United States District Court, D. Connecticut
ORDER ON MOTION TO DISMISS
Jeffrey Alker Meyer United States District Judge
case arises from a contractual relationship between ARMOUR
Capital Management LP (ACM), a registered investment advisor
focusing on mortgage-related securities, and SS&C
Technologies Inc. (SS&C), a provider of financial
services software and software-enabled services. ACM alleges
in essence that SS&C made misrepresentations and failed
to comply with its contractual obligations to implement a new
software system for ACM. SS&C now moves to dismiss the
amended complaint. For the reasons set forth below, I will
grant in part and deny in part SS&C's motion to
following facts as alleged in the amended complaint are
assumed to be true for purposes of this ruling. In 2014, ACM
sought to upgrade its portfolio accounting to a full-service
investment accounting platform, including software licenses
and implementation. Doc. #35 at 5. To achieve this, ACM's
executives researched several financial services software
providers to find a platform that would serve ACM's
needs. Ibid. ACM and SS&C engaged in a series of
discussions about using SS&C's CAMRA software for the
full-service investment accounting platform that ACM sought.
Id. at 5-6.
a series of pre-contractual communications, SS&C
allegedly made a series of misrepresentations that induced
ACM to enter into a contract. ACM identifies three categories
of pre-contract misrepresentations. First, SS&C
represented that it had extensive experience and expertise
regarding complex accounting operations, including those
involving mortgage real estate investment trusts.
Ibid. Second, SS&C represented that the
“hosting” option for utilizing the CAMRA software
would be appropriate for ACM's needs. Id. at 7.
To that end, SS&C provided a written “proof of
concept” to demonstrate that the CAMRA hosting option
satisfied ACM's requirements. Ibid. Finally,
SS&C represented that it was capable of implementing the
software in a successful and timely fashion. Id. at
8. For example, in December of 2014, SS&C provided ACM
with an implementation budget and proposed migration timeline
which represented that SS&C could complete implementation
within four to six months after contract execution.
Ibid. ACM alleges that these misrepresentations
induced it to enter into a contract with SS&C.
parties entered into a “Master Agreement” on
December 19, 2014. Id. at 9; Doc. #35-1 at 2-17.
Under this agreement, ACM purchased a license for the CAMRA
software and for implementation services and training for the
software. Doc. #35-1 at 2. ACM maintains that SS&C was
obligated under the contract to successfully implement the
software, while SS&C contends that it was ACM who
retained the ultimate responsibility for implementing CAMRA.
Master Agreement includes a “Time Limit to Claim
Breach” provision stating that any court action for
breach must be brought within one year of when a party knew
or reasonably should have known of a breach:
No action arising out of any breach or claimed breach of this
Master Agreement or transactions contemplated by this Master
Agreement may be brought by either party more than one (1)
year after the cause of action has accrued. For purposes of
this Master Agreement, a cause of action will be deemed to
have accrued when a party knew or reasonably should have
known of the breach or claimed breach.
Id. at 10 (¶ 6.7.16).
Master Agreement also includes a provision regarding
“Termination for Material Breach or Insolvency”
which states that if either party materially breaches the
contract, the non-breaching party may terminate the agreement
after providing written notice to the breaching party and the
breaching party fails to cure within 30 days. Id. at
7 (¶ 6.4.2.). In addition, the Agreement incorporates
several attachments, including the License and Maintenance
Program Agreement providing that ACM would perpetually
license the software from SS&C and that SS&C would
provide maintenance and support. Id. at 11-12. The
Maintenance Program contains a limited 364-day warranty that
CAMRA would perform in substantial accordance with
SS&C's representations. Id. at 12.
from the Master Agreement, the parties entered into three
Work Request Agreements, the first of which was
contemporaneous with the Master Agreement. The first Work
Request provides for the initial setup of CAMRA and includes
the description of services to be performed. Id. at
SS&C failed to implement the software, the parties agreed
to Work Request Two effective as of March 21, 2016. This
second work request further defines SS&C's
obligations with respect to implementing the software and
caps the fees set forth in Work Request One. Doc. #35-2 at
2-3. Work Request Two also “incorporates the terms
of” the Master Agreement. Id. at 2.
parties then entered Work Request Three effective as of April
20, 2016, which provides for further onsite and remote
implementation services. Doc. #35-3 at 2. Work Request Three
states that “the Master Agreement remains in full force
and effect.” Ibid. Additionally, under the
terms of the Master Agreement, “The terms and
conditions of this Master Agreement are incorporated into and
made a part of each Work Request.” Doc. #35-1 at 5
alleges that SS&C continuously misrepresented that it was
capable of implementing CAMRA and would do so in the near
future but that it failed. At the start of the Master
Agreement term, SS&C represented that it could
successfully implement CAMRA in four to six months. Doc. #35
at 11. On March 31, 2015, three months after the effective
date of the Master Agreement, SS&C provided an
“Implementation Roadmap” that confirmed that it
had “obtained sufficient information to scope out the
necessary steps and criteria for a successful implementation
of SS&C's applications.” Id. at 12.
then, after confronting difficulty with implementing CAMRA,
SS&C delayed the deadline for implementation completion
until early August 2015. Id. at 11.
SS&C continued to delay this date until SS&C stopped
providing a revised deadline altogether. Ibid.
SS&C provided multiple reasons for the implementation
failure to and continually assured ACM that it would soon
complete the implementation. Id. at 11-12.
of 2015, ACM began to withhold payments due to SS&C's
failure to implement CAMRA. Id. at 13. ACM
repeatedly notified SS&C in writing of its failure to
implement CAMRA throughout 2015, 2016, and 2017.
alleges that SS&C made specific misrepresentations to
induce ACM to not make a warranty claim under the Master
Agreement, to not terminate the Master Agreement, to release
payments to which SS&C was not entitled, and to enter
into further Work Requests. For instance, on December 18,
2015, two weeks before the expiration date of the warranty on
December 29, 2015, ACM expressed concerns regarding the
implementation of CAMRA and noted that ACM had a claim under
the warranty. Id. at 13. SS&C reassured ACM that
the problems with CAMRA were fixable and implementation was
close to being completed. Id. at 14.
April 2016, ACM requested that SS&C extend the warranty,
but SS&C declined because ACM had recourse under the
Maintenance Agreement. Ibid. Based on this
misrepresentation, ACM agreed to Work Request Three.
Ibid. SS&C also induced ACM not to terminate the
master agreement by providing new experts who would assure
ACM that their expertise would solve the problems with CAMRA.
Ibid. SS&C never successfully ...