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Simulados Software, Ltd. v. Photon Infotech Private, Ltd.

United States District Court, N.D. California, San Jose Division

May 1, 2014

SIMULADOS SOFTWARE, LTD., Plaintiff,
v.
PHOTON INFOTECH PRIVATE, LTD., Defendant

Page 1192

[Copyrighted Material Omitted]

Page 1193

[Re: Docket Item No. 46].

For Simulados Software, Ltd., Plaintiff, Counter-defendant: Bruce Charles Piontkowski, Tingley Piontkowski LLP, San Jose, CA; Curtis R. Tingley, Kevin Patrick O'Brien, Tingley Law Group, PC, San Jose, CA; Charles Marcellus Vethan, Houston, TX.

For Photon Infotech Private, Ltd., Defendant: Christopher Joseph Sargent, LEAD ATTORNEY, Computerlaw Group LLP, Palo Alto, CA; David E. Dunham, LEAD ATTORNEY, Taylor, Dunham & Burgess, LLP, Austin, TX; Anthony Ricciardelli, PRO HAC VICE, Taylor Dunham LLP, Austin, TX; Christopher Sargent, Giacomo A. Russo, PRO HAC VICE, ComputerLaw Group LLP, Palo Alto, CA.

For Photon Infotech Private, Ltd., Counter-claimant: Christopher Joseph Sargent, Computerlaw Group LLP, Palo Alto, CA.

Page 1194

ORDER GRANTING MOTION TO DISMISS

EDWARD J. DAVILA, United States District Judge.

Presently before the Court is Defendant Photon Infotech Private, Ltd.'s (" Photon" or " Defendant" ) Motion to Dismiss Plaintiff Simulados Software, Ltd.'s (" Simulados" or " Plaintiff" ) Amended Complaint (" AC" ). See Docket Item No. 46. Federal jurisdiction arises under 28 U.S.C. § 1332(a). This case is proceeding in this Court because of the parties' venue selection clause in their contract. See Docket Item No. 15. Having fully reviewed the parties' papers, the Court will GRANT Defendant's motion for the reasons stated below.

I. BACKGROUND

Simulados is a Texas software development company based in Houston, Texas. Photon is a technology consulting corporation incorporated in New Jersey with its principal place of business in Chennai, India and a virtual office in San Jose, California. See AC, Docket Item No. 44 ¶ ¶ 1-2. Simulados developed a program called Certify Teacher, which is a test simulation program used by educators to prepare for the Texas Examinations of Educator Standards (" TExES" ) certification exam. Simulados decided to produce a version of its product compatible with Apple Macintosh (" Mac" ) computers as well as an internet web application. Id. ¶ ¶ 3-4.

In early 2009, Photon called Simulados, representing Photon's ability to create a Mac-compatible product and develop a web application. Id. ¶ ¶ 6-7. Simulados and Photon entered into a contract (" Contract" ) on March 31, 2009, which consisted of a Statement of Work (" SOW" ) and a Master Professional Services Agreement (" MPSA" ). See Docket Item No. 1-1 (the SOW incorporates all the terms and conditions of the MPSA). In the Contract, Photon represented that the project would start on May 20, 2009 and finish on September 17, 2009. The Contract provided that Photon would complete: CD mastering, migrating the existing source code to Real Basic, convert VB project, add Mac specific BASIC code, add support for New DB format, address performance bottlenecks in product, customize for Mac operating systems, add platform specific paths, tweak for Mac Human Interface Guidelines, provide license key generation and key validation, create a web application, create website authentication certification for downloads, upgrade to database content creator, provide support for reading the content, provide support for modifying content, migrate up to three sample products, and code review. Simulados agreed to pay $23,560 in four installments, the final of which was to be made upon delivery of a complete workable product. Id. at 10-12. The Contract contained the following choice-of-law and forum selection provision: " [t]his Agreement shall be governed by and construed and enforce [sic] in accordance with the laws of the State of California." Id. at 23.

Simulados contends that Photon never fulfilled its obligations under the Contract. On June 9, 2009, Photon communicated to Simulados that it was initiating the project, and represented that there would not be any outstanding serious or critical defects at the time of the site launch, with fewer than five medium defects and fewer than ten low defects. On August 14, 2009, Photon requested that Simulados approve completion of the project's development phase. A teleconference demonstration was held on August 19, 2009 and on September 24, 2009 Simulados received an access link for user testing and approval.

Page 1195

During the review, Simulados found 38 low level and 8 critical issues. Simulados requested a status update on the web application and expressed dissatisfaction that the product was not complete. On May 3, 2010, Simulados gave Photon a deadline of June 3, 2012 to correct an additional 17 errors. On May 17, 2010, Photon responded to Simulados' notice, providing a link to incomplete software. To date, Photon has not provided Simulados with fully functioning web application. Dkt. No. 44 ¶ ¶ 12-16.

Simulados filed a complaint on May 11, 2012 in the District Court for the Southern District of Texas. See Docket Item No. 1. The case was transferred to this Court on August 20, 2012, based on the choice-of-law provision in the Contract. See Docket Item No. 16. Simulados filed an Amended Complaint (" AC" ) on December 11, 2012. Dkt. No. 44. On December 24, 2012, Photon filed a Motion to Dismiss, which is presently before the Court. Dkt. No. 46. Plaintiffs have filed written opposition to this motion. See Docket Item No. 51. The parties engaged in mediation, but failed to reach an agreement regarding arbitration. See Docket Item No. 63. Photon re-noticed its Motion on July 23, 2013. See Docket Item No. 67. Pursuant to Civil Local Rule 7-1(b), the Court took the motion under submission without oral argument.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient specificity to " give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotations omitted). A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). " Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). Moreover, the factual allegations " must be enough to raise a right to relief above the speculative level" such that the claim " is plausible on its face." Twombly, 550 U.S. at 556-57.

Claims which sound in fraud are subject to a heightened pleading standard. Fed.R.Civ.P. 9(b) (" In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." ); Swartz v. KPMG LLP, 476 F.3d 756, 765 (9th Cir. 2007) (" Rule 9(b) imposes heightened pleading requirements where 'the object of the conspiracy is fraudulent.'" ). The allegations must be " specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). To that end, the allegations must contain " an account of the time, place, and specific content of the false representations as well as the identities of the parties to ...


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