Insight Teleservices, Inc. v. Zip Mail Servs., Inc.

Decision Date11 December 2014
Docket NumberCase No. 14-11395
PartiesINSIGHT TELESERVICES, INC., Plaintiff, v. ZIP MAIL SERVICES, INC., Defendant.
CourtU.S. District Court — Eastern District of Michigan

INSIGHT TELESERVICES, INC., Plaintiff,
v.
ZIP MAIL SERVICES, INC., Defendant.

Case No. 14-11395

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

December 11, 2014


Hon. Patrick J. Duggan

OPINION AND ORDER

This diversity action involves a contractual dispute between two businesses. Plaintiff Insight Teleservices, Inc. ("Plaintiff" or "Insight") is a fundraising organization that solicits donations for various charities over the telephone and receives verbal pledges of support. Insight then mails a pledge card, which is similar to an invoice, with the pledge amount and instructions on how to remit payment to those it previously solicited. To mail these pledge cards, Plaintiff used the bulk mailing services of Defendant Zip Mail Services ("Defendant" or "Zip Mail") for approximately ten years.

This previously amicable, and perhaps symbiotic, business relationship broke down in late 2013, just before the busy (and apparently lucrative) holiday season. A check Plaintiff used to pay Defendant for its mailing services was

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returned due to insufficient funds, and despite replacing the check immediately, the replacement check was not deposited for two weeks. During this two-week period, Defendant continued to collect Plaintiff's outgoing mail and even continued to invoice Plaintiff for its services. Unbeknownst to Plaintiff, however, Defendant stopped delivering Plaintiff's outgoing mail until the replacement check cleared. According to Plaintiff, the mail hold caused "catastrophic" consequences for its business. This twelve-count lawsuit followed.

Two motions are presently before the Court: (1) Plaintiff's Motion for Partial Summary Judgment, which seeks summary judgment with respect to Defendant's liability only, filed pursuant to Federal Rule of Civil Procedure 56 and (2) Defendant's Cross Motion for Summary Judgment, filed pursuant to Rules 12(b)(6) and 56. The Court held a motion hearing on December 4, 2014. For the reasons that follow, the Court will grant summary judgment in Defendant's favor on all but Counts I and II. The Court concludes that genuine issues of material fact preclude a finding that judgment as a matter of law in favor of either litigant is appropriate on Counts I and II. The Court therefore denies Plaintiff's Motion on these counts, as well as Defendant's Motion on Count II.

I. BACKGROUND

A. Factual

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This dispute centers on events occurring in November and December of 2013. At the time the underlying events transpired, Plaintiff had used the mailing services of Defendant for approximately a decade. These services included: (1) daily pickup of pledge cards to be mailed to potential donors; (2) automated processing of the outgoing pledge cards in Defendant's facilities; and (3) drop-off of Plaintiff's processed mail to a United States postal facility within one business day. Defendant billed Plaintiff weekly for the services provided the previous week, which included the cost of postage.1 Defendant emailed Plaintiff the invoices each week, and, according to past practice, Plaintiff typically remitted payment within seven days.

Plaintiff endeavored to pay Defendant $9,925.24 for services rendered for the week ending on November 15, 2013 by way of a check dated November 22, 2013. (Check No. 157843, Pl.'s Mot. Ex. B.) According to Plaintiff, a change in its bank's ownership (from Citizens Bank to First Merit Bank) caused a one-day delay in funds deposited into its account such that the deposit Insight typically received on Tuesdays - in this case, Tuesday, December 4, 2013 - was delayed until Wednesday, December 5, 2013. Unfortunately, the November 22, 2013 check was posted on December 4, the day before the deposit of funds needed to

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cover the check amount. (Bank Statement, Pl.'s Mot. Ex. C.) Thus, the check Insight issued to Zip Mail was returned for insufficient funds (the "NSF check").

In an email dated December 9, 2013, Zip Mail's general manager Bob Muñoz informed Insight of the NSF check. (12/9/2013 Email, Pl.'s Mot. Ex. D.) Insight indicated that it would provide a replacement check immediately, which it did the following day.2 (Id. (email from manager indicating that "[w]e will pick up the replacement check in the morning with the regular pick up"); see also Check No. 158456, Pl.'s Mot. Ex. E.) The replacement check was not deposited for nine days, as reflected by a bank stamp dated December 19, 2013 on the back of the check. The check did not post to Plaintiff's account until December 23, 2013.3 (Bank Statement, Pl.'s Mot. Ex. F.)

Unbeknownst to Plaintiff, Defendant stopped delivering Plaintiff's mail from December 9, 2013 until the replacement check cleared. Only after noticing an inexplicable decline in donor collections and after an email exchange with Mr.

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Muñoz on January 8, 2014, did Insight's principals learn that Zip Mail had held Insight's mail. (1/8/14 Email, Pl.'s Mot. Ex. G ("Zip Mail held your mail because you bounced a check. We will not release mail until a replacement check is received and that check clears.").) Defendant does not deny holding Plaintiff's mail during this period. (Answer ¶¶ 22, 34, ECF No. 15.) A review of the exhibits submitted by the parties suggests that Zip Mail had a practice, at least in the past, regarding the holding of mail: in his December 9 email, Mr. Muñoz wrote: "The previous [general manager] held your mail if your check was not here on Tuesday morning." (12/9/2013, Pl.'s Mot. Ex. D.) At the motion hearing, defense counsel confirmed that Zip Mail had held Insight's mail on at least one previous occasion, but noted that this occurred several years before the present dispute.

Despite the hold, Zip Mail continued to pick up Insight's mail and continued to invoice Insight during this two week period, as if it was delivering the mail to the post office, which it was not. Invoices submitted by Insight reflect that Zip Mail billed Plaintiff for services totaling $62,920.91 during the period it was holding the mail. (Invoices, Pl.'s Mot. Ex. I.) Upon learning of the mail hold, Insight stopped payment on two checks totaling $21,785.68. Thus, Insight paid $41,135.23 to mail pledge cards it believed Zip Mail had processed and delivered to the post office, when the items had not been mailed at the time payment was made.

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Defendant contends that once the funds from the replacement check were deposited in its account, it sent out all of the mail it had been holding. While nothing in Plaintiff's brief directly challenges this contention, at the motion hearing, Plaintiff's counsel for the first time indicated that it possesses emails showing that many pledge cards were not sent out until December 31, 2013, over a week after the replacement check funds were deposited in Zip Mail's account.

B. Legal Proceedings

Plaintiff instituted the present civil action in the Circuit Court for the County of Oakland on February 21, 2014. Defendant received a copy of the summons and complaint on March 6, 2014, and, on April 4, 2014, timely removed the action to this Court, invoking this Court's diversity jurisdiction. 28 U.S.C. § 1332; (Notice of Removal, ECF No. 1.) Plaintiff subsequently filed an Amended Complaint as of right on June 24, 2014, containing the following counts:

Count I: Breach of Contract;

Count II: Breach of Implied Contract;

Count III: Quantum Meruit and Unjust Enrichment;

Count IV: Promissory Estoppel;

Count V: Fraudulent Misrepresentation;

Count VI: Nondisclosure/Fraudulent Concealment (Silent Fraud);

Count VII: Innocent Misrepresentation;

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Count VIII: Conversion;

Count IX: Tortious Interference with a Business Relationship;

Count X: Civil Conspiracy;

Count XI: Tortious Breach of Contract; and

Count XII: Negligence.

(ECF No. 13.)

Defendant answered Plaintiff's Amended Complaint on July 30, 2014, which triggered the need for a scheduling conference that was ultimately held on August 13, 2014. (ECF No. 15.) After the conference, the Court entered a scheduling order, which was subsequently amended by Magistrate Judge David R. Grand on December 4, 2014. (ECF Nos. 16, 39.)

On the day of the scheduling conference, Plaintiff filed its Motion for Partial Summary Judgment pursuant to Federal Rule of Civil Procedure 56. (ECF No. 17.) Plaintiff seeks summary judgment on the issue of liability with respect to eleven of twelve counts contained in its Amended Complaint, but concedes that factual disputes preclude the entry of judgment with respect to damages. Defendant responded to this motion on September 12, 2014. (ECF No. 25.) In addition to serving as a Response Brief, Defendant's filing contains a request for

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cross summary judgment on several, but not all, of Plaintiff's causes of action.4 In this filing, Defendant also asks the Court to impose sanctions on Plaintiff or Plaintiff's counsel.5 Plaintiff filed its Reply Brief on September 26, 2014, (ECF

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No. 27), however, language in this brief mischaracterizing Defendant's Response as untimely and suggesting that it be stricken prompted Defendant to file a Supplemental Brief pointing out the error, (ECF No. 28). Plaintiff filed a Corrected Reply Brief on September 29, 2014. (ECF No. 29.) On October 3, 2014, Plaintiff responded to Defendant's cross motion, and Defendant replied on October 20, 2014. 6 (ECF Nos. 30, 31.)

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II. GOVERNING LEGAL STANDARD

Federal Rule of Civil Procedure 56 instructs courts to "grant summary judgment 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). A court assessing the appropriateness of summary judgment asks "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Amway Distribs. Benefits Ass'n v. Northfield Ins. Co, 323 F.3d 386, 390 (6th Cir. 2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S....

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