J.V. & Sons Trucking Inc. v. Asset Vision Logistics, LLC

• Decision Date: 15 September 2022
• Docket Number: 20-cv-02538-KMM-BRT
• Court: U.S. District Court — District of Minnesota
• Parties: J.V. & Sons Trucking, Inc., Plaintiff, v. Asset Vision Logistics, LLC, Defendant.

J.V. & Sons Trucking, Inc., Plaintiff,
v.
Asset Vision Logistics, LLC, Defendant.

No. 20-cv-02538-KMM-BRT

United States District Court, D. Minnesota

September 15, 2022

ORDER

KATHERINE MENENDEZ, DISTRICT JUDGE

This case involves a contractual dispute between Plaintiff J.V. & Sons Trucking, Inc. (“J.V. & Sons”), and Defendant Asset Vision Logistics, LLC (“AVL”). J.V. & Sons brought suit on June 24, 2020, alleging that AVL had breached its contractual obligations by failing make payments to J.V. & Sons for eight invoices memorializing trucking hauls. [Gleekel Decl., Ex. 55, ECF No. 71]. AVL counterclaimed, alleging that J.V. & Sons had breached its contractual obligations under a different agreement, the QuickPay Agreement (“QPA”), by taking actions inconsistent with its non-disclosure and non-solicitation clauses. [ECF No. 7]. Before the Court are cross-motions for summary judgment. [ECF Nos. 67 & 103]. For the reasons that follow, AVL's motion is denied, and J.V. & Sons' motion is denied in part and granted in part.

I. BACKGROUND

This case begins with a budding business relationship between J.V. & Sons, a hauling company, and AVL, a logistics broker which coordinates the hauling of crude

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oil between trucking and oil companies. J.V. & Sons provided the trucks and the drivers; AVL brokered with third parties to provide dispatches for hauling jobs, and provided J.V. & Sons with e-ticketing software and logistics management, such as completing paperwork, Certificates of Insurance, and Access Agreements for each site.

In June 2019, Dan Kitchings, J.V. & Sons' field coordinator, introduced J.V. & Sons' president, Michael Conners, to Jason Barnett, an AVL employee. [Michael Conners Aug. 4, 2021 Dep., 69:13-24, ECF No. 73]. After a short phone call, the two agreed to work with one another. [Id. 76:1-7].

A. The Hauling Relationship

J.V. & Sons cleared several logistical hurdles before starting to haul for AVL's clients, including AVL coordinating all of the necessary permissions for J.V. & Sons trucks to enter their clients' land. [Id. 44:8-14]. The two companies also negotiated the rates that AVL would pay J.V. & Sons for future hauling arrangements, which were memorialized in a rate agreement. [See Gleekel Decl., Ex. 9-11].

Throughout their relationship, J.V. & Sons and AVL negotiated six separate rate sheets, three for West Texas and three for East Texas. [Gleekel Decl., Exs. 90-98, “Rate Sheets”]. Each rate sheet determines how J.V. & Sons will be paid for its hauls. [Conners I, 138:14-23]. Each rate sheet lists the haul rates per mile in increments of five miles, the minimum number of oil barrels to be hauled, reject rate charges, splitticket charges, wait time charge rates, high H2S charges, rough road charges, and extra

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stop charges. The rate agreements themselves stated that the “*Rough Road charges round trip and per site and must be agreed upon in writing prior to assessing to freight bill.”

A typical haul went something like this. An oil company contacts AVL with a hauling opportunity and provides the number of loads it wants hauled. AVL reaches out to one of its haulers' dispatches, such as the J.V. & Sons dispatch, with the opportunity. [Conners Dep., 130:6-12]. If J.V. & Sons accepts the dispatch, J.V. & Sons assigns a driver to complete the haul. [Id.] Certain details, such as the location, date, and time of pick-up or delivery, are sent through AVL's e-ticketing software to the drivers, and the driver completes the haul and prints a haul ticket memorializing the details of the haul. [Id. 130:1-25 (describing the typical haul)].

B. The QuickPay Agreement

In July 2019, AVL suddenly switched its payment schedule. Originally, according to Mr. Conners, AVL indicated that it would pay J.V. & Sons within 15 days of receiving the invoice. [Id. 101:3-8]. But this changed over a phone call, when AVL informed J.V. & Sons that AVL would now pay invoices on a thirty-day time frame. [Id. 102:10-19].

By the end of July, after Mr. Conners spoke to Tyler, Jason Barnett, and AVL's president, Joshua Holwell, Mr. Holwell emailed Conners with a proposition. In order for JVL to receive payment “net-30,” AVL would factor J.V. & Sons' invoices and pay them within 30 days, if J.V. & Sons signed a “QuickPay Agreement.” [Id. 102:10-19].

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The QuickPay Agreement (“QPA”) states that it generally governs “the general terms and conditions under which, from time to time during the Term, Seller [(J.V. & Sons)] may offer and sell certain Receivables [(the invoices)] to Purchaser [(AVL)].” [QPA § 2.1, ECF No. 32]. Under this arrangement, AVL would pay J.V. & Sons an advance of 90% of the invoice price prior to payment from AVL's client. [Id. § 3.3]. Within ten days of receiving payment from its client, AVL would deduct 3% of the total invoice price as a fee for the factoring arrangement, and pay J.V. & Sons the remaining 7%. [Id. §§ 3.2, 3.4]. The agreement specified that when J.V. & Sons wanted to factor its invoices, it would send AVL an “Assignment and Transfer of Receivables” form, which was attached to the QPA, and AVL would send back an acceptance of the form with the advance payment. [Id. § 2.2].

The QPA contained several clauses that are relevant to these proceedings:

(1) An exclusivity clause, which prohibited J.V. & Sons from assigning its receivables to any other company [Id. § 2.5].

(2) A choice-of-law clause, stating that the Agreement shall be construed and enforced in accordance with Texas state law. [Id. § 14.8].

(3) A Non-Solicitation clause, stating “During the Term and for a period of one hundred eighty (180) days following the Purchaser's last transaction with Seller, the Seller shall not, directly or indirectly, solicit or accept any business or enter into any business relationship in any way with: (a) any of

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Purchaser's customers or (b) with any person or entity directly or indirectly introduced to Seller by Purchaser.”

(4) A Non-Disclosure clause, stating “During the Term and thereafter, Seller agrees to hold all Confidential Information in strict confidence and agrees that it shall not (a) disclose any Confidential Information to any other person or (b) use any Confidential Information for the Seller's own benefit or for the benefit of any other person or entity, in each case without Purchaser's express prior written consent. For the purposes of this Agreement, ‘Confidential Information' means all information, whether written or oral, that is disclosed or made available to Seller directly or indirectly, through any means of communication, including Seller's observations by virtue of opportunities provided to Seller by Purchaser.” [Id. § 14.4].

(5) A provision to pay all fees, costs, and expenses associated with enforcing the agreement. [Id. § 11].

Breach of any of the above clauses was considered default under the QuickPay Agreement, which would entitle AVL to any remedies available under Texas law. [Id. § 6]. J.V. & Sons signed the QuickPay Agreement on August 6, 2019.

Over the next few months, AVL factored J.V. & Sons' invoices for hundreds of hauls. [Joshua Holwell Dep. 108:10-11, ECF No. 107-1]. However, according to Mr. Conners, AVL and J.V. & Sons never followed the explicit terms of the QPA.

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J.V. & Sons would email AVL an invoice, AVL would email back an acknowledgment, and pay J.V. & Sons an advance 30 days after receipt. [Conners Dep. 231:1-232:2]. There is no evidence in the record that the parties filled out or used the Assignment and Transfer of Receivables Form to do so.

C. J.V. & Sons Begins Hauling for Continental Logistics

This period of peaceful commerce did not last. As winter approached, the parties' relationship became strained. In January 2020, Jason Barnett, now an employee of a logistics broker, Continental Logistics (“Continental”), contacted J.V. & Sons to provide hauling services to Continental's client. J.V. & Sons hauled for Continental Logistics for 22 days, performing a total of 94 loads. [Gleekel Decl., Ex. 53].

Through Continental, J.V. & Sons performed hauls for Delek U.S. Holdings (“Delek”). Mr. Conners testified in his deposition that J.V. & Sons had also hauled oil for Delek prior to working for AVL. [Conners Dep. 70:11-24]. Mr. Holwell testified similarly, stating that Delek actually introduced J.V. & Sons to AVL. [Holwell Dep. 232:1-233:25]. However, neither party disputes that Delek was AVL's client while J.V. & Sons performed hauls for AVL. On behalf of Continental, J.V. & Sons hauled 47 loads for Delek over nine days. [Gleekel Decl., Ex. 53].

J.V. & Sons did not communicate to AVL that it was hauling for Delek through Continental. However, J.V. & Sons did not obtain new permissions to access Delek sites; instead, it used its previous permissions to access the Delek site. [Def. Opp'n at 6-7].

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“In addition, during J.V. & Sons' business relationship with Continental, J.V. & Sons forwarded emails received from AVL to Continental.” [See, e.g., Ex. 28].

D. End of the Business Relationship

In February 2020, AVL stopped paying J.V. & Sons for their hauls. 108:14114:24]. J.V. & Sons continued to haul for AVL until March, and repeatedly requested that AVL pay them for the work done. AVL assured them that they would be paid on multiple occasions. [See Gleekel Exs. 37, 40, ECF No. 71-1]. Finally, J.V. & Sons sent AVL an email purporting to terminate their business relationship, and when AVL continued to withhold...