Radiance Aluminum Fence, Inc. v. Marquis Metal Material, Inc.

• Decision Date: 18 May 2020
• Docket Number: Case Number 18-12605
• Parties: RADIANCE ALUMINUM FENCE, INC., Plaintiff and Counter-Defendant, v. MARQUIS METAL MATERIAL, INC., Defendant and Counter-Plaintiff.
• Court: U.S. District Court — Eastern District of Michigan

461 F.Supp.3d 531

RADIANCE ALUMINUM FENCE, INC., Plaintiff and Counter-Defendant,

v.MARQUIS METAL MATERIAL, INC., Defendant and Counter-Plaintiff.

Case Number 18-12605

United States District Court, E.D. Michigan, Southern Division.

Signed May 18, 2020

Alexander E. Blum, The Blum Law Firm, PLLC, Farmington Hills, MI, for Plaintiff and Counter-Defendant.

Charles R. Ash, IV, David M. Black, Jason J. Thompson, Sommers Schwartz, P.C., Southfield, MI, Joel S. Magolnick, Marko and Magolnick P.A., Miami, FL, Rod M. Johnston, Sommers Schwartz, P.C., Troy, MI, for Defendant and Counter-Plaintiff.

OPINION AND ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT, AND DENYING PLAINTIFF'S MOTION AND AMENDED MOTION TO STRIKE

DAVID M. LAWSON, United States District Judge

Plaintiff Radiance Aluminum Fence, Inc., as its business name implies, sells and installs aluminum fence materials on a wholesale and retail basis. It has developed a unique fence rail, which it markets to other installers and consumers. Defendant Marquis Metal Material, Inc. imported aluminum fence components from overseas mills and supplied Radiance with aluminum products, including its specially manufactured aluminum rail. Radiance brought this action against Marquis, alleging that it breached its contract to deliver aluminum during May and June 2017 and in the first quarter of 2018, which "eviscerated" the plaintiff's business. Marquis responded with a straight-forward explanation: it stopped shipping product because Radiance stopped paying for it, and then resumed shipments when Radiance made payments to bring its account within prearranged credit limits, all as set out in Marquis's counterclaim. Radiance now contends that the non-payment argument is a ruse to cover up Marquis's problems securing product from an aluminum mill in Asia, which is the true reason for its delayed deliveries.

Both sides have moved for summary judgment. And they both offer competing interpretations of the facts. One thing is certain: Radiance did not pay for the initial three shipments on time, and Marquis entertained doubts that it would be able to do so. Any fact disputes that remain are not material, and the evidence conclusively demonstrates that Radiance's breach of contract claim is meritless for two reasons: first, Radiance accepted each allegedly nonconforming (i.e., late) delivery without any reservations and therefore did not adequately notify Marquis that it believed Marquis breached the contract; second, Radiance fell behind on its payments, absolving Marquis of its obligation to deliver the aluminum. The record also reflects that Radiance failed to pay the full price for Marquis's last delivery and refused to provide adequate assurances that it would, entitling Marquis to damages under the contract. Therefore, the plaintiff's motion for summary judgment will be denied and the defendant's motion for partial summary judgment will be granted.

I. Facts and Proceedings

The parties’ business relationship began in 2015, when Marquis agreed to sell aluminum to Radiance on credit, based on a credit agreement signed in December 2015 by Radiance's owner, Matthew Isaacs. Isaacs dealt primarily with Marquis's sales representative, Michael Falconer. It appears that Marquis approved a $200,000 credit limit at the time, but it was increased to $300,000 in July 2017. Radiance says that its initial credit limit was $300,000, and the record contains some support for that position. Marquis did not have a formal credit department; rather, it acquired insurance policies to cover any potential failure to pay by Radiance (and its other customers) and allowed Radiance to buy aluminum from Marquis on credit up to the approved credit limit. A series of purchase orders beginning in 2016 followed.

Isaacs understood that the terms and conditions and the credit agreement applied to all of his orders. Each purchase was subject to two conditions: the status of past paid invoices and the available credit limit at the time of delivery. Operating under the credit agreement, Radiance never paid cash on delivery.

A. Blanket Order

The agreement at the center of this case took shape through a series of documents and emails, ultimately resulting in a blanket order for 400,000 to 500,000 pounds of aluminum to be delivered in 13 installments throughout 2017. Each shipment would come in a "container," which held various quantities of fence stock (posts, pickets, and rails), and delivery would be spaced approximately three weeks apart. The price was $.71 per pound, a figure established by the London Metal Exchange (LME), throughout 2017.

A sales order was submitted by Marquis and approved by Isaacs on behalf of Radiance on November 9, 2016. See ECF No. 63-9. The order called for delivery to start March 1, 2017, with one container delivered every three weeks for a total of 13 containers. The payment terms recited on the order form were "Net 30 day(s)," but an email exchange that preceded the order established a price of ".71$/lb to lock for one year, with 45 days payment credit." ECF No. 63-8 (emphasis added). The parties agree that the initial payment terms required payment within 45 days, not 30 days.

B. Course of Performance

From the outset, performance of the agreement varied substantially from its terms. Although the agreement required Radiance to pay within 45 days of each delivery, the parties occasionally modified that condition to give Radiance more time to pay when it was unable to meet the 45-day term. In fact, Radiance missed every payment due date for the aluminum that Marquis delivered — even the extended due dates.

Radiance asserts that Marquis agreed to a more generous oral modification of the payment terms, under which all Radiance had to do was make one container payment per month to receive future container deliveries. Other than Isaacs's own self-serving statement, however, there is no evidence in the record to support that allegation.

1. March – April 2017

Radiance altered the delivery schedule before Marquis delivered the first container by requesting that Marquis delay the shipment from March 1, 2017, to April 1, 2017. Marquis partially accommodated the request, delivering the container on March 14, 2017. Marquis delivered the next two containers on nearly three-week intervals, on April 6 and April 28.

2. May – June 2017

By May 2017, Marquis delivered three containers, but Radiance had not paid for any of them. The parties dispute what happened next.

Marquis contends that it withheld the next installment delivery because Radiance exceeded its credit limit by $90,718.03 and failed to pay for the previous three deliveries. Radiance acknowledges that it had not paid for the previous three shipments, but it insists that it did not exceed its line of credit at the time. Pointing to an email from Helen Lu, Marquis's head of accounting, Radiance contends that Marquis increased Radiance's credit limit to $500,000 on January 13, 2017. If that were true, Radiance calculated that it had $9,281.91 of unused credit remaining on its line by April 28, 2017. But Radiance misreads the record. There is some evidence that Marquis established an initial credit limit of $300,000, and it is undisputed that it agreed to increase Radiance's initial credit authorization to that amount in July 2017. Marquis concedes that Radiance's coverage under Marquis's insurance policy was increased from $300,000 to $500,000 on January 13, 2017. But there is no evidence of a corresponding increase in Radiance's line of credit. And it is undisputed that Marquis subsequently changed insurance providers from "Atradius" to "EDC," resulting in a decrease in Marquis's coverage on the Radiance account from $500,000 to $200,000, because "Atradius could no longer cover the exceedingly long payment terms that were necessary to accommodate Radiance." ECF No. 120, PageID.4099; EDC Policy, ECF No. 120-1. Marquis never alleged when exactly this occurred, but asserted that by July 7, 2017, it secured an increase to $300,000 in its policy limit as to Radiance, when the credit line was increased to that amount.

Radiance also contends that Marquis had no product to deliver from its allegedly unreliable supplier, Global Vietnam Aluminum (GVA), and could not ship any aluminum to Radiance during May and June 2017. The record is unclear on that point. There are internal Marquis emails expressing a "need" for a "solid backup supplier," and consideration of ("mov[ing] some production to another mill."); Wang Email to Falconer, 11/29/17, ECF No. 115-4, PageID.4003. And Radiance furnished email exchanges between Falconer and Lu discussing the facts of this lawsuit (apparently produced mistakenly by the defendant and subject to a claw back provision) speculating about the reason for the delay in shipments during May and June 2017. However, the record is uncontradicted on the point that Marquis had secured contracts with the mill in December 2016 for the containers that were to be delivered in May and June, and that those shipments were imported in mid-June and July. And there is a suggestion in the record that Marquis asked that the shipments — which were ready for export from Asia in March and early May 2017 — be delayed because of storage problems that would be caused by not delivering the product to Radiance when it was not able to pay for it. See Falconer Email to Wang, 4/5/2017, ECF No. 72-7, PageID.1951 ("Be aware, Matt [Isaacs] said after the delivery this week it will be unlikely that the next one can be in 3 weeks. He like Royal will be ‘stuffed to the gills’, I.e. No room!").

That, however, is beside the point. The record reflects that Radiance requested that Marquis hold off its May and June deliveries. See Falconer Email to Wang, 4/5/2017, ECF No. 72-7, PageID.1951; Lu Email, 6/25/19, ECF No. 66-14, PageID.1855 ("Did Radiance told you they want a little bit later delivery? from payment history it...