Summary
In American Tower Corp. and SPX, the Court found that it was inappropriate to grant a motion to dismiss based on the statute of limitations because there were questions of fact relating to the parties' intent as to whether duties imposed by contract were intended to be continuing obligations.
Summary of this case from Donald M. Durkin Contracting, Inc. v. City of NewarkOpinion
C.A. No. 09C-03-122 PLA.
Submitted: February 18, 2010.
Decided: March 8, 2010.
Upon Defendant's Motion to Dismiss.
DENIEDScott G. Wilcox, Esquire, BAYARD, P.A., Wilmington, Delaware, Attorney for Plaintiff.
Thad J. Bracegirdle, Esquire, WILKS, LUKOFF BRACEGIRDLE, LLC, Wilmington, Delaware, Attorney for Defendant.
This is a breach of contract case wherein Plaintiff American Tower Corporation ("ATC") asserts that Unity Communications, Inc. ("Unity") has reneged on sixteen separate licensing agreements for space on communication towers owned by ATC in Kentucky, Ohio, West Virginia, and Nevada. The Complaint alleges that Unity has failed to pay license fees under these sixteen agreements for more than three years and owes approximately $536,000.00.
Now before the Court is a Motion to Dismiss filed by Unity in which it contends that ATC's claims are legally deficient for two reasons: (1) Unity is not a party to fifteen of the sixteen license agreements and thus cannot be liable for any third-party's failure to pay under the contracts; and (2) even assuming that ATC had any claims against Unity, they are barred by the applicable statute of limitations.
In support of its contention that Unity is not a party to the license agreements, it submits that ATC's allegation in various paragraphs of its Complaint that Unity assumed the obligations under each of the contracts is a "bald allegation not supported by anything in the agreements themselves." It further argues that ATC's "conclusory allegation" that Unity assumed the obligations under the lease agreements is entitled to no weight, because the Court should not accept conclusory allegations as true without supporting factual allegations.
With respect to the statute of limitations argument, Unity submits that even assuming it owed any contractual obligations to ATC under the license agreements, ATC's claims arose more than three years before the Complaint was filed and are thus barred. Unity further argues that a written demand letter from ATC dated April 17, 2006, establishes that ATC knew or should have known about the alleged liability well before March 12, 2006, when the clock began to run on the statute of limitations.
ATC initially filed a response to the motion in which it asserts that, although Unity was not a party to the original licenses, it has made a valid claim by pleading facts sufficient to place Unity on notice that it will be asserting that Unity assumed the obligations under the license agreement. Since notice pleading is sufficient under the Delaware Rules of Civil Procedure, ATC is not required to plead evidence in the complaint, as Unity argues. With respect to the statute of limitations issue, ATC claims that the April 6, 2006 default letter, which terminated the license agreements on April 17, 2006, demonstrates that the statute of limitations did not begin to run until the latter date, thus making the March 12, 2009 filing within the three-year time provided by the statute of limitations.
I turn first to the question of whether ATC's complaint is sufficient. I conclude that it is. ATC is not required to present evidence sufficient to support the factual allegations in its Complaint, but is merely required to place Unity on notice of the cause of action asserted against it; hence the term "notice pleading." An allegation in a complaint is well pleaded, even if lacking in detail, if it places the opposing party on fair notice in a general way of the claim or claims being brought against it. As a general rule, a plaintiff is not required to plead any evidence in support of allegations in a complaint.
VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 611 (Del. 2003); Klein v. Sunbeam Corp., 94 A.2d 385, 391 (Del. 1952).
VLIW Tech., 840 A.2d at 611.
The Court rejects Unity's assertion that the paragraphs in ATC's Complaint that assert that Unity assumed the licenses and failed to make payments are conclusory allegations that must be supported by facts. Nor is the citation to Abbott v. Gordon, for the rule that the Court will not accept as true conclusory allegations without specific factual support, applicable in this case. The challenged paragraphs are not conclusory allegations but are assertions of fact intended to provide notice to Unity of the grounds upon which ATC relies for the relief it seeks. A factual allegation is not the same as a conclusory allegation, and in this case, the statements in the Complaint are factual, not conclusory.
By way of illustration, if ATC had asserted in its Complaint that Unity "breached the agreements," the allegation would be conclusory. If, instead, ATC states that Unity "breached the agreements because it failed to pay monthly licensing fees," it is asserting a statement of fact that it ultimately expects to prove in support of its cause of action for breach of contract. In this case, none of the allegations of the Complaint are conclusory.
Accordingly, the Court concludes that, accepting as true all of ATC's well-pleaded allegations, Unity is not entitled to dismissal of the Complaint.
I turn next to Unity's argument that the statute of limitations for contractual relations, 10 Del.C. § 8106(a), bars ATC's claims because they were not filed within the three-year period permitted.
Upon reviewing the initial submissions of the parties, the Court wrote to counsel in order to afford them an opportunity to address an additional issue that was prompted by their papers. Specifically, the Court referred to Chaplake Holdings, Ltd. v. Chrysler Corp., a case cited by ATC in its Reply to the Motion to Dismiss in support of its claim that "the statute of limitations does not begin to run until the agreement is terminated and the damages are set." Because Chaplake so held with regard to a claim for breach of a continuing contract, the Court asked counsel to provide supplemental briefs on the question of whether ATC should be considered to have had a continuing cause of action prior to its issuance of the default letter.
1999 WL 167834, at *22 (Del. Super. Jan. 13, 1999).
Both parties submitted additional argument that was helpful to the Court. Of particular relevance to the Court in deciding whether the motion to dismiss should be granted is the principle cited by ATC that whether a contract is a continuous or severable agreement is analyzed by reviewing the intent of the parties. The inquiry into "[w]hether the obligations under a contract are continuous or severable turns on the parties' intent, which may be ascertained through the contract's terms and subject matter, taken together with pertinent facts and circumstances surrounding the formation." With commendable forthrightness, the plaintiff acknowledges that it does not consider it likely that the license agreements be found to support continuing causes of action, but the fact of the matter is that the question of the parties' intent cannot be resolved on a motion to dismiss, as it is a factual issue that must be resolved by trial. Under these circumstances, the Court cannot decide this case on a motion to dismiss because dismissal would be appropriate only if "plaintiff would not be able to recover under any reasonably conceivable set of circumstances." In order to dismiss the Complaint in this case on the argument presented by Unity, the Court would be required to make factual determinations concerning the parties' intent, taken together with the relevant circumstances surrounding the negotiations and execution of the contract, which is clearly inappropriate at this stage of the litigation.
Pl.'s Supplemental Reply Br., ¶ 7 (citing Tracey v. Franklin, 67 A.2d 56, 61 (Del. 1949)).
Smith v. Mattia, 2010 WL 412030, at *4 (Del. Ch. Feb. 1, 2010).
Precision Air, Inc. v. Standard Chlorine of Del., Inc., 654 A.2d 403, 405 (Del. 1995).
Accordingly, Unity's Motion to Dismiss is hereby DENIED.
IT IS SO ORDERED.