ExxonMobil Global Services Co. v. Gensym Corp.

Citations: 54 F. Supp. 3d 707; 2014 WL 4676839Docket: Case No. 1:12-CV-442-JDR

Court: District Court, W.D. Texas; September 17, 2014; Federal District Court

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ExxonMobil has filed a Motion for Partial Summary Judgment against Gensym, alleging a breach of the 2008 License Agreement due to Gensym's failure to provide necessary access codes for the G2 Software Platform. The case arises from a computer software license agreement and a related purchase order submitted by ExxonMobil Research and Engineering Company (EMRE) to Gensym. In a previous ruling on March 26, 2013, the court established that Gensym is obligated to provide access codes regardless of whether ExxonMobil purchases maintenance services. However, it left unresolved whether Gensym had actually provided a functioning permanent access code prior to the lawsuit.

The court reviews summary judgment standards, stating that it is appropriate when there are no genuine disputes over material facts and the movant is entitled to judgment as a matter of law. The burden shifts to the non-movant to demonstrate material factual issues warranting a trial by presenting specific facts, not just conclusory allegations. The court must view evidence favorably for the non-movant and cannot resolve factual disputes or assess witness credibility at this stage; it must deny the motion if a reasonable jury could find in favor of the non-movant based on the evidence presented.

A court may exercise discretion to deny a summary judgment motion even when Rule 56 standards are met, favoring a full trial instead (Freeman v. U.S., 2005). Gensym raised several evidentiary objections to ExxonMobil's summary judgment evidence. The court sustained Gensym's objection to hearsay statements from Andrew Price’s deposition. It also sustained Gensym's objection to a legal conclusion in John Thurtell’s affidavit but overruled objections regarding hearsay statements related to Gensym and ExxonMobil, finding them relevant. Although some content in Thurtell's affidavit was deemed conclusory, the court did not find it entirely so and thus overruled that objection. Gensym's objection regarding Thurtell's qualifications to testify on damages or causation was deemed moot since ExxonMobil's motion focuses solely on breach.

The elements required to establish a breach of contract claim under Texas law include: a valid contract, proper party status, performance or excuse from performance by the plaintiff, a breach by the defendant, and resultant injury to the plaintiff. It is acknowledged that the 2008 License Agreement between Gensym and ExxonMobil is valid and that ExxonMobil fulfilled its obligations by paying for the license. The central issue is whether Gensym breached the agreement by not providing access codes for the G2 Software Platform. ExxonMobil contends that Gensym violated specific provisions of the 2008 License Agreement that required Gensym to supply annual license codes and other necessary security devices.

ExxonMobil presented evidence indicating that after the 2008 License Agreement was executed, Gensym established a process for annually distributing access codes, with codes generated each February for use from April 1 through October 1 of the following year. It is undisputed that Gensym provided these codes to ExxonMobil in 2008, 2009, and 2010, but did not do so in 2011 until after ExxonMobil initiated a lawsuit. Gensym communicated that new access codes would only be issued if ExxonMobil purchased maintenance services. In June 2011, ExxonMobil requested immediate delivery of access codes to avoid business disruption, but Gensym insisted that a support agreement was necessary. Despite repeated requests from ExxonMobil throughout June and into July 2011, Gensym continued to refuse access codes without confirmation of ExxonMobil’s participation in a support program. On August 1, 2011, ExxonMobil formally requested permanent access codes, but Gensym again refused, claiming the request was unjust and inconsistent with the license agreement, asserting that ExxonMobil could not use the G2 Software Platform without maintenance. Consequently, on August 29, 2011, ExxonMobil filed a lawsuit in Texas for breach of contract, seeking declaratory and injunctive relief for access to the G2 Software Platform. Gensym contended in court that ExxonMobil had only ever received temporary access codes, with Gensym’s contract CEO testifying similarly. Gensym now asserts that it did not breach the agreement because ExxonMobil has had a permanent access code since 2007.

ExxonMobil utilized the 02 Platform under prior agreements before the 2008 License Agreement and received a permanent access code, known as the '2007 Code,' from Gensym in 2007, allowing unlimited use on various computers. In 2011, ExxonMobil became aware of the 2007 Code but, advised by legal counsel, chose not to test or confirm its use with Gensym, instead opting to file a lawsuit. ExxonMobil contended that the 2007 Code was valid because it was issued before the 2008 License Agreement and was part of a separate license. However, the Court found that the 2007 Code was tied to a specific site (the Baton Rouge facility) and referenced a different license agreement than the 2008 one, limiting its use. Testimony indicated that Gensym explicitly instructed that the code should not be used outside the Baton Rouge facility, and there was no indication that Gensym authorized its use with the G2 Software Platform. Gensym asserted that ExxonMobil should have sought permission to use the 2007 Code after 2011 when annual access codes were denied, but the Court rejected this claim as inconsistent with Gensym's litigation position that ExxonMobil had no rights to use the G2 Software Platform without maintenance payments. Consequently, the Court concluded that ExxonMobil was not authorized to use the 2007 Code under the 2008 License Agreement and that Gensym did not breach its obligations in providing access codes. Gensym also noted that ExxonMobil had access to temporary codes at the lawsuit's filing and had agreed to use the 2007 Code in a stipulation in 2013, further supporting its position that it fulfilled its obligations under the agreement.

In Texas, a defendant can be held liable for anticipatory breach of contract if the plaintiff demonstrates: 1) an unequivocal repudiation of the obligation; 2) an absence of a valid excuse for the repudiation; and 3) damages incurred by the non-repudiating party. Gensym engaged in repeated repudiation of its obligation to provide annual access codes under the 2008 License Agreement throughout 2011. Gensym attempted to justify this repudiation by citing ExxonMobil’s failure to purchase maintenance services, but the Court ruled that Gensym was still obligated to provide access codes necessary for ExxonMobil's use of the G2 Software Platform, irrespective of maintenance service purchases. Consequently, ExxonMobil had to file a lawsuit seeking injunctive relief to compel Gensym to supply new access codes before the existing ones expired in October 2011. Gensym's later agreement to provide the necessary access codes does not negate its anticipatory breach. Gensym contends that summary judgment is inappropriate regarding ExxonMobil’s breach of contract claim due to lack of demonstrated damages, arguing that the damages claimed are not recognized under Texas law. However, since ExxonMobil is only seeking summary judgment on the breach issue and Gensym has not filed a motion for summary judgment, the Court will not consider causation or damages at this stage. The Court concludes that Gensym failed to perform its contractual obligation to provide access codes without a legal excuse, granting ExxonMobil’s Motion for Partial Summary Judgment concerning Gensym’s failure to provide access codes. EMRE, a branch of ExxonMobil, is responsible for software distribution, support, and the development of applications for the G2 Software Platform.