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Mayor & City Council of Baltimore v. Unisys Corp.

United States District Court, D. Maryland

November 18, 2014

THE MAYOR AND CITY COUNCIL OF BALTIMORE, Plaintiff
v.
UNISYS CORPORATION, Defendant

For The Mayor and City Council of Baltimore, Plaintiff, Counter Defendant: Daniel W Goldberg, LEAD ATTORNEY, Charlemayne N Walker, Jason Robert Foltin, Baltimore City Law Department, Baltimore, MD; David E Ralph, Baltimore City Department of Law, Baltimore, MD.

For Unisys Corporation, Defendant: Heather Louise Mitchell, Megan E Davis, LEAD ATTORNEYS, Kenneth L Thompson, Shannon Elizabeth Beamer, Venable LLP, Baltimore, MD.

For Unisys Corporation, Defendant: Heather Louise Mitchell, LEAD ATTORNEY, Kenneth L Thompson, Shannon Elizabeth Beamer, Venable LLP, Baltimore, MD.

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MEMORANDUM

James K. Bredar, United States District Judge.

The Mayor and City Council of Baltimore (" Plaintiff" ) brought this suit against the Unisys Corporation (" Defendant" ) seeking compensatory and punitive damages for alleged breaches of contract and express warranties, unjust enrichment, negligent misrepresentation, and intentional misrepresentation.[1] Now pending before

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the Court is Defendant's motion for summary judgment. (ECF No. 170.) The issues have been briefed (ECF Nos. 170, 180, 188), and no hearing is required, Local Rule 105.6. For the reasons explained below, Defendant's motion for summary judgment will be GRANTED IN PART and DENIED IN PART.

A. BACKGROUND[2]

Plaintiff entered into a contract with Defendant in May 2002 for the development and installation of computer software, referred to as an " Integrated Property Tax System" or " the System," which would integrate functions and databases related to the City's tax assessment and billing. The contract and accompanying documents projected that the software would be ready for use by November 2003, but this estimate was repeatedly pushed back over the following nine years. The parties each deny responsibility for these delays, and instead each blames the other.

Plaintiff alleges that Defendant's software was hopelessly riddled with errors; anytime Defendant would correct one set of issues, a new crop of problems would soon appear. (ECF No. 180 at 9-10.) In 2006, Defendant allegedly caused further delays when it removed its subcontractor from the project for failing to deliver acceptable software. ( Id. at 10.) In March 2010 the parties agreed to focus on 217 " Priority A" issues--" show stoppers" --that Defendant would correct. ( Id. at 11.) In contrast, Defendant alleges that performance delays were caused by Plaintiff's problematic involvement with the System's development. Plaintiff allegedly failed to share timely and accurate data with Defendant's developers (ECF No. 170-1 at 11-12), and also relied on inexperienced software testers, ( Id. at 13).

By December 2010, Plaintiff had paid Defendant over $8 million, but the System remained non-operational--suspended in development. In March 2011, Plaintiff declared Defendant in default, stating: " As of December 2010, there were approximately 217 Priority 'A' issues preventing the system from going live. Consequently, UNISYS Corporation failed to complete Phase I of the Contract and has failed to meet the terms expressly agreed upon in the Contract." (ECF No. 180-27.)

Within days, Defendant claimed to have resolved all remaining software problems and announced that it was prepared to move to the next project milestone, " Acceptance Testing." Acceptance Testing was to be a client-driven process " to verify that the agreed software requirements ha[d] been satisfied." (ECF No. 180-11 § 2.1.3.) In reliance on this claim, Plaintiff agreed to conduct a new form of testing--" Validation Testing." Validation Testing was introduced as an intermediate form of testing, to measure whether all critical errors had truly been resolved and thus whether the software was actually ready to move forward with Acceptance Testing. ( See ECF No. 170-1 at 20; ECF No. 180-8 at 29-30.) Acceptance Testing was specifically provided for in the contract and accompanying Statement of Work. (ECF No. 180-3 § 11; ECF No. 180-2 § 9.) Validation Testing, its precursor, was apparently not contemplated during contract drafting and is not expressly provided for in the contract. That said, the parties informally agreed to engage in Validation Testing after Plaintiff's declaration of default. Plaintiff ultimately terminated the

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contract when Validation Testing revealed new errors. Acceptance Testing was never formally attempted.

On January 18, 2012, Plaintiff filed the instant complaint in the Circuit Court for Baltimore City. Defendant removed the case to this Court, and on March 2, 2012, Defendant filed an answer to the complaint (ECF No. 9), along with a partial motion to dismiss for failure to state a claim, (ECF No. 11). The motion was fully briefed (ECF Nos. 11, 12, 14), and the Court granted it in part and denied it in part on August 16, 2012, (ECF No. 18). Plaintiff proceeded with discovery on its surviving claims, and Defendant filed this motion for summary judgment on May 7, 2014.

B. LEGAL STANDARD

" The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (citing predecessor to current Rule 56(a)). The burden is on the moving party to demonstrate the absence of any genuine dispute of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). If sufficient evidence exists for a reasonable jury to render a verdict in favor of the party opposing the motion, then a genuine dispute of material fact is presented and summary judgment should be denied. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). However, the " mere existence of a scintilla of evidence in support of the [opposing party's] position" is insufficient to defeat a motion for summary judgment. Id. at 252. The facts themselves, and the inferences to be drawn from the underlying facts, must be viewed in the light most favorable to the opposing party, Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007); Iko v. Shreve, 535 F.3d 225, 230 (4th Cir. 2008), who may not rest upon the mere allegations or denials of his pleading but instead must, by affidavit or other evidentiary showing, ...


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