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Armour Capital Management LP v. SS&C Technologies, Inc.

United States District Court, D. Connecticut

February 19, 2019

ARMOUR CAPITAL MANAGEMENT LP, Plaintiff,
v.
SS&C TECHNOLOGIES, INC., Defendant.

          ORDER ON MOTION TO DISMISS COUNTERCLAIMS

          JEFFREY ALKER MEYER, UNITED STATES DISTRICT JUDGE

         Plaintiff ARMOUR Capital Management, LP (ACM) and defendant SS&C Technologies, Inc. (SS&C) are embroiled in a dispute over a software implementation contract gone wrong. After ACM filed suit against SS&C for failing to adequately implement financial services software it had purchased from SS&C, I granted in part and denied in part SS&C's motion to dismiss. See Doc. #75; ARMOUR Capital Mgmt. LP v. SS&C Techs., Inc., 2018 WL 1368908 (D. Conn. 2018). SS&C followed by filing an answer and two counterclaims against ACM. Now ACM moves to dismiss the counterclaims. I will grant in part and deny in part ACM's motion to dismiss.

         Background

         ACM is a registered investment advisor that focuses on mortgage-related securities, while SS&C provides financial services software and related services. The following facts are drawn from the allegations of SS&C's counterclaim complaint. Doc. #101. ACM looked to SS&C for a new software platform, and SS&C agreed to provide ACM with a license for its CAMRA software program and to help ACM implement CAMRA. Id. at 21 (¶ 14). The parties entered into a “Master Agreement” in December of 2014. Ibid. (¶ 13). The Master Agreement included terms for “Hosting Services, ” for which ACM would pay SS&C $10, 000 each month, with a right to terminate on 120 days written notice to SS&C. Id. at 22 (¶ 19).[1]

         As the project of implementing CAMRA went on, the parties concluded a supplemental agreement known as “Work Request Two.” Under Work Request Two, which became effective on March 31, 2016, SS&C agreed to perform additional implementation services for ACM in exchange for no more than $307, 300 in fees. Doc. #101 at 22-23 (¶ 21). Work Request Two “‘incorporates the terms of' the Master Agreement.” Doc. #75 at 3 (quoting Doc. #35-2 at 2).

         Over the course of helping to implement CAMRA, SS&C alleges that from 2015 to 2017 it invested thousands of unbilled hours worth more than $800, 000. Doc. #101 at 25-26 (¶¶ 36- 43). SS&C alleges that while ACM benefited from these services, SS&C has not been paid in return. Ibid.

         On May 1, 2017, ACM unilaterally terminated the Master Agreement. Doc. #101 at 22 (¶ 20). SS&C alleges that by doing so, ACM failed to provide the required 120-day notice for terminating the agreement's Hosting Services provision, ibid., and argues that ACM's commitment to pay the monthly $10, 000 fee remained in effect “through and until August 29, 2017 (120 days from May 1, 2017).” Doc. #117 at 7. Similarly, SS&C alleges that while it performed its obligations under Work Request Two and satisfied the standards for the Work Request Two's “Certificate of Implementation” in 2016, ACM has failed to pay SS&C the balance that remains due ($107, 300) under Work Request Two. Doc. #101 at 23 (¶ 22).

         ACM sued SS&C on May 15, 2017, for failing to implement CAMRA. Doc. #1. SS&C then moved to dismiss ACM's claims. In reliance on a one-year contractual limitations provision of the Master Agreement, I granted the motion to dismiss in part. See ARMOUR Capital Mgmt. LP, 2018 WL 1368908. ACM's remaining claims against SS&C are for breaches of Work Request Two and the subsequent Work Request Three, negligent misrepresentation and an associated claim under the Connecticut Unfair Trade Practices Act (CUTPA), and rescission. Ibid.

         After I ruled on SS&C's motion to dismiss, SS&C filed an answer along with counterclaims against ACM. Docs. #88 and #101. SS&C alleges in Counterclaim One that ACM breached the Master Agreement and related Work Requests. Doc. #101 at 24 (¶¶ 29-33). SS&C also alleges in Counterclaim Two a claim for unjust enrichment against ACM, conditioned on ACM succeeding on its claim for rescission. Ibid. (¶ 34). ACM now moves to dismiss SS&C's counterclaims.

         Discussion

         The analysis of a motion to dismiss for failure to state a claim is equivalent for claims and counterclaims. See Tadayon v. DATTCO, Inc., 178 F.Supp.3d 12, 18 (D. Conn. 2016). The Court must accept as true all factual matters alleged in a counter-claimant's claims, although those claims may not survive unless the facts they recite are enough to state plausible grounds for relief. See, e.g., Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Mastafa v. Chevron Corp., 770 F.3d 170, 177 (2d Cir. 2014). This “plausibility” requirement is “not akin to a probability requirement, ” but it “asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678. Because the focus must be on what facts a counterclaim alleges, a court is “not bound to accept as true a legal conclusion couched as a factual allegation” or “to accept as true allegations that are wholly conclusory.” Krys v. Pigott, 749 F.3d 117, 128 (2d Cir. 2014).

         Counterclaim One - breach of contract

         ACM contends that SS&C's breach of contract claim is barred under the Master Agreement's one-year limit on lawsuits. Doc. #105-1 at 3-4. As I noted in my prior ruling on SS&C's motion to dismiss, Connecticut law not only allows parties to agree to a contractual time limit for when they may sue each other but also exempts those time limits from statutory or equitable tolling rules. See ARMOUR Capital Mgmt. LP, 2018 WL 1368908, at *3-*4.

         SS&C does not dispute this general rule (much less its application in its favor in my last ruling), but nonetheless makes several arguments for tolling the one-year period as to its counterclaim. First, SS&C argues that it was required under Federal Rule of Civil Procedure 12(a)(4)(A) to wait until after the Court resolved its motion to dismiss ACM's claims before asserting counterclaims in a responsive pleading.[2] I do not agree. Rule 12(a)(4)(A) extends the procedural deadline for filing a responsive pleading such as an answer or counterclaims, but it does not purport to govern any state law limitations period. See Peekskill City Sch. Dist. v. Colonial Sur. Co., 6 F.Supp.3d 372, 377 (S.D.N.Y. 2014) (noting that even if plaintiff “never missed any deadline set by the Federal Rules of Civil Procedure to serve a ...


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