Harrison Co. v. A-Z Wholesalers, Inc.
| Decision Date | 15 September 2020 |
| Docket Number | CIVIL ACTION NO. 3:19-CV-1057-B |
| Parties | HARRISON COMPANY LLC, Plaintiff, v. A-Z WHOLESALERS, INC. and BARKAT G. ALI, Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Before the Court are Plaintiff Harrison Company LLC's Motion for Summary Judgment (Doc. 51) and Defendants A-Z Wholesalers, Inc. and Barkat G. Ali's Motion for Summary Judgment (Doc. 54). For the reasons that follow, Plaintiff's Motion for Summary Judgment (Doc. 51) and Defendants' Motion for Summary Judgment (Doc. 54) are DENIED. Further, Harrison's Objections to and Motion to Strike (Doc. 69) and Defendants' objections as set forth in their Motion for Summary Judgment (Doc. 54) are MOOT.
Plaintiff Harrison Company LLC is a regional food distributor in Bossier City, Louisiana. Doc. 52, Pl.'s Br., 2. In 2008, three trusts acquired Plaintiff's parent entity, Noble Feldman, Inc., which in 2014 merged into Imperial Trading Company LLC. Id. Imperial then became Plaintiff's sole member, sharing common upstream ownership, yet remaining "separate entities." Id. Starting in2015, "Imperial and [Plaintiff] began sharing certain executive level management and accounting services functions . . . ." Id.
On March 11, 2011, Defendant A-Z and Plaintiff executed a Credit Agreement, which Defendant Ali guaranteed. Id. at 3. As a result of the Credit Agreement, Defendant A-Z has two account with Plaintiff. Id. at 4. However, Plaintiff alleges that as of late 2017, Defendant A-Z had accrued an outstanding balance in excess of $3,000,000 on these accounts. Id. at 5. Plaintiff alleges that as a result, Brad Prendergast, Imperial's Chief Financial Officer, and Wayne Baquet, Imperial's President and Chief Executive Officer, began discussing with Defendant A-Z how to collect this debt. Id. Plaintiff explains that without any agreement, in late 2019, it retained Locke Lord LLP in its attempts to collect on the debt. Id. at 5-6. Plaintiff alleges that despite these attempts to collect, which included a demand letter, Defendants have failed to pay Plaintiff what it is currently owed—which it believes is $2,575,335,73. Id. at 6.
Defendants, unsurprisingly, tell a different story. They point out that originally, Imperial brought a state civil suit based on the same alleged missed payments. Doc. 57, Defs.' Br., 4-5. That suit was eventually dismissed without prejudice. Doc. 56, Defs.' App., Ex. B (motion to dismiss without prejudice), 15-16; id., Ex. C (order granting dismissal without prejudice), 17. Defendants believe "that there are no outstanding invoices due [Plaintiff]," and that the invoices in question involve a contract agreed upon between Imperial and Defendant A-Z, not Plaintiff and Defendant A-Z. Doc. 57, Defs.' Br., 7. Defendants argue that Defendant A-Z had an open account with Imperial, and that they "never entered into a guarantee with Imperial." Id. As evidence that the debt in question involved a contract between Defendants and Imperial, and not Plaintiff, Defendants point out that the invoices in question are labeled with Imperial's, not Plaintiff's, name. See Doc. 57,Defs.' Br., 11 .
On May 2, 2019, Plaintiff filed suit against Defendants, alleging breach of contract by Defendant A-Z and breach of guaranty by Defendant Ali. Doc. 1, Compl., 3-4. Plaintiff also seeks attorneys' fees. Id. at 5. On June 16, 2020, both parties filed motions for summary judgment. Doc. 51, Pl.'s Mot.; Doc. 54, Defs.' Mot. All briefing has been filed, and the motions are ripe for review.
Federal Rule of Civil Procedure 56(a) provides that summary judgment is appropriate "if the movant shows that 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). The substantive law governing a matter determines which facts are material to a case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The summary-judgment movant bears the burden of proving that no genuine issue of material fact exists. Latimer v. Smithkline & Fr. Labs., 919 F.2d 301, 303 (5th Cir. 1990). Usually, this requires the movant to identify "those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quotation marks omitted). But if the non-movant ultimately bears the burden of proof at trial, the summary-judgment movant may satisfy its burden by pointing to the mere absence of evidence supporting an essential element of the non-movant's claim. See Austin v. Kroger Tex., L.P., 864 F.3d 326, 335 n.10 (5th Cir. 2017).
Once the summary-judgment movant has met this burden, the burden shifts to the non-movant to "go beyond the pleadings and designate specific facts" showing that a genuine issue exists.Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (per curiam) (citing Celotex, 477 U.S. at 325). "This burden is not satisfied with 'some metaphysical doubt as to the material facts,' by 'conclusory allegations,' by 'unsubstantiated assertions,' or by only a 'scintilla' of evidence." Id. (citations omitted). Instead, the non-moving party must "come forward with specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis in original) ( quotation marks omitted). "[C]ourts are required to view the facts and draw reasonable inferences in the light most favorable to the party opposing the summary judgment motion." Scott v. Harris, 550 U.S. 372, 378 (2007) (). But the court need not "sift through the record in search of evidence to support a party's opposition to summary judgment." Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998) (citation and quotation marks omitted). If the non-movant is unable to make the required showing, the court must grant summary judgment. Little, 37 F.3d at 1076.
In sum, there are genuine disputes of material fact that prevent summary judgment on Defendants' affirmative defenses and the parties' cross-motions for summary judgment on Plaintiff's breach-of-contract and breach-of-guaranty claims. The Court will first address Defendants' affirmative defenses, and then the parties' cross-motions for summary judgment on Plaintiff's breach-of-contract and breach-of-guaranty claims.
Defendants assert four affirmative defenses in their motion for summary judgment: (1) standing, (2) judicial estoppel, (3) modification, and (4) novation. Doc. 57, Defs.' Br., 12-13.
Defendants first allege that Plaintiff does not have standing to sue on the contract. Defendants explain "that the Ali Guarantee was granted to Harrison, and the invoices relied upon" to invoke that guarantee were issued by Imperial, "an entirely separate and distinct corporation[.]" Doc. 57, Defs.' Br., 11 (internal citations omitted). Defendants acknowledge that the Credit Agreement states that the guarantee "shall apply to all sales made by Seller to Purchaser," and that the Credit Agreement defines the Seller and Purchaser as Plaintiff and Defendant A-Z, respectively. Id. (citation and emphasis omitted). But Defendants note that in the state action, Imperial stated that it "was the entity that sold and delivered goods to A-Z." Id. at 11-12 (citation omitted). And Defendants argue that after Imperial acquired Plaintiff, "all future sales [involving Defendants] were conducted through Imperial." Id. at 12 (citations omitted). Finally, Defendants point out that in Imperial's UCC Financing Statement, "it has been Imperial holding a lien on the assets of A-Z for shipment of sundries and cigarettes to A-Z[.]" Id. (citation omitted). From all of this, Defendants argue that because the at-issue sales were outside of the original Credit Agreement and involved Imperial, it is Imperial, not Plaintiff, who has standing to sue on the contract. See id. (citation omitted).
In response, Plaintiff argues that Defendants' argument "is based on Defendants' unsupported contention that [Plaintiff] assigned the Credit Agreement to Imperial." Doc. 61, Pl.'s Resp., 6. Plaintiff notes that Defendants concede that the Credit Agreement was between Defendants and Plaintiff. Id. To Plaintiff, that Imperial's name was on invoices is not relevant, and this "formatting change to the invoices is explained by [Plaintiff's] declarations." Id. (citation omitted). These declarations explain that "[b]ecause Imperial is the more prominent brand in the portfolio, invoicesbear the 'Imperial' name and also reference the location from where the products are being shipped, e.g., 'Bossier,' which internally tells accounting and/or management that [Plaintiff] sold and shipped the product to [Plaintiff's] customer." Id. at 4. (citation omitted).
Contractual standing "is really an issue of 'contract interpretation' that goes to the merits of a claim," and "is 'entirely distinct from standing for purposes of Article III [of the Constitution].'" Cotton v. Certain Underwriters at Lloyd's of London, 831 F.3d 592, 594 (5th Cir. 2016) (quoting, inter alia, Perry v. Thomas, 482 U.S. 483, 492 (1987)). Though there is not much law on the subject of contractual standing, the Court finds South Shore Hellenic Church, Inc. v. Artech Church Interiors, Inc., 183 F. Supp. 3d 197 (D. Mass. 2016), instructive. In South Shore, the plaintiff, South Shore Hellenic Church (SSHC), brought a breach-of-contract action against the defendant involving repairs to the Panagia Greek Orthodox Church. 183 F. Supp. 3d at 202. The defendant sought summary judgment, alleging that Panagia signed the contract, id. at 211, and that SSHC was not a party to the...
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