Free Response to Motion - District Court of Delaware - Delaware

Case 1 :04-cv-00148-GIVIS Document 77 Filed 08/22/2005 Page 1 of 4
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
In re: Chapter 11
INACOM CORP., et al., Bankruptcy Case N0. 00-2426 (PJW)
Debtors.
INACOM CORP., on behalf of all affiliated Case N0. O4-CV-148
debtors,
Plaintiff]
vs.
TECH DATA CORPORATION,
Defendant.
TECH DATA CORPORATION,
Third-Party Plaintiff,
vs.
COMPAQ COMPUTER CORP., IT Y
CORP., and CUSTOM EDGE, INC.,
Third-P Defendants.
HEWLETT-PACKARD COMPANY ’S REPLY IN SUPPORT OF ITS MOTION
IN LIMINE TO EXCLUDE EVIDENCE RELATED TO TECH DATA
CORPORATION’S CLAIMS AS A THIRD-PARTY BENEFICIARY
Tech Data Corp0rati0n’s ("Tech Data") response to Hewlett-Packard
C0mpany’s (“HP") motion in limine fails to cite any authority in which the intent to
create third-party beneficiary rights was disputed, or which involved a "no thirdparty
beneficiary clause" in the contract. Instead, Tech Data focuses on a non-assignment
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clause, which is entirely different and has nothing to do with Tech Data’s right to enforce
the Asset Purchase Agreement in this case.
The Court should exclude all evidence and dismiss Tech Data’s claims
relating to the Asset Purchase Agreement because, as a matter of law, Tech Data is not a
third—party beneficiary to the agreement. Accordingly, Tech Data lacks standing to
enforce the agreement.
I. TECH DATA IS NOT AN INTENDED BENEFICIARY OF
THE ASSET PURCHASE AGREEMENT
The parties agree that only intended beneficiaries to a contract have a right
to enforce the contract, and incidental beneficiaries do not. See Tech Data’s Proposed
Jury Instructions at p. 14 ("To establish that it is entitled to enforce the contract as a
beneficiary, the plaintiff [Tech Data] has the burden to prove by a preponderance of the
evidence that the original parties to the contract intended the plaintiff to be a direct
beneficiary and not just an incidental beneficiary?). See also Fourth Ocean Putnam
Corp. v. Interstate Wrecking Co., Inc., 66 N.Y.2d 38, 44 (1985).
The parties further agree that, as a matter of law, the best evidence of
whether contracting parties intended their contract to benefit third parties is the language
of the contract itself. See Tech Data’s Proposed Jury Instructions ("Although you may
consider all ofthe circumstances sturotmding the original parties at the time they entered
into the contract, the plaintw must prove that the contract terms themselves contain
some clear indication that the original parties intended the plaintiff to be a direct
beneficiary.”)(emphasis added). Burns, Jackson, Miller, Summit & Spitzer v. Lindner,
108 Misc. 2d 458, 475-76 (N.Y. Sup. 1981); Nepco Forged Products, Inc. v.
Consolidated Edison, 470 N.Y.S.2d 680, 681 (App. Div. 1984). Where a provision exists
in an agreement expressly negating an intent to permit enforcement by third parties, that
provision is decisive ofthe parties’ intent. Id. (complaint dismissed based on no—third-
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Case 1:04-cv—00148-G|\/IS Document 77 Filed 08/22/2005 Page 3 of 4
pa1ty—beneiiciary provision).
Here, the intent of the parties to the Asset Purchase Agreement- hiacom,
Compaq, and ITY Corp — is expressed in Section 13.08 which states that there is no intent
to confer any rights or remedies on any third parties. This is the exclusive statement of
intent regarding third party beneficiaries.] That provision is decisive and negates any
intent to permit enforcement by Tech Data.
Section 13.08 is not "best characterized" as a non-assignment clause.
Compaq and Inacom were well aware of the distinction between a clause precluding
intended beneficiaries and a clause precluding assignment, and specifically addressed
both in the Asset Purchase Agreement. See Asset Purchase Agreement, Sections 13.04
and 13.08. Tech Data’s citation to a case involving a non-assignment clause — without
any provision that precluded third-party beneficiaries - has no bearing to the facts of this
case.
CONCLUSION
For the foregoing reasons, HP requests that the Court grant an in limine
order dismissing Tech Data’s breach of contract claims and precluding Tech Data from
presenting any argument or evidence based on a claim as a third-party beneficiary to the
Asset Purchase Agreement.
I Section 13.09 of the Asset Purchase Agreement contains the following integration clause:
Entire Agreement. This Agreement, the Fulfillment Agreement, the Services, Supply and Sales
Agreement, the agreements contemplated by Section 7.07 and the Confidentiality Agreement
constitute the entire agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter of this Agreement.
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Case 1:04-cv—00148-G|\/IS Document 77 Filed 08/22/2005 Page 4 of 4
Dated: August 22, 2005
Wilmington, Delaware MORRIS, NICHOLS, ARSHT & TUNNELL
William H. gudell,%r. (No. 463)
Derek C. Abbott (No. 3376)
Gregory T. Donilon (N o. 4244)
Daniel B. Butz (No. 4227)
1201 N. Market Street
Wilmington, DE 19899-1347
(302) 658-9200
- and -
FRIEDMAN DUNLAS & SPRINGWATER LLP
Ellen A. Friedman
Cecily A. Dumas
Gail S. Greenwood
Brandon C. Chaves
One Maritime Plaza, Suite 2475
San Francisco, CA 94111
(415) 834-3800
Attorneys for Third-Party Defendant
Hewlett-Packard Company
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