Wall Street Systems Sweden AB v. Hertz Global Holdings, Inc.

Filing 19

OPINION & ORDER re: 15 MOTION for Judgment on the Pleadings . filed by Hertz Global Holdings, Inc. Accordingly, defendant's motion for judgment on the pleadings is GRANTED. The Clerk of Court is directed to terminate the motion at ECF No. 15. (Signed by Judge Katherine B. Forrest on 1/13/2015) (lmb)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
WALL STREET SYSTEMS SWEDEN AB,
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:
Plaintiff,
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-v:
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HERTZ GLOBAL HOLDINGS, INC.,
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Defendant.
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USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: 01/13/2015

14-cv-7819 (KBF)
OPINION & ORDER

KATHERINE B. FORREST, District Judge:
On September 26, 2014, Wall Street Systems Sweden AB (“plaintiff” or “Wall
Street Systems”) filed this diversity action for breach of contract against Hertz
Global Holdings, Inc. (“defendant” or “Hertz”). (ECF No. 1 (“Compl.”).) Hertz filed
an Answer on November 12, 2014. (ECF No. 10.) On December 4, 2014, Hertz filed
a motion for judgment on the pleadings under Rule 12(c) of the Federal Rules of
Civil Procedure. (See ECF Nos. 13-16.) That motion became fully briefed on
December 23, 2014. For the reasons set forth below, the motion is GRANTED.
I.

BACKGROUND1
On November 10, 2009, the parties entered into a written subscription

agreement (the “Subscription Agreement” or the “Agreement”) under which Wall
Street Systems agreed to provide Hertz with access to an electronic treasury
management service (the “treasury service”) in exchange for periodic fees. (See

1

This section includes only those facts that are relevant to defendant’s motion.

Compl. ¶¶ 1, 8, 9.) Hertz subsequently executed a Services Order Form ordering
assistance in implementing the service. (See id. ¶¶ 1, 10.)
The Subscription Agreement, which is attached to and incorporated by
reference in the Complaint, provides for a three-year initial subscription period,
commencing on November 10, 2009. (See Compl. Ex. A (“SA”) at 1.) Paragraph 11
(the “termination provision”) sets forth the procedure for terminating the
Agreement. It states, in relevant part:
The Agreement shall become effective once duly signed by both parties
and shall continue in effect for the Subscription Period set forth herein.
After the initial Subscription Period, the Agreement shall be
automatically extended for consecutive additional 12-month periods at
an increase of 3%, unless terminated earlier by either party providing
90 days written notice of termination prior to the expiration of the then
current Subscription Period.
(Id. at 5.)
On August 6, 2012, Hertz terminated the Agreement in accordance with
Paragraph 11 by providing Wall Street Systems with at least 90 days written notice
of termination prior to the expiration of the initial subscription period. (Answer and
Jury Demand (“Ans.”) ¶ 30, ECF No. 10.)
On September 30, 2012, after Hertz’s notice of termination, Wall Street
Systems issued Invoice No. 5008160 (the “September 30, 2012 Invoice”)
prospectively charging Hertz $204,506.39 for access to the treasury service for the
period between November 10, 2012 and November 9, 2013. (See Compl. ¶ 11, Ex.
C.) Hertz did not pay anything on the September 30, 2012 Invoice. (See id. ¶¶ 1415.)
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On September 26, 2014, Wall Street System brought this action to recover
the payments due on the September 30, 2012 Invoice and two other invoices issued
to Hertz.2 The Complaint asserts two breach-of-contract claims—one under the
Subscription Agreement and another under the related Services Order Form.3
On December 4, 2014, Hertz filed a Rule 12(c) motion for judgment on the
pleadings as to the September 30, 2012 Invoice. Hertz argues that plaintiff is not
entitled to payment on the September 30, 2012 Invoice because that invoice
prospectively charges Hertz for a subscription period postdating Hertz’s termination
of the Agreement. Hertz’s motion is the subject of this Opinion & Order.
II.

LEGAL STANDARDS
A.

Rule 12(c)

“After the pleadings are closed—but early enough not to delay trial—a party
may move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). “The standard for
granting a Rule 12(c) motion for judgment on the pleadings is identical to that of a
Rule 12(b)(6) motion for failure to state a claim.” Patel v. Contemporary Classics of
Beverly Hills, 259 F.3d 123, 126 (2d Cir. 2001) (citations omitted). The court must
accept as true all factual allegations contained in the complaint and draw all
reasonable inferences in the non-moving party’s favor. Bank of New York v. First
Millennium, Inc., 607 F.3d 905, 922 (2d Cir. 2010). “To survive a Rule 12(c) motion,
the complaint ‘must contain sufficient factual matter, accepted as true, to state a

The other invoices—issued on September 30, 2011 and February 28, 2012—are not at issue on the
present motion.
2

3

The present motion concerns only the claim under the Subscription Agreement.

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claim to relief that is plausible on its face.’” Id. (quoting Hayden v. Paterson, 594
F.3d 150, 160 (2d Cir. 2010)). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
“On a 12(c) motion, the court considers ‘the complaint, the answer, any
written documents attached to them, and any matter of which the court can take
judicial notice for the factual background of the case.’” L-7 Designs, Inc. v. Old
Navy, LLC, 647 F.3d 419, 422 (2d Cir. 2011) (quoting Roberts v. Babkiewicz, 582
F.3d 418, 419 (2d Cir. 2009)). A complaint is “deemed to include any written
instrument attached to it as an exhibit, materials incorporated in it by reference,
and documents that, although not incorporated by reference, are ‘integral’ to the
complaint.” Id. (quoting Sira v. Morton, 380 F.3d 57, 67 (2d Cir. 2004)) (internal
quotation mark omitted).
B.

New York Contract Law4

Under New York law, “when the terms of a written contract are clear and
unambiguous, the intent of the parties must be found within the four corners of the
contract.” In re Matco-Norca, Inc., 22 A.D.3d 495, 496 (N.Y App. Div. 2005)

Paragraph 12.7 of the Subscription Agreement provides that the Agreement is governed by and
must be construed in accordance with New York law. (SA at 7.) Accordingly, the Court applies New
York law in resolving the present motion. See Cargill, Inc. v. Charles Kowsky Res., Inc., 949 F.2d
51, 55 (2d Cir. 1991) (explaining that the effect of contractual choice-of-law provision in a diversity
case is to be considered by applying choice-of-law rules of forum state); id. (“In the absence of a
violation of a fundamental state policy, New York courts generally defer to the choice of law made by
the parties to a contract.” (citation omitted)).
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(citations omitted). “Further, a court may not write into a contract conditions the
parties did not insert by adding or excising terms under the guise of construction,
nor may it construe the language in such a way as would distort the contract’s
apparent meaning.” Id. (citations omitted).
“When a contract is terminated . . . , the rights and obligations thereunder
cease.” Twitchell v. Town of Pittsford, 106 A.D.2d 903, 904 (N.Y. App. Div. 1984)
(citations omitted), aff’d, 489 N.E.2d 250 (N.Y. 1985). “The fact that the parties
continue to deal under some sort of informal arrangement does not, without more,
mean that all the terms of the expired formal contract continue to apply.” Id.
(citation omitted).
III.

DISCUSSION
Plaintiff’s claim for payment on the September 30, 2012 Invoice must be

dismissed on the pleadings.
The pertinent facts are undisputed. It is undisputed that the Subscription
Agreement governs plaintiff’s breach-of-contract claim as to the September 30, 2012
Invoice. It is also undisputed that Agreement contains a termination provision
allowing either party to terminate the Agreement by providing 90 days written
notice prior to the expiration of the then-current subscription period. It is further
undisputed that Hertz complied with the termination provision. On August 6,
2012—more than ninety days prior to the expiration of the three-year initial
subscription period—Hertz sent a letter to Wall Street Systems stating, in relevant
part:
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This shall serve as NOTICE by Hertz Global Holdings, Inc., its
affiliates and subsidiaries, of its intent to not renew the Subscription
Agreement for WALLSTREET Treasury ASP subscription service,
dated on or about November 10, 2009, and the Services Agreement
dated on or about November 6, 2009, upon their next respective
renewal date(s).
(Defendant’s Memorandum of Law in Support of 12(c) Motion for Judgment on the
Pleadings at 3, Ex. B, ECF No. 16; see also Ans. ¶ 30.) Finally, it is undisputed that
the September 30, 2012 Invoice—issued almost two months after Hertz’s
termination letter—prospectively charges Hertz subscription fees for an additional
year. These facts entitled Hertz to a judgment on the pleadings as to the September
30, 2012 Invoice.
Plaintiff’s sole argument in opposition is that Hertz users accessed the
treasury service on three occasions after the initial subscription period expired on
November 9, 2012. (Plaintiff’s Memorandum of Law in Opposition to Defendant’s
Motion for Judgment on the Pleadings at 2, ECF No. 17.) This argument is
inapposite. While such post-termination usage may give rise to a claim for
equitable relief, no such claim is asserted here—the Complaint is limited to claims
for breach of contract. These claims fail as to the September 30, 2012 Invoice
because a contract cannot be breached after it has been terminated. See A.J.
Temple Marble & Tile, Inc. v. Long Island R.R., 682 N.Y.S.2d 422, 423 (N.Y. App.
Div. 1998) (affirming summary-judgment dismissal of a claim for, inter alia, breach
of contract because the defendant had exercised its “absolute, unqualified right to
terminate [the] contract on notice pursuant to an unconditional termination clause”
(citations omitted)). The Subscription Agreement sets forth clear and unambiguous
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requirements for a proper termination, and “cessation of all usage” is not among
them. By complying with these requirements, Hertz extinguished the parties’
“rights and obligations” under the Subscription Agreement. Twitchell, 106 A.D.2d
at 904.
IV.

CONCLUSION
Accordingly, defendant’s motion for judgment on the pleadings is GRANTED.

The Clerk of Court is directed to terminate the motion at ECF No. 15.
SO ORDERED.
Dated:

New York, New York
January 13, 2015

______________________________________
KATHERINE B. FORREST
United States District Judge

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