The opinion of the court was delivered by: Ellen Segal Huvelle United States District Judge
Plaintiff Transformational Strategies Consulting, Inc. ("TSCI") has sued ACS State Healthcare, LLC ("ACS") for breach of contract, seeking to recover approximately $2 million allegedly owed as a result of ACS's early termination of the parties' agreement. TSCI has filed a motion for summary judgment, and ACS has moved to dismiss the complaint to the extent that TSCI seeks payment of"Early Termination Charges" under the agreement. As set forth herein, ACS's motion will be granted in part and denied in part, and TSCI's motion will be denied.
In October 2005, ASC and TSCI entered into an agreement (the "Original Agreement") for TSCI to provide "Executive Consulting and Advice Regarding the Architecture and Development of the ACS Enterprise Claims Processing Application," a software application. (Pl.'s Statement of Undisputed Material Facts ["Pl.'s Statement"] ¶ 1; Affidavit of Fernando Salgado ["Salgado Aff."], Ex. 1 at 1.) In September 2006, the parties executed an Amendment to the Original Agreement (the "Amendment") for TSCI to provide "Executive Management Resources and Consulting and Advice Regarding Planning, Start up and Formational Executive Management" of the "ACS Solution Center." (Pl.'s Statement ¶ 2; Salgado Aff., Ex. 2 at 1.) The Amendment included an additional scope of work to be performed, as well as amended provisions regarding staffing, compensation, and termination. (See id., Ex. 2.)
The Amendment contemplated that ACS would designate "at contract signing the initial number of Senior Executives and Senior Specialists" to staff the additional scope of work, and specified annual rates of compensation for each category of professional - - $530,000 per year for each Senior Executive and $300,000 per year for each Senior Specialist. (Id. at 3.) With respect to payment, the Amendment provided for an advance payment of ten percent of the "Amended Scope Cost" - - defined in the Amendment as equal to "[(# of Senior Executives * $530,000 # of Senior Specialist * $300,000) * 2 years*fn1 ]" - - and for monthly billing by TSCI "based on actually worked full time equivalent work days during the month." (Id. at 3-4.)
Although the Amendment included an expiration date of October 15, 2008, it permitted early termination by ACS in certain circumstances:
ACS can terminate this Agreement in case of TSCI default due to grave cause or negligence imputable to TSCI, if TSCI fails to remedy to the satisfaction of ACS said default within 30 days of ACS written notification to this effect. Should ACS terminate, TSCI shall be paid the Invoices issued up to and including the current month, pro-rated if for a partial month, of final determination to Terminate.
If, at the ACS'S sole discretion, the Agreement for this Amended Scope is terminated for the convenience of ACS; then ACS can, at its sole discretion, select one of the following two options:
a) ACS would be able to modify the scope of assignment of the TSCI resources, for the remainder of the original period of two years, to other projects that require similar skills and experience under the same Terms and Conditions, other than the new amended scope or
b) TSCI shall be paid for the Invoices issue up to and including the month when the Notice of Termination for Convenience was received by TSCI. In addition, ACS will pay Early Termination Charges in an amount equal to fifty percent (50%) of the remaining balance of the total Amended Scope Cost minus the actual payments received by TSCI, if Termination within the first 18 months period. ACS will pay Early Termination Charges in an amount equal to twenty five percent (25%) of the remaining balance of the total Contract amount of Amended Scope Cost minus the actual payments received by TSCI, if Termination within the last six month period of the Contract.
The parties signed the Amendment on September 18, 2006 (id. at 4), and ACS made its initial staffing designations by email that same day, designating four Senior Executives and two Senior Specialists as the "[i]nitial people."*fn2 (Pl.'s Statement ¶ 5; Salgado Aff., Ex. 3.) TSCI thereafter issued an invoice to ACS in the amount of $544,000, ten percent of an Amended Scope Cost of $5,440,000, calculated based on ACS's initial designations, and ACS paid the invoice the following month. (Pl.'s Statement ¶¶ 6-7; Salgado Aff., Exs. 4-5.)
In May 2007, ACS determined that TSCI had billed it for work performed by TSCI personnel on weekends and holidays. (Decl. of Kevin Cleary ["Cleary Decl."] ¶ 11.) Kevin Cleary, a Director of Finance for the Government Solutions Group of ACS, Inc., notified Dan Acton, a TSCI Senior Executive working for the Solution Center, that ACS did not authorize or approve these charges, and ACS then deducted the charges from the invoice in question. (Id. ¶¶ 2, 11.) When TSCI continued to bill ACS for weekend and holiday work in later months, ACS again notified TSCI that the charges were not authorized and deducted those amounts from TSCI's invoices. (Id. ¶¶ 13, 16, 18.)
In June 2007, Anastasios Tsolakis, the ACS Senior Vice President in charge of the Solution Center, directed Acton to reduce TSCI's staff from five to three by removing two TSCI Senior Executives (Chris McClenaghan and Mark Baenziger) from the project due to their inability to perform the work needed by ACS. (Decl. of Anastasios Tsolakis ["Tsolakis Decl."] ¶ 7.) TSCI did not remove McClenaghan and Baenziger, who continued to perform work for ACS even after June ...