NEW SKIES SATELLITES, B.V. v. HOME2US COMMUNICATIONS, INC.

Filing 23

OPINION filed. Signed by Judge Peter G. Sheridan on 3/28/2014. (jjc)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

NEW SKIES SATELLITES, B.V.,
Plaintiff,

Civil Action No. 13-0200 (PGS) (TJB)

v.
OPINION
HOME2US COMMUNICATIONS, INC.,
Defendant.

SHERIDAN, U.S.D.J.
This matter comes before the Court on Plaintiff New Skies Satellites, B.V.’s (“New Skies” or
“Plaintiff”) Motion to Dismiss Defendant Home2US Communications, Inc.’s (“Home2US” or
“Defendant”) Counterclaim pursuant to FED. R. CIV. P. 12(b)(6) and/or FED. R. CIV. P. 9(b) and to
Strike Defendant’s Jury Demand (ECF No. 12). In its Complaint, Plaintiff alleges that Defendant
defaulted under the terms of a satellite service agreement by failing to make timely and full payment
of monthly service charges. Defendant now counterclaims that Plaintiff breached the contract and
perpetrated fraud by failing to provide satellite service in accordance with the terms of the
agreement. The Court decides this matter without oral argument pursuant to FED. R. CIV. P. 78(b).
For the reasons set forth herein, Plaintiff’s Motion to Dismiss Defendant’s Counterclaim and Strike
Defendant’s Jury Demand is granted.
I.

BACKGROUND
A. Parties

Plaintiff New Skies Satellites, B.V. (“New Skies”) is a corporation organized under the laws
of the Netherlands with a principal place of business in Princeton, New Jersey. (Compl. at ¶ 1). It
operates a fleet of high-powered fixed satellites in the C-Band and Ku-Band which provide uplink
and downlink capabilities for such services as voice, video, data, Internet, and satellite news
gathering to a wide variety of customers in the domestic and international markets. (Id. at ¶ 5).
Defendant Home2US Communications, Inc. (“Home2US”) is a corporation organized under the
laws of the State of Delaware with a principal place of business in Herndon, Virginia. (Id. at ¶ 2).
Home2US is in the business of acquiring the rights to foreign television programs and channels from
television broadcast operators and content producers and redistributing them via satellite to
audiences in North and South America. (Def.’s Answer & Countercl. (“Countercl.”) at ¶ 3).
Home2US distributes this content either directly or through “sub-distribution” agreements with
third-party cable-television and satellite platform operators. (Id.).
B. Factual Background
On or about March 4, 2004, Home2US entered into a Ku-Band Multiple Channel per Carrier
(“MCPC”) Global Service Agreement (“Global Service Agreement” or “GSA”) with New Skies’
predecessor-in-interest SES Americom, Inc. (“SES Americom” or “SES”) to broadcast its television
signals through SES-operated satellites to domestic service providers and end-users in North and
South America. (Compl. at ¶ 6; Countercl. at ¶ 3). Over the next several years, as permitted under
the terms of the GSA, Home2US entered into several Individual Service Description (“ISDs”)
agreements through which it obtained additional satellite transponder services. 1 (Compl. at ¶ 6).
According to the Defendant, the contractual relationship between Home2US and SES Americom
continued to develop “without major incident[]” until late 2007 or early 2008. (Countercl. at ¶ 6).
1

For example, on or about September 17, 2009, Home2US entered into a Satellite Service Agreement with SES
Americom Colorado, Inc. through which Home2US obtained additional satellite transponder services. (Compl. at ¶
7).

2

In October 2007, however, the SES-operated satellite through which Home2US was
broadcasting its television signals, identified as AMC-4, “began having technical issues[.]” (Id. at ¶
7). According to the Defendant, “[b]etween 2008 and 2010, AMC-4 suffered a series of technical
failures which in turn prevented Home2US from providing its content to its customers in an
acceptable manner[.]” (Id.). As a result of these alleged failures, Home2US was forced to
temporarily “migrate its services to [another satellite identified as] AMC-2 . . . [which was] used as
an emergency spare back-up for AMC-4.” (Id.). According to the Defendant, SES Americom was
“aware of these satellite failures and its consequential interruption of service to Home2US” and both
parties “were engaged in regular communication[s] in an effort to address the problems.” (Id. at ¶ 8).
In response to the technical issues involving AMC-4, SES Americom transitioned Home2US to a
new satellite identified as SES-1. According to Home2US, the transition to “SES-1 resulted in
significantly more service interruptions . . .[,] a smaller geographical area of coverage[,] . . . [and]
and inferior link budget” compared to the service that had been provided using the AMC-4 satellite.
(Id. at ¶ 9).
On or about December 23, 2009, SES Americom notified Home2US that effective January 1,
2010, it was assigning its interest in Home2US’s obligations to New Skies. Under that assignment,
the terms and conditions of the SES/Home2US agreements remained in full force and effect. (Id. at ¶
2). Specifically, Home2US was required to make payment to New Skies no later than the first day of
the month with late payments being subject to a 1.5 percent per month late fee. (Compl. at ¶ 13).
On or about June 9, 2010, after Home2US had demanded that New Skies take measures to
address the issues arising from the transition to the SES-1 satellite, the two companies entered into
an agreement whereby New Skies agreed to provide $1 million in “credits” to Home2US as
“transition assistance[.]” (Countercl. at ¶ 15). According to the Defendant, one month later, on July

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8, 2010, New Skies “attempted to force Home2US to sign a new one-sided agreement in which New
Skies would avoid all liability[.]” (Id. at ¶ 17). Around this time, New Skies also allegedly contacted
two customers with whom Home2US was negotiating contract renewals (BVN and The California
Channel).
The Plaintiff presents a different version of the factual history for this time period. According
to the Plaintiff, Home2US “defaulted under the terms of the Home2US Agreements when it failed to
tender timely and full payment of the required monthly service charges starting in July 2010.”
(Compl. at ¶ 15). In an effort to “resolve Home2US’s defaults and permit the continuation of service
going forward, New Skies worked with Home2US to address the outstanding arrears and also
permitted the termination of certain ISDs.” (Id. at ¶ 16). According to the Plaintiff, “because New
Skies was hopeful that Home2US would cure its arrears” New Skies also entered into a new ISD
with Home2US in December 2011. (Id. at ¶ 17).
Between September 2011 and April 2012, Home2US made certain payments under the
Home2US Agreements, however, according to the Plaintiff, Home2US “did not completely cure its
default.” (Id. at ¶ 18). After April 2012, Home2US made no additional payments. (Id. at ¶ 19). On
September 4, 2012, New Skies sent a letter to Home2US advising the company that it remained in
default and that $1,463,663.33 remained outstanding and overdue for services that New Skies had
provided from July 2010 through September 2012. (Id. at ¶ 20). New Skies further advised
Home2US that if full payment on all amounts due was not received within ten days of the date of the
letter, New Skies would “exercise its rights to terminate the Home2US Agreements.” (Id.). Failing to
receive full payment by the deadline, New Skies terminated the Home2US Agreements by letter
dated September 24, 2012. (Id. at ¶ 21).

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On January 10, 2013, Plaintiff filed a two count Complaint in the United States District Court
for the District of New Jersey. In Count One, Plaintiff asserts a breach of contract claim against
Home2US. Specifically, Plaintiff contends that “Home2US is liable to New Skies for breaching the
Home2US Agreements in the amount of at least $1,463,663.33 as of September 24, 2012, plus
interest and attorneys’ fees, for all charges that were due and owing as of the date of termination.”
(Id. at ¶ 23). In Count Two, Plaintiff alleges that “[u]pon termination, Home2US is liable . . . for the
Termination Liability as defined in the Home2US Agreements [in] the approximate amount of
$927,350.00[.]” (Id. at ¶ 26) Specifically, Plaintiff contends that Defendant is liable for the “net
present value amount of monthly payments due for the remaining term of the Home2US Agreements
plus late charges and interest[.]” (Id.).
On March 28, 2013, Defendant filed an Answer and Counterclaim to Plaintiff’s Complaint.
In Counterclaim One, Defendant alleges a breach of contract claim against New Skies. Specifically,
Defendant argues that “SES and New Skies failed to provide [the promised] satellite services to
Home2US when Home2US was assigned to satellite AMC-4, AMC-2 and after it was transitioned to
SES-1.” (Countercl. at ¶ 21). In Counterclaim Two, Defendant alleges a breach of the implied
warranty of fitness for a particular purpose. According to the Defendant, “Home2US relied on the
assurances, experience, and knowledge of SES and New Skies that it would be provided . . .
services” and “SES and New Skies failed to provide [those] services[.]” (Id. at ¶¶ 25-26). In
Counterclaim Three, Defendant asserts a lost profits claim. Specifically, Defendant argues that “[a]s
a direct and proximate result of the failure to provide service by SES and New Skies, Home2US lost
customers, opportunities for growth, and potential customers, resulting in damages and lost profits.”
(Id. at ¶ 32). Those losses allegedly included a decrease in annual revenue streams of between $2.5
million and $3.5 million and a loss of 60,000 Home2US customers. (Id. at ¶¶ 10, 13). In

5

Counterclaim Four, Defendant asserts that SES Americom or New Skies committed fraud by
“offering and inducing Home2US to accept” changes to its services that resulted in “inferior and
inadequate services” despite having given “assurances that [those] services would not be affected.”
(Id. at ¶ 35). Finally, in Counterclaim Five, Defendant asserts a tortious interference with prospective
economic advantage claim against New Skies. On May 2, 2013, New Skies filed the instant Motion
to Dismiss Defendant’s Counterclaim.
II.

DISCUSSION
A. Standard of Review
A motion to dismiss a counterclaim is properly evaluated under the familiar Rule 12(b)(6)

standard. RBC Bank (USA) v. Petrozzini, 2012 U.S. Dist. LEXIS 75845, at *2 (D.N.J. May 31,
2012); Malibu Media, LLC v. Lee, 2013 U.S. Dist. LEXIS 72218, at *3 (D.N.J. May 22, 2013). FED.
R. CIV. P. 12(b)(6) provides for the dismissal of a counterclaim if the counterclaimant “fail[s] to state
a claim upon which relief can be granted[.]” When deciding a motion to dismiss pursuant to FED. R.
CIV. P. 12(b)(6), courts are required to "accept all factual allegations as true, construe the
[counterclaim] in the light most favorable to the [counterclaimant], and determine whether, under
any reasonable reading of the [counterclaim], the [counterclaimant] may be entitled to relief."
Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (internal citation and quotations
omitted). In other words, “a [counterclaim] 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) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127
S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). “The inquiry is not whether [a counterclaimant] will
ultimately prevail in a trial on the merits, but whether [he or she] should be afforded an opportunity
to offer evidence in support of [his or her] claims.” In re Rockefeller Ctr. Props., Inc., 311 F.3d 198,

6

215 (3d Cir. 2002). The Supreme Court has clarified, however, that “the tenet that a court must
accept as true all of the allegations contained in a [counterclaim] is inapplicable to legal
conclusions.” Iqbal, 556 U.S. at 678. Furthermore, “[t]hreadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at
555).
“To decide a motion to dismiss, courts generally consider only the allegations contained in
the [counterclaim], exhibits attached to the [counterclaim] and matters of public record.” Pension
Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993) (citations
omitted). The court may consider "undisputedly authentic document[s] that . . . [are] attache[d] as
an exhibit to a motion to dismiss if the [counterclaims] are based on the [attached] document[s]." Id.
"[D]ocuments whose contents are alleged in the [counterclaim] and whose authenticity no party
questions, but which are not physically attached to the pleading, may [also] be considered." Pryor v.
Nat'l Collegiate Athletic Ass'n, 288 F.3d 548, 560 (3d Cir. 2002) (citation omitted); see also U.S.
Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002) ("Although a district court may not
consider matters extraneous to the pleadings, a document integral to or explicitly relied upon in the
[counterclaim] may be considered without converting the motion to dismiss into one for summary
judgment.") (internal citation omitted). The Court may not, however, "rely on other parts of the
record in making its decision." See Vartan v. Wells Fargo Bank Nw., N.A., 2012 U.S. Dist. LEXIS
54467, at *3 (M.D. Pa. Apr. 18, 2012) (citing Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d
1250, 1261 (3d Cir. 1994)).
To determine whether a counterclaim is plausible on its face, courts conduct a three-part
analysis. Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the court must
"tak[e] note of the elements a [counterclaimant] must plead to state a claim." Id. (quoting Iqbal, 556

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U.S. at 675). Second, the court should identify allegations that, "because they are no more than
conclusions, are not entitled to the assumption of truth." Id. at 131 (quoting Iqbal, 556 U.S. at 680).
Finally, "where there are well-pleaded factual allegations, a court should assume their veracity and
then determine whether they plausibly give rise to an entitlement for relief." Id. (quoting Iqbal, 556
U.S. at 680). This plausibility determination is a "context-specific task that requires the reviewing
court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679. A counterclaim
cannot survive where a court can only infer that a claim is merely possible rather than plausible. Id.
B. Home2US’s Counterclaims Against New Skies
1. Counterclaim One: Breach of Contract
In Counterclaim One, Home2US alleges that New Skies breached the terms of the Global
Service Agreement by refusing to declare AMC-4 a “Satellite Failure” 2 and failing to provide
satellite services in accordance with the agreement. (Countercl. at ¶¶ 20-21). Plaintiff argues that the
First Counterclaim should be dismissed because it is barred by the two-year limitations period
contained in the Global Service Agreement. That provision provides, in relevant part:
Any action of any kind by either Party arising out of this Agreement must be
commenced within two (2) years from the date the right, claim, demand or cause
of action shall first arise. (Countercl. at ¶ 1, Ex. A, Attach. A, art. 11).
Plaintiff relies on several of the allegations made in Defendant’s Counterclaim to support its
contention that Defendant’s breach of contract claim is time-barred. For example, Defendant states
that “SES and New Skies failed to provide satellite services to Home2US when Home2US was
assigned to satellite AMC-4, AMC-2 and after it was transitioned to SES-1.” (Id. at ¶ 21) (emphasis
added). Furthermore, Defendant states that “[o]n or about July 8, 2010, it became clear to Home2US
2

Under the Global Service Agreement, the term “Satellite Failure” is defined as a satellite: “(1) on which one or
more of the basic subsystems fail, rendering the use of the satellite for its intended purposes impractical, as
determined by SES Americom in its in its reasonable business judgment, or on which more than one-half of the
transponders on the payload are transponder failures; and (2) that SES Americom has declared a failure.”
(Countercl. at ¶ 1, Ex. A, Attach. A, art. 2).

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that New Skies was unreasonably refusing to declare AMC-4 a ‘Satellite Failure’ in an effort to
avoid liability[.]”(Id. at ¶ 17). Based on these allegations, New Skies contends that any potential
claims belonging to Home2US began to accrue as early as 2008 (when Home2US was first
transferred to AMC-2) and as late as 2010 (when it became clear to Home2US that New Skies
refused to declare AMC-4 a “Satellite Failure.”). (Pl.’s Br. in Supp. of Mot. to Dismiss (“Pl.’s Br.”)
at 6-7). Plaintiff contends that because Defendant’s Counterclaim was not filed until March 28,
2013, more than two years after either date of accrual, Home2US’s claims are time-barred.
In opposition, Home2US argues that dismissal of its counterclaim based upon the two-year
limitations period included in the GSA would be improper because the parties were still engaged in
negotiations to resolve the technical issues up until, at least, August of 2012. (Def.’s Br. in Opp. to
Pl.’s Mot. to Dismiss (“Def.’s Opp. Br.”) at 1). According to the Defendant, the two-year limitations
period should be equitably tolled and New Skies should be “equitably estopped from arguing [that]
the statute of limitations clause is applicable when [New Skies] continued to negotiate with
[Home2US] in order to facilitate its expiration.” (Id. at 2). The Court will first consider the validity
of the GSA’s limitations provision and then address whether the negotiations between the parties
entitle the Defendant to equitable tolling of the limitations period.
It is well settled that parties may contractually limit the time for bringing claims, despite a
statute of limitations to the contrary. In Order of United Comm. Travelers of Am. v. Wolfe, 331 U.S.
586, 608, 67 S. Ct. 1355, 91 L. Ed. 1687 (1947), the Supreme Court held that “it is well established
that, in the absence of a controlling statute to the contrary, a provision in a contract may validly
limit, between the parties, the time for bringing an action on such contract to a period less than that
prescribed in the general statute of limitations, provided that the shorter period itself shall be a
reasonable period.” New Jersey courts have come to a similar conclusion. In Eagle Fire Prot. Corp.

9

v. First Indem. of Am. Ins. Co., 145 N.J. 345, 354, 678 A.2d 699 (N.J. 1996), the New Jersey
Supreme Court held that a one year statute of limitations included in a surety bond, which limited
New Jersey’s six-year statute of limitations for bringing contract claims, was valid. The Court stated
that “[c]ontract provisions limiting the time parties may bring suit have been held to be enforceable,
if reasonable.” Eagle Fire Prot. Corp., 145 N.J. at 354; see also A.J. Tenwood Assoc. v. Orange
Senior Citizens House. Co., 200 N.J. Super. 515, 523, 491 A.2d 1280 (App. Div. 1985), cert. denied,
101 N.J. 325, 501 A.2d 976 (N.J. 1985) (noting that “[a]lthough the statutory limitation in this State
for actions in contract is six years, N.J.S.A. 2A:14-1, such limitation may be waived by express
agreement of the parties.”). Accordingly, the Court finds that the GSA provision limiting the time for
bringing an action to two years is both reasonable and valid.
Having determined that the GSA provision is valid, the Court must now consider whether the
contractual two-year limitations period should be tolled due to the ongoing negotiations between the
parties. Home2US argues that the Court should toll the two-year statute of limitations from 2008,
when the technical issues with the AMC-4 satellite first arose, until August 2012, when negotiations
between the parties to address these ongoing technical issues concluded. Under certain
circumstances, negotiations between a claimant and a prospective defendant can provide a basis for
tolling a statute of limitations. See W.V. Pangborne & Co., Inc. v. N.J. Dep’t of Transp., 116 N.J.
543, 556, 562 A.2d 222 (N.J. 1989) (“Courts have determined that through the process of
negotiating, a defendant can intentionally lull a plaintiff into believing litigation is not necessary; a
defendant in those circumstances may not take advantage of the protracted negotiations to have the
statute of limitations run against the plaintiff’s claim.”). However, mere negotiations, without more,
are insufficient to invoke equitable tolling. Home2US must allege and prove that SES Americom or
New Skies engaged in inequitable conduct to lull Home2US into forgoing suit within the limitations

10

period in order to be entitled to equitable tolling for the period from 2008 until 2012. See id. at 553
(observing that “equitable estoppel has been used to prevent a defendant from asserting the statute of
limitations when the defendant engages in conduct that is calculated to mislead the plaintiff into
believing that it is unnecessary to seek civil redress.”); see also Eagle Fire Prot. Corp. v. First
Indem. of Am. Ins. Co., 280 N.J. Super. 430, 441, 655 A.2d 939 (App. Div. 1995) (“The tolling of a
contractual or statutory limitation due to conduct, requires some type of unconscionable conduct on
the part of the [defendant] and not just mere negotiations or discussions.”), rev’d on other grounds,
145 N.J. 345, 678 A.2d 699 (N.J. 1996).
While this Court is obligated to accept Defendant’s well-pleaded allegations as true for
purposes of Plaintiff’s Motion to Dismiss, the Court will not accept bald assertions, unsupported
conclusions, unwarranted references, or sweeping legal conclusions cast in the form of factual
allegations. See Iqbal, 556 U.S. at 678-79. On the contrary, Home2US is obligated to set forth
“factual content that allows the court to draw the reasonable inference that [New Skies] is liable for
the misconduct alleged.” Santiago, 629 F.3d at 128 (citation omitted). While detailed factual
allegations are not necessary to survive a Rule 12(b)(6) motion, Defendant’s “obligation to provide
the grounds of [its] entitlement to relief requires more than labels[,] . . . conclusions, and a formulaic
recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. Instead, Home2US must
provide enough factual allegations “to raise a right to relief above the speculative level.” Id. Here,
the Court finds that Home2US fails to set forth any factual allegations to show that SES Americom
or New Skies engaged in any inequitable conduct calculated to lull Home2US into forgoing suit
within the limitations period. Rather, Home2US’s allegations describe little more than “mere
negotiations or discussions.” As such, Home2US has failed to plead and prove that it is entitled to

11

equitable tolling. Accordingly, the Court finds that Defendant’s First Counterclaim is barred by the
two-year limitations period provided for in the GSA. 3
While the Court finds that Defendant’s breach of contract counterclaim is barred by the GSA
limitations provision, the Court will dismiss that claim without prejudice to afford Home2US an
opportunity to prove its entitlement to equitable tolling. The policy embodied in the Federal Rules of
Civil Procedure favors discovery in learning whether any evidence exists to demonstrate inequitable
conduct on the part of SES Americom or New Skies. See Caldwell Trucking PRP Group v.
Spaulding Composites, Co., 890 F. Supp. 1247, 1252 (D.N.J. 1995) ("Since the long-established
federal policy of civil litigation is to decide cases on the proofs, district courts generally disfavor
Rule 12(b)(6) motions."). Discovery relating to the limitations issue shall be limited to facts
surrounding the negotiations with SES Americom or New Skies that allegedly lulled Home2US into
forgoing suit. Should Defendant wish to proceed with its breach of contract claim after such
discovery, Defendant may file an Amended Counterclaim clearly identifying the inequitable conduct
that forms the basis of its equitable tolling argument.
2. Counterclaim Two: Breach of Implied Warranty of Fitness for a Particular
Purpose
In Counterclaim Two, Home2US alleges that New Skies breached the implied warranty of
fitness for a particular purpose by “fail[ing] to provide satellite services to Home2US as required
when Home2US was assigned to satellite AMC-4, AMC-2 and after it was transitioned to SES-1.”
(Countercl. at ¶¶ 27-28). Plaintiff argues that Defendant’s Second Counterclaim should be dismissed
for two reasons. First, Plaintiff contends that the breach of implied warranties claim is barred by the
two-year limitations period imposed by the Global Service Agreement. Second, Plaintiff contends

3

The Court’s finding does not preclude Home2US from later asserting the affirmative defense of a set-off, which it
pled in its Answer to News Skies’ Complaint. (See Def.’s Answer & Countercl. at ¶ 17).

12

that the counterclaim must fail because the New Jersey Uniform Commercial Code (“NJ U.C.C.”)
does not apply to contracts for services. The Court will address both of these arguments in turn.
Home2US’s claim for breach of implied warranties is based on the same factual allegations
giving rise to its breach of contract claim in Counterclaim One. Having already determined that the
breach of contract claim is barred by the two-year limitations period imposed by the Global Service
Agreement, the Court finds that Defendant’s Second Counterclaim is also time-barred.
In addition to being barred by the limitations period set forth in the Global Service
Agreement, the Court finds that the contract between Home2US and New Skies was a services
contract not subject to the implied warranties of the NJ U.C.C. The Third Circuit has clearly stated
that “[t]he commercial warranty provisions found in Article Two of the U.C.C. apply only to
‘transactions in goods[.]’” Paramount Aviation Corp. v. Gruppo Agusta, 288 F.3d 67, 72 (3d Cir.
2002) (citing N.J.S.A. 12A:2-102). Moreover, the implied warranty of fitness for a particular
purpose, which is a cause of action arising under the NJ U.C.C., provides that such a warranty is
implied only “[w]here the seller at the time of contracting has reason to know any particular purpose
for which the goods are required and that the buyer is relying on the seller’s skill or judgment to
select or furnish suitable goods[.]” N.J.S.A. 12A:2-315 (emphasis added). The term “goods” is
defined in the NJ U.C.C. as “all things . . . which are movable at the time of identification to the
contract for sale other than money in which the price is to be paid, investment securities . . . and
things in action.” N.J.S.A. 12A:2-105.
Here, the record indicates that the agreement between Home2US and New Skies was for
services. As an initial matter, the agreement itself is called a “Global Service Agreement.”
(Countercl. at ¶ 1, Ex. A). The language used throughout the Agreement indicates that it is a contract

13

for services and does not refer in any way to a transaction in “goods.” For example, Section One of
the contract, entitled “Service,” provides:
SES Americom will provide to [Home2US] full-time compressed digital video
Ku-Band Transponder Protected Channel services on SES Americom’s Ku-Band
Multiple Channel per Carrier (“MCPC”) Digital Compression Platform on the
AMC-4 Satellite (the “Service”). Service will be provided in accordance with the
terms and conditions set forth in this Agreement. (Id.).
Home2US’s own characterization of the contract between it and New Skies also supports the
conclusion that any contract between the two was a services contract. For example, Home2US states
in its Counterclaim that New Skies “was to provide Home2US Satellite transponder and platform
services.” (Countercl. at ¶ 1). Home2US describes its business as “acquiring the rights to foreign
television programs and/or channels from television broadcast operators as well as content producers
to re-distribute them via satellite and other delivery methods to their intended target audiences in
North [and] South America[].” (Id. at ¶ 3). Even within its Second Counterclaim, Home2US states
that “[it] relied on the assurances, experience and knowledge of SES and New Skies that it would be
provided . . . services in an efficient manner” and “SES and New Skies failed to provide satellite
services[.]” (Id. at ¶¶ 25, 27). Because Home2US’s Second Counterclaim is based on a contract for
services, the U.C.C. does not govern and no claim for breach of the implied warranty of fitness for a
particular purpose can stand. Moreover, the Global Service Agreement expressly prohibits such
claims between the parties. Article 8 of the Agreement explicitly states: “No warranties, expressed,
implied, or statutory, including any warranty of merchantability or fitness for a particular purpose,
apply to the Service or the equipment and facilities used to provide the Service.” (Id. at ¶ 1, Ex. A,
Attach. A, art. 8). Accordingly, the Court will dismiss Defendant’s Second Counterclaim with
prejudice.
3. Counterclaim Three: Lost Profits

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In Counterclaim Three, Defendant asserts an independent cause of action for “lost profits.”
Specifically, Defendant contends that “[a]s a direct and proximate result of the failure to provide
service by SES and New Skies, Home2US lost customers, opportunities for growth, and potential
customers, resulting in damages and lost profits.” (Id. at ¶ 32). Plaintiff argues that Home2US’s
Third Counterclaim for “lost profits” must be dismissed because “it is a remedy and not a valid,
independent cause of action.” (Pl.’s Br. at 11). The Court agrees with Plaintiff that no cause of action
for lost profits exists and that this is simply a measure of damages that may be available under one of
Defendant’s other theories of liabilities. As this Court has previously explained:
[D]amage theories and causes of action are separate concepts which should not be
confused. Damages are "pecuniary compensation or indemnity, which may be
recovered in the courts by any person who has suffered loss, detriment, or injury,
whether to his person, property, or rights, through the unlawful act or omission or
negligence of another." Damages may be categorized or "theorized" as, inter alia,
actual, compensatory, consequential, punitive, expectancy, future, hedonic,
incidental, liquidated, rescissory, special, or speculative. Causes of actions, by
contrast, encompass "[a] situation or state of facts which would entitle [a] party to
sustain [an] action and give him [the] right to seek a judicial remedy in his
behalf." Lithuanian Comm. Corp. v. Sara Lee Hosiery, 2002 U.S. Dist. LEXIS
15038, at *8-9 (D.N.J. Feb. 13, 2002) (quoting BLACK'S LAW DICTIONARY 389
(6th Ed. 1990).
Given this distinction, the Court will dismiss Defendant’s Third Counterclaim with prejudice
while recognizing that doing so does not proscribe Defendant from later asserting a lost profits
theory of damages should it wish to proceed on those counterclaims which the Court is dismissing
without prejudice. The Court notes, however, that Defendant’s likelihood of recovery is dubious
based on Article 8 of the Global Service Agreement which states that “SES Americom . . . will not
be liable for . . . loss of actual or anticipated revenues or profits, [or] loss of business, customers or
good will[.]” (Countercl. at ¶ 1, Ex. A, Attach. A, art. 8).

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4. Counterclaim Four: Fraud
In Counterclaim Four, Defendant asserts a claim of common law fraud against New Skies. 4
According to the Defendant, New Skies “committed fraud by offering and inducing Home2US to
accept . . . changes [to its services] with assurances that [the quality of] its services would not be
affected.” (Countercl. at ¶ 35). Plaintiff argues that Defendant’s Fourth Counterclaim should be
dismissed for two reasons. First, Plaintiff contends that the common law fraud claim is barred by the
two-year limitations period imposed by the Global Service Agreement. Second, Plaintiff contends
Home2US has failed to plead the elements of common law fraud with sufficient particularity to
satisfy the heightened pleading requirements imposed by FED. R. CIV. P. 9(b).
In its Opposition, Home2US more clearly identifies the allegedly fraudulent actions by New
Skies giving rise to its fraud claim. Specifically, Home2US contends that New Skies committed
fraud by: (1) knowingly misrepresenting its intent to declare a satellite a “Satellite Failure” under
certain circumstances; (2) knowingly misrepresenting that its satellites would meet the requirements
of Home2US’s business; and (3) knowingly misrepresenting that Home2US would receive a
$1,000,000 credit for services provided. (Id. at 5-8). All three of these alleged events occurred more
than two years prior to Defendant’s filing of its Counterclaim. As the Court has already determined
that the two-year limitations period imposed by the Global Service Agreement is both reasonable
and valid, the Court finds that Defendant’s Fourth Counterclaim is also time-barred.
In addition, after accepting the allegations in the Counterclaim as true and construing the
facts in the light most favorable to the Defendant, the Court finds that Home2US has failed to
sufficiently allege a claim of common law fraud against New Skies. In order to state a claim for
4

In its Counterclaim, Defendant also asserts that Plaintiff’s actions constituted a violation of the New Jersey
Consumer Fraud Act (“NJCFA”). (Counter. at ¶ 36). In its Opposition Brief, however, Home2US concedes “that it
cannot bring a cause of action under the New Jersey Consumer Fraud Act for this type of transaction.” (Def.’s Opp.
Br. at 5). Accordingly, to the extent that Home2US’s Fourth Counterclaim is based on New Skies having violated
the New Jersey Consumer Fraud Act, that claim is dismissed with prejudice.

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common law fraud, a plaintiff must allege “(1) a material misrepresentation of a presently existing or
past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person
rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages. Gennari v.
Weichert Co. Realtors, 148 N.J. 582, 610, 691 A.2d 350 (N.J. 1997) (citing Jewish Ctr. of Sussex
Cnty. v. Whale, 86 N.J. 619, 624-25, 432 A.2d 521 (N.J. 1981)). Here, Home2US does not plead any
facts suggesting that New Skies knew, at the time it entered into the Global Service Agreement, that
it would either (1) unreasonably refuse to declare AMC-4 a “Satellite Failure” at some point in the
future or (2) experience technical issues with its satellites that would inhibit its ability to provide
service to Home2US. According to the Defendant, “[p]rior to 2008, Home2US and SES were
working together without major incidents and Home2US was growing at a steady rate[.]”
(Countercl. at ¶ 6). Such an allegation leads this Court to conclude that the technical issues which
plagued the satellites were unanticipated and that New Skies was performing in accordance with the
terms of the Global Service Agreement. Home2US also fails to set forth facts showing that New
Skies intended for Home2US to rely upon its alleged misrepresentations or that Home2US did in
fact reasonably rely upon those misrepresentations. As such, Home2US has not set forth “enough
facts to state a claim to relief that is plausible on its face.” See Twombly, 550 U.S. at 570. The Court
will therefore dismiss Defendant’s Fourth Counterclaim without prejudice. Should Defendant wish
to proceed with its common law fraud claim, Defendant shall (1) present sufficient evidence
demonstrating its entitlement to a tolling of the two-year limitations period and (2) plead with
particularity the circumstances which form the basis of its fraud claim.
5. Counterclaim Five: Tortious Interference with Prospective Economic Advantage
In Counterclaim Five, Defendant asserts a tortious interference with prospective economic
advantage claim against New Skies. In describing the alleged conduct giving rise to its claim,

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Defendant states that New Skies interfered with Home2US’s prospective economic advantage by:
(1) being “responsible for the technical difficulties” associated with the satellites; (2) “enter[ing] . . .
a field of service they had never done before[]”; and (3) “engaging [Home2US’s] existing clients to
steal existing and viable future business.” (Countercl. at ¶ 39). Plaintiff argues that Defendant’s Fifth
Counterclaim should be dismissed because the claim is barred by the Global Service Agreement’s
two-year limitations period and because Defendant has failed to plead sufficient facts to establish a
prima facie case for tortious interference.
Defendant’s Counterclaim indicates that Home2US’s tortious interference claim is based on
New Skies allegedly contacting two of Home2US’s customers with whom it was negotiating
contract renewals in or about July 2010. (Id. at ¶ 18). Because Plaintiff did not file its Counterclaim
until March 28, 2013, more than two years after the allegedly tortious conduct undertaken by the
Plaintiff, the Court finds that Defendant’s Fifth Counterclaim is barred by the two-year limitations
provision in the Global Service Agreement.
In addition, the Court agrees with Plaintiff’s argument that Defendant has failed to establish a
prima facie case of tortious interference with prospective economic advantage. To state a claim for
tortious interference with prospective economic advantage under New Jersey law, a plaintiff must
allege: “(1) a reasonable expectation of economic advantage from a prospective contractual or
economic relationship; (2) the defendant intentionally and maliciously interfered with the
relationship; (3) the interference caused the loss of the expected advantage; and (4) actual damages
resulted. Am. Leistritz Extruder Corp. v. Polymer Concentrates, Inc., 363 Fed. Appx. 963, 967 (3d
Cir. 2010); accord Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 563 A.2d 31, 37
(N.J. 1989). For purposes of this tort, "malice is defined to mean the harm was inflicted intentionally
and without justification or excuse." Printing Mart-Morristown, 116 N.J. at 751 (citing Rainier's

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Dairies v. Raritan Valley Farms, Inc., 19 N.J. 552, 563, 117 A.2d 889 (N.J. 1955)). While Defendant
alleges that New Skies contacted BVN and The California Channel “with the intention of destroying
both existing and prospective, viable contracts[,]” it fails to present facts suggesting that New Skies
did so with the specific intent of convincing those customers to decline renewal of their contracts. In
fact, Defendant’s Counterclaim fails to allege any facts suggesting the substance of the conversations
between New Skies and those customers. Moreover, Defendant fails to produce any evidence
indicating a reasonable probability that BVN and The California Channel would have renewed their
contracts with Home2US in the absence of New Skies’ alleged interference. See Printing MartMorristown, 116 N.J. at 759 (“A plaintiff shows causation when there is proof that if there had been
no interference there was a reasonable probability that the victim of the interference would have
received the anticipated economic benefits.”) (citations and quotations omitted). Defendant’s tortious
interference with prospective economic advantage counterclaim, in the opinion of this Court, relies
solely on a “formulaic recitation of the elements of [the] cause of action,” and therefore, cannot
survive Plaintiff’s Motion to Dismiss. For these reasons, and the fact that Home2US has not opposed
New Skies’ Motion with respect to the Fifth Counterclaim, the Court will dismiss Defendant’s Fifth
Counterclaim with prejudice.
C. New Skies’ Motion to Strike Home2US’s Jury Demand
New Skies also moves to strike Home2US’s jury demand pursuant to a provision of the
Global Service Agreement entered into by the parties. Article 11 of the Global Service Agreement
provides, in relevant part: “Each of the Parties hereby irrevocably waives (and agrees not to assert)
the right to trial by jury[.]” (Countercl. at ¶ 1, Ex. A, Attach. A, art. 11). Where, as here, a federal
action is premised upon diversity jurisdiction, the right to a jury trial in federal court presents a
question of federal law. Simler v. Conner, 372 U.S. 221, 222, 83 S. Ct. 609, 9 L. Ed. 2d 691 (1963);

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In re City of Phila. Litig., 158 F.3d 723, 726 (3d Cir. 1998). "Although the right to a jury trial is
guaranteed by the Seventh Amendment to the United States Constitution, like all constitutional
rights it can be waived by the parties." In re City of Phila. Litig., 158 F.3d at 726. To be valid, a
contractual waiver of the right to a jury must be voluntary and knowing. First Union Nat'l Bank v.
United States, 164 F. Supp. 2d 660, 663 (E.D. Pa. 2001). The following factors guide a court’s
determination of whether a contractual provision waiving the right to a jury is valid: "(1) there was
no gross disparity in bargaining power between the parties, (2) the parties are sophisticated business
entities, (3) the parties had an opportunity to negotiate the contract terms, and (4) the waiver
provision was conspicuous." Id.; Titan Stone, Tile & Masonry, Inc. v. Hunt Const. Group, Inc., 2007
U.S. Dist. LEXIS 4661, at *4 (D.N.J. Jan. 22, 2007). Here, both parties are sophisticated business
entities, the waiver provision in the Global Service Agreement is conspicuous, and the parties had an
opportunity to negotiate the terms of the agreement. In addition, Home2US has not asserted any
basis, in either its Counterclaim or Opposition to Plaintiff’s Motion, as to why the jury waiver
provision contained in the Global Service Agreement is invalid. Accordingly, Plaintiff’s Motion to
Strike Defendant’s Jury Demand is granted and the jury demand asserted by Home2US in its
Answer and Counterclaim is hereby stricken.
III.

CONCLUSION
For the reasons set forth above, Plaintiff’s Motion to Dismiss Defendant’s Counterclaim is

granted and Plaintiff’s Motion to Strike Defendant’s Jury Demand is granted. An appropriate Order
follows.

Date: March 28, 2014

s/Peter G. Sheridan
PETER G. SHERIDAN, U.S.D.J.

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