United States District Court, D. Colorado
ORDER
RAYMOND P. MOORE UNITED STATES DISTRICT JUDGE
This
matter is before the Court on Defendant's motion for
summary judgment (ECF No. 955) and six other motions that are
pending in this case (ECF Nos. 957-961, 993). Plaintiff filed
this lawsuit after Defendant refused to pay a bill. The
seventy-one-page complaint expands a relatively
straightforward billing dispute to encompass multiple issues
that have arisen throughout the parties' business
relationship. But the fifteen asserted claims overlap
significantly and, for the most part, lack merit. Therefore,
as explained below, the Court grants in part and denies in
part the motion for summary judgment, denies Plaintiff's
motion to amend the complaint, grants Defendant's motion
to strike two other pending motions, denies as moot
Plaintiff's motion to supplement, and grants
Plaintiff's motion for leave to file a corrected motion.
I.
LEGAL STANDARD
Summary
judgment is appropriate only if there is no genuine dispute
of material fact and the moving party is entitled to judgment
as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986); Gutteridge v.
Oklahoma, 878 F.3d 1233, 1238 (10th Cir. 2018). Applying
this standard requires viewing the facts in the light most
favorable to the nonmoving party and resolving all factual
disputes and reasonable inferences in its favor. Cillo v.
City of Greenwood Vill., 739 F.3d 451, 461 (10th Cir.
2013). Whether there is a genuine dispute as to a material
fact depends upon whether the evidence presents a sufficient
disagreement to require submission to a jury or is so
one-sided that one party must prevail as a matter of law.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
251-52 (1986); Stone v. Autoliv ASP, Inc., 210 F.3d
1132, 1136 (10th Cir. 2000). “The mere existence of
some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary
judgment; the requirement is that there be no genuine issue
of material fact.” Scott v. Harris, 550 U.S.
372, 380 (2007). A fact is “material” if it
pertains to an element of a claim or defense; a factual
dispute is “genuine” if the evidence is so
contradictory that if the matter went to trial, a reasonable
jury could return a verdict for either party.
Anderson, 477 U.S. at 248.
Where,
as here, the moving party does not bear the ultimate burden
of persuasion at trial, it can meet its initial burden by
pointing out the lack of evidence on an essential element of
the nonmoving party's claim. Adams v. Am Guar. &
Liab. Ins. Co., 233 F.3d 1242, 1246 (10th Cir. 2000). At
that point, the burden shifts to the nonmoving party to
identify sufficient evidence that is pertinent to the
material issue by reference to an affidavit, deposition
transcript, or specific exhibit. Id.
II.
BACKGROUND
Defendant
manufactures heating, ventilation, and air conditioning
(“HVAC”) units for transit buses. (ECF No. 1008-1
at ¶ 1.) Plaintiff sells air purification systems known
as ultraviolet germicidal irradiation (“UVGI”)
kits that can be installed in Defendant's HVAC units.
(Id. at ¶ 11.)
In
2010, North American Bus Industries, Inc.
(“NABI”), a bus manufacturer, was awarded a
contract to build several hundred buses for Dallas Area
Regional Transit (“DART”). (Id. at
¶ 13.) The buses were to be purchased in phases and were
to include Defendant's HVAC units installed with UVGI
kits from JKA Company (“JKA”). (Id.) For
years, Defendant ordered UVGI kits from JKA, installed them
in its HVAC units, and sent them to NABI to fill DART's
bus orders. (Id. at ¶ 19.) Defendant's
price for each UVGI kit was $1, 575 and did not change even
after Plaintiff acquired JKA and upgraded the UVGI kit with
an improved ballast. (Id. at ¶ 32.)
In
2014, NABI was acquired by New Flyer Industries (“New
Flyer”). (Id. at ¶ 22.) New Flyer planned
to fill DART's pending orders using the same design NABI
had used, but it wanted to use a new design for future
orders. (Id.) To get the new design approved by
DART, New Flyer had to build two “pilot” buses
for testing. (Id. at ¶ 26.)
In July
2015, JKA's founder died and his stepdaughter began
managing the business. (Id. at ¶ 23.)
In
October 2015, New Flyer ordered two HVAC units from Defendant
for the pilot buses. (Id. at ¶ 27.) Defendant
filled the order using UVGI kits it had previously received
from JKA and shipped the HVAC units to New Flyer in December
2015. (Id. at ¶ 28.) DART ultimately approved
the pilot buses, allowing New Flyer to implement the new
design on its next order. (Id. at ¶ 56.) To
fill that order, Defendant ordered 55 UVGI kits from JKA on
February 12, 2016. (Id. at ¶ 31.)
Meanwhile,
JKA was in the process of upgrading its UVGI kit with a new
ballast. (Id. at ¶ 30.) Plaintiff was
officially formed on February 18, 2016, and on the same day,
it entered an agreement with JKA to acquire all its assets,
including Defendant's latest order. (Id. at
¶¶ 31, 36.) Plaintiff informed Defendant about the
acquisition on February 29, 2016, while stating that it was
“doing business as” JKA. (Id. at ¶
41.) In the months that followed, Plaintiff repeatedly
represented that it was closely connected with JKA, including
in its correspondence with Defendant. (Id. at ¶
44.)
On
March 10, 2016, DART approved Plaintiff's upgraded UVGI
kit for use in its buses. (Id. at ¶ 56.)
Plaintiff shipped upgraded kits to Defendant in phases to
fill its latest order. (Id. at ¶¶ 33, 51.)
On March 28, 2016, Defendant amended that order to be for 49
kits instead of 55. (Id. at ¶ 31.) When
Defendant installed an upgraded kit in one of the pilot
buses, it discovered that Plaintiff had used butt-splice
connectors in the ballast wiring, which DART's
specifications did not allow. (Id. at ¶ 55.) In
May 2016, Defendant informed Plaintiff about the wiring issue
and returned 28 kits that had already been delivered. (ECF
No. 1 at ¶ 48.) Plaintiff determined that 5 of the kits
were completely damaged and unusable and shipped them back to
Defendant so that it could investigate what had happened.
(Id. at ¶ 53.) At a June 2016 meeting,
Defendant refused to accept responsibility for damaging the
kits while insisting that they were reparable. (Id.
at ¶ 63.) Plaintiff told Defendant not to use the
damaged kits. (ECF No. 1 at ¶ 103.) In addition, the
parties were having trouble agreeing on terms of a
nondisclosure agreement. (ECF No. 1008-1 at ¶¶
68-71.)
In
August 2016, Plaintiff completed the order for 49 UVGI kits
and sent Defendant a final invoice for $52, 754.63, the cost
of 33 UVGI kits plus a handling fee. (Id. at ¶
67.) Meanwhile, Defendant began an audit of its transactions
with JKA and Plaintiff. (Id. at ¶ 61.) In
connection with the audit, Defendant “request[ed]
‘proof of shipment' of the products listed on three
specific invoices from JKA in 2013 and 2014”
(id. at ¶ 64) that, according to Defendant,
totaled $39, 375 (ECF No. 1 at ¶ 109). Plaintiff
initially refused to provide “old shipping
records” from “a different company.”
(Id. at ¶ 110.) When Plaintiff sent a payment
reminder regarding the final invoice, Defendant accused
Plaintiff of overbilling, stating that according to its
records it had received 494 kits from JKA and Plaintiff but
had been billed for 519. (Id. at ¶ 115.)
Defendant attached a spreadsheet it had created, showing
details related to its transactions with JKA and Plaintiff
going back to 2012. (Id.) According to the
spreadsheet's bottom line, Defendant had been invoiced
for 564 units but had received only 544 units. (ECF No.
1008-1 at ¶ 62.) Plaintiff requested documentation to
support Defendant's claim of overpayment, but Defendant
did not respond. (ECF No. 1 at ¶ 117.) Plaintiff also
relented to Defendant's request for shipping receipts
related to the disputed JKA invoices (id. at ¶
119), but Defendant contends the documentation Plaintiff sent
corresponds to the wrong invoices (ECF No. 1 at ¶ 120).
Defendant
issued a check to Plaintiff for $13, 379.63, which is $39,
375 less than the final invoice. (ECF No. 1008-1 at ¶
67.) In a later e-mail, Defendant provided a new explanation
for refusing to pay the final invoice in full, stating that
based on its records, it had ordered a total of 543 kits but
had paid for 544, resulting in a payment discrepancy of $33,
552.50. (ECF No. 1 at ¶ 124.) Plaintiff refused to
accept the partial payment (ECF No. 1008-1 at ¶ 72), and
this lawsuit followed.
III.
MOTION FOR SUMMARY JUDGMENT
A.
Breach of Contract (First and Second Causes of
Action)
To
state a claim for breach of contract under Colorado law, a
plaintiff must show (1) the existence of a contract, (2)
performance by the plaintiff or some justification for
nonperformance, (3) failure to perform the contract by the
defendant, and (4) resulting damages to the plaintiff. W.
Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo.
1992) (en banc).
In its
first two causes of action, Plaintiff alleges that it
performed its contractual obligations by delivering the UVGI
kits that Defendant ordered, yet Defendant refuses to pay in
full the final invoice for $52, 754.63. Defendant contends
that it is entitled to a credit of $39, 375 (i.e., the cost
of 25 UVGI kits). But granting summary judgment in
Defendant's favor on these claims would require the Court
to find there is no genuine issue that Defendant paid for 25
more UVGI kits than it received. The current record provides
no basis for such a conclusion.
Defendant's
reliance on the spreadsheet mentioned above is insupportable.
The spreadsheet contains empty fields, unclear entries, and
unexplained notations.[1] By no means does it establish the relevant
transaction history as a matter of undisputed fact. But even
were the Court to accept the spreadsheet's bottom line at
face value, it still does not support Defendant's
position. According to the spreadsheet, Defendant received 20
fewer UVGI kits than it was billed for, yet Defendant
currently claims it is entitled to a credit for the cost of
25 kits. The spreadsheet indicates Defendant was billed for
$33, 352.50 more than it paid, yet Defendant currently claims
it is entitled to a credit of $39, 375. In other words, the
spreadsheet sheds absolutely no light on whether
Defendant's failure to perform by paying the final
invoice is justified.[2]
Nor do
Defendant's other contentions show the absence of a
genuine issue on Plaintiff's breach of contract claims.
Defendant contends that Plaintiff “refused to provide
any assistance in clarifying the billing questions” it
had. (ECF No. 955 at 11.) But Defendant's “billing
questions” do not establish the absence of a genuine
issue as to whether it may justifiably claim a $39, 375
credit on Plaintiff's final invoice. Although Defendant
concedes that it owes Plaintiff $13, 379.63 (ECF No. 955 at
11), there clearly is a genuine issue as to what additional
amount, if any, Defendant owes Plaintiff. Accordingly,
Defendant is not entitled to summary judgment on these
claims.
B.
Breach of Implied Covenant of Good Faith and Fair Dealing
(Third Cause of Action)
The
duty of good faith and fair dealing applies when one party to
a contract “has discretionary authority to determine
certain terms of the contract, such as quantity, price, or
time.” ADT Sec. Servs., Inc. v. Premier Home Prot.,
Inc., 181 P.3d 288, 293 (Colo.App. 2007). “[T]he
implied covenant of good faith and fair dealing is breached
when a party uses discretion conferred by the contact to act
dishonestly or to act outside of accepted commercial
practices to deprive the other party of the benefit of the
contract.” Id.
Plaintiff
asserts that Defendant breached the covenant by several
means. Defendant argues that Plaintiff fails to establish the
existence of any discretionary term that would support such a
claim. The Court finds that Defendant is entitled to summary
judgment on this issue because Plaintiff has not identified
any discretionary contractual term that corresponds to any of
Defendant's alleged misconduct and because the conclusory
allegations in the complaint are insufficient to show the
existence of a genuine issue with respect to this claim.
First,
Plaintiff contends Defendant failed to update a purchase
order to reflect Plaintiff's name rather than that of
JKA. But it is undisputed that the February 12, 2016,
purchase order was placed six days before Plaintiff was
officially formed and weeks before Plaintiff formally
introduced itself to JKA's customers. (ECF No. 1008-1 at
¶¶ 36, 41-42.) Moreover, Plaintiff fails to explain
how it was deprived of a benefit of its contract with
Defendant by its alleged refusal to change the name on an
invoice-particularly where Plaintiff continued to represent
that it was “doing business as JKA” in its
correspondence with Defendant. (See Id. at ¶
44.)
Second,
Plaintiff contends Defendant provided inconsistent reasons
for refusing to pay the final invoice. But the Court has
already determined that there are genuine issues of material
fact with respect to whether Defendant breached its
contractual obligations to Plaintiff by refusing to pay the
final invoice. Plaintiff's damages for those claims
depend on Defendant's nondiscretionary contractual
obligations. Plaintiff has not identified a discretionary
obligation that Defendant might also have violated under the
circumstances. ...