Sirsi Corporation v. Craven-Pamlico-Carteret Regional Library System

Filing 9

Memorandum in Support of Motion to Dismiss filed by Craven-Pamlico-Carteret Regional Library System. (Attachments: # 1 Exhibit Exhibt A to Brief in Support of Motion to Dismiss, # 2 Exhibit Exhibit B to Brief in Support of Motion to Dismiss, # 3 Exhibit Exhibit C to Brief in Support of Motion to Dismiss) (Bettis, Lee)

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF NORTH CAROLINA EASTERN
DIVISION Civil Action No. 4:11-cv-00059-FL
SIRSI CORPORATION d/b/a
SIRSIDYNIX,
Plaintiff,

BRIEF IN SUPPORT OF
MOTION TO DISMISS
PURSUANT TO Rule 12(b)(6)

v.

CRAVEN-PAMLICO-CARTERET
REGIONAL LIBRARY SYSTEM,
Defendant.
______________________________________________________________________________
Defendant submits this Memorandum of Law in support of its Motion to Dismiss
pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure.
STATEMENT OF THE CASE
Plaintiff, Sirsi Corporation doing business as SirsiDynix, (hereinafter “Plaintiff” or
“SirsiDynix”), is a corporation organized under the laws of Delaware, with its principal place of
business in Utah. Defendant, Craven-Pamlico-Carteret Regional Library System, (hereinafter
“Defendant” or “CPC Regional”), is a regional public library system in North Carolina,
comprised of nine (9) member libraries, with its administrative offices located in the New Bern,
Craven County, public library.

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This lawsuit arises from a dispute as to whether Plaintiff and Defendant entered into a
binding, valid contract (hereinafter “Contract”) on or about April 29, 2009, for the purchase of
SirsiDynix‟s library management software entitled “Symphony”, and whether Defendant
breached that contract. Plaintiff alleges that Defendant, in exchange for the software and
associated services, would pay Plaintiff a total of $146,844.80, over a period of three (3) years.
SirsiDynix filed the above-captioned action on or about April 15, 2011, alleging Breach
of Contract and Breach of Implied Duty of Good Faith and Fair Dealing. Plaintiff now seeks
damages in the amount of $146,844.80 plus interest, and costs.
STATEMENT OF THE FACTS
On or about February 3, 2009, Plaintiff‟s representatives approached Defendant with
respect to selling its Symphony software. During this conversation, Defendant did not agree to
purchase any software or maintenance services from Plaintiff. Plaintiff provided Defendant
(hereinafter “CPCR”) with a quote which provided the cost of transitioning from CPC
Regional‟s existing library management system, also a SirsiDynix product, to Symphony.
Thereafter, on or about February 5, 2009, CPC Regional received a document entitled
“Schedule 1 SirsiDynix Quote” (hereinafter “Quote”) from Plaintiff, which outlined the costs of
Symphony. This quote was valid for a period of four (4) months, from February 4, 2009 until
June 10, 2009. CPCR took no action on the Quote. In or around April of 2009, Plaintiff‟s
representative approached CPCR and informed it that the Quote would expire on June 10, 2009,
but if CPCR signed a Sirsi document entitled “Master Software License and Services
Agreement” (hereinafter “Master Agreement” Exhibit A) Sirsi would hold the Quote
indefinitely.

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In the “Definition of Terms” section of the Master Agreement, the “Contract” or
“Agreement” between the parties is defined as follows:
“Agreement” means this Master Software License and Services Agreement, Ordering
Forms, SaaS Schedule, reference to information contained in a SirsiDynix URL or policy and
such other attachments and exhibits that the Parties‟ authorized representatives may mutually
agree to in writing.”
On its face the Master Agreement, as plead in the Complaint, standing on its own, does
not contain the essential terms of a binding contract between the parties. The Master Agreement
is reliant on documents entitled: “Ordering Forms” and the “SAAS Schedule” to supply the the
necessary terms, including and most importantly in this Rule 12(b)(6) Motion to Dismiss, the
date on which the parties obligation to perform arose. 1
The Master Agreement defines Ordering Forms as;
(i) the document executed by the Parties that describes in detail Customers
order-specific information, including but not limited to, description of Software
or Services ordered, fees, License Period or Term, or (ii) a Purchase Order.”
The “SAAS Schedule” (Exhibit B) incorporated by reference into the Master Agreement
by the Plaintiff, contains a form entitled “SAAS Migration Ordering Form” (hereinafter
collectively referred to as “SAAS). The SAAS provides a: “Description of Items and services
being purchased/licensed” which states:
For the complete list of items and services to be delivered under this Ordering
Form, please see Schedule 1- SirsiDynix quote dated 4 February 2009, attached
hereto and incorporated herein by reference.
On its face the “SAAS Migration Ordering Form” contains no specific details of the
Contract and is not the ordering form required by the Master Agreement to be a binding contract.
The SAAS is a conduit which portends to transform the document entitled “Quote” (Exhibit C)
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These documents were previously filed with the Court as Exhibits to Defendant‟s Motion to Dismiss.

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into the “Ordering Form” required by the Master Agreement. Hereinafter the Quote will be
referred to as Quote/Ordering Form.
The Master Agreement contains no date defining when CPCR‟s obligation to perform
arises. The SAAS which was incorporated into the Master Agreement contains no date defining
when CPCR‟s obligation to perform arises. The Quote/Ordering Form, which was incorporated
into the SAAS, which was incorporated into the Master Agreement, contains no date defining
when CPCR‟s obligation to perform arises.
Plaintiff‟s Complaint is equally uninformative as to the date it alleges CPCR‟s obligation
to perform arose. The Complaint does however allege that Sirsi agreed that CPCR did not have
to perform because of financial burdens. (Comp. Para. 9)
Although The Master Agreement, the SAAS and the Quote/Ordering Form (hereinafter
collectively referred to as “Contract”) do not contain a specific date for the Parties performance,
each document contains the term “Go Live Date” which Plaintiff has defined differently in each
document.
The Master Agreement defines Go Live Date as:
“The date on which the SirsiDynix Software is placed into operational use for normal
daily business…”

The Quote defines Go Live Date as:
“The date on which the SirsiDynix Software is available for operational use for normal
daily business…”

The SAAS defines Go Live Date as:
“The date on which Customer is scheduled in the Installation Timetable set forth in the
Ordering Form, to begin using the Hosted Application for normal daily business…”

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The Master Agreement‟s definition provides no assistance in determining when the
parties obligation to perform would arise, it simply states it‟s the date when the Software is
placed into operational use. The software was never placed into operational use.
The Quote‟s definition states Go Live is the date the software is available for operational
use, which provides no assistance on when the parties obligation to perform would arise.
Additionally, the Quote and the Master Agreement seem to be in conflict as to the definition of
Go Live Date.
The SAAS definition of Go Live refers the parties to the Quote/Ordering Form, and yet
another sub-document entitled “Installation Timetable” which was to have been set forth in the
Quote/Ordering Form. The Quote/Ordering Form does not contain an “Installation Timetable”
arguably because it was merely a quote and not an Ordering Form.
ARGUMENT
On its face the Complaint fails to allege a date when the parties obligation to perform
arose therefore it is impossible to determine when a breach would or could occur. Plaintiff plead
that CPCR breached the Master Agreement, which includes the Quote/Ordering Form, and the
SAAS, therefore because the documents are intrinsic to the Complaint it is proper for the Court,
in a Rule 12(b)(6) Motion to Dismiss, to examine the documents. The Contract documents do
not contain a date the parties obligation to perform would arise, which is an essential element in
the formation of a contract. Without a performance date it is impossible to determine when the
breach of contract date would occur, or even if a breach of contract could occur.
The Defendant now moves to dismiss Plaintiff‟s Complaint because:
1. Plaintiff‟s Complaint, on its face, does not allege facts sufficient for this Court to
determine that a valid Contract existed between the parties.

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2. Plaintiff has failed to establish a breach of contract action; and
3. The terms of the Master Agreement as plead in the Complaint, indicate that the
alleged Contract was illusory and unenforceable.
The standard of review for a Rule 12(b)(6) motion, which tests the legal sufficiency of a
complaint, “is whether the complaint states a claim for which relief can be granted under some
legal theory when the complaint is liberally construed and all the allegations included therein are
taken as true.” Stanback v. Stanback, 297 N.C. 181, 254 S.E.2d 611 (1979); Burgin v. Owen, 181
N.C. App. 511, 512, 640 S.E.2d 427, 428 (2007). A motion to dismiss under Rule 12(b)(6) is
properly granted by a court, provided one of the following conditions are met, including: “(1) the
complaint on its face reveals that no law supports the plaintiff‟s claim; (2) the complaint on its
face reveals the absence of facts sufficient to make a good claim; or (3) the complaint discloses
some fact that necessarily defeats the plaintiff‟s claim.” Wood v. Guilford Cty., 355 N.C. 161,
166, 558 S.E.2d 490, 494 (2002).
In regards to such motion, “the well-pleaded material allegations of the complaint are
taken as admitted; but conclusions of law or unwarranted deductions of facts are not admitted.' "
Sutton v. Duke, 277 N.C. 94, 98, 176 S.E.2d 161, 163 (1970); Quoting 2A Moore's Federal
Practice § 12.08 (2d ed. 1968).
While a motion to dismiss for failure to state a claim, pursuant to Rule 12(b)(6), should
not be granted freely, but instead “should only be granted in very limited circumstances[,]” it is
properly granted when a defendant can successfully demonstrate that no law supports plaintiff‟s
claim, facts essential to plaintiff‟s claim are missing, or, importantly, when a fact disclosed by
plaintiff in their complaint defeats the plaintiff‟s claim. Rogers v. Jefferson-Pilot Life Ins. Co.,
883 F.2d 324, 325 (4th Cir. 1989); Hare v. Butler, 99 N.C. App. 693, 394 S.E.2d 231 (1990). The

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Fourth Circuit has held that such a motion should be granted if “it appears to a certainty that the
plaintiff would be entitled to no relief under any state of facts which could be proved in support
of his claim.” Id.
A Motion to Dismiss should be treate as a Motion for Summary Judgment when a trial
court considers materials outside the pleadings N.C.Gen.Stat. 1A-1, Rule 12(b)(6), Carlisle v.
Keith, 169 N.C.App 674, 688-90, 614 S.E.2d 542, 551-52(2005).
I.

PLAINTIFF FAILS TO PLEAD A CLAIM FOR BREACH OF CONTRACT

Under North Carolina law, a party asserting a claim for breach of contract must demonstrate:
“(1) existence of a valid contract; and (2) breach of the terms of that contract.” Poor v. Hill, 138
N.C. App. 19, 26, 530 S.E.2d 838, 843 (2000); citing Jackson v. Carolina Hardwood Co., 120
N.C. App. 870, 871, 463 S.E.2d 571, 572 (1995). In addition the plaintiff must allege “that a
valid contract existed between the parties, that defendant breached the terms thereof, the facts
constituting the breach, and that damages resulted from such breach. Claggett v. Wake Forest
University, 126 N.C. App. 602, 608, 486 S.E.2d 444, 447 (1997). A party asserting that a
breach of contract must have either first performed or offered to perform their promise, so as to
preserve their rights under the contract at issue.” Cater v. Barker, 617 S.E.2d 113, 116 (2005);
Boyd v. Watts, 73 N.C. App. 566, 570, 327 S.E.2d 46, 49 (1985).
The essential element necessary for a breach of the Contract to have occurred was a date
for performance, and that element is missing, and the Plaintiff‟s have failed to make any
allegation of an agreed upon date for performance of the Contract.
In addition to the Complaint alleging that the Plaintiff‟s waived performance of the
Contract due the Library‟s financial troubles, the Master Agreement fails on its face to establish
a date for performance. The Contract simply states, in three conflicting definitions, that the

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Contract will begin on the “Go Live Date” which will be discussed below. No actual date was
ever established for performance under the Contract and neither party ever performed on the
Contract.
The essential elements of a breach of contract action are, 1) the existence of a valid
contract, and 2) breach of the terms of the contract. Poor v. Hill, 138 N.C. App. 19, 26 (2000).
While the Court must accept for true that a valid contract existed, Plaintiff has failed to plead
facts sufficient to make out a valid cause of action for breach of contract.
Pursuant to the terms of the alleged Contract, specifically the Master Software License
and Services Agreement, as well as the SAAS Schedule, which are all incorporated into the
Complaint by reference, no time for performance of the Contract was agreed upon, and so no
breach has occurred. The Contract and integrated subparts (hereinafter referred to as “Contract”)
purport that the performance begins on the “Go Live Date.” According the to the Contract the
Go Live Date would not only trigger the beginning of the contract, but serve as the time that
“100% of total services and first year subscription fees were due.
Plaintiff‟s documents provide three conflicting definitions of the Go Live Date:
(1)

The Master Software and License Services Agreement defines the Go Live Date
as: “with respect to the SirsiDynix Software license orders, the date on which
the SirsiDynix Software is placed into operational use for normal daily
business, including searching the public access catalog and circulating
materials[,]”

(2)

Schedule I defines the Go Live Date as: “with respect to the SirsiDynix Software
license orders, the date on which the SirsiDynix Software is available for

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operational use for normal daily business, including searching the public
access catalog and circulating materials.”
Therefore, in the instant matter, Plaintiff has not asserted a claim upon which relief can
be granted, pursuant to the Rules of Civil Procedure 12(b)(6), as Plaintiff has not sufficiently
pleaded both essential elements for a breach of contract. The Complaint, on its face, fails to
assert a claim for breach of contract, as it fails to demonstrate that a breach has occurred. Here,
by the very language of Plaintiff‟s own documents, a Go Live date has not ever occurred.
Defendants continued utilizing the “old” software, with both it and the server being maintenance
by Plaintiff on a monthly basis, and have never placed Symphony into operational use for normal
daily business. As such, an essential element for the claim of breach of contract fails, and a cause
of action for same may therefore not stand. Not only does the Complaint reveal insufficient facts
so as to establish a valid claim for breach of contract, but the Complaint itself discloses a fact
which itself defeats the claim, specifically, that Plaintiff agreed to delay implementation and that
the Symphony Software has not been installed to date. Therefore, pursuant to the holding in
Woods, Plaintiff‟s claim is properly disposed of by a Rule 12(b)(6) Motion for Failure to State a
Claim for which Relief can be Granted. Wood v. Guilford Cty., 355 N.C. 161, 166, 558 S.E.2d
490, 494 (2002).
Furthermore, similar to the matter in Jones v. Realty Co., discussed by the Court of
Appeals of North Carolina in Orthodontic Centers of America, where the plaintiff sued to
recover a sales commission for obtaining a purchaser of property who was a ready, willing, and
able buyer pursuant to the agent‟s agreement with the sellers. 226 N.C. 303, 37 S.E.2d 906
(1946); 151 N.C.App. 133, 564 S.E.2d 573, 575 (2002). In that matter, the Court interpreted the

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language of the agreement to mean the commission came due when the deal “closed up,” and
since it never did “close up,” the Court held:
It can make no difference whether the event be called a contingency
or the time of performance. Certainly, under either construction, the
result would be the same; since, if the event does not befall, or a
time coincident with the happening of the event does not arrive, in
neither case may performance be exacted. Nor will it do to say that a
promise to pay „when the deal is closed up‟ is a promise to pay when
it ought to be closed up according to the terms of the contract. Such is
not the meaning of the words used. It is the event itself, and not the
date of its expected or contemplated happening, that makes the
promise to pay performable.
Bowman v. Hill, 45 N.C.App. 116, 262 S.E.2d 376 (1980) (emphasis added). The Court there
went on to state that the weight of authority denotes that “the use of such words as 'when', 'after',
'as soon as', and the like, gives clear indication that a promise is not to be performed except upon
the happening of a stated event.” Id. Finally, it is a well settled rule of construction “that an
ambiguity in a written contract is to be inclined against the party who prepared the writing.”
Jones v. Palace Realty Co., 226 N.C. 303, 37 S.E.2d 906 (1946); citing Wilkie v. New York Mut.
Life Ins. Co., 146 N.C. 513, 60 S.E. 427 (1908).
In the matter sub judice, the language of the alleged contract, in both the Master Software
and License Services Agreement and Schedule I, although a software and support agreement, is
readily comparable to the real estate agent agreement discussed in Jones, supra. In Jones, as in
the matter at hand, a specific and identifiable date was never placed into the language of the
agreement. Instead, words were used to describe when the alleged “time of performance,” in
other words, payment by the Defendant, would be due and owed. In the instant matter, the
language defining such was titled the “Go Live Date,” which would not only trigger the
beginning of the contract, but serve as the time that “100% of total services and first year
subscription fees under this ordering form due on date of initial live use of SaaS services.” The
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“Go Live Date” is defined in the Master Software and License Services Agreement as meaning:
“with respect to the SirsiDynix Software license orders, the date on which the SirsiDynix
Softward is placed into operational use for normal daily business, including searching the public
access catalog and circulating materials[,]” and is again defined, although inconsistently, in the
“Other Terms” section of Schedule I, as meaning “with respect to the SirsiDynix Software
license orders, the date on which the SirsiDynix Software is available for operational use for
normal daily business, including searching the public access catalog and circulating materials.”
As stated previously, such “Go Live Date” has never occurred. Therefore, pursuant to language
of the Court in Jones, that “[i]t is the event itself, and not the date of its expected or contemplated
happening, that makes the promise to pay performable[,]” here, as the “Go Live Date” has not
yet occurred, which is the very event the agreement states would trigger the alleged promise to
pay, has not yet happened, a cause of action for breach of contract cannot yet exist.
Furthermore, as the court in Bowman stated, the use of language, such as when, after, as
soon as, or other similar language, serves as an indicator that a promise to perform is not
triggered until the happening of a specific, stated event. In the matter sub judice, this stated
event is defined in the Master Agreement, and its related and incorporated documents, as the Go
Live Date. As evidenced by Plaintiff‟s own Complaint, Symphony Software is not now, nor was
ever, put into normal daily business use for CPC Regional. Comp. ¶ 9. Therefore, without the
event which triggers a promise to pay, the Go Live Date, no performance is required, nor can be
expected, by CPC Regional. Simply put, Plaintiff‟s Complaint, at Paragraph 9, itself admits that
a breach has not yet occurred, and therefore, pursuant to Rule 12(b)(6), an action for breach of
contract is not ripe. Comp. ¶ 9. Therefore, Defendant respectfully requests the Court enter an
Order dismissing the action against Defendant, as such action is premature at best.

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II.

PLAINTIFF’S CLAIM FOR BREACH OF CONTRACT NECESSARILY
FAILS AS PLAINTIFF’S COMPLAINT DEMONSTRATES THE TERMS
THEREIN WERE ILLUSORY
Under North Carolina law, the courts hold that “[g]enerally, a party seeking to enforce a

contract has the burden of proving the essential elements of a valid contract.” Orthodontic
Centers of America, Inc. v. Hanachi, 151 N.C.App. 133, 564 S.E.2d 573, 575 (2002). To prove
same, a plaintiff must allege that there existed between the parties a binding agreement that
involved “mutual asset, legal capacity, consideration, and a legal bargain.” Id. One of the
required elements of a valid contract is that there is a promise to perform, which is defined as “an
assurance that a thing will or will not be done.” Bowman v. Hill, 45 N.C.App. 116, 262 S.E.2d
376 (1980). In terms of contract law, the mere expression of the intention or desire to do
something is not sufficient to amount to a promise. Id.; citing 17 Am.Jur.2d Contracts § 2, p.
334. Such an expression is referred to as an illusory promise, as an apparent promise simply
makes performance optional with the promisor despite what future events or conduct may occur,
and is therefore not in fact a promise at all. Id.
An illusory promise has been defined by the Court of Appeals of North Carolina as “[a]n
apparent promise which, according to its terms, makes performance optional with the promisor
no matter what may happen, or no matter what course of conduct in other respects he may
pursue, is in fact no promise[,]” and when parties are not bound by promises, the contract can be
set aside based on a lack of consideration. Bowman v. Hill, 45 N.C.App. 116, 117, 262 S.E.2d
376, 377 (1980). Further, even where a contract recites consideration, as in the case of the
employment dispute in Milner Airco, Inc. v. Morris, but does not actually bind a party to any
promise, a court may hold that the consideration is illusory and therefore a contract is
unenforceable. Milner Airco, Inc. v. Morris, 111 N.C.App. 866, 433 S.E.2d 811 (1993). In
Milner Airco, Plaintiff and Defendants entered into an employment contract with a covenant not12

to compete provisions in the 1980s, with Defendants engaged in the work of installer and
installer helper for Plaintiff. Id. at 812. Subsequently, in 1990, Defendants were required to sign
another employment contract, despite having recently been demoted, and such contracts held
covenants not to compete. Id. Thereafter, in October 1991, Defendants resigned and began
working for a competitor, and began soliciting customers of Plaintiffs, contrary to their previous
employment contracts. Id. The Court held that while the contract itself recited consideration, it
did not actually bind the employer to any promise at all. Id. at 814. As it was not a new
employment relationship, and therefore employment alone would not be sufficient consideration,
and because Plaintiff made no new promises that it would be required to keep in exchange for
the promise to not compete, the court held that “[t]he purported consideration was illusory at
best.” Id. The court in Milner went on to state that a contract of that type, “wanting in mutuality,
[and] presenting no equitable considerations,” is not enforceable by a court of equity. Id.
While the matter in Milner dealt with an employer providing an illusory promise or
consideration, the matter at hand proves analogous to that in Milner. Here, while the alleged
contract appears to provide sufficient consideration, with the Plaintiff providing services and
software in exchange for Defendant‟s payment, Plaintiff‟s own Complaint demonstrates that this
agreement was illusory at best, just as the Court of Appeals found in Milner. Plaintiff‟s
Complaint states: “After entering into the Master Agreement with SirsiDynix, CPC Regional
asked to delay implementation of the Symphony system due to funding issues. SirsiDynix agreed
to those delays.” Comp. ¶ 9. By their own factual allegations, Plaintiff admits that it waived
consideration; payment by Defendant in exchange for the implementation of software on the Go
Live Date. Plaintiff has supplied this Court, through its pleadings, with the allegations necessary
to find that the Contract was illusory, and similar to that in Milner. Neither party actually owed

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the other anything, unless they desired to do so, which, as discussed above, is not a promise, but
is rather merely an illusory promise. Therefore, Defendant respectfully requests the Court to find
in favor of Defendant‟s Motion to Dismiss, and to issue an Order finding the consideration
illusory, and holding the alleged contract as unenforceable.

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