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World Cam, LLC v. Omnibond Systems, LLC

United States District Court, D. South Carolina, Anderson Division

November 20, 2019

World Cam, LLC, Plaintiff,
v.
Omnibond Systems, LLC and Kenneth Boyd Wilson, Defendants, AND Omnibond Systems, LLC, Counterclaim Plaintiff,
v.
World Cam, LLC and Andrew Slattery, Counterclaim Defendants.

          OPINION AND ORDER

          Bruce Howe Hendricks United States District Judge

         This matter is before the Court on Defendant/Counterclaim-Plaintiff Omnibond Systems, LLC's (“Omnibond”) motion for preliminary injunction (ECF No. 10), and Plaintiff/Counterclaim-Defendant World Cam, LLC's (“World Cam”) motion for preliminary injunction (ECF No. 25). For the reasons set forth herein, the Court grants Omnibond's motion and denies World Cam's motion.

         BACKGROUND

         Omnibond is a software development company focusing on products that include computer-vision-based solutions for vehicle traffic monitoring. (Am. Countercl. ¶¶ 9-11, ECF No. 22.) World Cam is a small business formed by Counterclaim-Defendant Andrew Slattery (“Slattery”) to operate a proprietary business process he developed for quick oil change facilities, which involves the use of cameras, equipment, cabling, software, and other technology to track, record, monitor, measure, schedule, improve, and expedite wait times, dwell times, service times, service performance, and other aspects of the quick oil change business. (Slattery Aff. ¶¶ 4-5, ECF No. 25-2.) As part of that business process, World Cam sought a video-analytics solution it could integrate with its camera and computer system for resale to quick oil change businesses, and Omnibond developed a new software product called “BayTracker” which met that need. (Am. Countercl. ¶¶ 15- 24.)

         After several years of research and development, World Cam presented its proprietary business process to Valvoline, LLC and Valvoline Instant Oil Change Franchising, Inc. (collectively “Valvoline”), and on April 25, 2017 entered into the Valvoline Agreement wherein it agreed to supply a turn-key, full-service version of its business process to Valvoline corporate stores and franchisee-owned stores (collectively “Valvoline stores”). (Slattery Aff. ¶¶ 6-8.) The Valvoline Agreement set forth an initial term of five (5) years in which World Cam would sell camera and computer equipment to Valvoline-with the BayTracker software preinstalled-and provide, at a rate of $55 per month per Valvoline store, various services to support and monitor the functionality of the BayTracker computers and software wherever they were installed. (See ECF No. 1-2 at 2-7.) The Valvoline Agreement explicitly references World Cam's independent agreement with Omnibond to provide the analytical services utilized by the BayTracker computers and software. (See Id. at 2, 7.) While the Valvoline Agreement states that there is no obligation on the part of any franchisee store to elect to utilize the BayTracker software (see Id. § 2.b.), it contemplates all Valvoline corporate stores and most, if not all, franchisee stores receiving installation of the BayTracker computers and software over time (see Id. § 8.c. (stating, “When ninety percent (90%) of the Franchisee Stores have purchased Equipment and Software hereunder, VIOC[1] may, at its option, pay the Franchisee Store Monthly Services Fee on behalf of all VIOC Franchisees” (emphasis added))).

         On May 22, 2017, Omnibond and World Cam entered into the Reseller Agreement, which appointed World Cam as an “independent nonexclusive reseller” of certain Omnibond products and services, including the BayTracker software, within World Cam's resale “territory”-expressly limited to Valvoline corporate and franchisee stores. (See ECF No. 1-1 § 1.1, Ex. A.) The Reseller Agreement provided that, during the term of the Valvoline Agreement, Omnibond would not market or sell, or authorize others to market or sell, the BayTracker software to an itemized list of other major quick oil change companies. (Id. § 1.1, Ex. B.) The Reseller Agreement further stated that Omnibond would share 50% of World Cam's monthly gross revenue from the sale of BayTracker, which World Cam would pay to Omnibond on a monthly basis. (Id. §§ 5.3, 5.4.) Unlike the 5-year term of the Valvoline Agreement, the Reseller Agreement provided for a 12-month term, to be automatically renewed for additional 12-month terms thereafter, with each party reserving the right to terminate the Reseller Agreement at any time, without cause, with 180 days' advance written notice. (Id. § 8.) On January 24, 2019, Omnibond exercised its right to terminate the Reseller Agreement by giving 180 days' notice of termination, resulting in an effective termination date of July 23, 2019. (Compl. ¶ 25, ECF No. 1.) Section 9.2(d) of the Reseller Agreement stated: “Notwithstanding the foregoing, upon termination, Omnibond will continue to honor existing agreements with end users for Omnibond's Products and Services, subject to Reseller's payment of all applicable fees, and the terms and conditions in Exhibits B and C, either directly or through another reseller of Omnibond's choosing.” (ECF No. 1-1 § 9.2(d).)

         World Cam filed this action against Omnibond and its CEO, Kenneth Boyd Wilson, on July 23, 2019, alleging claims for injunctive relief (Omnibond only), breach of contract (Omnibond only), tortious interference with contract, fraud, and violations of both South Carolina and North Carolina's unfair and deceptive trade practices statutes. (See ECF No. 1.) World Cam's claims center around Omnibond's refusal to bring new Valvoline stores “online” since the Reseller Agreement was terminated. (See ECF No. 25-1 at 5.) Once the necessary camera and computer equipment is installed at a Valvoline store, World Cam transmits an email request to Omnibond that the store go online, which simply involves Omnibond acknowledging the store's unique IP address so that the store's local BayTracker software can interact with the backend analytical services provided by Omnibond. (See id.; see also Ex. A, Omnibond Mot. for Prelim. Inj., ECF No. 10-3 (emails from World Cam to Omnibond seeking activation of various IP addresses).) By way of various theories of liability, World Cam essentially alleges that Omnibond has failed to fulfill its post-termination contractual duties to honor those portions of World Cam's obligations to Valvoline for which Omnibond is ultimately responsible, and that Omnibond did so with the purpose of supplanting World Cam's profitable relationship with Valvoline. (See Compl. ¶¶ 24-42.)

         Omnibond filed its motion for preliminary injunction on September 6, 2019, claiming that World Cam's authority to resell and distribute Omnibond's BayTracker software was immediately revoked upon termination of the Reseller Agreement, but that World Cam has continued to sell and install BayTracker software beyond the termination date, causing harm to Omnibond. (See ECF No. 10-1 at 2.) Omnibond's motion relates to its counterclaim for breach of contract against World Cam and requests that the Court enjoin World Cam from (1) reselling or installing BayTracker software, and (2) marketing, promoting, or advertising products containing BayTracker software. (Id. at 8, 16.) World Cam responded (ECF No. 24) and Omnibond replied (ECF No. 26) in turn.

         World Cam filed its motion for preliminary injunction on October 7, 2019, claiming that Omnibond has breached section 9.2(d) of the Reseller Agreement and is actively attempting to dishonor and tortuously interfere with the Valvoline Agreement by sabotaging World Cam's ability to fulfill its obligations thereunder. (See ECF No. 25-1 at 2-3.) World Cam asserts that Omnibond's breach threatens World Cam with irreparable harm-specifically, the destruction of its business because Valvoline is its only customer. (Id. at 3.) World Cam requests that the Court enjoin Omnibond from its alleged breach of the Reseller Agreement and compel it to comply with its purported post-termination obligation to bring new stores online. (See ECF No. 25 at 1-2.) Omnibond responded (ECF No. 27) and World Cam replied (ECF No. 31) in turn.

         These matters are ripe for consideration and the Court now issues the following ruling.

         STANDARD OF REVIEW

         The Supreme Court has stressed that “[a] preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Nat. Resources Def. Council, Inc., 555 U.S. 7, 24 (2008); see also Pashby v. Delia, 709 F.3d 307, 319 (4th Cir. 2013) (“Because preliminary injunctions are extraordinary remedies involving the exercise of very far-reaching power, this Court should be particularly exacting in its use of the abuse of discretion standard when it reviews an order granting a preliminary injunction.” (quotation marks and citation omitted)). To obtain a preliminary injunction, the moving party must establish: “(1) that he is likely to succeed on the merits, (2) that he is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in his favor, and (4) that an injunction is in the public interest.” Id. at 20. The party seeking the injunction bears the burden to establish each of these elements by a “clear showing.” Real Truth About Obama, Inc. v. Fed. Election Comm'n, 575 F.3d 342, 346 (4th Cir. 2009), cert. granted, judgment vacated on other grounds, 559 U.S. 1089 (2010), and adhered to in part sub nom. The Real Truth About Obama, Inc. v. F.E.C., 607 F.3d 355 (4th Cir. 2010).

         DISCUSSION

         Omnibond filed its motion for preliminary injunction first, and the Court will begin its discussion with that filing and the related briefing. It should be noted that Omnibond's request for a preliminary injunction relates to its counterclaim for breach of contract only. Omnibond argues that the instant dispute revolves around a straightforward legal question of contract interpretation: “Can World Cam continue to resell Omnibond's BayTracker Software indefinitely as World Cam suggests, or does the explicit language of the Reseller Agreement terminate World Cam's distribution rights upon termination?” (ECF No. 10-1 at 2.) Omnibond asserts that the latter is true based on the plain language of the Reseller Agreement and contends that it is seeking to maintain the status quo post termination. (Id.) Moreover, Omnibond states that it “will continue to permit the then-existing (as of July 2019 date of termination) end users access to BayTracker and World Cam can continue to collect its share of revenue from those existing end users.” (Id.) But it asserts that World Cam's conduct in continuing to resell BayTracker to new end users as if the Reseller Agreement was never terminated amounts to “pirat[ing] BayTracker.” (Id.)

         It is undisputed that Omnibond was within its rights to terminate the Reseller Agreement and that it did so pursuant to the contractually specified procedure, which resulted in an effective termination date of July 23, 2019. (See ECF No. 24 at 2.) However, World Cam argues that under section 9.2(d) the “existing agreement” that Omnibond promised to honor post termination is the Valvoline Agreement and the “end users” Omnibond promised to continue servicing are ...


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