Court Opinion

ID: 2967019
Source: CourtListenerOpinion
Date Created: 2015-09-22 01:46:42.772091+00
Date Added: 2024-06-11T15:27:48.062330
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

SCHEDULED AIRLINES TRAFFIC
OFFICES, INCORPORATED,
Plaintiff-Appellee,
                                                                    No. 97-2713
v.

OBJECTIVE: INCORPORATED,
Defendant-Appellant.

Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Claude M. Hilton, Chief District Judge.
(CA-97-265-A)

Argued: January 26, 1999

Decided: June 14, 1999

Before WIDENER, MURNAGHAN, and HAMILTON,
Circuit Judges.

_________________________________________________________________

Affirmed by published opinion. Judge Murnaghan wrote the opinion,
in which Judge Widener and Judge Hamilton joined.

_________________________________________________________________

COUNSEL

ARGUED: Robert Matthew Beckman, BODE & BECKMAN,
L.L.P., Washington, D.C., for Appellant. Jonathan S. Feld, BRAND,
LOWELL & RYAN, P.C., Washington, D.C., for Appellee. ON
BRIEF: Sheri M. Lyons, Daniel S. Heyneman, Jacquelyn Gluck,
BODE & BECKMAN, L.L.P., Washington, D.C., for Appellant. Ross
A. Nabatoff, BRAND, LOWELL & RYAN, P.C., Washington, D.C.,
for Appellee.

_________________________________________________________________

OPINION

MURNAGHAN, Circuit Judge:

Scheduled Airlines Traffic Offices, Inc. ("SATO") and Objective:
Inc. ("Objective") agreed to produce a travel software system
together. After Objective ceased work on the project, SATO filed a
complaint for breach of contract and breach of warranty against
Objective. Objective filed an answer and six counterclaims. The dis-
trict court granted SATO's motion for summary judgment on four of
the six counterclaims -- namely, the claims alleging defamation, vio-
lations of the Lanham Act, breach of fiduciary duty, and misappropri-
ation of trade secrets. After the jury trial, the court granted
Objective's motion to dismiss SATO's breach of warranty claim, as
well as SATO's motion for judgment as a matter of law on Objec-
tive's two remaining counterclaims, breach of contract and fraud in
the inducement of the contract. On SATO's remaining breach of con-
tract claim, the jury found in favor of SATO and awarded the com-
pany $1.00 in damages. On appeal, Objective challenges the court's
grant of summary judgment and judgment as a matter of law against
all its counterclaims.

I.

Appellee SATO, a Delaware corporation whose corporate head-
quarters are located in Arlington, Virginia, provides travel manage-
ment services. Before 1994, SATO provided travel services only to
government agencies. In April 1994, SATO set out to expand its busi-
ness to include travel services for private sector companies. SATO
envisioned a custom software system that would assist in providing
travel management services to its prospective private sector custom-
ers. The software system, dubbed Eagleware, would be installed on
the desktop computers of SATO travel agents at a reservation call
center. A second software system, Navigator, would be used by indi-
vidual travelers to make travel arrangements directly from their own
personal or office computer.

                    2
To develop the software systems, SATO considered proposals from
several outside firms. In March 1994, Objective's President and Chief
Executive Officer, Bernadette Reiter, submitted a proposal to SATO
recommending use of an Objective software programming tool called
Macroscope to produce the Eagleware and Navigator Systems. Objec-
tive offered a fixed-price contract of $900,000 to complete all the
work.

In May 1994, SATO entered into a Software and Development
Support Agreement ("Agreement") with Objective to develop the cus-
tom software. Under the Agreement, Objective assigned to SATO all
of its "proprietary rights in and to the [Software] System and all `Sys-
tem Updates' and `System Enhancements.'" Objective also granted
SATO "the right and license to use, reproduce, sublicense, prepare
derivative works, distribute copies, publicly perform and display such
Proprietary Components for use in connection with the System."
Finally, the Agreement was the complete contractual agreement of the
parties. As the terms of the contract make clear, it"supersede[d] all
prior oral or written agreements, commitments or understandings with
respect to the matters provided for [therein]." Objective signed the
Agreement on May 12, 1994, and SATO signed days later.

In July 1994, SATO requested that Objective prepare a simulation
of the software systems under development for use at an annual travel
industry convention to be held the following month. The simulation
was to demonstrate how the travel call center would work when the
software was completed. Objective requested an additional $200,000
for its work assisting SATO on the demonstration units, which SATO
agreed to and paid.

Having failed to complete the Eagleware and Navigator Systems
by the targeted deadline of January 31, 1995, presumably in part due
to its work on the simulation, Objective committed to a completion
date of May 31, 1995. Objective tested the software components in
May 1995 and uncovered significant problems that made the software
inoperable. Despite the problems, Objective's management directed
its employees to stop programming and vacate the project as of May
31, 1995. At the time of Objective's departure from the project, the
Eagleware System was incomplete, and no programming work had

                    3
been done on the Navigator System. Objective had, however, received
full payment from SATO.

In a letter dated May 31, 1995, SATO specifically notified Objec-
tive that its work had not been completed. SATO emphasized that
Objective remained "obligated under the Software Development and
Support Agreement (the Agreement) to develop, deliver, install and
test an Eagleware System which operates in accordance with the
Detail Design." SATO complained that "Objective [was] withdrawing
its development team prior to development being completed." As a
result of the software defects, SATO never used the Objective-
programmed Eagleware software. Instead, SATO constructed its own
Eagleware System using a different programming tool called Power-
builder.

On February 24, 1997, SATO filed a complaint for breach of con-
tract and breach of warranty against Objective. On March 17, 1997,
Objective filed an answer and counterclaim. In response to SATO's
motion to dismiss, Objective filed an amended answer and six-count
amended counterclaim. On September 5, 1997, the district court
granted SATO's motion for summary judgment on four of Objec-
tive's six amended counterclaims. Specifically, the court granted sum-
mary judgment to SATO on the counterclaims for defamation,
Lanham Act violations, breach of fiduciary duty, and misappropria-
tion of trade secrets. The court denied SATO's motion for summary
judgment on Objective's counterclaims for breach of contract and
fraud in the inducement of the contract.

On October 27, 1997, a jury trial commenced. The court denied
Objective's motion for judgment as a matter of law on SATO's
breach of contract claim, finding that there was ample evidence to
proceed, and granted Objective's motion to dismiss the breach of war-
ranty claim. At the close of evidence, the court granted SATO's
motion for judgment as a matter of law on Objective's breach of con-
tract and fraud in the inducement of the contract counterclaims. On
October 30, 1997, the jury found in favor of SATO on its breach of
contract claim and awarded $1.00 in damages. Accordingly, the court
entered an Order to this effect, from which Objective now appeals.

                    4
II.

A. Judgment as a Matter of Law Against Objective's Counterclaim
        for Breach of Contract

At the close of evidence, the district court entered judgment as a
matter of law against Objective's breach of contract counterclaim,
determining that the claim only sought damages for future projected
profits which Virginia law prohibited.1 We review a district court's
grant of judgment as a matter of law de novo. See Benesh v. Amp-
henol Corp., 52 F.3d 499, 502 (4th Cir. 1995). On review, the facts
are viewed and inferences are drawn in a light most favorable to the
nonmoving party. See Singer v. Duncan, 45 F.3d 823, 827 (4th Cir.
1995). Judgment as a matter of law is proper only when, without
weighing the credibility of the evidence, there can be but one reason-
able conclusion as to the proper judgment. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249-50 (1986); Singer, 45 F.3d at 826.

Under Virginia law, a loss of anticipated profits from an unestab-
lished business cannot be a proper measure of damages. See Mullen
v. Brantley, 195 S.E.2d 696, 700 (Va. 1973). The Supreme Court of
Virginia determined in Mullen that "such a business is a speculative
venture, the successful operation of which depends upon future bar-
gains, the status of the market, and too many other contingencies to
furnish a safeguard in fixing the measure of damages." Id. at 700.
Appellant Objective argues that the district court misapplied the
Mullen rule. Noting that there is no evidence that its custom software
project for SATO is an essentially different business from its prior
custom software projects, Appellant maintains that it is an ongoing
business so, under Goldstein v. Kaestner, 413 S.E.2d 347, 350 (Va.
1992) (holding that even though there was a change in ownership of
supermarket, the day-to-day operations remained the same, so lost
profits were recoverable), the jury should have been allowed to make
a reasonable estimate of lost future profits.2
_________________________________________________________________
1 The Agreement provides that the laws of the Commonwealth of Vir-
ginia will govern any claims or disputes arising under the contract.
2 Objective also insists that it is seeking damages beyond mere lost
future profits. On appeal, Objective maintains that it is entitled to dam-
ages for "being put out of business" and $40,000 annually for software
support services after the warranty period expired. The record indicates,
however, that at trial Objective only submitted evidence of potential
future profits.

                    5
To the contrary, the Virginia Supreme Court in Goldstein deter-
mined that the plaintiff was entitled to lost profits only after it con-
cluded that the predecessor store was "nearly identical" to its
successor. 413 S.E.2d at 350. The evidence establishing that "the day-
to-day operations of the [two stores] were substantially the same" pro-
vided a sufficient basis for the jury to estimate lost profits with "rea-
sonable certainty." Id. In the case at bar, however, there is no such
basis on which to estimate damages. The software product was newly
developed, so there was no predecessor product on which to predicate
a reasonably certain estimate of lost profits. Rather, any estimate
would be rooted in speculation and conjecture, both of which consti-
tute improper grounds for damages under Virginia law. See id. at 349;
Mullen, 195 S.E.2d at 700 (denying damages for lost profits where
"the anticipated profits ... could have been based only on speculation
and conjecture"); see also LaVay Corp. v. Dominion Federal Savings
& Loan Association, 830 F.2d 522, 529 (4th Cir. 1987) ("Damages
may not be awarded ... where an award would be based on an estimate
of lost profits which is speculative."), cert. denied, 484 U.S. 1065
(1988).

It does not matter that Objective may have produced other custom
software previously. See Mullen, 195 S.E.2d at 698, 700 (denying
damage award for lost profits even where plaintiff had operated other
franchises of same restaurant); Pennsylvania State Shopping Plazas,
Inc. v. Olive, 120 S.E.2d 372, 375, 377-78 (Va. 1961) (setting aside
damage award for lost profits from unconstructed service station even
where plaintiff operated fourteen other service stations); see also
Coastland Corp. v. Third National Mortgage Co., 611 F.2d 969, 978
(4th Cir. 1979) (denying damage award based on projected profits
from sales of condominium units even where plaintiff had been in real
estate development business for at least four years). The new software
project was a new endeavor, as evidenced by the testimony of Objec-
tive's president who stated that "the type of technolog[y] ... had never
been done before." The project's profitability depended on many fac-
tors, including the state of the market and the success of the market-
ing strategy; the industry's acceptance of SATO's entry into the
commercial market, where its clientele had previously been limited to
the government; and future negotiations. Indeed, it cannot be certain
that there would have been any profits at all. See Coastland, 611 F.2d
at 978 (noting that where the business or venture is new, "the antici-

                     6
pated profits from such business, cannot be recovered as an item of
damages because it cannot be rendered reasonably certain that there
would have been any profits at all from the conduct of the business").
Accordingly, the district court properly dismissed the breach of con-
tract counterclaim, since Objective only sought uncertain, lost profits
from its new venture with SATO. Such damages are not recoverable
under Virginia law.

B. Judgment as a Matter of Law Against Objective's Counterclaim
        for Fraud

Appellant Objective maintains that, in order to induce it to agree
to a low, fixed price, SATO indicated that: (1) it was on a limited
budget of less than $1 million; (2) Objective would get "very good
visibility" from producing the software product; (3) Objective would
be identified as the developer and get "hundreds of millions of dol-
lars;" (4) SATO would give Objective lots of exposure if Objective
produced a simulation of the software system for exhibition at the
industry trade show; and (5) the product and its derivatives would be
jointly marketed to third parties, with SATO and Objective dividing
the revenue evenly. Objective maintains that it relied on these alleg-
edly fraudulent representations and suffered substantial damages as a
result. The district court disagreed and, at the close of evidence,
entered judgment as a matter of law against Objective. The court
observed that Objective's allegations "really amount to nothing more
as a matter of law, than the negotiations for entry into this contract."

Under Virginia law, "fraudulent inducement to perform may arise
when one party induces the other to perform by concealing some fact
which excuses performance by the latter." Ware v. Scott, 257 S.E.2d
855, 857 (Va. 1979). With this standard in mind and assuming the
veracity of Objective's claims, even if SATO had revealed that their
budget for the software project was unlimited, that fact would not
excuse Objective's performance of its contractual obligations.
Informed of certain budgetary constraints, Objective was free to
accept or decline the project based on its own ability to produce the
desired product. It opted to accept the project and proposed terms that
included a low, fixed price for its services. There was no fraudulent
inducement, as contemplated by the Virginia Supreme Court in Ware.

                     7
Furthermore, trial and deposition testimony established that the
simulation at the trade show displayed Objective's logo, as Objective
designed it. There is no indication from the record that SATO prom-
ised anything more to Objective. Any statements that Objective would
receive "enormous exposure" or "very good visibility" from produc-
ing the simulation or the software systems were expressions of opin-
ion that, as a matter of law, cannot form the basis for fraud. See
Watson v. Avon Street Business Center, Inc., 311 S.E.2d 795, 798
(Va. 1984) (holding that statement by sellers' agent that warehouse
had "a good roof" was an expression of opinion insufficient to consti-
tute fraud). Our conclusion is buttressed by the fact that the record
reflects no agreement or discussion as to how SATO would ensure the
"enormous exposure" or "very good visibility." There was no misrep-
resentation of a material fact and, thus, no fraud.

Finally, Objective's claim that it had an oral agreement with SATO
to market the software jointly and divide the revenue evenly is contra-
dicted by the express language of the Agreement. The Agreement
provides:

          Promptly following the execution of this Agreement, the
          parties shall commence negotiations regarding a mutually
          acceptable marketing arrangement that would grant Devel-
          oper [Objective] the non-exclusive right to sublicense the
          System to Third Parties on terms and conditions which
          would be agreed to by the parties.

The Agreement further provides:

          This Agreement ... constitutes the entire agreement between
          the parties hereto with respect to the transactions contem-
          plated herein, and it supersedes all prior oral or written
          agreements, commitments or understandings with respect to
          the matters provided for herein.

Even if the parties had agreed to market the software jointly and share
the revenue, any discussion is superseded by the written contract that
both parties signed. While the Agreement does call for the com-
mencement of "negotiations [between the parties] regarding a mutu-
ally acceptable marketing arrangement," since neither SATO nor

                    8
Objective attempted to initiate such negotiations, 3 it would be inap-
propriate to label SATO's inaction fraudulent.

Viewing the facts in the light most favorable to Objective, there is
no evidence in the record on which a reasonable jury could find that
SATO committed fraud. The district court, therefore, properly granted
judgment as a matter of law against Objective's counterclaim.

C. Summary Judgment Against Objective's Lanham Act
        Counterclaim

Objective argues that SATO misrepresented to prospective custom-
ers that it developed the software that Objective authored, in violation
of the Lanham Act, 15 U.S.C.A. § 1125(a) (West 1998). The relevant
statutory provision provides as follows:

          (a) Civil action

           (1) Any person who, on or in connection with any goods
          or services, or any container for goods, uses in commerce
          any word, term, name, symbol or device, or any combina-
          tion thereof, or any false designation of origin, false or mis-
          leading description of fact, or false or misleading
          representation of fact, which --

           (A) is likely to cause confusion, or to cause mis-
          take, or to deceive as to the affiliation, connection,
          or association of such person with another person,
          or as to the origin, sponsorship, or approval of his
          or her goods, services, or commercial activities by
          another person, or

            (B) in commercial advertising or promotion,
           misrepresents the nature, characteristics, qualities,
           or geographic origin of his or her or another per-
           son's goods, services, or commercial activities,
_________________________________________________________________
3 Objective's president, Bernadette Reiter, did state in a written declara-
tion that SATO refused to negotiate, but she later conceded on cross-
examination that Objective never attempted to initiate any negotiations.

                    9
         shall be liable in a civil action by any person who believes
         that he or she is or is likely to be damaged by such act.

15 U.S.C.A. § 1125(a)(1). The district court rejected Objective's
claim and granted SATO's motion for summary judgment, finding
that SATO "did not pass off [Objective's] product as its own, nor did
it unlawfully conceal defendant's identity." We review a district
court's grant of summary judgment de novo. See Evans v. Technolo-
gies Applications & Serv. Co., 80 F.3d 954, 958 (4th Cir. 1996). The
facts are viewed and inferences are drawn in a light most favorable
to the nonmoving party. See id. at 961. Summary judgment should be
granted only when "there is no genuine issue as to any material fact
and the moving party is entitled to judgment as a matter of law." Id.
at 958.

Objective maintains that there was sufficient evidence to raise a
genuine issue as to whether SATO misrepresented Objective's soft-
ware system as its own at the 1994 trade show and in discussions with
a prospective customer. Objective points to the deposition of SATO's
Chief Operating Officer, Scott Kellar, who testified that Objective's
name was not on SATO's booth at the trade show and that the first
computer screen read "SATO Travel." Objective also argues that in
a proposal made by SATO in February 1995 to a prospective cus-
tomer, Qualcomm, Inc. ("Qualcomm"), SATO falsely represented that
the two versions of Objective's system were developed in-house by
SATO's Information Technology Division.

To support its contention, Objective relies on Smith v. Montoro,
648 F.2d 602 (9th Cir. 1981), in which the name of an actor in a
movie was replaced with another name in the credits. The Ninth Cir-
cuit held that the name substitution, or "reverse passing off,"4 violated
the Lanham Act. The court noted that the victim of"reverse passing
off" is "involuntarily deprived of the advertising value of its name and
_________________________________________________________________
4 "Reverse passing off" occurs expressly "when the wrongdoer removes
the name or trademark on another party's product and sells that product
under a name chosen by the wrongdoer." Smith , 648 F.2d at 605. "`Im-
plied' reverse passing off occurs when the wrongdoer... removes or oth-
erwise obliterates the name of the manufacturer or source and sells the
product in an unbranded state." Id.

                    10
of the goodwill that otherwise would stem from public knowledge of
the true source of the satisfactory product." Id. at 607. Appellant's
reliance on Smith is misplaced, however, since in the present case,
there is no allegation that SATO removed Objective's name or trade-
mark from the software.5 Indeed, the evidence demonstrated that
Objective designed the simulation to display Objective's name and
logo before the SATO name, which it did. There was no attempt by
SATO to misbrand or misrepresent the product. To the contrary, the
program operated just as Objective intended.

Regarding SATO's proposal to Qualcomm, the language at issue
merely states that the company "employs systems analysts and pro-
grammers who assist" in developing certain software. The proposal
further states that SATO has "two automated reservations products
under development" and briefly describes each. The proposal does not
constitute an attempt by SATO to misappropriate Objective's work
product. Indeed, the statements were true. Objective's programmers
were employed by SATO and assisted in the development of at least
one of the software systems. Furthermore, under the terms of the
Agreement, SATO had been granted all rights to the software so did,
in fact, own the "products under development." Under such circum-
stances, there can be no false or misleading representation. We, there-
fore, find that Objective has not stated a valid claim for relief under
§ 1125(a) of the Lanham Act.

D. Summary Judgment Against Objective's Counterclaim for Theft
       of Trade Secrets

The district court granted summary judgment against Objective's
counterclaim for theft of trade secrets, finding that Objective granted
SATO unrestricted permission to use Objective's software system.
Objective argues that the district court overlooked words in the
_________________________________________________________________
5 As a threshold matter and as we point out below, it is doubtful that
Objective has a legitimate interest protected by the Lanham Act, since
Objective granted ownership and all rights to the software to SATO
under the terms of the Agreement. See generally Smith, 648 F.2d at 608
(noting that the "dispositive question" in determining standing under
§ 1125(a) is whether the plaintiff "has a reasonable interest to be pro-
tected against false advertising").

                    11
Agreement that raise a genuine issue as to whether Objective imposed
a restriction on use of its trade secrets. Paragraph 2(A) reads:

          Developer hereby grants to Customer, in perpetuity, without
          any further payment therefore [sic], the right and license to
          use, reproduce, sublicense, prepare derivative works, distrib-
          ute copies, publicly perform and display such Proprietary
          Components for use in connection with the [software] Sys-
          tem.

Objective insists that the court erred in ignoring the restriction on
SATO's use of Objective's trade secrets to "use in connection with"
Objective's software system. Because SATO modified the software
and maintains that it did not use Objective's product, Objective
argues that its trade secrets were not used "in connection with the
System," as contemplated under the Agreement.

To the contrary, Paragraph 2(B) establishes that SATO owned all
the rights to any application with which Objective assisted. Under
Paragraph 2(B), Objective made the following assignment to SATO:

          Developer hereby assigns and conveys to Customer all of
          Developer's proprietary rights in and to the System and all
          "System Updates" and "System Enhancements" ... includ-
          ing, but not limited to, all material, data, specifications,
          tapes and programs, either written or readable by machines
          composed, submitted or interpolated by Developer in con-
          nection with the System whether such rights arise by opera-
          tion of law, or otherwise.

In addition, Objective agreed to "execute whatever documents ... rea-
sonably require[d] to evidence [SATO's] ownership of all patents,
copyrights, trademarks and trade secrets in the System, System
Updates and System Enhancements." The unambiguous language of
the Agreement not only granted SATO the use of any of the soft-
ware's components, but established SATO's ownership of the trade
secrets at issue. Under the terms of the Agreement, there was no mis-
appropriation by SATO. The district court properly granted summary
judgment in its favor.

                    12
E. Summary Judgment Against Objective's Counterclaim for
        Defamation

Objective also claims that language in SATO's annual report is
defamatory. The relevant sections read: "Picking up where an outside
firm left off, Sato Travel programmers spent months modifying and
rewriting software, providing that the in-house computer experts
could handle the job on their own -- and handle it they did." The dis-
trict court determined that the "allegedly defamatory statements, even
if recognized by a knowledgeable person as referring to [Objective],
are no more than [SATO's] attempt at self congratulation and can
hardly bring ridicule and scorn to anyone." We agree.

Objective maintains that the district court exceeded its limited role
at the summary judgment level by determining that the allegedly
defamatory statements could not hold anyone to ridicule and scorn.
Objective argues that the district court, in so doing, applied the test
of defamation per se, when it should have applied the test for defama-
tion per quod. Under the defamation per quod test, "the defamatory
meaning of published words ... may arise by innuendo from the pub-
lished words in combination with known extrinsic facts." Wilder v.
Johnson Publishing Co., Inc., 551 F.Supp. 622, 623 (E.D. Va. 1982).
Objective insists that a reasonable jury could find that SATO'S state-
ment in its annual report is false and defamatory because the refer-
ence would be understood in the software development industry as
referring to Objective and implying that the company disappointed a
customer without justification. As a consequence, Objective main-
tains that it suffered a loss of reputation and standing. See Sateren v.
Montgomery Ward & Co., Inc., 362 S.E.2d 324, 326 (Va. 1987) (indi-
cating that loss of reputation and standing in the community is suffi-
cient for the award of damages in libel suit).

To establish defamatory libel under Virginia law, Objective must
demonstrate that the statement "was intended to refer to [it] and
would be so understood by persons reading it who knew [the com-
pany]." Gazette, Inc. v. Harris, 325 S.E.2d 713, 738, cert. denied,
Fleming v. Moore, 105 S.Ct. 3513 (1985). "[I]f the publication on its
face does not show that it applies to the plaintiff, the publication is
not actionable, unless the allegations and supporting contemporane-
ous facts connect the libelous words to the plaintiff." Id. at 738. In the

                     13
case at bar, the statement in question does not name Objective, nor
does it provide any identifying details that would"lead those who
knew or knew of [Objective] to believe that the [report] was intended
to refer to [it]." Id. Even if others in the industry knew the statement
referred to Objective, however, the company would have no action-
able claim since it provides no evidence that the statement is false.
The uncontroverted evidence suggests that SATO programmers did
modify the software after the relationship between SATO and Objec-
tive ended, which is all that the report maintains. See Wilder, 551
F.Supp. at 624-25 (noting that the "defamatory meaning must flow
readily from the statement and [the extrinsic facts]. `It is a clear rule
of law, that innuendo cannot introduce a broader meaning than that
which the words, taken in connection with the [extrinsic facts], would
naturally bear.'"). Without demonstrating that the statement was false
and that readers believed it referred to Objective, Objective cannot
sustain its defamation claim. See Celotex Corp. v. Caterett, 477 U.S.
321, 323 (1986) (noting that party opposing summary judgment must
produce evidence establishing every element on which it bears the
burden of proof). The district court, therefore, properly granted sum-
mary judgment against Objective's claim.

F. Summary Judgment Against Objective's Counterclaim for Breach
        of Fiduciary Duty

Finally, Objective claims that SATO breached its fiduciary duty
arising out of an alleged joint venture between the two companies to
market the software systems to third parties. The district court dis-
missed the claim on summary judgment on the ground that "the
alleged joint venture, which would have been a part of, or would have
preceded, the actual written Agreement, is precluded by the integra-
tion clause in that Agreement." "As a joint venture does not exist," the
court continued, "plaintiff does not owe defendant a fiduciary duty
arising therefrom."

Objective argues that the court ignored the evidence in the written
Agreement that the parties had agreed to form a joint venture and
would negotiate the details after executing the written Agreement. As
stated above, Paragraph 7 of the Agreement provides that "[p]romptly
following the execution of this Agreement, the parties shall com-
mence negotiations regarding a mutually acceptable marketing

                     14
arrangement that would grant Developer [Objective] the non-
exclusive right to sublicense the System to Third Parties on terms and
conditions which would be agreed to by the parties." In addition, Ber-
nadette Reiter, Objective's president, testified by written declaration
that the two companies agreed to share the proceeds evenly and that
further "[d]etails would be negotiated promptly after signature of a
formal software development contract, but SATO refused to do so."
Objective insists that there is ample evidence on which a reasonable
jury could find that a joint venture existed.

However, the language in the Agreement clearly states that after
the signing of the contract, the parties "shall commence negotiations"
concerning a marketing arrangement. There were only plans to nego-
tiate a marketing arrangement, and on cross-examination, Objective's
president conceded that the company never attempted to begin such
negotiations. Moreover, any pre-Agreement discussions regarding a
joint venture are invalidated by the integration clause in the Agree-
ment, which provides that the Agreement is the entire agreement of
the parties and "supersedes all prior oral or written agreements, com-
mitments or understandings ...." See Spotsylvania County School
Board v. Seaboard Surety Co., 415 S.E.2d 120, 126 (Va. 1992)
(excluding evidence of pre-contract discussions or correspondence
based on existence of similar integration clause). It is clear from the
unambiguous language of the contract that no joint venture existed,
so no fiduciary duty emerged. The district court's grant of summary
judgment against Objective's claim is, therefore, justified.

Consequently, we conclude that the judgment should be

AFFIRMED.

                    15