Nat'l Traffic Serv., Inc. v. Fiberweb, Inc

• Citation: 829 F.Supp.2d 185
• Decision Date: 02 November 2011
• Docket Number: No. 08–CV–262–S.,08–CV–262–S.
• Parties: NATIONAL TRAFFIC SERVICE, INC., Plaintiff, v. FIBERWEB, INC. and Reemay, Inc., Defendants.
• Court: U.S. District Court — Western District of New York

829 F.Supp.2d 185

NATIONAL TRAFFIC SERVICE, INC., Plaintiff,

v.FIBERWEB, INC. and Reemay, Inc., Defendants.

No. 08–CV–262–S.

United States District Court, W.D. New York.

Nov. 2, 2011.

A. Nicholas Falkides, Attorney at Law, Buffalo, NY, for Plaintiff.

Gregory J. Mascitti, LeClair Ryan, Terence Lee Robinson, Jr., Nixon Peabody LLP, Rochester, NY, for Defendants.

DECISION AND ORDER

WILLIAM M. SKRETNY, Chief Judge.

I. INTRODUCTION

In this diversity action, Plaintiff National Traffic Service, Inc. (“National Traffic”), a New York corporation, brings suit against Defendant Fiberweb, Inc. (“Fiberweb”), a South Carolina corporation, claiming breach of contract and unjust enrichment.¹ Plaintiff's claims arise out of Defendant's failure to pay Plaintiff for negotiating discounted rates with freight carriers in the second year of the parties' agreement. Presently before this Court is Defendant's Motion for Summary Judgment.² For the reasons discussed below, Defendant's motion is granted in part, and denied in part.

II. BACKGROUND

A. Facts

Plaintiff, National Traffic, is a New York corporation with its principal place of business in Amherst, New York, and is a provider of transportation logistics services. (Plaintiff's Statement of Material Undisputed Facts (“Pl.'s Statement”), Docket No. 26, ¶ 1.) Defendant, Fiberweb, is a South Carolina corporation with its principal place of business in Old Hickory, Tennessee. (Defendant's Local Rule 56.1 Statement of Material Facts (“Def.'s Statement”), Docket No. 20, ¶¶ 1, 5.) Defendant is engaged in the business of developing and manufacturing high performance nonwoven fabrics, used in a variety of commercial products. (Defendant's Memorandum of Law in Support of Motion for Summary Judgment (“Def.'s Mem.”), Docket No. 21, 2–3.)

On December 8, 2005, the parties entered into a 2–year Logistics Management Services Agreement (“Agreement”), whereby National Traffic agreed to provide logistic management services for Fiberweb's domestic and international shipping. (Pl.'s Statement ¶¶ 2, 3, 4.) Such services included negotiating freight contract rates, preparing freight transportation plans, auditing and paying freight carrier bills, submitting weekly progress reports, and various related tasks. ( Id. ¶ 4.) Payment for National Traffic's services was set in accordance with two separate fee structures. For the first year, National Traffic would receive a percentage of document savings it had generated through its negotiations. ( Id. ¶ 7.) In the second year, National Traffic would be paid by a separate criteria listing compensation rates for completion of specific tasks, including filing weekly reports, auditing, on-line carrier routing, and 30% of documented negotiated savings for carrier negotiation services. ( Id.)

Pursuant to National Traffic's agreement to provide carrier negotiation services, the Agreement authorized National Traffic to negotiate contracts with authorized carriers on Fiberweb's behalf. ( Id. ¶ 25.) The Agreement also reserved Fiberweb's right not to be bound by any of the negotiated contracts. ( Id.) Finally, the Agreement granted Fiberweb the right to end the Agreement for any reason on thirty days notice. ( Id. ¶ 3.) If Fiberweb did so within the first twelve months of the Agreement, it would be obligated to pay National Traffic a fee based on projected savings. ( Id.)

For the first year of the Agreement, National Traffic negotiated discounted rates with Fiberweb's carriers, realizing savings of $383,136. In accordance with the Agreement, Fiberweb paid National Traffic 30% of that amount, or $114,940. ( Id. ¶ 9.) National Traffic received confirmation from Fiberweb to again negotiate discounted rates for the second year of the Agreement. ( Id. ¶ 10.) Following negotiations, National Traffic presented Fiberweb with a transportation plan detailing the expected cost savings. ( Id. ¶¶ 15, 16.) The transportation plan did not take into account the closure of three of Fiber's manufacturing locations. ( Id. ¶ 22.) The unaccounted for closures corresponded with an approximately 10% decrease in overall shipping volume. ( Id.) Fiberweb elected not to adopt National Traffic's transportation plan. ( Id. ¶ 17.) Although Fiberweb did use several of the carriers included in the transportation plan, it did so at the original year one rates. (Def.'s Statement ¶ 30.)

National Traffic now seeks payment of 30% of the expected savings detailed in the transportation plan, that National Traffic alleges would have been realized had Defendant adopted the plan.

B. Procedural History

National Traffic commenced this action on March 28, 2008 by filing a complaint in the United States District Court for the Western District of New York. On March 31, 2010, Fiberweb filed the instant Motion for Summary Judgment.

III. DISCUSSION

A. Choice of Law

Neither party disputes that Tennessee law should govern this dispute pursuant to § 10.1 of the Agreement. Determining the controlling substantive law requires application of New York's choice of law rules. Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135, 151 (2d Cir.2008) (quoting Booking v. Gen. Star Mgmt. Co., 254 F.3d 414, 419 (2d Cir.2001)). New York courts will enforce a contractual choice-of-law clause so long as the chosen law bears a reasonable relationship to the parties or the transaction. Aramarine Brokerage, Inc. v. OneBeacon Ins. Co., 307 Fed.Appx. 562, 564 (2d Cir.2009); Burns v. Del. Charter Guarantee & Trust Co., No. 10 Civ. 4535, 2011 WL 2314835, at *6 (W.D.N.Y. June 8, 2011). Fiberweb's principal place of business is in Old Hickory, Tennessee. In addition, at the time the parties entered into the agreement, Fiberweb was operating eight separate manufacturing facilities, including two in Tennessee. On this basis, the Court finds that there is a reasonable relationship between the choice of Tennessee law and the parties, and will apply Tennessee law to the construction and interpretation of the Agreement.

B. Summary Judgment Standard

Summary Judgment is warranted when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A genuine issue of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Ford v. Reynolds, 316 F.3d 351, 354 (2d Cir.2003). A fact is material if it “might affect the outcome of the suit under governing law.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

The party seeking summary judgment must first demonstrate the absence of any disputed material facts. The opposing party is then required to “go beyond the pleadings” and “designate specific facts showing that there is a genuine issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Holcomb v. Iona College, 521 F.3d 130, 137 (2d Cir.2008). To carry this burden, the opposing party “must do more than simply show that there is some metaphysical doubt as to the material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), and it “may not rely simply on conclusory statements or on contentions that the affidavits supporting the motion are not credible ... or upon the mere allegations or denials of the adverse party's pleading,” Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir.1995) (internal quotation and citations omitted).

In assessing whether summary judgment is appropriate, the court's obligation is to view the evidence and the inferences drawn from the evidence “in the light most favorable to the party opposing the motion.” Adickes v. S.H. Kress and Co., 398 U.S. 144, 158–59, 90 S.Ct. 1598, 1609, 26 L.Ed.2d 142 (1970). The court's function is not “to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249, 106 S.Ct. 2505. “Only when reasonable minds could not differ as to the import of evidence is summary judgment proper.” Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.1991).

C. Plaintiff's Breach of Contract Claim

Under Tennessee law, “a plaintiff seeking damages for an alleged breach of contract must prove: (1) the existence of an enforceable contract; (2) nonperformance amounting to a breach of the contract; and (3) damages caused by the breach of contract.” AllGood Entm't, Inc. v. Dileo Entm't & Touring, Inc., No. 09 Civ. 5377(HB), 2010 WL 3322530, at *3 (S.D.N.Y. Aug. 19, 2010) (quoting Ervin v. Nashville Peace & Justice Ctr., 673 F.Supp.2d 592, 612 (M.D.Tenn.2009)).

Neither party disputes that there is an enforceable contract. The only issue therefore is whether Fiberweb breached its contract by not paying National Traffic 30% of the savings Fiberweb would have realized had it adopted National Traffic's transportation plan.

Plaintiff argues that Fiberweb breached the Agreement by not accepting National Traffic's transportation plan because National Traffic had negotiated with Fiberweb's carriers as Fiberweb's agent. (Plaintiff's Memorandum of Law in Opposition to Defendants' Motion for Summary Judgment (“Pl.'s Opp'n.”), Docket No. 25, 11.) The relevant language in § 4.2 of the Agreement states:

[National Traffic] shall be authorized to act as [Fiberweb's] logistics management agent to negotiate contracts with Authorized Carriers. [NATIONAL TRAFFIC] MAY NOT BIND [FIBERWEB] INTO ANY CONTRACTUAL AGREEMENT. [Fiberweb] will review and approve, prior to implementation, the Carrier agreements. [Fiberweb] will also review [National Traffic's] forms and suggest additions and changes, which [National Traffic] will not unreasonably reject.

(Affidavit of Joann Salek (“Salek Aff.”), Docket No. 19, Ex. 3) (emphasis in original).

National Traffic contends that interpreting this provision to allow Fiberweb to...