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Des Lauriers Municipal Solutions, Inc. v. Township

June 9, 2009


The opinion of the court was delivered by: Wolfson, United States District Judge


Presently before the Court is a Motion for Summary Judgment brought by Defendants Township of Franklin ("Township") and Michael Gallagher (collectively "Defendants") to dismiss Plaintiff Des Lauriers Municipal Solutions, Inc.'s ("Plaintiff") Complaint. Plaintiff alleges that Defendants are in breach of contract, or alternatively, have been unjustly enriched by Plaintiff's services when the Township retained and used Plaintiff's software licenses without compensating Plaintiff. Defendants deny Plaintiff's allegations and contend that (1) an amendment to the agreement between the parties was not properly executed and (2) Defendants never used the software licenses. For the reasons that follow, Defendants' Motion for Summary Judgment is granted with respect to Plaintiff's contract claims. However, the Court does not dismiss Plaintiff's claim for unjust enrichment.


Plaintiff is a corporation organized and operating in Delaware, which specializes in the design and sale of town management software. Pl.'s Compl. ¶1. The Township is a municipal corporation under the laws of the State of New Jersey with offices located in Somerset, New Jersey. Id. ¶2. Gallagher is a former employee of the Township. Certification of Vincent P. Trovini ("Trovini Certif."), Exh. A, Deposition of Michael Gallagher ("Gallagher T") 121-25. During his tenure with the Township, Gallagher was a computer and network administrator, responsible for overseeing technology computer servicing for the Township. Id.

On June 27, 2000, after a secret bid, competitive contracting process in accordance with N.J.S.A. 40A:11-4, the Township Council awarded a contract to Plaintiff for the purchase of town management software. Certification of Ted Del Guercio ("Guercio Certif."), Exh. B, June 27, 2000 Resolution. The June 27th resolution authorized the Mayor and the Township Clerk to enter into such a contract with Plaintiff. Id. The software would allow various Township departments to process and track their workloads and report activity associated with their respective functions to the State of New Jersey. Gallagher T 44:1-9. Pursuant to the agreement, the software licenses were to be used primarily by the Township's planning, zoning and building departments. Gallagher T 42:13-25. Test licenses were also purchased for the Township's health department, the Township clerk, and the fire prevention department. Gallagher T 42:13-25. Gallagher, however, indicated in an email that the test licenses were never used. Guercio Certif., Exh. C, June 8, 2004 email.

The agreement also provided that the Township would purchase a fixed number of licenses that authorized Township employees to use Plaintiff's GeoTMS software. Gallagher T 44:19-45:25. These licenses were not allotted to specific individuals in the various departments. Id. Rather, a fixed number of licenses were purchased for each department and any user authorized to use the GeoTMS software could do so, provided that the number of users using the software at any given time did not exceed the number of licenses allotted to that department. Id. As the need arose, more fixed licenses were purchased by the Township, pursuant to the agreement. Gallagher T 48:14-17. All purchases, the Township asserts, were made in accordance with the Local Public Contracts Law by formal resolution of the Township Council, as memorialized in Resolutions No. 04-158 and 01-083. Guercio Certif., Exh. D and G, Township Resolutions No. 04-158 and No. 01-083.

Sometime in 2003, the Township, realizing that it may have a need for additional licenses, inquired as to the possibility of amending its agreement with Plaintiff. Gallagher T 48:17-51:2. The terms of the amendment were to be as follows: The Township would have access to additional licenses for each department and in return, Plaintiff would receive a percentage of fees received by the Township generated from processing zoning, planning, and building applications and permits with the software. Id. Essentially, the amended agreement would provide the Township with an additional number of licenses at the cost of 5% of the fees generated by the use of the software. Gallagher T 51:10-16. On October 17, 2003, Gallagher signed an amendment to the original agreement, effectively changing the fixed licensing arrangement to the fee based arrangement discussed by the parties. Gallagher T 77:4-18; Guercio Certif., Exh. H, October Amendment. The amendment provided that the Township would have an unlimited number of licenses to Plaintiff's GeoTMS software, removed yearly maintenance charges called for under the original agreement, and changed the method of billing, in which Plaintiff was owed 5% of fees generated using the software. Defendants assert that no Township Council Resolution or Ordinance formally authorized such an amendment to the original agreement. Further, Defendants contend that Gallagher was not authorized to enter into such an agreement on the Township's behalf.

However, Plaintiff argues that Ordinance No. 3392, passed on August 12, 2003 by the Township Council, was done so for the specific purpose of increasing municipal permit fees so that a portion of those increased revenues could be used to pay for the new fee arrangement outlined in the amendment to the original agreement. See Guercio Certif., Exh. N, Ordinance No. 3392. In support, Plaintiff relies on: (1) Gallagher's representation to one of its representatives, Mark Durfee, that Ordinance No. 3392 increased the Township's building permit fees to fund the 5% due to Plaintiff under the amendment; and (2) Vincept Lupo, Construction Official and Director of Community Development for the Township, who testified at his deposition that it was his understanding that Ordinance No. 3392 was enacted in order to cover the additional fees due to Plaintiff under the amendment. Trovini Certif., Exh. D, Deposition of Vincent Lupo ("Lupo T") 31-32.*fn1

Gallagher re-executed another copy of the October 13th amendment on December 18, 2003. Plaintiff contends that the Township never informed Gallagher that he was not authorized to execute contracts. To the contrary, Plaintiff asserts that Gallagher was advised by the Township Chief Financial Officer, Marc Dashield and the Township Manager, Kenneth Daly, to re-execute the amendment to the original agreement. See Gallagher T 93:14-96:2. However, Gallagher also admitted during his deposition testimony that he "had proceeded incorrectly. . .[and] [I] don't know why I went ahead and signed [the amendment]." Gallagher T 116:1-7. Daly, too, confirmed that Gallagher's responsibilities did not extend to the authorization of contracts or amendments thereto beyond a certain dollar amount.*fn2 Specifically, Daly testified that Gallagher's responsibilities were to "plan and manage . . .make recommendations, to [Daly] and the Township Council, in terms of the hard, you know, the hardware systems that we should have and, you know, all his recommendations, if they involved budget, they had to be put in the budget and the budget had to be approved by the Council." Guercio Certif., Exh. J, T 25:4-11. With respect to Daly's order to Gallagher to proceed with re-executing the amendment, Defendants point to the email offered by Plaintiff as stating only that there were discussions about altering the original agreement and no discussion of Gallagher unilaterally re-executing the amendment. See Guercio Certif., Exh. G, December 12, 2003 Email.

After Gallagher's re-execution of the amendment, the Township informed Gallagher it was not ready to proceed with the changes to the original agreement. On February 3, 2004, Plaintiff sent Gallagher a license configuration file containing the additional licenses under the amendment to the original agreement. Defendants proffer that the licenses were never installed beyond the central network and never rendered usable for other workers. At this point, sometime during the first or second week of February 2004, Daly, Dashield, and Gallagher held a teleconference with Plaintiff's representatives Durfee and Dorian DesLauriers to inform them that although Gallagher was not authorized to execute an amendment to the original agreement, the Township was still interested in pursuing a structural change to its billing arrangement under the original agreement, but that such a change would need to go before the Council. Exh. A, T 119-120. Gallagher testified that Plaintiff's representatives, although not particularly enthused by this revelation, were "eventually amenable." Id.

In order for the parties to revert back to the terms of the original agreement, Plaintiff emailed Gallagher on March 29, 2004 an executable program that would permit the Township to reset the number of licenses it was authorized to use. Trovini Certif., Exh. C., Deposition of Mark Durfee ("Durfee T") 61:3-63:3. The program would remove the twenty additional licenses sent to Gallagher on February 3, 2004. Gallagher admits that he never ran the program, leaving the additional licenses installed on the Township's central computer system. Gallagher T 143:5-144-7. It was not until April 2005 that Plaintiff discovered during routine testing and maintenance that the Township had never removed the additional licenses. Durfee T 72:3-73:12.

Plaintiff initiated this action in United States District Court for the new District of New Jersey on February 28, 2006. Plaintiff's Complaint alleges breach of contract, or alternatively, that Defendants were unjustly enriched when they retained the additional software licenses without compensating Plaintiff. On June 26, 2006, Defendants filed an Answer thereto. This case was then reassigned to this Court from the Honorable Stanley R. Chesler, U.S.D.J, on July 10, 2006. On October 15, 2008, Defendants filed the present motion for summary judgment, seeking dismissal of Plaintiff's claims. For the reasons that follow, Plaintiff's breach of contract claims are dismissed but because a genuine issue of material fact exists as to whether Defendants retained and used the additional licenses, Plaintiff may proceed with unjust enrichment claims.


A. Standard of ...

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