Super98, LLC v. Delta Air Lines, Inc.

• Decision Date: 02 February 2018
• Docket Number: CIVIL ACTION NO. 1:16–CV–1535–LMM
• Parties: SUPER98, LLC, Plaintiff, v. DELTA AIR LINES, INC., Defendant.
• Court: U.S. District Court — Northern District of Georgia

309 F.Supp.3d 1368

SUPER98, LLC, Plaintiff,

v.DELTA AIR LINES, INC., Defendant.

CIVIL ACTION NO. 1:16–CV–1535–LMM

United States District Court, N.D. Georgia, Atlanta Division.

Signed February 2, 2018

Allison Huebert, Daniel R. Lombard, Frank Dylewski, John Michael Robinson, Jonathan C. Bunge, Michelle Renee Schmit, Quinn Emanuel Urquhart & Sullivan LLP, Laurence H. Levine, Laurence H. Levine Law Offices, Chicago, IL, Angela R. Fox, James Darren Summerville, The Summerville Firm, LLC, Atlanta, GA, for Plaintiff.

Catherine M. O'Neil, James Andrew Pratt, Katherine Paige Nobles, David Lewis Balser, King & Spalding, LLP, David E. Meadows, Alexandra Spear Peurach, Halli Dee Cohn, Kaylan Michelle Meaza, Mary M. Weeks, Steven Leonard Strasberg, William N. Withrow, Jr., Troutman Sanders, LLP, Atlanta, GA, Graciela Rodriguez, King & Spalding, LLP, Washington, DC, for Defendant.

ORDER

HONORABLE LEIGH MARTIN MAY, UNITED STATES DISTRICT JUDGE

This matter is before the Court on Plaintiff Super98, LLC's Motion for Summary Judgment [59]. After due consideration, the Court enters the following Order:

I. BACKGROUND¹

On September 24, 2014, the parties signed an agreement where Defendant agreed to buy and Plaintiff agreed to sell up to 117 Super98 drag reduction devices ("Systems") for Defendant's MD–88 aircraft ("Agreement"). Dkt. No. [7249] ¶¶ 1–3. Starting in November 2014, Defendant began issuing Purchase Orders for Systems, culminating in a consolidated Service Purchase Order for 117 Systems in early 2015. Id. ¶¶ 4–6. On or about November 12, 2015, Defendant asked Plaintiff to stop shipping additional Systems until Defendant could calculate the average Performance Improvement of the first ten Systems. Id. ¶ 17. By that time, Plaintiff had delivered 42 Systems to Defendant and procured most of the components necessary to complete delivery on the remaining 75 Systems from the Purchase Orders. Id. ¶ 20. Defendant contends that the Performance Improvement calculation showed that the Performance Improvement of the first ten Systems fell short of the 2.5% fuel savings guaranteed by the Agreement. Id. ¶¶ 29–30; Dkt. No. [85] 14.

Defendant canceled the Purchase Orders for the 75 undelivered Systems and alleges that the delivered Systems did not provide sufficient Performance Improvement as guaranteed in the Agreement. Dkt. No. [72–49] ¶¶ 22, 30.

The parties disagree as to how Performance Improvement was supposed to be calculated. Defendant contends that at the time of the Agreement it believed that the Performance Improvement Guarantee applied to mission fuel mileage, while Plaintiff alleges that it only applied to cruise fuel mileage. Dkt. No. [85] ¶¶ 7, 9. "Mission" fuel mileage measures the mileage of the entire flight from takeoff to landing, while "cruise" fuel mileage only measures the mileage when the aircraft operates at a steady, high altitude. Id. ¶¶ 1, 5.

Defendant contends that the cruise/mission issue is an essential element to the contract because other Agreement provisions are related to the Performance Improvement Guarantee² and it would not have entered into the Agreement if the Performance Improvement Guarantee only applied to cruise fuel mileage. Dkt. Nos. [72] at 10; [85] ¶ 5. Defendant further contends that because there was no meeting of the minds on an essential element of the Agreement, the Agreement is invalid. Dkt. No. [72] at 17, 18.

Defendant notes that during discussions on earlier versions of the Agreement, Plaintiff represented to Defendant that the Performance Improvement Guarantee applied to mission fuel mileage. Dkt. No. [85] ¶¶ 1, 4, 12. However, Plaintiff maintains that because the Agreement itself unambiguously defines Performance Improvement with reference to cruise fuel mileage, any prior representations are parol evidence that should not be considered in determining whether there was a meeting of the minds, particularly in light of the Agreement's Integration Clause.³ Id.

The parties also disagree on whether Defendant is bound by the Purchase Orders and therefore owes Plaintiff for the 75 undelivered Systems. Defendant alleges that it is not bound by the Purchase Orders because the delivered Systems did not provide sufficient Performance Improvement, and therefore Defendant has the right to "discontinue the purchase of Systems" under the Agreement. Dkt. Nos. [60–1] at 6; [72] at 19–20. Plaintiff argues that even if the Systems did not provide sufficient Performance Improvement, Defendant's right to "discontinue the purchase of Systems" under the Agreement only applies to future Purchase Orders, and therefore Defendant must pay for the 75 undelivered Systems. Dkt. No. [60] at 19.

In addition, the parties disagree on whether the Performance Improvement Guarantee and its related Price Reduction apply to partially-installed Systems. This is relevant because while Defendant has stated it will pay for the 42 delivered Systems, Dkt. No. [85] ¶ 22, Plaintiff alleges that Defendant did not fully install 25 of the 42 delivered Systems and therefore should not be able to receive a price reduction on those Systems. Dkt. No. [60] at 18, 19. The parties further differ on whether Defendant can delay payments owed to Plaintiff by delaying Systems installation, and whether Defendant can set-off payments owed.

On May 12, 2016, Plaintiff filed a complaint asserting breach of contract, promissory estoppel, and unjust enrichment/restitution. Dkt. No. [1]. On July 12, 2017, Plaintiff filed a Motion for Summary Judgment. Dkt. No. [59].

II. LEGAL STANDARD

Federal Rule of Civil Procedure 56 provides "[t]he court shall grant summary judgment if the movant shows 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).

A factual dispute is genuine if the evidence would allow a reasonable jury to find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if it is "a legal element of the claim under the applicable substantive law which might affect the outcome of the case." Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997).

The moving party bears the initial burden of showing the Court, by reference to materials in the record, that there is no genuine dispute as to any material fact that should be decided at trial. Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260 (11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). The moving party's burden is discharged merely by " ‘showing’—that is, pointing out to the district court—that there is an absence of evidence to support [an essential element of] the nonmoving party's case." Celotex Corp., 477 at 325, 106 S.Ct. 2548. In determining whether the moving party has met this burden, the district court must view the evidence and all factual inferences in the light most favorable to the party opposing the motion. Johnson v. Clifton, 74 F.3d 1087, 1090 (11th Cir. 1996).

Once the moving party has adequately supported its motion, the non-movant then has the burden of showing that summary judgment is improper by coming forward with specific facts showing a genuine dispute. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). There is no "genuine [dispute] for trial" when the record as a whole could not lead a rational trier of fact to find for the nonmoving party. Id. (citations omitted). All reasonable doubts, however, are resolved in the favor of the non-movant. Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993).

III. DISCUSSION

Plaintiff seeks summary judgment on four issues: (1) that Defendant is bound by the 117 Purchase Orders it issued to Plaintiff; (2) that the Performance Improvement Guarantee does not apply to uninstalled or partially-installed Systems; (3) that Defendant cannot delay payments by delaying Systems installation; and (4) that Defendant cannot set-off payments owed.⁴ However, before the Court addresses these contract claims, it will first analyze whether the Agreement itself is a valid and enforceable contract as a matter of law.

a. Validity of the Agreement

Defendant argues that because there was no meeting of the minds on whether Performance Improvement should be calculated using cruise or mission fuel mileage, there is a genuine issue of fact on the Agreement's enforceability which precludes summary judgment in Plaintiff's favor.

"Unless and until there is a meeting of the minds as to all essential terms, a contract is not complete and enforceable." TranSouth Fin. Corp. v. Rooks, 269 Ga.App. 321, 604 S.E.2d 562, 564 (2004). This applies to contracts for the sale of goods under Article 2 of Georgia's Uniform Commercial Code. AgriCommodities, Inc. v. J.D. Heiskell & Co., 297 Ga.App. 210, 676 S.E.2d 847, 850–51 (2009). In deciding whether there was a meeting of the minds, courts look to the contract's express language, as well as to relevant extrinsic evidence of correspondence and discussions. Cox Broad. Corp. v. Nat'l Collegiate Athletic Ass'n, 250 Ga. 391, 297 S.E.2d 733, 737 (1982). Whether the parties' minds met is generally an issue of fact for the jury to decide. Legg v. Stovall Tire & Marine, 245 Ga.App. 594, 538 S.E.2d 489, 491 (2000).

Plaintiff argues that in analyzing whether there was a meeting of the minds, the Court cannot consider pre-Agreement representations Plaintiff made to Defendant because the Agreement itself is unambiguous and manifests the parties' intent. However, the Court can look at parol evidence even if the contract's express language is unambiguous if the parol evidence is used to show that no valid agreement ever went into existence. See Patterson v. CitiMortgage, 820 F.3d 1273, 1276–77 (11th Cir. 2016) ; Moreno v. Smith, 299 Ga. 443, 788 S.E.2d 349, 352 (2016) ; BellSouth Advert. v. McCollum, 209 Ga.App. 441, 433 S.E.2d 437, 440 (1993). See...