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Intelsat United States Sales Corp. v. Juch-Tech, Inc.

United States District Court, District of Columbia

March 27, 2013

INTELSAT USA SALES CORP., Plaintiff, Counterdefendant
JUCH-TECH, INC., Defendant, Counterclaimant

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Re Document No.: 12.

For INTELSAT USA SALES CORP., A Delaware Corporation, Plaintiff, Counter Defendant: David I. Bledsoe, David I. Bledsoe, Esq., Sole Practitioner, Alexandria, VA.

For JUCH-TECH, INC., A Company Incorporated Under the Laws of Canada, Defendant, Counter Claimant: Stephanie Ann Joyce, LEAD ATTORNEY, Jonathan E. Canis, PRO HAC VICE, ARENT FOX LLP, Washington, DC.


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RUDOLPH CONTRERAS, United States District Judge.


Granting in Part and Denying in Part the Plaintiff's Motion to Dismiss the Defendant's Counterclaim


At the heart of this lawsuit is a contract dispute between two satellite communications companies. Now before the court is the plaintiff's motion to dismiss the defendant's counterclaim. The court grants the motion in part and denies the motion in part.


Intelsat USA Sales Corp. (" Intelsat" ) and Juch-Tech, Inc. (" Juch-Tech" ) are companies that operate in the satellite communications industry. In 2005, the parties entered into a contractual agreement titled the Non-Exclusive Service Agreement (" NESA" ). Counterclaim ¶ 23. Under this agreement, Juch-Tech leased satellite capacity from Intelsat on two satellites so that Juch-Tech could provide communications services to its customers. Id.

In early 2009, the parties entered into an additional agreement, under which Juch-Tech agreed to lease additional satellite capacity from Intelsat. Id. ¶ 24. Juch-Tech claims that it was induced to enter this additional agreement via several promises: in particular, Intelsat promised to assign certain consumer contracts to Juch-Tech, to provide certain sales leads, and to abstain from competing with Juch-Tech under certain circumstances. These promises were memorialized in a contract called the Transition Agreement. See generally id., Ex. A.

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Intelsat claims that it performed all of its contractual obligations but that Juch-Tech refused to pay for the services rendered. See Compl. ¶ ¶ 6-7. Juch-Tech claims that Intelsat did not provide services at the level mandated by the NESA. Counterclaim ¶ 34. Juch-Tech also claims that Intelsat failed to correct technical problems with its satellites, which made it harder for Juch-Tech to serve its clients or to obtain new customers. Id. ¶ 27. In addition, Juch-Tech claims that Intelsat violated the Transition Agreement by failing to assign customer contracts, failing to provide sales leads, and by breaching its agreement not to compete. Id. Finally, Juch-Tech claims that Intelsat interfered with its business by spreading false rumors that Juch-Tech was on the verge of bankruptcy. Id.

Both parties agree that their contractual relationship was terminated in October 2010. Compl. ¶ 8; Counterclaim ¶ 8. Intelsat brought suit for breach of contract and quantum meruit, and Juch-Tech brought a host of counterclaims. See Docket No. 10. The counterclaim's many counts oscillate between New York and Canadian law: Breach of Contract under New York law (Count I); Fraud under New York law (Count II); Fraudulent Misrepresentation under Canadian law (Count III); Tortious Interference with Contractual Relations under New York law (Count IV); Tortious Interference with Contractual Relations under Canadian law (Count V); Tortious Interference with Business Relations under New York law (Count VI); Tortious Interference with Commercial Matters under Canadian law (Count VII); Defamation under New York law (Count IX); [1] Defamation under Canadian Law (Count X); Violation of the Canadian Trademark Act (Count XI); and Declaratory Judgment (Count XII). For the reasons explained below, the court will grant in part and deny in part Intelsat's motion to dismiss.


A. Legal Standard for a Motion to Dismiss Under Rule 12(b)(6)

All that the Federal Rules of Civil Procedure require of a complaint is that it contain a " short and plain statement of the claim" in order to give the defendants fair notice of what the claim is and the grounds upon which it rests. Fed.R.Civ.P. 8(a)(2), see Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). A motion to dismiss under Rule 12(b)(6) does not test a plaintiff's ultimate likelihood of success on the merits; rather, it tests whether a plaintiff has properly stated a claim. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). A court considering such a motion presumes the factual allegations of the complaint to be true and construes them liberally in the plaintiff's favor. See, e.g., United States v. Philip Morris, Inc., 116 F.Supp.2d 131, 135 (D.D.C. 2000). It is not necessary for the plaintiff to plead all elements of his prima facie case in the complaint. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 510-12, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002); Bryant v. Pepco, 730 F.Supp.2d 25, 28-29 (D.D.C. 2010).

Nevertheless, " [t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted). " Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements," are therefore insufficient

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to withstand a motion to dismiss. Id. A court need not accept a plaintiff's legal conclusions as true, id., nor must the court presume the veracity of legal conclusions that are couched as factual allegations. Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

B. Legal Standard for Pleading a Fraud Claim Under Rule 9(b)

Federal Rule of Civil Procedure 9(b) requires that a party " alleging fraud or mistake . . . must state with particularity the circumstances constituting fraud or mistake." FED. R. CIV. P. 9(b). " The rule serves to discourage the initiation of suits brought solely for their nuisance value, and safeguards potential defendants from frivolous accusations of moral turpitude. . . . And because " fraud" encompasses a wide variety of activities, the requirements of Rule 9(b) guarantee all defendants sufficient information to allow for preparation of a response." United States ex rel. Joseph v. Cannon, 642 F.2d 1373, 1385, 206 U.S. App. D.C. 405 (D.C. Cir. 1981). Although Rule 9(b) imposes a heightened pleading standard, it should be read in conjunction with Rule 8's command that a complaint need only include a " short and plain statement" of the claim. United States ex rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251, 1256, 363 U.S. App. D.C. 419 (D.C. Cir. 2004). Read together, Rules 8 and 9(b) require that the pleader state the time, place, and content of the false misrepresentations, the fact misrepresented, and what was retained or given up as a consequence of the fraud, as well as the individuals allegedly involved in the fraud. Id. (citing Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1278 (D.C. Cir. 1994)).

C. Juch-Tech's Contract Claim (Count I)

Juch-Tech alleges that Intelsat committed a breach of contract when it violated the NESA and the Transition Agreement. Counterclaim ¶ ¶ 33-40. Intelsat argues that Juch-Tech's counterclaim does not contain enough factual allegations to constitute a plausible claim to relief and should be dismissed under Rule 12(b)(6). Pl.'s Mot. at 12.

As a preliminary matter, both parties agree that Count I should proceed under New York law due to a choice-of-law provision in the contract. Pl.'s Mot. at 9; Def.'s Opp'n at 8. To establish a breach of contract under New York law, a plaintiff must allege: (1) the existence of the contract; (2) the plaintiff's performance pursuant to the contract; (3) the defendant's breach of its obligations pursuant to the contract; and (4) damages resulting from that breach. Elisa Dreier Reporting Corp. v. Global NAPS Networks, Inc., 84 A.D.3d 122, 921N.Y.S.2d 329, 2011 WL 1630922, at *4 (N.Y.App.Div. Apr. 26, 2011).

Juch-Tech alleges that Intelsat breached several contractual agreements. The first is contained within the NESA. The NESA provided that " Intelsat would supply Juch-Tech with satellite transponder services at a guaranteed minimum service level." Counterclaim ¶ 34. Juch-Tech alleges that Intelsat breached its obligations under the NESA " by failing to provide Juch-Tech the services identified . . . at a service level required by the NESA and failing to conduct the transition of services properly." Id. ¶ 38. Similarly, Juch-Tech alleges that Intelsat " refused to correct . . . several technical problems with its satellite transponders that materially impaired, or precluded, Juch-Tech from serving its existing clients or obtaining new customers." Id. ¶ 26.

Second, Juch-Tech claims that Intelsat breached the Transition Agreement. Id. ¶ 39. Under the Transition Agreement, Intelsat promised to assign Juch-Tech several customer contracts. Id. Juch-Tech

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alleges that Intelsat failed to assign contracts for at least two customers: Millenium Arrow and Bentley-Walker. Id. ¶ ¶ 48-49, id., Ex. A (" Transition Agreement" ) (promising to assign those contracts). Intelsat also promised that it would provide Intelsat with certain sales leads. Transition Agreement § 2(iii) (" Intelsat will provide sales leads to Juch-Tech when possible." ). Juch-Tech alleges that Intelsat failed to abide by that promise as well. Counterclaim ¶ 39. Intelsat also agreed not to compete with Juch-Tech under certain circumstances. See Transition Agreement § 2(iii) (" Intelsat will not directly offer a competing Linkstar Hub Service in North America which uses a Linkstar hub on any Intelsat Satellite segment/service for the duration of this agreement." ). Juch-Tech alleges a violation of this promise as well. See Counterclaim ¶ 52 (" Intelsat also misrepresented its intention not to directly compete against Juch-Tech in North America." ).

Intelsat takes issue with the last two arguments, arguing that the missing sales leads are not specified, and that it did not violate its promise to abstain from competing. Pl.'s Mot. at 14. Even so, Juch-Tech's counterclaim contains enough factual matter to proceed to discovery. Juch-Tech's factual allegations fit neatly within the confines of a prima facie contract claim: Juch-Tech alleges (1) the existence of a contract (the NESA and the Transition Agreement); (2) Juch-Tech's performance, see Counterclaim ¶ 37 (" Until such time as Intelsat fraudulently induced Juch-Tech to enter into Service Order No. 22165 and the Transition Agreement, Juch-Tech performed pursuant to the terms of the NESA and Transition Agreement" ); (3) the other party's breach (Intelsat's refusal to provide services, failure to fix technical problems, and failure to assign customer contracts); and, (4) damages, see id. ΒΆ 40 (" Juch-Tech has paid for services it did not receive, suffered the loss of customers and potential customers, and has therefore ...

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