs

courts ordinarily to give the words and phrases employed their plain and commonly-

accepted meanings.”54         “If the contract is capable of only one reasonable

interpretation, i.e., is unambiguous,” then the courts will “give effect to the contract

as written.”55 “Where the language is free from ambiguity, its meaning may be

51
     Compl. ¶¶ 54–66.
52
     Def.’s Opening Br. at 15–17.
53
  See, e.g., Master Agr. § 15.4; Freedman v. Chem. Constr. Corp., 43 N.Y.2d 260, 265 n.*
(1977) (“As a general matter, the parties’ manifested intentions to have an agreement
governed by the law of a particular jurisdiction are honored”); Restatement (Second) of
Conflict of Laws § 187 (1971).
54
     Bank of New York Mellon v. Realogy Corp, 979 A.2d 1113, 1121 (Del. Ch. 2008).
55
  See VKK Corp. v. Nat’l Football League, 244 F.3d 114, 129 (2d Cir. 2001) (alteration
omitted) (quoting K. Bell & Assoc. v. Lloyd’s Underwriters, 97 F.3d 632, 637 (2d Cir.
1996)).

                                           11
determined as a matter of law on the basis of the writing alone without resort to

extrinsic evidence.” 56

         Two provisions of the Agreements bear on Count I: Section 2.a of exhibit A

to Schedule #3, which sets forth the license fee payment obligations, 57 and Section

1.2 of the Master Agreement, which defines “Vanare Platform Services.” 58

         Section 2.a requires that AdvisorEngine calculate Silver’s license fees as

follows: “The Monthly license fees for the Licensed Software shall be twelve

percent (12%) of the gross fees . . . charged by Vanare to its customers for Vanare

Platform Services . . ., subject to a monthly maximum of $250,000.00 and [certain

monthly minimums].” 59

         Section 1.2 defines Vanare Platform Services as “the wealth management

platform and related technology and business operations services of Vanare and its

wholly-owned subsidiary, NestEgg Wealth, Inc.” 60

         Silver argues that the Junxure software falls within the definition of Vanare

Platform Services because it is a “related technology” of the “wealth management

56
   Realogy Corp, 979 A.2d at 1121 (alteration omitted) (quoting Master–Built Constr. Co.
v. Thorne, 802 N.Y.S.2d 713, 714 (2005)).
57
     Schedule #3 Ex. A § 2.a.
58
     Master Agr. § 1.2.
59
     Schedule #3 Ex. A § 2.a (emphasis added).
60
     Master Agr. § 1.2.

                                            12
platform.” 61 Silver contends that the definition of Vanare Platform Services extends

to all technologies “related” to Vanare’s wealth-management platform. 62 But the

subordinate clause ending Section 1.2, “of Vanare and its wholly-owned subsidiary,

NestEgg Wealth, Inc.,” modifies the immediately preceding phrase, “related

technology and business operations services.” 63 Therefore, under the plain language

of Section 1.2, a “related technology” must be “of Vanare” to qualify as a Vanare

Platform Service. 64

         “[O]f Vanare” does not include Junxure software for three reasons. First, the

phrase “its wholly-owned subsidiary, NestEgg Wealth, Inc.” would be unnecessary

and superfluous if the phrase “of Vanare” by itself included all Vanare wholly-

owned subsidiaries.65 Superfluous contractual language is to be avoided under New

York law, where “longstanding principles of contract interpretation requi[re] courts

to give effect to every term[.]” 66 Next, under the canon that the expression of one

61
  See Dkt. 46, Pl. Silver Mgmt. Gp., Inc.’s Answering Br. in Opp’n to AdvisorEngine
Inc.’s Mot. for Partial Summ. J. (“Pl.’s Ans. Br.”) at 12–15, 20.
62
     Pl.’s Opening Br. at 14–15.
63
     Master Agr. § 1.2 (emphasis added).
64
  Int’l Bus. Machs. Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 147–48 (2d Cir. 2004)
(applying New York law and holding that “[a]bsent some contrary indication,” a
contractual phrase “refers to the nearest preceding referent”) (alteration omitted).
65
  Dkt. 60, Reply Br. in Supp. of Def. AdvisorEngine’s Mot. for Partial Summ. J. (“Def.’s
Reply Br.”) at 6.
66
     Oliver Wyman, Inc. v. Eielson, 282 F. Supp. 3d 684, 695 (S.D.N.Y. 2017).

                                             13
thing implies the exclusion of the other, 67 the specific inclusion NestEgg Wealth,

Inc. should be interpreted to exclude other AdvisorEngine subsidiaries.68 Finally,

“[a]bsent explicit language demonstrating the parties’ intent to bind future affiliates

of the contracting parties,” New York courts will deem a contract to exclude

obligations of future affiliates. 69 By analogy, if the sophisticated parties to the

Agreements intended to base license fees on future affiliates’ gross revenues, they

would have done so expressly. 70

         For these reasons, the language “of Vanare and its wholly-owned subsidiary

NestEgg Wealth, Inc.” does not include later-acquired, wholly-owned subsidiaries,

such as Junxure. Fees generated from the Junxure software, therefore, are not

included in the gross fees used to calculate Silver’s license fee under Section 2.a.

                2.     Silver’s Count II
         Silver moves for summary judgment on Count II, which seeks to compel

AdvisorEngine to provide categories of client billing information, including Junxure

client billing data. Silver bases Count II on Sections 11.1 and 5.6 of the Master

Agreement.

67
     See VKK Corp., 244 F.3d at 130 (applying expressio unius est exclusio alterius canon).
68
     Def.’s Reply Br. at 6.
69
  Ellington v. EMI Music, Inc., 24 N.Y.3d 239, 246 (2014) (citing VKK Corp., 244 F.3d at
130–31).
70
     Def.’s Reply Br. at 7–8.

                                             14
         Silver is not entitled to the client billing information under Section 11.1 of the

Master Agreement governing “Confidential Information.” 71 Section 11.1 does not

affirmatively require the parties to share information. Rather, it governs what

confidentiality protections the parties must afford information after receipt.

         It is unclear based on the record before the Court whether Silver is entitled to

any relief under Section 5.6. That section provides: “In the event of a good faith

dispute with regard to one or more item(s) appearing on an invoice, Vanare shall

notify Silver promptly after receipt of the invoice with reasonable detail as to the

nature of the dispute . . . .” 72 If Silver seeks through Count II Junxure billing only

as AdvisorEngine contends, then Silver’s request is denied based on the Court’s

ruling on Count I. But it is neither clear nor undisputed what information Silver

seeks. Further development of the factual record on this issue is desirable.73

                3.        Silver’s Count VI
         Silver moves for summary judgment on its Count VI, which seeks a

declaration that AdvisorEngine’s termination was ineffective under Section 16.2 of

71
   Master Agr. § 11.1 (“Confidential Information. Each party has made and will continue
to make available to the other party information that is not generally known to the public
and at the time of disclosure is identified as, or would reasonably understood by the
receiving party to be, proprietary or confidential (“Confidential Information”).
Confidential Information may be disclosed in oral, written, visual, electronic or other form.
Vanare’s confidential Information includes without limitation [(a)–(g) omitted for
brevity].”).
72
     Id. § 5.6 (emphasis added).
73
     See supra note 50.

                                              15
the Master Agreement.            Section 16.2 permits AdvisorEngine to terminate the

Agreements if Silver “materially breache[d] its obligations” under the Agreements.74

         AdvisorEngine argues that Silver materially breached the Agreements by

violating the implied covenant of good faith and fair dealing. 75 Under New York

Law, the implied covenant

                is breached when a party acts in a manner that although
                not expressly forbidden by any contractual provision,
                would deprive the other party of the right to receive the
                benefits under the agreement. The implied covenant
                protects the reasonable expectations of each party that
                arises from the agreement it entered into[.] 76

“A material breach is a breach that is so substantial it defeats the purpose of the

entire transaction.”77

         AdvisorEngine argues that Silver breached the implied covenant by making

“continuing demands that AdvisorEngine pay license fees to Silver based on . . .

revenue from Junxure’s . . . software.”78 AdvisorEngine does not attempt to argue

that these alleged breaches defeated any purpose of the Agreements, much less the

74
     Master Agr. § 16.2(a) (emphasis added).
75
     Def.’s Ans. Br. at 24–26.
76
  Glen Banks, New York Contract Law § 17:8 at 627 (2006) (citations and footnote
omitted).
77
  Id. § 17:10 at 632 (emphasis added) (citing Lipsky v. Commonwealth United Corp., 551
F.2d 887, 895 (2d Cir. 1976), In re Bradlees Stores, Inc., 2001 WL 1112308, at *7
(S.D.N.Y. 2001)).
78
     Pedi 10/2/18 Aff. Ex. K.

                                               16
entire transaction. 79 Having failed to brief the issue, AdvisorEngine waived its

ability to do so.80 Therefore, Silver is entitled to summary judgment to Count VI.

                  4.   AdvisorEngine’s Counterclaim II
          AdvisorEngine moves for summary judgment on its Counterclaim II, which

seeks a declaration that “the license fees are predicated on the use of Silver’s

backend software.” 81 According to AdvisorEngine, because it ceased using Silver’s

software in July 2018, it no longer owes monthly license fees. 82

          AdvisorEngine’s argument finds no support in the Agreements.                 The

Agreements base Silver’s monthly license fees on a percentage of the gross fees

charged for Vanare Platform Services and subject to monthly minimums and

maximums—not on AdvisorEngine’s use of Silver’s software.83 The Agreements

remain in effect until they expire or the parties terminate pursuant to Section 16 of

79
   AdvisorEngine uses the word “material” only once in its Answering Brief, and in
conclusory manner. Def.’s Ans. Br. at 26 (“Silver’s material breach of its obligation to act
in good faith proved a basis for AdvisorEngine’s termination of the Agreements.”).
80
  Pine River Master Fund Ltd. v. Amur Fin. Co., Inc., 2017 WL 4023099, at *10 n.76 (Del.
Ch. Sept. 13, 2017) (citing Emerald P’rs v. Berlin, 2003 WL 21003437, at *43 (Del. Ch.
Apr. 28, 2008), aff’d, 840 A.2d 641 (Del. 2003)) (granting summary judgment and
injunctive relief in breach of contract claim where defendant failed to address plaintiff’s
request for injunctive relief in its initial opposition to plaintiff’s motion for summary
judgment).
81
     Def.’s Opening Br. at 24 (emphasis omitted).
82
     Id. at 25.
83
     Schedule #3 Ex. A § 2.a.

                                             17
the Master Agreement 84—not until AdvisorEngine unilaterally determines to cease

using Silver’s software. The Court cannot rewrite the Agreements to impose a “use”

condition on license fee payments. Accordingly, AdvisorEngine’s motion as to its

Counter Claim II is denied.

         B.         The Non-Solicitation Dispute
         AdvisorEngine moves for summary judgment on Silver’s Count IV, which

claims that AdvisorEngine breached the Master Agreement’s non-solicitation

provision by soliciting Arnold’s employment.            The non-solicitation provision

prohibits AdvisorEngine from “solicit[ing] for employment employees or

contractors of [Silver] that were involved in the performance of the Services

hereunder . . . unless the other party provides prior written consent.”85

         AdvisorEngine argues that “New York law is clear: for a person to solicit a

potential employee, that person must initiate contact with the employee.” 86 Arnold,

not AdvisorEngine, initiated contact between them, according to AdvisorEngine.87

84
     Master Agr. § 16.1.
85
     Id. § 17.16.
86
   Def.’s Opening Br. at 21–23 (emphasis added) (citing Forum Pers., Inc. v. David J.
Greene & Co., LLC, 2002 WL 424344, at *1 (N.Y. App. Div. Mar. 14, 2002), NBT Bancorp
v. Fleet/Norstar Fin. Gp., 159 A.D.2d 902, 903 (N.Y. App. Div. 1990), and Bajan Gp., Inc.
v. Consumers Interstate Corp., 2010 WL 3341456, at *6 (N.Y. Sup. Ct. 2010) (TABLE)).
87
   Cancro 9/28/18 Aff. ¶ 15 (“In early 2016, Mr. Arnold set up a meeting with me. He
informed me that he was not happy working at Silver and that he was going to leave Silver.
Further, he said he was interested in potentially working with AdvisorEngine. I did not
mention or suggest AdvisorEngine as a potential opportunity for Mr. Arnold until after he
first raised the possibility of working with AdvisorEngine.”); Arnold Aff. ¶ 7 (“In or about
                                             18
AdvisorEngine’s CEO, Richard Cancro, avers that “[i]n early 2016, Mr. Arnold set

up a meeting with me. He informed me that he was not happy working at Silver and

that he was going to leave Silver.”88 Cancro admits that Arnold did not leave Silver

to work for AdvisorEngine for approximately ten months thereafter. 89 Cancro

further admits that during that period Cancro and Arnold “met several times . . . to

discuss opportunities in the market in general and possibly with AdvisorEngine.”90

Still, AdvisorEngine argues that because Arnold initiated the early 2016 meeting,

nothing AdvisorEngine did at that meeting or thereafter could have breached the

non-solicitation provision as a matter of law.

         Silver contends that New York law does not clearly require that a person must

initiate contact with the employee to breach a non-solicitation provision. Silver cites

to one federal decision applying New York law and holding that merely encouraging

an employee to leave his employer supports breach of a non-solicitation provision.91

January 2016, I set up a meeting with Mr. Cancro to inform him that I wanted to leave
Silver and that I was looking for a new position, including possibly to work with
AdvisorEngine.”).
88
     Cancro 9/28/18 Aff. ¶ 15.
89
     Id. ¶ 16
90
  Id.; see also Arnold Aff. ¶ 7 (“Mr. Cancro and I met a number of times over the following
months to discuss new opportunities, both in the market at large and with AdvisorEngine
because it was positioned for growth, and I had come to understand its business model.”).
91
     Pl.’s Ans. Br. at 31–32 (citing Oliver Wyman, 282 F. Supp. 3d at 696).

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         Further development of New York law on this issue is desirable. Additionally,

even if New York law is as AdvisorEngine contends, a fuller factual record should

serve to clarify the law’s application to this action. AdvisorEngine’s evidence comes

in the form of affidavits only; Silver has not obtained documents or taken depositions

to test AdvisorEngine’s assertions. It is desirable at this stage to allow the parties to

develop the factual record concerning Count IV.92

III.     CONCLUSION
         For the foregoing reasons, summary judgment is GRANTED on Silver’s

Count I in favor of AdvisorEngine and on Silver’s Count VI in favor of Silver.

Summary judgment is DENIED on Silver’s Count II, Silver’s Count IV, and

AdvisorEngine’s Counterclaim II.

92
     See supra note 50.

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