OPINION & ORDER Plaintiff Venture Group Enterprises, Inc. (“Venture”) brings this action against Defendant Vonage Business Inc. (“Vonage”) for breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppel, and quasi-contract. The dispute centers on a Channel Partner Agreement for Venture to sell Vonage’s voice over internet protocol (“VOIP”) services, and the subsequent breakdown of the business relationship between the parties. Now pending before the Court is Vonage’s motion for summary judgment. For the reasons that follow, the motion is granted. BACKGROUND I. The Channel Partner Agreement The following facts are undisputed unless otherwise noted.1 Vonage is a cloud-based communications provider that offers VOIP phone and internet services. The company largely outsources its sales function to independent contractors through its Channel Partner Program. On November 5, 2015, Vonage entered into one such Channel Partner Agreement (the “CPA”) with Venture, pursuant to which Venture would sell Vonage’s VOIP services through a network of sub-agents. Vonage Rule 56.1 Statement of Facts
4, 6. Pursuant to the CPA, Venture was expected to “own the end-to-end sales process” and “[s]ell the Company Services to customers without substantial involvement of [Vonage] staff.” CPA §1.1. Payment under the CPA was commission-based. For each customer contract that Venture obtained and Vonage accepted, Venture was paid a monthly residual commission for the life of that customer contract, calculated in accordance with Appendix A of the CPA. Id. §3.1; see id. App’x A §1.3. Vonage was entitled to charge back overpayments within 120 days if they were made under the following circumstances: (1) The account canceled prior to activation, (2) the account did not activate within ninety days of the initial booking, or (3) the account activated but terminated within ninety days of the initial booking. Addendum to App’x A §9(b), Fioccola Decl., Ex. 53; see also CPA §3.1. If Venture believed a “mistake in the calculation of compensation” occurred, it had ninety days from receipt of the purportedly mistaken payment to notify Vonage, otherwise it “waive[d] any right to object to or reject that calculation or to claim any breach of [the CPA] by [the] Company based on that calculation.” CPA §3.4. The CPA authorized Venture to hire sub-agents, but made Venture “accountable and liable for all Sub-Agent acts, omissions and non-compliances with the terms of this Agreement, to the same extent [Venture is] so accountable and liable.” Id. §1.1. As relevant to this motion, Section 2.5 of the CPA required Venture and its sub-agents to “truthfully and correctly communicate the availability, features, rates, and related information regarding the Company Services.” Id. §2.5. Similarly, Section 2.10 prohibited Venture and its sub-agents from “knowingly mak[ing] any false statement, misrepresentation, negative comment, half-truth or unrealistic promise or commitment about Company Services, a Customer Contract, or [the] Company to anyone.” Id. §2.10. Section 8 of the CPA governed renewal and termination. Under Section 8.1, after an initial term of thirty-six months, the Agreement would automatically renew for additional one-year terms “unless written notice of termination is provided by the terminating party to the non-terminating party not less than ninety (90) days prior to the expiration of the Initial Term or the then-current Renewal Term, as applicable.” Id. §8.1. Section 8.2.1 — the central provision at issue in this case — specified grounds on which the CPA could be terminated: 8.2.1 [Vonage] may terminate this Agreement…and any further compensation hereunder, upon your failure to cure within the 30 day cure period described above, if you: (1) Have intentionally or recklessly made any materially false representation, report or claim in connection with the sale of Company Services; or (2) Engage in any unlawful or fraudulent activity in connection with the sale of Company Services. Notwithstanding the foregoing or any other term of this Agreement, if a Sub-Agent of yours is responsible for the violations described in this Section 8.2.1, you will have the opportunity to effect the cure described in this section within thirty (30) days of your receipt of Vonage Business’ termination notice if each of the following is true: (i) N/A[;] (ii) you have not otherwise been negligent in your oversight or management of the Sub-Agent; (iii) you have not knowingly permitted or allowed such violations; (iv) you took appropriate and prompt means to terminate and further prevent such violations upon becoming aware of such violations. Id. In the event the CPA was terminated pursuant to Section 8.2.1, Vonage could cease to pay Venture’s commissions, as Section 3.2 stated: “Unless this Agreement is terminated by [the] Company pursuant to Section 8.2.1, [the] Company shall continue to pay you Commissions after termination of this Agreement for Customers procured by you for as long as such Customers continue to utilize the Services….” Id. §3.2. Vonage was also permitted to charge back overpayments at any time if they were “attributed to a violation of Section 8.2 by [Venture] of a Sub-Agent.” Id. §3.1. II. Sub-Agent Misrepresentations At some point during the life of the CPA, Venture’s sub-agents began using misrepresentations to make sales to consumers, which led to numerous cancellation requests of Vonage’s services. The earliest evidence in the record of such misrepresentations is from August 2017. On August 11, 2017, Thomas Greene, the Vice President of Sales and Operations at Venture, emailed several representatives at Telecom Group, Inc. (“Telecom”), one of Venture’s sub-agents, noting “2 complaints in the last week of customers saying they were told that Vonage purchased Spectrum and they need to switch their services,” an assertion that was false. Fioccola Decl., Ex. 10. He asked Telecom to “investigate ASAP as to who the sales rep was and what you are going to do to address this issue going forward.” Id. Mr. Greene followed up with another email on August 14, stating “[h]ere are 2 more…this is now a HUGE problem. Call me ASAP!” Id. Unfortunately for both Venture and Vonage, the misrepresentations persisted. The following email communications, which are non-exhaustive, reflect further examples of sub-agent misrepresentations that continued through 2019: On July 20, 2018, Aly Johnson, a Venture project manager who worked on the Vonage account, sent an email to Jennifer Greene, Venture’s Director of Operations, which read: “Keegan had a call with this customer today [who] expressed extreme concern because the agent stated that ‘optimum would be going out of business in their area and they had no choice but to switch to Vonage.…The customer had a visit from Optimum today and was told that this was not the case, that the customer was lied to. The customer is now very upset with being misl[ed] on the process…I feel like this could potentially be bad.” Fioccola Decl., Ex. 11. On July 26, 2018, Ms. Greene sent an email to Telecom noting a customer had recently canceled his Vonage service because “he agreed to sign up under the guise that Vonage purchased Spectrum…when he called Spectrum, [they] informed him that they were not purchased by [Vonage].” Fioccola Decl., Ex. 13. On August 24, 2018, Ms. Greene sent an email to Telecom which read: “Customers are stating they were told that Spectrum and Vonage were merging / buying each other out. Customers are…[u]nder the assumption they don’t have a choice to switch — which is inaccurate and misleading.” Fioccola Decl., Ex. 14. On October 4, 2018, Johnson sent an email to Jennifer and Thomas Greene noting that a customer requested to cancel his Vonage services “because he was told that Vonage bought out Charter and they would no longer be providing services in the area, so he had to switch. Customer does not wish to speak to sales again about this and feels as though he has been lied to.” Fioccola Decl., Ex. 15. On November 6, 2018, Johnson emailed a Telecom representative noting that a customer was told “she has no choice but to go with Vonage because her voice services would no longer be provided by Spectrum.” Fioccola Decl., Ex. 16. On February 6, 2019, Ms. Greene emailed Telecom reporting a customer complaint and noting, “The customer stated he was misled, he was told that ‘Vonage is taking over Spectrum services.’” Fioccola Decl., Ex. 17. On March 19, 2019, Tatyana Anderson, an account coordinator at Venture, emailed Jennifer and Thomas Greene reporting a cancellation request and noting that the customer “stated sales agent told her Comcast and Venture w[ere] merging.” Fioccola Decl., Ex. 19. On April 4, 2019, Doug Turpin, Venture’s Chief Executive Officer, emailed other Venture representatives stating, “[Vonage] did have a significant percentage of customers cancel due to what appears to be pretty clear misrep issues. This was the cancel reason we got on 15-20 percent of their customers after we had paid them for the order on submitted from info from Vonage or our calls to customers. It also influenced the poor install rate on the initial orders.” Fioccola Decl., Ex. 20. There is also evidence in the record that, at least throughout 2017 and 2018, Venture instructed its employees to hide the extent of the sub-agent misrepresentations from Vonage. For example, on September 6, 2017, Ms. Greene sent an email to two Venture agents, copying Johnson, that read: “Please delete the following note on this order…Customer is upset because they claim that they have been misled and lied to on numerous occasions.” Fioccola Decl., Ex. 34. Ms. Greene added: “We do not want Vonage to see this note.” Id. On August 10, 2018, nearly a year later, Ms. Greene again told Johnson that “cancellation reasons may need to be sanitized before sending to [Vonage].” Fioccola Decl., Ex. 35. She emphasized that “[w]e should NOT be telling Vonage” a customer canceled her services because she “felt like she was lied t[o]” by the sales agent. Id. On November 9, 2018, Miosha Cross, a Venture employee, emailed Jessie Tallant, a Service Delivery Manager at Vonage, reporting a customer had canceled his service “because the sales agent lied to him and stated that [V]onage bought out [C]harter.” Fioccola Decl., Ex. 36. Johnson then emailed Cross separately, stating: “We really want to make sure we sanitize these before we send them to Vonage. We should never tell Vonage that a customer cancelled because the agent lied to them, even if that is the reason. That only makes us look bad, and may get us into trouble.” Id. Finally, on November 19, 2018, Ms. Greene emailed Johnson and another Venture representative reiterating, “Please let everyone know that cancel emails should be reviewed by a mgr with the ‘reason’ being checked to make sure it is sanitized.” Fioccola Decl., Ex. 37. III. Vonage’s Investigation and Termination of the CPA On February 28, 2019, John Reid, the Regional Channel Manager at Vonage, sent Doug Turpin a “claw back list” of 125 accounts that had not been properly activated and thus did not qualify as valid sales. Fioccola Decl., Ex. 38; see also id., Ex. 39. According to Vonage, Venture “suspiciously activated” these 125 accounts — an assertion that Venture disputes — by simply switching the status to “active” without actually completing the activation process, including by obtaining valid credit card information. Vonage Rule 56.1 Statement of Facts
