Slavin v. Imperial Parking (U.S.), LLC

• Decision Date: 27 March 2019
• Docket Number: Civil Case No.: PWG-16-2511
• Parties: MARC R. SLAVIN, et al., Plaintiffs/Counter-Defendants, v. IMPERIAL PARKING (U.S.), LLC, Defendant/Counterclaimant.
• Court: U.S. District Court — District of Maryland

MARC R. SLAVIN, et al., Plaintiffs/Counter-Defendants, v. IMPERIAL PARKING (U.S.), LLC, Defendant/Counterclaimant.

Civil Case No.: PWG-16-2511

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND Southern Division

March 27, 2019

MEMORANDUM OPINION

Plaintiffs/Counter-Defendants MarcParc Valet, Inc., and MarcParc, Inc. and their sole shareholder, Marc R. Slavin (collectively, "MarcParc") and Defendant/Counterclaimant Imperial Parking (U.S.), LLC ("Impark") entered into an Asset Purchase Agreement ("APA" or "Purchase Agreement") on March 10, 2015 (retroactively effective March 1, 2015), under which MarcParc, a company that operated public parking lots and garages in Washington, D.C., Virginia, and Maryland, "sold substantially all of its assets" to Impark. Pls.' Mem. in Supp. Mot. to Confirm Arb. ¶¶ 1-2, ECF No. 35-1; Def.'s Opp'n to Mot. to Confirm Arb. 3, ECF No. 39; APA 1, ECF No. 80-4. The assets primarily included MarcParc's management contracts and leases pertaining to the parking lots it operated ("Material Contracts"). APA § 8.1(e)(1) & Sched. E, ECF No. 80-4, at 88-92. At the same time, Slavin and MarcParc entered into a Consulting Agreement ("CA" or "Consulting Agreement"), under which Slavin would "provide advice and assistance with regard to (a) the transition of the MarcParc . . . business and assets to Impark, (b) retention by Impark of MarcParc's . . . customers and (c) execution of Impark's business development initiatives and development of new customer opportunities for Impark," in exchange for Impark paying him $12,500 per month for five years, for a total of $750,000. CA §§ 1.1, 2.1, 5.1, APA Sched. K, ECF No. 80-4, at 120, 121, 123. Additionally, MarcParc Valet, Inc., and MarcParc, Inc. entered into a Transition Services Agreement ("TSA") with Impark, agreeing to assist each other for a period of time after closing the APA with the acquisition and management of the assets Plaintiffs sold to Impark in the APA. APA Sched. T, ECF No. 80-4, at 155-65.

Whatever harmony may have existed between the parties before the execution of these agreements soon vanished once they were signed, and they have been at sword's point ever since. Initially, MarcParc sought to resolve the parties' differences regarding payment of a "Holdback Amount"¹ due under the APA through arbitration, and it obtained an arbitration award ("Arbitration Award") of $1 million in its favor. That only led to further disagreements, and MarcParc filed this suit. Compl., ECF No. 2.

MarcParc claimed Impark breached the APA by failing to pay (a) the $1 million Holdback Amount, (b) $371,500 held in escrow ("Escrow Amount"), and (c) $514,874 from post-closing accounts receivable reconciliation (Count I). It also sought confirmation and enforcement of the Arbitration Award (Count II) and claimed breach of the Consulting Agreement between Slavin and Impark, which Impark had not paid in full (Count III). Id. Impark promptly filed a counterclaim for, inter alia, breach of the APA through fraud and misrepresentations (Count I);tortious interference with contractual relations and prospective economic advantage, based on the same allegedly fraudulent actions (Count V); and breach of the TSA by "refusing to remit sums owed to Impark" and failing to defend and indemnify Impark in a lawsuit brought against Impark and MarcParc by the owners of one of the parking lots namely, a lot at 501 K Street in Washington, D.C. ("501 K Street" and "501 K Street Litigation") (Count II).² Countercl., ECF No. 33; Am. Countercl., ECF No. 52.

MarcParc filed a Motion to Confirm Arbitration Award, which I granted, June 19, 2017 Mem. Op. & Order, ECF No. 63. I also dismissed three of Impark's counterclaims.³ Id. The June 19, 2017 Memorandum Opinion and Order mooted MarcParc's Count I insofar as it sought to recover the $1 million Holdback Amount, and it dismissed Impark's Count I insofar as it sought to vacate the Arbitration Award, to compel arbitration, and to recover a Holdback Amount from MarcParc. I denied Impark's Motion for Reconsideration of that Memorandum Opinion and Order. Jan. 9, 2018 Mem. Op. & Order, ECF No. 75.

The parties then stipulated to the dismissal of MarcParc's claim in Count I of the Complaint for $514,874 from post-closing accounts receivable reconciliation. ECF No. 82. They also stipulated to the dismissal of Impark's claims in Counts I, II and V of the Amended Counterclaim for future defense expenses arising from and indemnification for the 501 K Street Litigation. ECF No. 81.

But what remains at issue is still significant, and it is the subject of the parties' pending cross-motions for partial summary judgment. ECF Nos. 80, 85.⁴ Because genuine disputes of material fact exist regarding MarcParc's alleged misrepresentations and fraudulent actions and their effect on the contracts between the parties, the parties' cross-motions for partial summary judgment are, for the most part, denied as to MarcParc's Complaint and Counts I and III of Impark's Amended Counterclaim. MarcParc's motion is granted only as to Impark's counterclaim for tortious interference (Count V) and any counterclaim Impark sought to bring in its substantive briefing for breach of the duty of good faith and fair dealing. Impark's motion is granted, as to liability only, on (1) its APA counterclaim in Count I against Plaintiffs for costs and fees from the 501 K Street Litigation (the amount of those costs and fees await further determination), (2) its TSA counterclaim in Count II against the MarcParc Companies for the same; and (3) its claim in Count I of the Amended Counterclaim for pre- and post-closing liabilities. The motions otherwise are denied.

Standard of Review

Summary judgment is proper when the moving party demonstrates, through "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . admissions, interrogatory answers, or other materials," that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a), (c)(1)(A); see Baldwin v. City of Greensboro, 714 F.3d 828, 833 (4th Cir. 2013). If the party seeking summary judgment demonstrates that there is no evidence to support the nonmoving party's case, the burden shifts to the nonmoving party to identify evidence that shows that a genuine dispute exists as to material facts. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 & n.10 (1986). When considering cross-motions for summary judgment, "the court must view each motion in a light most favorable to the non-movant." Linzer v. Sebelius, No. AW-07-597, 2009 WL 2778269, at *4 (D. Md. Aug. 28, 2009); see Mellen v. Bunting, 327 F.3d 355, 363 (4th Cir. 2003).

Breach of APA and CA

The crux of the parties' dispute is how MarcParc's conduct (and Slavin's in particular) before the Holdback Period ended affected the terms of the parties' agreements and Impark's and Slavin's obligations under the agreements. MarcParc claims that Impark breached the APA and the CA by failing to pay the remaining amounts due under the contracts ($371,500 under the APA and $650,000 under the CA) and seeks summary judgment for those amounts. Impark counters that MarcParc and Slavin materially breached representations and warranties they made in both contracts before Impark ceased performing under the contracts, thereby releasing Impark from its contractual obligations and entitling it to damages. Def.'s Reply 1.

The relevant representations and warranties MarcParc made in the APA were that

• the "Books and Records fairly and correctly set out and disclose[d] in all material respects the financial position and condition of the Seller and all material financial transactions of the Seller relating to the Business have been accurately recorded in such Books and Records in the Ordinary Course of Business";

• there had "not been any default in any term, condition, provision or obligation to be performed under any Material Contract, and to Seller's Knowledge, each such Material Contract is in good standing";

• "neither the Seller nor Slavin [wa]s aware of any existing ground on which any action, suit or proceeding [could] be commenced with any reasonable likelihood of success";

• it was not violating any law; and

• there were no disclosures that the Seller or Slavin should make to ensure that "the representations and warranties [were] not misleading" or because they could "materially and adversely affect the Business or would operate to prevent the Purchaser from using the Assets to operate the Business in the manner in which the Seller has operated the Business prior to the date of this Agreement."

APA § 8.1(f), (n), (p), (aa), (cc). In the Consulting Agreement, Slavin agreed to

• provide "reasonable consulting and sales representative services," including "work[ing] with employees of Impark and its affiliates in a competent and professional manner to promote the interests of Impark and its affiliates and their customers";

• "exercise the degree of skill and care as would be expected of someone providing such services, but in any case . . . exercise no less than a reasonable degree of care";• "[d]iligently promote the goodwill and reputation of Impark and its Business . . . and . . . diligently use his efforts and such time, skills, energy and attention as is reasonably necessary, required or advisable to satisfactorily provide the Services"; and

• "use his best efforts not to do anything to affect adversely the goodwill or reputation of Impark or its Business."

CA §§ 1.2, 1.3, ECF No. 80-4, at 120-21. Thus, the issue is whether MarcParc and Slavin materially breached these provisions of the APA and the CA and if so, whether their breach excused Impark's non-performance and imposed liability on MarcParc.

Impark argues that MarcParc and Slavin breached the warranties and representations in these contracts...