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W.C. Bradley Co. v. Itelligence Inc

United States District Court, M.D. Georgia, Columbus Division

June 12, 2018

W.C. BRADLEY CO., Plaintiff,
v.
ITELLIGENCE, INC., Defendant.

          ORDER

          CLAY D. LAND CHIEF U.S. DISTRICT COURT JUDGE

         Plaintiff W.C. Bradley Co. needed help with a major software overhaul. Defendant itelligence, Inc. told W.C. Bradley that it had experienced consultants who could implement a software solution that met W.C. Bradley's needs. After extensive negotiations, W.C. Bradley entered an agreement with itelligence to implement the new software system. Then the trouble began. According to W.C. Bradley, it was a classic bait-and-switch: although itelligence had knowledgeable personnel who said all the right things during the sales process, the consultants who were actually assigned to the project did not have the capability or the expertise to implement the new software system successfully, and itelligence's software solution was not sufficiently tailored to meet W.C. Bradley's needs. After the first major rollout of the new software failed, W.C. Bradley made a list of grievances and threatened to fire itelligence. itelligence convinced W.C. Bradley that it would fix the problems and get the project back on track, so W.C. Bradley gave itelligence another shot. The problems continued. W.C. Bradley ultimately terminated the contract and brought this action alleging that itelligence fraudulently induced it to enter the initial agreement and committed additional fraud to keep W.C. Bradley from terminating the agreement. W.C. Bradley seeks rescission of the agreement and damages resulting from itelligence's alleged fraud. In the alternative, W.C. Bradley alleges that itelligence breached its contract with itelligence, including express warranties in that contract. Presently pending before the Court is itelligence's motion for judgment on the pleadings as to W.C. Bradley's fraud, negligent misrepresentation, and certain express warranty claims. As discussed below, that motion (ECF No. 33) is denied except as to W.C. Bradley's breach of express warranty claims set forth in paragraphs 158 and 159 of the Amended Complaint.

         JUDGMENT ON THE PLEADINGS STANDARD

         “Judgment on the pleadings is appropriate where there are no material facts in dispute and the moving party is entitled to judgment as a matter of law.” Cannon v. City of W. Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001). The Court “must accept the facts alleged in the complaint as true and view them in the light most favorable to the nonmoving party.” Id. The Court may consider written instruments attached to the complaint or answer in ruling on a motion for judgment on the pleadings without converting that motion to a summary judgment motion under Federal Rule of Civil Procedure 12(d) because Rule 7(a) defines “pleadings” to include the complaint and answer, and Rule 10(c) provides that a copy of a written instrument “that is an exhibit to a pleading is a part thereof for all purposes.” Fed.R.Civ.P. 10(c); accord Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002). If exhibits to a pleading “contradict the general and conclusory allegations of the pleading, the exhibits govern.” Griffin Indus., Inc. v. Irvin, 496 F.3d 1189, 1206 (11th Cir. 2007).

         FACTUAL ALLEGATIONS

         W.C. Bradley alleges the following facts in support of its claims. The Court must accept these facts as true for purposes of the pending motion.

         In 2014, W.C. Bradley decided to perform a global systems upgrade to replace its various business units' “disparate and aging” information technology systems with one integrated enterprise resource planning solution to provide a “single, consolidated view of operations and finances.” Am. Compl. ¶¶ 2, 15-17, ECF No. 8. W.C. Bradley needed an enterprise resource planning system that could “provide dynamic business analytics and real-time reporting, accommodate multi-currency, multilingual, foreign tax, and other international regulatory requirements that are inherent in a global business operation.” Id. ¶ 17. W.C. Bradley recognized that the upgrade project would be complex and that its in-house information technology personnel could not complete the project on their own. Therefore, W.C. Bradley formed a selection team to investigate and document its business needs and search for available software solutions.

         One software provider, SAP AG, recommended that W.C. Bradley partner with itelligence to design and implement a SAP system suitable for W.C. Bradley's business needs. W.C. Bradley had itelligence and other potential vendors demonstrate their software solutions to the selection team. And, itelligence had an opportunity “to participate in extensive information-gathering sessions” to understand W.C. Bradley's requirements for the enterprise resource planning solution. Id. ¶ 21. During those sessions, itelligence learned about W.C. Bradley's business processes, existing software, and IT personnel capabilities.

         After the preliminary discovery sessions, W.C. Bradley issued a request for proposals inviting potential vendors to submit their plans for a global enterprise solution for W.C. Bradley. W.C. Bradley emphasized that it wanted an implementation partner that had proven abilities to implement enterprise solutions and retain experienced resources. itelligence submitted a proposal suggesting a SAP enterprise resource planning software solution. In its proposal, itelligence represented that its solution would exceed W.C. Bradley's functional and technical requirements by meeting today's requirements and serving “as a flexible, scalable and stable platform for innovation and growth.” Id. ¶ 25. itelligence also stated that it had “deep expertise” and “proven delivery methods” with SAP software products, as well as a “deep understanding of specific regional and local requirements.” Id. ¶¶ 24-25. itelligence further represented that it would bring the “most qualified resources” with industry and SAP expertise to create an effective program on time and on budget. Id. ¶ 25. And, itelligence represented that it would deliver knowledge transfer and training to ensure that W.C. Bradley would be self-sufficient by the end of the project. Id. ¶ 26.

         After analyzing the proposals it received, W.C. Bradley invited itelligence and two other vendors for an on-site demo day. itelligence “pre-sales” consultants demonstrated itelligence's SAP software solution. Id. ¶ 27. And, over the course of several months, itelligence representatives convinced the selection team that itelligence's global template solution would work for W.C. Bradley's business, that itelligence personnel had the skills and experience necessary to customize the SAP solution to meet W.C. Bradley's requirements, and that itelligence could deliver a SAP solution “with less effort and expense than competing . . . vendors through the use of a global template.” Id. ¶¶ 4, 27. W.C. Bradley was concerned about the price of the project, so itelligence proposed splitting the global implementation of the SAP solution into two phases. Phase I would include W.C. Bradley's corporate operations and two business units: Zebco Holdings and W.C. Bradley Real Estate. Phase Two would include the two remaining business units, Char-Broil, LLC and Lamplight Farms Inc. And, by the end of Phase I, itelligence would train W.C. Bradley's IT personnel so that they could lead the Phase II rollout at a significantly lower cost. Id. ¶¶ 4, 28.

         W.C. Bradley asserts that when itelligence made these representations and proposals, it knew that W.C. Bradley really needed a solution tailored to meet its complex business requirements and that itelligence's pre-configured global template solution would not work for W.C. Bradley's business without significant customization, which would be upsold to W.C. Bradley at additional cost in terms of both money and time. W.C. Bradley further asserts that itelligence knew when it proposed the two-phase rollout plan that W.C. Bradley would not be able to implement Phase II on its own. And, W.C. Bradley contends that itelligence knew or should have known that its electronic data transfer tool was not capable of handling the data migration from W.C. Bradley's legacy software systems to the new SAP solution. But itelligence repeatedly assured W.C. Bradley in “dozens of conversations and written communications” that its template solution and the two-phase rollout plan would work despite the significant differences between the business processes of W.C. Bradley's business units and the limitations of W.C. Bradley's IT personnel. Id. ¶¶ 6, 29-32.

         Ultimately, itelligence presented an implementation services proposal to the W.C. Bradley selection team representing that Phase I of the project, which would roll out the SAP solution for Zebco and W.C. Bradley's corporate operations, would be done in 42 weeks and cost approximately $6 million. Phase II, which would cover Char-Broil and Lamplight, would be done in 24 weeks and cost approximately $475, 000, with W.C. Bradley personnel having enough training and knowledge transfer from itelligence to lead Phase II.

         When W.C. Bradley expressed concerns about the feasibility of the timeline and budget, itelligence represented that its program management methodology would ensure that the project would be successful. And when W.C. Bradley questioned whether W.C. Bradley personnel would be able to lead Phase II, itelligence assured W.C. Bradley that the work from Phase I would be reusable and that W.C. Bradley personnel would be able to lead Phase II with itelligence in a support role.

         After considering the proposals from the vendor candidates, W.C. Bradley decided to use the SAP enterprise resource planning software platform because of its ability to provide immediate business analytics in real time. And, based on itelligence's representations and proposals regarding its SAP implementation skills, the feasibility of its global template solution, and its ability to provide local expert consultants at each of W.C. Bradley's international business locations, W.C. Bradley selected itelligence as the implementation vendor for the project. On February 24, 2015, the parties entered a Master Services Agreement governing the terms under which itelligence would provide services on the project. The Master Services Agreement was later amended, and the parties also executed multiple statements of work, change orders, and amendments regarding the specific services to be provided by itelligence on the project. The statements of work, change orders, and amendments issued under the Master Services Agreement were incorporated as part of the Master Services Agreement. Def.'s Answer Ex. A, Master Services Agreement 1, ECF No. 19-1. The Master Services Agreement provided that itelligence's services would be provided on a time and materials basis unless the applicable statement of work provided for a fixed fee. Id. §§ 3.4-3.5. It also provided a “good faith estimate of itelligence ...


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