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Ascente Business Consulting, LLC v. DR myCommerce

United States District Court, D. Minnesota

July 26, 2018

ASCENTE BUSINESS CONSULTING, LLC d/b/a LIBERTYID, Plaintiff,
v.
DR MYCOMMERCE d/b/a ESELLERATE; DIGITAL RIVER, INC. Defendants.

          John Bisanz, Jr., Henson & Efron, P.A., and James G. Sawtelle, Sherman & Howard, LLC, appeared for Plaintiff.

          Gregory J. Stenmoe and Kristin M. Emmons, Briggs & Morgan, P.A., appeared for Defendants.

          JOAN N. ERICKSEN UNITED STATES DISTRICT JUDGE

         This matter involves a dispute between Plaintiff Ascente Business Consulting ("Ascente") and Defendants DR myCommerce ("DRM") and Digital River, Inc., DRM's parent company. Ascente paid DRM and Digital River nearly $250, 000 to design and build a web portal for its identity theft business. The portal failed to work properly and Ascente brought suit, alleging breach of contract, breach of good faith, unjust enrichment, fraud, negligent misrepresentation, gross negligence, and tortious interference with contract. Defendants moved to dismiss all seven counts. For the reasons set forth below, that motion is granted in part and denied in part.

         BACKGROUND

         Ascente is a Colorado-based limited liability company that provides identity theft protection products to consumers. DRM is a Minnesota-based software development company. Digital River is its parent company.

         In 2014, Ascente and DRM negotiated for DRM to develop a consumer-facing web portal that would allow Ascente's customers to purchase an identity-monitoring subscription service online. Ascente and DRM entered into two agreements in May of that year: the Statement of Work and the Publisher Agreement. The Statement of Work set forth the project specifications and provided that Ascente would pay $44, 822 to DRM for its web portal services. Under the Publisher Agreement, DRM would share in ten percent of the revenue generated by the web portal.

         The portal was to be completed by October 2014. That month, DRM informed Ascente that DRM had exceeded its projected costs in developing and building the web portal. On October 29, 2014, the web portal went live. It did not work as anticipated, and over the next two months, Ascente relayed a series of concerns about the web portal to DRM. The parties met in January 2015 to discuss these issues. At the meeting, DRM allegedly informed Ascente that it would need an additional $187, 336 to correct the web portal problems. Ascente agreed to pay this amount, apparently based on assurances from DRM that the completed portal would meet the specifications originally set forth in the Statement of Work. DRM continued to work on the portal. In May 2015, DRM notified Ascente that it needed an additional $6, 700 to complete the project. Ascente agreed to pay this amount - once again based on DRM's alleged assurances that the portal would meet all of the specifications. In June 2015, Ascente was forced to push back the planned launch of its business-to-customer ("B to C") marketing campaign because of continued defects with the portal.

         In July 2015, the parties executed a third agreement: the Software Development Agreement. Under the terms of this contract, Ascente formally agreed to pay $187, 336 - the additional amount the parties had agreed to in January - in exchange for a web portal that met the specifications set forth in an appendix to the Software Development Agreement. By December 2015, Ascente had paid $243, 258 to DRM and Digital River - the full amounts due under the Statement of Work and the Software Development Agreement.

         On February 1, 2016, DRM allegedly sent Ascente a communication that stated: "We've had some staffing changes in our business, and the team that created the portal is no longer with our company. Unfortunately we do not have any resources that would be able to take this one, even if it were a small simple change." Compl. ¶ 45. Ascente alleges that DRM then "washed its hands of the project," that they "refuse[d] to do any additional work" on it, and that none of Ascente's money has been refunded despite the fact that the portal does not work according to specifications. Compl. ¶¶ 46-47. Ascente also claims that DRM's failure to deliver a portal that met specifications "hamstrung Ascente's efforts to grow its business." Compl. ¶ 48.

         Ascente filed this complaint in January 2018, alleging breach of contract (against DRM only), breach of the covenant of good faith and fair dealing (DRM only), unjust enrichment (DRM and Digital River), fraud and fraudulent inducement (DRM and Digital River), negligent misrepresentation (DRM and Digital River), gross negligence (DRM and Digital River), and tortious interference with contractual relationships (Digital River only). Defendants moved to dismiss all seven counts.

         LEGAL STANDARD

         Under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Id. (quoting Twombly, 550 U.S. at 555 (1955)). Plausibility is assessed by "draw[ing] on . . . judicial experience and common sense." Id. at 679. Moreover, courts must "review the plausibility of the plaintiffs claim as a whole, not the plausibility of each individual allegation." Zoltek Corp. v. Structural Polymer Grp., 592 F.3d 893, 896 n.4 (8th Cir. 2010).

         DISCUSSION

         As noted above, Ascente's complaint sets forth seven claims against the Defendants. Two of those claims - breach of contract and unjust enrichment - survive the motion to dismiss. The other five do not.

         (1) ...


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