Aceva Techs. LLC v. Tyson Foods Inc.

2013 Ark. App. 495
CourtCourt of Appeals of Arkansas
DecidedSeptember 18, 2013
DocketCV-12-923
StatusPublished
Cited by7 cases

This text of 2013 Ark. App. 495 (Aceva Techs. LLC v. Tyson Foods Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Aceva Techs. LLC v. Tyson Foods Inc., 2013 Ark. App. 495 (Ark. Ct. App. 2013).

Opinion

Susan Williams Cite as 2013 Ark. App. 495 2019.01. 02 ARKANSAS COURT OF APPEALS 12:11:24 DIVISION I -06'00' No. CV-12-923

Opinion Delivered September 18, 2013 ACEVA TECHNOLOGIES, LLC, AND SUNGARD AVANTGARD, LLC APPEAL FROM THE WASHINGTON APPELLANTS COUNTY CIRCUIT COURT [NO. 2007-1677-2]

V. HONORABLE KIM M. SMITH, JUDGE

AFFIRMED ON DIRECT APPEAL; TYSON FOODS, INC. REVERSED AND REMANDED ON APPELLEE CROSS-APPEAL

JOHN MAUZY PITTMAN, Judge

Aceva Technologies, LLC, and Sungard Avantgard, LLC (collectively “Aceva”),

bring an appeal from a jury verdict in the Washington County Circuit Court in favor of

appellee, Tyson Foods, Inc. Aceva challenges several of the trial court’s rulings, and Tyson

brings a cross-appeal from its refusal to award prejudgment interest. We affirm on the direct

appeal and reverse and remand on the cross-appeal.

In 2004, the parties entered into a Value Assessment Agreement (VAA), in which

Aceva agreed to evaluate Tyson’s credit department’s processes and software needs for

$30,000. Aceva advised Tyson that it would save about $2,000,000 by implementing Aceva’s

software. Following that recommendation, Tyson purchased Aceva’s software and entered

into a Software License Agreement (SLA) in February 2005, whereby Tyson paid Aceva a

licensing fee of $400,000 and a first-year maintenance fee of $80,000. Tyson also agreed to Cite as 2013 Ark. App. 495

pay approximately $170,000 for Aceva to customize and install the software in accordance

with Tyson’s needs. Aceva agreed to complete the work in twelve weeks, beginning in

March 2005. The SLA contained the following limitation-of-liability clause:

a) Limitation: EXCEPT AS PROVIDED FOR IN THIS AGREEMENT, ACEVA’S AGGREGATE LIABILITY TO CUSTOMER IN ANY WAY RELATED TO THIS AGREEMENT, AND REGARDLESS OF WHETHER THE CLAIM FOR SUCH DAMAGES IS BASED IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, WILL NOT EXCEED THE LICENSE FEES RECEIVED BY ACEVA FROM CUSTOMER FOR THE AFFECTED SOFTWARE FOR THE 12 MONTH PERIOD PRECEDING THE OCCURRENCE OF SUCH LIABILITY.

b) No Consequential Damages. EXCEPT AS PROVIDED FOR IN THIS AGREEMENT NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES.

Aceva did not meet the twelve-week deadline. During the next year, Aceva billed

Tyson almost $900,000 for license and maintenance fees and services; according to Tyson,

the software never met its requirements and could not be used. Tyson notified Aceva of

breach on April 11, 2006, and demanded cure by May 12, 2006; in the alternative, it

demanded reimbursement for its out-of-pocket costs of $887,199.60. Aceva did not satisfy

those demands.

Tyson sued Aceva in 2007, asserting breach of the VAA, the agreement to provide

professional services, the SLA, express warranty, and implied warranties, and the implied

covenant of good faith and fair dealing in the VAA and SLA; negligence in performing the

VAA and professional services; promissory estoppel; unjust enrichment; negligent

misrepresentation; deceptive trade practices; and fraud. Tyson notified Aceva that, pursuant

to paragraph 10(f) of the SLA, the governing law would be that of Delaware. Aceva asserted

2 Cite as 2013 Ark. App. 495

various affirmative defenses, including Tyson’s material breach; it also contended that the

VAA and SLA had merged and that there was only one contract between the parties (the

SLA). Aceva also brought a counterclaim against Tyson for breach of contract, promissory

estoppel, and unjust enrichment.

Aceva moved for partial summary judgment to enforce the limitation-of-liability

provision of the SLA. It also filed a motion in limine, asking the court to permit it to produce

evidence of that provision and to preclude Tyson from introducing any evidence of damages

in excess of $400,000. Aceva asked the court to instruct the jury that the limitation-of-

liability clause applied to all of Tyson’s claims (except the fraud claims, if they survived). In

response, Tyson argued that all remedies under the Uniform Commercial Code were available

if it could prove that the limited remedy failed of its essential purpose, and that whether a

limited remedy failed of its essential purpose is a question of fact for the jury.1 It also argued

that the VAA was a separate agreement, which contained no limitation-of-liability clause, and

was not merged into the SLA.

The circuit court partially granted Aceva’s motions in limine and for partial summary

judgment, leaving the “failure-of-essential-purpose” question for the jury. The court stated

that if that provision did not fail of its essential purpose, it applied to the SLA-related claims

1 Delaware’s version of section 2-719 of the UCC, like the comparable statute in Arkansas, provides that a seller’s right to limit remedies in a UCC contract to “repair or replacement” or “return and refund” is subject to subsection (2) where circumstances cause an exclusive or limited remedy to “fail of its essential purpose”; if it fails, the UCC’s remedies are available and the buyer may disregard that term of the contract. Del. Code Ann. Tit. 6, § 2-719 (2013).

3 Cite as 2013 Ark. App. 495

(including negligence) but not to the VAA. The court dismissed several claims, leaving those

for breach of the VAA, the SLA, and express warranty; negligence in performance of

professional services; promissory estoppel; unjust enrichment; deceptive trade practices; and

fraud for trial.

The case was tried before a jury. Tyson nonsuited its claim for breach of the VAA.

During its case-in-chief, Tyson called witnesses who testified about Aceva’s failure to perform

adequately, using documentary evidence consisting of computer screen shots, emails, and

software-generated reports. The court denied Aceva’s motions for directed verdict based on

the limitation-of-liability clause. Over Tyson’s objection, the trial court permitted Aceva to

present the testimony of Harit Nanavati, a software engineer with Aceva during the relevant

time frame, who performed a live demonstration of the software using a computer server

provided by Aceva. Tyson argued that it needed an opportunity to first inspect the computer

server used by Nanavati in the demonstration to verify whether he was using the same

software that Tyson had on its server. Aceva assured the trial court that the software was the

same version that Tyson had, and the trial court permitted Nanavati to demonstrate that the

software worked at that time. Tyson asked for a recess to inspect the software before

conducting its cross-examination of Nanavati. The trial court denied Tyson’s request for a

recess. Nevertheless, after Nanavati had testified, during the presentation of the remainder

of Aceva’s case-in-chief, the circuit court allowed Tyson to inspect the computer. Kevin

McManus, a management consultant, testified that the software worked properly.

4 Cite as 2013 Ark. App. 495

Michael Mader, an IT employee of Tyson, testified on rebuttal that, based on his

limited inspection of the Aceva server and software, there were significant differences between

those files and the software files on Tyson’s server. He stated that, although he could not

identify the precise changes, “digital fingerprints” indicated that the software used by Aceva

during the demonstration was an altered version of the Aceva software that had been installed

on Tyson’s servers.

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