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NTV Management, Inc. v. Lightship Global Ventures, LLC

Superior Court of Massachusetts, Suffolk, Business Litigation Session

May 31, 2017

NTV Management, Inc.
v.
Lightship Global Ventures, LLC et al

          Filed June 2, 2017

          MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT DISMISSING THE COMPLAINT AND PLAINTIFF'S CROSS MOTION FOR SUMMARY JUDGMENT ON COUNT I OF ITS COMPLAINT

          Mitchell H. Kaplan, Justice.

         This case arises out of a Consulting and Advisory Services Agreement (the Agreement) between the plaintiff, NTV Management, Inc. (NTV) and the defendant Lightship Global Ventures, LLC (Lightship). The defendant, Kent Plunkett, founded a company, Salary.Com, Inc., which, following a series of acquisitions, became a division of IBM. Plunkett and a colleague formed Lightship for the purpose of reacquiring Salary.Com from IBM. The Agreement, while containing some one-off terms, was in effect a non-exclusive brokerage agreement pursuant to which NTV would be due a commission if it found financing for the acquisition and a lesser fixed sum for introducing " at least ten qualified sources of capital." Lightship did acquire Salary.com, but not with equity or debt partners introduced to the deal by NTV. NTV, nonetheless, alleges that it is due fees under the Agreement and damages for a variety of other wrongful conduct on the part of the defendants. It has pled its complaint in seven counts: breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppel, unjust enrichment, deceit, a violation of Chapter 93A, violations of the Uniform Fraudulent Transfer Act, and a count to reach and apply stock or assets of Salary.com (although curiously it has not named Salary.com, or the entity that presently owns it, as a defendant).

         Apparently, concerned about matching NTV's imaginative pleading measure for measure, the defendants have asserted five counterclaims against NTV: breach of a duty of confidentiality, breach of contract, defamation, misrepresentation, and tortious interference with contractual or business relations. These counterclaims are not the subject of a motion now before the court.

         The case is before the court on the defendants' motion for summary judgment dismissing all the claims asserted against them, and NTV's cross motion for summary judgment on part of its breach of contract claim. For the reasons that follow, the defendants' motion is Allowed, in part, and Denied, in part, and NTV's motion is Denied.

         FACTS

         Based on the summary judgment record, the following facts are undisputed or viewed in the light most favorable to the non-moving party.

         Salary.com was founded by Plunkett in 1999. It became a public company in 2007, and then was acquired by a firm called Kenexa, Inc. in 2010. In 2012, Kenexa was acquired by IBM, after which Salary.com was operated as a division of that company or an IBM affiliate. In 2014, IBM informed Plunkett that it was interested in selling Salary.com. Also, in 2014, Plunkett and another former colleague at Salary.com formed Lightship for the purpose of attempting to acquire Salary.com from IBM. Lightship signed a Non-Disclosure Agreement with IBM which limited Lightship's ability to disclose confidential information concerning Salary.com to others, including that IBM was actively seeking to dispose of this asset. As is typical in these kinds of potential transactions, IBM set up a data room where confidential information concerning Salary.com could be reviewed by Lightship and potential investors who would finance the acquisition. The information available to potential investors did not include financial statements specific to Salary.com because it was operated by IBM as division of a larger enterprise. In February 2015, Lightship and IBM entered into an agreement that gave Lightship the exclusive right, for a period of time, to negotiate a purchase agreement for Salary.com. Lightship had previously entered into an investment banking relationship with the firm Stifel Nicolaus & Co. (Stifel) to assist it in the proposed acquisition.

         Through Stifel, a number of potential investors were identified who signed NDAs with Lightship, were informed of the acquisition target, and given access to the data room. A number of potential investors presented Lightship with term sheets for an acquisition of Salary.com. In early 2015, a private equity firm called Genstar Capital signed an agreement with Lightship that gave it an exclusive right to try and negotiate a transaction with IBM. Genstar retained a firm, Alvarez and Marsal, to analyze Salary.com's earnings and prepare a report. This report was Genstar's property. Genstar, however, failed to reach terms acceptable to IBM. Thereafter, a firm called Symphony Technology Group (Symphony) entered a similar agreement with Lightship, but it also failed to reach agreement with IBM. In July 2015, Stifel informed Lightship that it would no longer represent it in connection with a Salary.com transaction.

         In July 2015, a mutual acquaintance, Steven Sandler, introduced Plunkett to a principal of NTV. NTV was then a newly formed organization which was planning to raise a venture capital fund, although it did not yet have any investors. After discussions, Lightship and NTV agreed to enter into an investment banking relationship in which NTV would seek to find investors willing to finance the acquisition of Salary.com. After some negotiations, their relationship was memorialized in the Agreement which was executed on August 5, 2015. As relevant to this case, the Agreement contained the following provisions.

         The term of the Agreement was six months, but it could be terminated by either party on 14 days notice. Section 4 of the agreement had standard confidentiality terms. It also provided that: " NTV further agrees to abide by all terms and conditions of the NDA entered into between IBM and Lightship." This meant that NTV should not disclose the name of the target, Salary.com, or any of its data, to a potential investor identified by NTV until the investor had signed an NDA.

         Most of provisions of the Agreement relevant to this case are found in a document entitled Scope of Work (SOW) that was an exhibit to the Agreement and made a part of it. The SOW described the services that NTV was going to provide Lightship as follows:

NTV will endeavor to source capital and structure financing transactions from agreed-upon target investors and/or lenders. NTV will facilitate and participate in meetings and due diligence with capital sources, structuring and negotiating terms, and closing ...

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