Carnegie Techs., LLC v. Triller, Inc.
| Decision Date | 07 June 2021 |
| Docket Number | SA-20-CV-00271-FB |
| Parties | CARNEGIE TECHNOLOGIES, LLC, PLAINTIFF, Plaintiff, v. TRILLER, INC., DEFENDANT, Defendant. |
| Court | U.S. District Court — Western District of Texas |
REPORT AND RECOMMENDATION AND ORDER OF UNITED STATES MAGISTRATE JUDGE
This Report and Recommendation concerns Plaintiff Carnegie Technologies, LLC's Motion for Summary Judgment [#33] and Defendant's Motion for Leave to File Limited Answer [#60]. All dispositive pretrial matters in this case have been referred to the undersigned for disposition pursuant to Western District of Texas Local Rule CV-72 and Appendix C [#18]. The undersigned has authority to enter this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). In issuing this report and recommendation, the undersigned has also considered the following responses and replies thereto [#35, #36, #39, #40, #41, #42, #43, #44, #45, #61, #63]. For the reasons set forth below, it is recommended that Plaintiff's Motion for Summary Judgment be GRANTED and Defendant's Motion for Leave to File Limited Answer be DENIED.
In making this recommendation, the undersigned has also resolved Defendant's evidentiary objections to Plaintiff's summary judgment evidence. The undersigned has authority to enter an order on the objections pursuant to 28 U.S.C. § 636(b)(1)(A).
This case is a breach of contract action between Plaintiff Carnegie Technologies, LLC ("Carnegie Technologies") and its affiliate, Defendant Triller, Inc. ("Triller"). Carnegie Technologies' Original Complaint alleges that it provided Triller certain administrative services pursuant to an Administrative Services Agreement dated December 1, 2017, but that Triller was unable to pay for the services. (Compl. [#1] at ¶ 5.) The Complaint alleges that Triller was purchased by a third party in 2019, and the parties executed an Amended and Restated Administrative Services Agreement on September 9, 2019. (Id. at ¶ 6.) In connection with the transaction, Triller signed a Promissory Note payable to Carnegie Technologies in the amount of $4,280,109. (Id. at ¶ 7.)
Carnegie Technologies contends that it made a written demand to Triller for payment of the past-due invoices in an amount of $339,284.53 on January 10, 2020, and gave Triller 30 days to make payment. (Id. at ¶ 10.) According to Carnegie Technologies, no payment has been received; Triller is in default as to the unpaid invoices; and Carnegie Technologies has accelerated payment of the unpaid principal amount and interest due under the Promissory Note. (Id. at ¶ 11.)
Carnegie Technologies filed this suit on March 5, 2020, to recover the amounts due under the Services Agreement and Promissory Note. The Complaint asserts causes of action for breach of the parties' Services Agreement and for suit on the Promissory Note. (Id. at ¶¶ 13-18.) Soon after the suit was filed, Triller moved to dismiss Carnegie Technologies' Complaint for failure to state a claim pursuant to Rule 12(b)(6) based on the affirmative defense of novation. In the motion, Triller argued that documents incorporated by reference into the Promissory Note attached to Carnegie Technologies' Complaint establish as a matter of law that Triller's debt wastransferred and assigned to a subsidiary of a sister company of Carnegie Technologies, Triller Legacy, and that this assignment constitutes a novation extinguishing any contractual obligation of Triller under the Promissory Note. The Court denied the motion, concluding that Triller had not established its affirmative defense as a matter of law on the face of the agreements before the Court because the assignment did not specifically discharge or release Triller of its contractual obligations.
Carnegie Technologies thereafter filed the motion for summary judgment that is the subject of this report and recommendation. In the motion, Carnegie Technologies argues that it is entitled to judgment as a matter of law and is entitled to damages under the Services Agreement and the Note.
After Carnegie Technologies filed its motion for summary judgment, Triller moved to compel arbitration, arguing that multiple written agreements executed in connection with the Triller sale and these agreements contain arbitration provisions that govern the parties' dispute in this case. The Court denied the motion, concluding that the contracts that were executed between Carnegie Technologies and Triller (the Services Agreement and Promissory Note) do not contain arbitration provisions and Triller had failed to establish that the parties to this suit intended and agreed to arbitrate the claims at issue in this suit or that the related contracts containing the arbitration provisions required arbitration of Carnegie Technologies' claims.
After the Court denied the motion to compel, Triller filed the motion for leave to file a limited answer, which is also before the Court. By this motion, Triller asks the Court to extend the deadline to file a limited answer in order to assert the additional affirmative defense of illegality and to formalize Triller's already briefed affirmative defense of novation, as Triller neglected to file an answer in this case.
Both Carnegie Technologies' motion for summary judgment and Triller's motion for leave to file a limited answer are ripe for review. Carnegie Technologies' motion for summary judgment was filed on November 11, 2020, soon after the Court denied Triller's motion to dismiss based on the defense of novation. At the time the motion was filed, there were approximately three months left in the discovery period. Triller's response to the motion argued that the motion was premature because meaningful discovery had yet to take place.
This argument is now moot. The discovery period has now been closed since February 22, 2021. (Scheduling Order [#28].) The day after discovery closed, Triller asked the Court to extend the discovery deadline so that it could obtain certain documents and communications between various parties involved in the negotiation of the Triller 2019 transaction. (Motion to Compel [#46].) Triller attempted to convince the Court that these documents could evidence the parties' intent to discharge Triller from its obligations under the Promissory Note, prove its novation defense, and defeat Carnegie's motion for summary judgment. The Court denied the motion, finding that the internal communications at issue could not establish the requisite intent to extinguish the Note and completely release Triller's obligations under it, as the parties' written agreements were controlling. (Order [#57].) The parties have had ample time to complete any relevant discovery and to brief the Court fully on the issues raised in Carnegie's motion for summary judgment.
Carnegie Technologies moves for summary judgment on its claim of breach of contract on the parties' Services Agreement and for its suit on the Promissory Note, arguing that it is entitled to judgment as a matter of law against Triller and to damages under both the Agreement and the Note. The motion should be granted.
Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Fed. R. Civ. P. 56(c). A dispute is genuine only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Once the movant carries its burden, the burden shifts to the nonmoving party to establish the existence of a genuine issue for trial. Anderson, 477 U.S. at 248; Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Wise v. E.I. Dupont de Nemours & Co., 58 F.3d 193, 195 (5th Cir. 1995). The non-movant must respond to the motion by setting forth particular facts indicating that there is a genuine issue for trial. Miss. River Basin Alliance v. Westphal, 230 F.3d 170, 174 (5th Cir. 2000). The parties may satisfy their respective burdens by tendering depositions, affidavits, and other competent evidence. Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992). The Court will view the summary judgment evidence in the light most favorable to the non-movant. Rosado v. Deters, 5 F.3d 119, 123 (5th Cir. 1993).
"After the non-movant has been given the opportunity to raise a genuine factual issue, if no reasonable juror could find for the non-movant, summary judgment will be granted." Westphal, 230 F.3d at 174. However, if the party moving for summary judgment fails to satisfy its initial burden, the motion must be denied, regardless of the nonmovant's response. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc).
Triller has filed objections to Carnegie Technologies' summary judgment record. (See Objections [#42].) Triller objects to numerous paragraphs of the Declaration of Karen Leger, the Controller of Carnegie Technologies. (Leger Decl. [#33-1].) Triller argues that Ms. Leger lacks foundation or personal knowledge to make the statements contained in her Declaration and that the probative value of her statements is substantially outweighed by the considerations set forth in Rule 403 of the Federal Rules of Evidence—unfair prejudice, confusing the issues, and wasting time. (Objections [#42].) Triller's objections are for the most part without merit.
Rule 103 of the Federal Rules of Evidence requires a party objecting to evidence to state the reasons for the objection with specificity. Fed. R. Evid. 103(a)(1). Triller's objections...
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