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September 19, 2002


The opinion of the court was delivered by: Hamilton, District Judge.


Plaintiff's motion for summary judgment came on for hearing on September 18, 2002, before this court, the Honorable Phyllis J. Hamilton presiding. Plaintiff appeared by its counsel Stuart C. Clark, and defendant appeared by its counsel Helene E. Swanson. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby GRANTS the motion for the following reasons.


This is a breach of contract case. Plaintiff PeopleSoft U.S.A., Inc. ("PeopleSoft"), which is based in California, designs and sells business software products. Defendant Softek, Inc. ("Softek"), which is based in Puerto Rico, provides software development services. In March 2000, the parties entered into a "Software License and Services Agreement." Pursuant to this agreement, PeopleSoft agreed to provide Softek with software, and Softek agreed to pay license and maintenance fees, which were noncancellable and nonrefundable, as well as installation and training fees. The agreement specified that the right to use PeopleSoft's software was exclusively for the purpose of facilitating the internal data processing operations of the Transportation Division of Softek's customer Policia de Puerto Rico ("Policia" — the Police Department of Puerto Rico).

After the agreement was signed, PeopleSoft had shipped the software and billed Softek. Unfortunately, Policia decided for some reason not to use the software. Softek advised PeopleSoft of the situation, and returned the software, unopened. Softek also told PeopleSoft that while it considered Policia's decision to be a contractual violation, it "prefer[red] to avoid further controversies with the Policia and the Government of Puerto Rico" because they were important customers for Softek's future projects. Nonetheless, PeopleSoft demanded to be paid. Softek has apparently agreed to pay $87,931.63 of the amount in dispute, which represents charges for training expenses and airfares. However, Softek argues that it should not have to pay the $150,000 license fee for the software it returned to PeopleSoft.

PeopleSoft filed this action on July 23, 2001, alleging a single cause of action for breach of contract. Softek asserted 17 affirmative defenses. PeopleSoft now seeks summary judgment, arguing that the facts are undisputed regarding the existence of the contract, PeopleSoft's performance thereunder, Softek's non-performance, and damages, and that there is no triable issue with regard to any of Softek's affirmative defenses.

Softek opposes the motion, arguing that triable issues exist with regard to the defenses of frustration of purpose, mistake, impossibility and impracticability of performance, mitigation of damages, failure of consideration, unconscionability, and also with regard to whether the contract contained an implied condition that Policia accept the software (not pled separately, but part of the frustration defense).


A. Legal Standard

Summary judgment is appropriate when there is no genuine issue as to material facts and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56. Material facts are those that might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute as to a material fact is "genuine" if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. Id. The court may rot weigh the evidence, and is required to view the evidence in the light most favorable to the nonmoving party. Id.

A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion, and of identifying those portions of the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the moving party will have the burden of proof at trial, it must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party. On an issue where the nonmoving party will bear the burden of proof at trial, the moving party can prevail merely by pointing out to the district court that there is an absence of evidence to support the nonmoving party's case. Id. If the moving party meets its initial burden, the opposing party must then set forth specific facts showing that there is some genuine issue for trial in order to defeat the motion. Anderson, 477 U.S. at 250, 106 S.Ct. 2505.

B. Plaintiffs Motion for Summary Judgment

PeopleSoft argues that summary judgment should be granted on its breach of contract claim because it has established the existence of contract, performance by PeopleSoft, nonperformance by Softek, and damages. Softek does not dispute that the parties had a contract, that PeopleSoft performed, and that Softek did not. Softek contends, however, the existence of disputed issues of material fact regarding its affirmative defenses precludes summary judgment. Softek claims that it should be released from its ...

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