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New Skies Satellites, B.V. v. Home2US Communications, Inc.

United States District Court, D. New Jersey

March 28, 2014


Page 460


For HOME2US COMMUNICATIONS, INC., Defendant: MICHAEL A. OROZCO, LEAD ATTORNEY, Price, Meese, Shulman & D'Arminio, Woodcliff Lake, NJ.

For HOME2US COMMUNICATIONS, INC., Counter Claimant: MICHAEL A. OROZCO, LEAD ATTORNEY, Price, Meese, Shulman & D'Arminio, Woodcliff Lake, NJ.



Page 461

PETER G. SHERIDAN, United States District Judge.

This matter comes before the Court on Plaintiff New Skies Satellites, B.V.'s (" New Skies" or " Plaintiff" ) Motion to Dismiss Defendant Home2US Communications, Inc.'s (" Home2US" or " Defendant" ) Counterclaim pursuant to Fed.R.Civ.P. 12(b)(6) and/or Fed.R.Civ.P. 9(b) and to Strike Defendant's Jury Demand (ECF No. 12). In its Complaint, Plaintiff alleges that Defendant defaulted under the terms of a satellite service agreement by failing to make timely and full payment of monthly service charges. Defendant now counterclaims that Plaintiff breached the contract and perpetrated fraud by failing to provide satellite service in accordance with the terms of the agreement. The Court decides this matter without oral argument pursuant to Fed.R.Civ.P. 78(b). For the reasons set forth herein, Plaintiff's Motion to Dismiss Defendant's Counterclaim and Strike Defendant's Jury Demand is granted.


A. Parties

Plaintiff New Skies Satellites, B.V. (" New Skies" ) is a corporation organized

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under the laws of the Netherlands with a principal place of business in Princeton, New Jersey. (Compl. at ¶ 1). It operates a fleet of high-powered fixed satellites in the C-Band and Ku-Band which provide uplink and downlink capabilities for such services as voice, video, data, Internet, and satellite news gathering to a wide variety of customers in the domestic and international markets. ( Id. at ¶ 5). Defendant Home2US Communications, Inc. (" Home2US" ) is a corporation organized under the laws of the State of Delaware with a principal place of business in Herndon, Virginia. ( Id. at ¶ 2). Home2US is in the business of acquiring the rights to foreign television programs and channels from television broadcast operators and content producers and redistributing them via satellite to audiences in North and South America. (Def.'s Answer & Countercl. (" Countercl." ) at ¶ 3). Home2US distributes this content either directly or through " sub-distribution" agreements with third-party cable-television and satellite platform operators. ( Id. ).

B. Factual Background

On or about March 4, 2004, Home2US entered into a Ku-Band Multiple Channel per Carrier (" MCPC" ) Global Service Agreement (" Global Service Agreement" or " GSA" ) with New Skies' predecessor-in-interest SES Americom, Inc. (" SES Americom" or " SES" ) to broadcast its television signals through SES-operated satellites to domestic service providers and end-users in North and South America. (Compl. at ¶ 6; Countercl. at ¶ 3). Over the next several years, as permitted under the terms of the GSA, Home2US entered into several Individual Service Description (" ISDs" ) agreements through which it obtained additional satellite transponder services.[1] (Compl. at ¶ 6). According to the Defendant, the contractual relationship between Home2US and SES Americom continued to develop " without major incident[]" until late 2007 or early 2008. (Countercl. at ¶ 6).

In October 2007, however, the SES-operated satellite through which Home2US was broadcasting its television signals, identified as AMC-4, " began having technical issues[.]" ( Id. at ¶ 7). According to the Defendant, " [b]etween 2008 and 2010, AMC-4 suffered a series of technical failures which in turn prevented Home2US from providing its content to its customers in an acceptable manner[.]" ( Id. ). As a result of these alleged failures, Home2US was forced to temporarily " migrate its services to [another satellite identified as] AMC-2 . . . [which was] used as an emergency spare back-up for AMC-4." ( Id. ). According to the Defendant, SES Americom was " aware of these satellite failures and its consequential interruption of service to Home2US" and both parties " were engaged in regular communication[s] in an effort to address the problems." ( Id. at ¶ 8). In response to the technical issues involving AMC-4, SES Americom transitioned Home2US to a new satellite identified as SES-1. According to Home2US, the transition to " SES-1 resulted in significantly more service interruptions . . .[,] a smaller geographical area of coverage[,] . . . [and] and inferior link budget" compared to the service that had been provided using the AMC-4 satellite. ( Id. at ¶ 9).

On or about December 23, 2009, SES Americom notified Home2US that effective January 1, 2010, it was assigning its interest in Home2US's obligations to New Skies. Under that assignment, the terms

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and conditions of the SES/Home2US agreements remained in full force and effect. ( Id. at ¶ 2). Specifically, Home2US was required to make payment to New Skies no later than the first day of the month with late payments being subject to a 1.5 percent per month late fee. (Compl. at ¶ 13).

On or about June 9, 2010, after Home2US had demanded that New Skies take measures to address the issues arising from the transition to the SES-1 satellite, the two companies entered into an agreement whereby New Skies agreed to provide $1 million in " credits" to Home2US as " transition assistance[.]" (Countercl. at ¶ 15). According to the Defendant, one month later, on July 8, 2010, New Skies " attempted to force Home2US to sign a new one-sided agreement in which New Skies would avoid all liability[.]" ( Id. at ¶ 17). Around this time, New Skies also allegedly contacted two customers with whom Home2US was negotiating contract renewals (BVN and The California Channel).

The Plaintiff presents a different version of the factual history for this time period. According to the Plaintiff, Home2US " defaulted under the terms of the Home2US Agreements when it failed to tender timely and full payment of the required monthly service charges starting in July 2010." (Compl. at ¶ 15). In an effort to " resolve Home2US's defaults and permit the continuation of service going forward, New Skies worked with Home2US to address the outstanding arrears and also permitted the termination of certain ISDs." ( Id. at ¶ 16). According to the Plaintiff, " because New Skies was hopeful that Home2US would cure its arrears" New Skies also entered into a new ISD with Home2US in December 2011. ( Id. at ¶ 17).

Between September 2011 and April 2012, Home2US made certain payments under the Home2US Agreements, however, according to the Plaintiff, Home2US " did not completely cure its default." ( Id. at ¶ 18). After April 2012, Home2US made no additional payments. ( Id. at ¶ 19). On September 4, 2012, New Skies sent a letter to Home2US advising the company that it remained in default and that $1,463,663.33 remained outstanding and overdue for services that New Skies had provided from July 2010 through September 2012. ( Id. at ¶ 20). New Skies further advised Home2US that if full payment on all amounts due was not received within ten days of the date of the letter, New Skies would " exercise its rights to terminate the Home2US Agreements." ( Id. ). Failing to receive full payment by the deadline, New Skies terminated the Home2US Agreements by letter dated September 24, 2012. ( Id. at ¶ 21).

On January 10, 2013, Plaintiff filed a two count Complaint in the United States District Court for the District of New Jersey. In Count One, Plaintiff asserts a breach of contract claim against Home2US. Specifically, Plaintiff contends that " Home2US is liable to New Skies for breaching the Home2US Agreements in the amount of at least $1,463,663.33 as of September 24, 2012, plus interest and attorneys' fees, for all charges that were due and owing as of the date of termination." ( Id. at ¶ 23). In Count Two, Plaintiff alleges that " [u]pon termination, Home2US is liable . . . for the Termination Liability as defined in the Home2US Agreements [in] the approximate amount of $927,350.00[.]" ( Id. at ¶ 26) Specifically, Plaintiff contends that Defendant is liable for the " net present value amount of monthly payments due for the remaining term of the Home2US Agreements plus late charges and interest[.]" ( Id. ).

On March 28, 2013, Defendant filed an Answer and Counterclaim to Plaintiff's Complaint. In Counterclaim One, Defendant

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alleges a breach of contract claim against New Skies. Specifically, Defendant argues that " SES and New Skies failed to provide [the promised] satellite services to Home2US when Home2US was assigned to satellite AMC-4, AMC-2 and after it was transitioned to SES-1." (Countercl. at ¶ 21). In Counterclaim Two, Defendant alleges a breach of the implied warranty of fitness for a particular purpose. According to the Defendant, " Home2US relied on the assurances, experience, and knowledge of SES and New Skies that it would be provided . . . services" and " SES and New Skies failed to provide [those] services[.]" ( Id. at ¶ ¶ 25-26). In Counterclaim Three, Defendant asserts a lost profits claim. Specifically, Defendant argues that " [a]s a direct and proximate result of the failure to provide service by SES and New Skies, Home2US lost customers, opportunities for growth, and potential customers, resulting in damages and lost profits." ( Id. at ¶ 32). Those losses allegedly included a decrease in annual revenue streams of between $2.5 million and $3.5 million and a loss of 60,000 Home2US customers. ( Id. at ¶ ¶ 10, 13). In Counterclaim Four, Defendant asserts that SES Americom or New Skies committed fraud by " offering and inducing Home2US to accept" changes to its services that resulted in " inferior and inadequate services" despite having given " assurances that ...

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