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Leisure Pass North America, LLC v. Leisure Pass Group, Ltd.

United States District Court, D. New Jersey

April 14, 2014

LEISURE PASS NORTH AMERICA, LLC, Plaintiff,
v.
LEISURE PASS GROUP, LTD., Defendant.

OPINION

WILLIAM J. MARTINI, District Judge.

Plaintiff Leisure Pass North America, LLC brings this breach of contract action against Defendant Leisure Pass Group, Ltd. The Court previously granted Defendant's motion to dismiss a number of Plaintiff's claims under Federal Rule of Civil Procedure 12(b)(6). Two motions are now pending in this case. First, Plaintiff moves for reconsideration of the Court's prior decision. Second, Defendant moves for summary judgment on Plaintiff's remaining claims under Federal Rule of Civil Procedure 56. There was no oral argument. Fed.R.Civ.P. 78(b). For the reasons set forth below, Plaintiff's motion for reconsideration and Defendant's motion for summary judgment are each DENIED.

I. BACKGROUND

The following facts are undisputed. Defendant is a company based in London, England. Defendant developed a product called the "Leisure Pass, " a travel card that allows consumers to access various tourist attractions in a city at a discounted rate. Defendant also developed a separate Leisure Pass Operating System ("LPOS"), a software system that is used to manage the Leisure Pass businesses.

In 2002, Defendant entered into an agreement with Plaintiff, which gave Plaintiff a license to sell Leisure Passes in North America. In a separate agreement, Defendant granted Plaintiff a license to use the LPOS software ("LPOS License Agreement"). In October 2008, the parties entered an additional agreement ("2008 Agreement"). Section 18 of the 2008 Agreement gave Plaintiff the option to purchase the rights to sell Leisure Passes in North America (the "Option"). Section 18 provided, in relevant part, that:

Leisure Group hereby grants North America the option, for the period beginning on October 1, 2011 and anytime thereafter so long as this Agreement remains in effect, to purchase the Product and Rights for utilization in the Expanded Territory....
Such option to purchase shall be deemed exercised immediately upon Leisure Group's receipt of North America's written notice of its intent to exercise the option (hereafter the "Option Notice"). Within a reasonable period of time from the date of Leisure Group's receipt of the Option Notice, but not later than 30 days subsequent thereto, the parties shall schedule a closing at a mutually convenient time, date and place within the United States to consummate North America's purchase of the Product and the Rights for the Expanded Territory....
The documents and instruments delivered at any such closing shall be reasonably acceptable in substance and form to North America's attorneys....

2008 Agreement at 23-25, Mot. to Dismiss App'x A, ECF No. 24-2. Section 18 does not provide Plaintiff with a right to conduct due diligence before or after exercising the Option. It also does not provide Plaintiff with the right to purchase the LPOS software. But the 2008 Agreement does provide that Plaintiff "shall... be permitted to continue to utilize the LPOS System for one year" after exercising the Option. Additionally, Section 18 provides that the purchase price for the "Product" and "Rights" will be "the aggregate sum equal to the product obtained by multiplying.24 by the Average Net Sales (the "Purchase Price"). Id. at 24. Average Net sales is defined as "the quotient obtained by dividing the Net Sales generated during the two previous 12-month periods ending on the date of calculation by two." Id. The 2008 Agreement further provides that "it shall not be modified in any manner except by an instrument in writing executed by the parties." Id. at 26.

In July 2011, Smart Destinations, Inc. ("Smart Destinations") filed a patent infringement suit against Plaintiff and Defendant over their use of the LPOS software. Defendant and Plaintiff discussed the possibility of entering a joint defense agreement ("JDA") for that action, but they never executed a JDA. Despite the absence of a JDA, Defendant took the lead on negotiating a potential settlement on behalf of itself and Plaintiff. Defendant requested that Plaintiff refrain from participating in those negotiations. Because settlement negotiations were still ongoing in October 2011, Plaintiff refrained from exercising its Option at that time. In November 2011, Mr. Tom Scullin, a member of Plaintiff, emailed Mr. Darren Evans, then CEO of Defendant, requesting that the Purchase Price of the Option be "tolled." Certification of Thomas F.X. Scullin ("Scullin Cert.") Ex. 22, ECF No. 53. Specifically, Sculling requested that the Option Purchase Price be calculated as of October 1, 2011, regardless of when Plaintiff exercised the Option (the "Tolling Modification"). Id.

On March 1, 2012, the parties met in Hoboken, New Jersey. Certification of Darran Evans dated June 11, 2013 ("Evans's Cert.") ¶ 16, ECF No. 6-1. In attendance were Evans, Mr. Rob Foreman on behalf one of Defendant's investors, as well as Scullin and Mr. Francis Tedesco on behalf of Plaintiff. Evans's Cert. ¶ 17. At the meeting, Plaintiff again raised the Tolling Modification. Evans's Cert. ¶ 20. Plaintiff alleges that the parties verbally agreed to the Tolling Modification. Defendant denies that it entered into any verbal agreement. The next day, Scullin sent an e-mail to Evans stating, in relevant part: "Also, appreciate your confirming the fact that you have agreed to toll' the amended and restated agreement with respect to the purchase price and average net sales.'" Scullin Cert. ¶ 54 & Ex. 25. Evans did not respond to Scullin. Evans did, however, forward Scullin's email to Forman, who responded: "Noted - must have been a different meeting he was in." Evans's Cert. ¶¶ 22-23 & Ex. 4.

Later in March 2012, Defendant reached a confidential settlement agreement with Smart Destinations (the "Settlement"). The Settlement disposed of all the claims pending against both Defendant and Plaintiff. Plaintiff did not sign the Settlement and never saw a copy of the Settlement. Shortly thereafter, Plaintiff exercised its Option to purchase the rights to sell Leisure Passes in North America. Plaintiff's exercise notice stated that the Purchase Price of the Option would be calculated as of October 1, 2011. Scullin Cert. Ex. 36. Scullin and Evans subsequently exchanged several emails regarding the Purchase Price. Scullin insisted that Defendant had agreed to the Tolling Modification, and Evans insisted that Defendant had not. Evans's Cert. ¶ 24.

Despite their disagreements, the parties began drafting and negotiating closing documents, as required by the terms of the Option. Evans's Cert. ¶ 26. Contrary to Plaintiff's requests, Defendant did not disclose the confidential Settlement to Plaintiff after it exercised the Option. However, in order to close the Option, Defendant agreed to indemnify Plaintiff for any claims made by Smart Destinations regarding Plaintiff's use of the LPOS software. Defendant also provided expansive representations and warranties assuring Plaintiff that it would have the ability to use the LPOS system for an additional year under the existing LPOS License Agreement, free and clear of any claim by Smart Destinations. The parties continued to disagree about the alleged tolling modification.

Under the Option, the closing was required to take place within thirty days after Plaintiff delivered its exercise notice - so sometime in April 2012. 2008 Agreement at 24. The deal did not close, because the parties could not agree on three issues: (1) disclosure of the Settlement; (2) the Tolling Modification; and (3) the form of the closing documents. On May 3, 2012, Defendant issued a time-of-the-essence closing letter, setting a closing date for June 4, 2012. Plaintiff ...


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