Africare, Inc. v. Xerox Complete Document Solutions Md., LLC, Case No. 17-cv-1712 (RMC)

• Decision Date: 17 January 2020
• Docket Number: Case No. 17-cv-1712 (RMC), Case No. 17-cv-1945 (RMC)
• Citation: 436 F.Supp.3d 17
• Parties: AFRICARE, INC., Plaintiff, v. XEROX COMPLETE DOCUMENT SOLUTIONS MARYLAND, LLC, et al., Defendants. De Lage Landen Financial Services, Inc., Plaintiff, v. Africare, Inc., Defendant.
• Court: U.S. District Court — District of Columbia

436 F.Supp.3d 17

AFRICARE, INC., Plaintiff,

v.XEROX COMPLETE DOCUMENT SOLUTIONS MARYLAND, LLC, et al., Defendants.

De Lage Landen Financial Services, Inc., Plaintiff,

v.Africare, Inc., Defendant.

Case No. 17-cv-1712 (RMC)

Case No. 17-cv-1945 (RMC)

United States District Court, District of Columbia.

Signed January 17, 2020

Madelaine Amanda Kramer, Sands Anderson PC, McLean, VA, Marshall T. Kizner, Stark & Stark, P.C., Lawrenceville, NJ, L. Lee Byrd, Sands Anderson P.C., Richmond, VA, for Plaintiff.

Benjamin John Razi, Kimberly C. Stietz, Covington & Burling LLP, Washington, DC, for Defendants.

ROSEMARY M. COLLYER, United States Senior District Judge

Africare, Inc. (Africare) complains that Complete Document Solutions Maryland, LLC (CDS) used high-pressure tactics and unfulfilled promises to induce Africare into leasing seven Xerox Corporation printer-copiers it did not need and could not afford. CDS supplied ink, toner, and other maintenance services and arranged financing through De Lage Landen Financial Services, Inc. (DLL), from whom Africare then leased the copiers. This sequence was followed in 2013 for two printer-copiers and in 2015 for an additional five printer-copiers. The 2015 agreement was intended to replace five printer-copiers manufactured by the Toshiba Corporation (Toshiba) that Africare had leased from CIT Technology Financing Services, Inc. (CIT). Africare alleges that CDS agreed to pay all lease charges Africare owed to CIT in exchange for the 2015 lease and maintenance agreements for the five Xerox printer-copiers.

In the meantime, the federal government decreased its grants to Africare and the non-profit decreased its work force by one third in 2015. When it could not negotiate lesser costs with DLL and CDS, Africare stopped making payments—to DLL in late 2016 and to CDS in mid-2017. CDS then stopped its payments to CIT on the remainder of Africare's lease of the Toshiba printer-copiers.

What followed was a barrage of litigation: DLL sued Africare in Pennsylvania state court and Africare sued CDS and CIT in this Court. All parties counterclaimed. The DLL matter was first removed to Pennsylvania federal court and then transferred to this Court for the convenience of the parties. The separate cases between (1) Africare and DLL and (2) Africare, CDS and CIT were consolidated through discovery and summary judgment.

Before the Court are motions for summary judgment against Africare filed by CDS, CIT, and DLL.

I. BACKGROUND

A. The Parties

Africare is a District of Columbia-based nonprofit that provides development assistance to individuals and groups in Africa.¹ Africare provides managerial, technical, and strategic support to programs throughout the continent.^{2 3}

CIT is a New Jersey-based company whose business includes the leasing of office equipment.

CDS is a Maryland-based company that acts as a regional sales agent for Xerox Corporation (Xerox) in the greater Washington, D.C. metropolitan area.⁴

DLL is a Pennsylvania-based financial services corporation whose business includes the leasing of office equipment through dealers such as CDS.

B. The 2013 Agreements Between Africare, Nauticon, and CIT

On March 5, 2013, Africare signed a lease with Nauticon Imaging Systems for five Toshiba copiers.⁵ Nauticon delivered the copiers and then assigned all rights to the equipment to CIT (hereafter, the CIT Lease). The CIT Lease required Africare to make 60 monthly lease payments of $3,481, totaling $208,860 (equal to $696.20/month or $41,772/60 months (5 years) to lease each Toshiba copier). See Ex. A-1, CIT's Mot. for Summ. J. (CIT Mot.), CIT Lease, Case No. 17-cv-1712 [Dkt. 39-4].

C. The 2013 Agreements Between Africare, CDS, and DLL

In early 2013, representatives from CDS began to talk to Africare about a possible lease for new Xerox-brand copiers. CDS sales representatives Michael Gross and Ryan Morrison visited Africare's offices and communicated via phone and email with Africare's Chief of Staff/Marketing and Development Officer Kendra Davenport and Africare's Regional Director of Business Development Katelyn Brewer.

These parties first met on April 10, 2013, soon after Africare had leased the Toshiba copiers. CDS salespeople toured Africare's facilities; discussed Africare's copier contracts and lease payments as well as its outside printing requirements; and talked about potential opportunities for CDS to provide sponsorships and donations to Africare. Africare thereafter forwarded to CDS its new copier contracts with CIT and an estimate of Africare's outside printing costs. CDS responded with a cost estimate if Africare leased two Xerox copiers through CDS. CDS projected a monthly savings of approximately $2,200 if Africare: 1) used Xerox copiers for print jobs instead of outsourcing them and 2) reduced its use of HP Inc. (HP) printers and renegotiated its maintenance agreement for the Toshiba copiers leased through CIT.⁶

Africare and CDS personnel met for a second time on April 26, 2013. In a follow-up, Mr. Gross of CDS sent an email to Ms. Brewer of Africare that projected that CDS would provide multiple business services and advantages, including: "assist[ing] in eliminating the use of HP Printers"; "writ[ing] a template for Africare to use with Nauticon to restructure the [Toshiba] service agreement"; "commit[ting] to sharing [CDS's] [p]rint shop list for Africare to further reduce expenses"; and "commit[ting] to sharing [CDS's] local customer database for Africare to tap into for further resources, donations and sponsorships." Ex. Y, Def. CDS's Mot. for Summ. J. (CDS Mot.), Case No. 17-cv-1712 [Dkt. 35-7]. Mr. Gross further stated that CDS would donate $10,000 to Africare "for a sponsorship or donation" in exchange for an Africare lease of Xerox copiers. Id.⁷ Mr. Gross told Africare that CDS would, over the next eighteen months, "evaluate the use of Toshiba[ ] [copiers] and determine their time for replacement," at which time CDS "would pay off the remaining payment stream" owed by Africare on their lease. Id.

On April 30, 2013—exactly eight weeks after the Nauticon documents were signed—Ms. Davenport executed a lease with DLL for two Xerox copiers and a maintenance agreement with CDS to maintain them. See Ex. B, CDS Mot., 2013 Maintenance Agreement [Dkt. 35-4]; Ex. F, Opp'n, 2013 Lease Agreement [Dkt 40-4]. Africare paid monthly fees and print charges to CDS under the 2013 Maintenance Agreement and $1,958 each month for the 60-month lease from DLL, totaling $117,480 (equal to $979/month or $58,740/60 months per copier) to lease the two Xerox copiers for five years. CDS had arranged the DLL financing for Africare.

On July 8, 2013, CDS sent Africare a letter that "confirm[ed] that [CDS] will be sending [Africare] a check in the amount of $10,000.00 as a donation to be used at Africare's discretion." See Ex. 1, Aff. of Samuel Vitale, 2013 Letter Agreement, Case No. 17-cv-1712 [Dkt. 35-9]. The 2013 Letter Agreement was executed by Mr. Gross for CDS and by Ms. Brewer for Africare. CDS sent the check which Africare treated as a donation.

D. The 2015 Agreements Between Africare, CDS, and DLL

In early 2015, CDS suggested that Africare lease five more Xerox copiers instead of the five Toshiba machines which were still under lease with CIT. CDS sent a maintenance agreement for five new copiers to Africare by email on March 12, 2015. CDS again obtained financing for Africare through DLL and sent Africare a proposed lease agreement with DLL requiring 60 monthly payments of $4,610 to DLL (a total of $276,600 or $922/month and $55,320/60 months for each copier). Ms. Davenport signed both agreements on behalf of Africare on March 19, 2015. See Ex. E, CDS Mot., 2015 Maintenance Agreement [Dkt. 35-4]; Ex. R, Opp'n, 2015 Lease Agreement [Dkt 40-4].

As a part of the 2015 maintenance/lease arrangement, CDS sent Africare a letter which stated, "CDS will send Africare a check in the amount of $100,000 to cover the remaining lease payments [under the CIT Lease] and ship back costs of your current machine[s]," including a "$10,000 contribution to be used where [Africare] need[s] it most." See Ex. F, CDS Mot., 2015 Letter Agreement [Dkt. 35-4]. Ms. Davenport signed the Letter Agreement on March 19, 2015, at the same time that she signed the 2015 Maintenance and Lease Agreements.

On April 22, however, Earlene Barnes, then-Senior Director of Human Resources for Africare, sent an email to Mr. Gross, expressing concern that Africare did not need five new copiers and asking to review the Maintenance and Lease Agreements before their delivery. Mr. Gross responded that "knowing your account the way we do," five copiers were "best" for Africare. Ex. AA, CDS Mot. [Dkt. 35-8]. Without further objection from Africare, it accepted delivery of all five new Xerox copiers on April 28, 2015.

The promised $100,000 check from CDS caused concern within that company. On May 18, 2015, Evelyn Zimmerman, the CDS financial controller, told a colleague, Salman Javed, that she was "uncomfortable with send[ing] a [single] 100K check to a customer based on [the 2015 Letter Agreement] ... [v]ery vague for sure." Ex. W, Opp'n, Email Correspondence between Ms. Zimmerman and Mr. Javed [Dkt. 40-4]. Mr. Javed responded, "We will not be sending out 100k all upfront. I am livid that [CDS Maryland] made this deal." Id . Samuel Vitale, the President of CDS, then sent Mr. Gross the following email on May 26, 2015 outlining Africare's options:

To send [Africare] $100,000.00 at one time, we would need them to retain [the Toshiba printers] at their location. We would not charge them to have us deliver their old machines back to their facility. We would deliver the check at that time. If we are to continue to retain the units at our office, then we would like them to forward the monthly invoice from the leasing company to us, and we will make that payment .... If they go this route, we will not send them the $100,000.00, but instead send them a check in the amount of

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