Court Opinion

ID: 4694088
Source: CourtListenerOpinion
Date Created: 2021-06-09 20:05:29.841966+00
Date Added: 2024-06-11T08:05:27.130489
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

ARKRAY AMERICA, INC.,                        )
                                             )
             Plaintiff,                      )
                                             )
        v.                                   )   C.A. No. N20C-12-012 MMJ [CCLD]
                                             )
NAVIGATOR BUSINESS                           )
SOLUTIONS, INC., AND N’WARE                  )
TECHNOLOGIES, INC.,                          )
                                             )
               Defendants.                   )

                             Submitted: March 29, 2021
                               Decided: June 9, 2021

On Defendant N’Ware Technologies, Inc.’s Motion to Dismiss Counts III, V, and
                          VII of the Complaint
              GRANTED IN PART and DENIED IN PART

 On Defendant Navigator Business Solutions, Inc.’s Motion to Dismiss Counts IV
                          and VI of the Complaint
                                  DENIED

  On Defendant Navigator Business Solutions, Inc.’s Motion for a More Definite
                                  Statement
                                  DENIED

                                    OPINION

Jennifer C. Wasson, Esq., Carla M. Jones, Esq., Potter Anderson Corroon LLP,
Wilmington, Delaware, Julia E. Markley, Esq. (Argued), Nathan R. Morales, Esq.,
Perkins Coie LLP, Portland, Oregon, Lindsey Dunn, Esq. (Argued), Perkins Coie
LLP, Denver, Colorado, Attorneys for Plaintiff ARKRAY America, Inc.

                                         1
Stephen J. Kraftschik, Esq., Christina B. Vavala, Esq., Polsinelli PC, Wilmington,
Delaware, Eric E. Lynch, Esq., Jonathan G. Brinson, Esq. (Argued), Polsinelli PC,
Phoenix, Arizona, Attorneys for Defendant Navigator Business Solutions, Inc.

Scott B. Czerwonka, Esq., Wilks Law, LLC, Wilmington, Delaware, Mark K.
Thompson, Esq. (Argued), MKT Law PLC, Minneapolis, Minnesota, Attorneys for
Defendant N’Ware Technologies, Inc.

JOHNSTON, J.
                                         2
                 FACTUAL AND PROCEDURAL CONTEXT
                                       Parties
       This case arises from the performance of a business software system.

Plaintiff ARKRAY America, Inc. (“ARKRAY”) is a Delaware corporation with its

principal place of business in Edina, Minnesota. 1 Defendant Navigator Business

Solutions, Inc. (“Navigator”) is a Utah corporation with its principal place of

business in Pleasant Grove, Utah.2 Defendant N’Ware Technologies, Inc.

(“N’Ware”) is a Delaware corporation with its principal place of business in

Dover, New Hampshire.3

                       ARKRAY’s Business Software Needs

       ARKRAY is a major manufacturer and distributor of diabetes testing and

management supplies.4 ARKRAY’s business practices are highly regulated by the

United States Food and Drug Administration.5 Additionally, many of ARKRAY’s

clients impose specific requirements on how orders are filled.6

       In order to ensure compliance with all manufacturing and distribution

requirements—such as documenting the batch and serial numbers of the finished

devices in each sale, and tracking which devices are under warranty—ARKRAY

1
  Compl. ¶ 6.
2
  Id. ¶ 7.
3
  Id. ¶ 8.
4
  Id. ¶ 13.
5
  Id. ¶ 14.
6
  Id. ¶ 13.
                                          3
purchased a fully integrated Enterprise Resource Planning (“ERP”) system. 7

ARKRAY needed an ERP system that would “[p]rovide an advanced Warehouse

Management System (WMS) for inventory receiving, inventory movement, order

management, order replenishment, and hand-held scanners for all inventory

transactions” and “[p]rovide advanced technical customer service functionality to

handle initial telephone calls from customers, field service technician dispatching,

complaint handling, and travel and material invoicing.”8

               ARKRAY Enters into Agreements with Navigator and N’Ware

        Navigator provides software and consulting services to manufacturers and

businesses in various industries.9 In early 2015, Navigator and ARKRAY began

discussing an arrangement whereby Navigator would provide ARKRAY with the

necessary ERP system.10 On April 27, 2015, Navigator visited ARKRAY’s

facilities in Edina, Minnesota.11 During this meeting, ARKRAY and Navigator

discussed ARKRAY’s operations and software needs.12 Navigator told ARKRAY

that it could design and implement an ERP system that would meet ARKRAY’s

requirements.13

7
  Id. ¶ 18.
8
  Id.
9
  Id. ¶ 7.
10
   Id. ¶ 19.
11
   Id. ¶ 20.
12
   Id.
13
   Id.
                                          4
        During the discussion stage, Navigator proposed a second meeting at

ARKRAY’s facilities and suggested that a representative from N’Ware also

attend.14 N’Ware provides custom “add-on” software and consulting services.15 A

Navigator representative told AKRAY that N’Ware was “the expert” and a “‘best

of breed’ partner for warehouse management.”16 Navigator and N’Ware visited

ARKRAY’s facilities on June 15, 2015.17 During this meeting, ARKRAY

reiterated the specifies of its operations and software needs.18 Navigator indicated

that it understood ARKRAY’s requirements and could provide an adequate

software system.19

        On September 25, 2015, Navigator sent ARKRAY an initial proposal

document setting forth its recommendation for an SAP BusinessOne ERP system

with nine software add-ons.20 One of the recommended add-ons was a warehouse

management program—LISA Distribution (“LISA”)—developed by N’Ware.21

Navigator represented that this configuration of base software and add-ons would

meets ARKRAY’s needs.22

14
   Id.
15
   Id. ¶ 8.
16
   Id. ¶ 20.
17
   Id. ¶ 22.
18
   Id.
19
   Id.
20
   Id. ¶ 24.
21
   Id.
22
   Id.
                                          5
        After negotiations and various proposal documents, ARKRAY entered into

an agreement with Navigator on February 24, 2016. Navigator agreed to provide

software and consulting services (the “Agreement”). 23 ARKRAY additionally

entered into a license agreement with N’Ware to utilize the LISA program on April

6, 2016 (the “License Agreement”).24

                       ARKRAY Terminates the Agreement

        Following execution of the Agreement and the License Agreement,

Navigator began working on ARKRAY’s ERP system.25 Navigator failed to meet

various deadlines as set out in the Agreement. 26 ARKRAY provided extensions to

Navigator.27 However, Navigator still failed to provide and test a successful

software system by May 2017.28

        ARKRAY notified Navigator and N’Ware—orally and in writing—about

various issues with the Navigator system as a whole and with the N’Ware LISA

add-on.29 On June 6, 2017, ARKRAY wrote a letter to Navigator, listing flaws in

the system. ARKRAY asked Navigator to complete nine tasks within 30 days.30

The June 6th letter also notified Navigator that ARKRAY viewed the system’s

23
   Id. ¶ 30.
24
   Id. ¶ 34.
25
   Id. ¶ 38.
26
   Id. ¶ 41.
27
   Id.
28
   Id. ¶ 42.
29
   Id. ¶ 45.
30
   Id. ¶ 46.
                                         6
failures as a material breach of the Agreement and gave Navigator 30 days to cure

the defects.31 Thirty days later, the issues with the system had not been cured.32

ARKRAY terminated the Agreement with Navigator on July 21, 2017. 33

                                Procedural History

       In October 2019, the parties entered into mediation to resolve various

disputes stemming from the Agreement and License Agreement.34 After mediation

was unsuccessful, ARKRAY filed suit in Minnesota on May 27, 2020.35 The

Minnesota action was dismissed based on forum non conveniens grounds, and

because ARKRAY failed to properly serve Navigator. 36

       ARKRAY filed suit in this Court on December 1, 2020. ARKRAY asserts

the following claims: (1) breach of contract against Navigator; (2) breach of

warranty against Navigator; (3) breach of warranty against N’Ware; (4) fraudulent

misrepresentations against Navigator; (5) fraudulent misrepresentations against

N’Ware; (6) violation of the Minnesota Unfair Trade Practices Act (UTPA) against

Navigator; and (7) violation of the Minnesota UTPA against N’Ware.

       Navigator filed a Motion to Dismiss Counts IV and VI of the Complaint on

January 13, 2021. Navigator also filed a Motion for a More Definite Statement on

31
   Id. ¶ 47.
32
   Id. ¶ 48.
33
   Id.
34
   Nav. OB at 7.
35
   Id.
36
   Id.
                                          7
the same day. N’Ware filed a Motion to Dismiss Counts III, V, and VII on January

29, 2021.

                               STANDARD OF REVIEW

            Failure to State a Claim Upon Which Relief Can be Granted

       In a Rule 12(b)(6) Motion to Dismiss, the Court must determine whether the

claimant “may recover under any reasonably conceivable set of circumstances

susceptible of proof.”37 The Court must accept as true all well-pleaded

allegations.38 Every reasonable factual inference will be drawn in the non-moving

party’s favor.39 If the claimant may recover under that standard of review, the

Court must deny the Motion to Dismiss.40

                          Failure to Provide Sufficient Information

       In a Rule 12(e) Motion for a More Definite Statement, the Court must

review the complaint and determine whether it provides sufficient information to

the defendant. If the complaint “appear[s] to be so vague or ambiguous as to make

it unreasonable to require the defendant to frame a responsive pleading, then a

more definite statement will be required to correct its defects.”41

37
   Spence v. Funk, 396 A.2d 967, 968 (Del. 1978).
38
   Id.
39
   Wilmington Sav. Fund. Soc., F.S.B. v. Anderson, 2009 WL 597268, at *2 (Del. Super.) (citing
Doe v. Cahill, 884 A.2d 451, 458 (Del. 2005)).
40
   Spence, 396 A.2d at 968.
41
   Twin Coach Co. v. Chance Vought Aircraft, Inc., 163 A.2d 278, 283 (Del. Super. 1960).
                                               8
                                     ANALYSIS
                                MOTIONS TO DISMISS
       Navigator and N’Ware have filed Motions to Dismiss. Navigator argues

that: (1) the Utah choice-of-law provision in the Agreement governs all claims

against it; (2) Count IV (fraudulent misrepresentation) is barred by Utah’s

economic loss doctrine; and (3) Count VI (violation of the Minnesota UTPA) does

not present a claim that is cognizable under Utah law.

       N’Ware argues that: (1) the Delaware choice-of-law provision contained in

the License Agreement governs all claims against it; (2) Count V (fraudulent

misrepresentation) must be dismissed because it is not properly pled and is barred

by the economic loss doctrine or bootstrapping doctrine; (3) Count VII (violation

of the Minnesota UTPA) should not be permitted because it attempts to apply the

statute of another state; (4) Count III must be dismissed because ARKRAY failed

to comply with certain contractual requirements prior to filing suit; (5) any

potential damages are capped at $31,500; and (6) ARKRAY contractually waived

its right to a trial by jury.

                                    Choice of Law
       The Agreement and the License Agreement include similar choice-of-law

provisions. The Navigator Agreement states that “[t]his Base Agreement shall be

governed by and construed under the laws of the State of Utah without reference to

                                          9
its conflicts of law principles.”42 The N’Ware License Agreement provides that it

“shall be governed by and construed in accordance with the laws of the State of

Delaware, United States of America, without reference to its conflicts of laws

principles.”43

       It is undisputed that both choice-of-law provisions are valid and apply to

contract-based claims. Utah law governs Counts I and II (breach of contract and

breach of warranty against Navigator). Delaware law governs Count III (breach of

warranty against N’Ware). However, the parties disagree over whether these

provisions also apply to the tort and statutory claims. ARKRAY contends that

these provisions are narrow. Navigator and N’Ware both urge the Court to apply

the provisions broadly to all claims between the parties.

       There is divergent precedent in Delaware on this issue. The argument for a

broad application is supported by Abry Partners V., L.P. v. F & W Acquisition

LLC.44 In that case, the Court of Chancery determined that a choice-of-law

provision that stated the agreement would “be governed by, and construed in

accordance with, the Laws of the State of Delaware, regardless of the Laws that

42
   Nav. OB, Ex. A at 2, § 4.2.
43
   N’Ware OB, Ex. A at 2, § 1.8.
44
   891 A.2d 1032 (Del. Ch. 2006).
                                         10
might otherwise govern under applicable principles of conflicts of law” applied to

both contract and tort claims.45 The Court of Chancery reasoned:

       Parties operating in interstate and international commerce seek, by a
       choice of law provision, certainty as to the rules that govern their
       relationship. To hold that their choice is only effective as to the
       determination of contract claims, but not as to tort claims seeking to
       rescind the contract on grounds of misrepresentation, would create
       uncertainty of precisely the kind that the parties' choice of law provision
       sought to avoid. In this regard, it is also notable that the relationship
       between contract and tort law regarding the avoidance of contracts on
       grounds of misrepresentation is an exceedingly complex and unwieldy
       one, even within the law of single jurisdictions. To layer the tort law of
       one state on the contract law of another state compounds that
       complexity and makes the outcome of disputes less predictable, the type
       of eventuality that a sound commercial law should not seek to
       promote.46
       The Court finds Abry distinguishable. This case does not involve an attempt

to void the contracts. ARKRAY has brought parallel breach of contract and

fraudulent misrepresentation claims, along with alleged statutory violations.

       Other subsequent cases have drawn a distinction between provisions that

include language about claims “arising out of” or “relating to” the contract and

those that simply govern “the agreement.” In Huffington v. T.C. Group, LLC,47

this Court found that a “choice of law provision, without language such as ‘arising

out of or relates to,’ only requires the Court to apply Delaware law to claims

45
   Id. at 1050.
46
   Id. at 1048.
47
   2012 WL 1415930, at *1 (Del. Super.)
                                           11
challenging the terms and provisions of the [a]greement.”48 Similarly, the Court of

Chancery, in Gloucester Holding Corp. v. U.S. Tape and Sticky Prods., LLC,49

found that a provision that “[did] not claim to cover litigation that arises out of or

relates to the Asset Purchase Agreement” was “not sufficiently broad enough to

cover tort claims such as fraud in the inducement.”50

       The United States Court of Appeals for the Third Circuit appears to approve

of this broad/narrow distinction based on language. In Underhill Inv. Corp. v.

Fixed Income Advisory Co.,51 the Third Circuit analyzed a choice-of-law provision

that stated the agreement would be “governed by and ... construed in accordance

with the laws of the State of Delaware.”52 Finding that “by its express terms, the

agreement limited the choice-of-law provision to claims arising from ‘this

Agreement,’” the Court determined that the provision did not cover quasi-contract

claims.53 Applying “the most significant relationship test” from the Restatement

(Second) of Conflicts, the Third Circuit ultimately determined that New York law

applied to the quasi-contract claims in the case.54

48
   Id. at *11.
49
   832 A.2d 116 (Del. Ch. 2003).
50
   Id. at 124 (emphasis in original).
51
   319 Fed.Appx. 137 (3d Cir. 2009).
52
   Id. at 141.
53
   Id. (cleaned up).
54
   Id.
                                          12
       The Court finds that the two choice-of-law provisions at issue in this case

are narrow and apply only to the contract-based claims found in the Counts I, II,

and III of the Complaint. As to the remaining claims, in order to determine which

state’s laws apply, the Court must apply a two-part test. First, the Court

determines whether there are any conflicts between the laws of the potentially

applicable states.55 Here, those states would be Delaware, Utah, and Minnesota. If

there are no conflicts, the analysis ends.56 If, however, a conflict exists, the Court

must engage in a conflict-of-laws analysis to determine which state has the most

substantial relationship to the dispute. 57

       With respect to Counts IV and V, there are no conflicts of law related to

fraudulent misrepresentation or the economic loss doctrine. Therefore, the Court

need not engage in a conflicts of law analysis for those claims. As further

discussed in the next section, the Court also need not perform a conflict-of-laws

analysis for Counts VI and VII.

                    Minnesota Statutory Claim Against Defendants

       Navigator and N’Ware argue that ARKRAY’s Minnesota UTPA claims are

not cognizable under Utah or Delaware law. ARKRAY maintains that there is no

55
   Bell Helicopter Textron, Inc. v. Arteaga, 113 A.3d 1045, 1050 (Del. 2015).
56
   Id.
57
   Id.
                                               13
conflict between the laws of Minnesota, Utah, and Delaware because all previously

have allowed plaintiffs to pursue claims based on statutes from sister states.

       After reviewing the applicable authority, it appears that Utah and Delaware

can recognize statutes from a sister state so long as applying the foreign law does

not offend public policy.58 “Comity permits one state to give effect to the laws of a

sister state, not out of obligation, but out of respect and deference.”59

       In the present case, there is nothing that suggests Delaware public policy

would be offended by applying the Minnesota UTPA. The statute at issue

prohibits persons from misrepresenting the quality of goods. 60 Delaware’s

Deceptive Trade Practices Act and Utah’s Deceptive Trade Practices Act contain

identical prohibitions against persons “[r]epresent[ing] that goods or services are of

a particular standard, quality, or grade, or that goods are of a particular style or

58
   See Galindo v. City of Flagstaff, 452 P.3d 1185, 1185 (Utah 2019) (stating that principles of
comity “create a rebuttable presumption that . . . [Utah] courts enforce our sister states’ laws
unless they violate Utah public policy”); Jackson v. Joyner, 367 P.2d 452, 454 (Utah 1961)
(“Since appellant was the president of the Utah corporation and the person who actually
transacted the business in Wyoming, there appears to be no good reason or public policy why our
courts should not entertain an action against him based on the statutorily created liability of
Wyoming.”); Tyson v. Scartine, 118 A.2d 795, 796 (Del. Super. 1955) (“[T]he law has long been
settled that a state will enforce rights arising under the statutes of a sister state provided the
statute of the state in which the injury complained of arose does not contravene the statutes or
announced public policy of the state in which the action is sought to be enforced.”).
59
   Columbia Cas. Co. v. Playtex FP, Inc., 584 A.2d 1214, 1218 (Del. 1991) (internal citation
omitted). See also Trillium USA, Inc. v. Board of County Com'rs of Broward County, Florida, 37
P.3d 1093, 1097-98 (Utah 2001) (discussing principles of comity).
60
   Minn. Stat. Ann. § 325D.13.
                                               14
model, if they are of another.”61 Because Delaware, Utah, and Minnesota all

penalize the same types of misrepresentations alleged in the Complaint, it cannot

be said that applying the Minnesota UTPA would offend public policy. 62

Therefore, no conflict of law exists. Defendants’ requests to dismiss ARKRAY’s

Minnesota UTPA claims are denied.

                  Fraudulent Misrepresentation Against Defendants

                                        Particularity

       Rule 9(b) requires that fraud claims be pled with particularity. The

particularity requirement “is met when the defendant is put on notice as to the

general nature of the special damage being asserted so that he may proceed to

investigate the details of the claim by the discovery processes available to him.”63

A plaintiff is not required to include “all evidence of fraud within the knowledge of

the plaintiffs” in the complaint, “but it is essential that the precise theory of fraud

with supporting specifics appear in the complaint.”64

       N’Ware argues that ARKRAY failed to plead fraudulent misrepresentation

with the requisite particularity. In the Complaint, ARKRAY alleges that an

N’Ware representative visited ARKRAY’s facilities on June 15, 2015 and received

61
   6 Del. C. § 2532; Utah Code Ann. § 13-11a-3.
62
   The Court notes that ARKRAY’s fraudulent misrepresentation claims and UTPA claims are
based on the same alleged conduct. Therefore, practically speaking, discovery in this case would
be essentially the same whether or not the UTPA claims are dismissed.
63
   Stitt v. Lyon, 103 A.2d 332, 333 (Del. Super. 1954).
64
   Nutt v. A.C. & S., Inc., 466 A.2d 18, 23 (Del. Super. 1983).
                                               15
information about ARKRAY’s software needs.65 The Complaint alleges that

Navigator and N’Ware presented a video demonstration about LISA to

ARKRAY.66 The Complaint further alleges that N’Ware represented that LISA

would meet ARKRAY’s needs.67 ARKRAY asserts that N’Ware either knew

LISA could not meet ARKRAY’s needs, or made the representations “without

knowledge of the truth of” the statements.68 Finally, the Complaint alleges that

N’Ware made misrepresentations about LISA to induce ARKRAY to enter into the

Agreement and the License Agreement, which ARKRAY did to its detriment. 69

       The Court finds that the allegations contained in the Complaint are sufficient

to put N’Ware on notice of ARKRAY’s claim against it and show ARKRAY’s

theory of fraud. Therefore, ARKRAY has pled Count V with the requisite

particularity. 70

                                        Bootstrapping

       Under Delaware law, a plaintiff may not ‘bootstrap’ a fraud claim to a

breach of contract claim. 71 However, this is not to say that a party can never bring

65
   Compl. ¶ 22.
66
   Id. ¶ 26.
67
   Id. ¶ 77.
68
   Id. ¶ 80.
69
   Id. ¶¶ 82-85.
70
   Navigator did not make an argument related to particularity in its Motion to Dismiss.
However, if it had, that argument would fail for the same reasons that N’Ware’s argument fails.
71
   See Narrowstep, Inc. v. Onstream Media Corp., 2010 WL 5422405, at *15 (Del. Ch.)
(discussing the prohibition against ‘bootstrapping’).
                                               16
both a fraud claim and a breach of contract claim. “[A] fraud claim alleged

contemporaneously with a breach of contract claim may survive, so long as the

claim is based on conduct that is separate and distinct from the conduct

constituting breach.”72 Parallel claims are permissible: “(1) where a plaintiff has

made particularized allegations that a seller knew contractual representations were

false or lied regarding the contractual representation, (2) where damages for

plaintiff's fraud claim may be different from plaintiff's breach of contract claim, (3)

when the conduct occurs prior to the execution of the contract and thus with the

goal of inducing the plaintiff's signature and willingness to close on the transaction,

or (4) when the breach of contract claim is not well-pled such that there is no

breach claim on which to ‘bootstrap’ the fraud claim.”73

       N’Ware argues that ARKRAY’s fraudulent misrepresentation claim against

it is impermissibly bootstrapped to its breach of warranty claim. This argument

fails for two reasons. First, the Court finds that ARKRAY’s fraudulent

misrepresentation claim is based on pre-contractual statements made with the

intent to induce ARKRAY to enter into the License Agreement. The alleged

actions are separate and distinct from the actions alleged in the breach of warranty

72
   Furnari v. Wallpang, Inc., 2014 WL 1678419, at *8 (Del. Super.) (internal quotations
omitted).
73
   Pilot Air Freight, LLC v. Manna Freight Sys., Inc., 2020 WL 5588671, at *26 (Del. Ch.)
(internal quotations omitted).
                                              17
claim. Second, the Court finds that the damages sought by ARKRAY are not

identical. For the breach of warranty claim, ARKRAY’s recovery may be capped

at the contractually agreed upon amount. For the fraudulent misrepresentation

claim, ARKRAY seeks rescissory damages. For these reasons, Delaware’s

bootstrapping doctrine does not prohibit ARKRAY’s breach of contract and

fraudulent misrepresentation claims from proceeding on a parallel track.

                                   Economic Loss Doctrine

       Navigator and N’Ware argue that the respective fraudulent

misrepresentation claims against them are barred by the economic loss doctrine.

This judicially-created doctrine “prohibits certain claims in tort where overlapping

claims based in contact adequately address the injury alleged, because, the theory

is, contract law provides a better and more specific remedy than tort law.”74

However, like Delaware’s bootstrapping doctrine, the economic loss doctrine does

not function as a blanket ban on all parallel tort and contract claims. Courts and

legislatures have recognized that pre-contractual fraud can be an exception to the

economic loss doctrine.75 In order to proceed on a parallel track, a plaintiff’s tort

74
  Alltrista Plastics, LLC v. Rockline Industries, Inc., 2013 WL 5210255, at *4 (Del. Super.).
75
  See id.; Minn. Stat. Ann. § 604.10(e) (stating that Minnesota’s statutorily codified economic
loss doctrine “shall not be interpreted to bar tort causes of action based upon fraud or fraudulent
or intentional misrepresentation”).
                                                 18
claim must arise from the inducement to enter into the contract and not from the

underlying contract itself. 76

       Navigator relies on HealthBanc International, LLC v. Synergy Worldwide,

Inc.,77 to argue that Utah never recognizes pre-contractual fraud as an exception to

the economic loss doctrine. The Court notes that while the Supreme Court of Utah

found that, under the facts of that case, the plaintiff’s fraud claim was barred, it

explicitly declined to “foreclose the possibility that in a future case a limited

exception for fraud in the inducement may be warranted.”78 This single case is not

enough to create a conflict of laws.

       Counts IV, V, VI, and VII of the Complaint all allege pre-contractual fraud

that goes to inducement rather than performance. ARKRAY alleges that Navigator

falsely represented, among other things, its ability to design and provide an

adequate software system for the purpose of convincing ARKRAY to hire

Navigator instead of another company. ARKRAY alleges that Navigator also

misrepresented the quality of the BusinessOne system and LISA add-on for the

same purpose. Finally, ARKRAY alleges that N’Ware misrepresented the quality

of its LISA program and the ability to meet ARKRAY’s needs to induce

ARKRAY to enter into the License Agreement. This alleged misconduct is

76
   Alltrista, 2013 WL 5210255, at *5.
77
   435 P.3d 193, 196 (Utah 2018).
78
   Id.
                                           19
sufficiently distinct from the conduct alleged in the contract-based claims to

survive a motion to dismiss.

      The Court finds that ARKRAY’s fraudulent misrepresentation claims, and

Minnesota UTPA claims, are not barred by the economic loss doctrine. These

claims may proceed on a parallel track with ARKRAY’s contract-based claims.

THEREFORE, Navigator’s Motion Dismiss is DENIED.

                       Breach of Warranty Against N’Ware
      N’Ware argues that ARKRAY’s breach of warranty claim fails because the

Complaint does not allege that ARKRAY complied with certain prerequisites to

filing suit set forth in the License Agreement. Therefore, N’Ware contends,

ARKRAY has failed to state a claim for Count III.

      In paragraph 45 of the Complaint, ARKRAY states that it “notified

Navigator and N’Ware multiple times, both orally and in writing, that LISA and

the new system configuration did not function.” Paragraph 43 states that LISA

“evidenced multiple functionality failures” and “instead of providing ARKRAY

with a fully functioning warehouse-management program as promised, N’Ware

demanded that ARKRAY reconfigure its warehouse.” Paragraph 43 additionally

states that “LISA could not process the large order sizes required by ARKRAY’s

national customers.” Paragraphs 64, 65, and 66 quote the express warranty at

issue—that LISA “shall perform substantially in accordance with the functional

                                         20
specifications contained in its associated documentation” and be free from

“defects.” These paragraphs state how that warranty was breached and allege that

ARKRAY informed N’Ware of the various problems with LISA.

      If ARKRAY failed to comply with all notice requirements under the License

Agreement, this failure may form the basis of a defense for N’Ware. However,

ARKRAY was not required to allege that it complied with all terms of the License

Agreement in the Complaint. The Court finds that ARKRAY has stated a claim

for breach of warranty.

      N’Ware argues in the alternative that if Count III survives the Motion to

Dismiss, ARKRAY’s potential recovery should be to $31,500 based on the terms

of the License Agreement. The Court finds that there is an insufficient basis at this

time for an adequate and comprehensive analysis of the limitation of damages

issue. Therefore, this issue will not by decided at the motion to dismiss juncture.

            Waiver of Right to Jury Trial for Claims Against N’Ware

      In the Complaint, ARKRAY demanded a trial by jury. In its motion,

N’Ware argues that ARKRAY contractually waived the right to a jury trial.

Section 1.8 of the License Agreement states that “[e]ach party waived any right,

                                         21
and agrees not to apply to have any disputes under this Agreement tried or

otherwise determined by a jury, except where required by law.” 79

         Under the plain language of this provision, the right to a jury trial on claims

arising from post-contractual conduct clearly are waived. Therefore, the Court

finds that ARKRAY is not entitled to a trial by jury for its breach of warranty

claim in Count III. Counts V and VII, ARKRAY’s fraudulent misrepresentation

and UTPA claims against N’Ware, involve pre-contractual conduct. ARKRAY

may not have waived its right to a jury trial for Counts V and VII. How this will

proceed at trial is a practical matter that remains to be seen. THEREFORE,

N’Ware’s Motion to Dismiss is GRANTED IN PART and DENIED IN PART.

                 MOTION FOR A MORE DEFINITE STATEMENT

         Navigator asserts that it is unable to make informed decisions about its

potential defenses because ARKRAY has failed to provide sufficient information

about its claims. Navigator requests that ARKRAY be required to amend its

Complaint and provide:

         (1) the specific Deliverables that were non-conforming to the
         Agreement; (2) the requirements within any Statement of Work
         (specified by each Statement of Work and its particular requirements)
         that were unmet by the Deliverables; (3) in what way the Deliverables
         did not meet any Statement of Work’s requirement; (4) when and how
         ARKRAY provided written notice to [Navigator] of such
79
     N’Ware’s OB, Ex. A, at 2 § 1.8.
                                            22
         nonconformance; and (5) specificity with respect to any alleged issues
         with Concord and FAMe.80
         The requested information is a proper subject for discovery. The Court finds

that it is not necessary to delay discovery to require a more definite statement with

the potential for inviting yet another round of dismissal motions. THEREFORE,

Navigator’s Motion for a More Definite Statement is DENIED.

                                   CONCLUSION
         The Court holds that Utah law governs ARKRAY’s contract-based claims

against Navigator in Counts I and II and Delaware law governs ARKRAY’s breach

of warranty claim against N’Ware in Count III. There are no conflicts of law

related to fraudulent misrepresentation or the economic loss doctrine, so the Court

need not engage in a conflict-of-law analysis for Counts IV and V. Additionally, a

conflict-of-law analysis is not necessary for Counts VI and VII because Delaware

public policy will not be offended by applying the Minnesota UTPA statute.

         The Court further finds that ARKAY’s claims are not barred by the

economic loss doctrine or Delaware’s bootstrapping doctrine. ARKRAY’s claims

are sufficiently pled. The Rule 9(b) particularity requirements are met, and a more

definite statement is not necessary. Based on the contractual provisions contained

in the N’Ware License agreement, the Court finds that ARKRAY contractually

80
     Nav. OB at 13.
                                          23
waived its right to a trial by jury for Count III. Finally, the Court finds that it

would be premature to decide the limitation of damages issue at this time.

      THEREFORE, Navigator’s Motion to Dismiss is hereby DENIED.

Navigator’s Motion for a More Definite Statement is hereby DENIED. N’Ware’s

Motion to Dismiss is hereby GRANTED IN PART with respect to the jury trial

waiver and DENIED IN PART with respect to the other issues.

      IT IS SO ORDERED.

                                              /s/ Mary M. Johnston
                                         The Honorable Mary M. Johnston

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