W. Silver Recycling, Inc. v. Nidec Motor Corp.
| Decision Date | 05 May 2022 |
| Docket Number | Case No. 4:20-CV-00837 JAR |
| Parties | W. SILVER RECYCLING, INC., Plaintiff / Counterclaim Defendant, v. NIDEC MOTOR CORP., Defendant / Counterclaim Plaintiff. |
| Court | U.S. District Court — Eastern District of Missouri |
Aaron D. French, James Rixey Ruffin, Sandberg Phoenix PC, St. Louis, MO, for Plaintiff / Counterclaim Defendant.
Joseph C. Orlet, Glennon P. Fogarty, Robert Jacob Hurtt, Jr., Husch Blackwell LLP, St. Louis, MO, for Defendant / Counterclaim Plaintiff.
This matter is before the Court on Plaintiff / Counterclaim Defendant W. Silver Recycling, Inc.’s ("WSR") Motion for Summary Judgment on Defendant / Counterclaim Plaintiff Nidec Motor Corporation's ("Nidec") First Amended Counterclaim (Doc. 82) and Nidec's Motion for Summary Judgment. (Doc. 84). Both motions are fully briefed and ready for disposition. The Court will address them in one Memorandum and Order because they concern related issues.
On August 31, 2018, WSR and Nidec entered a Scrap Management Agreement (the "Agreement"). (Doc. 111 at ¶ 1; Doc. 4-1).1 Pursuant to the Agreement, WSR would process and purchase scrap metal created as a by-product of Nidec's manufacturing at seven facilities for an initial term of three years. (Id. at ¶ 2; Doc. 4-1). Nidec's Laminaciones de Acero SA de CV facility ("NLA") was included in the Agreement. (Id. at ¶ 5).
In April 2020, scrap metal prices substantially increased due to manufacturing shutdowns caused by the COVID-19 pandemic. (Id. at ¶ 7). Nidec's Commodity Manager, Oscar Magana, contacted Lane Gaddy, Chief Executive Officer and part owner of WSR ("Mr. Gaddy"), on April 16, 2020 to inform him that "[a]s part of the continuous improvement process and current challenges," Nidec had "compar[ed] selling rates currently paid for similar steel scrap as NLA [and] found that there should be an opportunity to improve the current price formula." (Doc. 131 at ¶ 6; Doc. 140-2 at ¶¶ 20, 25). Mr. Gaddy responded that WSR and Nidec "are of course under contract." (Doc. 140-2 at ¶ 26). In June 2020, Nidec informed WSR that it was discontinuing WSR's services at NLA, but not the other facilities covered by the Agreement. (Doc. 111 at ¶ 15). This litigation soon followed.
On June 24, 2020, WSR filed suit in this Court bringing claims for breach of contract (Counts I and II), breach of the implied covenant of good faith and fair dealing (the "Covenant") (Count III), and negligent misrepresentation (Count IV). (Doc. 1). WSR's Complaint operates on the premise that the Agreement constituted an exclusive arrangement which Nidec breached by selecting a different scrap purchaser at NLA in June 2020. On December 24, 2020, this Court dismissed WSR's breach of contract claim because "there is no actual language in the Agreement permitting a reasonable person to conclude that WSR and Nidec had an exclusive arrangement." (Doc. 17 at 9). Having determined the Agreement was unambiguously non-exclusive, the Court held that Counts III and IV were neither duplicative of the breach of contract allegation nor barred by the economic loss doctrine. (Id. at 15). The Court specifically noted that it would be improper to dismiss these claims at such an early stage of litigation. (Id. at 11, 14). Nidec now seeks summary judgment on WSR's remaining claims. (Doc. 84).
On April 6, 2021, Nidec filed a First Amended Counterclaim ("FAC") against WSR. (Doc. 37). In Count I of the FAC, Nidec seeks $266,000 in damages due to WSR's alleged failure to comply with its obligation to guarantee highest scrap prices available under Exhibit B, ¶ 10 of the Agreement (hereinafter the "Guaranteed Price Provision"). (Id. at ¶¶ 27-33). In Count II of the FAC, Nidec contends that WSR breached its indemnification obligations under Exhibit A, Article 1 of the Agreement by failing to indemnify Nidec for the cost of this litigation. (Id. at ¶¶ 34-43). On May 26, 2021, this Court determined that the Guaranteed Price Provision was ambiguous and accordingly declined to dismiss Count I of the FAC. (Doc. 49 at 5). The Court dismissed Count II, however, after determining that the Agreement's indemnity provision did not "expressly and unequivocally apply to breach of contract actions between the parties." (Id. at 10). WSR seeks summary judgment on Nidec's claim for breach of the Guaranteed Price Provision. (Doc. 82).
Under Fed. R. Civ. P. 56(a), a movant is entitled to summary judgment if they can "show[ ] that there is no genuine dispute as to any material fact" and they are "entitled to judgment as a matter of law." See Meier v. City of St. Louis , 934 F.3d 824, 827-828 (8th Cir. 2019). This Court views the evidence in the light most favorable to the nonmovant when determining whether summary judgment is appropriate. Osborn v. E.F. Hutton & Co. , 853 F.2d 616, 619 (8th Cir. 1988). The nonmovant, however, "must do more than simply show that there is some metaphysical doubt as to the material facts, and must come forward with specific facts showing that there is a genuine issue for trial" Torgerson v. City of Rochester , 643 F.3d 1031, 1042 (8th Cir. 2011) (internal quotations omitted); see also Celotex Corp. v. Catrett , 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The Agreement incorporates Exhibit B, titled "Special Terms and Conditions," in which WSR agrees to "[g]uarantee highest prices available for scrap material through continual improvements in freight rates, handling/segregating ideas, new and competitive end users." (Doc. 4-1 at Exhibit B, ¶ 10). Nidec alleges that, based on a review of quotes at comparable facilities for similar scrap, WSR breached this provision by failing to offer higher prices. (Doc. 37 at ¶ 22). Nidec asked WSR to improve its pricing multiple times during the course of the Agreement (Doc. 140-2 at ¶¶ 20-24), and WSR has not suggested its prices were actually the highest available in the market. In fact, Nidec originally selected WSR even though WSR did not offer the highest quotes in the initial 2018 bidding process. (Doc. 131 at ¶ 16).
When WSR moved to dismiss the FAC, the parties offered two competing interpretations of the Guaranteed Price Provision. WSR described the Guaranteed Price Provision as a "Continual Improvement Provision" and suggested it merely "obligates WSR to provide Nidec with the best prices WSR could provide, not to match the best price offered to Nidec by a third party." (Doc. 40 at 5). Nidec responded that the Guaranteed Price Provision clearly required that WSR "provide the highest prices for the scrap." (Doc. 45 at 6). After careful consideration, this Court held that the Guaranteed Price Provision was ambiguous because "reasonable people could disagree as to the proper interpretation." (Doc. 49 at 5). WSR now suggests the Court should grant summary judgment because Nidec's breach of contract counterclaim fails even under Nidec's own interpretation of the Guaranteed Price Provision.
Under Missouri law,2 a breach of contract claim has the following elements: "(1) the existence and terms of a contract; (2) that plaintiff performed or tendered performance pursuant to that contract; (3) breach of the contract by defendant; and (4) damages suffered by the plaintiff."
Keveney v. Mo. Mil. Acad. , 304 S.W.3d 98, 104 (Mo. banc 2010) (citation omitted). When a contract contains ambiguous terms, "a question of fact arises as to the intent of the parties, and thus it is error to grant summary judgment." Lafarge North America, Inc. v. Discovery Grp., LLC , 574 F.3d 973, 979 (8th Cir. 2009) (citing Essex Dev., Inc. v. Cotton Custom Homes, LLC , 195 S.W.3d 532, 535 (Mo. Ct. App. 2006) ). As WSR notes, however, the existence of ambiguities in a written contract does not always preclude summary judgment, which may still be appropriate "where no reasonable jury could find the facts necessary to entitle a plaintiff to relief." Cherne Contracting Corp. v. Marathon Petroleum Co., LLC , 578 F.3d 735, 740 (8th Cir. 2009) (citation omitted) (applying Minnesota law).
This Court has held that the Guaranteed Price Provision is ambiguous, and substantial precedent encourages courts to deny summary judgment in such circumstances. See, e.g. , Zeiser v. Tajkarimi , 184 S.W.3d 128, 132-33 (Mo. Ct. App. 2006) (citation omitted). But WSR's motion for summary judgment does not require the Court to resolve any factual issues regarding the Guaranteed Price Provision. Instead, WSR accepts "as its premise, merely arguendo , that [Nidec's] interpretation is correct" and argues that Nidec's counterclaim still fails under its own interpretation. (Doc. 136 at 4). The Court believes this argument in the alternative is permissible and rejects Nidec's contention that this constitutes abandonment of WSR's prior position regarding the meaning of the Guaranteed Price Provision. (Doc. 130 at 2). Accordingly, the question before the Court is whether a reasonable factfinder could conclude that WSR breached the Guaranteed Price Provision under Nidec's interpretation.
WSR offers three arguments in supports of its claim that it did not breach the Guaranteed Price Provision as interpreted by Nidec. First, WSR could not have breached the provision because Nidec never advised WSR of the industry price it had to match. (Doc. 83 at 5). Second, Nidec did not award scrap metal purchasing contracts based exclusively on who offered the highest price. (Id. at 8). Third, Nidec failed to include an express price guarantee requirement in the Agreement despite including such a provision in both its Request for Quotations and a previous contract. (Id. at 8-9). The Court finds that each argument raises a fact issue more appropriate for resolution by the jury and does not establish WSR's right to summary judgment as a matter of...
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