Crescent Point Energy Corp. v. Tachyus Corporation

N.D. California

Crescent Point Energy Corp. v. Tachyus Corporation

DecidedApril 13, 2021

Docket3:20-cv-06850

StatusUnknown

This text of Crescent Point Energy Corp. v. Tachyus Corporation (Crescent Point Energy Corp. v. Tachyus Corporation) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Crescent Point Energy Corp. v. Tachyus Corporation, (N.D. Cal. 2021).

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 CRESCENT POINT ENERGY CORP., Case No. 20-cv-06850-MMC

10 Plaintiff, ORDER GRANTING DEFENDANT'S MOTION TO DISMISS; DISMISSING 11 v. COMPLAINT WITH LEAVE TO AMEND; CONTINUING CASE 12 TACHYUS CORPORATION, MANAGEMENT CONFERENCE 13 Defendant.

15 16 Before the Court is defendant Tachyus Corporation's ("Tachyus") Motion to 17 Dismiss, filed November 20, 2020. Plaintiff Crescent Point Energy Corp. ("Crescent 18 Point") has filed opposition, to which Tachyus has replied. Having read and considered 19 the papers filed in support of and in opposition to the motion, the Court hereby rules as 20 follows:1 21 1. The First Cause of Action, by which Crescent Point alleges it was fraudulently 22 induced to enter into an agreement with Tachyus, is subject to dismissal. As Tachyus 23 points out, Crescent Point fails to allege facts to support a finding that the statements on 24 which it relies (see Compl. ¶¶ 46-47) were false when made. Rather, in all but two 25 instances, Crescent Point cites to allegations that, at best, do no more than support a 26 27 1 finding that Tachyus breached the agreement (see Pl.'s Opp. at 6:22 – 8:24),2 which 2 allegations, without more, are insufficient to plead a claim of fraudulent inducement, see 3 Conrad v. Bank of America, 45 Cal. App. 4th 133, 157 (1996) (rejecting argument that 4 "failure to perform a promise is sufficient to prove fraud"; holding "this is not, and has 5 never been the law") (internal quotation, alteration, and citation omitted), and in those two 6 instances, Crescent Point's additional allegations likewise are unavailing. In particular, to 7 the extent Crescent Point alleges Tachyus, by announcing, in a proposal made 8 approximately nine months after the contract was executed, "'improvements and 9 enhancements'" to its software had been made (see Compl. ¶ 44), effectively "conceded 10 that its software . . . was flawed from the outset" (see id.), such allegation, contrary to 11 Crescent Point's argument, does not show the software was flawed from the outset, let 12 alone that Tachyus knew the software was flawed from the outset. Similarly unavailing is 13 Crescent Point's allegation that Tachyus's representation that the work would be handled 14 by Tachyus employees (see Compl. ¶ 22) was false when made, given its "history of 15 outsourcing" (see Compl. ¶ 51), an allegation that is both ambiguous and conclusory. 16 See Ashcroft v. Iqbal, 556 U.S. 662, 681 (holding "conclusory" allegations are "not 17 entitled to be assumed true"); see also Fed. R. Civ. P. 9(b) (providing fraud must be 18 alleged with "particularity"). 19 2. The Second Cause of Action, by which Crescent Point alleges breach of 20 contract, is subject to dismissal. In seeking dismissal, Tachyus asserts that, to bring 21 such claim, Crescent Point must first have complied with the "Termination" provision in 22 23 2 Crescent Point alleges Tachyus breached the parties' agreement by 24 "misrepresent[ing] the capabilities of its software" (see Compl. ¶ 59), "fail[ing] to conduct diligence" (see Compl. ¶ 60), "fail[ing] to set KPIs [key performance indicators]" (see 25 Compl. ¶ 61), "outsourc[ing] its software development and testing" (see Compl. ¶ 62), "fail[ing] to adequately gather information and feedback" (see Compl. ¶ 63), "fail[ing]" to 26 "make [its] software compatible with Crescent Point's wells" (see Compl. ¶ 64), "causing Crescent Point to spend significant amounts of its own money and resources to collect 27 . . . data for Tachyus" (see Compl. ¶ 65), and "sending Crescent Point an invoice" (see 1 the parties' written agreement. (See Richmann Decl. Ex. A ¶ 9.2.)3 In response, 2 Crescent Point does not dispute such assertion, but, rather, argues that, contrary to 3 Tachyus's assessment of the communications on which Crescent Point relies, it did 4 comply with the Termination provision. Even construing Crescent Point's allegations "in 5 the light most favorable to [it]," see NL Industries v. Kaplan, 792 F.2d 896, 898 (9th Cir. 6 1986), however, the Court finds Crescent Point's alleged communications to Tachyus 7 (see Compl. ¶¶ 31-33, 42) do not, either strictly or substantially, comply with the 8 Termination provision. 9 3. The Third Cause of Action, by which Crescent Point alleges breach of the 10 implied covenant of good faith and fair dealing, is subject to dismissal. In response to 11 Tachyus's assertion that Crescent Point must have complied with the Termination 12 provision to bring such claim, Crescent Point, as noted above, does not dispute such 13 assertion. Rather, Crescent Point again argues it did comply with the Termination 14 provision, and, as also noted, the Court finds Crescent Point has not adequately alleged 15 such compliance. 16 4. The Fourth Cause of Action, by which Crescent Point alleges unjust 17 enrichment, is subject to dismissal. To the extent the claim is based on a theory that 18 Tachyus, contrary to a provision in the parties' agreement setting forth the circumstances 19 under which an invoice may issue (see Richmann Decl. Ex. B at 10), nonetheless 20 submitted, and was paid in "error" on, an invoice during a "'risk-free' period (see Compl. 21 ¶¶ 40-41, 87-88), Crescent Point may not seek reimbursement under a theory of unjust 22 enrichment. See California Medical Ass'n. Inc. v. Aetna U.S. Healthcare, 94 Cal. App. 23 4th 151, 172 (2001) (holding "action for unjust enrichment does not lie where . . . express 24 binding agreements exist and define the parties' rights"; characterizing claim based on 25 unjust enrichment as "quasi-contract" claim). For the same reason, to the extent the 26

27 3 Tachyus's unopposed request that the Court take judicial notice of the three 1 claim is based on an allegation that Tachyus, contrary to a provision in the parties' 2 agreement defining the circumstances under which Tachyus can use Crescent Point's 3 "Customer Content" (see Richmann Decl. Ex. A ¶ 2.3.1), used Crescent Point's "data"4 to 4 "enhance and build its software for use with other customers" (see Compl. ¶ 89), 5 Crescent Point cannot rely on a theory of unjust enrichment. See California Medical 6 Ass'n, 94 Cal. App. 4th at 172. 7 5. The Fifth Cause of Action, by which Crescent Point alleges violations of 8 § 17200 of the California Business & Professions Code, see Cal. Bus. & Prof. Code 9 § 17200 (providing § 17200 claim may be based on, inter alia, a "fraudulent" or "unfair" 10 act), is subject to dismissal. Here, to the extent the claim is based on alleged fraud, it 11 fails for the reasons stated above with respect to the First Cause of Action. To the extent 12 the claim, irrespective of any allegation of fraud, is based on Tachyus's alleged unfair 13 outsourcing of work, it fails for the reason that Crescent Point fails to plead facts to show 14 it was harmed by such outsourcing. See Cal. Bus. & Prof. Code § 17204 (providing 15 plaintiff seeking relief under § 17200 must have "suffered injury in fact and . . . lost money 16 or property as a result of the unfair competition"). 17 6. As Tachyus has not shown, and the Court does not find, Crescent Point could 18 not, if afforded an opportunity to amend, potentially state a viable claim, the Court will 19 afford Crescent Point leave to amend.

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 CRESCENT POINT ENERGY CORP., Case No. 20-cv-06850-MMC

10 Plaintiff, ORDER GRANTING DEFENDANT'S MOTION TO DISMISS; DISMISSING 11 v. COMPLAINT WITH LEAVE TO AMEND; CONTINUING CASE 12 TACHYUS CORPORATION, MANAGEMENT CONFERENCE 13 Defendant.

15 16 Before the Court is defendant Tachyus Corporation's ("Tachyus") Motion to 17 Dismiss, filed November 20, 2020. Plaintiff Crescent Point Energy Corp. ("Crescent 18 Point") has filed opposition, to which Tachyus has replied. Having read and considered 19 the papers filed in support of and in opposition to the motion, the Court hereby rules as 20 follows:1 21 1. The First Cause of Action, by which Crescent Point alleges it was fraudulently 22 induced to enter into an agreement with Tachyus, is subject to dismissal. As Tachyus 23 points out, Crescent Point fails to allege facts to support a finding that the statements on 24 which it relies (see Compl. ¶¶ 46-47) were false when made. Rather, in all but two 25 instances, Crescent Point cites to allegations that, at best, do no more than support a 26 27 1 finding that Tachyus breached the agreement (see Pl.'s Opp. at 6:22 – 8:24),2 which 2 allegations, without more, are insufficient to plead a claim of fraudulent inducement, see 3 Conrad v. Bank of America, 45 Cal. App. 4th 133, 157 (1996) (rejecting argument that 4 "failure to perform a promise is sufficient to prove fraud"; holding "this is not, and has 5 never been the law") (internal quotation, alteration, and citation omitted), and in those two 6 instances, Crescent Point's additional allegations likewise are unavailing. In particular, to 7 the extent Crescent Point alleges Tachyus, by announcing, in a proposal made 8 approximately nine months after the contract was executed, "'improvements and 9 enhancements'" to its software had been made (see Compl. ¶ 44), effectively "conceded 10 that its software . . . was flawed from the outset" (see id.), such allegation, contrary to 11 Crescent Point's argument, does not show the software was flawed from the outset, let 12 alone that Tachyus knew the software was flawed from the outset. Similarly unavailing is 13 Crescent Point's allegation that Tachyus's representation that the work would be handled 14 by Tachyus employees (see Compl. ¶ 22) was false when made, given its "history of 15 outsourcing" (see Compl. ¶ 51), an allegation that is both ambiguous and conclusory. 16 See Ashcroft v. Iqbal, 556 U.S. 662, 681 (holding "conclusory" allegations are "not 17 entitled to be assumed true"); see also Fed. R. Civ. P. 9(b) (providing fraud must be 18 alleged with "particularity"). 19 2. The Second Cause of Action, by which Crescent Point alleges breach of 20 contract, is subject to dismissal. In seeking dismissal, Tachyus asserts that, to bring 21 such claim, Crescent Point must first have complied with the "Termination" provision in 22 23 2 Crescent Point alleges Tachyus breached the parties' agreement by 24 "misrepresent[ing] the capabilities of its software" (see Compl. ¶ 59), "fail[ing] to conduct diligence" (see Compl. ¶ 60), "fail[ing] to set KPIs [key performance indicators]" (see 25 Compl. ¶ 61), "outsourc[ing] its software development and testing" (see Compl. ¶ 62), "fail[ing] to adequately gather information and feedback" (see Compl. ¶ 63), "fail[ing]" to 26 "make [its] software compatible with Crescent Point's wells" (see Compl. ¶ 64), "causing Crescent Point to spend significant amounts of its own money and resources to collect 27 . . . data for Tachyus" (see Compl. ¶ 65), and "sending Crescent Point an invoice" (see 1 the parties' written agreement. (See Richmann Decl. Ex. A ¶ 9.2.)3 In response, 2 Crescent Point does not dispute such assertion, but, rather, argues that, contrary to 3 Tachyus's assessment of the communications on which Crescent Point relies, it did 4 comply with the Termination provision. Even construing Crescent Point's allegations "in 5 the light most favorable to [it]," see NL Industries v. Kaplan, 792 F.2d 896, 898 (9th Cir. 6 1986), however, the Court finds Crescent Point's alleged communications to Tachyus 7 (see Compl. ¶¶ 31-33, 42) do not, either strictly or substantially, comply with the 8 Termination provision. 9 3. The Third Cause of Action, by which Crescent Point alleges breach of the 10 implied covenant of good faith and fair dealing, is subject to dismissal. In response to 11 Tachyus's assertion that Crescent Point must have complied with the Termination 12 provision to bring such claim, Crescent Point, as noted above, does not dispute such 13 assertion. Rather, Crescent Point again argues it did comply with the Termination 14 provision, and, as also noted, the Court finds Crescent Point has not adequately alleged 15 such compliance. 16 4. The Fourth Cause of Action, by which Crescent Point alleges unjust 17 enrichment, is subject to dismissal. To the extent the claim is based on a theory that 18 Tachyus, contrary to a provision in the parties' agreement setting forth the circumstances 19 under which an invoice may issue (see Richmann Decl. Ex. B at 10), nonetheless 20 submitted, and was paid in "error" on, an invoice during a "'risk-free' period (see Compl. 21 ¶¶ 40-41, 87-88), Crescent Point may not seek reimbursement under a theory of unjust 22 enrichment. See California Medical Ass'n. Inc. v. Aetna U.S. Healthcare, 94 Cal. App. 23 4th 151, 172 (2001) (holding "action for unjust enrichment does not lie where . . . express 24 binding agreements exist and define the parties' rights"; characterizing claim based on 25 unjust enrichment as "quasi-contract" claim). For the same reason, to the extent the 26

27 3 Tachyus's unopposed request that the Court take judicial notice of the three 1 claim is based on an allegation that Tachyus, contrary to a provision in the parties' 2 agreement defining the circumstances under which Tachyus can use Crescent Point's 3 "Customer Content" (see Richmann Decl. Ex. A ¶ 2.3.1), used Crescent Point's "data"4 to 4 "enhance and build its software for use with other customers" (see Compl. ¶ 89), 5 Crescent Point cannot rely on a theory of unjust enrichment. See California Medical 6 Ass'n, 94 Cal. App. 4th at 172. 7 5. The Fifth Cause of Action, by which Crescent Point alleges violations of 8 § 17200 of the California Business & Professions Code, see Cal. Bus. & Prof. Code 9 § 17200 (providing § 17200 claim may be based on, inter alia, a "fraudulent" or "unfair" 10 act), is subject to dismissal. Here, to the extent the claim is based on alleged fraud, it 11 fails for the reasons stated above with respect to the First Cause of Action. To the extent 12 the claim, irrespective of any allegation of fraud, is based on Tachyus's alleged unfair 13 outsourcing of work, it fails for the reason that Crescent Point fails to plead facts to show 14 it was harmed by such outsourcing. See Cal. Bus. & Prof. Code § 17204 (providing 15 plaintiff seeking relief under § 17200 must have "suffered injury in fact and . . . lost money 16 or property as a result of the unfair competition"). 17 6. As Tachyus has not shown, and the Court does not find, Crescent Point could 18 not, if afforded an opportunity to amend, potentially state a viable claim, the Court will 19 afford Crescent Point leave to amend. 20 // 21 // 22 // 23 // 24 // 25 // 26

27 4 "Customer Content," as defined in the parties' agreement, includes "data." (See 1 CONCLUSION 2 For the reasons stated above, Tachyus's motion to dismiss is hereby GRANTED, 3 || and the complaint is DISMISSED with leave to amend. Any First Amended Complaint 4 || shall be filed no later than May 7, 2021. 5 In light of the above, the Case Management Conference is hereby CONTINUED 6 || from April 23, 2021, to July 23, 2021, at 10:30 a.m. A Joint Case Management 7 || Statement shall be filed no later than July 16, 2021. 8 IT IS SO ORDERED. 9 10 || Dated: April 13, 2021 , . INE M. CHESNEY 11 United States District Judge 12

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