Vizant Technologies, LLC v. Yrc Worldwide Inc.
| Decision Date | 01 March 2019 |
| Docket Number | 15 CVS 20654 |
| Citation | 2019 NCBC 15 . |
| Court | Superior Court of North Carolina |
| Parties | VIZANT TECHNOLOGIES, LLC, Plaintiff, v. YRC WORLDWIDE INC., Defendant. |
Lincoln Derr PLLC, by Sara R. Lincoln, for Plaintiff Vizant Technologies, LLC.
Strauch Green & Mistretta, P.C., by Jack M. Strauch and Jessie Charles Fontenot, for Defendant YRC Worldwide Inc.
1. THIS MATTER is before the Court upon Plaintiff Vizant Technologies, LLC's ("Vizant") Motion to Stay Proceedings Pending Appeal (the "Motion") in the above-captioned case.
2. Pursuant to N.C. Gen. Stat. § 1-294 and North Carolina Rule of Appellate Procedure ("Appellate Rule") 8(a), Vizant moves for a stay of proceedings before this Court pending appeal. After considering the parties' briefs in support of and in opposition to Vizant's Motion, the arguments of counsel at the February 13, 2019 hearing on the Motion, and other appropriate matters of record, the Court concludes that the Motion should be GRANTED in part and DENIED in part for the reasons stated herein.
3. The dispute between Vizant and Defendant YRC Worldwide Inc. ("YRC") arises from alleged breaches of a Professional Services Agreement ("PSA") entered into by the parties, the specifics of which have been discussed by the Court in opinions reported at Vizant Technologies, LLC v. YRC Worldwide Inc., 2018 NCBC LEXIS 155 (N.C. Super. Ct. Nov. 15, 2018), and Vizant Technologies, LLC v. YRC Worldwide Inc., 2018 NCBC LEXIS 65 (N.C. Super. Ct. June 26, 2018). Vizant's claims arise, in part, from YRC's nonpayment of fees allegedly owed under the PSA. See Vizant Techs., LLC, 2018 NCBC LEXIS 65, at *9.
4. According to the PSA's terms, Vizant was to consult with YRC and recommend ways to lower payment processing costs that YRC experiences in its business as a national and international freight carrier. Id. at *2-7. Part of this consultation required Vizant to generate an initial written report on its recommendations. Id. at *2. YRC would pay Vizant fees based upon a percentage of the "Financial Payment Cost Reductions" YRC realized. Id. at *11. Those "Financial Payment Cost Reductions" were calculated by comparing "Pre-Agreement Financial Payment Costs" to "Post-Agreement Financial Payment Costs"-terms defined in the PSA. Id. at 11-12. "Pre-Agreement Financial Payment Costs" were the costs YRC incurred before entering the PSA. Id. at *12. "Post-Agreement Financial Payment Costs" were defined as the financial payment costs YRC incurred "as a result of the strategies and solutions that [were] identified and recommended by Vizant in performance of its professional services[.]" Id.
5. Vizant contends that YRC implemented and achieved savings resulting from two recommendations included in Vizant's report-(i) charge YRC's clients an account management fee for credit card transactions and (ii) convince YRC's clients to switch from credit card payments to Automated Clearing House ("ACH") payments (the "ACH Recommendation"). Id. at *23. Vizant further contends that YRC did not pay Vizant fees based on those savings. Id. at *9, *23.
6. In response, YRC asserts that it never reviewed Vizant's written report and could not have knowingly implemented the strategies contained therein.[1] Id. at *19. YRC also contends that it was already implementing or had considered implementing cost-reduction strategies similar to the account management fee and ACH recommendations in Vizant's report and that YRC's management informed Vizant of this prior to the execution of the PSA. Id. at *4.
7. On January 19, 2018, Vizant and YRC filed cross-motions for summary judgment. During briefing and at the hearing on the motions, both sides disputed the conditions under which the PSA required YRC to pay Vizant a fee. These arguments focused on whether the PSA required YRC to pay Vizant for cost "reductions . . . even if YRC previously considered implementing the identified" strategies or implemented the identified strategies independently of the suggestions in Vizant's report (as Vizant argues the contract should be read) or whether YRC was only obligated to pay a fee "if Vizant's suggestions actually caused YRC to change business practices and realize savings" (as YRC contends). Id. at *9-10. In essence, YRC argued that it had to pay Vizant only if Vizant came up with and caused YRC to implement new strategies and that YRC did not owe Vizant for savings realized through strategies YRC was already considering or decided to implement of its own volition having never reviewed Vizant's report. See id. at *9. Vizant argued that the PSA contained no such nuance and simply required a payment if YRC implemented one or more of the strategies appearing in Vizant's report and realized savings. See id. at *10.
8. In an order and opinion entered June 26, 2018 (the "First Summary Judgment Order"), the Court examined whether Vizant's entitlement to a fee under the PSA turned upon which party caused the relevant cost-saving strategies to be implemented. In doing so, the Court looked to section 6 of the PSA, which defined "Post-Agreement Financial Payment Costs" as "Financial Payment Costs that [YRC] incurs on a monthly basis, as a result of the strategies and solutions that have been identified and recommended by Vizant[.]" (Pl.'s Mem. L. Supp. Mot. Summ. J. Ex. 2 § 6 [hereinafter "PSA"], ECF No. 84.3.)
9. The Court concluded that the answer to this specific dispute largely turned on the meaning of the term "Post-Agreement Financial Payment Costs" and that the definition of that term was in turn dependent upon the meaning of the word "identified." Vizant Techs., LLC, 2018 NCBC LEXIS 65, at *12-13. The Court noted that "identify" could mean "specify," "recognize," or "name"-definitions supporting Vizant's position-or "establish the . . . separate or distinct existence of"-a definition supporting YRC's argument. Id. at *13-14. Because both definitions of "identify" were reasonable, and the meaning of "identify" was thus ambiguous, the Court concluded that the definition of "Post-Agreement Financial Payment Costs" was ambiguous. Id. The Court further concluded that the extrinsic evidence presented by the parties did not allow the Court to resolve this ambiguity as a matter of law. Id. at *17-18. Thus, the Court held that whether Vizant was entitled to a fee under the PSA was an issue for the jury at trial. Id. at *22.
10. The First Summary Judgment Order also addressed a motion by YRC to exclude certain opinions and calculations offered by Vizant's damages expert, Scott Emmanuel ("Emmanuel"). The challenged opinions concerned the amount in fees YRC owed Vizant under the PSA should a jury determine that Vizant was entitled to a fee under the PSA's terms. Id. at *22-23. YRC forecast that Emmanuel would offer opinions on (i) Vizant's damages linked to outstanding fees owed for Vizant's "account management fee" recommendation and (ii) Vizant's damages connected with outstanding fees for Vizant's ACH Recommendation (the "ACH Damages"). Id. at *23. YRC's motion challenged Emmanuel's opinion or opinions on this second category of damages, contending that Emmanuel's ACH Damages calculation was speculative and unreliable under North Carolina Rule of Evidence 702. Id. at *23- 25.
11. The Court agreed with YRC. In so ruling, the Court stated that the PSA did not define "Post-Agreement Financial Payment Costs" as "broad, kitchen-sink savings realized after the execution of the PSA." Id. at *26. Instead, the agreement "expressly defined" the savings Vizant's fee would be based on as "those savings that specifically resulted from the strategies and solutions identified by Vizant." Id. This definition did not square with Emmanuel's method of calculating damages.
12. In calculating Vizant's ACH Damages, Emmanuel "assumed every single dollar of [post-PSA cost reductions] was due solely and completely to YRC having convinced customers to pay by ACH" and took no steps to account for other factors that may have led to a reduction in customers paying with credit cards, e.g., lost business. Id. at *29 (internal quotation marks omitted). This fact was demonstrated most clearly by the following exchange at Emmanuel's deposition:
(Emmanuel Dep. 137:4-11, ECF No. 90.10.) Because Emmanuel's calculation of ACH Damages did not consider or account for alternative causes of YRC's cost reductions, contained analytical gaps, and did not make an effort to follow the PSA's formula for calculating fees, the Court concluded that the ACH Damages calculation was unreliable. Vizant Techs., LLC, 2018 NCBC LEXIS 65, at *30. The Court ruled that Emmanuel would not be permitted to offer testimony or opinions relating to his ACH Damages calculation at trial and that no expert witness would be permitted to give testimony that was dependent upon Emmanuel's ACH Damages calculation. Id. at *31.
13. Following the First Summary Judgment Order, YRC filed a motion for reconsideration under Rule 54(b) of the North Carolina Rules of Civil Procedure. YRC pointed out that the Court, in ruling on the parties' summary judgment motions, had not considered or addressed a request by YRC for summary judgment on the sufficiency of Vizant's evidence supporting its alleged ACH Damages. Both sides submitted briefing on the motion for reconsideration and were given the opportunity to argue their positions...
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