Menu
Button: Make a Payment Button: Newsletter Mailing List

Icon: Healthcare LawHands-On Experience

Providing legal advice

and services since 1977

Technical Support Services, Inc., Plaintiff, Against International Business Machines Corporation, Defendant. International Business Machines Corporation, Counterclaim-Plaintiff, Against Technical Support Services,Inc., Counterclaim-Defendant. 02891/200

 Technical Support Services, Inc., Plaintiff, against
 International Business Machines Corporation, Defendant.
 International Business Machines Corporation,
 Counterclaim-Plaintiff, against Technical Support Services,
 Inc., Counterclaim-Defendant.

 02891/2006

 SUPREME COURT OF NEW YORK, WESTCHESTER COUNTY

 2007 NY Slip Op 52428U; 18 Misc. 3d 1106A; 2007 N.Y. Misc.
 LEXIS 8410

December 3, 2007, Decided

NOTICE:    THIS OPINION IS UNCORRECTED AND WILL NOT BE PUBLISHED IN THE PRINTED
OFFICIAL REPORTS.

PRIOR HISTORY: Tech. Support Servs. Inc. v. IBM, 2006 N.Y. Misc. LEXIS 2421
(2006)

HEADNOTES

    Contracts--Breach or Performance of Contract--Contractual Limitation of
Damages.

COUNSEL: Justine Clare Moran, Esq., Co-Counsel for Plaintiff, Astoria, New York.


Coggan & Tarlow, Co-Counsel for Plaintiff, New York, New York.

Cravath, Swaine & Moore LLP, Attorneys for Defendant/Counterclaim Plaintiff, New
York, New York.

JUDGES: Alan D. Scheinkman, Justice of Supreme Court.

OPINION BY: Alan D. Scheinkman

OPINION

   Alan D. Scheinkman, J.

   Defendant/Counterclaim-Plaintiff International Business Machines Corporation
("IBM" or "Defendant") brings two separate motions. It first moves for an order,
pursuant to CPLR 3212, granting summary judgment to IBM as to First, Second,
Third and Fourth Causes of Action contained in the Amended Complaint (Seq. # 6).
1 IBM's motion for summary judgment is opposed by Plaintiff Technical Support
Services, Inc. ("TSSI" or "Plaintiff") which cross-moves for an order, pursuant
to CPLR 3212, granting it summary judgment on its declaratory judgment claim
(Sixth Cause of Action) and  granting dismissal of IBM's counterclaims (Seq. #
7).

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -1   The
motion does not challenge the viability of the Fifth and Sixth Causes of Action.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

   Separately, IBM moves for an order striking Plaintiff's jury demand (Seq. #
8). Plaintiff opposes the motion.

   The motions and cross-motion are consolidated for purposes of decision and
disposition.

THE FACTS

A. Relevant Background

   This case was commenced in May, 2006. Thereafter, a Verified Complaint and an
Amended Verified Complaint were interposed. The Amended Verified Complaint
asserts six causes of action, to wit: (1) breach of contract; (2) negligence;
(3) gross negligence; (4) fraud; (5) work, labor and services performed, and (6)
declaratory relief. On or about July 17, 2006, Defendant asserted an Answer to
the Amended Complaint with Affirmative Defenses and Counterclaims sounding in
breach of contract and breach of implied covenant of good faith and fair
dealing. Upon the completion of discovery, Plaintiff served and filed a note of
issue demanding a jury trial with respect to all of its claims except for the
claim for declaratory relief.

   The action arises out of TSSI's work under, and subsequent withdrawal from, a
subcontract with IBM for information technology work to be rendered as part of a
technology services project that IBM had with Schering Corporation ("Schering").

   TSSI has been in the business of providing information technology
infrastructure management services to corporate and institutional clients. It
had a business relationship with IBM since at least 1995, whereby TSSI acted as
IBM's subcontractor on several information technology infrastructure projects.
TSSI performed tasks on IBM's behalf, including, but not limited to hardware and
software installation, removal, maintenance and repair. Plaintiff alleges it was
one of a small group of subcontractors who had been pre-qualified under IBM's
procedures and contracted with IBM to hold itself available for IBM
subcontracting work.

   TSSI alleges that, prior to January, 2005, IBM was invited by Schering to
submit a proposal to expand its then existing support of Schering main frame
equipment and become Schering's technical support services contractor. 2 IBM
would be responsible, inter alia, for the installation, removal, maintenance and
repair of all of Schering's information systems,  including all hardware and
software systems, as well as for technical support concerning Schering's
software systems and the provision of a Help Desk to assist Schering's employees
with computer-related problems.

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -2   When this
action was initially commenced, Schering was joined as a co-defendant with IBM.
By stipulation dated March 26, 2007, the action was discontinued as against
Schering, with prejudice.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

   IBM's decided to sub-contract out the deskside support services portion of
the anticipated contract with Schering. Thus, in or about January 2005, IBM
forwarded TSSI and other companies a Request for Proposal ("First IBM RFP") to
become its subcontractor. Deskside support services includes two categories of
work: "break/fix" work, which involves visiting a user's location to repair
hardware or software problems with the user's computer, monitor or printer, and
"installs, moves, adds and changes", which involves installing, moving, adding
or changing computer equipment at customer various locations (referred to as
"IMAC" work).

   The First IBM RFP included information regarding the estimated number and
location of Schering employees who required services; the estimated number of
computers, printers and monitors within the scope of the subcontract; and the
estimated number of deskside support events per year. TSSI submitted a
responsive bid on January 25, 2005.

   On January 27, 2005, IBM asked its potential subcontractors to refine their
bids based upon the availability of "ThinkVantage tools" and a "Level 1.5 help
desk." These resources were to be provided at IBM's expense. A "Level 1.5 help
desk" "is a help desk that has higher skilled people staffed on it that can
assist in resolving the more difficult [service] calls [remotely] without a
deskside visit." The term "ThinkVantage tools" generally refers to software that
facilitates remote repair of a user's computer. The primary such tool used on
the Schering Project is called "Rapid Restore."

   IBM's January 27, 2005 e-mail to TSSI stated that:


        ... [IBM's] assertion is that in a traditional environment we
     should see [REDACTED] [software] break fix calls per user per year and
     the level 1.5 help desk will solve a certain percent of those calls
     resulting in the quantities of a visit deskside that I have calculated
     below. With the staged implementation of Rapid Restore [a Think
     Vantage tool] these deskside events will further decrease due to the
     end user, the level 1 and level 1.5 help desk becoming more proficient
     at fixing the problem themselves using the tool.



   On January 29, 2005, TSSI submitted an updated offer in response to IBM's
January 27 e-mail. In updating the pricing, TSSI projected that each successive
year of the subcontract would see increasing cost savings. TSSI acknowledged, in
a deposition of Gregory Woodward ("Woodward"), TSSI's former Vice President for
Operations, that if Think Vantage tools were subject to a staged implementation,
the  effectiveness of the Level 1.5 help desk would also be affected, because
Think Vantage is one of the tools used by a Level 1.5 technician to solve
software problems remotely. On these motions, Woodward submits an affidavit in
which he claims that he then believed that there would be immediate
implementation. (Woodward Aff., PP4-14). IBM claims that TSSI was not told that
the 1.5 Help Desk and Think Vantage Tools would be available immediately.

   In a March 18, 2005 "update" Document of Understanding, TSSI said:


        As referenced in a 1/27/2005 email, IBM will implement a Level 1.5
     helpdesk to reduce the annual number of software calls and implement
     Think Vantage tools to reduce the overall quantity of hardware calls.
     Based upon this tssi has assumed the following deskside software
     visits + 5%:



   Year 1: 10800; Year 2: 8100; Year 3: 5400; Year 4: 3600; Year 5: 1800.

   IBM asserts that, over the next few months, TSSI worked with IBM further to
refine its bids as new information concerning the scope of the project was
learned. TSSI disputes that it worked with IBM on this process, and asserts
instead that IBM gave TSSI different parameters and asked TSSI to reprice to
bring the cost of the bid down.

   On May 5, 2005, IBM and Schering entered into an Information and Technology
Services Agreement, which provided, among other things, that "IBM would be
responsible for the installation, removal, maintenance and repair of Schering's
information systems for a five-year period." In the meantime, Schering had
decided to exclude some work from the scope of its arrangement with IBM.
Accordingly, IBM issued a second RFP (the "Second IBM RFP") to its vendors to
reflect the omission of the work that Schering decided to omit. Except for those
exclusions, and changes to section numbering, the data in the Second IBM RFP was
identical to the First IBM RFP. TSSI submitted its response to the Second IBM
RFP shortly thereafter.

   On May 26, 2005, IBM officially selected TSSI as its "vendor of choice"
("VOC"), for the Schering deskside support services subcontract. This enabled
the parties to begin negotiating a Statement of Work ("SOW") that would define
TSSI's specific duties on the Schering Project. B. Customer Solutions Agreement
and Statements of Work

   TSSI and IBM entered into "Customer Solutions Agreement 4900CS0268"
(sometimes referred to as the Base Agreement or Master Agreement in the
documents submitted), effective March 13, 2000. The Agreement "establishes the
basis for a multinational procurement relationship under which [TSSI] will
provide [IBM] the Deliverables and Services described in SOWs issued under this
Agreement." The  Agreement was signed by George DeMaria, TSSI's Chief Financial
Officer and Treasurer at the time, on behalf of TSSI on March 24, 2000. It also
was signed by a representative of IBM, Alex M. Sansky, on April 12, 2000.

   In his deposition, Mr. DeMaria admitted signing the Agreement and stated he
understood that the purpose of the Agreement was to permit the parties to
conduct business with each other. He acknowledged that the document was required
in order to do business with IBM and that it "... looks like it's an
encompassing agreement". (Buterman Aff., Ex. 1, De Maria Tr. 89:17-91:7;
91:10-92:17). There is no evidence indicating that the Agreement ever was
terminated or modified by the parties. In fact, the undisputed past history of
dealing between TSSI and IBM shows that a Customer Solutions Agreement served as
a master or template for the contractual relationship between them, with the
relevant CSA establishing general terms and conditions and the particular,
technical detail as to the actual work to be done being set forth in statements
of work, work authorizations, and other documentation issued with respect to
particular projects. For example, TSSI performed information technology services
as an IBM subcontractor for Washington Mutual, Inc., a bank with locations
nationwide. That work was performed pursuant to a Customer Solutions Agreement.

   In Section 1.0 of the Customer Solutions Agreement applicable in this case
("CSA"), the term "Agreement" is defined to mean "this agreement and any
relevant Statements of Work ("SOW"), Work Authorizations ("WA"), and other
attachments or appendices specifically referenced in this Agreement." A purchase
order issued by IBM is a Work Authorization under the CSA, as provided in the
Definition section of the CSA as follows:

   "Work Authorization" or "WA" means Buyer's authorization in either electronic
or tangible form for Supplier to conduct transactions under this Agreement
(i.e., a purchase order, bill of lading, or other Buyer designated document). A
SOW is a WA only if designated as such in writing by Buyer.

   Section 3.3 of the CSA provides that IBM may terminate any subcontract
subject to the CSA without cause on sixty days' notice.

   Section 11.0 of the CSA provides, in pertinent part, that "[e]xcept for
liability under the Section entitled Indemnification, in no event will either
party be liable to the other for any lost revenues, lost profits, incidental,
indirect, consequential, special or punitive damages."

   Section 12.0 of the CSA provides that TSSI would be considered an
"independent contractor" to IBM, and that entering into the CSA did not "create
an agency, partnership, or joint venture relationship" between the companies.

   The parties began negotiating the Statement of Work 4905AT0056 (the "SOW")
for the Schering Project in June 2005. Although IBM alleges that "every draft of
the SOW begins by stating that [t]his Statement of Work ["SOW"] #  4905AT0056
adopts and incorporates by reference the terms and conditions of the CSA', which
the SOW defines as the Base Agreement', the support cited for this assertion is
Exhibit 21 to the movant's affidavit. This exhibit includes an unauthenticated
e-mail from Mike Klobe at IBM dated June 7, 2004 to George DeMaria and Tom
McLaughlin of TSSI indicating that enclosed is a "first draft of the SOW for
Schering Plough". 3 The exhibit also includes the first page of a "Solutions
Engagement Agreement", with a sub-heading "Statement of Work" and with a further
heading indicating "Agreement # 4900CS0268, SOW # 4905AT0056". The Agreement, in
relevant part, reads as follows:

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -3   The
purported e-mail is included in an exhibit to an affirmation submitted by
counsel to IBM. While the attorney contends this is a true and complete copy of
the document, the Court has not been furnished with anything that would indicate
either that the sender testified to having sent it or that the recipient
acknowledged receipt of it.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

   This Statement of Work ("SOW") # 4905AT0056 adopts and incorporates by
reference the terms and conditions of Solutions Engagement Agreement #
4900CS0268 ("Base Agreement") between International Business Machines
Corporation and TSSI. This SOW is effective beginning on 6/2/2005 and will
remain in effect until 5/31/2008. ...

   (Buterman Aff., Ex. 21).

   Although TSSI indicates in its statement of the facts at issue that "IBM has
not produced any evidence whatsoever which shows that CSAs and SEAs are the same
exact thing", neither has TSSI come forward with any evidence indicating that
the CSA and SEA at issue here are not the same master or base agreement; indeed,
they both contain the identifying reference number 4900CS0268. By way of
explanation, IBM asserts the nomenclature used by IBM to refer to the base
agreement changed over time, from Customer Solutions Agreement to Solutions
Engagement Agreement. In support of this assertion, IBM cites the testimony of
Michael Klobe of IBM, who stated as follows:

   Q:I wanted to clarify it. As you define it what is a base master agreement
then?

   A:The CSA or an SEA, it's a customer solutions agreement. And then the SEA is
a solutions engagement agreement. They're one in the same. IBM changed the
acronym like later on.

   Contracts, I don't know the difference. I don't think there is a difference.
I think it just changed into a the acronym changed. So from now on we're very
seldom do you see CSAs anymore, but I believe the TSSI one was doe at the time
as a CSA.

    (Dep. Michael Klobe, 1/11/07, 14:15 to 15:3).

   Accordingly, IBM asserts the SOW initially referred to the base agreement
between IBM and TSSI as "SEA 4900CS0268", though the actual base agreement was
entitled "CSA 4900CS0268". The SOW also states that "[t]ransactions performed
under this SOW will be conducted in accordance with and be subject to the terms
and conditions of this SOW, the Base Agreement, and any applicable Work
Authorizations ("WA"). . ."

   IBM issued a Purchase Order ("PO") to TSSI for the Schering Project on August
15, 2005. (Buterman Aff., Ex. 24). The PO provides, in relevant part, that
"[t]he terms and conditions of IBM Customer Solutions Agreement Number
4900CS0268 [and] SOW 4905AT0056 apply to this order." The PO also states that
TSSI accept[s] the terms of this Statement of Work by either:

   1) signing the purchase order and returning a copy to us, or

   2) providing the Service/Deliverable.

   In the event of a conflict between the terms and conditions of the referenced
agreement and the terms and conditions of IBM's Standard Terms and Conditions
dated January 14, 2000, the terms and conditions of the referenced agreement
shall apply.

   IBM asserts the PO is a "Work Authorization" within the meaning of the CSA,
[which provides that a Work Authorization means "Buyer's authorization in either
electronic or tangible form for Supplier to conduct transactions under this
Agreement (i.e., a purchase order, etc.) A SOW is a WA only if designated as
such in writing by Buyer]". TSSI disagrees. Instead, TSSI argues that while the
purchase order states on its face that the terms and conditions of IBM Customer
Solutions Agreement Number 4900CS0268 and SOW 4905AT0056 apply to this order,
the PO is not a WA within the meaning of the CSA.

   TSSI's assertion that the PO is not a WA within the meaning of the CSA is
based upon the language of the Purchase Order quoted above which indicates that
"[i]n the event of a conflict between the terms and conditions of the referenced
agreement and the terms and conditions of IBM's Standard Terms and Conditions
dated January 14, 2000, the terms and conditions of the referenced agreement
shall apply." Taking this language out of context, TSSI asserts that the PO must
not be referring to the CSA because the aforementioned language references an
agreement dated January 14, 2000 and the CSA was not signed by TSSI until March
24, 2000. This is not convincing. Indeed, it seems apparent to the Court that in
the event of a conflict, the language of the base agreement, CSA # 4900CS0268
will control and not a separate agreement known as "IBM's Standard Terms and
Conditions" which was dated January 14, 2000 and annexed to the movant's
affidavit as Exhibit 60. In any event, the reference to the January 14th
agreement applies only in the event of a claimed conflict of terms, which does
not seem to be the  case here. Indeed, the January 14th Agreement is not part of
the contract between IBM and TSSI.

   IBM asserts TSSI accepted the PO electronically through IBM's Work Order
Interface ("WOI") system, and that in so doing, TSSI accepted the then-existing
Statement of Work draft. In support of these assertions, IBM cites the Purchase
Order, which indicates on page 1 that it was "Viewed, Accepted" (Buterman Aff.,
Ex. 24) and the deposition testimony of George DeMaria of TSSI, in the following
exchange:

   Q: Well, as far as you know, IBM preferred to exchange invoices and other
documents of that sort electronically, rather than through paper, right?

   A: As far as I know, we would bill IBM through this system that they called
WOI and receive purchase orders from this system which we would print out, and
other information.

   Q: And IBM would accept TSSI's invoices electronically?

   A: We would enter the documents onto we would enter the numbers on their
system electronically.

   Q: And they would accept it electronically, right?

   A: Yes.

   Q: And then when they issued purchase orders you would accept them
electronically? You meaning TSSI.

   A: Yes, we would go into their system and see it and print it out, if we
would like.

   Q: And you could also accept it on line, right?

   A: Right. There is a process that they would say accept, reject, review.

   Q: You had become familiar with these processes of IBM by talking to IBM? How
did you become familiar with it?

   A: I was part of I guess when we when IBM was I guess wanted TSSI to use
their WOI system I was part of the setup.

   Q: So you were the one who has having the communication with IBM to get TSSI
into the WOI system?

   A: Yes.

   Q: And did you receive documentation on the WOI system? How did you learn
about it?

   A: From what I remember I was just informed by IBM that they have this system
and they wanted us to register, enroll in the system.

   Q: And you did?

   A: And we did.

   (Buterman Aff., Ex. 1, DeMaria Tr., 410:15-412:9).

   TSSI argues that the above-cited testimony does not reference the  particular
PO at issue, and in no way represents TSSI's acceptance of the PO dated August
15, 2005. Additionally, TSSI submits there never was an existing Statement of
Work as of August 17, 2005; all that existed with respect to the Statement of
Work was a draft of a document that was in the process of negotiation. Moreover,
both the PO, and an e-mail which purports to be from George DeMaria to Mike
Klobe of IBM dated August 16, 2005 indicating that TSSI "... received the PO and
accepted it on WOI ..." are unauthenticated and, as such, are not in proper
evidentiary form for consideration on a motion for summary judgment. 4

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -4   As noted
previously, the Court has not been provided with any evidence that the sender
actually sent these documents or that the recipient acknowledged receiving them.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

   Nevertheless, this dispute is inconsequential given the admissions by TSSI.
In an affidavit submitted by George DeMaria, formerly of TSSI, he admits he
accepted the Purchase Order on IBM's electronic payment system on August 15,
2005. The PO provides that "[t]he terms and conditions of IBM Customer Solutions
Agreement Number 4900CS0268 [and] SOW 4905AT0056 apply to this order." (Buterman
Aff., Ex. 24 at 1, 3-4). Accordingly, there is no issue of fact as to whether
the PO was accepted by TSSI.

   On August 17, 2005, the PO was amended to change TSSI's payment terms from
forty-five to sixty days.

   TSSI could not receive payment for its work without accepting the PO, as
agreed to by George DeMaria in his deposition testimony. (Buterman Aff. Ex. 1,
De Maria Tr. at 99:10-14). Mr. DeMaria also acknowledged that TSSI was "looking
to receive some advance payment" before TSSI started working. IBM agreed to pay,
and did pay, TSSI's first three months' worth of revenue for "maintenance" or
"break/fix" work, which was approximately $ 477,000. (Id., at 412:25-414:8;
443:21-444:10); see also Buterman Aff. Ex. 3, McLaughlin Tr. at 405:10-406:14).

C. TSSI Hires Transnet Technicians

   Before IBM and TSSI began providing deskside support services to Schering on
August 31, 2005, that function was primarily performed by technicians from a
company known as TransNet. (Buterman Aff. Ex. 10, Tingo Tr. at 16:5-13; see
also, Buterman Aff. Ex. 4, Mulhearn Tr. at 15:11-18). TSSI decided it would try
to retain most of the deskside support technicians already working at Schering.
For example, in a February 2, 2005 "Document of Understanding" sent by TSSI to
IBM, TSSI states that it "will make every reasonable effort to retain original
staff members from the prior service organization to ensure the best transition
possible". (Buterman Aff. Ex. 30). Mr. Woodward testified that he, not IBM,
first raised the possibility of hiring TransNet technicians with IBM, in keeping
with standard industry practice to employ technicians  familiar with the
customer's environment:

   Q: When you bid on the first RFP or what I'll call the first and second RFP,
the January 2005 RFPs, at that time were you anticipating that you would hire -
I believe you called it the legacy techs?

   A: Yes, I anticipated hiring a certain number, whether it would be one or 100
of them, you know, percentage-wise, definitely.

   Q: Any why did you in that January time frame anticipate that that would be
the plan?

   A: Just from a knowledge transfer and a transition type into the environment.
They bring the knowledge of the inner workings that you can't know until you've
worked in the environment. So they have some insight into - and contacts,
specifically contacts within an organization that you can leverage to help you
perform.

   Q: Was the idea of hiring the legacy techs originally your idea?

   A: I would - I would say yes. Like I said, it was just - it was - I don't
want to say routine, but it was common in any large engagement that we would
transition to. And it worked the other way, too. When we would - if we lost a
deal that we had, a customer decided to move into another direction for whatever
reason, they transitioned from us to them in cases.

   Q: So this was just typical industry practice that you were accustomed to?

   A: Yes.

   (Buterman Aff., Ex. 2, Woodward Tr. at 70:22-72:3; see also, id. at
73:15-75-14; Buterman Aff., Ex. 11, Panaccione Tr. at 84:25-85:9).

   Mr. Woodward also testified that IBM never "insisted" that TransNet
technicians be hired:

   Q: To your knowledge, did IBM insist that TSSI hire the legacy techs?

   A: I wouldn't use the term insist, but there was - I'm trying to use the
right word. Insist would not be correct.

   Q: Would it be fair to say they supported your idea of hiring the TransNet
techs?

   A: Yes.

   (Buterman Aff., Ex. 2, Woodward Tr., at 75:15-22).

   Both sides agree the TransNet Technicians were subject to noncompete
agreements with TransNet, intended to prevent the technicians from joining a
competitor such as TSSI. It further is agreed that TSSI interviewed the TransNet
technicians beginning in or about early August 2005. TSSI's Chief Information
Officer, Gail Ferguson, who interviewed many of the TransNet technicians for
TSSI, testified as  follows:

   Q: During the course of work on the IBM/Schering-Plough contract you
interviewed a number of TransNet employees, do you recall that?

   A: Yes.

   Q: And you hired a bunch of them?

   A: Yes.

   Q: Okay. Did you ever question any of them when you were interviewing them
whether they were subject to noncompete agreements?

   A: I don't recall asking them that, no.

   Q: Why not?

   A: I just didn't.

   Q: You were certainly aware of the possibility that they could be subject to
noncompete agreements?

   A: Is it possible that they could have signed a noncompete agreement with
TransNet? Yes, it's certainly possible.

   Q: But you didn't bother to ask?

   A: I don't recall asking them that, no.

   (Buterman Aff. Ex. 12, Ferguson Tr. at 48:16-49:11; see also id. at
114:17-116:9).

   TSSI representatives did not ask these questions despite the fact that it
customarily required its own technicians to sign employment agreements including
non-compete clauses. After TransNet threatened litigation against TSSI in late
July 2005 (Buterman Aff., Ex. 29), TSSI continued to conduct interviews of
TransNet technicians, based on legal advice, given by its own attorneys, that
TransNet's non-compete clauses were unenforceable. Mr. Woodward testified that,
shortly after TransNet's threat of litigation, he participated in discussions
with Mr. McLaughlin and Ms. Ferguson about whether TransNet "can enforce [the
non-compete clauses]" or not. (Buterman Aff. Ex. 2, Woodward Tr. at
92:22-93:14). Woodward also testified that "[e]ssentially [ ] it was TSSI's
opinion that it wasn't enforceable and - because we weren't jeopardizing the
agreement." Woodward Tr., at 93:15-19. He also testified:

   Q: And I think you previously stated, but I just wanted to make sure it's
clear, that TSSI reached that conclusion on its own and with the help of its
counsel, correct?

   A: I believe that's true.

   Q: Did anybody else help TSSI reach that conclusion?

   A: Not to my knowledge."

   (Woodward Tr., at 93:20-94:3; see also, Id. at 86:14-87:23.)

   On August 3, 2005, TSSI's counsel (who represents TSSI in this litigation as
well) responded to TransNet's lawsuit threat. In this letter, Ms. Moran stated,
in  relevant part, that "the proposed action by TransNet would constitute
frivolous litigation and should such an action be instituted, [TSSI] would seek
an award of attorney[s]' fees and costs as sanctions, in addition to asserting a
cross-claim for TransNet's tortious interference with [TSSI's] business.
(Buterman Aff., Ex. 32, at IBM 9310011150).

D. TSSI's Withdrawal From the Schering Project

   Transition meetings with IBM began on May 31, 2005. On August 31, 2005 (the
"go-live" date), TSSI began providing deskside support services on the Schering
Project. In the first few days after the go-live date, the volume of deskside
support work to be performed was greater than anticipated by either TSSI or IBM
based on data provided by Schering in the Schering RFP. (Buterman Aff., Ex. 11,
Panaccione Tr. at 89:2-7). Once its performance began, TSSI admitted that it
"was unable to cover a large percentage of the work at [Schering] within the
time provided in the subcontract, as the workload was far in excess of that set
forth in the second RFP." (Complaint, P17, at 14-15).

   Citing the draft SOW, IBM asserts that when TSSI accepted the SOW, TSSI
promised to "provide the Services [set forth in the Agreement] to Buyer [IBM],
Customer [Schering], and Buyer's teaming partners and/or subcontractors subject
to the terms and conditions contained in th[e] Statement of Work (the
"Services")"; IBM alleges TSSI also agreed "that its performance shall meet or
exceed the Service requirements specified in this SOW." As indicated earlier,
TSSI claims that no SOW ever was accepted by TSSI. This, as previously
discussed, is belied by Mr. DeMaria's affidavit in which he admitted accepting
the Purchase Order, and, of course, by accepting the Purchase Order, TSSI
accepted the then-extant SOW. (Buterman Aff., Ex. 24 at 1, 3-4).

   It is clear that as early as September 15, 2005, IBM informed TSSI of its
concerns regarding TSSI's ability to handle the deskside support tasks at
Schering. On September 15, 2005, Ginny Telesca, Service Delivery Manager for
IBM, sent an e-mail to TSSI employees indicating that she was "very concerned
about the way we are handling deskside support at Schering. Our backlog is
growing and I don't get the feeling TSSI has this under control or has any plans
to get this back on track. If am [sic] wrong, pls [sic] let me know."
Additionally, the e-mail states that "[w]e are failing our SLAs miserably" and
asks for daily stats from TSSI on its progress. (Buterman Aff., Ex. 43; see,
also Ex. 7, Ellmore Tr. at 153:11-155:6).

   It is undisputed that almost immediately after the go-live date, the backlog
of deskside support work grew to unsatisfactory levels. As explained by Mr.
Ellmore of IBM, "[m]y customer had significant satisfaction issues because of
the backlog of [deskside support] tickets." (Buterman Aff., Ex. 7, Ellmore Tr.
at 151:20-22, see also, Id., at 152:4-154:4). Mr. Ellmore testified as follows:

   Q: Other than hearing that TSSI had provides services for prior IBM
contracts had you heard anything negative about them?

   A: No.

   Q: Did you ever wonder why [doing its job] was such a problem for them?

   A: Well, yes.

   Q: And what did you come up with?

   A: That they could not perform the services.

   Q: Did you come up with - did you ever give a thought as to why?

   A: No. It was - no.

   Q: Did it matter to you one way or the other as to why?

   A: Well, yeah. The service that they were providing was reflecting poorly on
IBM and on me personally, so, yes, I wondered.

   Q: And what did you do to try to discover what the problem was?

   A: We met with them to find out what - you know, the things that we already
talked about, scheduled meetings, provided additional resources, tried to help
them through it.

   (Buterman Aff., Ex. 7, Ellmore Tr. at 201:8-202:7).

   TSSI sought to withdraw from its subcontract with IBM in early October, 2005.
Although the parties present differing versions of the reasons for the
withdrawal, the testimony of Mr. McLaughlin of TSSI on the subject was, in
relevant part, is as follows:

   Q: Early October of 2005 you made a decision that TSSI should seek
alternatives in terms of going forward in the Schering project, right?

   A: Yes.

   Q: And what were the alternatives that you were considering at the time?

   A: Well, the very first thing prior to that was to attempt to have the
Schering management team - the IBM/Schering management team understand what the
problems were and to try and reconcile them. And absent any apparent success
that I fell back on the ongoing negotiations - discussions rather, with Halifax.

   (Buterman Aff., Ex. 3, McLaughlin Tr., at 479:15-480:4).

   The reference is to Halifax is to Halifax Corporation. TSSI alleges that, at
or about this time, it began negotiations with Halifax to assume TSSI's
responsibilities under the its subcontract with IBM. (Complaint, P19, p. 10, ln.
1-2).

   Mr. McLaughlin further testified as follows:

   Q: And can you tell me - Well, you don't need to look at the letter. Let's do
it this way. In early October or sometime in October you  said you began to have
conversations about TSSI exiting the contract -

   A: Yes.

   Q: with IBM. Tell me the start of those discussions and how they progressed
to finally the execution of this November 30th, 05 letter.

   A: I think it was really straightforward. I approached Bill Ellmore and told
him that we're looking to transition out of the service business. I have a
company of - who was an IBM partner who might be interested in picking up the
Schering-Plough project and I'd like to pursue that.

   Q: Okay. What was Mr. Ellmore's reaction?

   A: Tell me more.

   Q: Was this on a face-to-face conversation?

   A: Face to face, yes.

   Q: So this one, there's no tape recording of this conversation?

   A: No, there's no tape recording.

   Q: And as best you can recall, when was this conversation with Mr. Ellmore?

   A: Early October.

   ***

   Q: So you told [Mr. Ellmore] you would like to transition out of the service
business, meaning TSSI wanted to get out of the service business?

   A: Right.

   Q: And you wanted to focus on the Q? 5

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -5   "The Q"
is a software product TSSI had developed and wanted to focus on selling.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

   A: That's correct.

   (Buterman Aff., Ex. 3, McLaughlin Tr., at 486:12-487:16; 487:25-488:6).

   IBM and TSSI terminated their relationship in connection with the Schering
project on November 30, 2005, when Halifax replaced TSSI. In connection with the
termination, Thomas McLaughlin, President of TSSI, sent a letter dated November
30, 2005 to William Ellmore of IBM which indicated as follows:

   This letter shall serve as notice of the termination of tssi's support
obligations relating to providing services as a sub-contractor to IBM Global
Services for the Schering Plough account effective today, November 30, 2005. I
hereby release IBM from all contract obligations relating to the contract
effective today.

   This termination does not preclude tssi from being appropriately compensated
for services already rendered in the course of providing services from  August
31, 2005 through November 30, 2005.

   A dispute exists with regard to the damages allegedly owed to each party on
account of the Schering contract.

   E. Evidence Relating to TSSI's Claims of Gross Negligence and Fraud

   Mr. Woodward, TSSI's former Vice President, testified in his deposition that
commencing on May 31, 2005, he was not on-site at Schering every day, "but [he]
was down there very frequently. Less right in the beginning in June and it
certainly progressed more and more as it got closer ... as it got tighter I
spent more time on site." (Buterman Aff., Ex. 2, Woodward Tr. 54:8-12). It is
undisputed that Mr. Woodward was IBM's primary point of contact with TSSI and
that he was responsible for working on the RFP. If Mr. Woodward required
assistance, such assistance would be provided by Mr. DeMaria. (Buterman Aff.,
Ex. 1, DeMaria Tr. at 325:12-23).

   Between January 2005 and May, 2005, Mr. Woodward testified that IBM would go
to TSSI with changes, or different requirements regarding the scope of the
Schering project, and TSSI would respond to those requirements by altering its
bid on the project. (Buterman Aff., Ex. 2, Woodward Tr., 363:15-21). In the
course of these discussions, Mr. Woodward testified that he asked questions of
IBM to clarify information he received from IBM. (Id., at 364:8-15). He further
testified as follows:

   Q: Was IBM receptive to responding to your questions?

   A: Absolutely.

   Q: Did you get the sense IBM was trying to deceive you?

   A: No.

   (Id., at 364:16-21; 365:13-15).

   Mr. Woodward testified that he was kept informed by IBM when IBM learned of a
material change in the Schering Project parameters from Schering. For example,
he testified that he was kept informed of changes to the estimated number of
Schering machines to be serviced (i.e., the "asset count"):

   Q: With respect to the asset count, do you have an understanding of where
that information came from?

   A: For purposes of developing, you know, responding to the RFP, my
understanding it (sic) came of the Schering information to IBM. And I will add
that that did change, you know, during those pricing - I think the initial one
had 13,700. It might have moved to 12 at one point. It was a kind of moving
target. It didn't change 5,000 units. But id did kind of move around a bit.

   Q: As it would change IBM would inform you there had been a change; correct?

    A: Correct.

   (Id., at 364:22-365:12).

   Mr. McLaughlin testified that, when the volume of deskside support work to be
performed initially exceeded estimates in the days after the go-live date, IBM
employees expressed surprise:

   Q: So you were being told by members of your staff that the volumes were
higher than expected?

   A: Yes.

   Q: And then you raised that with IBM?

   A: I certainly did.

   Q: And in your discussions with IBM what was their reaction to the increased
volumes?

   A: The initial reaction

   Q: Uh-huh.

   A: was that the whole project that had been represented to us was
misrepresented. It wasn't correct.

   Q: And was that IBM saying that the project that was represented to IBM and
TSSI collectively had been misrepresented by Schering?

   A: The response from IBM was that they felt that there should be adjustments
and they were going to go to Schering to get that done. They thought it was
wacky.

   Q: The IBM people were as surprised as you were about the increased volumes?

   A: That's correct.

   Q: And who were the IBM people who expressed that surprise to you?

   A: Specifically Jim Panaccione.

   Q: Anyone else?

   A: I think that - what was her name - Ginny Telesca. The numbers were crazy.
She was worried about reporting. There was no - no real reporting. We jumped in
and helped them with the reporting, but there was nothing. It was incredible.

   (Buterman Aff., Ex. 3, McLaughlin Tr. at 472:14-473:22).

   Mr. McLaughlin expressed his belief that the data concerning the Schering
Project originally set forth in the First and Second IBM RFPs (such as the
number of machines and customers to be serviced, and the estimated number of
IMACs to be performed) came directly from Schering:

   Q: And you understood that IBM had received the asset count and IMACs from
Schering, right?

   A: That would be the only source, would be from Schering.

    (Id., at 473:23-474:3).

   Both IBM and TSSI witnesses have stated that between January and May 2005
when the IBM-Schering contract was being negotiated, IBM kept TSSI apprised of
changes to the criteria for the project ordered by Schering. Specifically, when
Schering's "numbers chang[ed]" with respect to, for example, the number of
computers to be serviced, these changes would be passed along by IBM to Mr.
Woodward, so that Mr. Woodward could adjust TSSI's price accordingly "[t]o match
the new criteria sent from Schering-Plough." (Buterman Aff., Ex. 8, (Foeller Tr.
at 54:15-56:7).

   Although TSSI expressed its concerns that it did not receive current
equipment lists (i.e., a detailed asset count) in a timely fashion, it is clear
from Mr. Woodward's testimony that TSSI received the most current asset
information in IBM's possession prior to the go-live date of August 31, 2005.
Indeed, Mr. Woodward testified as follows:

   A: ... I don't believe we received any type of asset feed with respect to
equipment types and quantities at certain sites until the last week of August.

   Q: Do you have an understanding of why you didn't receive that?

   A: As far as I know it wasn't provided to IBM.

   Q: IBM was trying to get it for you; were they not?

   A: We were asking IBM for it. I assume they were asking Schering.

   Q: You have no reason to believe that IBM was not asking Schering?

   A: Correct.

   (Buterman Aff., Woodward Tr., at 374:15-375:5).

   When TSSI complained about the high volume of calls in September, 2005, IBM
convened meetings for the purpose of understanding the problems TSSI was
experiencing and providing additional resources to address those problems,
although no evidence of additional resources was provided by IBM on this motion.
William Ellmore of IBM testified that in late September of 2005 he had
conversations with IBM employee Ray Harrison to see if IBM could pay TSSI on a
monthly basis, instead of every 60 days.

   Beginning in October, 2005, IBM assigned its own technicians and Schering
hired TransNet technicians to help reduce the backlog of deskside support work
that had built up beginning in September 2005. In his deposition, Mark Murrell,
the IBM employee responsible for supervising the pricing of the solution for the
Schering Project, stated that it was part of his responsibility to ensure that
the "solution" contained a profit margin for IBM that conformed to the targets
IBM had established,

    [REDACTED]

   Mr. Murrell testified that IBM asked TSSI to lower its price because of
efficiencies that would be realized on the project through the introduction of a
Level 1.5 Help Desk and Think Vantage tools. In asking TSSI to reduce its price,
IBM intended pass a portion of the reductions on to Schering, and to take some
of it in profit. As Mr. Murrell aptly stated, "[w]ell, that's the name of the
game." (Id. at 79:15-80:3). Mr. Murrell further indicated that he did not know
what percentage of the reductions were going to be taken by IBM as profit.
Specifically, he said: "... I don't think it was a conscious decision at that
point as to what was going to be profit and what was going to be cost reduction.
You know, throughout these engagements, you know, it's a constant give and take,
in terms of reducing cost and trying to keep your profit where you want it to
be." Id., at 80:4-12.

   It is clear that not all changes in the scope of the Schering Project which
would affect TSSI's pricing were immediately conveyed to TSSI. In an e-mail
exchange among employees of IBM, Bill Ellmore notified Jane Baird that IBM had
gotten Schering to agree to handle a certain portion of its work on its own.
When Ms. Baird responded by asking if they should "validate what impact, if any,
this has on TSSI's pricing and then adjust ... [IBM's] rates accordingly? ..."
Mr. Ellmore responded as follows:

   This one works in our favor. We will uncover other issues that go the other
way. Therefore, we will wait until we have critical mass before we ask TSSI to
reprice. I would rather queue these up and ask for a turn of the solution once
verses many smaller requests.

   (TSSI Cross-Motion Ex. G; Buterman Reply Aff., Ex. 61)

   While TSSI imputes a sinister motive to IBM as a result of this e-mail
exchange, IBM asserts the failure to immediately notify TSSI of the change was
simply was a matter of convenience. To that end, Mr. Ellmore testified that
"instead of going to TSSI for every single change that impacts them, let's queue
these things up and go back once." (Buterman Aff., Ex. 49, Ellmore Tr.,
239:7-240:6).

   TSSI contends that IBM did not do anything to confirm the accuracy of the
data for the Schering Project, either prior to May, 2005 or during the
transition period, despite the fact that TSSI was basing its bid for a five to
seven year period. It submits that IBM did not check the asset count it received
from Schering. IBM counters that both companies had contractual protections in
the event the RFP data was inaccurate. Mr. Murrell testified that, as here, in
the event a customer refuses to allow IBM to conduct its due diligence prior to
entering into a contract, IBM protects itself by negotiating "terms and
conditions", such that "you could correct those numbers and make the necessary
adjustments to the solution and the price if they're inaccurate." (Buterman
Reply Aff. Ex., 48, Murrell Tr. at 47:12-48:9). TSSI's subcontract contains
similar protections, as several TSSI witnesses acknowledged. (Buterman Aff. Ex.
22 § 7.3 at TSSIE000360-361 ("Discovery Clause"); Ex. 2, Woodward Tr. at
156:16-157:22; Ex. 1, DeMaria Tr. at 244:18-247:16, Ex. 3, McLaughlin Tr. at
465:24-468:19).

   TSSI was not entitled to receive additional payments if the number of
hardware and/or software break fix calls exceeded the baseline in the contract;
however, TSSI could and did receive retroactive compensation for additional
machines it serviced. TSSI was also entitled to additional payment for the
number of IMACS it performed which exceeded the baseline in the contract. IBM
asserts TSSI received $ 52,389.38 in such additional payments during its
three-month tenure on the Schering project.

   Under the terms of the SOW, TSSI is liable for SLA penalties based on a
failure to close a certain percentage of all break-fix or IMAC calls within the
allotted time, not based upon its failure to complete individual IMACs (or
break-fix calls) as asserted by TSSI. (Buterman Aff., Ex. 22 at TSSIE000375-376
[entries for "Time to Respond/Time to Resolve - Break-fix Call"; and "Time to
Respond/Time to Complete - IMAC"]).

   TSSI asserts, and IBM agrees, that James Panaccione acknowledged that he told
TSSI in the September 12, 2005 meeting that IBM would renegotiate with Schering
and he testified that he was trying to appease TSSI. He stated in the meeting
that IBM would go to Schering and renegotiate. (Panaccione Tr. 155:25-158:13;
170:25-171:9). It further is not disputed that IBM chose to supply additional
technicians to the Schering Project, but that TSSI did not agree to pay for
them.

F. TransNet Issues

   TSSI asserts there is evidence that IBM withheld information concerning
TransNet. Specifically, TSSI alleges IBM had a prior existing service contract
at Schering and had been onsite at Schering since 2003; it is further alleged
that TransNet was at Schering at the same time. Karl Salnoske, the CIO of
Schering, testified that the TransNet non-compete issue was discussed during the
transition planning phase in joint meetings with IBM and that IBM was aware of
the issue. Mr. Salnoske identified the "transition planning phase" as "the
period from contract signing to go-live."

G. Help Desk and Think Vantage Tools

   IBM asserts that a portion of its request for a refined bid, TSSI's response
thereto, and a revised document of understanding prove that TSSI was advised
from the inception that a Level 1.5 Help Desk and Think Vantage tools would not
be supplied to the project on the go-live date. TSSI argues that these documents
do not support  IBM's position, citing Mr. Woodward's affidavit and testimony.
Specifically, TSSI points to Mr. Woodward's testimony that the reduction in
calls and in TSSI's pricing over five years is based on efficiencies in the
environment and not on an understanding that Think Vantage tools and a Level 1.5
Help Desk would be implemented over time. IBM rejoins that such assertions are
at odds with Mr. Woodward's deposition testimony on this topic. IBM also asserts
that Mr. Woodward's affidavit stating that IBM represented that there would be a
"staged implementation" of Think Vantage tools directly contradicts his
deposition testimony that no IBM employee ever made such a representation to
him. (Buterman Reply Aff., Ex. 50, Woodward Tr. at 352:25-353:18). In addition,
IBM points out that Mr. Woodward could not explain why, if TSSI's price
reductions were based on factors other than a staged implementation of a Level
1.5 help desk and Think Vantage tools, his original price quote to IBM did not
include any reductions in price from years one through five based on
"efficiencies in the environment." (See Buterman Reply Aff. Ex. 50, Woodward Tr.
at 350:10-352:13).

   Additionally, although TSSI asserts that Mark Murrell testified that the
Level 1.5 Help Desk should have been available on August 31, 2005, Mr. Murrell
also testified that he had no specific knowledge of the implementation date for
the Level 1.5 help desk and that there is a "phase-in period for anything".
(Buterman Reply Aff. Ex. 48, Murrell, Tr. at 90:21-25; 91:3-6). Additionally,
Mr. Murrell indicated that the installation of Think Vantage tools could have
been done during the 120-day transition period, but that he didn't "... believe
that's what we proposed to do". Id. at 91:9-92:2. As IBM witnesses make clear,
Think Vantage tools were scheduled to be installed over a three-year period.
(See Buterman Aff. Ex. 8, Foeller Tr. at 66:19-69:12; Buterman Reply Aff., Ex.
49, Ellmore Tr. at 61:14-21, 73:23-74:12).

   TSSI claims that an e-mail attached to the Buterman Affidavit as Exhibit 15,
dated January 27, 2005, indicates that the Level 1.5 Help Desk will be available
subsequent to the first day of the project, and not at the go-live date as
allegedly previously indicated. IBM disputes this assertion. Instead, IBM avers
that the referenced e-mail to TSSI makes clear that the effectiveness of the
Level 1.5 help desk is related to the progress of the "staged implementation" of
Rapid Restore, a Think Vantage tool. Moreover, IBM points to the testimony of
its Delivery Project Executive, James Panaccione, who oversaw delivery of
services on the Schering Project. IBM quotes Mr. Panaccione's testimony that
"you can call things 1.5 or 1.0. [but] they don't become effective until you've
got experience in an environment you're supporting. You need to understand what
[Schering's] desktop environment is, how things work in conjunction with each
other ... All the information that you get from Schering over the course of
time, you start to become experienced at supporting their combination of
software and hardware." (Buterman Aff., Ex. 11, Panaccione Tr., 59:20-60:5; see
also, Buterman Aff., Ex. 49, Ellmore Tr. at 54:9-24 [effectiveness of a Level
1.5 help desk comes from a "knowledge base that's developed over time"]. IBM
asserts the evidence establishes that the gradual reduction in TSSI's projected
call volumes over a five-year period was premised on a staged introduction of a
Level 1.5 Help Desk and Think Vantage tools into the Schering environment. (IBM
Br. at 23-23; see also Buterman  Aff. 33 at IBM 9410000027).

   TSSI further points to the testimony of Mark Murrell in which he states as
follows:

   Q: How many 1.5 level help desk technicians did you envision working in order
to - working at a single time in order to reduce the MACs?

   MR. BUTERMAN: Objection. 6

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -6   It is not
clear to the Court what was the basis of this objection and it is not now
apparent to the Court that the question was objectionable. Accordingly, the
Court will consider the testimony for present purposes.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

   A: Three, four.

   Q: Did they know where they were going to be working from?

   A: They could either work at wherever we had the help desk or sometimes they
could be set up in an ancillary desk that would actually be at the customer
location. In this case I can't recall where it finally ended up.

   Q: Now originally, before increasing the efficiency by going with the 1.5
help desk, what did the solution call for?

   A: I don't understand your question. I mean, if we didn't have the 1.5 help
desk what would be called for is more people performing deskside support, more
physical people performing software break/fix and handling MACs.

   (Buterman Reply Aff, Ex. 48, Murrell Tr., 82:5-25).

   In response, IBM points out that Mr. Murrell testified that he had no
specific knowledge of the implementation date for the Level 1.5 help desk and
that "[t]ypically there's a phase-in period for anything". (Id., at 90:21-25;
91:3-4). Moreover, IBM witnesses testified that the Level 1.5 help desk gains
effectiveness over time as the relevant help desk technicians gain familiarity
with the environment they are servicing. (Buterman Aff., Ex. 11, Panaccione Tr.,
59:20-60:5; see also, Buterman Aff., Ex. 49, Ellmore Tr. at 54:9-24
[effectiveness of a Level 1.5 help desk comes from a "knowledge base that's
developed over time"].

   TSSI next points to the testimony of Mike Foeller to the extent he testified
he told Mr. Woodward of TSSI that Think Vantage tools would be rolled out over
three years and to Mr. Woodward's sworn denial that this conversation took
place. (See, Foeller Tr. 56:19-57; 67:23; Woodward Affidavit, P11).
Additionally, Mr. Foeller testified that he included Think Vantage tools in
IBM's cost case and that they were part of the solution he created. (See,
Foeller tr. 62:5-6). IBM responds that Think Vantage tools were scheduled to be
installed over a three year period, based on the refresh cycle of Schering's
computers. (Buterman Aff. Ex. 8, Foeller Tr., 66:19-16:12;  Buterman Reply Aff.,
Ex. 49, Ellmore Tr. at 61:14-62:13, 73:23-74:12; Buterman Reply Aff. Ex. 56,
Panaccione Tr. at 53:7-13). IBM asserts that "as part of the process of
[formulating] the bid and in [TSSI's] RFP responses, Mr. Woodward assumed Think
Vantage tools would be introduced into the Schering environment as part of a
gradual effort to install new "images" or software packages, on Schering's
computers. (Buterman Reply Aff. Ex. 50, Woodward Tr. at 163:10-165:22). Mr.
Woodward testified:

   Q: Just so I'm clear, to your knowledge, did IBM ever represent to TSSI that
it was going to give new images to every user before the go live date?

   A: No.

   Q: So when you say that IBM told you that they were going to put these tools
into the new images it would be a phased process?

   A: I assumed that it would be, yeah. (Id., at 165:23-166:7, 182:24-186:18).

   H. Valuation Issues

   As part of its tort damages, TSSI seeks to recover $ 15 million from IBM,
representing the value of TSSI's business which was allegedly "complete[ly]
shut[] down" and "los[t]" as a result of IBM's conduct. (Buterman Aff., Ex. 26,
P4). Mr. McLaughlin, who verified TSSI's interrogatory responses, valued TSSI at
$ 15 million in Interrogatory Response No. 4 based on the anticipated "growth of
the company over the next number of years, and I'm not sure what that number of
years was." (Buterman Aff., Ex. 3, McLaughlin Dep. Tr., 176:4-6). The two
components that were to have provided that growth are "[t]he maintenance
business that we had and lost", as well as anticipated sales of a software
product TSSI developed, known as the Q. (Id., at 176:11-16).

   At his deposition, Mr. McLaughlin could not remember any basis for his $ 15
million valuation. Specifically, he could not identify a single spreadsheet
projecting TSSI's growth or the valuation methodology (if any) TSSI employed. In
fact, Mr. McLaughlin testified that he performed his valuation solely in
cooperation with his attorney, who to his knowledge is not an "expert in
valuation". (Id., at 173:22-186:13; 176:7-10; 176:19-180:2; 176:10-177:10).

THE SUMMARY JUDGMENT STANDARD

   The proponent of a motion for summary judgment carries the initial burden of
production of evidence as well as the burden of persuasion. Alvarez v. Prospect
Hospital, 68 NY2d 320, 501 N.E.2d 572, 508 N.Y.S.2d 923 (1986). Thus, the moving
party must tender 7 sufficient evidence to demonstrate as a matter of law the
absence of a material issue of fact. Once that initial burden has been
satisfied, the "burden of production" (not the burden of persuasion) shifts to
the opponent, who must now go forward and produce sufficient evidence in
admissible form to establish the existence of a triable issue of fact. The
burden of persuasion, however, always remains where It began, i.e., with the
proponent of the issue. Thus "if the evidence on the issue is evenly balanced,
the party that bears the burden must lose." Director, Office of Workers
Compensation Programs v. Greenwich Collieries, 512 U.S. 267, 272, 114 S. Ct.
2251, 129 L. Ed. 2d 221; 300 East 34th Street Co. v. Habeeb, 248 AD2d 50, 683
N.Y.S.2d 175 (1st Dept. 1997).

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -7   There is
no requirement that proof be submitted in the form of affidavit, as opposed to
other acceptable forms, such as deposition testimony. Muniz v. Bacchus, 282
AD2d. 387, 724 N.Y.S.2d 46 (1st Dept. 2001).
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

   The court's function on this motion for summary judgment is issue finding
rather than issue determination. Sillman v. Twentieth Century Fox Film Corp., 3
NY2d 395, 144 N.E.2d 387, 165 N.Y.S.2d 498 (1957). Since summary judgment is a
drastic remedy, it should not be granted where there is any doubt as to the
existence of a triable issue. Rotuba Extruders v. Ceppos, 46 NY2d 223, 385
N.E.2d 1068, 413 N.Y.S.2d 141 (1978). Thus, when the existence of an issue of
fact is even arguable or debatable, summary judgment should be denied. Stone v.
Goodson, 8 NY2d 8, 167 N.E.2d 328, 200 N.Y.S.2d 627 (1960); Sillman v. Twentieth
Century Fox Film Corp., supra.

   The role of the Court is to determine if bona fide issues of fact exist, and
not to resolve issues of credibility. As the Court stated in Knepka v. Tallman
(287 AD2d 811, 718 NYS2d 541 [4th Dept. 2000]):


        Supreme Court erred in resolving issues of credibility in granting
     defendants' motion for summary judgment dismissing the complaint (see,
     Mickelson v. Babcock, 190 AD2d 1037, 593 N.Y.S.657; see generally
     Black v. Chittenden, 69 NY2d 665, 669, 511 NYS2d 833, 503 NE2d 1370;
     Capelin Assocs. v. Globe Mfg. Corp., 34 NY2d 338, 341, 357 NYS2d 478,
     313 NE2d 776). Any inconsistencies between the deposition testimony of
     plaintiffs and their affidavits submitted in opposition to the motion
     present credibility issues for trial (see, Schoen v. Rochester Gas &
     Elec., 242 AD2d 928, 665 NYS2d 372; Mickelson v. Babcock, supra ).


(See also, Yaziciyan v. Blancato, 267 AD2d 152, 700 N.Y.S.2d 22 (1st Dept.
1999) ["The deponent's arguably inconsistent testimony elsewhere in his
deposition merely presents a credibility issue properly left for the trier of
fact.")

    Nevertheless, summary judgment is properly granted when the opponent of the
motion raises only feigned issues of fact. See, Perez v. Bronx Park South
Associates, 285 AD2d 402, 728 N.Y.S.2d 33 (1st Dept. 2001), in which the Court
held that the submission of a one-page affidavit from a neighbor, which was in
conflict with plaintiff's deposition testimony, was insufficient to raise an
issue of fact; Glick & Dullock v. Tri-Pac Export Corp., 22 NY2d 439, 239 N.E.2d
725, 293 N.Y.S.2d 93 (1968) [plaintiff's expert opinion that illegally parked
car was proximate cause of accident was a legal conclusion which was of no
consequence, and could not defeat defendant's motion for summary judgment];
Phillips v. Bronx Lebanon Hospital, 268 AD2d 318, 701 N.Y.S.2d 403 (1st Dept
2000) ["self-serving affidavits" submitted by plaintiff in opposition clearly
contradict plaintiff's own deposition testimony and can only be considered to
have been tailored to avoid the consequence of her earlier testimony...").

   As previously noted, IBM seeks summary judgment on TSSI's claims for breach
of contract (First Cause of Action), negligence (Second Cause of Action), gross
negligence (Third Cause of Action), and fraud (Fourth Cause of Action). TSSI
opposes the motion and cross moves for summary judgment on its declaratory
judgment cause of action (Fifth Cause of Action). The Court will address each
claim in turn.

BREACH OF CONTRACT (FIRST CAUSE OF ACTION)

A. The "Release"

   IBM asserts that the breach of contract (First) cause of action must be
dismissed because TSSI released IBM from all of its contractual obligations to
TSSI. IBM maintains that the November 30, 2005 letter (quoted in full above),
signed by Thomas McLaughlin as President of TSSI, constitutes a valid release
which should be enforced according to its terms, in that the letter indicates
that Mr. McLaughlin released "... IBM from all contract obligations relating to
the contract effective today." (Buterman Aff., Ex. 16)

   It is well settled law that, while a broad general release will be given
effect, "a release may not be read to cover matters which the parties did not
desire or intend to dispose of." Rotondi v. Drewes, 31 AD3d 734, 735, 819
N.Y.S.2d 779 (2d Dept. 2006). "If from the recitals therein or otherwise, it
appears that the release is to be limited to only particular claims, demands or
obligations, the instrument will be operative to those matters alone." Hughes v.
Long Island University, 305 AD2d 462, 762 N.Y.S.2d 401 (2d Dept. 2003). In
deciding the meaning of a written instrument, "the natural and ordinary meaning
of the language will be imparted to it." Carpenter v. Machold, 86 AD2d 727, 447
N.Y.S.2d 46 (3rd Dept. 1982). Ambiguities in the alleged release should be
interpreted contra proferentem, against the party that drafted the purported
release language. 151 West Associates v. Printsiples Fabric Corp., 61 NY2d 732,
734, 460 N.E.2d 1344, 472 N.Y.S.2d 909 (1984). The parties' intent is
determinative of the scope of the release. Gordon v. Vincent Youmans, Inc., 358
F.2d 261, 263 (2d Cir. 1965).

   IBM's motion to dismiss TSSI's breach of contract claim originally was denied
by Hon. Kenneth W. Rudolph, the Justice previously assigned to this matter in  a
Decision and Order dated August 21, 2006. The Court reasoned that the release,
which was "... executed in the context of TSSI's withdrawal from the [Scherinsg]
project, was clearly limited; and never contemplated the simultaneous
interposition of claims by IBM with respect to potential liability for
additional costs or penalties related to TSSI's performance between August 11,
2005 and November 30, 2005. ..."

   IBM reasserts its claim that Mr. McLaughlin's letter is a valid and binding
release. This Court disagrees. The language of the letter indicates that Mr.
McLaughlin, on behalf of TSSI, released IBM "from all contract obligations
relating to the [Schering] contract, effective ..." November 30, 2005. While the
Court might have trouble with the assertion of claims by TSSI for alleged
breaches of the contract after November 30, 2005, the Court does not read the
aforementioned language as clearly and unequivocally releasing IBM from any and
all claims for breach of the contract prior to November 30, 2005. Moreover,
there is nothing in Mr. McLaughlin's deposition testimony, in which he states
that in attempting to settle the dispute with IBM, TSSI asked for payment of its
outstanding invoices, which suggests that TSSI intended to unequivocally release
all claims against IBM by signing the November 30th letter. To the contrary, a
portion of Mr. McLaughlin's testimony and the testimony of Bill Ellmore, the IBM
employee who drafted the disputed language, suggest that the intent merely was
to terminate services under the Schering contract. (Buterman Aff., Ex. 3,
McLaughlin Tr. 506:5-8; Ex. 7, Ellmore Tr. 167:16-173:21). Accordingly, a
material question of fact exists as to the effect of the letter signed by Mr.
McLaughlin on November 30, 2005.

B. Application of the CSA and the SOW

   IBM argues that the vast majority of TSSI's alleged contract damages are
specifically barred by the parties' agreements.

   As previously stated, in March, 2000, TSSI and IBM entered into the CSA,
which sets forth the terms and conditions applicable to all projects between the
companies. The CSA established "the basis for a multinational procurement
relationship" under which TSSI would provide IBM with "Deliverables and
Services" described in future SOWs. There is no evidence the CSA ever was
rescinded or modified by either TSSI or IBM.

   On August 15, 2005, TSSI accepted a PO for the Schering project providing
that "[t]he terms and conditions of IBM Customer Solutions Agreement Number
4900CS0268 [and] SOW 4905AT0056 apply to this order." (Buterman Aff., Ex. 24 at
1, 3-4). From June 2005 through the middle of August 2005, TSSI negotiated an
SOW with IBM, in which the drafts stated, "This Statement of Work ("SOW") #
4905AT0056 adopts and incorporates by reference the terms and conditions of the
Solution Engagement Agreement # 4900CS0268." (Buterman Aff. Ex. 22 at
TSSIE00354). TSSI admits that Exhibit 22 to the Buterman Affidavit is in fact
the extant SOW as of August 15, 2005. (See, TSSI Br.  at 9). Thus, it is clear
that the parties' contractual relationship for the Schering Project is defined
by the PO, CSA and the August 15, 2005 SOW.

   TSSI's arguments that the terms of the CSA are not applicable to the PO and
SOW are not convincing. First, TSSI submits that "in order to make an agreement
that encompasses the terms and conditions of the CSA, there must be a SOW
between the parties that is either specifically referenced' in the CSA or
attached to' the CSA and a work authorization." Thus, according to TSSI, the CSA
cannot apply to the Schering SOW, because the "CSA was executed more than five
years prior to the commencement of the Schering project". This argument is
contrary to the plain language of the CSA.

   The CSA unambiguously applies to future SOWs, as indicated by the first
sentence of the CSA, which reads:

   This Agreement dated as of 03/13/2000 ("Effective Date"), between
International Business Machines Corporation ("Buyer") and Technical Support
Services Inc. (tssi) "("Supplier"), establishes the basis for a multinational
procurement relationship under which Supplier will provide Buyer the
Deliverables and Services described in SOWs issued under this Agreement.

   The CSA further provides that such Deliverables and Services acquired by IBM
"on or after the Effective Date" (of the CSA) (which TSSI would then provide
pursuant to an SOW) are "covered by" the CSA. (CSA, §3.1). TSSI's strained
construction of the phrase "included in this Agreement" to restrict the CSA's
scope also is not convincing. By this logic, the CSA would serve no purpose
whatsoever because it did not attach or specifically reference any SOWs or WA's,
such an interpretation would leave the aforementioned clauses meaningless - a
result disfavored in the law.

   TSSI's assertion that the SOW was not "finalized" is not relevant to the
issues on this motion. The assertion by TSSI that "the parties never agreed upon
a final SOW on the Schering project" references recordings of conversations with
IBM personnel about the SOW after August 15, 2005. However, negotiations
surrounding the form of what would have been a superceding SOW occurring
subsequent to August 15 are irrelevant. The PO - which TSSI admits is part of
the contract between the parties (Complaint, P23) unambiguously provides that by
accepting the PO, TSSI also accepted the CSA and the then-extant SOW. (See,
Buterman Aff., Ex. 24 at 1, 3-4; see also, Liberty Mgmt. & Constr. Ltd. v. Fifth
Ave. & Sixty-Sixth St. Corp., 208 AD2d 73, 77-78, 620 N.Y.S.2d 827 (1st Dept.
2005) (plaintiff accepted contract when it agreed to separate document
incorporating contract by reference). In any event, because the PO explicitly
incorporates the CSA by reference, TSSI agreed that the CSA's terms would apply
to the Schering project when its accepted the PO, regardless of whether it
agreed to an SOW.

   TSSI next asserts that the August 15th SOW is "ambiguous on its face,
because it incorporates the terms of a Solutions Engagement Agreement' not a
Customer Solutions Agreement', even though both formulations of the title are
followed by the exact same ten-digit number. TSSI also ignores Mr. Klobe's
uncontradicted testimony (cited above) that an SEA and CSA are "one and the
same". TSSI also fails to mention that Mr. DeMaria provided the same agreement
number to IBM on the very day TSSI accepted the PO, a document which references
"Customer Solutions Agreement" # 4900CS0268". TSSI has advanced no evidence to
suggest that any other agreement between IBM and TSSI existed with the exact
same number. Nor has TSSI produced any such agreement. Accordingly, there is no
material issue of fact surrounding the nomenclature of the master agreement
between these parties.

   Finally, TSSI argues that Section 11.0 of the CSA, entitled "Limitation of
Liability" should not apply here. This section reads:

   Except for liability under the Section entitled Indemnification, in no event
will either party be liable to the other for any lost revenues, lost profits,
incidental, indirect, consequential, special or punitive damages. In no event
will either party be liable for the respective actions or omissions of its
Affiliates under this Agreement.

   First, TSSI alleges that Section 11.0 is invalid because it is "overbroad and
ambiguous", "boilerplate" and contains language "which was never negotiated" by
the parties. However, TSSI does not provide any legal ground for disregarding
Section 11.0 on these bases. TSSI also asserts that the PO and SOW take
precedence over the CSA in the event of a conflict, but TSSI never shows any
conflict between the documents. And since neither the PO nor the SOW address
limitations of liability at all, there is no "conflict" with Section 11.0. 8
Finally, TSSI's suggestions that the CSA is unconscionable, and that IBM had an
unfair advantage in bargaining power is belied by the rule that "[i]n cases
involving transactions of a commercial nature, courts have rarely found
unconscionability, and its has been held that when businessmen contract in a
commercial setting, a presumption of conscionability arises." Lister Elec., Inc.
v. Inc. Vill. of Cedarhurst, 108 AD2d 731, 734, 484 N.Y.S.2d 897 (2d Dept. 1985)
.

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -8   IBM's
"Standard Terms and Conditions dated January 14, 2000", referenced in the PO and
on page 11 of TSSI's brief are not part of the parties' agreement; the PO states
that they apply only if a referenced agreement is not incorporated. Here, the
CSA and the SOW specifically were incorporated into the PO.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

   TSSI also argues that Section 11.0 should not be enforced because "even if
the Court accepts IBM's argument that the CSA was incorporated into the draft
SOW, the parties continued to negotiate the SOW after performance had already
begun, and TSSI may have been able to negotiate the limitations (presumably of
the CSA) away, as the final SOW would have taken precedence." (TSSI Br. at 9).
Unfortunately for TSSI, what it might have been able to accomplish
hypothetically is of no relevance to the  contractual provisions at issue.

   In light of the foregoing, the motion for summary judgment with respect to
TSSI's claim for breach of contract should be granted solely to the extent that
TSSI's damages for any such breach shall be limited as indicated in Section 11.0
of the CSA.

NEGLIGENCE (SECOND CAUSE OF ACTION)

   IBM asserts it is entitled to summary judgment on TSSI's negligence claims
because TSSI's damages claims for this count are barred by the terms of the CSA
and because TSSI did not have a "special relationship" with IBM.

A. Damages

   Damages are a necessary element of a negligence claim and must be pleaded and
proven. Siler v. Lutheran Social Servs. of Metro. NY, 10 AD3d 646, 648, 782
N.Y.S.2d 93 (2d Dept. 2004). Section 11.0 of the CSA limits the parties'
liability for many categories of damages, including lost revenues, lost profits,
incidental, indirect, consequential, special or punitive damages. In general,
such limitation of liability causes are enforceable against negligence claims.
See, e.g., Colnaghi, U.S.A. v. Jewelers Protection Servs., 81 NY2d 821, 823, 611
N.E.2d 282, 595 N.Y.S.2d 381 (1993) (New York law generally enforces contractual
provisions absolving a party from its own negligence); accord, L & S Motors,
Inc. v. Broadview Networks, Inc., 25 AD3d 767, 808 N.Y.S.2d 777 (2d Dept. 2006).

   Here, the damages TSSI seeks under its negligence claim are all either lost
revenues, lost profits, incidental, indirect, consequential or special damages
which are barred under the CSA. Specifically, TSSI seeks damages including: (i)
$ 25,000 for costs related to the TransNet litigation (Buterman Aff., Ex. 26,
P4); (ii) "additional management and staff time of $ 150,000 (id.); (iii) "costs
related to the resultant shutdown of tssi of $ 175,000" (id.); and (iv) $
15,000,000 for the "complete shutdown and loss of [TSSI's] business. (Id.). As
such, it appears that TSSI's negligence claim is barred because the damages it
seeks were expressly waived in the CSA.

   TSSI's argument that Section 11.0 of the CSA cannot apply to negligence
claims because the clause "does not contain the word negligence" is without
merit. Damages are a necessary element of the claim, and if there are no
recoverable damages, there is no viable claim. Siler v. Lutheran Social Servs.
of Metro. NY, 10 AD3d 646, 648, 782 N.Y.S.2d 93 (2d Dept. 2004). TSSI's further
argument that "the question of categorization of damages into direct or indirect
is a jury question" is unsupported and contrary to the many cases categorizing
certain damage claims and barring them as a matter of law. See, e.g., Suffolk
Laundry Servs., Inc. v. Redux Corp., 238 AD2d 577, 578-79, 656 N.Y.S.2d 372 (2d
Dept. 1997) (characterizing certain tort damages as "consequential damages" and
barring them as a matter of law); Hemming v. Certainteed Corp., 97 AD2d 976, 468
N.Y.S.2d 789 (4th Dept. 1983) (same). Here, even if TSSI had suffered tort
damages,  those damages would have been an indirect consequence of actions
allegedly taken by IBM, and, as such, barred by the CSA.

B. Special Relationship

   IBM argues that in order for TSSI to maintain a negligence claim against IBM,
TSSI must establish a violation of "a legal duty independent of the contract
itself." Clark-Fitzpatrick, Inc. v. L.I.R.R. Co., 70 NY2d 382, 389-90, 516
N.E.2d 190, 521 N.Y.S.2d 653 (1987), often referred to as a "special
relationship" between the parties giving rise to a duty of care. See, Atkins
Nutritionals, Inc. v. Ernst & Young, LLP, 301 AD2d 547, 548, 754 N.Y.S.2d 320
(2d Dept. 2003). In general, there is no duty of care between parties to an
arm's-length business relationship. See, id. at 548-49. Here, the evidence shows
that the parties' relationship was an arm's length business relationship.
Indeed, TSSI became a sub-contractor to IBM via the CSA, which established the
relationship under which the parties would work together. Indeed, Mr. DeMaria,
who signed the CSA on behalf of TSSI stated his understanding that the purpose
of the Agreement was to permit the parties to conduct business with each other
and further indicated that the CSA "... looks like its's an encompassing
agreement." (Buterman Aff., Ex. 1, De Maria Tr. 89:17-91:7; 91:10-92:17).

   Moreover, the CSA expressly defines and limits the nature of the relationship
between the parties, providing that TSSI is an "independent contractor", and
that entering into the CSA did not "create an agency, partnership, or joint
venture relationship" between it and IBM. (Buterman Aff., Ex. 17, § 12.0). The
CSA, therefore, establishes that TSSI, as an independent contractor, was in a
classic arm's-length relationship with IBM. Accordingly, summary judgment in
IBM's favor as to the Second Cause of Action is appropriate. See, e.g.,
Gardianos v. Calpine Corp., 16 AD3d 456, 456, 791 N.Y.S.2d 628 (2d Dept. 2005)
(affirming summary judgment for defendants as to negligent misrepresentation
claim when "there was no evidence of a special relationship between the
parties").

   In attempting to defeat this argument, TSSI relies upon affidavits contending
that TSSI and IBM had worked together for more than ten years and that TSSI
relied on IBM to ensure that the operational data on the Schering project was
accurate. (See TSSI Br. at 16, citing McLaughlin Aff. PP12-13; Woodward Aff.
P10). However, even if true, this evidence does not, as a matter of law, show
that the parties were in a special relationship. See Murphy v. Kuhn, 90 NY2d
266, 269, 682 N.E.2d 972, 660 N.Y.S.2d 371 (1997) (rejecting plaintiff's
argument that a "long, continuing course of business between plaintiffs and
defendant" created a special relationship); Elghanian v. Harvey, 249 AD2d 206,
671 N.Y.S.2d 266 (1st Dept. 1998) ("The requisite [special] relationship between
the parties must have existed prior to the transaction from which the alleged
wrong emanated, and not as a result of it.").

   Accordingly, the negligence count of the Amended Complaint should be
dismissed.

GROSS NEGLIGENCE (THIRD CAUSE OF ACTION)

   AND FRAUD (FOURTH CAUSE OF ACTION)

   The Third Cause of Action alleges that IBM acted with gross negligence, and
the Fourth Cause of Action alleges IBM committed fraud, by recklessly or
intentionally providing TSSI with allegedly inaccurate information regarding
Schering's information technology requirements. (Complaint, PP30, 36-37, 43). In
opposition, IBM counters that there is no evidence that IBM acted with scienter
or reckless indifference to TSSI's rights.

   In order to establish a claim for gross negligence, a plaintiff must
establish that defendant's conduct "evince[d] a reckless disregard for the
rights of others" or that defendant's conduct "smacks of intentional
wrongdoing". Aphrodite Jewelry, Inc. v. D & W Central Station Alarm Co., Inc.,
256 AD2d 288, 289, 681 N.Y.S.2d 305 (2d Dept. 1998); Federal Insurance Company
v. Automatic Burglar Alarm Corp., 208 AD2d 495, 496, 617 N.Y.S.2d 53 (2d Dept.
1994); accord, Colnaghi, U.S.A. v. Jewelers Protection Servs., 81 NY2d 821,
823-824, 611 N.E.2d 282, 595 N.Y.S.2d 381 (1993). Additionally, TSSI must
establish a violation of "a legal duty independent of the contract itself."
Clark-Fitzpatrick, Inc. v. L.I.R.R. Co., 70 NY2d 382, 389-90, 516 N.E.2d 190,
521 N.Y.S.2d 653 (1987), often referred to as a "special relationship" between
the parties giving rise to a duty of care. See, Atkins Nutritionals, Inc. v.
Ernst & Young, LLP, 301 AD2d 547, 548, 754 N.Y.S.2d 320 (2d Dept. 2003). As
indicated above, TSSI has failed to refute IBM's evidence that no special
relationship exists between the parties, thereby negating TSSI's claim of gross
negligence.

   To plead a prima facie case of fraud based upon misrepresentation, the
complaint should set forth all the essential elements of fraud, i.e., (1) the
making of a material representation by the defendant; (2) that the
representation was false; (3) that the defendant knew it was false and made it
with the intention of deceiving the plaintiff; (4) that the plaintiff believed
the representation to be true and justifiably acted in reliance on it, and was
deceived; and (5) that the plaintiff was damaged thereby. Small v. Lorillard
Tobacco Co., Inc., 94 NY2d 43, 720 N.E.2d 892, 698 N.Y.S.2d 615 (1999); 60A NY
Jur. 2d Fraud and Deceit Sec. 232. Where the alleged misrepresentation relates
to facts which would not appear to be exclusively within the defendant's
knowledge, the complaint may be regarded as insufficient for failing to show why
the plaintiff could not have ascertained such facts through the exercise of
ordinary diligence. 320 Realty Management Co. v. 320 West 76 Corp., 221 AD2d
174, 633 N.Y.S.2d 295 (1st Dept. 1995).

   Here, IBM's witnesses, as well as TSSI's witnesses, testified that, between
January and May 2005 when the IBM-Schering contract was being negotiated, IBM
kept TSSI apprised of changes to the criteria of the project ordered by
Schering. Specifically, when Schering's "numbers chang[ed]" with respect to, for
example, the number of computers to be serviced, these changes would be passed
along by IBM to Mr. Woodward, so that he could adjust TSSI's price "to match the
new criteria sent from Schering-Plough." (Buterman, Ex. 8, Foeller Tr. at
54:15-56:7). Mr. Woodward of  TSSI testified that IBM was responsive to his
questions and promptly informed him of material changes in the project scope
ordered by Schering. (Buterman Aff., Ex, 2, Woodward Tr. at 364:22-365:12). Mr.
Woodward testified he never had the sense that IBM was "trying to deceive" TSSI;
nor did he ever believe that IBM was "purposefully withholding information" from
him. (Id., at 364:16-21, 365:13-15).

   Mr. McLaughlin testified that IBM employees "were as surprised as [Mr.
McLaughlin] about the increased volumes" of work in the days after the go-live
date, and that IBM suspected that Schering had perhaps misrepresented the amount
of work to be performed to IBM and TSSI collectively. (Buterman Aff. Ex. 3,
McLaughlin Tr. at 472:14-474:3). He also acknowledged that the "operational
date" concerning the project (i.e., the number of machines and customers to be
serviced) came from Schering, which would be the "only source" of such data. (
Id., at 473:23-474:3).

   Although TSSI alleges that IBM attempted to deceive TSSI by understating the
asset count in the IBM RFP's, this argument makes little sense. As TSSI's own
witnesses have admitted, the contract between the parties allowed for
alterations to the asset count, thereby allowing TSSI to be paid retroactively
for any extra machines it serviced. (See Buterman Aff., Ex. 22 § 7.3; see also,
Buterman Aff. Ex. 2, Woodward Tr. at 156:16-157:22; Buterman Aff. Ex. 1, DeMaria
Tr. at 244:18-248:19; Buterman Af. Ex. 3, McLaughlin Tr. at 465:24-468:19). In
fact, IBM asserts TSSI was paid over $ 100,000 in extra revenue as a result of
such an adjustment. (See, IBM Facts PP60-72). Because TSSI was compensated based
on actual asset figures rather than the figures in the IBM RFPs, there was no
reason or possible benefit to IBM in deceiving TSSI with regard to the asset
count.

   Moreover, there is evidence that IBM worked with TSSI, both before and after
the go-live date, to ensure that TSSI could meet its obligations under the SOW.
In mid-August 2005, at TSSI's request, IBM advanced TSSI approximately $ 477,000
to defray TSSI's start-up costs. (See IBM Facts P46; see also Buterman Aff. Ex.
1, DeMaria Tr. at 412:25-414:8). When TSSI complained about the high volume of
calls in September 2005, IBM met with TSSI to identify causes of the problems
and to propose solutions. (See, IBM Facts PP63, 84). In late September, 2005,
IBM offered to waive its normal payment terms so that TSSI's invoices would be
paid in 30 days instead of 60 days, and, beginning in October 2005, IBM assigned
its own technicians, third-party technicians, and TransNet technicians hired
directly by Schering to assist in reducing the accumulated backlog of work. (
Id., PP85, 86).

   Additionally, to avoid summary judgment, TSSI must point to specific evidence
supporting IBM's scienter, and not merely rely on "conclusory allegations" of an
intent to deceive. However, TSSI has failed to present sufficient evidence to
create an issue of material fact in this regard.

   First, TSSI asserts that IBM employees were motivated to defraud TSSI to
reduce its bid so those employees could get higher bonuses. This assertion,
however,  is little more than speculation, and, as such cannot create a triable
issue as to IBM's intent. Indeed, "fraud must be established by clear and
convincing factual proof ... [and] not rest alone on conjecture or supposition."
Thor Food Serv. Corp. v. Makofske, 28 Misc 2d 872, 874, 218 N.Y.S.2d 93 (Sup.
Ct. 1961) (internal citations omitted). Moreover, "[f]raud is established only
were facts are proved from which it results as an unavoidable inference." Altman
v. Casale, 25 AD2d 877, 878, 270 N.Y.S.2d 509 (2d Dept. 1966). The motive
ascribed to IBM's employees here - a desire for higher compensation - is found
in virtually all commercial transactions, making it an ill-suited motive from
which to draw an inference of intent to defraud. See, e.g., In re Merrill Lynch
& Co. Research Reports Sec. Litig., 289 F.Supp.2d 416, 428 (S.D.NY 2003)
(concluding that defendant's desire to increase bonus is not probative of intent
to commit securities fraud: "If this Court were to accept the plaintiffs'
allegations of scienter as adequate, it would essentially read the scienter
element out of existence" because "all individuals are assumed to desire to
increase their compensation").

   Second, TSSI's reliance on the e-mail chain submitted as Exhibit G to its
counsel's affirmation (and described at length earlier herein) to establish
intentional fraud is without merit. Mr. Ellmore explained that IBM delayed
notifying TSSI of this particular change in the project scope for TSSI's
convenience "instead of going to TSSI for every single change that impacts them"
he stated "let's queue these things us and go back once." (Buterman Reply Aff.,
Ex. 49, Ellmore Tr., at 239:7-240:6). Mr. Murrell and Mr. Ellmore both also
explained that when Mr. Ellmore referred to the change as "work[ing] in our
favor" (Ex. G at IBM 9410075355), he meant that it reduced costs for both IBM
and TSSI in relation to Schering. (Buterman Reply Aff., Ex. 48, Murrell Tr. at
156:16-157:11; see also, Buterman Reply Aff. Ex. 49, Ellmore Tr. at
239:7-240:6). This e-mail does not evince an intent to defraud TSSI when taken
in context of the other evidence presented.

   As part of its fraud claim, TSSI submits there is evidence that IBM withheld
information concerning TransNet. Specifically, TSSI asserts IBM had a prior
existing service contract at Schering and had been onsite at the account since
2003 (concurrently with TransNet employees). Karl Salnoske, the CIO of Schering,
testified that the TransNet non-compete issue was discussed during the
transition planning phase in joint meetings with IBM and that IBM was aware of
the issue. Mr. Salnoske identified the "transition, planning phase" as "the
period from contract signing to go-live." TSSI asserts IBM knew TSSI would have
to pay TransNet for hiring its technicians, but didn't tell TSSI, so that TSSI
didn't include that cost in its pricing which would have the effect of
decreasing IBM's profit.

   In response, IBM asserts that TSSI has conceded the insufficiency of its
fraud claim with respect to the TransNet issue, as TSSI does not dispute that
"[a]fter TransNet threatened litigation against TSSI in late July 2005 ... TSSI
continued to conduct interviews of TransNet technicians, based on its own legal
advice that TransNet's noncompete clauses were unenforceable." (IBM Facts P54,
See, TSSI Facts P54). Detrimental reliance on defendant's misrepresentation is
an element of  both negligent misrepresentation and fraud claims. Because TSSI
admits that it relied on its attorneys and not IBM, IBM submits, and the Court
agrees, that IBM is entitled to judgment on TSSI's TransNet-related tort claims.
See, Meyercord v. Curry, 38 AD3d 315, 316, 832 N.Y.S.2d 29 (1st Dept. 2007)
("Plaintiff must show [inter alia] that defendant's misrepresentation induced
plaintiff to engage in the transaction in question". (internal citation
omitted). Zuyder Zee Land Corp. v. Broadmain Bldg. Co., 86 NYS2d 827, 829 (Sup.
Ct. 1949) (dismissing negligent misrepresentation claim when "there was in fact
no reliance by plaintiff upon [defendant's alleged misrepresentations], since
the [contract] itself was [reviewed] by its officers and attorney, upon whose
judgment plaintiff relied").

   In sum, there is no evidence that IBM was aware of TransNet's employment
policies before TSSI notified it of the threatened lawsuit on or about July 27,
2005 (see Buterman Aff. at Ex. 29), and further there is no evidence to suggest
that IBM intentionally or recklessly withheld information concerning TransNet
from TSSI.

   Further, it is clear that hiring technicians from TransNet was TSSI's idea
from the beginning. Mr. Woodward first raised the possibility of hiring TransNet
technicians (See Buterman Aff., Ex. 2, Woodward Tr., at 70:22-72:3; 73:15-75:14;
see also Buterman Aff. Ex. 30 at 2. This admission contradicts TSSI's allegation
that IBM "insisted" that TransNet technicians be hired. Further evidence that
TSSI's hiring of TransNet technicians had nothing to do with IBM is provided by
an October 2005 e-mail from Mr. McLaughlin to Halifax in which he states that
"[n]o matter who started the [Schering] account these people would have been
needed and the same lawsuit would have prevailed." (Buterman Aff., Ex. 31 at 1).

   Additionally, TSSI cannot justifiably have relied on IBM to provide
information concerning TransNet because TSSI failed to exercise "ordinary
intelligence" to make a "simple inquiry" into the relevant facts before it began
hiring technicians. Jana L. v. West 129th St. Realty Corp., 22 AD3d 274, 278,
802 N.Y.S.2d 132 (1st Dept. 2005). Gail Ferguson, who was responsible for
interviewing TransNet technicians, testified that she never asked the TransNet
employees she interviewed if they were subject to non-compete agreements,
despite the fact that TSSI typically entered into similar noncompete agreements
with its own technicians. (See Buterman Aff., Ex. 12, Ferguson Tr., at
48:16-49:11; 46:8-48:15). Moreover, TSSI admitted it had at least one direct
meeting with a TransNet representative in July 2005 before it was first
threatened with a lawsuit. (Buterman Aff., Ex. 26, P44). TSSI's failure to
inquire mandates judgment as a matter of law for IBM on these claims. See, e.g.,
Shao v. 39 College Point Corp., 309 AD2d 850, 851, 766 N.Y.S.2d 75 (2d Dept.
2003) (granting summary judgment for defendant on fraud claim when "plaintiff's
deposition testimony established that he failed to take any action ... to
ascertain [the allegedly misrepresented facts]").

   As a further component of its fraud claim, TSSI asserts IBM made
misrepresentations about the Level 1.5 HelpDesk and Think Vantage tools. Indeed,
TSSI asserts for the first time in its Amended Complaint that it was
fraudulently induced to enter into its agreement with IBM by IBM's alleged
promises to implement, by the go-live date, a Level 1.5 help desk and Think
Vantage tools in order to reduce the number of annual software deskside visits.

   The evidence shows that when IBM asked TSSI for a refined bid on the
assumption that IBM would provide Think Vantage tools and the Level 1.5 help
desk in order to reduce the number of software-related deskside support calls,
IBM indicated that there would be a "staged implementation of Rapid Restore (the
primary Think Vantage tool to be used on the Schering project). (Buterman Aff.,
Ex. 15 at 1, 2). Similarly, the document makes clear that "the Level 1.5 [would]
becom[e] more proficient at fixing ... problem[s]" as Rapid Restore was
implemented into the environment.

   On March 18, 2005, TSSI prepared a Document of Understanding that read:

   As referenced in a 1/27/2005 email, IBM will implement a Level 1.5 helpdesk
to reduce the annual number of software calls and implement Think Vantage tools
to reduce the overall quantity of hardware calls. Based upon this tssi has
assumed the following deskside software visits + 5%:

   Year 1: 10800; Year 2: 8100; Year 3: 5400; Year 4: 3600; Year 5:1800.

   This reduction in calls is clearly based on a staged introduction of the
Level 1.5 Help Desk and Think Vantage tools into the Schering environment. Even
TSSI's Mr. Woodward admitted that, based on the assumptions communicated to IBM
by TSSI, "someone could conclude" that TSSI understood that the Level 1.5 Help
Desk and Think Vantage tools would be rolled out over time. (Buterman Aff., Ex.
2, Woodward Tr. at 352:6-13).

   Because TSSI was made aware from the start that the reductions it would see
in deskside visits would occur over time, TSSI's new fraud claim on this ground
should be dismissed. Additionally, TSSI's fraud claims related to alleged
promises to implement, by the go-live date, a Level 1.5 Help Desk and Think
Vantage tools must be dismissed because they are duplicative of TSSI's contract
claims covering the same alleged promises. It is well settled that a claim "for
fraud arising out of a contractual relationship may be maintained only where the
plaintiff alleges a breach of a duty separate from, or in addition to, a breach
of contract." Levine v. American International Group, 16 AD3d 250, 251, 792
N.Y.S.2d 35 (1st Dept. 2005).

   In light of the foregoing, TSSI's gross negligence and fraud claims must be
dismissed. Given, this fact, TSSI's argument that its damages with respect to
these claims are not too speculative to survive summary judgment, are moot.
Similarly, TSSI's request for punitive damages, given the dismissal of its
claims for fraud,  negligence and gross negligence, is likewise moot, as it
cannot be established that IBM acted with the requisite high degree of moral
turpitude and wanton dishonesty as to imply a criminal indifference to civil
obligations. See Ross v. Louise Wise Servs., 8 NY3d 478, 489, 868 N.E.2d 189,
836 N.Y.S.2d 509 (2007).

THE CROSS MOTION (DECLARATORY JUDGMENT)

   To the extent TSSI cross-moved for an order declaring that there was never
any agreement to a Statement of Work between TSSI and IBM, and for dismissal of
IBM's counterclaims on the grounds that there never was any agreement between
TSSI and IBM whereby IBM was entitled to deduct from amounts owed to TSSI any
amounts for alleged additional costs incurred by IBM in the Schering Project,
such cross-motion is denied. In dealing with IBM's motion above, this Court
already has found that TSSI accepted the then-extant August 15, 2005 Statement
of Work when it accepted the Purchase Order. Thus, TSSI is not entitled to
declaratory relief on this issue. Moreover, TSSI's brief provides no support for
the relief sought in the motion. Finally, and perhaps most importantly, all
summary judgment applications on this matter were ordered by this Court to be
served and filed no later than June 29, 2007. The instant cross-motion was not
served and filed until August 10, 2007 and TSSI never requested, much less
received, leave of the Court to vary the briefing schedule which was established
by the Court with the consent of counsel.

   Accordingly, the cross-motion is denied in its entirety.

THE MOTION TO STRIKE THE JURY DEMAND

   As previously discussed, in March of 2000, IBM and TSSI entered into the CSA.
Section 14.3 of the CSA contains an express waiver of the parties' right to a
jury trial, as follows: "The parties expressly waive any right to a jury trial
regarding disputes related to this Agreement."

   IBM asserts the jury waiver applies to all of TSSI's claims. The term
"Agreement" is defined in section 1.0 of the CSA as follows: "Agreement' means
this agreement [i.e. the CSA] and any relevant Statements of Work (SOW'), Work
Authorizations (WA'), and other attachments or appendices specifically
referenced in this Agreement." IBM contends that all of the work that TSSI
performed as a subcontractor on the Schering Project was done pursuant to the
CSA, a WA (the PO) and a SOW. IBM states that the drafts of the SOW made clear
to TSSI that the terms and conditions of the CSA would apply to the work TSSI
would perform on the Schering Project.

   IBM also claims that all of TSSI's claims are subject to the CSA's jury
waiver provision because all of the conduct TSSI has alleged IBM is liable for
is conduct that IBM undertook as part of its contractor-subcontractor
relationship with TSSI on the  Schering Project and is, therefore, "related to"
the Agreement as defined in the CSA. Whether it is IBM's alleged actions with
respect to the Schering RFP, TransNet, a Level 1.5 help desk or Think Vantage
tools, those actions were only undertaken because of the relationship formed by
the CSA. Thus, IBM asserts that all of TSSI's claims have their roots in the
relationship between the parties which was created by the contract - mandating
that they be adjudicated in a bench trial. As a result, IBM asserts that this
Court should strike TSSI' jury demand.

   In opposing the motion, TSSI stresses the constitutional "inviolate" right to
a jury trial found in the New York State Constitution and in relevant case law.

   The Constitution of New York State, at Article I, § 2, provides that "trial
by jury in all cases in which it has heretofore been guaranteed by
constitutional provision shall remain inviolate forever." Indeed, "... [t]he
right to trial by jury is zealously protected in our jurisprudence and yields
only to the most compelling circumstances. John W. Cowper Co. v. Buffalo Hotel
Dev. Venture, 99 AD2d 19, 21, 471 N.Y.S.2d 913 (4th Dept. 1984); Matter of
Schapira, 12 Misc 3d 1195A, 824 N.Y.S.2d 770 (Sup. Ct. Bronx Co. 2006).
Nevertheless, "... by written agreement parties may expressly waive their right
to a jury trial on any claim." Tiffany At Westbury Condominium v. Marelli
Development Corp., 34 AD3d 791, 791, 826 N.Y.S.2d 623 (2d Dept. 2006), citing
Gunn v. Palmieri, 187 AD2d 485, 589 N.Y.S.2d 577 (2d Dept. 1995); Barclays Bank
of NY v. Heady Elec. Co., 174 AD2d 963, 571 N.Y.S.2d 650 (2d Dept. 1991).

   Here, the CSA provides, at Section 14.3, as follows:

   This Agreement and the performance of transactions under this Agreement will
be governed by the laws of the country where the Buyer entering into the
relevant agreement or PA is located, except that the laws of the State of New
York applicable to contracts executed in and performed entirely within that
State will apply if any part of the transaction is performed within the United
States. The United Nations Convention on Contracts for the International Sale of
Goods does not apply. The parties expressly waive any right to a jury trial
regarding disputes related to this Agreement. ...

   The waiver contained in Section 14.3 is a standard waiver routinely upheld by
courts. See, e.g., Gunn v. Palmieri, 187 AD2d 485, 486, 589 N.Y.S.2d 577 (2d
Dept. 1992) (finding provision stating "I waive my right to a trial by jury in
any action, proceeding, or counterclaim in any way connected with this agreement
or the plan" to be unambiguous and valid).

   It is apparent that TSSI's own statements and actions demonstrate that the
CSA, and its jury waiver apply in this case. Indeed, as previously stated in
connection with IBM's motion for summary judgment, TSSI accepted a PO
specifically incorporating the CSA on August 15, 2005, when TSSI's Chief
Financial Officer, George DeMaria accepted a PO for the Schering Project
explicitly incorporating the CSA and  SOW by reference. At that same time, TSSI
accepted the then-extant SOW, which also incorporated by reference the CSA - and
is considered part of the Agreement under Section 1.0 of the CSA (defining an
"Agreement" as the CSA and any relevant Statements of Work, Work Authorizations,
and other attachments or appendices specifically referenced in this Agreement).

   TSSI's contention that it never knew or intended that the CSA, and therefore
the jury waiver, would apply to its work on the Schering project is not relevant
in this instance, because the CSA applies regardless of TSI's claimed subjective
intent. See, W.W.W. Assocs., Inc. v. Giancontieri, 77 NY2d 157, 162, 566 N.E.2d
639, 565 N.Y.S.2d 440 (1990) (refusing to consider extrinsic evidence to
interpret an unambiguous contract provision: "before looking to evidence of what
was in the parties' minds, a court must give due weight to what was in their
contract").

   Even assuming, arguendo, that extrinsic evidence was pertinent, the evidence
here demonstrates that TSSI knew all along that the CSA was applicable to the
Schering project. TSSI's president, Mr. McLaughlin informed his employees,
including Mr. DeMaria, on August 13, 2005, two days before TSSI accepted the
Purchase Order (see DeMaria Aff. P 4) - that "[f]or everyone's info, the IBM SOW
is superceded by another global agreement that we signed in the past and
explicitly indicates that IBM can cancel without cause in 60 days." (Buterman
Reply Aff. Ex. 59 at TSSIE034924). There can be no honest dispute that the
document containing the termination provision Mr. McLaughlin referenced is the
CSA. (See, IBM Jury Br. Ex. A §3.3). Moreover, Mr. DeMaria not only accepted a
PO (DeMaria Aff. P 4) which explicitly incorporated the CSA by reference, but
contacted IBM on August 15, 2005 to ensure that the CSA would be correctly
referenced in the PO. (See, Buterman Aff., Ex. 23 [DeMaria "thought that it
would be a good idea to double check that the PO will be issued to the correct
account number[s] for [TSSI]", including "CSA # 4900CS0268]).

   The dispute over whether the CSA applies to TSSI's tort causes of action are
no longer relevant, in light of this Court's granting summary judgment to IBM on
those claims.

   In Bonnie-Lassie Sportswear, Inc. v. Century Factors, Inc., 283 A.D. 702,
703, 127 N.Y.S.2d 740 (1st Dept. 1954), a tort action, defendant argued that
plaintiff had waived its right to a jury trial by entering into a master
agreement establishing a relationship between the parties, in which the parties
waived the right to a jury trial "in any action upon or claim arising under this
agreement.'". The Appellate Division rejected plaintiff's argument that its tort
suit did not arise out of the agreement. Specifically, the court held that
"[w]hile it might be said that the action is not upon the agreement, it cannot
realistically be held that the claim involved in the action does not arise under
the agreement. Id. at 703.

   It is well established under New York law that "[t]he phrase any controversy
... arising out of or relating to this contract ...' is broad enough to embrace
tort as well as contractual liabilities so long as they have their roots in the
relationship between the parties which was created by the contract." Litchfield
Fabrics, Inc. v. Rosewood Fabrics, Inc., 79 AD2d 910, 912, 438 N.Y.S.2d 239 (1st
Dept. 1981).

   In light of the foregoing, it is clear that the jury waiver of the CSA
applies to the remaining claims in the case at bar.

CONCLUSION

   The Court has considered the following papers in connection with this motion:

   1) Notice of Motion for Summary Judgment dated June 29, 2007 and exhibits
annexed thereto; Affidavit of Lawrence E. Buterman in Support, and the Exhibits
annexed thereto;

   2) IBM's Memorandum of Law in Support of Its Motion for Summary Judgment
dated June 29, 2007;

   3) Notice of Cross-Motion to Motion to Dismiss of Defendant International
Business Machines Corporation dated July 27, 2007 and the Affidavit of Thomas
McLaughlin, sworn to July 27, 2007; the Affidavit of Gregory Woodward sworn to
July 27, 2007; the Affidavit of George DeMaria sworn to July 27, 2007; the
Affirmation of Justine Clare Moran, Esq. dated July 27, 2007, and the exhibits
annexed thereto;

   4) Plaintiff's Memorandum of Law in Opposition to Motion for Summary Judgment
and in Support of Cross Motion dated July 27, 2007;

   5) Reply Affidavit of Lawrence E. Buterman, Esq. dated August 9, 2007 and the
Exhibits annexed thereto; Affidavit of Michael N. Kennedy sworn to August 9,
2007.

   6) IBM's Reply Memorandum of Law in Support of Its Motion for Summary
Judgment dated August 10, 2007;

   7) IBM's Statement of Undisputed Facts Pursuant to Rule 19-A in Support of
its Motion for Summary Judgment dated June 29, 2007;

   8) Plaintiff's Statement of Facts as to Which There Exist Genuine Issues to
be Tried dated July 27, 2007;

    9) IBM's Rule 19-A(B) Counter statement to Plaintiff's Statement of
"Additional Facts at Issue" dated August 10, 2007;

   10) Notice of Motion to Strike Jury Demand dated June 29, 2007 and IBM's
Memorandum of Law in Support of Its Motion to Strike TSSI's Jury Demand dated
June 29, 2007;

   11) Plaintiff's Memorandum of Law in Opposition to Motion to Strike Jury
Demand dated July 27, 2007;

   12) IBM's Reply Memorandum of Law in Support of Its Motion to Strike TSSI's
Jury Demand dated August 10, 2007.

   13) Order dated September 14, 2007 finding that the parties demonstrated good
cause for a sealing order pursuant to 22 N.Y.C.R.R., Section 216.1 (the "Sealing
Order").

   The Court will file the redacted versions of the papers upon which it relied
in connection with this Decision and Order in light of the Sealing Order. In
order to give counsel the opportunity to present to the Court reasons why any
specific portion of this Decision and Order should be redacted prior to filing
with the County Clerk, the Court will calendar this matter for a conference on
December 7, 2007 at 9:30 a.m. This appearance is in addition to the final
Pre-Trial Conference scheduled for January 25, 2008. The Court has previously
scheduled the commencement of trial for February 11, 2008.

   Based upon the foregoing papers, and for the reasons set forth above, it is
hereby

   ORDERED that IBM's motion for summary judgment (Seq. # 6), TSSI's
cross-motion for summary judgment (Seq. # 7), and IBM's motion to strike the
jury demand (Seq. # 8) are consolidated for purposes of decision and
disposition; and it is further

   ORDERED that IBM's motion for summary judgment as to the First, Second, Third
and Fourth Causes of Action of the Amended Complaint is decided as hereinafter
set forth (SEQ # 6); and it is further

   ORDERED that the motion for summary judgment by IBM with respect to TSSI's
First Cause of Action) (Breach of Contract) is granted solely to the extent that
TSSI's damages for any such breach shall be limited as indicated in Section 11.0
of the CSA; and it is further

    ORDERED that the motion for summary judgment by IBM with respect to TSSI's
Second Cause of Action (Negligence), Third Cause of Action (Gross Negligence)
and Fourth Cause of Action (Fraud) is granted and said Causes of Action are
dismissed; and it is further

   ORDERED that the motion for summary judgment by IBM with respect to TSSI's
Claim for Gross Negligence (Count III) and Fraud (Count IV) is granted, and
those causes of action are dismissed; and it is further

   ORDERED that TSSI's cross-motion for summary judgment is denied in its
entirety (SEQ # 7); and it is further

   ORDERED that IBM's motion to Strike TSSI's jury demand (SEQ # 8) is granted
and the jury demand is hereby vacated; and it is further

   ORDERED that counsel for the parties shall appear for a conference before
this Court on December 7, 2007 at 9:30 a.m.

   The foregoing constitutes the Decision and Order of this Court.

   Dated: White Plains, New York

   December 3, 2007

   ENTER:

   Alan D. Scheinkman

   Justice of the Supreme Court