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Microbilt Corporation v. L2c

August 23, 2011

MICROBILT CORPORATION, PLAINTIFF-APPELLANT,
v.
L2C, INC. AND MICHAEL MONDELLI, DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1118-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted November 15, 2010

Before Judges A. A. Rodriguez and Grall.

Microbilt Corporation (Microbilt) appeals from: (a) the November 19, 2009 order dismissing its complaint against L2C, Inc. (L2C) and its president Michael Mondelli (collectively "L2C") for failure to state a cause of action upon which relief could be granted; and (b) the February 19, 2010 order denying reconsideration of the earlier order. We affirm.

MicroBilt provides small and medium-sized business "end users" with a variety of risk management tools, such as financial background information and credit scores on individual consumers. L2C is a company that analyzes data relating to creditworthiness and provides its conclusions, usually in the form of a credit score, to businesses such as MicroBilt.

On November 14, 2008, MicroBilt entered into a written service agreement with L2C to analyze data bearing on the credit worthiness of MicroBilt's applicants. This required L2C to accept electronic applicant credit queries submitted from End Users points of sale, determine which queries are suitable for L2C credit review, perform credit evaluations on suitable applicants, reach conclusions about the credit-worthiness of those applicants and quickly (as defined herein) return those conclusions to [MicroBilt], and [MicroBilt] to its End Users, through its interface with L2C.

The contract specified that "[i]n each case, the conclusion returned by L2C shall be a score, attributes or a combination of the two."

Upon execution of the contract, MicroBilt paid L2C $60,000 implementation fee. Shortly thereafter, MicroBilt claimed L2C was required to provide to it the underlying data used to calculate the credit scores. L2C disagreed but contacted its data provider, eFunds Corporation (eFunds), to seek release of the data. eFunds notified L2C that MicroBilt sued eFunds for breaching a contract to provide MicroBilt with data and eFunds counterclaimed alleging MicroBilt had improperly distributed the data to unauthorized end users. The suit was pending resolution. Therefore, eFunds prohibited L2C from providing its data to MicroBilt.

L2C advised MicroBilt and did not provide the data. MicroBilt notified L2C that it was in breach of contract and demanded a return of the $60,000 implementation fee. L2C refused.

MicroBilt filed suit seeking in count one to have the contract declared "null and void ab initio" based on a claim of "fraud in the inducement." Counts two, three, and four alleged, respectively, breach of contract, breach of the implied covenant of good faith and fair dealing, and "fraud or, alternatively, a material mistake of fact (albeit unilateral)."

In lieu of filing an answer, defendants moved to dismiss the complaint for failure to state a claim upon which relief can be granted, Rule 4:6-2(e), and for lack of subject matter and personal jurisdiction. Microbilt had sued eFunds for breaching a contract to provide Microbilt with data, that eFunds had counterclaimed alleging Microbilt had improperly distributed the data to unauthorized end users, and that the suit was still pending. MicroBilt opposed the motion.

Judge Thomas W. Sumners, Jr., granted the motion dismissing the complaint with prejudice. The judge rejected L2C's jurisdictional arguments, but found that the complaint failed to ...


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