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Surplus.Com, Inc., An Illinois Corporation v. Oracle Corporation

December 23, 2010

SURPLUS.COM, INC., AN ILLINOIS CORPORATION, PLAINTIFF,
v.
ORACLE CORPORATION, A CALIFORNIA HON. AMY J. ST. EVE CORPORATION, AND ORACLE AMERICA, INC., A DELAWARE CORPORATION ERRONEOUSLY SUED AS ORACLE USA, INC., DEFENDANTS.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge:

MEMORANDUM OPINION AND ORDER

Plaintiff, Surplus.Com, Inc. has filed an action against Defendants, Oracle Corporation and Oracle America, Inc. (collectively "Oracle") for breach of contract. (R. 17.) Oracle has filed a motion to dismiss the lawsuit, arguing that the allegations in the Amended Complaint reveal that the Statute of Limitations bars Plaintiff's breach-of-contract claim. (R. 25; R. 37.) Plaintiff concedes that "[t]he outcome of Defendants' motion turns on whether the Court rules as a matter of law that the UCC applies to this transaction. If it does, the four (4) year statute of limitations set forth in section 2-725(1) of the UCC applies, and Plaintiff's claim is time barred."

(R. 33 at 5.) Because the allegations in the Amended Complaint require application of Illinois's Uniform Commercial Code, Plaintiff's suit for breach of contract is time-barred. The Court therefore grants Oracle's motion to dismiss, with prejudice, and denies Oracle's motion to strike as moot.

BACKGROUND

On May 3, 2010, Plaintiff filed a complaint against Oracle in the Circuit Court of Cook County, seeking damages for breach of contract. (R. 1 at 1; R. 1-2.) On June 8, 2010, Oracle removed the case to federal court, invoking this Court's diversity jurisdiction. (R. 1 at 2.) Oracle subsequently filed a motion to dismiss, contending that Plaintiff's breach-of-contract claim could not survive the Uniform Commercial Code's four-year Statute of Limitations provision. (R. 8.) Plaintiff elected not to respond to the motion to dismiss, but instead filed an Amended Complaint on August 5, 2010. (R. 17.) Oracle now seeks to dismiss the Amended Complaint. (R. 22.)

Plaintiff alleges that it purchased a software program called "Dynamic Pricing Engine and eAuction MME, Version 1.3 software" from Siebel Systems, Inc., which in turn ultimately became Oracle America. (R. 17 at 2.) It also alleges that it obtained "a product entitled Siebel Systems, Inc. Maintenance and Support," along with the software program. (Id.) That program allegedly came with a Software License and Services Agreement ("SLSA") and an End User License and Services Agreement ("EULA"), the former of which provided program and services warranties. (Id. at 3.) The Amended Complaint further provides that Siebel's e-Business senior account executive, Aaron Schmidt, "informed Surplus.com that the Software was not fully operational 'out of the box,' and that Surplus.com would have to hire a separate company to develop and implement the Software." (Id. at 5.)

Plaintiff allegedly could not obtain the license files for the software without first developing and implementing it, as Plaintiff would not have a development IP address until that time. (Id. at 6.) According to the Amended Complaint, Mr. Schmidt directed Plaintiff to retain a company called Dynamic Quest ("DQ") to develop and implement the software. (Id.) Plaintiff hired DQ, which developed and implemented the software "over a period of approximately six weeks." (Id.) Plaintiff further alleges that, "[d]ue to the extensive development and implementation required to get the Software to become operational . . . Siebel did not sell a software product to Surplus.com. Rather, Siebel sold Surplus.com intangible intellectual property rights that DQ used to create from scratch Surplus.com's custom-made auction website to meet Surplus.Com's specific individualized requirements." (Id. at 7.)

In addition, Plaintiff alleges that DQ "never properly implemented or developed the Software," that "Mr. Schmidt did not assist Surplus.com in resolving the issue, and did not provide any support," and that, despite purchasing an additional six-month maintenance agreement that entitled it to Version 7.0 of the software, Siebel did not provide Surplus.com with that version. (Id. at 7-8.) Through these and other alleged acts, Plaintiff contends that Oracle breached their contract. (Id. at 10-12.)

On August 27, 2010, Oracle filed a motion to dismiss the Amended Complaint under Federal Rule of Civil Procedure 12(b)(6). (R. 22.) Oracle contends that the Amended Complaint alleges breach of contract for events that occurred between November 2000 and May 6, 2004, and therefore the applicable statute of limitations bars the case. (R. 25 at 2.)

LEGAL STANDARD

"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). Pursuant to Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief."

Fed. R. Civ. P. 8(a)(2). This short and plain statement must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41 (1957)). As the Seventh Circuit teaches, this "[r]ule reflects a liberal notice pleading regime, which is intended to 'focus litigation on the merits of a claim' rather than on technicalities that might keep plaintiffs out of court." Brooks v. Ross, 578F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)).

Under federal notice-pleading standards, a plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Put differently, 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, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). "[W]hen ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations ...


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