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System Dvmt Integration v. Computer Sciences Corp

April 1, 2011

SYSTEM DVMT INTEGRATION
v.
COMPUTER SCIENCES CORP



Name of Assigned Judge or Magistrate Judge Amy J. St.Eve Sitting Judge if Other than Assigned Judge

CASE TITLE

DOCKET ENTRY TEXT

The Court grants in part and denies in part Plaintiff's motion to alter judgment order and memorandum opinion dated September 13, 2010 [111]. Judgment entered on September 13, 2010 is stricken. Case reopened. Status hearing set for 4/20/11 at 8:30 a.m. O[ For further details see text below.] Notices mailed by Judicial staff.

STATEMENT

Plaintiff, System Development Integration, L.L.C. ("SDI"), has filed a motion under Federal Rule of Civil Procedure 59(e) to alter or amend the Court's September 13, 2010, judgment order and memorandum opinion ("the Opinion"), which granted summary judgment in favor of Defendant, Computer Sciences Corporation ("CSC"). For the following reasons, the Court grants Plaintiff's motion in part and denies it in part.

BACKGROUND

Plaintiff alleges that Defendant breached the parties' contract and partnership agreement, and interfered with Plaintiff's business. (R. 83.) It contends that CSC induced it to enter into a partnership agreement to obtain a long-term business opportunity with Exelon Corporation, but then terminated the agreement and replaced Plaintiff with one of Plaintiff's competitors. (Id.) The Court assumes familiarity with the case, and notes that its September 13, 2010, Opinion addresses the relevant facts in detail. (R. 109 at 6-21.)

In that Opinion, the Court determined that no genuine issue of material fact existed, thus entitling Defendant to summary judgment on Plaintiff's counts of breach of contract, tortious interference with prospective business advantage, breach of fiduciary duty, quantum meruit, and equitable estoppel. (R. 109 at 24-39.)

Courtroom Deputy KF Initials:

In its Opinion, the Court ruled as follows: With regard to breach of contract, there was no dispute that Defendant never signed the last version of the written agreement that it had sent to Plaintiff. (Id. at 24-25.) Although Plaintiff's return of the signed subcontract agreement led certain individuals within Defendant company to believe that the parties had reached an agreement, Plaintiff was unable to contradict evidence that its President, Mr. David Gupta, returned a rate card with the agreement that did not evidence the rate card to which Defendant had agreed. (Id. at 25.) The evidence, construed in Plaintiff's favor, revealed that the parties did not create a contract because Plaintiff's "acceptance" did not conform exactly to the "offer," thus violating the mirror-image rule. (Id. at 25-26.) Nor did the parties form an oral contract because the agreement, which would have provided for a five-year subcontract between the parties with a possibility of three one-year extensions, could not be performed within a year. (Id. at 26-27.) The Statute of Frauds applied because no writing evidenced Defendant's supposed acceptance of Plaintiff's counter offer, which contained new rate cards. (Id. at 27.) The doctrine of equitable estoppel did not provide an exception to the Statute of Frauds, as Plaintiff merely proffered conclusory assertions, rather than evidence, that Defendant intended or expected that SDI would act on its representations. (Id. at 27-28.)

With respect to Plaintiff's tortious-interference-with-prospective-business-advantage claim, none of Plaintiff's three purported business expectancies was legitimate. First, the evidence did not support Plaintiff's assertion that it had an expectation of a long-term relationship with Exelon. (Id. at 29.) Nor did it support Plaintiff's receipt of 15% of Exelon's information-technology business, as Plaintiff never entered into a contract with Exelon and because there was no evidence that Exelon intended Plaintiff to receive 15% of that business. (Id.) Finally, Plaintiff had no expectation of continuing its relationships with the twenty-nine IP specialists it had hired and recruited, since Plaintiff rescinded all of their offers after it failed to reach agreement with Defendant. (Id.) Plaintiff's arguments to the contrary relied only on facts that demonstrated that it unilaterally decided to recruit and hire IT specialists, that Defendant had stressed the benefits of the Plaintiff-Defendant relationship to Exelon, and that Plaintiff had met with Exelon to discuss the former's potential agreement with Defendant. (Id. at 30.) Such evidence did not create a genuine issue of material fact precluding the entry of summary judgment in Defendant's favor. (Id.)

Defendant was also entitled to summary judgment on Plaintiff's breach-of-fiduciary-duty claim because the evidence did not support a finding that the parties had entered into a partnership agreement, upon which Plaintiff's claim depended. (Id. at 30-34.) The parties agreed that no written, executed partnership agreement between them existed. (Id. at 31.) The emails and deposition testimony, which Plaintiff argued evidence a partnership agreement, failed to establish the existence of such an agreement. (Id. at 30-34.) The emails' colloquial use of "partnership," and the disclaimer within one that it "should not operate to bind CSC to any . . . contract," did not demonstrate that a partnership actually existed as defined by law. (Id. at 33.) The parties did not file a partnership certificate with the County Clerk; nor did they file partnership tax returns. They did not have a partnership name; nor did they intend to share profits-Plaintiff presented no evidence that "15% of the total contract value" constituted the sharing of profits. (Id.)

Defendant was further entitled to summary judgment on Plaintiff's quantum meruit claim because SDI did not proffer any evidence that any of the services it provided to Defendant was not gratuitous. (Id. at35.)

Finally, the evidence did not support Plaintiff's claim for equitable estoppel. (Id. at 36-39.) The Court did not see occasion to answer the question whether equitable estoppel in Illinois law can give rise to an independent cause of action (that is, whether it can be used as a "sword," as well as a "shield," in the famous words of Lord Denning in Ctr. London Prop. Trust, Ltd. v. High Trees House, [1947] K.B. 130). Even if Plaintiff could use equitable estoppel offensively, the undisputed facts entitle Defendant to summary judgment because there is no evidence that Defendant misrepresented or concealed material facts. (R. 109 at 36-37.) Specifically, all the relevant alleged misrepresentations cited by Plaintiff concerned promises of future action, which cannot form the basis for equitable estoppel. (Id. at37-38.)

In light of its ruling on summary judgment, the Court entered judgment on September 13, 2010. (R. 110.) Subsequently, Plaintiff filed a motion to alter or amend that opinion and ensuing judgment. (R.111.) The Court grants the motion in part and denies it in part.

LEGAL STANDARD

Rule 59(e) permits parties to file, within twenty-eight days of the entry of judgment, a motion to alter or amend the judgment. See Fed. R. Civ. P. 59(e). Motions under Rule 59(e) serve the limited function of allowing the Court to correct manifest errors of law or fact or to consider newly discovered material evidence. See Cnty. of McHenry v. Ins. Co. of the West, 438 F.3d 813, 819 (7th Cir. 2006). Rule 59(e) "essentially enables a district court to correct its own errors, sparing the parties and the appellate courts the burden of unnecessary appellate proceedings." Russell v. Delco Remy Div. of Gen. Motors Corp., 51 F.3d 746, 749 (7th Cir. 1995). Whether to grant a Rule 59(e) motion "is entrusted to the sound judgment of the district court." Matter of Prince, 85 F.3d 314, 324 (7th Cir. 1996).

ANALYSIS

I. The Court Grants Plaintiff's Rule 59(e) Motion as to the Breach-of-Contract Claim

The Opinion observed that Plaintiff could base its claim for breach of the subcontract agreement on either a written contract or an oral agreement. (R. 109 at 24-28.) With respect to the potential written contract, the Court found that "SDI did not accept the offer made to it by CSC on September 24, 2008," because "SDI had exchanged the rate cards associated with CSC's proposal for rate cards more favorable to SDI," which constituted a counter-offer that CSC did not accept. (Id. at 24-26.) The Opinion also determined that the Illinois Statute of Frauds barred Plaintiff from pursuing a breach-of-contract claim with respect to the parties' September 23, 2008, oral agreement. It rejected SDI's contention that CSC had admitted to the fact of the September 23 oral agreement because "[t]here is no evidence in the record that CSC ever agreed ...


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