Case 1:20-cv-01540-LTB Document 1 Filed 05/29/20 USDC Colorado Page 1 of 11
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
`
`
`Civil Action No. 1:20-cv-
`
`SOPRIS SYSTEMS, LLC,
`
`
`
`v.
`
`FOLIO3 Software, Inc.
`
`
`
`
`
`
`
`
`Plaintiff
`
`Defendant.
`
`
`COMPLAINT
`
`
`
`For its Complaint, Plaintiff Sopris Systems, LLC alleges as follows:
`
`JURISDICTION AND VENUE
`
`
`
`
`
`1.
`
`This Court has jurisdiction over this action under 28 U.S.C. § 1332(a)(1) and (2)
`
`because this is a civil action between citizens of different states, and citizens of a State and citizens
`
`of a foreign state, and the matter in controversy exceeds $75,000, exclusive of interest and costs.
`
`2.
`
`Venue is proper in this District under 28 U.S.C. § 1391 because a substantial part
`
`of the events giving rise to the claim occurred in Colorado.
`
`3.
`
`Further, the contract at issue between the parties provides disputes may be
`
`submitted to “any” United States Federal Court. (See Ex. A ¶ 12.3.)
`
`PARTIES
`
`4.
`
`Plaintiff Sopris Systems, LLC (“Sopris”) is a Colorado Limited Liability Company
`
`with its principal office street address of 7887 E. Belleview Ave., Suite 1100, Englewood,
`
`Colorado 80111.
`
`
`
`1
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
`
`
`Civil Action No. 1:20-cv-
`
`SOPRIS SYSTEMS, LLC,
`
`
`
`v.
`
`FOLIO3 Software, Inc.
`
`
`
`
`
`
`
`
`Plaintiff
`
`Defendant.
`
`
`COMPLAINT
`
`
`
`For its Complaint, Plaintiff Sopris Systems, LLC alleges as follows:
`
`JURISDICTION AND VENUE
`
`
`
`
`
`1.
`
`This Court has jurisdiction over this action under 28 U.S.C. § 1332(a)(1) and (2)
`
`because this is a civil action between citizens of different states, and citizens of a State and citizens
`
`of a foreign state, and the matter in controversy exceeds $75,000, exclusive of interest and costs.
`
`2.
`
`Venue is proper in this District under 28 U.S.C. § 1391 because a substantial part
`
`of the events giving rise to the claim occurred in Colorado.
`
`3.
`
`Further, the contract at issue between the parties provides disputes may be
`
`submitted to “any” United States Federal Court. (See Ex. A ¶ 12.3.)
`
`PARTIES
`
`4.
`
`Plaintiff Sopris Systems, LLC (“Sopris”) is a Colorado Limited Liability Company
`
`with its principal office street address of 7887 E. Belleview Ave., Suite 1100, Englewood,
`
`Colorado 80111.
`
`
`
`1
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`
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`Case 1:20-cv-01540-LTB Document 1 Filed 05/29/20 USDC Colorado Page 2 of 11
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`5.
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`Plaintiff has two members, (1) Laura Pfohl who is domiciled in and a citizen of
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`Florida residing at 6578 N. 197th Pl., Jupiter, Florida, 33458, and (2) Sonata Software Ltd. which
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`is a public limited company registered under the laws of the Republic of India. Its registered office
`
`is 208, T V Industrial Estate, 2nd Floor, S K Ahire Marg, Worli, Mumbai Maharashtra 400 030,
`
`India. Its corporate office is located at 1/4, APS Trust Building, Bull Temple Road, N. R. Colony,
`
`Bangalore Karnataka 560 004, India. Its stock trades on the National Stock Exchange of India
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`under the symbol SONATSOFTW. As a public limited company, Sonata Software Ltd. is an
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`incorporated entity under section 7 of India’s Companies Act, 20131, and is therefore akin to a
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`corporation in the United States.
`
`6.
`
`Folio3 Software, Inc. is a California corporation having its principal place of
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`business at 333 Twin Dolphin Drive, Redwood City, California 94065.
`
`FACTS
`
`7.
`
`Sopris and Folio3 are parties to an agreement dated March 14, 2014 (the
`
`“Agreement”) pursuant to which Folio3 provided services relating to creating an application for
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`IOS (iPhone, iPad), Android and Windows devices referred to as Mobile App for GeoSpec (the
`
`“App”) including but not limited to creating source code, programs, systems, data and instructions
`
`to operate the app. (See Ex. A).
`
`8.
`
`On July 18, 2014 the parties agreed to Work Order No. 2 pursuant to which Folio3
`
`agreed to integrate Folio3’s “Dynamics” into the App and further agreed to add “Edit
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`functionality” to the App. (See Ex. B at p. 1 ¶4 and p.8 ¶4; Work Order No. 2)
`
`
`1 A copy of India’s Companies Act, 2013 is available on the website for the Government of India, Ministry of
`Corporate Affairs, http://www.mca.gov.in/MinistryV2/homepage.html.
`
`
`
`2
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`Case 1:20-cv-01540-LTB Document 1 Filed 05/29/20 USDC Colorado Page 3 of 11
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`9.
`
`The parties agreed to share revenue from the App, 35% to Folio3 and 65% to Sopris.
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`(See Ex. B at p. 1 ¶4 and p.8 ¶4; Work Order No. 2). All of Folio3’s services including the App
`
`itself are referred to in the Agreement and here as “Work”.
`
`10.
`
`Sopris made multiple payments to Folio3.
`
`11.
`
`A dispute arose between parties whereby Sopris demanded receipt of the Work
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`before continuing to make payments, and Folio3 demanded payment before providing the Work.
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`12.
`
`The parties participated in an arbitration which resulted in an award against Sopris
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`for failure to Folio3.
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`13.
`
`Based on the award, on June 24, 2019, Folio3 obtained a judgment in the amount
`
`of $98,567.25 against Sopris in the District Court, City and County of Denver, Colorado in Case
`
`No. 2019CV32289.
`
`14.
`
` On October 1, 2019 Sopris paid this amount by submitting it to the Court’s
`
`Registry.
`
`15.
`
`On January 8, 2020 the Denver Court increased the amount of the judgment to
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`$117,573.17 to include interest.
`
`16.
`
`Sopris paid the judgment in full in early March 2020 and Folio3 acknowledged
`
`receipt of payment on March 6, 2020 by filing a Satisfaction of Judgment acknowledging receipt
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`of $117,573.17 from Sopris.
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`17.
`
`All Work is owned by Sopris.
`
`18.
`
`Section 7.1 of the Agreement provides:
`
`…all right, title, and interest, including copyright interests and any other
`intellectual property in and to the Work or any deliverables created by the
`Work, including but not limited to any programs, systems, data, or materials
`produced or provided by [Folio] alone or in combination with [Sopris]
`and/or its employees under this Agreement shall be the property of
`[Sopris].
`
`
`
`3
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`Case 1:20-cv-01540-LTB Document 1 Filed 05/29/20 USDC Colorado Page 4 of 11
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`(See Ex. A, §7.1) (emphasis added).
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`19.
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`20.
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`Sopris has repeatedly demanded Folio3 deliver the Work to Sopris.
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`Folio3 has agreed to deliver the Work to Sopris.
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`21.
`
`Folio3 has failed to deliver the Work to Sopris.
`
`22.
`
`23.
`
`In particular, Folio3 has failed to deliver to Sopris the IOS version of the App.
`
`Folio3 demonstrated the IOS version of the App to Sopris throughout the
`
`development process, and when demonstrated to Sopris, the App was fully functioning.
`
`24.
`
`It was later discovered IOS version of the App did not reside on Sopris’ servers but
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`instead on Folio3’s servers.
`
`25.
`
`26.
`
`Sopris does not have possession of the IOS version of the App.
`
`Further, Folio3 without Sopris’ authorization offered for sale and upon information
`
`and belief sold Sopris’ App.
`
`27.
`
`Also without Sopris’ authorization Folio3 solicited at least one of Sopris’
`
`customers, Beacon Rail Leasing.
`
`28.
`
`Section 8 of the Agreement prohibits Folio3 from engaging in unfair competition
`
`by among other things the “sale or unauthorized use or disclosure of [Sopris’] Confidential
`
`Information…including information concerning customer lists, marketing plans, and prospective
`
`customer lists….” (See Ex. A, §8) (emphasis added).
`
`29.
`
`The Agreement defines Confidential Information in section 6 as “[Sopris’]
`
`intellectual property, that relates to existing and future products or services, designs, business
`
`plans, business opportunities….” (See Ex. A, §6.2) (emphasis added).
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`30.
`
`The Work and Sopris’ customers constitute Confidential Information under the
`
`Agreement.
`
`
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`4
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`Case 1:20-cv-01540-LTB Document 1 Filed 05/29/20 USDC Colorado Page 5 of 11
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`31.
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`On May 31, 2016, Sopris received a general solicitation email from Folio3 in which
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`Folio3 was attempting to sell software using pictures of software that belongs to Sopris under the
`
`Agreement. (See Ex. C, Email).
`
`32.
`
`Specifically, on page 3 of Exhibit C under “Dynamics AX Mobile Solutions”,
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`Folio’s email states the app includes “field services”.
`
`33.
`
`The “field services” feature was part of functionality created by Folio3 for Sopris’
`
`App pursuant to Work Order No. 2. (See Ex. C, Work Order No.2).
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`34.
`
`Folio3 has failed to share with Sopris any revenue it has received from the sale of
`
`the App.
`
`35.
`
`In approximately September, 2019 Sopris learned that in 2018, Folio3 solicited at
`
`least one of Sopris’ customers, Beacon Rail Leasing.
`
`36.
`
`Folio3 provided the following services to Beacon Rail:
`
`
`
`
`See Folio3’s website, https://dynamics.folio3.com/beacon-rail/ (last accessed May 21, 2020).
`
`
`
`37.
`
`Folio3 had access to Sopris’ customer lists.
`
`38.
`
`Folio3 knew Beacon Rail was Sopris’ customer.
`
`39.
`
`Nevertheless Folio3 solicited Beacon Rail.
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`40.
`
`Sopris has suffered losses of more than $75,000, and continues to suffer losses, as
`
`a result of Folio3’s actions including but not limited to the lost value of Work including but not
`
`limited to the App and lost revenues from the App.
`
`41.
`
` Section 11.1 of the Agreement provides that Folio3 agrees to indemnify Sopris
`
`from and against,
`
`
`
`5
`
`
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`Case 1:20-cv-01540-LTB Document 1 Filed 05/29/20 USDC Colorado Page 6 of 11
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`… all loss, liability, damages, claims and expenses, including reasonable attorneys’
`fees, arising out of claims or suits for damages or injury to persons or property in
`connection with, in whole or in part, 1) any negligence act, omission, or willful
`misconduct of [Folio3] in the performance of this Agreement; and 2) [Folio3’s]
`failure to comply with federal, state or local law.
`
`(See Ex. A, §11.1).
`
`42.
`
`Section 12.10 of the Agreement provides that in the event of a dispute, the
`
`prevailing party shall be entitled to reasonable attorneys’ fees and other costs and expenses
`
`incurred in resolving the dispute. (See Ex. A, §12.10).
`
`43.
`
`The Agreement provides that before filing a court action, the parties “shall
`
`endeavor” to settle any dispute by mediation in San Jose, California before the American
`
`Arbitration Association (AAA). (See Ex. A §12.8).
`
`44.
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`The parties subsequently agreed to mediate on April 25, 2020 at the AAA offices
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`in San Francisco, California.
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`45.
`
`The mediation on April 25, 2020 did not take place. Due to the COVID-19
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`pandemic and related government quarantine restrictions, the AAA offices were closed in April
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`and there was no other available venue in San Francisco. Similarly, Sopris and its counsel were
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`unable to travel due to health concerns and government quarantine restrictions in Colorado and
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`Florida limiting travel unless absolutely necessary.
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`46.
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`Sopris requested the mediation proceed via video or telephone conference, but
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`Folio3 would not agree. The parties then agreed to continue the in-person mediation to May 28,
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`2020.
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`47.
`
`The mediation on May 28, 2020 did not take place. The AAA offices in San
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`Francisco were still closed and AAA indicated the offices will remain closed through September,
`
`2020, and there was no other available venue in San Francisco. Further, Sopris and its counsel
`
`
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`6
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`Case 1:20-cv-01540-LTB Document 1 Filed 05/29/20 USDC Colorado Page 7 of 11
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`were still unable to travel due to health concerns and government quarantine restrictions in
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`Colorado and Florida limiting travel unless absolutely necessary.
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`48.
`
`According to the New York Times, as of May 28, 2020, California had the fourth
`
`highest cases of COVID-19 in the United States and is listed as one of the states “where new cases
`
`are increasing”:
`
`See https://www.nytimes.com/interactive/2020/us/coronavirus-us-cases (last visited May 29,
`
`
`
`2020).
`
`49.
`
`Sopris again requested the parties mediate via video or telephone conference, but
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`Folio3 again would not (and does not) agree.
`
`50.
`
`Despite the COVID-19 pandemic and related health risks and quarantine
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`restrictions, Folio3 continues to demand that Sopris and its counsel travel to California to attend
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`the mediation in-person.
`
`51.
`
`Due to concerns about the expiration of statute of limitations, Sopris filed this
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`lawsuit.
`
`52.
`
`Folio3 contends all of Sopris’ claims are barred by the statute of limitations, but
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`has failed to explain the basis for its contention.
`
`53.
`
`Folio3 failed to submit a mediation statement on April 7 as required by the
`
`mediator.
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`54.
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`Folio3’s demand for an in-person mediation in California light of the COVID-19
`
`pandemic and Sopris’ concerns about expiration of statutes of limitations is in bad faith and a delay
`
`
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`7
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`Case 1:20-cv-01540-LTB Document 1 Filed 05/29/20 USDC Colorado Page 8 of 11
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`tactic to avoid delivering the Work to Sopris so Folio3 can continue selling Sopris’ App for its
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`own profit, to avoid sharing revenue with Sopris from the App, and to avoid responsibility for
`
`improperly soliciting Sopris’ customer.
`
`55.
`
`Sopris remains willing to mediate via video or telephone until the AAA offices in
`
`San Francisco reopen, Sopris and counsel feel safe traveling to San Francisco to attend an in person
`
`mediation, and quarantine restrictions limiting travel unless absolutely necessary are lifted.
`
`56.
`
`The Agreement provides that if mediation is unsuccessful, the parties’ dispute shall
`
`be arbitrated. (See Ex. A §12.9). However, the arbitration provision states it “does not apply to the
`
`breach of provisions pertaining to confidentiality and proprietary rights, and that either party may
`
`petition a court of law for injunctive relief and such other rights and remedies as it may have at
`
`law or equity against such breaches.” (See Ex. A §12.9).
`
`57.
`
`Sopris’ allegations in this Complaint allege breach of contract provisions pertaining
`
`to confidentiality and proprietary rights, therefore, the arbitration provision does not apply.
`
`FIRST CLAIM FOR RELIEF
`(Breach of Contract)
`
`Sopris realleges and incorporates by references the above paragraphs as if fully set
`
`A contract exists between Sopris and Folio3. (See Exs. A and B).
`
`Sopris has fulfilled its obligations and complied with all conditions of the
`
`58.
`
`forth herein.
`
`59.
`
`60.
`
`contract(s) it is required to perform including “endeavoring” to settle by mediation.
`
`61.
`
`To the extent the contract requires a mediation to take place, Sopris has been
`
`excused from the requirement to mediate before filing suit, or the requirement to mediate is
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`unenforceable because the COVID-19 pandemic and Folio3’s refusal to conduct mediation via
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`video or telephone have prevented Sopris from mediating and have rendered mediation impossible
`
`
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`8
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`Case 1:20-cv-01540-LTB Document 1 Filed 05/29/20 USDC Colorado Page 9 of 11
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`or impracticable prior to the expiration of applicable statutes of limitations.
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`62.
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`Folio3 has breached section 7.1 of the Agreement by failing to deliver the Work to
`
`Sopris.
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`63.
`
`Folio3 has breached sections 6.2 and 8 of the Agreement by soliciting Sopris’
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`customer Beacon Rail.
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`64.
`
`Folio3 has breached sections 6.2 and 8 of the Agreement by advertising and upon
`
`information and belief selling Sopris’ App to others as indicated by Ex. C, and by failing to share
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`revenues with Sopris pursuant to Ex. B.
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`65.
`
`Folio3’s breaches have caused, and continue to cause damages to Sopris. Sopris has
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`suffered losses of more than $75,000 as a result of Folio3’s actions including but not limited to the
`
`lost value of Work including but not limited to the App and lost revenues from the App.
`
`SECOND CLAIM FOR RELIEF
`(Indemnification)
`
`66.
`
`Sopris realleges and incorporates by references the above paragraphs as if fully set
`
`forth herein.
`
`67.
`
`Section 11.1 of the Agreement provides that Folio3 agrees to indemnify Sopris from
`
`and against,
`
`… all loss, liability, damages, claims and expenses, including reasonable attorneys’
`fees, arising out of claims or suits for damages or injury to persons or property in
`connection with, in whole or in part, 1) any negligence act, omission, or willful
`misconduct of [Folio3] in the performance of this Agreement; and 2) [Folio3’s]
`failure to comply with federal, state or local law.
`
`(See Ex. A, §11.1)
`
`
`68.
`
` Folio3 has negligently or willfully violated section 7.1 of the Agreement by
`
`refusing to deliver the Work to Sopris despite being paid in full.
`
`69.
`
`Folio3 has negligently or willfully violated sections 6.2 and 8 of the Agreement by
`
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`9
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`Case 1:20-cv-01540-LTB Document 1 Filed 05/29/20 USDC Colorado Page 10 of 11
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`soliciting at least one customer of Sporis (Beacon Rail).
`
`70.
`
`Folio3 has negligently or willfully violated sections 6.2 and 8 of the Agreement by
`
`advertising and upon information and belief selling Sopris’ App to others as indicated by Ex. C,
`
`and by failing to share revenues with Sopris pursuant to Ex. B.
`
`71.
`
`Folio3 has further failed to comply with federal and state law by violating the
`
`aforementioned provisions of the Agreement.
`
`72.
`
`Sopris has suffered losses of more than $75,000 as a result of Folio3’s actions
`
`including but not limited to the lost value of Work including but not limited to the App, lost
`
`revenues from the App, and related attorneys’ fees and costs related.
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`PRAYER FOR RELIEF
`
`
`
`WHEREFORE, Sopris Systems, LLC prays for judgment in its favor and against Folio3
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`Software, Inc. as follows:
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`A. An order requiring Folio3 to immediately deliver to Sopris all Work including the
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`IOS version of the App;
`
`B.
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`Such actual damages as this Court deems just and proper;
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`C. Attorneys’ fees and costs pursuant to the parties’ Agreement;
`
`D.
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`Costs of this action as allowed by law;
`
`E.
`
`F.
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`Pre-judgment and post-judgment interest as allowed by law;
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`Such other and further relief as this Court may deem appropriate.
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`Case 1:20-cv-01540-LTB Document 1 Filed 05/29/20 USDC Colorado Page 11 of 11
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`Dated May 29, 2020.
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` s/ Tamara A. Seelman
`Tamara A. Seelman
`GORDON REES SCULLY MANSUKHANI LLP
`555 Seventeenth Street, Suite 3400
`Denver, Colorado 80202
`Tel: (303) 200-6885
`tseelman@grsm.com
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`Plaintiff’s Address:
`7887 E. Belleview Ave., Suite 1100
`Englewood, Colorado 80111
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`11
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`
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