Alternative System v. Synopsys CV-00-546-B 08/02/01
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Alternative System
Concepts, Inc.
v. Civil No. 00-546-B
Opinion No. 2001 DNH 142
Svnopsvs, Inc.
MEMORANDUM AND ORDER
Alternative System Concepts, Inc. ("ASC") entered into an
agreement with Languages for Design Automation ("LEDA") to
temporarily become LEDA's exclusive marketing agent for one of
its product lines. The temporary agreement obligated LEDA and
ASC to "negotiate in good faith a permanent agreement based on
experiences during the term of [the a g r e e m e n t ] ." It also
provided, however, that "[n]either LEDA nor ASC has any
obligation in entering such a permanent agreement." LEDA was
acquired by Synopsys, Inc. before LEDA and ASC reached a
permanent agreement. Synopsys declined to negotiate with ASC
after it acquired LEDA.
ASC has sued Synopsys in its capacity as LEDA's successor
for breach of contract, misrepresentation, and breach of the
implied duty of good faith and fair dealing. It has also sued
Synopsys based on its own conduct for interference with a
contractual relationship. Snyopsys moves to dismiss pursuant to
Fed. R. Civ. P. 1 2 (b) (6) .
I. BACKGROUND1
LEDA and ASC entered into a "Letter of Understanding"
("LOU") pursuant to which ASC became the exclusive marketing
agent for LEDA's Proton product line in the United States from
April 1, 1999 until September 30, 1999. The LOU stated that
"LEDA and ASC will negotiate in good faith a permanent agreement
based on experiences during the term of this LOU. Neither LEDA
nor ASC has any obligation in entering such a permanent
agreement." LOU, Exh. A to Def.'s Mot. to Dismiss, (Doc. No.
14 ) r 1 19.
In September 1999, LEDA orally agreed to extend the area
covered by the agreement to include Canada. In October 1999, the
parties orally agreed to extend the term of the agreement for a
reasonable period after the introduction of a new version of the
1 Unless otherwise indicated, I take the background facts
from ASC's First Amended Complaint ("Cplt."), (Doc. No. 12).
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Proton product line.
LEDA resisted efforts by ASC to negotiate a permanent
marketing agreement during the fall of 1999. Snyopsys ultimately
acquired LEDA and assumed all of its liabilities in January 2000.
Thereafter, it terminated negotiations with ASC.
II. STANDARD OF REVIEW
A motion to dismiss based on Fed. R. Civ. P. 12(b) (6)
requires the court to accept the complaint's well-pleaded facts
as true and draw all reasonable inferences in favor of the
plaintiff. See Blackstone Realty LLC v. Fed. Deposit Ins. C o r p . ,
244 F.3d 193, 197 (1st Cir. 2001); Washington Legal Found, v.
Massachusetts Bar Found. ,
993 F.2d 962, 971 (1st Cir. 1993). I
may dismiss the complaint only if, when viewed in this manner, it
appears beyond doubt that the plaintiff can prove no set of facts
that would entitle her to relief. See Tompkins v. United
Healthcare of New England, I nc.,
203 F.3d 90, 93 (1st Cir. 2000)
("The complaint will survive as long as it pleads sufficient
facts to warrant recovery on any cognizable theory of the
case."); Cooley v. Mobil Oil Co r p . , 851 F.2d 513, 514 (1st Cir.
1988).
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The threshold for stating a claim under the federal rules
"may be low, but it is real." G o o l e v , 851 F.2d at 514. While I
must construe all well-pleaded facts in the plaintiff's favor, I
need not accept a plaintiff's "unsupported conclusions or
interpretations of law." Washington Legal F o und.,
993 F.2d at
971; see Rogan v. M e n i n o ,
175 F.3d 75, 77 (1st Cir. 1999).
I apply this standard in reviewing defendant's motion to
dismiss.
Ill. DISCUSSION
ASC asserts claims for: (1) breach of contract; (2)
misrepresentation; (3) interference with contractual relations;
and (4) breach of the implied covenant of good faith and fair
dealing. I address each claim in turn.
A. Breach of Contract
ASC claims that Synopsys is liable for LEDA's breach of its
contractual duty to make a good faith attempt to negotiate a
permanent agreement. Synopsys argues that this claim is
defective because ASC has failed to allege sufficient facts to
support its claim. I disagree.
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Federal Rule of Civil Procedure 8 (a) requires that a
complaint contain "a short and plain statement of the claim
showing that the pleader is entitled to relief." The system of
notice pleading established by the Federal Rules does not require
a detailed recitation of the facts supporting a claim. See
Leatherman v. Tarrant County Narcotics Intelligence &
Coordination U n i t , 507 U.S. 163, 168 (1993). Here, ASC has
alleged all of the elements of a breach of contract claim and
sufficient supporting facts so that the claim can be understood.
Nothing more is required at this stage of the litigation.2
B. Misrepresentation
ASC alleges that LEDA misrepresented its relationship with
Synopsys by assuring ASC that the relationship with Synopsys was
a "technical partnership which would not affect the ASC-LEDA
2 Snyopsis mistakenly assumes that ASC is claiming a breach
of an oral agreement to grant it an exclusive marketing agreement
for Proton products in Canada. It then challenges this purported
claim based on the statute of frauds. In reality, ASC is
claiming that LEDA breached its contractual obligation to make a
good faith effort to negotiate a permanent marketing agreement
that initially covered the United States and later was amended to
include Canada. Because negotiations concerning this agreement
could be fully completed within one year, any breach of the
agreement to negotiate in good faith is not subject to the
statute of frauds. See Phillips v. Verax C o r p . . 138 N.H. 240,
245 (1994) (quoting Davis v. G r i m e s ,
87 N.H. 133, 135 (1934)) .
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relationship." Cplt. I 24. ASC contends that it relied on this
false information to its detriment. I d . I 26.
Federal Rule of Civil Procedure 9 (b) requires that
allegations of fraud must be plead with specificity.
Accordingly, the complaint must specify the "time, place, and
content of the alleged false or fraudulent representations."
Powers v. Boston Cooper C o r p . , 926 F.2d 109, 111 (1st Cir. 1991).
ASC charges that LEDA's representations about its
relationship with Synopsys were false and that LEDA "intended for
ASC to rely upon this information." Cplt. 25, 26. However,
ASC has not provided any details as to when the statements were
made; where they were made; who they were made by; who were they
made to; and what exact actions resulted from the false
statements. See Powers, 926 F.2d at 111.
Accordingly, I grant Synopsys' motion to dismiss this claim.
C. Interference with Contractual Relations
ASC claims that Synopsys intentionally interfered with the
contractual relationship between LEDA and ASC, causing LEDA to:
(1) delay in negotiating in good faith a permanent contract with
ASC; and (2) renege on its decision to grant ASC the Canadian
di s tribu t o r s h i p .
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To prove tortious interference with contractual relations in
New Hampshire, a plaintiff must show that: (1) the plaintiff had
an economic relationship with a third party; (2) the defendant
knew of this relationship; (3) the defendant intentionally and
improperly interfered with this relationship; and (4) the
plaintiff was damaged by such interference. Jay Edwards, Inc. v.
B a k e r . 130 N.H. 41, 46 (1987).
Synopsys contends that because it has acquired LEDA, it
cannot have committed tortious interference against itself. The
purchase, however, did not occur until January of 2000. ASC
alleges that Synopsys interfered with its contractual relation
ship with LEDA prior to the acquisition.
Accordingly, I deny Synopsys' motion to dismiss this claim.
D. Breach of the Implied Covenant of Good Faith and Fair
Dealing
ASC claims that LEDA breached the implied covenant of good
faith and fair dealing inherent in their agreement by refusing to
negotiate a permanent agreement in good faith.
"Under New Hampshire law, every contract contains an
implied covenant of good faith performance and fair dealing."
Renovest Co. v. Hodges Dev. C o r p . , 135 N.H. 72, 81 (1991). In
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New Hampshire, however, "a breach of contract standing alone does
not give rise to a tort action. If, however, the facts
constituting the breach of the contract also constitute a breach
of a duty owed by the defendant to the plaintiff independent of
the contract, a separate claim for tort will lie." Lawton v.
Great Southwest Fire Ins. C o . , 118 N.H. 607, 613 (1978) (internal
citation o m i t t e d ) ; see also Centronics Corp. v. Genicom C o r p . ,
132 N.H. 133, 137 (1989) ("[G]iven this jurisdiction's clear law
that a breach of contract does not sound separately in tort . . .
the trial court treated the covenant of good faith mentioned in
count two as the term said to have been breached under count one,
and we will accept that merger of pleading." (internal citation
omitted)).
ASC has not claimed that Synopsys breached any duty
independent of the agreement. Consequently, ASC's good faith and
fair dealing claim is redundant because it will be addressed in
its claim for breach of contract.
Accordingly, I grant Synopsys' motion to dismiss ASC's claim
for breach of the implied covenant of good faith and fair
dealing.
IV. CONCLUSION
For the foregoing reasons, I deny Synopsys' motion to
dismiss, (Doc. No. 14), ASC's breach of contract and interference
with contractual relations claims and grant the motion with
regard to ASC's misrepresentation and covenant of good faith and
fair dealing claims.
SO ORDERED.
Paul Barbadoro
Chief Judge
August 2, 2001
cc: John P. Griffith, Esq.
Chris Scott Graham, Esq.
Irvin D. Gordon, Esq.
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