Calltrol Corporation v. LoxySoft AB

Background

Calltrol Corporation brought a breach-of-contract action concerning a March 29, 2002 reseller agreement. Under that agreement, Loxysoft had a non-exclusive, non-transferable right to market and resell Calltrol’s contact-center software products, software developer kits, and related support services. The agreement required Loxysoft to use its best efforts to promote the products, restricted certain sales without concurrent sales of reseller products or services, and restricted participation in developing or commercializing competing software products. It also provided for automatic yearly renewals unless either party gave written notice of termination.

Calltrol alleged that Loxysoft failed to use best efforts to market Calltrol’s products, sold products covered by the agreement without the required concurrent sales, and participated in developing or commercializing competing software. The court noted that the earlier dismissal order had dismissed Calltrol’s tortious-interference and Lanham Act claims without prejudice, while Calltrol’s breach-of-contract claim against Loxysoft AB remained. Calltrol’s other claims for unfair competition and deceptive business practices had been voluntarily dismissed, and the tortious-interference and Lanham Act claims were later treated as dismissed with prejudice after Calltrol did not file an amended complaint.

The Summary-Judgment Motion

Loxysoft moved for summary judgment, which is a request to decide a claim without a trial when no material fact is genuinely disputed. Loxysoft argued that Calltrol’s contract claim was barred by New York’s six-year statute of limitations and that Calltrol lacked proof of damages.

The court found factual issues concerning whether the reseller agreement remained in effect, whether Loxysoft had mutually abandoned it, and whether Loxysoft had given the written notice required by the agreement. Loxysoft asserted that the agreement ended in July 2012 when payments stopped and access to Calltrol’s products was cut off, but it did not provide a sworn declaration from a principal establishing those facts or explaining the parties’ relationship during the limitations period. The court also declined to consider Loxysoft’s argument under New York General Obligations Law § 5-903 because Loxysoft had not pleaded that statute as an affirmative defense in its answer.

On damages, the court explained that disgorgement—requiring a defendant to give up profits—is generally not available for a breach-of-contract claim. Contract damages may instead include compensatory or consequential damages, such as losses or lost profits, if supported by the claim and evidence. The court concluded that factual issues remained about whether Loxysoft violated the agreement and whether Calltrol could establish recoverable damages.

Discovery and Ruling

Discovery was still ongoing, including disputes about financial documents, sales of competing products, confidential information, email discovery, and a deposition notice. Calltrol’s lawyer submitted a declaration identifying the discovery needed to evaluate the alleged breaches and calculate damages. The court found that declaration sufficient under Federal Rule of Civil Procedure 56(d), which permits a court to defer or deny summary judgment when the opposing party cannot yet present essential facts because necessary discovery remains incomplete.

The court denied the defendants’ motion for summary judgment. It did not enter judgment for either side on the breach-of-contract claim. The parties could seek leave to file a second summary-judgment motion after discovery was completed, and the court directed them to continue discovery under Magistrate Judge Paul E. Davison’s supervision.