Etc International, Inc. v. Curriculum Advantage, Inc.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 06-3368
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ETC INTERNATIONAL, INC.,
Appellant,
v.
CURRICULUM ADVANTAGE, INC.;
PRIME ENTERTAINMENT, INC.; MICHAEL GLOVER;
COMPUTER AND CONTROLS, LTD;
PETER GILLETTE, jointly, severally and individually;
LINDSEY COOK
__________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 03-cv-05898)
District Judge: Honorable Jose L. Linares
__________
Submitted Under Third Circuit LAR 34.1(a)
on January 31, 2008
Before: RENDELL and CHAGARES, Circuit Judges,
and POLLAK,* District Judge.
(Filed: April 3, 2008)
__________________
* Honorable Louis H. Pollak, Senior Judge of the United States District Court for the
Eastern District of Pennsylvania, sitting by designation.

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__________
OPINION OF THE COURT
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RENDELL, Circuit Judge.
The instant appeal revolves around the assertion by Plaintiff-Appellant ETC
International, Inc. (“ETC”) in its District Court complaint that Defendant-Appellee
Curriculum Advantage, Inc. (“Curriculum”) committed fraud and breach of contract. The
District Court granted Curriculum’s motion to dismiss the fraud count and granted
summary judgment in favor of Curriculum on the breach of contract count. The District
Court also granted summary judgment in favor of Curriculum on its counterclaim for
$125,000 for products sold and delivered by Curriculum to ETC for which payment had
not been made. ETC has appealed each of these rulings. We will affirm.
ETC is a corporation that provides software and training services for school
districts in foreign countries. In April 2000, ETC entered into a contract with
Curriculum’s predecessor whereby ETC would purchase licenses for Curriculum’s
educational software, along with the right to resell those licenses throughout the
Carribean. ETC in turn sold a number of the licenses to a local company in Trinidad,
Computers & Controls, Ltd. (“C&C”), which had a contract with the Trinidad Ministry of
Education to procure educational software for the country’s schools. ETC asserts that its
contract with Curriculum called for ETC to be the sole distributor of Curriculum’s

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software in the Carribean and thus prohibited Curriculum from selling its own product
directly to Carribean companies or governments. Curriculum, however, subsequently
arranged to sell its software directly to C&C. ETC alleged that Curriculum and C&C
dealt behind its back, deceived it, and misled it as to what it believed was the exclusive
nature of its license-distribution rights.
The District Court summarized the relationship among the parties, in a footnote, as
follows:
From ETC’s submissions to the Court, it appears that ETC’s role in the
transaction was as the “middle-man.” Typically, a Caribbean school district
would place an order for software with C&C, who would then order the
licenses from ETC. ETC would then order the licenses from Curriculum.
Upon receipt of the licenses, ETC would sell the licenses to C&C and use
funds received from C&C to pay Curriculum. Plaintiff’s civil action
relates to defendant’s sale of software directly to C&C, which allegedly
eliminated the need for plaintiff’s function as a “middle-man.”
(App 9a n.6.)
The District Court had jurisdiction pursuant to 28 U.S.C. § 1332 and we now have
jurisdiction pursuant to 28 U.S.C. § 1291. Our review of a district court’s grant or denial
of a Rule 12(b)(6) motion to dismiss is plenary. In re Merck & Co., Inc. Sec. Litig., 432
F.3d 261, 266 (3d Cir. 2005). Federal Rule of Civil Procedure 12(b)(6) calls for dismissal
if a complaint “fail[s] to state a claim upon which relief can be granted.” Importantly for
this case, Federal Rule of Civil Procedure 9(b) creates heightened pleading requirements
for allegations of fraud, requiring the plaintiff to “state with particularity the
circumstances constituting fraud.” Our review of a district court’s grant or denial of

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summary judgment is also plenary. Abramson v. William Paterson Coll. of N.J., 260 F.3d
265, 276 (3d Cir. 2001). Summary judgment should be granted “if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c).
On appeal, ETC complains that the District Court erred in determining that its
relationship with Curriculum was nonexclusive, and by finding that there was no fraud
committed by Curriculum in “going behind Plaintiff-Appellant’s back to conclude its
own deal.” (Petr.’s Br. 3.) ETC also challenges both the District Court’s failure to find
that Curriculum had violated a duty of good faith and fair dealing and its award of
summary judgment on the counterclaim notwithstanding Curriculum’s alleged fraudulent
deception and breach of its duties.
ETC urges that there were genuine issues of material fact with respect to all of
these issues, which the District Court ignored. Furthermore, ETC maintains that the
District Court should have permitted the case to proceed on the theory of promissory
estoppel instead of dismissing it.
We will not recount the extensive procedural history leading up to the District
Court’s order, but will recount those aspects of the District Court’s ruling that compel us
to affirm its order.
First, the District Court concluded that ETC had failed to plead its claim of

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common law fraud with sufficient particularity. We agree. ETC’s contentions as to
fraud are stated in general terms, without sufficiently referencing times, dates, or other
specifics. As the District Court noted, ETC appears to allege no more than a breach of an
existing contract, rather than a claim of fraud based on this contract. The District Court
also noted that “[t]o the extent that plaintiff alleges that it relied to its detriment on
defendant’s assurances relating to a future agreement, then the proper claim appears to be
one for promissory estoppel, not fraud.” (App. 15a.) Unfortunately for ETC, however, it
chose to plead a claim for fraud, not promissory estoppel, and did so inartfully. It is for
the plaintiff, not the court, to set forth its claims in its complaint; the court has no power,
let alone obligation, to amend sua sponte a plaintiff’s inartful pleading. Furthermore,
ETC never requested the District Court to permit it to amend its complaint to include a
promissory estoppel claim.
ETC’s claim that the District Court improperly granted summary judgment on its
breach of contract claim is similarly flawed. ETC urges that its agreement with
Curriculum gave it exclusive distribution rights in Trinidad, and that Curriculum violated
the agreement by dealing directly with C&C. However, as the District Court found, the
record is clear that the April 2000 contract specifically states that the grant to ETC of the
right to distribute the educational software licenses in the Caribbean constitutes “a
nonexclusive agreement.” (App. 19a & n.13.) ETC relies on “sole source exclusivity
letters” that, it argues, changed the nature of the contract. However, those letters were not

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produced to the District Court. Moreover, as the District Court noted, ETC waived any
argument regarding the letters when it clearly indicated in its summary judgment brief
that it “does not dispute the facts set forth by [Curriculum] in [Curriculum’s] twenty
paragraph Statement of Material Facts.” (App. 13a, 559a). In the Statement of Material
Facts to which ETC was referring, Curriculum stated that the April 2000 contract
“accurately represents the written terms of ETC’s contractual relationship with
Curriculum.” (App. 434a.) In addition, to the extent they pre-dated the contract and are
inconsistent with its terms, the alleged letters are barred by the parol evidence rule.
ETC urges that even if its breach of contract claim cannot prevail, Curriculum has
breached an implied duty of good faith and fair dealing present in all contracts by denying
ETC the “benefit of its hard work and excellent contacts in the Caribbean, without which
[Curriculum] could initially sell nothing.” (App. 21a.) However, as the District Court
correctly observed, ETC pled breach of contract, not breach of duty of good faith and fair
dealing, in its complaint. As was noted by the District Court, a breach of an implied
covenant of good faith and fair dealing is different from a breach of an express contract
under New Jersey law, which applies here. See, e.g., Wade v. Kessler, 798 A.2d 1251,
1259 (N.J. 2002). Moreover, ETC did not plead breach of an implied contract.
Accordingly, we will not disturb the District Court’s conclusion that ETC’s fraud
and breach of contract claims lacked merit. The dismissal of the former and the grant of
summary judgment in favor of Curriculum on the latter were both proper.

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The District Court rejected ETC’s impossibility argument, stating:1
Plaintiff entered into a nonexclusive contract with defendant which did not
bind nor reference C&C, nor preclude defendant from pursuing other
business deals. It is established that Plaintiff ordered licenses from
Defendant and failed to pay Defendant within sixty (60) days. Plaintiff did
not return the licenses or otherwise attempt to negotiate a new contract with
Defendant. In this respect it is clear to the court that Plaintiff’s breach was
due entirely to Plaintiff’s “personal inability . . . to perform” rather than
some intervening event. For these reasons, the Court grants summary
judgment to Defendant on Plaintiff’s defense of impossibility of
performance.
(App. 25a (citations omitted).)
We discuss only Count 1 (fraud), Count 10 (breach of contract), and the counterclaim,2
as the order of the District Court entered June 14, 2006 was the only order from which an
appeal was taken. The remaining counts had previously been dismissed and no appeal
was taken from such previous order.
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ETC makes a number of arguments with respect to Curriculum’s counterclaim. It
maintains that its affirmative claims of fraud and breach of the duty of good faith and fair
dealing should entitle it to withhold the $125,000 due for software licenses that
Curriculum delivered to it. Also, it urges that because Curriculum’s actions rendered
ETC unable to pay for the licenses, the doctrine of impossibility should bar Curriculum’s
recovery. Based on our discussion of ETC’s claims above, and our agreement with the
District Court’s view of the impossibility defense, we conclude that the District Court1
properly granted summary judgment against ETC on Curriculum’s counterclaim.
In light of the above, we will AFFIRM the Order of the District Court.2

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