Paul Gauguin Cruises Inc v. Econtact Inc
| Decision Date | 01 March 2011 |
| Docket Number | CASE NO. 10-80038-CIV-MARRA/JOHNSON |
| Parties | PAUL GAUGUIN CRUISES, INC,. a/k/a PGC, Inc. a Delaware corporation, Plaintiff, v. eCONTACT, INC., a Florida corporation, and STEVE HABER, Defendants. |
| Court | U.S. District Court — Southern District of Florida |
This cause is before the Court upon Defendants eContact, Inc. and Steve Haber's Motion for Summary Judgment (DE 26) and Plaintiff Paul Gauguin Cruises, Inc.'s Motion for Summary Judgment (DE 30). The Court held oral argument on the motions on February 4, 2011. The Court has carefully considered the motions and the arguments of counsel and is otherwise fully advised in the premises.
The facts, as culled from affidavits, exhibits, depositions, answers, answers to interrogatories and reasonably inferred therefrom, for the purpose of these motions, are as follows:
Defendant eContact, Inc. ("eContact") provides business development and marketing services primarily in the travel industry. (Steve Haber Dep. at 6-7, DE 27-1.) Defendant Steve Haber ("Haber") is the President and co-owner of eContact, a company he co-founded in 2001. (Haber Dep. at 6-7.) His wife, Betsy Flynn, is a director and co-owner of eContact andeContact's designated corporate representative. (Elizabeth Flynn Dep. at 3, 5-6, DE 25.) With respect to their co-ownership of eContact, Haber is responsible for sales and clients while Flynn handles operations and administration. (Haber Dep. at 36.) The owner and president of Plaintiff Paul Gauguin Cruises, Inc. ("PGC") is Harry "Hank" Lewis ("Lewis"). PGC is comprised of a single vessel, the Paul Gauguin. (Lewis Dep. at 7-8, DE 24-1.) The Paul Gauguin is a cruise ship that cruises Tahiti, the French Polynesia and the South Pacific Ocean.
Lewis and Haber began discussing the terms of a potential contract somewhere between December 2008 and March 2009. They had approximately six different meetings in connection with the potential contract. (Lewis Dep. at 15-17, 33-34.) Lewis told Haber that it was his intention to sell or charter the ship, but if he could not do so, he would need eContact's services to help book 2010 cruises aboard his ship. (Lewis Aff. ¶ 3, DE 31-1.) According to Lewis, Haber understood that he was in the process of selling or chartering the ship (Lewis Dep. at 41) whereas Haber stated that while he knew Lewis wanted to sell the ship, Lewis told him it was not happening any time soon (Haber Dep. at 102-03; Haber Aff. ¶ 4, DE 35-3). Haber suggested putting language into the contract stating that PGC would pay eContact $250,000 if PGC sold the ship or if PGC were to terminate the agreement, but Lewis rejected this provision. (Haber Dep. at 103-06, 170.)
On or about June 10, 2009, PGC and eContact entered into a contract wherein eContract was to provide marketing services, inside sales and a reservation team to PGC. (Contract, Ex. A, DE 29-1.) Lewis negotiated the terms of the contract and personally signed the contract on behalf of PGC. (Lewis Dep. at 21-22; Contract.) The terms of the contract required PGC to advance to eContract three installments of $100,000.00 against commissions starting on June 1, 2009 and ending on August 1, 2009. The contract provided that "[a]dvance will be netted from eContact commissions, and eContact will continue until advance is net zero or return a check back to PG Cruises for any advance amount which have not netted to zero (e.g., if the arrangement is terminated by either party)." Additionally, the terms of the contract stated that "[e]ither party must provide the other sixty days notice of termination." (Ex. C to Contract.) Lastly, the contract contained a provision which called for a review of the program "every 3 months to determine continuation." (Contract.) eContact drafted the contract, negotiated it and understood that the contract contained a 60-day notice of termination clause. (Flynn Dep. at 4142; 83-85, 92-93.) eContact had an attorney review the contract before it was signed. (Haber Dep. at 100.)
According to Joseph Kurosz, one of PGC's main contact persons with eContact and Haber, Haber told him that he recommended that PGC draft contract language to "assure that unearned advance money is returned to PGC if the agreement is terminated and 60 days notice is required for termination." (Kurosz Aff. ¶¶ 2-3, DE 31-1.) Haber disputes that he recommended such language or anything contrary to the terms of the contract. (Haber Aff. ¶ 5.) According to Lewis, PGC and Lewis relied on Haber's representation that all unearned commissions would be returned to PGC in the event that the contract was cancelled and Lewis would not have entered into the agreement without such assurances. (Lewis Aff. ¶¶ 5-7.)
PGC advanced $200,000 in commission money under the June 10, 2009 contract. eContact used the first two $100,000.00 installments to pay for a variety of expenses associated with the project. (Flynn Dep. at 12, 19-20, 26, 28, 30-31, 33, 37.) On July 22, 2009, PGC's counsel, Keith Nashawaty, contacted eContact and stated that PGC wanted to terminate thecontract and advised eContact that it was in the process of selling substantially all of its assets to a third-party to whom it would introduce eContact. (Lewis Dep. at 32-35; July 22, 2009 letter from Nashawaty to Haber, Ex. F, DE 29-1.) Flynn told Nashawaty that there was a 60-day termination notice in the contract and an additional $100,000.00 payment was due to eContact. (Flynn Dep. at 42-43.) The following day, on July 23, 2009, PGC, via email, provided formal notice to eContact that it was terminating the contract in 60 days and it advised that it would not be advancing the additional $100,000 due under the agreement. (July 23, 2009 email from Nashawaty to Flynn, Ex. E, DE 31-1.) Flynn emailed back, stating that she was confused about the impact of the non-funding of the $100,000 on the parties' agreement. (July 13, 2009 email from Flynn to Nashawaty, Ex. E, DE 31-1.)
In September of 2009, PGC demanded return of the $200,000 and attempted to foster an arrangement to accomplish this. (September 11, 2009 email from Nashawaty to Haber, Ex. M, DE 31-1.) In mid to late September of 2009, PGC's counsel, Nashawaty, came to the Boca Raton, Florida offices of eContact, asking for PGC's $200,000 back. Haber told him that eContact would not be giving back the commission money advanced, but would instead continue to earn against the commissions advanced. (Haber Dep. at 59-63.) On September 24, 2009, PGC's counsel sent Haber an email stating that the agreement between the parties addressed a transition in ownership and the possibility of having to terminate the contract and the return of unearned commissions. (September 24, 2009 email from Nashawaty to Haber, Ex. M, DE 31-1.) Lewis then sent Haber a letter demanding the return of all unearned commissions advanced eContact by PGC, threatening legal action if return was not made. (September 25, 2009 letter from Lewis to Haber, Ex. O, DE 31-1.)
During the period in which the contract was in effect, eContact provided no productivity reports to PGC, despite PGC's repeated requests. (Lewis Dep. at 40-41; 83.) On the date PGC provided the notice to terminate the contract, eContact had not earned any commissions. (Flynn Dep. at 45; Haber Dep. at 36-37, 174.) eContact contends it was possible for eContact to have earned some commissions during the 60-day time period after the notice of termination. (Haber Dep. at 87, 125; Flynn Dep. at 45.) Instead of giving back unearned commissions, eContact expected to net the advance to zero. (Flynn Dep. at 80-85; Haber Dep. at 90-91, 115-124.) The non-payment of the final $100,000 did not hinder eContact's ability to perform any obligations or earn commissions under the contract.1 (Haber Dep. at 127; Flynn Dep. at 43.)
In moving for summary judgment, Haber contends that the economic loss rule bars any recovery for fraud, and Plaintiff has failed to provide any evidence of fraud by Haber. With respect to the breach of contract claim, eContact states that Plaintiff breached the contract by failing to provide the final $100,000 installment payment or provide 60 days notice of their termination of the contract, constituting a breach of contract by PGC. eContact thus contends PGC's breach excused eContact from fulfilling its contractual obligations.
Plaintiff's motion for summary judgment makes the following arguments: (1) eContact breached the contract when it failed to return all unearned commissions when Plaintiff terminated the contract and (2) Haber fraudulently induced Plaintiff to enter into the contact as evidenced by his statements that it was never his intent to return the commission money advanced, but rather eContact was going to continue to earn against the advances no matter howlong it took.2
The Court may grant summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(a). The stringent burden of establishing the absence of a genuine issue of material fact lies with the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The Court should not grant summary judgment unless it is clear that a trial is unnecessary, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986), and any doubts in this regard should be resolved against the moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).
The movant "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp., 477 U.S. at 323. To discharge this burden, the movant must point out to the Court that there is an absence of evidence to support the nonmoving party's case. Id. at 325.
After the movant has met its burden under Rule 56(a), the burden of...
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