Scheduled Airlines Traffic Offices, Inc. v. Objective, Inc.

180 F.3d 583, 51 U.S.P.Q. 2d (BNA) 1038, 1999 U.S. App. LEXIS 13124, 1999 WL 387744
CourtCourt of Appeals for the Fourth Circuit
DecidedJune 14, 1999
Docket97-2713
StatusPublished
Cited by27 cases

This text of 180 F.3d 583 (Scheduled Airlines Traffic Offices, Inc. v. Objective, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Scheduled Airlines Traffic Offices, Inc. v. Objective, Inc., 180 F.3d 583, 51 U.S.P.Q. 2d (BNA) 1038, 1999 U.S. App. LEXIS 13124, 1999 WL 387744 (4th Cir. 1999).

Opinion

Affirmed by published opinion. Judge MURNAGHAN wrote the opinion, in which Judge WIDENER and Judge HAMILTON joined.

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 district court granted SATO’s motion for summary judgment on four of the six counterclaims — namely, the claims alleging defamation, violations of the Lanham Act, breach of fiduciary duty, and misappropriation 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 Objective’s two remaining counterclaims, breach of contract and fraud in the inducement of the contract. On SATO’s remaining breach of contract claim, the jury found in favor of SATO and awarded the company .$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 headquarters are located in Arlington, Virginia, provides travel management services. Before 1994, SATO provided travel services only to government agencies. In April-1994, SATO set out to expand its business 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 customers. 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 individual travelers to make travel arrangements directly from their own personal or office computer.

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 Macro-scope to produce the Eagleware and Navigator Systems. Objective 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 custom software. Under the Agreement, Objective assigned to SATO all of its “proprietary rights in and to the [Software] System and all ‘System 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 *587 the parties. As the terms of the contract make clear, it “supersede^] 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 been done on the Navigator System. Objective had, however, received full payment from SATO.

In a letter dated May 31, 1995, SATO specifically notified Objective 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 Eagle-ware 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 Powerbuilder.

On February 24, 1997, SATO filed a complaint for breach of contract 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 Objective’s six amended counterclaims. Specifically, the court granted summary judgment to SATO on the counterclaims for defamation, Lanham Act violations, breach of fiduciary duty, and misappropriation 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 warranty claim. At the close of evidence, the court granted SATO’s motion for judgment as a matter of law on Objective’s breach of contract 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.

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 *588 claim only sought damages for Mure 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. Amphenol 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. Dungan, 45 F.3d 823, 827 (4th Cir.1995).

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180 F.3d 583, 51 U.S.P.Q. 2d (BNA) 1038, 1999 U.S. App. LEXIS 13124, 1999 WL 387744, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scheduled-airlines-traffic-offices-inc-v-objective-inc-ca4-1999.