Deere & Company v. XAPT Corporation

CourtDistrict Court, C.D. Illinois
DecidedMay 6, 2020
Docket4:19-cv-04210
StatusUnknown

This text of Deere & Company v. XAPT Corporation (Deere & Company v. XAPT Corporation) is published on Counsel Stack Legal Research, covering District Court, C.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Deere & Company v. XAPT Corporation, (C.D. Ill. 2020).

Opinion

IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF ILLINOIS ROCK ISLAND DIVISION

DEERE & COMPANY, Plaintiff,

v. Case No. 4:19-cv-04210-SLD-JEH

XAPT CORPORATION, Defendant.

Order Now before the Court are Plaintiff Deere & Company’s Motion for Leave to File Plaintiff’s Second Amended and First Supplemental Complaint, Memorandum of Law, and Request for Ruling (Doc. 43) and Defendant XAPT Corporation’s Motion to Stay Discovery Pending Resolution on Defendant’s Motion to Dismiss (Doc. 36). The Motions are fully briefed and for the reasons set forth below, the Plaintiff’s Motion is GRANTED and the Defendant’s Motion is DENIED AS MOOT. I The Plaintiff filed its original Complaint on October 18, 2019 against Defendant XAPT Corporation (XAPT), and thereafter filed its Amended Complaint (Doc. 5) on October 23, 2019. In the Amended Complaint, the Plaintiff brought claims against XAPT for breach of contract, fraudulent inducement, and reformation. The Plaintiff alleged that it determined in 2013 that it could better serve its dealers by developing a single, fully integrated “Dealer Business System” (DBS) for purchase by all of its dealers in key markets. (Doc. 5 at pg. 4 ¶17). Thus, it determined it needed a platform on which the system would be built, and a developer to create and implement the system as well as provide ongoing support. (Doc. 5 at pg. 5 ¶21). From the inception of Deere’s relationship with XAPT1 via a telephone call in December 2015 and consistently over the next almost two years prior to contract execution, Deere consistently described its development needs: a global DBS template, customizable by region, including more than three hundred enumerated capabilities, data migration from Deere’s prior systems, full integration among its applications, and initial roll-out to dealers in seven countries. (Doc. 5 at pg. 6 ¶25). Four principal contracts between the Plaintiff and Defendant governed the creation and development of the Global DBS: a Master Services Agreement (MSA); a Work Order Template – Global Template; a Work Order – Governance; and XAPT Subscription Delivery Agreement. (Doc. 5 at pg. 10 ¶41). The Plaintiff further alleges that after contract execution, gaps to produce the global DBS multiplied exponentially and the Defendant failed to deliver project deliverables, it produced code riddled with errors, and it racked up costs. (Doc. 5 at pg. 15). The Plaintiff then invested in training XAPT in an effort to support XAPT, but post-training, gaps increased, quality did not improve, and XAPT sought a $10 million increase in the contract price to deliver the same product. (Doc. 5 at pgs. 16-17). On December 12, 2019, the parties jointly moved to stay this matter so that they could mediate this case, and the Court granted their motion and stayed the case to no later than February 5, 2020. On February 24, 2020, Defendant XAPT filed its Motion to Dismiss (Doc. 24). On March 4, 2020, the Court adopted the parties’ discovery plan which includes a deadline of July 10, 2020 to amend the

1 Deere alleged XAPT “styles itself a ‘global leading provider of Microsoft Dynamics ERP business solutions’ that ‘provides a full complement of business consulting services, including implementation and integration, for mid-size and enterprise organizations globally.’” (Doc. 5 at pg. 3 ¶12). pleadings and join additional parties. The next day, March 5, 2020, the Defendant filed its Motion to Stay Discovery Pending Resolution on Defendant’s Motion to Dismiss (Doc. 36). On March 27, 2020, the Plaintiff filed its Response (Doc. 41) to the Defendant’s Motion to Dismiss and its Motion for Leave to File Plaintiff’s Second Amended and First Supplemental Complaint, Memorandum of Law, and Request for Ruling (Doc. 43) (Motion to Amend). In its Motion to Amend now before the Court, the Plaintiff seeks to join additional parties as defendants – XAPT Kft, XAPT Solutions2, and Cosmo Consult3 – and to add additional claims that arose from the conduct of XAPT, XAPT Kft, XAPT Solutions, and Cosmo Consult. II A The Plaintiff properly seeks leave to file its amended complaint pursuant to Federal Rule of Civil Procedure 15 given that the deadline to amend pleadings and add parties has not yet passed. Rule 15(a)(2) provides in relevant part that the Court should freely give leave to a party to amend its pleading “when justice so requires.” FED. R. CIV. P. 15(a)(2). However, leave to amend may be denied where there is undue delay, bad faith on the movant’s part, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party if the amendment is allowed, or futility. Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th Cir. 2010) (citations omitted). Here, Defendant XAPT argues the Plaintiff’s Motion to Amend should be denied as amendment would be futile. Specifically, XAPT argues: 1) the amendment is futile because Deere cannot allege compliance with Section 15.6.1

2 XAPT Kft and XAPT Solutions Pty Ltd are identified as “approved subcontractors” in the MSA. (Doc. 27 at pgs. 6-7). 3 In the proposed second amended complaint, Plaintiff Deere alleges that, “In or about October or early November 2019, Deere learned that XAPT was utilizing an unapproved subcontractor on its project that operated under the email address @cosmoconsult.com.” (Doc. 46 at pg. 27 ¶123). of the MSA; 2) the amendment is futile due to a lack of personal jurisdiction over XAPT Solutions; and 3) the amendment is futile due to the absence of a viable theory of liability against XAPT Kft, XAPT Solutions, and Cosmo Consult. An amendment is futile when the new pleading would not survive a motion to dismiss. Gandhi v. Sitra Capital Mgmt., LLC, 721 F.3d 865, 869 (7th Cir. 2013). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674, 685 (7th Cir. 2014) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). B 1 Defendant XAPT argues that the proposed second amended complaint includes vague allusions to some form of a dispute resolution process which remain insufficient to fulfill the specific requirements of Section 15.6.1 of the MSA which provides for a mandatory pre-suit dispute resolution process. Section 15.6.1 of the MSA specifically provides: The parties agree to work together in good faith to resolve controversies, claims or disputes relating to this Master Agreement (“Dispute”). The respective Project Managers will first attempt to resolve the Dispute; however, if there is no resolution within ten (10) business days, either Party may then require that their next level of management meet within the next ten (10) business days to resolve the Dispute. If these managers are unable to resolve the Dispute, then there may be one final escalation to designated leaders, who will meet within ten (10) business days to make one last attempt to resolve the Dispute. Except for injunctive relief described below, the Parties agree to use this mutual dispute resolution process before pursuing any legal action against the other. Each Party will provide the other with information and documentation to substantiate its position with respect to the Dispute. (Doc. 27 at pgs. 29-30).

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Deere & Company v. XAPT Corporation, Counsel Stack Legal Research, https://law.counselstack.com/opinion/deere-company-v-xapt-corporation-ilcd-2020.