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Justad v. Bank of America Corp.

United States District Court, M.D. North Carolina

August 9, 2017

PAUL JUSTAD, Plaintiff,


          L. Patrick Auld, United States Magistrate Judge.

         This case comes before the undersigned United States Magistrate Judge for a recommendation on Bank of America's “Motion for Judgment on the Pleadings” (Docket Entry 10) (the “Motion”). For the reasons that follow, the Court should deny the Motion.


         Paul Justad filed a Complaint against Bank of America Corporation and Bank of America, National Association (collectively, “Bank of America”) for copyright infringement. (See Docket Entry 1, ¶ 44.)[1] The Complaint alleges as follows:

         Justad holds a federally registered copyright in the “Host Robot, ” a computer program that functions as a “PC-to-Mainframe automation tool.” (Id., ¶¶ 12, 13, 15.) In or around 2000, Bank of America engaged Justad as a software consultant. (Id., ¶ 16.) During the consulting period, Justad aided Bank of America with their “Account Control Automation Project” (the “ACAP”). (Id., ¶ 17.) “[A]s part of the proof of concept phase, ” Justad used the Host Robot to demonstrate an automated method for conducting “mainframe transactions, like debit and credit card exceptions.” (Id., ¶ 18.) Following September 11, 2001, while the ACAP was still under development, Bank of America terminated several contractors, including Justad. (Id., ¶¶ 24, 25.)

         Twelve years later, Bank of America again engaged Justad as a consultant. (Id., ¶ 27.) At that time, Justad discovered that, following his previous termination, Bank of America had installed the Host Robot on multiple servers, and “during the entire period from 2001 forward” continued to use, copy, and deploy the “Visual Basic 6.0 modules” that constitute the Host Robot. (Id., ¶¶ 28-30.) As of 2015, Bank of America employed the Host Robot to automate “thousands of debit/credit card claims” daily, a practice that Justad believes continues to occur. (Id., ¶¶ 28-30, 33, 36.) Bank of America did not and does not possess a license or Justad's permission to use, copy, distribute, display, or reproduce that software following Justad's involvement in the concept phase, including in any production environment. (See id., ¶¶ 30, 32, 44.)

         In response to these allegations, Bank of America filed an Answer to which it attached a General Release and Program Agreement (Docket Entry 9-1) (the “Agreement”), which, according to Bank of America's Brief in Support of the Motion, bars Justad's claim (see Docket Entry 12 at 1-2). More specifically, Bank of America contends that, in executing the Agreement to receive severance benefits upon his termination in September 2015, Justad relinquished his ability to bring the instant copyright infringement claim. (See id.) As such, Bank of America maintains that the Court should enter judgment in its favor on the pleadings. (See id.) Justad disputes Bank of America's contentions. (See, e.g., Docket Entry 16 at 3 (“While Mr. Justad contends that the Agreement presents no bar to his claims, by its terms it does not bar his claim for copyright infringement occurring after September 24, 2015.”).)


         I. Relevant Standards

         “After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). In evaluating a Rule 12(c) motion, the Court considers only the pleadings, (i) taking all factual allegations in the Complaint as true, (ii) taking all factual allegations in the Answer as “true only where and to the extent they have not been denied or do not conflict with the [C]omplaint, ” and (iii) drawing all reasonable inferences in favor of the nonmoving party. Alexander v. City of Greensboro, 801 F.Supp.2d 429, 433 (M.D. N.C. 2011) (internal quotation marks omitted). “The test applicable for judgment on the pleadings is whether or not, when viewed in the light most favorable to the party against whom the motion is made, genuine issues of material fact remain or whether the case can be decided as a matter of law.” Smith v. McDonald, 562 F.Supp. 829, 842 (M.D. N.C. 1983), aff'd, 737 F.2d 427 (4th Cir. 1984), aff'd, 472 U.S. 479 (1985). In resolving a motion for judgment on the pleadings, “the [C]ourt may consider the [C]omplaint, the [A]nswer, and any documents incorporated by reference into these pleadings.” Crisp v. Allied Interstate Collection Agency, 149 F.Supp.3d 589, 594 n.5 (M.D. N.C. 2016). Notably, “[b]ecause the burden of establishing an affirmative defense[, such as a release agreement, ] rests on the defendant asserting it, a motion under . . . Rule 12(c) is generally not the appropriate vehicle to mount such a challenge.” McQuade v. Xerox Corp., No. 5:10-CV-149, 2011 WL 344091, at *3 (E.D. N.C. Feb. 1, 2011). It is only in the “rare circumstances” where “all facts necessary to deciding the issue clearly appear” on the face of the pleadings that “the [C]ourt will reach an affirmative defense through a motion under Rule 12(c).” Id.

         When asked “[t]o enter judgment [on the pleadings] on the basis of a plaintiff having signed a release agreement, the [C]ourt conducts a two-step analysis to determine (1) whether the release agreement is valid; and (2) if it is, whether the agreement's plain language bars the plaintiff's claims.” Harris v. Ann's House of Nuts, No. 4:13-CV-0039, 2013 WL 5592936, at *2 (E.D. N.C. Oct 10, 2013). Under North Carolina law, “[w]hen the language of the contract is clear and unambiguous, construction of the agreement is a matter of law for the [C]ourt[, ] and the [C]ourt cannot look beyond the terms of the contract to determine the intentions of the parties.” Piedmont Bank & Trust Co. v. Stevenson, 79 N.C.App. 236, 240, 339 S.E.2d 49, 52 (1986).[2]

         II. Analysis

         A. Validity

         Justad does not dispute the authenticity of the Agreement (see Docket Entry 16 at 3), but he does not concede the validity of the Agreement (see id. (“Justad contends that the validity of the Agreement may be in question.”)). Moreover, Justad asserts that the Court cannot reach the issue of validity on a motion for judgment on the pleadings. (See id. at 6 & n.1 (asserting that a determination of the ...

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