IN THE UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`
` )
`MADISON RIVER MANAGEMENT
` )
`COMPANY,
` )
` )
`Plaintiff,
` )
` ) 1:03CV00379
`v.
` )
`BUSINESS MANAGEMENT SOFTWARE )
` )
`CORPORATION, a/k/a BMS,
` )
`Defendant.
` )
`
`MEMORANDUM OPINION AND ORDER
`
`OSTEEN, District Judge
`
`Plaintiff Madison River Management Company (“Madison”)
`brings this action against Defendant Business Management Software
`Corporation (“BMS”) seeking a declaration that certain agreements
`between the parties were not void and remain in full force and
`effect, and that it is not infringing BMS’ software copyright.
`Defendant brought a counterclaim premised on copyright
`infringement under the Copyright Act of 1976 (“Copyright Act”),
`as amended, 17 U.S.C. §§ 101 et seq., and violations of state and
`common law. This matter is now before the court on Plaintiff’s
`amended motion for summary judgment, Defendant’s motion to extend
`the time to respond to the summary judgment motion beyond the
`expiration of a previously granted extension of time, and
`Defendant’s motion for leave to file an over length opposition
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`
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`
` )
`MADISON RIVER MANAGEMENT
` )
`COMPANY,
` )
` )
`Plaintiff,
` )
` ) 1:03CV00379
`v.
` )
`BUSINESS MANAGEMENT SOFTWARE )
` )
`CORPORATION, a/k/a BMS,
` )
`Defendant.
` )
`
`MEMORANDUM OPINION AND ORDER
`
`OSTEEN, District Judge
`
`Plaintiff Madison River Management Company (“Madison”)
`brings this action against Defendant Business Management Software
`Corporation (“BMS”) seeking a declaration that certain agreements
`between the parties were not void and remain in full force and
`effect, and that it is not infringing BMS’ software copyright.
`Defendant brought a counterclaim premised on copyright
`infringement under the Copyright Act of 1976 (“Copyright Act”),
`as amended, 17 U.S.C. §§ 101 et seq., and violations of state and
`common law. This matter is now before the court on Plaintiff’s
`amended motion for summary judgment, Defendant’s motion to extend
`the time to respond to the summary judgment motion beyond the
`expiration of a previously granted extension of time, and
`Defendant’s motion for leave to file an over length opposition
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`brief. For the reasons set forth herein, Defendant’s motions
`will be denied; Plaintiff’s motion for summary judgment will be
`granted in part and denied in part.
`I.
`PROCEDURAL POSTURE
`This case has a history of unnecessary delay. Madison
`initiated this action in May 2003. In October 2003, the parties
`entered into a highly contentious discovery period, which closed
`April 3, 2004. After a hearing on April 26, the court reopened
`discovery for an additional 75 days. Before the extended
`discovery period ended, Madison moved to compel the depositions
`of certain BMS employees and BMS’ answers to written discovery.
`The court held another hearing on October 26, 2004, and
`subsequently ordered BMS to secure the attendance of its
`employees for depositions and awarded sanctions to Madison.
`Because of the delay in completing discovery, the court extended
`the dispositive motion deadline to December 1, 2004, and
`continued the trial from the January 2005 to the April 2005
`master calendar.
`On December 1, 2004, while Madison’s motion to dismiss was
`being considered by the court, Madison moved for summary judgment
`and for leave to file a lengthy brief. Madison contended it
`needed to file an over length brief because the case was complex
`and it had to reargue points within its pending motion to
`dismiss. The court denied Madison’s motion for a lengthy brief
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`on December 16 and instead gave Madison twenty days from the date
`of the court’s forthcoming order on its motion to dismiss from
`which to renew its summary judgment motion. The court issued a
`memorandum opinion and order partially granting Madison’s motion
`to dismiss on January 5, 2005. Therein, the court dismissed all
`of BMS’ claims except for four copyright claims (Counts 1-4), two
`breach of contract claims (Counts 5 and 9), and three
`misrepresentation claims (Counts 10-12).
`On January 19, 2005, Madison filed an amended motion for
`summary judgment on BMS’ remaining counts and a supporting brief
`within the twenty-page limit specified by Local Rule 7.3(d).
`BMS’ opposition to summary judgment was due February 18, 2005,
`but it moved for and was granted an extension of time up to and
`including March 4, 2005. No opposition brief was filed. On
`April 6, the clerk of court telephoned BMS’ counsel and told him
`that because BMS had filed no opposition, the court was
`considering Plaintiff’s motion for summary judgment unopposed.
`BMS made no further filing until April 19. That day, BMS
`filed a motion for leave to file an opposition brief in excess of
`the page limit contained in Local Rule 7.3(d) and a motion to
`extend the time until April 18 to file its opposition.1 BMS
`finally filed its untimely and over length opposition to summary
`
`1 It is indicative of BMS’ behavior in this case that a
`second motion for extension of time was filed on April 19 seeking
`an extension only through April 18 for a document which was filed
`April 20.
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`judgment on April 20. One week later, the court held a hearing
`on the motions for over length brief and late filing.
`All matters pending before the court are now fully briefed.
`Because the court’s decision on whether to accept BMS’ over
`length, late-filed opposition brief will undoubtedly affect its
`analysis on summary judgment, the court will address BMS’ motions
`first. The court will then address whether summary judgment is
`appropriate.
`II. DEFENDANT’S MOTIONS FOR LEAVE TO FILE AN OVER LENGTH, LATE-
`FILED BRIEF
`The Federal Rules of Civil Procedure give district courts
`discretion to permit an act to be done after the expiration of
`the specified period where the failure to act was the result of
`excusable neglect. Fed. R. Civ. P. 6(b). This district’s local
`rules, which provide that “[e]xtensions will not be allowed
`unless the motion is made before the expiration of the specified
`time, except upon a showing of excusable neglect,” reinforce this
`principle. L.R. 6.1(a). The term “excusable neglect,” as used
`in the rules has been characterized as an “elastic concept,”
`which is not limited to “omissions caused by circumstances beyond
`the control of the movant” and may include inadvertent delays.
`Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. P’ship, 507 U.S.
`380, 392, 113 S. Ct. 1489, 1496 (1993). Whether neglect is
`excusable is an equitable inquiry, “taking account of all
`relevant circumstances surrounding the party’s omission,”
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`including: (1) the danger of prejudice to the non-movant, (2)
`the length of the delay and its potential impact on judicial
`proceedings, (3) the reason for the delay, including whether it
`was within the reasonable control of the movant, and (4) whether
`the movant acted in good faith. Id. at 395, 113 S. Ct. at 1498.2
`Taking into account all of the relevant circumstances in
`this case, BMS has not shown excusable neglect for its failure to
`timely file its opposition brief. Weighing heavily against it is
`the length of the delay. Even after BMS received a 14-day
`extension of time, it was over six weeks late in filing its
`opposition. That significant delay is made even more remarkable
`by the fact that BMS delayed for almost two weeks after receiving
`a deficiency notice from the clerk of court that the summary
`judgment motion was being considered unopposed. See Brewer v.
`Jefferson-Pilot Standard Life Ins. Co., 333 F. Supp. 2d 433, 436
`(M.D.N.C. 2004) (finding no excusable neglect for failure to file
`an opposition to summary judgment, where plaintiff was notified
`by the clerk of court that the motion would be treated as
`
`2 In Pioneer Investment Services Co. v. Brunswick
`Associates Ltd. Partnership, 507 U.S. 380, 113 S. Ct. 1489
`(1993), the Supreme Court construed the phrase “excusable
`neglect” as it is used in Bankruptcy Rule 9006(b)(1). The Fourth
`Circuit has held that the Pioneer analysis has “general
`application to the consideration of excusable neglect” under the
`Federal Rules of Civil Procedure. Skinner v. First Union Nat’l
`Bank, No. 98-1627, 1999 WL 261944, at *2 (4th Cir. May 3, 1999);
`see Thompson v. E.I. DuPont de Nemours & Co., 76 F.3d 530, 533
`(4th Cir. 1996) (citing United States v. Hooper, 9 F.3d 257, 259
`(2d Cir. 1993), for the proposition that “nothing in Pioneer
`limits its interpretation of ‘excusable neglect’ to the
`Bankruptcy Rules”).
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`unopposed and the plaintiff failed to respond until two weeks
`later).
`A second factor of great weight is the reason for delay.
`Despite defense counsel’s contentions that the delay was caused
`by the sheer volume of documents and evidence counsel had to
`review in preparing an opposition, these were matters within his
`control. Defense counsel was added to the case in August 2004,
`but chose not to review any evidence or discovery until Madison
`filed its summary judgment motion in January 2005. Only then did
`counsel decide to review over 1,300 pages of deposition testimony
`and 1,500 pages of discovery, apparently leaving an additional
`10,000 pages of discovery completely unreviewed. While counsel
`may contend that it was not prudent to review the case so far in
`advance of trial to save costs and energy, the court cannot
`conceive of any way counsel could have ever expected to review
`all of the evidence and complete an opposition brief within the
`30 days allotted under local rules. This is not a case of
`inadvertence. Counsel made a strategic decision.
`The court cannot excuse the conduct of counsel because he
`inherited the case from another attorney and is a sole
`practitioner, for those matters were also within his control. It
`is counsel’s responsibility, once he undertakes representation of
`a client, to ensure that he is capable of handling his case load
`or else to associate with co-counsel who can assist in the
`matter. See, e.g., North Carolina Rules Prof’l Responsibility
`1.1 (“A lawyer shall not handle a legal matter that the lawyer
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`knows or should know he or she is not competent to handle without
`associating with a lawyer who is competent to handle the matter.
`Competent representation requires the legal . . . preparation
`reasonably necessary for the representation.”). The court cannot
`be expected to consider counsel’s individual capabilities to
`comply with court deadlines. See Pioneer, 507 U.S. at 398, 113
`S. Ct. at 1499; Shoaf v. Kimberly-Clark Corp., 294 F. Supp. 2d
`746, 749 (M.D.N.C. 2003) (holding that counsel’s case load, which
`created a conflict with the due date for a response brief, did
`not constitute excusable neglect).
`The court is also troubled by what it perceives as defense
`counsel’s possible bad faith. Defense counsel has acted less
`than forthright with opposing counsel and this court about the
`reasons for delay. BMS’ first request for an extension of time
`was based solely on its counsel’s heavy case load. (Mot. Extend
`Time Respond Mot. & Br.) However, opposing counsel was told, and
`defense counsel later acknowledged, that the request for an
`extension was based in part on defense counsel’s prepaid vacation
`plans. (Madison’s Agreement BMS’ Mot. Ext. Time File Opp’n Mot.
`Summ. J. at 1.) Moreover, there is some indication that defense
`counsel had suggested “play[ing] dumb” about the filing deadlines
`and asked local counsel to avoid contact with opposing counsel
`and the court during the period of delay. (Aycock Decl. Apr. 19,
`2005 ¶¶ 14, 18, 21.) Such behavior cannot be rewarded with
`leniency.
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`Lastly, the consequences of BMS’ delay are not
`inconsequential. The court has expended energy and resources
`considering the several motions filed as a result of the delay
`and in holding a hearing. Madison and its counsel have also
`invested time and energy. Rescheduling this matter for trial,
`which is the normal course, has also been delayed.
`In summary, the court can find no excusable neglect in BMS’
`failure to timely file its opposition brief. Defense counsel was
`aware of the deadlines, his noncompliance, and its ramifications,
`yet still he chose not to comply with the court’s deadlines.
`During this time, he refused to consult with the court or
`opposing counsel about the delay. When the brief was filed, it
`was 51 pages, vastly over the 20-page limit imposed by local
`rules, see L.R. 56.1(c), despite having notice that the court was
`not keen on lengthy briefs because of its previous denial of
`Madison’s motion. The court must enforce the meaning and intent
`of the rules under which it operates. Failure to do so would be
`a greater injustice than that of which BMS will most surely
`complain. Therefore, BMS’ motion to extend the time to respond
`to Madison’s motion beyond the expiration of the previously
`granted extension of time and BMS’ motion for leave to file an
`over length response brief will be denied.
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`III. PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
`A.
`Background3
`Plaintiff Madison is a telecommunications company that
`specializes in rural telephone services. Defendant BMS is a
`software company that designed, developed, and copyrighted a
`suite of computer applications specifically for the
`telecommunications industry called the Ticket Control System
`(“TCS”).4
`The TCS Program
`1.
`The TCS suite enables telecommunications companies to
`automatically manage the supply of service to and problems with
`their telephone networks. The TCS suite identifies network
`problems, schedules and assigns personnel to fix the problems,
`arranges for materials needed to make such repairs, and tracks
`the repair through completion. The TCS suite includes “TCS
`Control,” the core event manager, and five additional products:
`(1) “TCS Provide” for service provisioning; (2) “TCS Resolve” for
`trouble management; (3) “TCS Force” for workforce management; (4)
`“TCS Satisfy” for customer care; and (5) “TCS Defend” for fraud
`
`3 Because BMS has waived its right to oppose summary
`judgment by filing an untimely brief, the court has accepted the
`facts as established in Madison’s motion for summary judgment
`except where contradicted by its own evidence or admissions in
`its pleadings.
`4 BMS received two certificates of copyright registration
`for its TCS suite, the second occurring in 2000. (Howe Dep.
`4/1/04 at 46.)
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`detection. (Howe Dep. 4/1/04 at 36-39.) The TCS program
`utilizes a customer’s raw data that is saved in an Oracle
`relational database by imposing on the raw data a new structure
`and metadata5 enhancements. (Howe Dep. 11/10/04 at 5, 10, 14.)
`The raw data subjected to the TCS structure, processes, triggers,
`program modules, and stored procedures is called the “TCS
`database.” (Id. at 9.)
`2.
`The Software License Agreement
`After lengthy meetings over a period of several months, BMS
`and Madison executed a Software License Agreement (“Agreement”)
`on or about September 10, 2000, under which BMS licensed its TCS
`Control and TCS Provide software to Madison. Under the
`Agreement, Madison purchased 15 TCS Control licenses and 15 TCS
`Provide licenses for its Gulf Telephone Company (“Gulf”) division
`and was to pay for any actual use exceeding the 15 licenses.6
`(Exs. Br. Supp. Madison River’s Mot. Summ. J. Ex. G at 6 ¶ 3.3,
`and at 16; Howe Dep. 4/1/04 at 99.)
`
`5 Metadata means, literally, data about data. It describes
`“how and when and by whom a particular set of data was collected,
`and how the data is formatted.” Webopedia, Jupitermedia
`Corporation, at http://www.webopedia.com (last modified April 20,
`2004).
`6 A license, under the terms of the Agreement, is a
`“concurrent connection” to the TCS program and “includes all
`users and processes that require a connection to the TCS
`Database.” (Exs. Br. Supp. Madison River’s Mot. Summ. J. Ex. G
`at 16.) “Concurrent connections” are the “maximum number of
`simultaneous sessions that may be connected to the specified TCS
`Database at a given point in time by employees or processes
`authorized by [Madison].” (Id. at 3 ¶ 1.3; Howe Dep. 4/1/04 at
`107.)
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`The Dispute Over the Scope of a “License”
`3.
` According to the Agreement, the TCS software was to be up
`and running at Madison by February 1, 2001 (Exs. Br. Supp.
`Madison River’s Mot. Summ. J. Ex. G at 25), but it was not in
`live operation until late October 2001. (Howe Dep. 4/1/04 at
`125.) Less than a month after the TCS software became
`operational, BMS notified Madison that its use was exceeding its
`licenses. (Id. at 86, 89.)
`BMS asserted Madison had to purchase a separate license for
`each connection that a program makes to the TCS database (Id. at
`107), meaning that one user of the system who accessed a dozen
`customer accounts at one time could potentially require a dozen
`licenses. (See id. at 119.) BMS also asserted that the system
`itself, without any user, could run processes that required
`licenses. (Id. at 109-10.) Madison disagreed that it was
`exceeding its licenses because it understood each license to
`cover one user accessing the database. (Becker Decl. ¶ 2.)
`Under Madison’s understanding, one user who accessed a dozen
`customer accounts at one time would require only one license.
`At the time, there was some belief that Madison’s alleged
`overuse was temporarily caused by delays in another software
`project between BMS and Madison.7 As a result, BMS took no
`
`7 In early 2001, Madison asked BMS to design an interface
`between the TCS Provide/Control system and the billing system
`used at Gulf. (Howe Dep. 4/1/04 at 135.) The interface project
`was substantially delayed and therefore not operational until May
`(continued...)
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`action with regard to the overuse. Nevertheless, even after the
`other software project was completed in late May 2002, BMS
`asserted that Madison’s use of the TCS software was still
`exceeding its licenses under the Agreement.
`In the summer of 2002, Madison requested that BMS quote a
`price for an unlimited use license, also known as a site license.
`(Madison’s Ans. & Affirm. Defenses to Am. Countercl. ¶ 43.) The
`site license contemplated was for the entire suite of TCS
`software. (Howe Dep. 4/1/04 at 259.) On August 1, 2002,
`representatives of BMS and Madison met to discuss the TCS
`software. (Madison’s Ans. & Affirm. Defenses to Am. Countercl. ¶
`44.) In that meeting, BMS made a presentation in which it
`projected a high level of return on investment for Madison if it
`purchased a site license. (Id. ¶ 46; Howe Dep. 4/1/04 at 157-
`61.) Madison, for its part, acknowledged it had realized some
`cost savings at its Gulf location as a result of the TCS
`software. (Madison’s Ans. & Affirm. Defenses to Am. Countercl. ¶
`45.)
`
`When Madison did not purchase a site license following the
`parties’ meeting, BMS gave Madison a notice of violation of the
`Agreement and of BMS’ copyright. (Exs. Br. Supp. Madison River’s
`Mot. Summ. J. Ex. J ¶ 2.h., j.) BMS also invoiced Madison for
`
`7(...continued)
`30, 2002. (Id. at 134-35.) BMS acknowledges that the interface
`could have reduced the number of concurrent connections made by
`Madison to the TCS database. (Id. at 86.)
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`its allegedly excessive use of 136 licenses at the high water
`mark. (Howe Dep. 4/1/04 at 100, 196.) The invoices totaled over
`$1 million. (Id. at 195.) In response to the notice of
`violation and invoices, Madison changed BMS’ password needed to
`access Madison’s TCS server, essentially revoking BMS’ access.
`(Madison’s Ans. & Affirm. Defenses to Am. Countercl. ¶ 50.)
`After Madison received written assurances from BMS that it would
`not limit the database license key, it reinstated BMS’ access.
`(Id. ¶ 51.)
`Madison invoked the dispute resolution provision in the
`Agreement and the parties entered into private mediation in early
`November 2002. (Howe Dep. 4/1/04 at 171.) The parties then
`entered into negotiations to resolve Madison’s alleged overuse.
`(Id. at 178.) During the negotiations, Madison agreed to again
`consider whether to purchase a site license for a TCS suite of
`products, including evaluating potential cost savings.
`(Madison’s Ans. & Affirm. Defenses to Am. Countercl. ¶¶ 54, 55.)
`4.
`The New Agreements
`Based on their discussions, the parties executed a First
`Amendment to the Software License Agreement (“First Amendment”)
`and an Expanded License Letter of Intent (“Letter of Intent”) on
`December 5, 2002. The First Amendment provides that Madison
`would purchase 45 additional TCS Control and 45 additional TCS
`Provide concurrent connections for the sum of $300,000. (Br.
`Supp. Madison River’s Mot. Summ. J. Ex. H at 1 ¶ 1.) The First
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`Amendment also contains mutual releases of any disputes arising
`in conjunction with the original License Agreement. (Id. at 1-2,
`¶¶ 4-5.) The Letter of Intent acknowledges Madison’s intent to
`“enter into an expanded license agreement and business
`relationship.” (Br. Supp. Madison River’s Mot. Summ. J. Ex. I at
`1.) It sets forth that the parties would hold a “Kickoff
`Meeting” to discuss BMS’ TCS suite so the parties could begin to
`explore the feasibility and cost effectiveness of purchasing
`additional BMS products. (Id. at 1 ¶ 1.) It further provides
`that the parties “shall target to have a preliminary assessment
`of and conversion plan to additional BMS products” by January 17,
`2003. (Id. at 1 ¶ 2.) Following the preliminary assessment,
`Madison agreed to notify BMS of whether it intended to “roll out”
`additional BMS products. (Id. at 1-2 ¶ 2.) If Madison elected
`to roll out additional products, the Letter of Intent set forth
`additional responsibilities of Madison in furtherance thereof,
`and payment and price schedules. (Id. at 2-3.) If Madison
`elected not to roll out additional products, Madison agreed to
`pay BMS $150,000, the Letter of Intent would then terminate, and
`the Agreement and Second Agreement would remain in effect. (Id.
`at 2 ¶ 4.)
`
`The Post-Agreement Disputes
`5.
`Madison assembled a team of people who gathered and analyzed
`information about Madison’s operations and evaluated the benefit
`of the BMS suite of products. (Amburn Decl. ¶¶ 6-7.) The
`parties held a kick-off conference call on December 10, 2002, and
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`an in-person meeting at Gulf on January 8, 2003. (Howe Dep.
`4/1/04 at 187, 218-19; Exs. Br. Supp. Madison River’s Mot. Summ.
`J. Ex. L.) Thereafter, the parties did not work together on an
`assessment plan. On or about January 16, 2003, Madison sent a
`letter to BMS advising it in writing that Madison had elected not
`to roll out additional products. (Amburn Decl. ¶ 14.) The
`letter was not received by BMS, who on or about February 19,
`2003, called Madison to inquire about the preliminary assessment.
`(Howe Dep. 4/1/04 at 245; Howe Dep. 11/10/04 at 140.) Madison
`then informed BMS about the January 16 letter and its decision.
`(Howe Dep. 4/1/04 at 245.) It later tendered to BMS the $150,000
`required by the Letter of Intent, but BMS rejected the payments,
`believing Madison was not acting in good faith. (Id. at 202,
`206; Amburn Decl. ¶ 15.) After further discussions between the
`parties broke down, Madison initiated this action.
`B.
`STANDARD OF REVIEW
`Summary judgment is appropriate when an examination of the
`pleadings, affidavits, and other proper discovery materials
`before the court demonstrate that there is no genuine issue of
`material fact, thus entitling the moving party to judgment as a
`matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett,
`477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552 (1986). The basic
`question in a summary judgment inquiry is whether the evidence
`“is so one-sided that one party must prevail as a matter of law.”
`Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct.
`2505, 2512 (1986). Summary judgment should be granted unless a
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`reasonable jury could return a verdict in favor of the nonmovant
`on the evidence presented. McLean v. Patten Cmties., Inc., 332
`F.3d 714, 719 (4th Cir. 2003) (citing Anderson, 477 U.S. at
`247-48, 106 S. Ct. at 2509-10). A court “must draw all
`reasonable inferences in favor of the nonmoving party and may not
`make credibility determinations or weigh the evidence.” Williams
`v. Staples, Inc., 372 F.3d 662, 667 (4th Cir. 2004) (citing
`Thompson v. Aluminum Co. of Am., 276 F.3d 651, 656 (4th Cir.
`2002)). Although the court must view the facts in the light most
`favorable to the nonmovant, see Anderson, 477 U.S. at 255, 106 S.
`Ct. at 2513, “bare allegations unsupported by legally competent
`evidence do not give rise to a genuine dispute of material fact.”
`Solis v. Prince George’s County, 153 F. Supp. 2d 793, 807 (D. Md.
`2001); see Ross v. Communications Satellite Corp., 759 F.2d 355,
`364 (4th Cir. 1985), abrogated on other grounds, Price Waterhouse
`v. Hopkins, 490 U.S. 228, 109 S. Ct. 1775 (1989) (“Genuineness
`means that the evidence must create fair doubt; wholly
`speculative assertions will not suffice.”). When a party fails
`to respond to a summary judgment motion, it may leave
`uncontroverted those facts established by the motion, but the
`moving party must still show that the uncontroverted facts
`entitle it to judgment as a matter of law. Custer v. Pan Am.
`Life Ins. Co., 12 F.3d 410, 416 (4th Cir. 1993).
`C.
`ANALYSIS
`Of the claims brought in BMS’ first amended answer and
`counterclaim, four claims for copyright infringement (Counts 1-
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`4), two for breach of contract (Counts 5 and 9), and three for
`misrepresentation (Counts 10-12) survived dismissal. Madison
`moves for summary judgment on these remaining claims. The court
`will begin its analysis with the misrepresentation claims.
`1.
`Defendant’s Misrepresentation and Concealment
`Claims (Claims 10-12)
`BMS brings three claims based upon alleged wrongful acts of
`Madison during the parties’ negotiations between September and
`December 2002 leading up to the signing of the First Amendment
`and the Letter of Intent. In Claim 10, BMS contends that certain
`fraudulent misrepresentations made by Madison induced BMS to
`execute the First Amendment and Letter of Intent. Claims 11 and
`12 contain allegations of fraudulent concealment and negligent
`misrepresentation, respectively, during the negotiations.
`Madison advances four reasons, based upon North Carolina law, why
`summary judgment should be entered against BMS on these claims:
`(1) BMS has offered no evidence that Madison did not intend to
`perform when it signed the Letter of Intent; (2) the claimed
`misrepresentations are too imprecise; (3) BMS has not shown
`justifiable reliance; and (4) there is no evidence of a duty to
`disclose the allegedly concealed, or negligently misrepresented,
`facts.
`Madison has failed to meet its burden of showing it is
`entitled to judgment as a matter of law because it erroneously
`advances its arguments under North Carolina law. A federal court
`sitting in diversity must apply the choice-of-law rules from the
`
`17
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`
`
`forum state. Wells v. Liddy, 186 F.3d 505, 521 (4th Cir. 1999).
`Thus, the court must look to North Carolina’s choice-of-law rules
`as they apply to fraud and misrepresentation. Under North
`Carolina law, matters affecting the substantial rights of parties
`are determined by lex loci delicti, the law of the situs of the
`claim. Boudreau v. Baughman, 322 N.C. 331, 335, 368 S.E.2d 849,
`853-54 (1988). For actions sounding in tort, such as fraud and
`misrepresentation, the state where the injury occurred is
`considered the situs of the claim. Id. An injury occurs where
`“the last event necessary to make a defendant liable for an
`alleged tort occurs.” Brendle v. General Tire & Rubber Co., 408
`F.2d 116, 117 (4th Cir. 1969) (quoting Restatement (First) of
`Conflict of Laws § 377 (1934)) (internal quotation marks
`omitted).
` Madison argues that North Carolina law controls because the
`alleged misrepresentations and concealments took place in North
`Carolina. (Br. Supp. Madison River’s Mot. Summ. J. at 5-6.)
`This position, however, disregards the clear holdings within this
`circuit and of this court. In an unpublished decision, the
`Fourth Circuit, applying the lex loci delicti doctrine to a fraud
`action absent state law authority adopting a different approach,
`followed the Restatement view that “when a person sustains a loss
`by fraud, the place of the wrong is where the loss is sustained,
`not where the fraudulent representations are made. Jordan v.
`Shaw Indus., Inc., No. 96-2189, et al., 1997 WL 734029, at **3
`
`18
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`
`
`(4th Cir. Nov. 26, 1997) (quoting Restatement (First) of Conflict
`of Laws § 377 n.4 (1934)). Jordan has been explicitly adopted by
`this district, see Rhone-Poulenc Agro S.A. v. Monsanto Co., 73 F.
`Supp. 2d 554, 556 (M.D.N.C. 1999), and its adoption has been
`implicitly reaffirmed by this court. See Norman v. Tradewinds
`Airlines, Inc., 286 F. Supp. 2d 575, 584 (M.D.N.C. 2003) (citing
`Rhone-Poulenc Agro). It has also been adopted by other districts
`in this circuit. See, e.g., Insteel Indus., Inc. v. Costanza
`Contracting Co., 276 F. Supp. 2d 479, 487-88 (E.D. Va. 2003).
`Applying these cases, it is clear that Colorado law governs
`Defendant’s fraud and misrepresentation claims because Defendant
`suffered any injury as a result of alleged misrepresentations in
`Colorado, its principal place of business.
`The Jordan decision and the subsequent adopting opinions
`within this circuit cannot be disregarded. Plaintiff’s counsel
`failed to follow this line of controlling cases and instead
`advanced arguments for summary judgment under North Carolina law.
`Under the circumstances, the court will not venture into the
`realm of the unbriefed, expending its own resources determining
`whether Madison’s arguments are valid under Colorado law.
`Plaintiff has failed to meet its burden of showing it is entitled
`to relief as a matter of law. Summary judgment will be denied as
`to Defendant’s misrepresentation and concealment claims (Claims
`10-12).
`
`2.
`
`The Release of Defendant’s Claims for Copyright
`(Claims 1-4) and Claim for Breach of the Software
`License Agreement (Claim 5)
`
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`
`
`
`The next argument Madison advances on summary judgment is
`that BMS’ claims for copyright and claim for breach of the
`Agreement were surrendered by a release provision in the First
`Amendment. The First Amendment contains language which purports
`to release Madison from “any and all claims . . . raised in
`connection with any disputes in conjunction with [Madison’s]
`performance under the Original [Agreement] . . . up to and
`through the date of this First Amendment.” (Br. Supp. Madison
`River’s Mot. Summ. J. Ex. H ¶ 4.) Madison argues this release
`language clearly surrenders any of BMS’ claims, including its
`copyright claims and claim for breach of the Agreement, which
`rest on events occurring before the execution of the First
`Amendment. (Id. at 11-12.) Madison acknowledges, however, that
`the release is effective only in the absence of fraud and
`misrepresentation and is contingent upon the court’s entry of
`judgment in its favor on Claims 10 through 12. (Id. at 11.)
`Because the court has denied summary judgment on BMS’ fraud and
`misrepresentation claims, the issue of waiver is not ripe for
`adjudication. Thus, the court will deny summary judgment on this
`ground and consider Madison’s arguments as to the merits of BMS’
`claims.
`
`Defendant’s Copyright Claims (Claims 1-4)
`3.
`BMS brings four claims alleging copyright infringement in
`its first amended answer and counterclaim. Because Madison
`brings unique arguments as to each of the four claims, the court
`will consider them separately.
`
`20
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`
`
`a.
`
`Copyright Infringement for Use in Excess
`of Plaintiff’s Licenses (Claim 1)
`In its first copyright claim, BMS alleges the Agreement
`provided that Madison would pay for each additional concurrent
`connection to the TCS database in excess of the 15 licenses
`purchased. (Def.’s First Am. Answer & Countercl. ¶¶ 71-73.) BMS
`further alleges that Madison exceeded its licenses, was billed
`for that excessive use, and has not paid the outstanding
`invoices. (Id. ¶¶ 74-83.) BMS concludes that Madison’s
`excessive, unpaid use was therefore unauthorized and constitutes
`copyright infringement. (Id. ¶¶ 84-91.) Madison argues on
`summary judgment that its excess use cannot be unauthorized
`because excess use is contemplated and explicitly allowed in the
`Agreement. (Br. Supp. Madison River’s Mot. Summ. J. at 12-13.)
`Any violation of the Agreement, according to Madison, is a breach
`of the term requiring payment for excess use and is c
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