Nat'l Waste Assocs. v. Lifeway Christian Res. of S. Baptist Convention
| Decision Date | 25 July 2022 |
| Docket Number | 3:20-cv-00654 |
| Parties | NATIONAL WASTE ASSOCIATES, LLC, Plaintiff, v. LIFEWAY CHRISTIAN RESOURCES OF THE SOUTHERN BAPTIST CONVENTION, Defendant. |
| Court | U.S. District Court — Middle District of Tennessee |
This is a breach-of-contract case brought by National Waste Associates, LLC (NWA) against Lifeway Christian Resources of the Southern Baptist Convention (Lifeway). The parties contracted for NWA to manage solid waste and recycling services for Lifeway's retail bookstores for a term of five years. By thirteen months into the contract, Lifeway had closed all its retail locations and canceled NWA's services at each location. NWA sued, claiming that Lifeway breached the contract and benefited from unjust enrichment. The parties filed cross-motions for summary judgment. (Doc. Nos. 64-65, 67-68, 88, 90, 95, 97). For the following reasons, NWA's motion will be denied, and Lifeway's motion will be granted in part and denied in part. Specifically, Lifeway will be granted summary judgment on NWA's quasi-contract claims and request for contractual attorney's fees, but it will be denied summary judgment on NWA's breach-of-contract claim and request for punitive damages.
NWA began managing solid waste and recycling services for Lifeway's bookstores around 2006. (Doc. No. 96 ¶ 1). The parties entered a three-year contract in 2010, and when that contract expired, the relationship continued on a year-to-year basis. (Id. ¶¶ 1-2). In 2018 NWA and Lifeway entered a contract with a five-year term. (Id. ¶ 3). That contract, which the Court will now refer to by its title of “Service Agreement,” became effective on November 1, 2018, and the parties agree that it is valid and enforceable. (Doc. No. 91 ¶¶ 1-2). Lifeway was motivated to contract by its desire to, among other things, have a reliable long-term partner to manage its trash program, enter an agreement with a five-year term, and experience an immediate savings of 35%. (Id. ¶ 6).
The Service Agreement states that NWA “will manage the solid waste and recyclable services . . . for the locations listed in Addendum A for services effective November 1, 2018 through October 31, 2023, and all locations that are opened and acquired during the term of this agreement.” (Doc. No. 1-2 at 2).[2] Addendum A lists 143 retail locations. (See id. at 11-15). The Service Agreement also includes a “Cancellation” Clause that is the focal point of the parties' breach dispute, discussed in detail below. (See id. at 5-6).
After reviewing sales information for the 2018 Christmas season, Lifeway decided to close all its retail locations. (Doc. No. 91 ¶ 21). Neither party anticipated this decision when it entered the Service Agreement. (Id.). In March 2019, Lifeway notified NWA of this decision. (Id. ¶ 22). Between May 2019 and November 30, 2019, Lifeway closed all retail locations, communicating with NWA about the timing of each closure and cancelling NWA's services at each closed location. (Id. ¶¶ 22, 27). NWA has not provided any services to Lifeway since the final location closed, and Lifeway paid every invoice tendered by NWA. (Id. ¶¶ 27-28).
NWA sued Lifeway, asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and quantum meruit. (Doc. No. 1 at 4-7). The Complaint also requests punitive damages and attorney's fees. (Id. at 7). The Court previously dismissed NWA's implied-covenant claim. (Doc. No. 42). Cross-motions for summary judgment on the remaining claims followed.
The Court will grant summary judgment if a moving party shows that “there is no genuine dispute as to any material fact” and it is “entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A dispute is ‘genuine' only if based on evidence upon which a reasonable jury could return a verdict in favor of the non-moving party.” Niemi v. NHK Spring Co., 543 F.3d 294, 298 (6th Cir. 2008) (citing Hedrick v. W. Reserve Care Sys., 355 F.3d 444, 451 (6th Cir. 2004)). And “[a] factual dispute concerns a ‘material' fact only if its resolution might affect the outcome of the suit under the governing substantive law.” Id. (citing Hedrick, 355 F.3d at 451). “In deciding a motion for summary judgment, the court must view the factual evidence and draw all reasonable inferences in favor of the nonmoving party.” Salling v. Budget Rent-A-Car Sys., Inc., 672 F.3d 442, 444 (6th Cir. 2012) (citation omitted).
A choice-of-law provision in the Service Agreement specifies that Connecticut law applies to NWA's breach of contract claim. (Doc. No. 1-2 at 8). There are four elements to this claim: “[F]ormation of an agreement, performance by one party, breach of the agreement by the other party, and damages.” Meyers v. Livingston, Adler, Pulda, Meiklejohn & Kelly, P.C., 311 Conn. 282, 291 (2014). The contested elements here are breach and damages.
Under Connecticut law, the first step to interpretating contested contract language is to “ascertain the parties' intent from the language they used in their contract, looking at the contract as a whole and giving the contract's words their ordinary meaning and one that renders its provisions consistent.” C & H Elec., Inc. v. Town of Bethel, 312 Conn. 843, 853 (2014) (citing Murtha v. Hartford, 303 Conn. 1, 7-8 (2011)). The “fundamental question” at the outset of the analysis is whether the relevant language is ambiguous. Cruz v. Visual Perceptions, LLC, 311 Conn. 93, 101 (2014). “[T]he mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous.” Id. at 102-03 (United Illuminating Co. v. Wisvest-Connecticut, LLC, 259 Conn. 665, 670 (2002)).
Contract language is unambiguous where it is “clear and conveys a definite and precise intent.” Id. at 102-03 (quoting United Illuminating, 259 Conn. at 670). “[T]here is a presumption against finding ambiguity where . . . a contract is of a commercial nature between sophisticated parties.” Omega Eng'g, Inc. v. Omega, S.A., 432 F.3d 437, 446 (2d Cir. 2005) (citing United Illuminating, 259 Conn. at 670). When contract language is unambiguous, the Court may not consider extrinsic evidence “to learn what was intended, or to contradict what is written.” Cruz, 311 Conn. at 106 (quoting Tallmadge Bros., Inc. v. Iroquois Gas Transmission Sys., L.P., 252 Conn. 479, 502 (2000)). “The interpretation of definitive contract language is a question of law.” CCT Commc'ns, Inc. v. Zone Telecom, Inc., 327 Conn. 114, 133 (2017) (citing Joseph Gen. Contracting, Inc. v. Couto, 317 Conn. 565, 575 (2015)).
By contrast, contract language is ambiguous where it “is susceptible to more than one reasonable interpretation.” Cruz, 311 Conn. at 103 (quoting United Illuminating, 259 Conn. at 671). “‘[A]ny ambiguity in a contract must emanate from the language used' by the parties.” United Illuminating, 259 Conn. at 671 (quoting Levine v. Massey, 232 Conn. 272, 278 (1995)). “[W]hen contract language is ambiguous and there is extrinsic evidence of the parties' intent, the trial court must consider that evidence.” Cruz, 311 Conn. at 104 n.11 (citing Schilberg Integrated Metals Corp. v. Cont'l Cas. Co., 263 Conn. 245, 277 (2003)). Determining the parties' intent from ambiguous contract language “is a question of fact.” Id. at 101 (quoting Ramirez v. Health Net of the Ne., Inc., 285 Conn. 1, 13 (2008)).
The contested contract language is primarily found in the Cancellation Clause of the Service Agreement. (See Doc. No. 1-2 at 5-6). NWA argues that Lifeway acted contrary to its obligations under this clause by closing all retail locations, cancelling all of NWA's services, and terminating the Service Agreement. (Doc. No. 68 at 14-16). Lifeway maintains that the Cancellation Clause unambiguously permits it to close any location and cancel NWA's services at that location; that authorization does not change, Lifeway argues, simply because it chose to close all its locations and cancel all of NWA's services. (Doc. No. 65 at 16, 18-19). As explained below, the relevant language of the Cancellation Clause is ambiguous, and the extrinsic evidence of the parties' intent is not so one-sided that the Court can resolve the breach dispute on summary judgment.
The Cancellation Clause spans pages four and five of the eight-page Service Agreement. (Doc. No. 1-2 at 5-6). It begins:
Cancellation: [Lifeway] may cancel service at any location where service is no longer needed due to location closure and the price to [Lifeway] will be reduced according to the reduction in service. [Lifeway] will give sufficient notice to [NWA] concerning location closures.
(Id. at 5). Later within the same clause, it states:
After the initial sixty (60) days from the beginning date of this Agreement (transition period), Agreement may be terminated or otherwise canceled by either party for non-performance upon (60) days written notice....This Agreement may not be terminated or otherwise canceled by either party without cause.
(Id. at 6).
Reading the Cancellation Clause as a whole, the Court concludes, as it did when considering Lifeway's motion to dismiss,[3] that the relevant language is ambiguous. On one hand it is reasonable for Lifeway to favor a broad reading of this clause that places no limit on its right to “cancel service at any location where service is no longer needed due to location closure.” (Doc. No. 1-2 at 5 (emphasis added)). After all, “use of the word ‘any' to modify [a] phrase . . . gives the resulting phrase an expansive meaning-one that [the Court] will not...
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