The Supreme Court of New York County recently issued a decision in the case of GCS Software v. Spira Footwear. This case illustrates the venerable wisdom of a previous era: that every lawsuit is a morality play where the first side caught in a bad act loses credibility, and often the case. Somewhat less abstractly, this case was about two sides each alleging the other had breached the contract. Yet one side prevailed via summary judgment because they convinced the judge that it was overwhelming likely the other side was at fault.
Background of the Case
Spira, the defendant, signed a contract with GCS regarding an item of software called A2000 that was useful for companies in the clothing business. As part of the February 2010 agreement, GCS would provide a perpetual license, as well as installation, training, and technical support for the A2000 software (“The Software.”) In return, Spira agreed to pay approximately $60,000.
Computer software is almost always licensed and not sold due to various considerations involving intellectual property and property rights. It may interest you to know that you probably do not “own” much of the software installed upon your personal computer. When you install a new piece of software, the screen that pops up, that most people do not examine very closely, is a license agreement that you must accept in order to proceed with installation. Thus, you are ‘signing’ a contract each and every time you install software! These license agreements often contain all manner of interesting and unusual information, such as a disclaimer of all warranties and a clause that (for example when installing a printer’s driver software) states that Japanese law applies to any dispute arising out of the software license!
At any rate, Spira made only one payment of approximately $10,000 and GCS sued to recover the balance due. Spira counterclaimed and made several allegations, the most serious of which was that GCS breached the contract by delivering defective and/or unusable software.
The court summarized the requirements for a plaintiff to win on a summary judgment motion for breach of contract. The plaintiff must prove: 1) a valid contract existed; 2) the plaintiff fully performed under the contract; 3) defendant’s breach; and 4) damages. Here, there was little argument about elements 1, 3, and 4. The major issue was regarding element 2: did the plaintiff fully perform, or did the plaintiff itself breach the contract by delivering defective software as alleged by the defendant?
The judge carefully weighed the evidence introduced by both sides. One key clause in the contract required Spira to notify GCS of any defect in the software. However, Spira’s evidence regarding the defective software was an email written from Spira to GCS one month after GCS filed the current lawsuit. Spira’s only other evidence regarding the defect was an affidavit of one of its officers, stating that the software was defective.
The court ruled that the affidavit had several problems. It did not mention the specific details of the defects, when they were discovered, or any details regarding how the defects affected Spira. The general rule applied in New York was that allegations must be pled with sufficient specificity to raise a triable issue-of-fact. Bald conclusions with not detail simply do not satisfy this rule. The court very much agreed with the plaintiff’s theory that defendant had stopped payment because of financial difficulty, not any defect, and that all ‘evidence’ was simply self-serving statements made after the lawsuit was filed. Thus, plaintiff prevailed via summary judgment.
A breach of contract trial may be won at the outset if one side has markedly superior pleadings and supporting evidence. Please don’t hesitate to contact our office for a consultation.