Anexia, Inc. v Horizon Data Solutions Ctr., LLC

Annotate this Case

Download PDF

Anexia, Inc. v Horizon Data Solutions Ctr., LLC 2020 NY Slip Op 32167(U) June 29, 2020 Supreme Court, New York County Docket Number: 657444/2019 Judge: O. Peter Sherwood Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [* 1] INDEX NO. 657444/2019 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 06/29/2020 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION ART 49 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - )( ANE)r(IA, INC., DECISION AND ORDER Index No.: 657444/2019 Plaintiff, -against- Motion Seq. No.: 001 HORIZON DATA SOLUTIONS CENTER, LLC d/b/a V AZA TA, Defendant. 0. PETER SHERWOOD, J.: J.- FACTS As this is a motion to dismiss, the following facts arc t ken from the Amended Complaint (Complaint, NYSCEF Doc. No. 3) and are presumed to be tru Plaintiff Anexia, Inc (Anexia), is in the business of pre viding "Infrastructure-as-aServicc, cloud services, outsourced services, including netwo king, managed hosting, colocation, and IP Transit to global businesses" (Complaint,~ 13 ). Oefe dant Horizon Data Solutions Center LLC d/b/a Vazala (Vazata) provides "managed hostin , Infrastructure-as-a-Service, and cloud managed" services (id., ii 14). Anexia provided some of these services at a data cent r located in Manassas, Virginia which it leased from non-party Corporate Office Propc11y Tr st (COPT) in .June 2017 1• Anexia leased only part of the data center, including Suite 201/202 (t e Suite). In the transaction in which Anexia leased the Suite. Anexia also acquired certain ustomers from COPT, who were using the Suite, including the Federal Deposit Insurance Cm any (FDIC). The FDIC was In 20 I0, Vaz.ala leased the Suite through its wholly-owned-subsi iary, Horizon Data Center Solutions II ( HDCS 11) from the company that built the Data Center, Power Lo fl. Va ta guaranteed the lease payments from HDCS I! to PowerLoft, and frequently had to make payments. PowerLo sold the Data Center to COPT in 2010. Vazata then sold H DCS II to Day 1 Solutions, Inc (Day I). Day 1 was sub tituted into the lease of the Suite and Vazata' s contract with FDIC. Day l de fou lied and that lease was term i nat d in December 20 15. J us! before CO PT issued the notice of default to Day I, Day I gave Vazata a below-market ! asc for a space in the Suite to sub-sublease to customers and entered an agreement for Vazata to act as collecti n agent for six contracts. in exchange for 20% of the revenues from those contracts. Day I also assigned Vazata th right Lo collect a portion of lease payments from subcontractors. In April 20 16, Day 1 and CO PT entered in to a Settlement Agree ent to resolve the defau It. Day I assigned all rights in customer contracts to COPT, including the Vazata sub-sub-le se and the agreements between Day I and Vazata described above. COPT then sought a new tenant to lease the Sui and perform the obligations for clients it inherited from Vazata/Dayl, and brought in Anexia. 1 2 of 9 [* 2] INDEX NO. 657444/2019 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 06/29/2020 originally Vazata's customer, but that contract had been trans rred first to Dayl in 2015, then to COPT, and then to Anexia. However, lhe FDIC refused to co sent to the assignment to Anexia. As a result, in December 20 l 7, Anexia had to agree to a mana ement services agreement with Vazata (the MSA) under which Vazata would continue to pro ide certain management services for FDIC, transfer 80% of revenues received from the FDIC t Ancxia, and sublease portions of the Suite (id., if 4). Anexia complains that Vazata appropriated some of it customers, including FDIC, the biggest customer in the Suite, and transferred the services Va ata provided FDIC to Vazata's data center in Dallas, Texas (the Dallas Data Center). After t e move, Vazata has not paid Anexia its claimed 80%1 of the revenues from the FDIC accou t. Anexia also claims Vazata failed to pay for additional power and power outlets for its cu tomers, and by failing to pay for Anexia's consulting services or provide access to books and r cords. Vazata maintains the agrecmenl with Anexia is limited to the Manassas Data Cente and that Ancxia is not entitled to share revenue derived from services it provided to FDIC at ot er locations. Anexia asserts the following causes of action: I I- Breach of Contract, including breach of the implied c venant of good faith and fair dealing; 2- Declaratory Judgement that defendant is obligated to urn over 80% of revenue received from the FDIC; I 3- Theft of Services, for installing extra power connecfa ns and not paying for electricity use; 4- Violation ofVa. Code Section 18.2-187.1- for theft o electricity and communication services; and 5- Unjust Enrichment- by keeping payments made by th FDIC. II. DISCUSSION A. Standards on a motion to dismiss To succeed on a mo ti on to dismiss pursuant to CPI. R § 3211 (a) ( I ), the documentary evidence submitted that forms the basis of a defense must re. )Ive all factual issues and definitively dispose ofthc plaintiffs claims (see 51 l W. 232 Owners Corp. vJenn{fer Realty Co .. 98 NY2d 144, 152 [2002]; Blonder & Co., Inc. v Citiba k. N.A., 28 AD3d 180, 182 [Pt Dept 2006]). A motion to dismiss pursuant to CPLR 9 321 l a) (1) "may be appropriately granted only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (McC lly v. Jersey Partners, Inc., 60 I 3 of 9 [* 3] INDEX NO. 657444/2019 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 06/29/2020 AD3d 562, 562 [I si Dept. 2009]). The facts as alleged in the omplaint are regarded as true, and the plaintiff is afforded the benefit of every favorable inlerenc (see Leon v Martinez, 84 NY2d 83, 87-88 [ 1994]). Allegations consisting of bare legal concl sions as well as factual claims flatly contradicted by documentary evidence arc not entitled t any such consideration (see e.g. Nisari v Ramjohn, 85 AD3d 987. 989 l2nd Dept 201 IJ). CPLR § 3211 (a) (1) does not explicitly define "docm cntary evidcnce.h As used in this statutory provision, <"documentary evidence' is a 'fuzzy term , and what is documentary evidence for one purpose, might not be documentary cvidenc for another" (Fontanella v John Voe 1. 73 J\.D3d 78, 84 [2nd Dept 2010]). "lTlo be consider 'documentary: evidence must be unambiguous and of undisputed authenticity" (id. at 86, citin Siegel, Practice Commentaries, McKinney's Cons. Laws ofN.Y., Book 7B, CPLR 3211: 10, t 21-22). Typically that means "'judicial records, as well as documents reflecting out-of-cou transactions such as mortgages, deeds, contracts, and any other papers, the contents of which e 'essentially undeniable,' " (id. at 84-85). Here, the documentary evidence is the contracts (tl e MSA, the ff)lC Contract. and the contracts regarding the transfer of the Data Center sublea ~). While plaintiff has quibbled with excerpts of those documents being Ii led, plaintiff does n t dispute the authenticity of those documents, and they arc proper documentary evidence. On a motion to dismiss a plaintiff's claim pursuant to :PLR § 3211 (a) (7) for failure to state a cause of action, the court is not called upon to determi e the truth of the allegations (see, Campaign .fhr Fiscal Equity v State, 86 NY2d 307, 31 7 [ 199 Alexander\ Inc., 46 NY2d 506, 509 [ J 9791). Rather, the co J; 219 Broadway Corp. v tis required to "afford the pleadings a liberal construction, take the allegations of the co 1plaint as true and provide plaintiff the benefit of every possible inference l citation omitted J. Wh ther a plaintiff can ultimately establish its allegations is not part of the calculus in determin ng a motion to dismiss" (F:RC Iv Goldman, Sachs & Co., 5 NY3d 11, 19 120051). The court's ole is limited to determining whether the pleading states a cause of action, not whether the e is evidcntiary support to establish a meritorious cause of action (see Guggenheimer v Ginzburg, 43 NY2d 268, 275 [ 1977]; Sokol v Leader, 74 AD3d 1180 l2d Dept 2010]). 4 of 9 [* 4] INDEX NO. 657444/2019 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 06/29/2020 B. Claim 1- Breach of Contract To sustain a breach of contract cause of action, plainti f must show: ( 1) an agreement; (2) plaintiffs perfomrnnce; (3) defendant's breach of that agrecm nt; and (4) damages (see Furia v Furia, 116 AD2d 694, 695 [2d Dept 1986]). "The fundament rule of contract interpretation is that agreements are construed in accord with the parties' inten ... and 'ltJhc best evidence of what parties to a written agreement intend is what they say in heir writing' .... Thus, a written agreement that is clear and unambiguous on its face must bee forced according to lhe plain terms, and extrinsic evidence of the parties' intent may be con idered only if the agreement is ambiguous [internal citations omitted]" (Riverside South Plan ing Corp. v CRP!t.xtell Riverside f,P, 60 AD3d 61, 66 [I st Dept 2008l affd 13 NY3d 398 1200 ]). Whether a contract is ambiguous presents a question oflaw for resolution by the co rts (id. at 67). Courts should adopt an interpretation of a contract which gives meaning to every ovision of the contract, with no provision left without force and effect (see RM 14 FK Co1p_ v Bank One Trust Co., NA., 37 AD3d 272 [lst Dept 200TJ). Vazata seeks dismissal of only that portion of the first ause of action that relates to the FDIC contract (see Doc. No. 3, iJ 46 lal and [b]). Although il seeks dismissal pursuant to CPLR 3211 (a)(7), Vazata does not urgue that the complaint fails to tate a-cause of action. Instead, it argues that there has been no breach of the MSA in connectio with the FDIC contract. The MSA is an agreement to make agreements (thew rk statements or customer orders). Under the MSA, Anexia agreed to provide services (providin physical space, electrical outlets, etc.) to Vazata and Vazata would pay money. Section J(C) o the October 1, 2017, Statement of Work attached to the MSA provides that: "Anexia shall provide Customer tVazataj the services described in Schedule A regarding the FDIC Cage. Customer shall maintain th Customer relationship with FDIC indefinitely, including responsibility for th billing and collection for the Services from FDIC. Customer agrees to remit ei hty (80%) percent of the revenue collected from fDIC, commencing with the i1 voice for October 2017, during the term of the agreement with FDIC, without dditional deduction or offset against the payments received by Customer fro FDIC" Exhibit A to MSA, NYSCEF Doc. No. 24 at 18). It is clear. oth from the Complaint and from the Statement of Work, that the FDIC contract is with Vazata and not Ancxia. The Statement of Work does not specify a termination date fiJr the rental of the ·DIC Cage, but the MSA has a 5 of 9 [* 5] INDEX NO. 657444/2019 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 06/29/2020 five-year term (MSA 13.131 ). No one argues that the MSA. r any portion of iL was terminated when Vazata moved the FDIC's data and services to the Dall s Data Center. Vazata's main argument is that it is only required tor the FDIC fi.ir the portion of work it does from the Manassas it 80% of revenues received from ta Center. It points to a number of places in the parties' agreements which il argues shows an ntention to limit the scope of the agreements to the Manassas Data Center (see, e.g, introducto y paragraphs to Statement of Work; Recitals in Schedule ([Doc, No. 24 ]). However, the re erences do not "utterly refute" the breach of contract alleged. Section 3C of the M SA provides: '[c ]ustomer agrees to remit eighty (80%) percent of the revenue collected from fDIC ... during he term of the agreement with FDIC". Neither the Statement of Work nor the MSA express limits the remittance obligation to apply to only to work to performed at the Manassas locatio . Moreover, the term ''agreement" is not defined. and the MSA does not clarify whether the time is limited by the term of the I3asic Operating Agreement (I30A) between the FDIC and V<1zata 2 r the agreements made between Vazata and the FDIC pursuant to the BOA In any event, the SA docs not state expressly where services to lhe FDIC would be provided. This aspect o the motion must be denied. C. Claim 2- Declaratory Judgement "The supreme court may render a declaratory judgme1 t having the effect of a final judgment as to the rights and other legal relations of the parti s to a justiciable controversy whether or not further relief is or could be claimed" (CPLR 3 01). A court "may decline to hear the matter irthere are other adequate remedies available'' (M< genthau v Erlhaum, 59 NY2d 143, 148 11983 J). As the amount of potential damages is not nown (80% of future revenues from the FDIC relationship until the end or the MSA contract period being an unknown number), there is not another adequate remedy currently available. Th s claim will survive. D. Claim 3- Theft of Services The Complaint poses this claim as theft of services fo installing extra power connections and not paying for electricity use. In its opposition, Anexia c arified this claim as the "common law tort of conversion of electricity'' (Opp at 11. citing Poton c Elec. Power Co. v Mon Paris Resl., Inc., 12 Va Cir 74 fVa Cir Ct J 987J). "Conversion is t e wrongful assumption or exercise The BOA is not a contract for services. Rather, it is an agrecme I that provides a framework for making future agreements. 6 of 9 [* 6] INDEX NO. 657444/2019 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 06/29/2020 of the right of ownership over goods or chattels belonging to nother in denial of or inconsistent with the owner's rights" (State <~/Maine v Adams, 277 Va 230 243 [2009] quoting Economopouios v Kolaitis. 259 Va 806, 814 l20001). A plaintiff need only allege and prove that the defend t interfered with plaintiff's right to possess the property. The defendant docs not have to have aken the property or benefitted from it (see llillcrest Homes, LLC v A lb ion Mobile Homes, Jn ·., 117 NYS2d 755 (4th Dept 2014). A conversion claim may not be maintained where dan ages are sought merely for a breach of contract (see Sutton Park Dev. Trading Corp. v Gue in & Guerin, 297 AD 2d 430, 432 [3d Dept 2002]). Anexia first alleges "Vazata ... established secret ele rical power connections beneath the floor of its space in the DC-6 Center in violation of the ex ress limits on those connections expressed in the MSA and applicable SOWs" (Complaint,~ 5 ). This is expressed as a breach of contract, and the allegation docs not allege Vazata exercised t e right of ownership over goods or chattels belonging to Anexia. This is not a claim of either co version or theft of services. Ancxia also alleges ''Vazata has failed and refused to 1eimburse Anexia for the stolen power that it has been misappropriating for over two years" (i . , il 56). Giving Ancxia the benefit of every inference, Ancxia seems to be alleging Vazal used more power than was allotted to it under the MSA and applicable SOWs, resulting i Anexia having to pay COPT more money for electricity. The MSA provides at§ 5.1 that: "Except as otherwise set forth in an applicable Work S tcment, Anexia will furnish all ... resources necessary to accomplish the provisioi of services and will bear all associated expenses" Anexia contends that lhe electric power allowed Vazata is I mited by § 2C of the Stalement of Work which provides: "Anexia shall provide [Vazataj with t 'I-Sight Cage' ... which contains 540 square feet, inclusive of 11 L6-30a/20S v alb power pairs" (Doc. No. 24). (Statement of Work, attached to MSA, NYSCEF Om.:. No. 24 at section 2[C]) (en phasis added). This is not limiting language and the claim fails. Plainliff also states it billed defendants for the excess lf electricity, but defendant failed to pay (Opp at 12). This issue is covered by the contract bet een the parties and is within the I contract claim in this action. 6 7 of 9 [* 7] INDEX NO. 657444/2019 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 06/29/2020 Also, "an action for conversion can be maintained on! by the person having a property interest in and entitled to the immediate possession of the ite alleged to have been wrongfully converted" (Economopoulos v Kolaitis, 259 Va 806, 814 [200 "I). In Polomac Elec. Power Co. v Mon Paris Rest., Inc., ( 12 Va Cir 74 l Va Cir Ct 19871), relied· pon by the plaintiff, the power company sued landlords and their tenant for conversion of cle ·tricity, where the line running power to the building was alleged to be unauthorized and the owcr used by the tenant was never paid for. That case suggests at the time defendant used the po er it was owned by the utility company, not plaintiff, so this claim would also fail for that r E. Claim 4- Violation of Va. Code Section 18.2Plaintiff also seeks to invoke a Virginia penal statute c ncerning theft of electricity and communication services. Virginia Code§ 18.2 - 187.1 provid "A. It shall be unlawful for any person knowingly, wi obtain or attempt to obtain, for himself or for another, telephone, telegraph, cable television or electronic cm use of any false information, or in any case where sue disconnected by the supplier and notice oL.lisconnecti B. It shall be unlawful for any person to obtain or attc gas, water, telephone, telegraph, cable television or cl service by the use of any scheme, device, means or m application for service with intent to avoid payment o (Va Code Ann the intent to defraud, to ii, electric, gas, water, munication service by the service has been n has been given. 1pt to obtain oil, electric, ctronic communication thod, or by a false lawful charges therefor" *18.2-187. l ). The parties dispute whether pl· in tiff has standing to sue under this law as it is not a "party providing oil, electric, gas, water, tele hone, telegraph, cable television or electronic communication service who is aggrieved by a vi lation of this section" (id. at § E). The leading case is Sky Cahle, LLC v Coley (5: 1 I CV 00048, 013 WI. 3 51 733 7 [WO Va July 11, 2013]). In that case, plaintiff Sky Cable was an affiliate deal r for broadcast satellite system operator Direct TV. Direct TV assigned Sky Cable an accou t which Sky Cable was supposed to service, and for which Sky Cable was to receive commissi ns (id. at *5). The account holder connected more end users to the account than were allowed u Ider terms of the account's contract with Direct TV (among other issues). Sky Cable sued the ac ount holder and Direct TV (id. at *6-7). The United States District Court held that Sky Cable -as not a party "providing ... cable television or electronic communication service" as "[i]t was 1 ot Sky Cable's cable television or electronic communication service that was pirated. It was Di ect TV's," so Sky Cable lacked standing to make the claim (id. at * 13 ). I lcrc, Anexia claims to be the provider of electricity to 8 of 9 [* 8] INDEX NO. 657444/2019 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 06/29/2020 the defendant, similar to Direct TV in the Sky Cable case, and so argues it has standing under this statute (Opp at 14). However, unlike Direct TV, plaintiff doe not allege doing anything to create, process, or provide power. Anexia merely bills defend nt for the service and pays someone else. Anexia is more like Sky Cable, the middleman than Direct TV. Accordingly, this claim also fails for lack of standing. F. Claim 5- Unjust Enrichment- by keeping pa ents made by the FDIC. "Unjust enrichment is a quasi contract theory of recov ry, and 'is an obligation imposed by equity to prevent injustice, in the absence of an actual agre ment between the parties 51 concerned'" (Georgia Malone & Co., inc. v Rieder, 86 AD3d 406, 408 (1 Dept 2011], ajfd. 19 NY3d 511 [2012], quoting IDT Corp. v Morgan Stan! ey Dea Witter & Co., 12 N Y3d 132, 142 [2009]). In order to plead a claim for unjust enrichment, the laintiff must allege "that the other party was enriched, at plaintiff's expense, and that 'it is again t equity and good conscience to permit [the other partyJ to retain what is sought to be recover d'" (Georgia Malone & Co., 86 AD3d at 408, quoting Mandarin Trading Ltd. v Wildenslein, 6 NY3d 173, 182 [2011 ]). There is an agreement between the parties here, and the MSA states what portion, if any, of the FDIC revenue stream defendant is obligated to pay plaintiff This c aim too must be dismissed. Accordingly, it is hereby ORDERED that the motion to dismiss (Motion Sequ nee Number 001) of defendant Horizon Data Solutions Center, LLC d/b/a Vazata, is GRAN. "ED to the extent that the third ("theft of services"); fourth (Violation of Virginia Code § 18. - 187. l ); and fifth (unjust enrichment) causes of action are hereby dismissed and is oth rwise DENIED; and it is further ORDERED that defendant shall answer the Complai t as to the remaining causes of action within twenty (20) days of service of this Order with n lice of entry; and it is furthcr ORDERED that counsel shall appear for a prelimina y conference on Tuesday, September 29, 2020 at 10:00 AM in the event the courthouse is open to in-person appearances and otherwise counsel shall contact the court to schedule an, ppearance by video. This constitutes the decision and order of the court. DATED: June 29, 2020 0. PET (R SHERWOOD .J.S.C. 8 9 of 9

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.