Anexia, Inc., Plaintiff, v. LLC VAZATA (2026)

The following e-filed documents, listed by NYSCEF document number (Motion 008) 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184, 185, 186, 187, 188, 217, 225, 228, 231, 241, 242, 243, 244, 245, 246, 247, 248, 249, 253, 255, 257, 258, 259, 260, 261, 275, 276, 277 were read on this motion for SUMMARY JUDGMENT.

The following e-filed documents, listed by NYSCEF document number (Motion 009) 189, 190, 191, 192, 193, 194, 195, 196, 197, 198, 199, 200, 201, 202, 203, 204, 205, 206, 207, 208, 209, 210, 211, 212, 213, 214, 215, 216, 226, 229, 230, 232, 233, 234, 235, 236, 237, 238, 239, 240, 252, 254, 256, 262, 263, 264, 265, 266, 267, 268, 269, 270, 271, 272, 273, 274, 279 were read on this motion for SUMMARY JUDGMENT.

This is a breach of contract action involving a Master Services Agreement (MSA) entered by plaintiff Anexia, Inc. and defendant Horizon Data Center d/b/a Vazata (Vazata). According to the terms of the MSA, plaintiff agreed to provide colocation services to defendant at a data center located in Manassas, Virginia (DC6). The Federal Deposit Insurance Corporation (FDIC) was a Vazata customer at the DC6 location. In September of 2019, the FDIC made the decision to relocate to Texas. Plaintiff and defendant assert competing breach of contract claims and counterclaims, among other claims, arising from the actions undertaken by the other leading up to, and following, the FDIC's relocation of its data center operations to Texas.

In motion sequence 008, Vazata seeks summary judgment dismissing plaintiff's claims for breach of contract for power theft and plaintiff's claims related to revenue defendant obtained from the FDIC. Defendant also seeks partial judgment on its counterclaims for breach of the covenant of good faith and fair dealing, misuse of confidential information, and breach of contract related to an allegation that Anexia improperly terminated power and locked defendant out of the premises.

In motion sequence 009, plaintiff seeks summary judgment granting it relief on its breach of contract and declaratory judgment claims related to the FDIC data center relocation to Texas as well as for dismissal of defendant's counterclaims.

Background

Vazata offers data, power, and expert IT management services for businesses and federal government agencies (affidavit of Lance Black, NYSCEF doc. no. 166, para. 3). Anexia provides data center and colocation services (first amended complaint, NYSCEF doc. no. 133, para. 13). Pursuant to a Master Services Agreement (MSA) effective October 1, 2017, Anexia provided colocation services at DC6 to Vazata (NYSCEF doc. no. 167). The "Statement of Work," annexed to the MSA as Exhibit A, states that Anexia was to provide colocation services to Vazata, at its DC6 facility, located at 9651 Hornbaker Road, Manassas, Virginia (MSA, exhibit A, NYSCEF doc. no. 167, pg. 17).

FDIC Relationship

Vazata was awarded a Basic Ordering Agreement from the FDIC for the period of March 5, 2012 through August 30, 2019 (NYSCEF doc. no. 168). The agreement required that Vazata provide data colocation services to the FDIC at its discretion (id.).

Anexia was required by section 3.C of the MSA (statement of work) to provide colocation services for the FDIC servers identified in the agreement as the "FDIC Cage" (NYSCEF doc. no. 167). The agreement provided that Vazata shall maintain the customer relationship with the FDIC and shall bill the FDIC for its services. However, Vazata was to remit, to Anexia, eighty percent (80%) of the revenue collected from FDIC during the term of the agreement with FDIC. Vazata agreed to provide Anexia with copies of monthly invoices to track the actual revenue to be collected from FDIC under the terms of the agreement (id.).

In September 2019, the FDIC relocated to a data center in Texas. The FDIC purportedly maintained its relationship with Vazata and utilized a location where Vazata rents power and space from the landlord (NYSCEF doc. no. 170).

Cage and Lockout Dispute

Pursuant to the terms of the MSA, Vazata assigned seventeen customer contracts directly to Anexia in exchange for Anexia's provision of collocation services at Cage C-9 for three years at no charge (statement of work, section 3.A, NYSCEF doc. no. 167).

In October 2019, after the FDIC vacated the DC-6 location, Anexia invoiced Vazata for 25 months of alleged 'power theft' for services rendered at cage C-9 (NYSCEF doc. no.175), totaling $404,455, of which Anexia claims $226,569 remains outstanding (complaint, NYSCEF doc. no. 003, para. 42). Anexia asserts that the invoice and charges resulted from a routine audit conducted in October of 2019, which purportedly revealed the installation of unauthorized equipment. Anexia submits that, due to the installation of unapproved equipment, Vazata overused electricity and exceeded the contractual allotment set forth in the MSA (NYSCEF doc. no. 136, pg. 2). Vazata denies the overuse charges and refuses to pay the invoices. Vazata alleges that Anexia terminated power to the C-9 cage and locked Vazata and its customers out of the DC6 location (id.).

Vazata's Solicitation Claim

In the MSA, Anexia agreed that Vazata "will be allowed to contract with third parties, . . . for [Vazata] to provide its services to those third-party customers, for no additional charge" (MSA, statement of work, NYSCEF doc. no. 167, § 2.G). Science Applications International Corporation (SAIC) was one of Vazata's major third-party customers at the DC6 location. In August of 2018, Vazata began providing colocation services to SAIC at DC6 with an initial one-year term (NYSCEF doc. no. 176).

On October 31, 2018, Anexia's Head of Sales, Rex Stover, emailed SAIC to discuss plans for space and power at the DC6 location after termination of the Vazata agreement (NYSCEF doc. no. 153). Vazata alleges that Stover assisted SAIC directly with drafting requests for proposals for the 2019 renewal term (NYSCEF doc. no. 155). Stover purportedly solicited SAIC directly and requested information regarding its anticipated power, space, and equipment requirements for the future (NYSCEF doc. no. 154), and later offered SAIC a discounted price for power, at a limited one-year term, with flexible renewal options (NYSCEF doc. no. 157, 159). Anexia and SAIC ultimately entered a Master Services Agreement for services at the DC6 location.

In August of 2019, Anexia advised Vazata that it intended to "cut ties" (NYSCEF doc. no. 162) and the parties thereafter terminated their working relationship.

Procedural History

An amended complaint was filed on January 16, 2020 (NYSCEF doc. no. 003). The amended complaint asserts five causes of action: breach of contract (including an assertion of breach of the implied covenant of good faith and fair dealing); declaratory judgment that Anexia is entitled to 80% of Vazata's revenue indefinitely; theft of services; violation of Virginia Code for theft of electricity and communication services, and unjust enrichment (id.).

Following motion practice, this court dismissed plaintiff's third (theft of services), fourth (violation of Virginia Code) and fifth (unjust enrichment) causes of action, and directed that defendant answer the remaining two causes of action in the complaint (breach of contract and declaratory judgment) (NYSCEF doc. no. 42).

In its amended answer with counterclaims, defendant asserts nine counterclaims: four separate counterclaims alleging breach of contract; tortious interference with business relations; breach of the covenant of good faith and fair dealing; declaratory judgment; trespass to chattels; and conversion (NYSCEF doc. no. 78). Plaintiff moved to dismiss the counterclaims, and this court granted the motion to the extent of dismissing defendant's first (breach of contract), third (tortious interference with business relations), fifth (declaratory judgment), eighth (trespass to chattels) and ninth (conversion) counterclaims.

This action proceeds on plaintiff's first cause of action for breach of contract premised, primarily, upon a claim of power theft and a purported failure by defendant to pay FDIC revenue, and plaintiff's second cause of action for declaratory judgment that Anexia is, in fact, entitled to 80% of Vazata's revenue from the FDIC.¹ Defendant's second counterclaim for breach of contract, fourth counterclaim for breach of the covenant of good faith and fair dealing, and defendant's sixth and seventh causes of action for breach of contract for plaintiff's alleged acts in removing power and locking defendant's out of its location, remain for consideration by the court on this motion (NYSCEF doc. no. 78).

Legal Standard

Summary judgment may be granted only when it is clear that no triable issue of fact exists (Alvarez v Prospect Hosp., 68 NY2d 320, 325 [1986]). Since an order granting summary judgment resolves an issue as a matter of law, it is considered a drastic remedy which should only be employed when there is no doubt as to the absence of triable issues. The court's role on a motion for summary judgment is issue-finding, not issue-determination (Lebedev v Blavatnik, 193 AD3d 175, 182 [1st Dept 2021][internal citations omitted]).

On a motion for summary judgment, the proponent must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact (Alvarez, 68 NY2d at 324). A failure to make such a prima facie showing requires denial of the motion, regardless of the sufficiency of the opposing papers (Ayotte v Gervasio, 81 NY2d 1062, 1063 [1993]). If a prima facie showing is satisfied, however, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action. The facts must be considered in the light most favorable to the non-moving party, and conclusions, unsubstantiated allegations, or expressions of hope are insufficient to defeat a summary judgment motion (Zuckerman v City of New York, 49 NY2d at 557, 562, [1980]; Martin v. Briggs, 235 AD2d 192, 196 [1st Dept 1997]).

Discussion

Vazata's Motion for Summary Judgment (motion seq. no. 008)

Vazata first moves for summary judgment on plaintiff's breach of contract claim. In the complaint, Anexia alleges that Vazata breached the MSA by failing to maintain the FDIC relationship and by conspiring with the FDIC to move its data center operations from Virginia to a facility in Texas (NYSCEF doc. no. 133, para. 46). Vazata denies conspiring with the FDIC to move its facility and argues that the terms of the MSA do not obligate Vazata to pay Anexia indefinitely. Vazata denies breaching its contractual obligations to Anexia, and asserts that, according to the plain language of the MSA, its responsibility for payment for services rendered by Anexia is limited to the DC6 location.

Vazata submits the affidavit of Lance Black, Vazata President and Chief Executive Officer. Black attests that Anexia provided colocation services to Vazata at the D6 location in Manassas, Virginia (NYSCEF doc. no. 166). He avers that the statement of work annexed to the MSA as Exhibit A explicitly relates to suites 201 and 202 of the DC6 data center where Vazata maintained an FDIC cage (NYSCEF doc. no. 167, pg. 17). According to Black, the MSA obligated Anexia to provide services to the "FDIC cage" — a 540 square foot lockable cage (id. at pg. 18). In exchange, Vazata was required to maintain the relationship with the FDIC, and was responsible for billing and collection from the FDIC. Vazata agreed to remit eighty percent (80%) of the revenue collected from FDIC, during the term of the agreement with FDIC, without additional deduction or offset against the payments received by Vazata (id.).

In opposition, Anexia submits a contrary view of the obligations of the parties. According to Anexia, Vazata agreed to accept what amounts to a "20% agent fee" and simply "contracted away" its right to receive FDIC revenue (memo in op, NYSCEF doc. no. 248). Anexia submits that the statement of work, annexed to the MSA as Exhibit A, obligated Vazata to maintain the FDIC relationship for Anexia's benefit indefinitely. Anexia alleges that, when it agreed to acquire DC6 from the nonparty entity COPT, it agreed to assume the duties of the vendor obligations under the FDIC contract, in exchange for the revenue derived from the FDIC. Anexia asserts that Vazata was merely "the face" of the relationship for the FDIC, and was not entitled to the bulk of its revenue. According to Anexia, Vazata agreed to remit 80% of the FDIC revenue, and the contract required such to be done indefinitely, irrespective of where the FDIC receives its colocation services. Anexia argues that the MSA obligates Vazata to remit revenue during the term of the agreement with the FDIC, which purportedly remains in effect. It is Anexia's position that Vazata should have brought the FDIC's request to move locations to Anexia, and permitted Anexia to re-structure the relationship to mimic that of the DC6 location. Anexia views itself as the principal performing the relevant necessary services, and alleges that Vazata breached the agreement by not acting in a manner that continued to allow Anexia to actualize 80% of the FDIC-based revenue.

Under New York law, it is "elementary" that clauses of a contract "should be read together contextually in order to give them meaning" (Diamond Castle Partners IV PRC, L.P. v. IAC/InterActivecorp, 82 AD3d 421, 422 [1st Dept 2011]). "A written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (Schron v Troutman Sanders LLP, 20 NY3d 430, 436 [2013]). Here, it is this court's view that, from a plain reading of the MSA, and all documents, exhibits, invoices and schedules incorporated into the MSA by reference, Vazata's obligation to pay Anexia for FDIC services relates directly to Anexia's contractual obligation to provide services at the C2 cage located at the DC6 location.

The statement of work explicitly states that Anexia is providing colocation services to Vazata at the D6C location. Section 3.C of the statement of work refers specifically to the FDIC relationship and provides that Anexia is to deliver services as described in Schedule A. Schedule A sets forth the FDIC services and pricing schedule, and specifically identifies the C-2 cage as the location for the services rendered (NYSCEF doc. no. 167 pgs. 17, 18, 34). The MSA obligated Anexia to provide services to Vazata at the "FDIC cage," which the agreement identifies as a 540 square foot lockable cage c-2 [id. at pg. 18]. The MSA further provides that Vazata "shall maintain the customer [FDIC] relationship with FDIC indefinitely" . . . but provides that receipt of 80% of the revenue collected from FDIC would commence "with the invoice for October 2017, during the term of the agreement with FDIC" (NYSCEF doc. no. 167 pg.18). The term of the FDIC agreement ended at its earliest with the FDIC's departure from DC6 in September of 2019, and Vazata's obligation to pay Anexia for services terminated at the latest with the expiration of the MSA following its five (5) year term (MSA, section 13.13.1, NYSCEF doc. no. 167, pg. 12).

Anexia points to many contractual relationships established prior to the MSA, to justify receipt of 80% of Vazata's revenue from the FDIC (id. at 5). Anexia claims the bargained-for consideration in assuming duties as the DC6 vendor from a nonparty COPT was made contingent upon receipt of FDIC revenue. Language to that effect, however, is notably absent from the MSA. Also absent from the MSA is any term that designates Vazata as "agent" of Anexia, or that identifies Vazata "as the face" of the agreement.

The documents Anexia relies upon to establish the groundwork for its interpretation of the MSA are not incorporated in the MSA by reference. There is no mention or reference to the 2015 Membership Purchase Agreement between Vazata and Day 1, the 2016 Settlement Agreement between Day 1 and COPT, the 2016 Assignment between Day 1 and COPT or the 2017 Assignment between COPT and Anexia. Anexia's unilateral understanding and reasoning for entering the MSA and agreeing to its terms are not recited or reflected in the MSA itself.

According to the plain language of the MSA, the parties agreed that Anexia would provide services at DC6 to Vazata, as customer, and obligates Vazata to pay for the services. Section 16.11 the MSA states that the writing constitutes the entire agreement of the parties, and supersedes any and all prior agreements and understandings of the parties, whether written or oral, with respect to the subject matter (NYSCEF doc. no. 202, pg. 15).

Anexia views Vazata's contractual relationship with FDIC to be one continuous services agreement notwithstanding that the location at which the services were to be provided was identified in the MSA. That view does not comport when reading the MSA, its exhibits and addendums in totality (Diamond Castle Partners IV PRC, L.P., at 422). To adopt Anexia's interpretation requires that this court ignore the other addendums, statements of work and exhibits that accompany the agreement and provide for a specific location at which Anexia's services were to be provided to the FDIC. Adopting such a view would render those addendums and the statement of work meaningless or without effect. The MSA specifically provides that the statement of work and the MSA be interpreted together (NYSCEF doc. no. 202, pg. 17), and the statement of work refers to a specific location for the services to be provided. Where, as here, the parties agreed to incorporate language that identifies where, how, and in what amounts colocation services were to be provided, the court should not read the agreement in a manner that results in that plain language having no effect.

If the court were to adopt Anexia's reading of the MSA, Vazata would have the obligation to remit revenue indefinitely, irrespective of the location of the services provided, which would render the contractual identification of service locations to be ineffectual and irrelevant. The court should not interpret a contract to produce a result that is both contrary to the contract's plain language and commercially unreasonable (Keller-Goldman v Goldman, 149 AD3d 422 [1st Dept 2017] [it is important for a court to adhere to the plain language of an agreement . . . a contract should not be interpreted to produce a result that is absurd, commercially unreasonable or contrary to the reasonable expectations of the parties]).

Anexia currently provides no services to Vazata or the FDIC at the Texas facility. In this court's assessment, no reasonable interpretation of the language of the MSA would permit the conclusion that it creates an independent obligation to pay Anexia separate and apart from services rendered at the DC6 location. Although the MSA does require that Vazata maintain the FDIC relationship for Anexia's benefit, nothing in the agreement requires that the benefit conferred by the MSA to Anexia be continued beyond the DC6 location.

Based solely on the contractual language of the MSA, and all addendums, attachments and exhibits thereto, the court does not find any question of fact as to whether Vazata breached its contractual obligations by failing to pay Anexia for services rendered to the FDIC in Texas, or any location other than DC6.

However, the court does find that questions of fact exist as to whether Vazata breached other obligations under the MSA. The amended complaint asserts four other grounds for breach of the Master Services Agreement: 1) that Vazata entered into "secret" negotiations with the FDIC to move its equipment from Anexia's suite to a Vazata facility in Dallas, Texas to "steal" the revenue due to Anexia under the MSA; 2) that Vazata "stole" power and services from Anexia without Anexia's consent and without paying for the value of the services; 3) that Vazata failed to pay Anexia's invoices when due; and 5) that Vazata failed to permit a full inspection of Vazata's books and records as required by the MSA (NYSCEF doc. no. 133).

To plead a successful cause of action for breach of contract, a plaintiff must establish that a contract exists, plaintiff performed in accordance with the contract, defendant breached its contractual obligations, and the breach resulted in damages (34-06 73, LLC v Seneca Ins. Co., 39 NY3d 44, 52 [2022][internal citations omitted]).

On summary judgment, Vazata as movant bears the burden of proof of establishing the lack of a triable issue of fact. In this court's view, Vazata has not met this burden. An email from the FDIC to Vazata was produced in discovery that reflects a meeting was held on December 7, 2017, at which Vazata's data center capabilities in Texas were explored (NYSCEF doc. no. 173). The agenda reflects that at least preliminary questions about Vazata's data center capabilities in Texas were raised, including discussions surrounding Vazata's ability to offer "options in the future on contiguous space if a customer wants to expand in the out-years of a contract" (id.). Vazata admits that on August 6, 2017 it pitched the FDIC on expanding its services to replicate the then-current service provided at DC6, but explains that the communication was for the purpose of exploring "geographic redundant colocation facilities," with full capabilities in both DC6 and Texas. Vazata denies that the correspondence was secret or reflected negotiations to "steal" plaintiff's FDIC revenue.

Anexia asserts that Vazata was negotiating with the FDIC move to Texas, in tandem with the execution of the MSA with Anexia (NYSCEF doc. no. 248 pg. 9). According to Anexia, the timing of these conversations raises a question of fact as to whether Vazata acted for the benefit of both parties to maintain the relationship with the FDIC "indefinitely," as the contract required. Although Vazata provides a different justification for the negotiations with the FDIC, on defendant's summary judgment motion the court must view the facts in the light most favorable to plaintiff — the non-moving party (Bazdaric v Almah, 41 NY3d 310, 316 [2024]).

With respect to Anexia's other claim, alleging theft of services, the parties make wildly different factual assertions. For example, with respect to the power theft claim, Anexia submits the testimony of an employee who claims he was secretly instructed to install excess power pairs in the contracted cages for Vazata (NYSCEF doc. no. 242, 152:3-10). Vazata denies the claim and submits testimony and records that a "secret installation" did not occur, and provides evidence that purportedly shows Vazata's power usage did not, in fact, increase (NYSCEF doc. no. 137, 239:12). In addition, Vazata submits time records and invoices that contradict the testimony of the Anexia witnesses who alleged excess power pairs were installed in violation of the MSA terms, together with records that reflect that Anexia admitted that no unauthorized modifications or installations were made by Vazata (NYSCEF doc. no. 130, pg. 29).

The function of the court upon motion for summary judgment is issue-finding, not issue-determination. The court is not to determine credibility (SJ Capelin Assoc Inc v Glob Mfg Corp, 34 NY2d 338 [1974]). To grant summary judgment, it must clearly appear that there are no material issues of fact (Goodman v Goodman, 62 AD2d 939, 940 [1st Dept1978][internal citations omitted]). Here, Vazata's arguments do not dispose of all triable questions of fact. The parties present conflicting testimony best reserved for consideration by the trier of fact. Therefore, summary judgment in favor of Vazata on Anexia's breach of contract claims premised upon "secret" FDIC negotiations, power theft, unpaid invoices, and failed document inspection, is denied (NYSCEF doc. no. 133).

Vazata's Counterclaims

On this motion, Vazata also seeks summary judgment on four of its counterclaims (two, four, six and seven) asserting breach of contract for Anexia's alleged misuse of confidential information, breach of the implied covenant of good faith and fair dealing, and breach of contract arising from Anexia's purported termination of power and lockout at the DC6 facility.

The Implied Covenant of Good Faith and Fair Dealing

The covenant of good faith and fair dealing is implied in every contract and embraces a pledge that neither party shall do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract (Emmet & Co. v Cath. Health E., 49 Misc 3d 1058, 1073 [NY Sup 2015]). The provision does not encompass terms that are inconsistent with the written agreement, but encompasses terms which a reasonable person would be justified in understanding were included (id.).

First, Vazata alleges that Anexia breached the covenant by directly soliciting Vazata's customer, SAIC. Vazata asserts that Anexia emailed SAIC directly to discuss expanding services after the one-year contract with Vazata concluded. Vazata also alleges that Anexia barred Vazata from SAIC's consideration during the contract renewal process, by submitting proposals that were lower, less expensive, more flexible and more competitive. Essentially, Vazata contends that Anexia engaged in a scheme of offering initial services to Vazata customers for one term only, and then undercutting Vazata by offering better direct-service agreements to those customers upon more favorable terms. Vazata argues that this practice undermined the purpose of the MSA and deprived Vazata of the benefit of the parties' bargain in violation of the implied duty of good faith and fair dealing.

In support of its arguments, Vazata relies upon section 2 of the MSA, which sets forth the statement of work between the parties and the agreement related to power and space (MSA, exhibit A, NYSCEF doc. no. 167, pg. 17). Subsection "G" provides that

"customer will be allowed to purchase additional cabinets, including "bio-readable" cabinets, in DC-6 at the discounted rates set forth in Schedule A. The Parties agree Customer will be allowed to contract with third parties, including the Department of Energy ("DOE") and Science Applications International Corporation ("SAIC"), for Customer to provide its services to those third-party customers, for no additional charge. The initial order for the cabinets at the rates set forth in Schedule A."

Anexia does not specifically contest that it contacted SAIC and submitted a proposal to SAIC to obtain its business. It is Anexia's position that the solicitation was permissible because the MSA does not contain any exclusivity provisions and does not expressly prohibit solicitation of the parties' customers.

Viewing the agreement and evidence in a light most favorable to Anexia, the nonmoving party, it is this court's view that summary judgment on this counterclaim must be denied. The contractual agreement provides no limiting language that prohibits the plaintiff from direct contact with Vazata's customers. Section 2.G, cited above, addresses the purchase of cabinets and states that no additional charge will result from Vazata's contract with third parties for services in the cabinets. Nothing in the provision speaks to direct solicitation, or the submission of competing proposals once third-party contractual arrangements end. Anexia's submission of a better proposal with more favorable terms than Vazata does not deprive Vazata of the benefit of the MSA. Vazata had the right to submit any proposal it deemed necessary to retain its own customer. To the extent that Vazata's ability to make a more favorable offer relied upon obtaining favorable terms from Anexia, then the onus to include such terms limiting solicitation, or establishing the exclusive right to negotiation, falls upon Vazata to assure it was included in the written agreement (MSA). Here, no such language exists, and the court does not find that Vazata has met its prima facie burden. Vazata has not set forth an act by Anexia which injured Vazata's right to obtain the benefit of the MSA, or behavior that a reasonable person would be justified in understanding was implied in the agreement (Emmet & Co., 49 Misc 3d at 1073). Vazata's motion for summary judgment on this counterclaim is denied.

Breach of Contract

Next, Vazata submits that Anexia breached the MSA by misusing confidential information to solicit SAIC. Section 8.1 of the agreement provides that the confidential information of a party must be held in confidence by the other, using a reasonable degree of care, only for the purpose of performing contractual obligations (NYSCEF doc. no. 167, pg. 8). The parties agreed that neither party would utilize or make available any confidential information and will only make disclosure available where reasonably necessary for the performance of its duties (id.).

Vazata identifies correspondence between Anexia and SAIC that references SAIC's then-current colocation specification. In the correspondence, Anexia indicates that service could be improved. Vazata argues that, in order to formulate and submit favorable proposals to SAIC, Anexia used confidential client information regarding SAIC's technical specifications, power usage, equipment and service needs.

Anexia denies using confidential information and asserts that the information used to submit the proposal was accessible and known to both parties equally. According to Anexia, SAIC solicited proposals from all available sources and vendors, and provided the scope of the proposals and their need for colocation services when soliciting bids. Anexia submits that all proposals were above board, and no confidential information was provided or utilized. Further, Anexia alleges that the relationship between SAIC and Vazata "soured" prior to the ending of SAIC and Vazata's contractual term, and asserts that Vazata and SAIC had a collateral agreement that was purportedly terminated by SAIC "for cause" (memo in op, NYSCEF doc. no. 248, pg. 24). Due to the purported breakdown of the relationship, Anexia submits that SAIC solicited other proposals resulting in the termination of Vazata, for reasons unrelated to any act by Anexia.

Here, there are clear factual disputes between the parties that cannot be resolved on summary judgment. The parties dispute whether the SAIC information was of such a confidential nature as to fall under the purview of the confidentiality provision of the MSA, and dispute whether Anexia's use of the information constituted a breach of that agreement. Given that it was Anexia who ultimately provided the colocation services as the owner of the facility, a trier of fact could determine that an analysis of its own records, regarding SAIC's use of the facilities, did not constitute a breach of the parties' agreement. On the other hand, the trier of fact could determine that Anexia's solicitation of SAIC was improper and determine that any use of information arising out of SAIC's relationship with Vazata was a violation of Vazata's contractual rights. The court, on summary judgment, should not determine credibility, and summary judgment is not appropriate when a triable issue exists or where there are unresolved factual issues (Sillman v Twentieth Century Fox Film Corp, 3 NY2d 395 [1957]; SJ Capelin Associates Inc v Globe Mfg Corp, 34 NY2d 338 [1974]). Summary judgment on Vazata's second counterclaim for breach of contract for the misuse of confidential information is denied.

Finally, Vazata seeks judgment on its sixth and seventh counterclaims for breach of contract relating to the termination of power and lockout at DC6 and within the C9 cage. For the same reasons as set forth above, the court declines to grant summary relief. The parties paint conflicting factual pictures as it pertains to the ending of the contractual relationship. Vazata alleges that the MSA obligated Anexia to provide power services to the C9 cage without a fee and permitted unfettered access to the DC6 cage, along with other areas and accessways. Vazata alleges that Anexia breached the MSA by failing to comply with the contract terms and provide service and access to the designated areas.

Anexia opposes these arguments and argues that Vazata was never locked out or denied access from the specified locations. Anexia admits that power was terminated to certain "excess" power pairs, but submits that the "excess" power locations that were terminated did not fall within the scope of the contracted areas under the MSA. Anexia also claims that power was properly reduced to align with Anexia's obligations as set forth in the MSA, and did not violate Vazata's rights.

The arguments of the parties present a clear factual dispute regarding the rights and obligations under the MSA and whether the parties properly performed under the contract terms. To resolve the dispute the trier of fact must make factual determinations as to which party's recitation of events sounds most credible. Factual disputes preclude the grant of summary judgment on a breach-of-contract theory, where questions of performance and contract application exist (J Events Co. LLC v Maturana, 70 Misc 3d 1224(A) (NY Sup 2021). It is improper for the court, on summary judgment, to determine credibility (Sillman, 3 NY2d 395). Vazata's request for summary judgment on its sixth and seventh counterclaims is denied.

Anexia's Motion for Summary Judgment (motion. seq. no. 009)

On motion sequence 009, Anexia seeks summary judgment, first, on its breach of contract claim premised upon the receipt of FDIC revenue. Anexia takes the position that the MSA requires Vazata to remit to Anexia 80% of all revenue that Vazata receives from the FDIC. This claim is premised upon the receipt of revenue actualized by Vazata under an FDIC agreement that predates the parties' MSA by over five years. Anexia denies the existence of any geographic limitation on Vazata's obligation to remit FDIC revenue, and submit that Vazata's failure to remit revenue following the FDIC's departure from the DC6 is a breach of the MSA.

For the reasons set forth above, the court rejects Anexia's claims and finds that the plain language of the MSA is limited to the DC6 location and does not find any legal merit to the allegation that Vazata breached the agreement by failing to remit revenue once the FDIC transferred its facilities. The court does not find that the language of the MSA, its statement of work, addendums, attachments and incorporations by reference, can support Anexia's claim. The court declines to address the remainder of Anexia's arguments in this regard, and, in finding in favor of Vazata, dismisses this cause of action from the amended complaint (Count I) and denies Anexia's motion for summary judgment.

The remainder of Anexia's motion seeks judgment on Vazata's counterclaims, and requests dismissal of Vazata's second counterclaim for breach of the MSA's confidentiality provision, dismissal of Vazata's fourth counterclaim for breach of the implied duty of good faith and fair dealing, and dismissal of Vazata's sixth and seventh counterclaim related to the power shut down and lockout at the DC6 facility.

For the reasons already stated, this court finds questions of fact surrounding the circumstances of Anexia's solicitation of SAIC, and the alleged shut down and lockout at the DC6 facility. Both parties have submitted evidence and conflicting material facts that make the award of summary judgment improper (Selph v Vance, 11 AD2d 655 [1st Dept 1960][where factual issues are presented that require a trial, summary judgment is improper]). Anexia's request for judgment dismissing Vazata's second, sixth and seventh counterclaim is denied.

However, as to Vazata's fourth counterclaim for breach of the implied covenant of good faith and fair dealing, this court finds that summary judgment, in favor of Anexia, is warranted. The covenant of good faith and fair dealing is implied in every contract and embraces a pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract (Emmet & Co., 49 Misc 3d at 1073). The covenant does not cover conduct that is contained in writing, but encompasses promises which a reasonable person would be justified in understanding were included (id.).

Here, Vazata's amended answer with counterclaims asserts the following:

140. Because the Agreement expressly contemplates that VAZATA will be entitled to contract with SAIC, any reasonable person would understand the Agreement to also include a covenant that Anexia will not interfere with or attempt to outbid VAZATA for a contract with one of VAZATA's customers.

141. The Agreement would be meaningless to VAZATA if Anexia could simply allow VAZATA to find a customer, deliver information about that customer to Anexia, and then allow Anexia to contract with that customer directly at the exclusion of VAZATA.

142. Anexia breached the implied covenant of good faith and fair dealing when it impermissibly raised the cost of its services to prevent VAZATA from renewing the SAIC Agreement, expressly refused to allow VAZATA to extend the SAIC Agreement, misused confidential information and negotiated its own contract with SAIC and cut VAZATA out.

This claim fails to set forth conduct that a reasonable party would understand was encompassed within the MSA. The MSA sets forth an agreement between parties for the provision of colocation services at a specific location. Vazata is identified as the "customer," and Vazata was permitted by the terms of the agreement to make available those services to its customers. Nothing in the MSA spoke to "exclusivity," or reserved the right, to Vazata, to provide exclusive services to anyone. While it is arguable that the agreement would reasonably preclude Anexia from contracting for and providing services to Vazata customers during a contract term with a third party, the agreement cannot be read to reasonably extend an exclusivity right to Vazata to contract with those parties after the conclusion of Vazata's third-party agreements unless expressly stated in the language of the contract.

Here, SAIC contracted with Vazata for colocation services for a one-year term. Anexia is not required to provide favorable service terms to Vazata to enable Vazata to continue its relationship with SAIC. Nothing in the terms of the MSA would imply such an arrangement between the parties. Neither could it be said that a reasonable businessperson would have that expectation.

Anexia's refusal to renegotiate, submission of a more favorable bid to SAIC, and solicitation of SAIC is conduct that Vazata deems to be unfair, but this court does not find that the conduct violates the "spirit" of the MSA. Anexia performed as required under the agreement as it pertained to the SAIC cage during the life of Vazata's SAIC agreement. Neither can Vazata reasonably assert that Anexia's conduct prevented Vazata's expectations under the MSA from being fulfilled. It cannot be said that Vazata held an expectation for future SAIC business where the contract ended on its own terms, and SAIC requested proposals from the public. In sum, this court does not find a question of fact as to whether Vazata met its prima facie burden of establishing a claim for breach of the implied covenant of good faith and fair dealing. Vazata did not submit any evidence that Anexia destroyed or injured its right to receive the fruits of the MSA (Emmet & Co., 49 Misc 3d at 1073).

The court has considered all remaining arguments in support of, and in defense of, the claims asserted herein and finds them unavailing.

Accordingly, it is hereby

ORDERED that Vazata's motion for summary judgment (motion seq. no. 008) is granted to the limited extent of dismissing Anexia's breach of contract claim (Count I of the Complaint) premised upon the receipt of FDIC revenue, and to the extent of dismissing Count II of the Complaint seeking a declaratory judgment, and is otherwise denied; and it is further

ORDERED that Anexia's motion for summary judgment (motion seq. no. 009) is granted to the limited extent of dismissing Vazata's claim for breach of the implied duty of good faith and fair dealing (Counterclaim 4), and is otherwise denied; and it is further

ORDERED that the parties shall appear for an initial trial scheduling conference on October 20, 2026 at 11a.m.

DATE August 21, 2026

ROBERT R. REED, J.S.C.

FOOTNOTES

1.   Neither party moved for judgment on that portion of plaintiff's first cause of action for breach of contract that asserts, in a single sentence, that Vazata has breached the implied duty of good faith and fair dealing (NYSCEF doc. no. 3, para. 47). Accordingly, this motion does not address the merits of that portion of the breach of contract claim.

Robert R. Reed, J.