Everbridge Inc v, 2018 ABQB 996

Court of Queen’s Bench of Alberta Citation: Everbridge Inc v 1353475 Alberta Ltd, 2018 ABQB 996 Date: 20151205 Docket: 1501 12515 Registry: Calgary Between: Everbridge, Inc. Plaintiff - and - 1353475 Alberta Ltd, operating as “CommAlert” or “Comm-Alert (2007)” or “CommAlert Inc” Defendant _______________________________________________________ Reasons for Decision of J.T. Prowse , Master in Chambers _______________________________________________________ [ 1 ] The plaintiff Everbridge Inc. (“Everbridge”) brings this application for

summary judgment against the defendant CommAlert Inc. (“CommAlert”). [ 2 ] Everbridge licensed CommAlert to sell Everbridge’s software package in combination with CommAlert’s software and services. The parties agreed to participate in a joint marketing program. If a sale was made CommAlert was to remit to Everbridge a fee of 50% of the list price of the Everbridge software included in the sale.

[ 3 ] In the written contract between Everbridge and CommAlert (the “OEM”) CommAlert guaranteed a certain volume of sales. CommAlert did not achieve that volume of sales, and so Everbridge sues for the fees it would have received if that volume of sales had been achieved. [ 4 ] CommAlert raises two types of defence, one of which may have merit.

(1) Pre-Contractual Misrepresentations [ 5 ] The first type of defence raised by CommAlert is based on pre-contractual misrepresentations allegedly made by Everbridge to CommAlert. In my view this defence lacks merit. [ 6 ] When one looks at the list of misrepresentations, they are not misrepresentations of fact.

They are a list of promises allegedly given by Everbridge during contractual negotiations, but not incorporated into the written OEM contract. [ 7 ] The promises allegedly given during negotiations are as follows: • Everbridge would provide exclusivity to CommAlert to sell Everbridge products in its territory; • Everbridge's sales department would support CommAlert; • Everbridge would not compensate its internal sales staff differently when working with CommAlert to sell to and obtain clients; • CommAlert's client information would not be used by Everbridge for Everbridge's sole benefit; • CommAlert's clients and prospective clients would not be directly approached by Everbridge; • CommAlert would not be excluded from sales of Everbridge products generated in CommAlert 's territory; • Everbridge would not directly offer clients or prospective clients of CommAlert lower prices for Everbridge software than what CommAlert could offer for Everbridge products; • Everbridge would not offer packages directly to CommAlert's clients or prospective clients that included better product options and/or pricing than CommAlert could provide; • Everbridge would not sell its product to mutual aid organizations for them to resell to their members; • Everbridge would not interfere with CommAlert's relationships with its clients; • Everbridge would provide CommAlert with weather software to alert its clients to potential dangers in the weather forecast; • Everbridge would train and support CommAlert in relation to the technical aspects of Everbridge products; and • Everbridge had locations in Canada where it would store the data of CommAlert and its clients, and this data would not be accessed outside of Canada. [ 8 ] These alleged representations and promises were not incorporated into the OEM Agreement.

In addition, the OEM Agreement provided: This Agreement, including its Exhibits, constitutes the entire agreement between the Parties and supersedes all other agreements and understandings between the Parties, oral or written, with respect to the subject matter hereof, including any confidentiality agreements. This Agreement shall not be modified or amended except by a writing signed by both Parties. [ 9 ] If CommAlert’s approach was correct, parties to a commercial agreement might as well not even bother writing down the terms of their agreement.

In the event of a dispute, either party could simply adopt a position based on alleged unwritten pre-contractual promises. [ 10 ] The whole point of a written agreement is to document what promises survive negotiations and are adopted by the parties. [ 11 ] The danger of allowing parol evidence to contradict the written terms of a contract are summarized in Gainers Inc. v Pocklington Financial Corporation. , 2000 ABCA 151 , 2000 CarswellAlta 508.

(2) Breach By Everbridge Of Covenants Regarding Confidentiality And Unethical Practices [ 12 ] This defence arised by CommAlert potentially has merit. It is based on the terms of the written OEM agreement whereby Everbridge promised not to misuse confidential information and to avoid unethical practices. [ 13 ] I am unable to come to a conclusion on the merits of this potential defence because the totality of the evidence placed before the court by both parties does not provide sufficient evidence to allow me to understand the commercial context of the contract. Attempting to interpret the contract without that commercial context would not be wise.

[ 14 ] Specifically I am unable to determine, from the evidence placed before me, to what extent sales of the combined product of Everbridge and CommAlert are in direct competition with the standalone Everbridge product. Would one type of customer require the combined product, while another type of customer would be adequately serviced with the standalone product? [ 15 ] Here is the background as to how that commercial context is important in interpreting the OEM. [ 16 ] The OEM is apparently a standard form contract developed by Everbridge for use in many areas of the world.

The principal of CommAlert negotiated the OEM without the assistance of a lawyer. [ 17 ] The OEM, notwithstanding that it is Everbridge’s standard form contract, is not clearly drafted. [ 18 ] All that needed to be expressed, preferably in one clause, was that: (

i) CommAlert had the exclusive right to market Everbridge’s software in Canada for use in conjunction with CommAlert’s software and services , (ii) CommAlert had the non-exclusive right to market Everbridge’s software in Canada for use on a standalone basis (in other words, not in conjunction with CommAlert’s software and services). [ 19 ] Everbridge may protest that this is exactly what the contract does, and in the end I agree with Everbridge that this is the correct

interpretation. My point is that the drafting is not clear. [ 20 ] Nowhere does it say expressly that CommAlert has the non-exclusive right to market Everbridge’s software on a stand-alone basis. Rather, that is to be inferred by a carve-out allowing Everbridge to sell its software world-wide on a stand alone basis. That carve- out, however, commences with the words “Everbridge reserves all other rights not included herein”. [ 21 ] If CommAlert did not carefully read the

definitions clauses, it would then mistakenly not understand that it might be potentially competing head to head with Everbridge in Canada for standalone sales of Everbridge software. One can see how a non- lawyer in CommAlert’s position could be confused. [ 22 ] Back to commercial context.

If the combined product and the standalone product were in direct competition, something I cannot judge without more extensive evidence, then CommAlert has an arguable position that the following conduct is contrary to Everbridge’s written covenants not to use CommAlerts information other than for the purpose of the OEM, and to avoid unethical practices: • Everbridge using customer data input by CommAlert into a joint database to have Everbridge’s sales force contact that customer to sell Everbridge software on a standalone basis directly to CommAlert’s customers. • Everbridge structuring its sales commissions so Everbridge’s sales force would earn more commission selling Everbridge’s software on a standalone basis than selling the combined Everbridge/CommAlert package. (the OEM called for the parties to participate in a joint marketing program). [ 23 ] Everbridge’s position is that it can engage in conduct as set out above and still hold CommAlert to its guaranteed sales threshold. [ 24 ] As stated in Whitecourt Power Limited Partnership v Elliott Turbomachinery Canada Inc. , 2015 ABCA 252 , 2015 CarswellAlta 1379, at para 9 : In light of the Supreme Court's decision in Hryniak v Mauldin , 2014 SCC 7 , [2014] 1 S.C.R. 87 (S.C.C.) and decisions of this court since Hryniak ,

summary judgment is no longer denied solely on the basis that the evidence discloses a triable issue. Rather, the court asks whether there is any issue of merit that genuinely requires a trial or, conversely, whether the claim or defence is so compelling that the likelihood it will succeed is very high such that it should be determined summarily. A second consideration is whether examination of the existing record can lead to an adjudication and disposition that is fair and just to both parties . See generally P. (W.) v Alberta , 2014 ABCA 404 (Alta. C.A.) at para 26 , (2014), 7 Alta. L.R. (6th) 319 (Alta.

C.A.); Windsor v Canadian Pacific Railway , 2014 ABCA 108 (Alta. C.A.) at para 16 , (2014), 572 A.R. 317 (Alta. C.A.). [ 25 ] In my view the sparse evidence placed before the court regarding commercial context is not a sufficient record on which I can interpret the OEM contract. Accordingly I decline to grant

summary judgment.

(3) Costs [ 26 ] If the parties cannot agree on a costs outcome they may approach me for a ruling in that regard. Heard on the 29 th day of November, 2018. Dated at the City of Calgary, Alberta this 5 th day of December, 2018.

J.T. Prowse M.C.C.Q.B.A. Appearances: Theodore Stathakos McCarthy Tétrault LLP for the Plaintiff Dave Risling McLennan Ross LLP for the Defendant