CAG Food Servs., LLC v. Shaver Foods, LLC
| Decision Date | 17 March 2021 |
| Docket Number | Civil Action No. 1:18-cv-02753-SDG |
| Parties | CAG FOOD SERVICES, LLC, f/k/a CORRECTIONAL ADVISOR'S GROUP, LLC, Plaintiff, v. SHAVER FOODS, LLC, Defendant. |
| Court | U.S. District Court — Northern District of Georgia |
This matter is before the Court on Defendant Shaver Foods, LLC's motions to strike Count I of Plaintiff CAG Food Services, LLC's Amended Complaint [ECF 102] and for summary judgment [ECF 107], and Plaintiff CAG Food Services, LLC's motion for leave to file surreply [ECF 129]. After careful consideration of the parties' briefing, and with the benefit of oral argument, the Court GRANTS Defendant's motion for summary judgment, DENIES Plaintiff's motion for leave to file a surreply, and DENIES as moot Defendant's motion to strike.
The following facts are undisputed. Defendant Shaver Foods, LLC (Shaver) is a low-cost, institutional food distributor servicer that provides food to customers, including correctional facilities, schools, healthcare providers, senior feeders, distributors, and manufactures.1 In 2007, Shaver and Plaintiff CAG Food Services, LLC (CAG) entered into a supply agreement through which Shaver would supply CAG customers with food services.2 In July 2008, the parties amended the agreement to make Shaver the primary food supplier to CAG's clients in exchange for CAG receiving a five percent commission "of the total amount paid" to Shaver for each future invoice of a client managed by CAG.3 The agreement allowed the parties to create separate supply agreements with different terms for individual clients "based on various circumstances to be determined as they arise."4 The agreement also prohibited Shaver from soliciting CAG clients or entertaining solicitations from CAG clients.5
On May 2, 2018, Ashley White, the President and CEO of Shaver, sent an email to CAG purporting to terminate the amended supply agreement "effective immediately."6 Rich Adams, the President and CEO of CAG, responded on behalf of CAG, asserting that the amended supply agreement was "rock solid andbinding" and a "long term contract," which included Shaver sales to customers "past, present, and future."7
On May 16, 2018, CAG filed suit in Superior Court of Cobb County, Georgia.8 Shaver timely removed.9 CAG initially sought a preliminary injunction, claiming that Shaver was in breach of the restrictive covenants of the amended agreement.10 The Court denied CAG's motion for a preliminary injunction.11 CAG subsequently amended its Complaint, asserting claims for (I) Breach of Contract (Past Commission); (II) Breach of Contract (April 2018 Commissions); (III) Breach of Contract (Commissions for May 2018 Forward); (IV) Unjust Enrichment (in the Alternative): (V) Tortious Interference with Contractual and Business Relations;(VI) Unfair Competition Under the Lanham Act; (VII) Breach of the Covenant of Good Faith and Fair Dealing;12 and (VIII) Attorney's Fees and Expenses.13
Shaver moved to dismiss Counts I, III, IV, V, VI, and VIII of the Amended Complaint, arguing, as relevant here, that (1) Count I, alleging breach of contract for past commissions, should be dismissed because CAG was bound by its sworn admissions in its initial complaint and in moving for preliminary injunction that Shaver made monthly commission payments to CAG in accordance with the agreement;14 (2) the contract terms entitling CAG to future commissions were unenforceable;15 and (3) CAG cannot assert a claim for unjust enrichment when the parties were governed by a valid contract.16 The Court granted the motion in part, dismissing Counts III and V.17
Following the Court's order, Shaver moved for reconsideration "to amplify points that Shaver made only briefly (and without robust supporting legal authority) in its Motion to Dismiss" with respect to the Court's ruling on CAG's unjust enrichment claim.18 Specifically, Shaver sought to emphasize Georgia case law, which, according to Shaver, show that a party cannot enforce an illegal restrictive covenant or contravene Georgia public policy favoring fair trade through a claim for unjust enrichment.19 The Court denied the motion because Shaver had not met the legal standard for reconsideration.20
CAG moved for partial summary judgment on Count II, for April 2018 commissions owed but not paid by Shaver.21 The Court granted CAG's motion as to liability, but found that an issue of material fact existed as to what amount Shaver owed CAG for the April 2018 commissions.22 Shaver has a pending motion for summary judgment as to the counts remaining in this case,23 which include Count I for breach of contract for past commissions, Count VI for unjustenrichment, Count VII for breach of the covenant of good faith and fair dealing, and Count VIII for attorney's fees and expenses,24 as well as a pending motion to strike Count I as a sanction for discovery abuses.25 The parties have briefed both motions.26
On its motion for summary judgment, Shaver first asserts that a party cannot inhibit trade or enforce an otherwise unenforceable restrictive covenant through a claim for unjust enrichment. Shaver also argues that CAG's unjust enrichment claim fails because it is premised on client contracts that do not exist and because CAG cannot prove its damages. As to CAG's breach of contract claims, Shaver argues that the entire amended supply agreement is void because of the overbroad restrictive covenants and because CAG failed to present evidence in support of these claims.
Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is "material" only if it can affect the outcome of the lawsuit under the governing legal principles. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is "genuine . . . if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.
A party seeking summary judgment has the burden of informing the district court of the basis for its motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If a movant meets its burden, the party opposing summary judgment must present evidence showing either (1) a genuine issue of material fact or (2) that the movant is not entitled to judgment as a matter of law. Id. at 324.
In determining whether a genuine issue of material fact exists, the evidence is viewed in the light most favorable to the party opposing summary judgment, "and all justifiable inferences are to be drawn" in favor of that party. Anderson, 477 U.S. at 255; see also Herzog v. Castle Rock Entm't, 193 F.3d 1241, 1246 (11th Cir. 1999). "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions," and cannot be made by thecourt in evaluating summary judgment. Anderson, 477 U.S. at 255. See also Graham v. State Farm Mut. Ins. Co., 193 F.3d 1274, 1282 (11th Cir. 1999). Summary judgment for the moving party is proper "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Shaver argues that summary judgment is appropriate for CAG's unjust enrichment claim because (1) it is premised on client contracts that never existed; (2) an unjust enrichment claim cannot be used to enforce an otherwise unenforceable contract; and (3) CAG's damage calculation is speculative. While the Court finds that there is a question of fact as to whether the client contracts exist, it agrees with Shaver that CAG is improperly attempting to enforce the invalid restrictive covenants in the amended supply agreement through the unjust enrichment claim and that CAG's damage calculation is entirely speculative. Summary judgment is therefore warranted.
"Unjust enrichment is an equitable concept and applies when as a matter of fact there is no legal contract, but when the party sought to be charged has been conferred a benefit by the party contending an unjust enrichment which thebenefitted party equitably ought to return or compensate for." Sitterli v. Csachi, 344 Ga. App. 671, 673 (2018). CAG claims that Shaver was unjustly enriched when it took over CAG's client contracts and continued to supply food to these clients without paying CAG a commission.
Shaver first argues that no "client contracts" exist as alleged in the Amended Complaint. The Amended Complaint defines "client contracts" as written agreements CAG entered into with its various clients to whom it provided food management services.27 Shaver asserts that there is no evidence that CAG entered into client contracts prior to Shaver's and CAG's business relationship and that CAG is improperly broadening the scope of what is included in the client contracts. However, whether and when CAG entered into contracts with these clients and whether Shaver had independent relationships with those clients are questions of material fact, and CAG has come forward with evidence sufficient to create a dispute as to these facts.28 In particular, CAG presented evidence that Shaver assigned CAG customers to Shaver's sale managers after the two entities entered into the supply agreement and that Shaver internally labeled certainclients as CAG's.29 Because the Court finds that a question of fact exists regarding CAG's client contracts, CAG's proposed surreply is unnecessary to the extent it seeks to reinforce this position.30
Shaver's next argument is more compelling. It contends, citing JR Construction/Electric, LLC v. Ordner Construction Co., 294 Ga. App. 453, 455 (2008), that Georgia case law and public policy prohibit enforcement of void...
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