Mehul's Inv. Corp. v. Abc Advisors, Inc.

• Decision Date: 07 February 2001
• Docket Number: No. CIV.A. DKC 99-3120.,CIV.A. DKC 99-3120.
• Citation: 130 F.Supp.2d 700
• Parties: MEHUL'S INVESTMENT CORPORATION T/A National Printing & Copying v. ABC ADVISORS, INC.
• Court: U.S. District Court — District of Maryland

130 F.Supp.2d 700

MEHUL'S INVESTMENT CORPORATION T/A National Printing & Copying v. ABC ADVISORS, INC.

No. CIV.A. DKC 99-3120.

United States District Court, D. Maryland.

February 7, 2001.

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Onkar N. Sharma, Sharma & Bhandari, Silver Spring, MD, for Plaintiff.

Andrew J. Morris, Mayer, Borwn & Platt, Washington, DC, Anthony W. Hawks, Law Office, Alexandria, VA, for Defendants.

MEMORANDUM OPINION

CHASANOW, District Judge.

Pending before the court and ready for resolution is the motion for summary judgment of Defendant, ABC Advisors, Inc. ("ABC"). No hearing is deemed necessary, and the court now rules pursuant to Local Rule 105.6. For the reasons that follow, the court shall deny the motion with respect to count I (breach of contract), and grant the motion with respect to all other counts.

I. Background

The following facts are undisputed or presented in the light most favorable to Plaintiff, Mehul's Investment Corporation t/a National Printing & Copying ("National"). Defendant, ABC, acquires and resells Government Printing Office ("GPO") bid solicitations. ABC "codes" and sorts these solicitations into various "production categories," for instance, copying and duplicating, color copying, saddle stitching, four-color processing, etc. It then sells them to printing companies that have requested work in that specific category. Paper no. 13 at 2. National is a printing company that uses the service of companies like Defendant to bid on GPO contracts.

In 1997, Printers Service, Inc. ("PSI") contracted to provide GPO solicitation bid services for ten years at $1 a month to Bina's Investment Corporation t/a Metro Printing & Copying ("Metro"). Paper no. 1 ("Complaint"), Plaintiff's exhibit 2 at 1 ("1997 agreement").¹ The express terms of the 1997 agreement call for PSI to provide Metro bid solicitations in only one production category, copying and duplicating. Despite this limitation, Metro received copies of GPO solicitations in multiple production categories, as reflected in Metro Printing's "Bid's Unlimited, Inc., Application for Bid Service." Plaintiff's exhibit 2 at 2.² ("bid service application"). Additionally, the 1997 agreement contains a clause binding the successors and/or assigns of PSI and Metro.

When the PSI-Metro agreement was executed, PSI was owned by Robert Schlauch and Bhavi L. Vora. The latter also owned Metro. Schlauch explains that PSI provided bid solicitations to Metro in categories other than copying and duplicating because Vora was part owner of PSI, and because Vora invested in PSI's predecessor, Bids Unlimited, Inc., which Schlauch owned. (Robert Schlauch Aff. ¶¶ 3-4).

In 1998, ABC bought all of PSI's stock. However, Schlauch continued as President of PSI under an "outsourcing agreement." See Plaintiff's exhibit 1. The outsourcing agreement obligated ABC to continue to provide PSI clients with bid solicitation service "upon such terms and conditions as Schlauch may approve on behalf of PSI." Id. § 2(b), at 2. It specifically provided that ABC and PSI would continue "to honor the terms and conditions of PSI's ... existing service agreement with Metro Printing and Copying, Inc." Id.

Until March 2, 1999, Metro received from ABC bid solicitations in essentially the same categories that it had received from PSI. See Plaintiff's exhibit 2 at 3 ("production categories sheet"). Defendant claims that it stopped its service under all agreements because Metro and Vora were involved in a debarment proceeding that disqualified Metro from being able to bid on GPO contracts.³

In April 1999, National purchased Metro. National claims that pursuant to both the 1997 and outsourcing agreements, it had the right to receive GPO bid solicitations from ABC. ABC, however, did not believe that National's purchase of Metro was legitimate. ABC thought that Metro was attempting to avoid debarment by bidding on contracts under a new name, i.e., National.

ABC's counsel wrote a letter, dated March 2, 1999, to Schlauch, among other things, expressing concern regarding Metro's debarment. The letter does not mention National. The March 2 letter spawned a series of letters between counsel for Plaintiff and Defendant. In a letter to National's counsel, dated July 13, 1999, ABC's counsel requested proof that National and Metro were separate entities and that National had the means to perform the tasks for which it sought bid solicitations.⁴ Plaintiff's exhibit 6. In another letter, ABC stated that it suspected National was brokering GPO bids. Plaintiff's exhibit 7.

After determining that National and Metro were separate companies, ABC provided National bid solicitation service with respect to copying and duplicating for four months in 1999.⁵ National claims that its business viability depends on the bid solicitation service of companies like ABC. Currently, to obtain this service, National has contracted for approximately $1,200 per month with another company, International Bid Service.

II. Standard of Review

It is well established that a motion for summary judgment 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. Fed. R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In other words, 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. Anderson, 477 U.S. at 250, 106 S.Ct. 2505; see also Pulliam Inv. Co., Inc. v. Cameo Properties, 810 F.2d 1282, 1286 (4th Cir. 1987); Morrison v. Nissan Motor Co., Ltd., 601 F.2d 139, 141 (4th Cir.1979); Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir.1950). The moving party bears the burden of showing that there is no genuine issue of material fact. Fed. R.Civ.P. 56(c); Pulliam, 810 F.2d at 1286 (citing Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir.1979)).

When ruling on a motion for summary judgment, the court must draw all reasonable inferences in favor of and construe the facts in the light most favorable to the non-moving party. Tinsley v. First Union Nat'l Bank, 155 F.3d 435, 437 (4th Cir. 1998). A party who bears the burden of proof on a particular claim must factually support each element of his or her claim. "[A] complete failure of proof concerning an essential element ... necessarily renders all other facts immaterial." Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Thus, on those issues on which the nonmoving party will have the burden of proof, it is his or her responsibility to confront the motion for summary judgment with an affidavit or other similar evidence. Anderson, 477 U.S. at 256, 106 S.Ct. 2505.

In Celotex, the Supreme Court stated:

In cases like the instant one, where the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the "pleadings, depositions, answers to interrogatories, and admissions on file." Such a motion, whether or not accompanied by affidavits, will be "made and supported as provided in this rule," and Rule 56(e) therefore requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the "depositions, answers to interrogatories, and admissions on file," designate "specific facts showing that there is a genuine issue for trial."

Celotex, 477 U.S. at 324, 106 S.Ct. 2548. However, "`a mere scintilla of evidence is not enough to create a fact issue.'" Barwick v. Celotex Corp., 736 F.2d 946, 958-59 (4th Cir.1984) (quoting Seago v. North Carolina Theatres, Inc., 42 F.R.D. 627, 632 (E.D.N.C.1966), aff'd, 388 F.2d 987 (4th Cir.1967)). There must be "sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505 (citations omitted).

III. Analysis

A. Breach of Contract

ABC claims that National has no standing to assert contract rights in this matter because the 1997 agreement, the bid service application and the production categories sheet are all non-assignable personal services contracts. The court disagrees. The Court of Appeals of Maryland has held that:

In the absence of a contrary provision — and there was none here — rights and duties under an executory bilateral contract may be assigned and delegated, subject to the exception that duties under a contract to provide personal services may never be delegated, nor rights be assigned under a contract where delectus personae [choice of the person⁶] was an ingredient of the bargain.

Macke Co. v. Pizza of Gaithersburg, Inc., 259 Md. 479, 482, 270 A.2d 645, 646-47 (1970) (citing 4 Corbin on Contracts § 865 (1951) at 434; 6 Am.Jur.2d, Assignments § 11 (1963) at 196).

In its memorandum in support of its motion, ABC contends that it adds value to GPO solicitations by coding, sorting and distributing them to printing companies. Even so, the contract between the parties here is distinguishable from a typical personal services contract, such as a contract to paint a portrait, write a novel, or perform other work requiring "rare genius" and "extraordinary skill." Macke, 259 Md. at 484, 270 A.2d at 648. (citing Taylor v. Palmer, 1866 WL 830, 31 Cal. 240, 247-48 (1866)).

As set forth below, cases cited by ABC to support its argument that the agreements here are personal enough to invoke the rule of delectus personae are unavailing. In Eastern Advertising Co. v. McGaw, 89 Md. 72, 42 A. 923, 926 (1899) the Court of Appeals refused to allow an advertising agency to delegate its duties under a contract, which had been entered into by a company that...