International Business Machines Corporation, respondent, v. Mullen Technologies, Inc., appellant. (2026)

Argued—January 20, 2026

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract, the defendant appeals from a judgment of the Supreme Court, Westchester County (Sam D. Walker, J.), dated December 1, 2021.  The judgment, upon an order of the same court dated April 21, 2020, among other things, granting those branches of the plaintiff's motion which were for summary judgment on the issue of liability on the causes of action to recover damages for breach of a Joint Development and Technology Licensing Agreement and breach of an Ingredient Logo Trademark License Agreement, and upon a decision dated November 9, 2021, made after an inquest on the issue of damages, is in favor of the plaintiff and against the defendant in the principal sum of $4,500,000.

ORDERED that the judgment is reversed, on the law, with costs, that branch of the plaintiff's motion which was for summary judgment on the issue of liability on the cause of action to recover damages for breach of the Joint Development and Technology License Agreement is denied, the order is modified accordingly, and the matter is remitted to the Supreme Court, Westchester County, for further proceedings consistent herewith and the entry of an appropriate amended judgment thereafter.

In December 2017, the parties entered into, as relevant to this appeal, a Joint Development and Technology License Agreement (hereinafter the JDA) and an Ingredient Logo Trademark License Agreement (hereinafter the TLA) to develop lithium batteries for use in the defendant's electric motor vehicles.  Pursuant to clause 4.1A.1 of the JDA, as partial consideration for receipt of certain materials maintained by the plaintiff, the defendant was to pay the plaintiff $4 million within 10 business days of the date the JDA became effective.  Pursuant to clause 5B.1 of the JDA, upon the plaintiff's receipt of that payment, the plaintiff was to “make available and allow [the defendant] to electronically download (using the file transfer protocol (FTP) feature within [the plaintiff's] Customer Connect extranet website ․ or by other mutually agreeable means, the IBM Background Copyrightable Materials including the IBM Background Know-how described therein, and as described in Appendix B–1(A), which will be considered IBM Confidential Information.”  Under the TLA, the plaintiff granted the defendant a worldwide and nonexclusive license to use a Licensed Mark shown in Schedule 1 of the TLA. In exchange for this license, the defendant was required to pay the plaintiff a royalty fee of $500,000 within 10 business days of the TLA's effective date.  The defendant failed to make either payment under the relevant agreements, alleging that, in early January 2018, it learned that the plaintiff's lithium air battery was 10 years away from commercialization rather than the 2 years the plaintiff represented.

In May 2019, the plaintiff commenced this action against the defendant, alleging causes of action, inter alia, to recover damages for breach of the JDA and the TLA. In July 2019, the defendant interposed an answer.  In September 2019, the plaintiff moved for summary judgment on the complaint.  The defendant opposed the motion, contending, among other things, that the plaintiff failed to perform its obligations under the JDA and that the defendant required discovery to develop its defense of fraudulent inducement based upon the plaintiff's misrepresentations with respect to how long it would take to commercialize the battery and an air filtration system.  In an order dated April 21, 2020, the Supreme Court, inter alia, granted those branches of the plaintiff's motion which were for summary judgment on the issue of liability on the causes of action to recover damages for breach of the JDA and the TLA and directed an inquest to be held to determine the amount of damages owed to the plaintiff by the defendant under the JDA and the TLA. After the inquest, the court, in a decision dated November 9, 2021, found that the plaintiff was entitled to damages in the sum of $4,500,000.  In a judgment dated December 1, 2021, the plaintiff was awarded the principal sum of $4,500,000, plus interest, costs, and disbursements, for a total sum of $5,617,191.58.  The defendant appeals.

“To establish prima facie entitlement to judgment as a matter of law on a cause of action alleging breach of contract, a party is required to demonstrate the existence of a contract, the party's performance under the contract, the other party's breach of the contract, and that the party suffered harm as a result” (U.S. Bank N.A. v. Reddy, 220 AD3d 967, 972;  see All Nations Steel Corp. v. KSK Constr.  Group, LLC, 240 AD3d 835, 837).  However, “a party cannot sustain its prima facie burden by relying on evidence submitted for the first time in its reply papers” (Bonilla v Southside United Hous. Dev. Fund Corp., 181 AD3d 550, 551 [alteration and internal quotation marks omitted];  see O'Connell v Los Compadres Liquors & Wines, 211 AD3d 963, 964).

Here, the plaintiff established its prima facie entitlement to judgment as a matter of law on the issue of liability on the cause of action to recover damages for breach of the TLA (see Shulamith Sch. for Girls, Inc. v Shulamith Sch. for Girls of Brooklyn, 230 AD3d 822, 824;  Ben Ciccone, Inc. v. Naber Elec. Corp., 214 AD3d 936, 938).  The plaintiff submitted evidence demonstrating, among other things, that the defendant breached the TLA by failing to make the royalty payment due thereunder.  In opposition, the defendant failed to raise a triable issue of fact.

However, the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law on the issue of liability on the cause of action to recover damages for breach of the JDA. The plaintiff failed to eliminate triable issues of fact as to whether the plaintiff performed pursuant to the terms of the JDA (see All Nations Steel Corp. v. KSK Constr.  Group, LLC, 240 AD3d at 837;  Avery v. WJM Dev. Corp., 216 AD3d 887, 889).  Accordingly, that branch of the plaintiff's motion which was for summary judgment on the issue of liability of the cause of action to recover damages for breach of the JDA should have been denied, regardless of the sufficiency of the defendant's opposition papers (see Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 321).

“ ‘It has long been recognized that the theory underlying damages for breach of contract is to make good or replace the loss caused by the breach’ ” (Long Is. Minimally Invasive Surgery, P.C. v MultiPlan, Inc., 228 AD3d 638, 641, quoting iGo Mktg. & Entertainment, LLC v Hartbeat Prods., LLC, 217 AD3d 753, 754–755).  “Damages are intended to return the parties to the point at which the breach arose and to place the nonbreaching party in as good a position as it would have been had the contract been performed” (iGo Mktg. & Entertainment, LLC v Hartbeat Prods., LLC, 217 AD3d at 755;  see Bi–Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d 187, 195).  “General damages ‘are the natural and probable consequence of the breach’ of a contract” (Biotronik A.G. v Conor Medsystems Ireland, Ltd., 22 NY3d 799, 805, quoting American List Corp. v. U.S. News & World Report, 75 N.Y.2d 38, 43), and include the “money that the breaching party agreed to pay under the contract” (id. [internal quotation marks omitted] ).  “ ‘It is fundamental to the law of damages that one complaining of injury has the burden of proving the extent of the harm suffered’ ” (Chen v. Wen Fang Wang, 177 AD3d 694, 696, quoting G & A Moving & Stor. Co. v. Computer Assoc.  Intl., 233 A.D.2d 479, 479–480).  “While a plaintiff may recover damages when the measure of damages is unavoidably uncertain or difficult to ascertain, a reasonable connection between a plaintiff's proof and [the] determination of damages is nevertheless necessary” (Parris v Schneider Elec. Mobility NA, Inc., 197 AD3d 710, 712 [internal quotation marks omitted];  see J.R. Loftus, Inc. v. White, 85 N.Y.2d 874, 877).

Here, the plaintiff established its general damages to $500,000 for breach of the TLA, as that was the amount that the defendant had agreed to pay under that agreement for the trademark license transferred to it (see Biotronik A.G. v Conor Medsystems Ireland, Ltd., 22 NY3d at 805;  Onekey, LLC v. Byron Place Assoc., LLC, 200 AD3d 896, 899–900).  Moreover, at the inquest, the plaintiff's proof established a reasonable connection with the damages sought.

Accordingly, we remit the matter to the Supreme Court, Westchester County, for further proceedings on the cause of action to recover damages for breach of the JDA and the entry of an appropriate amended judgment thereafter.

The parties' remaining contentions are either without merit or academic in light of our determination.

BARROS, J.P., VOUTSINAS, GOLIA and HOM, JJ., concur.

2021–09089 DECISION & ORDER ON MOTION

International Business Machines Corporation,

respondent, v Mullen Technologies, Inc.,

appellant.

(

/19)

Motion by the respondent to dismiss the appeal on the ground that it has been rendered academic.  By decision and order on motion of this Court dated June 30, 2023, the motion was held in abeyance and referred to the panel of Justices hearing the appeal for determination upon the argument or submission thereof.

Upon the papers filed in support of the motion and the papers filed in opposition thereto, and upon the argument of the appeal, it is

ORDERED that the motion is denied.

BARROS, J.P., VOUTSINAS, GOLIA and HOM, JJ., concur.

ENTER:

Darrell M. Joseph

Clerk of the Court