Wadley Crushed Stone Co. v. Positive Step, Inc.
| Decision Date | 24 May 2022 |
| Docket Number | 21-11002 |
| Parties | WADLEY CRUSHED STONE COMPANY, LLC, an Alabama Limited Liability Company, Plaintiff-Counter Defendant-Appellant, v. POSITIVE STEP, INC., a Georgia Corporation d.b.a. 1st Quality Equipment Company, Defendant-Counter Claimant-Appellee, 1st Quality Equipment Company, Inc., Defendant-Counter Claimant, Thomas W. Curley, Defendant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Michael Sansbury, Emily J. Tidmore, Spotswood Sansom & Sansbury, LLC, Birmingham, AL, Jonathan Griffith, Albert L. Jordan, Oscar M. Price, III, Wallace, Jordan, Ratliff & Brandt, LLC, Birmingham, AL, for Plaintiff-Counter Defendant-Appellant.
William Jackson Britton, James Northcutt Walter, Jr., Capell & Howard, PC, Montgomery, AL, Charles D. Gabriel, Attorney, Chalmers & Adams, LLC, Johns Creek, GA, Robert T. Meadows, III, Capell & Howard, PC, Opelika, AL, for Defendant-Counter Claimant-Appellee.
Before Newsom, Tjoflat, and Hull, Circuit Judges.
This is a case about whether Wadley Crushed Stone Company, LLC, ("Wadley") has filed its breach of contract claim against 1st Quality Equipment Company ("1st Quality") within the applicable statute of limitations. And the applicable statute of limitations depends on whether the contract is for goods under the Uniform Commercial Code ("UCC") or for services under traditional contract law. Because we hold that the contract is for goods, and the applicable statute of limitations under the UCC has already run, we affirm the District Court's ruling that Wadley's claim was time-barred. We also affirm the District Court's grant of summary judgment and denial of reconsideration as to 1st Quality's counterclaim for unpaid invoices.
To sum up this case, it's all fun and games until the granite plant turns out to be inefficient. Wadley is an Alabama corporation in the granite processing business. In 2009, Wadley wanted to build a granite plant in Alabama that, among other specifications, would process 500 tons of granite per hour. 1st Quality is a Georgia corporation that represents manufacturers in the sale of equipment used in the granite industry. 1st Quality sells equipment, provides customer support in connection with equipment sales, and supplies parts for some equipment from its warehouse. Based on prior business dealings between the executives of both companies, Wadley reached out to 1st Quality as it began the process of planning to build the granite plant.
1st Quality worked with both Wadley and several third parties to figure out how big the equipment would have to be to support the plant and sub-contracted with engineers, contractors, and other vendors to figure out how the plant would operate. In other words, 1st Quality was doing its due diligence to figure out what kind of equipment the new Wadley plant would need. After this investigation period, 1st Quality and Wadley entered into a contract worth $5,579,255, which allocated $4,140,255 for 27 line items of equipment, $1,384,000 for erection, installation, and electrical, and $55,000 for extra electrical. The parties expected that 1st Quality would hire Gaston Construction Company to complete the line items for erection, installation, and electrical work for the plant (and 1st Quality would pay Gaston Construction Company accordingly).
In February 2012, Wadley asked 1st Quality if Wadley could work directly with Gaston Construction Company on the erection, installation, and electrical work.1 1st Quality agreed to that arrangement, and the parties signed a modified contract in May 2012, which subtracted out almost $1.5 million for the work Gaston Construction Company would do independently.2 In the modified contract, worth $ 4,059,224.43, there were 27 line items. Twenty-five of the line items were for individual pieces of equipment, adding up to $3,887,274.43. The other two line items were for installation, setup, and calibration of scales and for engineering, which combined, only added up to $171,950, less than five percent of the contract price. Both parties understood that the engineering line item would be done by a third party, whom 1st Quality would pay.
Wadley received all the contracted-for equipment but did not pay the invoices for some of that equipment because Wadley was not satisfied with the functioning of the plant. On its own dime, 1st Quality visited the plant to try to figure out why the equipment it sold Wadley did not meet the 500 ton-per-hour requirement. 1st Quality understood that the plant was supposed to process 500 tons of granite per hour when it sold the equipment to Wadley.
About five years after the plant was completed, Wadley sued 1st Quality in Alabama state court, arguing, among other things, that 1st Quality breached its contract with Wadley when the granite plant did not meet the 500 ton-per-hour requirement.3 1st Quality removed that case to federal district court in the Middle District of Alabama. The procedural history of this case from there is convoluted, and, frankly, irrelevant for our purposes until we get to Wadley's Fourth Amended Complaint.4 In that complaint, Wadley alleged breach of contract as to the 500 ton-per-hour requirement and as to the loadout capacity and also alleged misrepresentation by 1st Quality as to the specifications of the plant. 1st Quality moved to dismiss, arguing that both the breach of contract claims as well as the misrepresentation claim were barred by the applicable statute of limitations. Specifically, 1st Quality argued that the UCC's four-year statute of limitations applied to the breach of contract claims because, 1st Quality said, the contract was for goods rather than services. And 1st Quality argued that a two-year statute of limitations applied to the misrepresentation claim. The District Court then dismissed the misrepresentation claim as barred by the two-year statute of limitations but allowed the breach-of-contract claims to proceed because Wadley had alleged enough facts to make it plausible that the contract was for services rather than goods, so that it was plausible the action was not time-barred.5
1st Quality then answered the Fourth Amended Complaint and counterclaimed against Wadley for breach of contract (and unjust enrichment) for failing to pay 1st Quality for some of the equipment at the granite plant. In the midst of both discovery and trial preparation, 1st Quality then filed two summary judgment motions, one for Wadley's claims and one for its own counterclaims against Wadley. The District Court then granted both motions for summary judgment. As to Wadley's breach of contract claims, the District Court determined that the contract was for goods under the UCC, so the applicable statute of limitations had passed before Wadley filed suit. Thus, the District Court granted summary judgment on the breach of contract claims. As to 1st Quality's counterclaim, the District Court determined Wadley had to pay the unpaid invoices, with interest and costs, and granted summary judgment on the counterclaim as well. After the District Court denied its motion to reconsider, Wadley timely appealed the District Court's order granting summary judgment as to both claims, the District Court's denial of the motion to reconsider its grant of summary judgment as to 1st Quality's counterclaims, and the District Court's order for Wadley to pay 1st Quality based on the counterclaim, with interests and costs.
Now, we must determine whether the District Court erred in granting summary judgment for 1st Quality on both the breach of contract claims and the counterclaim for unpaid invoices and whether it erred in denying Wadley's motion for reconsideration on the grant of summary judgment as to 1st Quality's counterclaim.
We review a district court's grant of summary judgment de novo . Sierra Club, Inc. v. Leavitt , 488 F.3d 904, 911 (11th Cir. 2007). We grant summary judgment "when viewing the evidence in the light most favorable to the non-moving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Id. ; see Fed. R. Civ. P. 56(c). We review a District Court's factual findings for clear error and its legal conclusions de novo . AcryliCon USA, LLC v. Silikal GmbH , 985 F.3d 1350, 1363 (11th Cir. 2021). Where there is no dispute over the contract terms themselves, we review de novo the determination of whether the contract is for goods or services. BMC Indus., Inc. v. Barth Indus., Inc. , 160 F.3d 1322, 1331 (11th Cir. 1998).
And, finally, we review a district court's denial of a motion for reconsideration for abuse of discretion. Corley v. Long-Lewis, Inc. , 965 F.3d 1222, 1234 (11th Cir. 2020).
Let's start with the governing law. Federal courts sitting in diversity apply the choice of law rules for the state in which they sit. Klaxon Co. v. Stentor Elec. Mfg. Co. , 313 U.S. 487, 496, 61 S. Ct. 1020, 1021, 85 L.Ed. 1477 (1941). So, Alabama choice of law rules apply in this case. Alabama's choice of law rule states that the law of the state where the contract was signed governs the contract. See Cherokee Ins. Co., Inc. v. Sanches , 975 So. 2d 287, 292 (Ala. 2007). So, Georgia substantive law governs the contract at issue. But for procedural matters, generally Alabama applies its own law, and Alabama law considers the statute of limitations to be a procedural matter.6 See Battles v. Pierson Chevrolet, Inc. , 290 Ala. 98, 274 So.2d 281, 285 (1973). So, we are left with Georgia law governing the interpretation of the contract—whether it is for goods or services in this case—and Alabama law governing whether Wadley filed its complaint within the applicable statute of limitations. Alabama and Georgia have both adopted the UCC, and the applicable statute of limitations under the UCC is four years. See Ala. Code § 7-2-725(1) ; O.C.G.A. § 11-2-725.
Starting with the substance of the contract, Georgia law says that when a contract is for both goods and...
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