Pasternak & Fidis, P.C. v. Recall Total Info. Mgmt., Inc.

• Decision Date: 25 March 2015
• Docket Number: Case No. PWG–14–2015.
• Court: U.S. District Court — District of Maryland
• Parties: PASTERNAK & FIDIS, P.C., Plaintiff, v. RECALL TOTAL INFORMATION MANAGEMENT, INC., Defendant.

95 F.Supp.3d 886

PASTERNAK & FIDIS, P.C., Plaintiff

v.RECALL TOTAL INFORMATION MANAGEMENT, INC., Defendant.

Case No. PWG–14–2015.

United States District Court, D. Maryland, Southern Division.

Signed March 25, 2015.

Stacey H. Myers, Hunsucker Goodstein PC, Michael D. Goodstein, Hunsucker Goodstein and Nelson, Washington, DC, for Plaintiff.

Cynthia Fleming Crawford, Leclairryan, Washington, DC, for Defendant.

MEMORANDUM OPINION

PAUL W. GRIMM, District Judge.

Plaintiff, a law firm, entered into an agreement with Defendant, under which Defendant would store Plaintiff's clients' documents and files, including original-signature documents in a secure, climate-controlled environment in Defendant's document storage facility. When an accident in 2012 resulted in the destruction of numerous documents at the facility (but none of the documents in the secure storage), Plaintiff learned that its original-signature documents had not been stored securely or refiled properly, as promised. These documents were ruined, and Plaintiff filed suit for breach of contract, bailment liability, negligence, gross negligence, fraud, and unfair business practices. Defendant has moved to dismiss,¹ contending that Plaintiff fails to state a claim for gross negligence, fraud, or unfair business practices, and its liability on the remaining claims is limited to $620, such that Plaintiff cannot meet this Court's jurisdictional minimum. Alternatively, Defendant moves for summary judgment on the basis of accord and satisfaction. Because Plaintiff has not stated a claim under either the Georgia or Maryland consumer protection statute, I will dismiss its claim for unfair business practices. But, given that Plaintiff has stated claims for gross negligence and fraud, I will deny Defendant's motion to dismiss the remaining claims. Further, because a genuine dispute exists as to whether Plaintiff agreed to release its claims in exchange for a credit to its account, I will deny Defendant's motion for summary judgment as to the affirmative defense of accord and satisfaction.

I. BACKGROUND²

Plaintiff Pasternak & Fidis, P.C. (“P & F”) is a law firm that derives more than half its revenue from its estate planning and administration practice, for which it prepares “wills and other estate planning and administration documents bearing original signatures.” Compl. ¶¶ 1, 10, 63, ECF No. 1. P & F entered into a document storage and delivery agreement (the “Agreement”) in 2005, with Defendant Recall Total Information Management, Inc. (“Recall”), a business that “maintains ... off-site commercial document warehouses,” including one in Landover, Maryland, to provide its customers with “secure document storage, management, indexing, archiving, retrieval, and delivery.” Id. ¶¶ 2, 12. “Recall advertise[d] that it ‘provides state-of-the-art, climate-controlled storage, high-security vault protections for items of high intrinsic value’ ” through “ ‘[s]ecure document storage facilities' ” (“Vault Storage”), “ ‘built to sustain severe weather.’ ” Id. ¶ 5 (quoting www.recall. com/solutions/protect (last visited July 19, 2014)).

P & F designated its boxes of original-signature documents “1586–S,” so that they would be “stored in the vault area storage area of the Landover Facility,” i.e., Vault Storage; these were referred to as “Vault Boxes” that contained “Vault documents” or “Vault items.” Compl. ¶¶ 13–15. Its other boxes, designated “1586,” were “stored in the regular warehouse portion of the Landover Facility.” Id. ¶ 13. “P & F's understanding and agreement with Recall was that boxes of documents designated '1586–S' would be kept in the vault,” and that, when P & F needed a file from an “1586–S” box, Recall would retrieve it “and then promptly return[ ]” it “to the vault” and refile it “to ensure the safety of these files.” Id. ¶ 14. The parties discussed the process and importance of Vault Storage and prompt refiling of the “Vault documents” on “multiple occasions.” Id. ¶ 16–23.

On June 28, 2012, “a temporary employee working for Recall crashed an order picker (a vehicle similar to a forklift) into a storage rack holding cartons at the Landover Facility, causing successive racks to fall in a domino effect, damaging an exterior wall, and ultimately causing a portion of the roof to collapse;” one Recall employee died in the accident. Compl. ¶¶ 27, 29, 53. As a result, 310 items that P & F had in storage at the Landover Facility, including 9 Vault Boxes and 145 “individual file folders that had been designated by P & F for Vault Storage” (“Vault Files”),³ were destroyed. Id. The Vault Storage area was not affected; the Vault Files that were destroyed were items that Recall had not filed properly. Id. ¶¶ 41, 46, 48. Specifically, the destroyed files were “files that P & F had requested for retrieval, then sent back to Recall for re-filing” at least four months earlier, and in some instances more than four years earlier.Id. ¶¶ 54, 57. Specifically, Recall received for refiling 2 Vault Files in 2008, 1 in 2009, 5 in 2010, 112 in 2011, and 25 on February 13, 2012. Id. ¶ 57. The fact that “individual file folders were destroyed (but not the boxes that they were supposed to be filed in)” suggests that “these files must have been loose somewhere in Recall's main warehouse area, rather than properly filed and secured” in Vault Storage. Id. ¶ 55. “Recall's Account Manager admitted that ‘during all of this that all of [P & F's] Safe documents were not in the correct place,’ ” and “Recall's Operations Manager acknowledged that P & F's original documents had not been kept in the vault area.” Id. ¶¶ 46, 48.

Maryland Occupational Safety and Health (“MOSH”) investigated the accident and determined that “Recall failed to certify that its temporary employee was trained on the order picker he was operating at the time of the incident,” and that another employee previously was terminated “for striking a rack with an order picker.” Compl. ¶¶ 30, 32, 33. It further determined that the thirty-three foot high storage racks “were poorly designed and installed in a manner that created dangerous conditions,” and “were not suitable for Recall's use as storage for cartons of documents,” and that the “boxes were unsafely stacked.” Id. ¶¶ 34, 36, 39. MOSH also noted that the warehouse roof previously had “failed, and had to be rebuilt.” Id. ¶ 35.

The Vault Boxes and Vault Files contained “the estate planning documents of 399 clients,” each of whom had “[o]n average, ... between five and ten original documents in their file.” Id. ¶ 61. Plaintiff alleged that it incurred expenses inventorying its files and republishing the original-signature documents, as well as “additional probate costs due to the lack of original estate documents,” and damage to its business through loss of reputation. Id. ¶¶ 65, 66. Yet the Agreement⁴ limited Defendant's liability as follows:

(A) IN THE EVENT OF ANY LOSS, DAMAGE OR DESTRUCTION OF CUSTOMER MATERIALS CAUSED BY RECALL'S BREACH OF ANY OBLIGATION TO CUSTOMER, RECALL'S LIABILITY SHALL BE LIMITED TO $2.00 PER REGISTERED CARTON, CONTAINER, DISKETTE, TAPE, OR OTHER SUCH ITEM. (B) WITH RESPECT TO ANY OTHER CLAIMS, INCLUDING, WITHOUT LIMITATION ANY FAILURE OR DELAY IN THE PERFORMANCE OF A SERVICE, RECALL'S LIABILITY SHALL BE LIMITED TO (I) THE FEE PAID BY CUSTOMER FOR THE PARTICULAR SERVICE, AND (II) IN NO EVENT WILL RECALL'S LIABILITY EXCEED A MAXIMUM AMOUNT EQUAL TO THE FEES PAID HEREUNDER DURING THE 12–MONTHS IMMEDIATELY PRIOR TO THE DATE OF CUSTOMER'S FIRST CLAIM, EXCEPT AS MAY OTHERWISE BE REQUIRED BY APPLICABLE LAW. (C) NOTWITHSTANDING ANYTHING IN SUBSECTIONS (A) OR (B) ABOVE OR ANY OTHER PROVISION IN THIS AGREEMENT, IN NO EVENT SHALL RECALL BE LIABLE

TO CUSTOMER OR ANY OTHER PERSON, WHETHER IN CONTRACT OR IN TORT, OR UNDER ANY OTHER LEGAL THEORY (INCLUDING WITHOUT LIMITATION, NEGLIGENCY [SIC] OR STRICT LIABILITY) FOR LOSS, DAMAGER OR DESTRUCTION OF ANY INFORMATION OR DATA CONTAINED IN ANY CUSTOMER MATERIALS, FOR THE COST OF RECREATING SUCH INFORMATIN [SIC], FOR LOST PROFITS OR REVENUES, LOSS OF USE OR SIMILAR ECONOMIC LOSS, OR FOR ANY INDIRECT, INDICENTAL [SIC], CONSEQUENTIAL OR SIMILAR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY SERVICES PROVIDED BY RECALL, OR FOR ANY CLAIM AGAINST CUSTOMER BY ANY OTHER PERSON, EVEN IF RECALL HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH CLAIM.

Agr. § 10, Def.s' Mem. Ex. A, ECF No. 5–3. It also stated:

Customer has the option of paying increased fees to increase the liability of Recall in express [sic] of the amount described in Section 10A, but such option can be exercised only by written agreement made with Recall specifying the increased limit of Recall's liability and the increased fee to be paid by the Customer for the added liability to Recall.

Id. § 15(b). It is undisputed that Plaintiff did not exercise its right to increase Recall's liability under the Agreement. The Agreement also includes a choice-of law-provision, electing Georgia law to govern contractual disputes, id. § 15(d), and an integration clause stating that “these terms and conditions constitute the entire agreement between Recall and [P & F] with respect to the subject matter hereof and supersede any prior discussions, agreements and representations,” id. ¶ 16.

Undeterred by the limitation of liability clause, Plaintiff filed suit, claiming negligence (Count I); gross negligence (Count II); bailment liability (Count III); breach of contract (Count IV); fraud (Count V); and unfair business practices under Georgia's Fair Business Practices Act (“FBPA”), Ga.Code Ann. § 10–1–390, and Maryland's Consumer Protection Act (“MCPA”), Md.Code Ann., Com. Law § 13–101 et seq. (Count VI). Defendant moves to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and (6), arguing that Plaintiff “failed to state a claim for gross negligence, fraud, or for violation of the consumer protection/unfair business practices statutes,” and recovery under the remaining claims is...