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Insight Public Sector Inc. v. Proteam Solutions Inc.

United States District Court, D. Arizona

May 11, 2016

INSIGHT PUBLIC SECTOR, INC., Plaintiff,
v.
PROTEAM SOLUTIONS, INC., Defendant.

ORDER

H. Russel Holland United States District Judge

Motion to Extend Deadlines and for Leave to File Second Amended Counterclaim

Procedural History

Defendant/counterclaimant moves for leave to amend its counterclaim and to modify the scheduling order in this case.[1] This motion is opposed.[2] Oral argument has not been requested.

Facts

Plaintiff/counterdefendant is Insight Public Sector, Inc. Defendant/counterclaimant is Proteam Solutions.

“Insight is a global provider of information technology hardware, software and service solutions to private and public sector organizations.”[3] “Proteam offers professional information technology solutions and consulting services to private and public sector organizations in Ohio.”[4]

“In March 2010, Insight and Proteam entered into an agreement ... in which Proteam agreed to provide Insight with information about specific sales opportunities within Ohio.”[5]The agreement referred to these sale opportunities as “Designated Opportunities.”[6] If Insight made any “Designated Opportunities” sales, Proteam was to receive a royalty in the amount of 50% of the gross profit for the sale.[7] The “Designated Opportunities” were to order products directly from Insight.[8]

Insight alleges that from July 2013 through October 2013, Proteam placed orders in its own name in the amount of $726, 498.07.[9] Proteam paid Insight $350, 000 plus Proteam had a $23, 438 credit with Insight, which left $352, 950.07 unpaid.[10] Insight alleges that Proteam owes it this unpaid amount because these sales were not governed by the parties’ agreement, but rather were purchases made directly by Proteam and not by “Designated Opportunities.”[11]

Proteam alleges that after the parties entered into their agreement, Insight learned that “the involved Ohio purchasing agencies require[d] that payments for purchases be remitted to Proteam, rather than Insight” and that “Insight did not thereafter make any effort to amend the Contract to reflect that requirement.”[12] Proteam alleges that during the time that the parties’ agreement was in effect, it “brokered the sales of $4, 387, 034.33 of Insight-supplied goods and services to various Ohio governmental agencies.”[13] Proteam alleges that “[d]uring the tenure of the Contract, Insight either instructed Proteam to submit bids to purchasing agencies in amounts equal to 101% to 103% of Insight’s pricing, or to submit bids in amounts equal to Insight’s pricing for the goods.”[14] Proteam alleges that Insight told Proteam that this small mark-up was equal to the amount of Proteam’s royalty, [15] which resulted in an average royalty payment for Proteam of 1.6%. Proteam alleges that this royalty amount was inconsistent with “Insight’s annual reports to shareholders [which] state that during each year of the term of the Contract, Insight’s gross profits were in excess of 13%.”[16] Thus, Proteam alleges that Insight breached the contract “by ... concealing the true gross profits resulting from Proteam-brokered sales, and failing to pay Proteam its Contractually established royalties in the amount of 50% of such gross profits.”[17] Proteam further alleges that Insight misrepresented the amount of royalty that Proteam was due under the parties’ agreement and that Insight concealed its gross profits on the goods that it sold to Proteam.[18] Proteam alleges that Insight owes it in excess of $500, 000.[19]

On October 16, 2014, Insight commenced this action, in which it asserts a breach of contract claim and an unjust enrichment claim against Proteam. Proteam has asserted three counterclaims against Insight: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, and (3) intentional misrepresentation.

Following the filing of the instant motion to amend counterclaim and modify scheduling order, an informal discovery conference was convened on March 25, 2016. As a consequence of that conference, the court ordered that the parties re-brief the pending motion.[20] The supplemental briefing has been received[21] and reviewed by the court. The focus of the supplemental briefing is Proteam’s contention that its motion to extend discovery deadlines should be granted.

Discussion

Proteam seeks leave to amend in order to add new factual allegations to its counterclaims.[22] Although Proteam moves to amend its counterclaims to add this new factual information, Proteam also takes the position that its counterclaims as currently pled are broad enough to ...


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