KVC Waffles Ltd. v. New Carbon Co.
| Decision Date | 22 July 2022 |
| Docket Number | Civil Action 20-cv-195-LKG |
| Parties | KVC WAFFLES LTD., Plaintiff, v. NEW CARBON COMPANY, LLC, Defendant. |
| Court | U.S. District Court — District of Maryland |
Filed Under Seal Re-issued: July 22, 2022 [*]
In this civil action, plaintiff KVC Waffles, Limited (“KVC”) brings breach of contract, tortious interference with contractual relations, and tortious interference with prospective advantage claims against its former business partner, New Carbon Company, LLC (“NCC”). See generally Compl., ECF No 1. NCC has moved for summary judgment on KVC's claims pursuant to Fed.R.Civ.P. 56, upon the grounds that: (1) KVC's breach of contract claim is barred by the doctrine of mutual default; (2) the contractual agreement between the parties prohibits an award of lost profits; and (3) KVC has failed to support its tortious interference claims with sufficient evidence to establish causation and damages. See generally Def. Mot., ECF No. 55; see also Def. Mem., ECF No. 55-1. NCC has also moved to exclude the testimony of KVC's expert witness, Dr. L. Adel Turki. See Def. Mot. Exclude, ECF No. 64.
NCC's motions are fully briefed and no hearing is necessary to resolve these motions. See Pl. Resp., ECF No. 69; Def. Reply, ECF No. 76; Pl. Resp. Mot. Exclude, ECF No. 71; Def. Reply Mot. Exclude, ECF No. 78; see also L.R. 105.6 (D. Md. 2021). For the reasons that follow, the Court: (1) GRANTS-in-PART NCC's motion for summary judgment; (2) DENIES-as-MOOT NCC's motion to exclude; and (3) DISMISSES the complaint.
In this action, KVC asserts breach of contract and tortious interference claims against NCC arising from the termination of the parties' business relationship in January 2017. See Compl. at ¶ 1. KVC is a limited liability company organized under the laws of England that exclusively distributed NCC's “Golden Malted” products in the United Kingdom, Ireland, and parts of France from 2007 to 2017. See Compl. at ¶ 4; Def. Mem. at 2. NCC is an Indiana limited liability company that manufactures waffle irons and waffle mix under the “Golden Malted” trademark. See Compl. at ¶¶ 5, 14.
As background, in January 2007, KVC and NCC entered into a distribution agreement that made KVC the exclusive distributor for NCC's “Golden Malted” branded products in the United Kingdom (the “2007 Agreement”). Id. at ¶¶ 11, 13; Def. Mem. at 2; see also Def. Mem. Ex. 1, ECF No. 55-3 (2007 Agreement). In January 2009, the parties entered into a second distribution agreement that provided for a five-year term and expanded KVC's exclusive distribution territory to Ireland and parts of France (the “2009 Agreement”). See Compl. at ¶¶ 24-25; Def. Mem. at 3; Def. Mem. Ex. 2 (2009 Agreement). The 2009 Agreement is the subject of the parties' dispute in this case.
There are several provisions in the 2009 Agreement regarding KVC's payment and customer service obligations that are relevant to NCC's pending motions. First, with regards to KVC's obligation to timely pay invoices, Section 8 of the 2009 Agreement provides that:
Unless otherwise agreed to by [NCC] or specified in the terms and conditions of the [purchase orders], payment of the Purchase Price for Products ordered by [KVC] shall be made on a net twenty (20) day basis after delivery thereof to [KVC] or, if shipped directly to [KVC's] customers, after delivery.... In the event that invoices are not paid and received on a net thirty (30) day basis, [KVC] agrees from and after that date, all invoices shall automatically bear interest, compounded monthly, at the rate of one and one-half (1.5%) percent per month, to the extent allowed by applicable law. [KVC] shall further be liable for all costs and expense, including reasonable attorneys' fees, for collecting any amount due and owing to [NCC] for more than thirty (30) days.
Def. Mem. Ex. 2 at 9 § 8. And so, the 2009 Agreement requires that KVC pay all invoices due within 20 days of delivery and provides that any invoices remaining unpaid after 30 days of delivery would accrue interest until paid in full. See id.
Second, with regards to KVC's customer service obligations, Section 3 of the 2009 Agreement requires that KVC “use its good faith, best efforts to service all accounts” during the contract term and “ship all orders submitted by its customers in a reasonably prudent time frame after receipt of an order.” Id. at 5 § 3(c). In addition, this provision requires that KVC “promote vigorously the Products and [NCC's] goodwill throughout” the contract term. Id. at 4 § 3.
The parties' business relationship began to deteriorate in early 2016, after KVC failed to timely pay several invoices and NCC received complaints about KVC's customer service.
In this regard, it is undisputed that KVC failed to make certain payments under the 2009 Agreement in a timely manner in early 2016. See Def. Mem. at 4-5; see also Pl. Resp. at 7-8. And so, on January 4, 2016, NCC's President emailed KVC regarding a past due balance in the amount of $134,874.17. See Def. Mem. Ex. 3 at 2. KVC ultimately paid this past due amount and NCC did not terminate the 2009 Agreement at that time. See Def. Mem. at 4; see also Pl. Resp. at 8.
The parties also agree that KVC again failed to make timely payments on certain invoices later in 2016 and in early 2017. In this regard, it is undisputed that KVC had a past due balance in the amount of more than $140,000.00 in December 2016. See Def. Mem. Ex. 6 at 20 (). There is also no dispute that KVC had a past due balance in the amount of $58,512.03 on February 6, 2017, and a past due balance in the amount of $111,358.93 on March 15, 2017. See Def. Mem. Exs. 16, 17.
Lastly, it is undisputed that, on January 13, 2017, NCC received an email from one of KVC's largest customers, Creams Cafe, raising concerns about KVC's customer service, including KVC's “ongoing evasiveness” and failure to “deliver the required quantities” of product. See Def. Mem. at 6; see also Def. Mem. Ex. 14 at 1.
On January 17, 2017, NCC informed KVC that it would “terminate KVC as a distributor,” unless KVC agreed to a non-exclusive distributor agreement. See Def. Mem. Ex. 15. After KVC refused NCC's offer, NCC terminated the parties' business relationship on January 23, 2017. See Compl. Ex. 2.
KVC commenced this action challenging NCC's decision to terminate the 2009 Agreement on January 22, 2020. See generally Compl.
KVC commenced this matter on January 22, 2020. See Compl.
On October 26, 2021, NCC filed a motion for summary judgment, pursuant to Fed.R.Civ.P. 56, and a motion to exclude the testimony of KVC's expert witness, Dr. L. Adel Turki, pursuant to Fed.R.Evid. 702. See Def. Mot.; Def. Mem.; Def. Mot. Exclude; Def. Mem. Exclude. KVC filed responses in opposition to NCC's motions on November 30, 2021. See Pl. Resp.; see also Pl. Resp. Mot. Exclude. NCC filed replies in support of its motions on December 29, 2021. See Def. Reply; see also Def. Reply Mot. Exclude.
NCC's motions for summary judgment and to exclude the testimony of KVC's expert witness having been fully briefed, the Court resolves the pending motions.
A motion for summary judgment filed pursuant to Fed.R.Civ.P. 56 will be granted only if there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). And so, if there clearly exist factual issues “that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party,” then summary judgment is inappropriate. See Anderson, 477 U.S. at 250; see also Pulliam Inv. Co., Inc. v. Cameo Props., 810 F.2d 1282, 1286 (4th Cir. 1987); Morrison v. Nissan Motor Co., Ltd., 601 F.2d 139, 141 (4th Cir. 1979).
When ruling on a motion for summary judgment, the Court must construe the facts alleged in the light most favorable to the party opposing the motion. See United States v. Diebold, 369 U.S. 654, 655 (1962); Gill v. Rollins Protective Servs. Co., 773 F.2d 592, 595 (4th Cir. 1985). In this regard, the moving party bears the burden of showing that there is no genuine issue as to any material fact and that the party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Catawba Indian Tribe of S.C. v. State of S.C., 978 F.2d 1334, 1339 (4th Cir. 1992), cert. denied, 507 U.S. 972 (1993). But, a party who bears the burden of proof on a particular claim must also factually support each element of his or her claim. See Celotex Corp., 477 U.S. at 322-23. Given this, “a complete failure of proof concerning an essential element . . . necessarily renders all other facts immaterial.” Id. at 323. And so, on those issues which the nonmoving party will have the burden of proof, it is the nonmoving party's responsibility to confront the motion for summary judgment with an affidavit or other similar evidence to show the existence of a genuine issue for trial. See Anderson, 477 U.S. at 256.
In this regard, the United States Court of Appeals for the Fourth Circuit has held that, “[a] mere scintilla of evidence in support of the nonmovant's position will not defeat a motion for summary judgment.” Detrick v. Panalpina Inc., 108 F.3d 529, 536 (4th Cir. 1997). And so, there...
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