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RSA 1 L.P. v. Paramount Software Assocs., Inc.

United States Court of Appeals, Eighth Circuit

July 17, 2015

RSA 1 Limited Partnership; Iowa RSA 2 Limited Partnership, Plaintiffs - Appellants
v.
Paramount Software Associates, Inc., doing business as Professional Software of Amarillo, Defendant - Appellee

Submitted April 14, 2015

Appeals from United States District Court for the Southern District of Iowa - Council Bluffs.

For RSA 1 Limited Partnership, Iowa RSA 2 Limited Partnership (14-2947, 14-3382), Plaintiffs - Appellants: Steven Lowell Nelson, Davis & Brown, Des Moines, IA.

For Paramount Software Associates, Inc., doing business as: Profressional Software of Amarillo (14-2947, 14-3382), Defendant - Appellee: Elizabeth Chermel, Mullin & Hoard, Dallas, TX; Stephen E. Doohen, Whitfield & Eddy, Des Moines, IA; John G. Turner III, Mullin & Hoard, Amarillo, TX.

Before WOLLMAN and GRUENDER, Circuit Judges, and DOTY,[1] District Judge.

OPINION

GRUENDER, Circuit Judge.

In this breach-of-contract case, two cellular-service providers dispute whether they owe approximately $260,000 in liquidated damages to a billing-services company. The district court[2] granted summary judgment to the billing company, Paramount Software Associates. We affirm.

I. Background

In March 2009, Paramount, a Texas company, contracted with two Iowa cellular-service providers, RSA 1 Limited Partnership and Iowa RSA 2 Limited Partnership (together, the " RSAs" ). The parties agreed that Paramount would provide billing services by processing RSA customer information and that the RSAs would pay Paramount $1.05 per month for each RSA customer whose information Paramount processed.

Several aspects of the contract are particularly important. First, there is the $1.05 rate itself. Paramount set this rate to help achieve its target profit margin for its entire business, a small overall margin. Next, there is Section 1 of the contract, which provided for an initial three-year term, followed by continual renewal for twoyear terms, unless a party gave six months' notice. Next, Section 12 provided for early termination and liquidated damages. As relevant here, the RSAs could end the agreement before the end of a term, but if they did, they would have to pay Paramount " all projected monthly fees based on the number of unexpired months remaining on" the term. Paramount intended the prospect of these liquidated damages to dissuade the RSAs from terminating the contract early. Finally, there is what the contract did not include: the contract did not guarantee Paramount a minimum number of RSA customer records to process, nor did it require the RSAs to use Paramount exclusively.[3]

For a time, Paramount served the RSAs, spending " a significant amount of time" on them each month. But in late 2011, the RSAs sent Paramount a letter explaining that the RSAs were switching billing companies. The letter explained that the RSAs would " be asking for [Paramount's] assistance . . . to make the conversion successful." The RSAs would " send an official notice to [Paramount] when [they] want[ed] the system shut down." They concluded by thanking everyone " who worked on [their] account over the past years" and wishing Paramount " much success in the future."

Over the next year or so, Paramount continued to serve the RSAs while helping them transfer to their new billing company. Before the transfer was finished, the initial, three-year term of the contract ended, and the contract renewed for a two-year term. Finally, in January 2013, the RSAs stopped using Paramount entirely, with over a year remaining on the renewed term.

From its reading of Section 12, Paramount believed that the RSAs had terminated the contract early and, accordingly, that they owed liquidated damages. The RSAs contended they did not. The RSAs sought a declaratory judgment, Paramount counterclaimed for breach of contract, both sides moved for summary judgment, and the district court granted summary judgment to Paramount. The RSAs now appeal, ...


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