Wall Recycling, LLC v. 3Tek Glob.

• Decision Date: 01 March 2022
• Docket Number: 1:20cv371
• Parties: WALL RECYCLING, LLC, Plaintiff, v. 3TEK GLOBAL, LLC, Defendant.
• Court: U.S. District Court — Middle District of North Carolina

WALL RECYCLING, LLC, Plaintiff, v. 3TEK GLOBAL, LLC, Defendant.

No. 1:20cv371

United States District Court, M.D. North Carolina

March 1, 2022

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

This is an action alleging breach of contract for the sale of an industrial metal recycling shredder. Before the court is the motion of Defendant 3TEK Global, LLC (“3TEK”) for summary judgment pursuant to Federal Rule of Civil Procedure 56. (Doc. 40.) Plaintiff Wall Recycling, LLC (“Wall”) has filed a response in opposition. (Doc. 50.) 3TEK has also filed a motion to strike and objections to the declaration of Daniel Wall. (Doc. 56.) Wall opposes this motion. (Doc. 58.) For the reasons set forth below, 3TEK's motion to strike will be denied and its for summary judgment will be granted.

I. BACKGROUND

The facts, either not in dispute or viewed in the light most favorable to Wall as the non-moving party, establish the following:

Wall is a recycling company based in central North Carolina. (Doc. 2 ¶ 8.) 3TEK manufactures scrap metal processing equipment including a large industrial NEXT 6280 shredder (the “NEXT shredder”), which is the subject of this dispute. (Id. ¶¶ 2, 9.) In April 2018, at an industry convention in Las Vegas, Nevada, Dan Wall, owner of Wall, met Bill Padula, 3TEK's Vice President of Sales and discussed the NEXT shredder. (Doc. 41-1 at 1 ¶ 3.) At that time, 3TEK had not completed the fabrication of a NEXT shredder, nor had it installed a shredding system with any customer. (Id. at 1-2 ¶ 4.)

In December 2018, following several months of discussions between Dan Wall and Padula, Dan Wall signed an agreement with 3TEK on behalf of Elite Waste Services, Wall's predecessor, that “provided options to purchase” two mobile shredders, and Wall paid a $100, 000 deposit. (Doc. 51-1 at 3 ¶ 5.) In February, Wall decided to purchase a downstream system for the 3TEK shredder, which sorts the material after it is processed; so, on February 28 2019, 3TEK sent Wall an 11-page letter captioned, “RE: NEXT 6280 with Mobile Downstream Quotation” (“the February Agreement”), which Wall countersigned. (Id. at 15-25.) Wall's prior $100, 000 deposit was applied to the February Agreement. (Id. at 16.) While Wall contends, and 3TEK denies, that the February Agreement constitutes a valid contract for the sale of a NEXT shredder, the February Agreement does set forth Wall's intent to purchase a NEXT shredder and downstream system for $2, 299, 500, and states that “[c]urrently” the available NEXT shredder would “be ready for shipment in July, of 2019.” (Doc. 41-1 at 8, 17.) The February Agreement contains a significant amount of specific information about 1) price; 2) quantity; 3) detailed product specifications; 4) shipping and assembly; 5) payment terms; 6) warranty information; and 7) a validity period for the right of first refusal at the price offered through December 2019. (Id. at 7-17.)

The NEXT shredder was a newly-developed product at the time, which Wall understood. (Doc. 41-2 at 145:14-21.) 3TEK maintains that it completes each NEXT shredder to the same specifications and then distributes the machine on a first-come, first-served basis while it is being manufactured. (Doc. 41-1 at 1-2 ¶ 4.) However, the February Agreement offered Wall a right of first refusal for the second and sixth NEXT shredder production slots under the following conditions:

If 3TEK receives a signed Sales Contract with deposit from another customer, we will extend to Elite Waste Services seventy-two (72) hours to determine your course of action. If for example you elect to take the second slot, then 1.) Signing of the 3TEK Sales Contract will be required; 2.) Payment of the balance of the initial 20% will be due and payable; and 3.) A finalized ready to ship date from 3TEK will be pledged. If you elect to pass, then your name will be attached to the next machine.

(Doc. 41-1 at 8.)

On April 18, 2019, Padula emailed Wall that the customer holding the third production slot had come forward with its full deposit, meaning Wall could exercise its right of first refusal for the second production slot. (Doc. 53-2 at 2.) Padula emailed Dan Wall and informed him that to exercise Wall's right of first refusal, Wall would need to wire the balance of its 20% deposit and sign a 3TEK Sales Contract (“the Sales Contract”), which was attached to the email.^[1] (Id.) Padula advised Dan Wall that the machine would not be ready by July (as earlier referenced in the February Agreement) and wrote that “[i]f you choose this path then 3TEK will pledge a firm shipment date in September of 2019.” (Doc. 51-1 at 4 ¶ 12; Doc. 53-2 at 2.) Dan Wall expressed his discontent with this delivery timeframe, noting he was losing substantial profits not being able to sell shredded metal at a higher value, which the machine would enable him to do. (Doc. 51-1 at 4 ¶ 12.) According to Dan Wall, Padula responded that the shredder would be ready for shipment “by the end of September 2019, and that this was a conservative, safe date for [Wall] to plan around.” (Id.) Dan Wall says that “Padula offered that 3TEK could include a 10% reduction in the sales price for the shredder if 3TEK could not delivery [sic] it by the end of the year.” (Id. at 4-5 ¶ 13 (emphasis added).)^[2] Wall chose to exercise its right of first refusal. (Id. at 5 ¶ 14.)

Wall wired the remaining balance of the 20% deposit to 3TEK -- $359, 900. (Id.) However, Wall did not sign and return the Sales Contract. Instead, on April 19, 2019, Wall's Chief Financial Officer, RJ Smith, sent 3TEK a redlined version of the Sales Contract with Wall's “proposed revisions, ” which included several proposed revisions including a 10% penalty if 3TEK failed to deliver the NEXT shredder by the end of 2019. (Doc. 53-3.)

Padula emailed Smith on April 23, 2019, to schedule a phone call to discuss the proposed revisions to the Sales Contract. (Doc. 53-1 at 103:1-25.) Specifically, Padula advised “I'm following up on this lose [sic] end. Wanting to get this document signed as we move closer.” (Id.) Yet for over a month, neither Smith nor Wall responded, and no progress was made on finalizing the Sales Contract.

Padula, after having Matthew Morrison, President of 3TEK, review Wall's proposed revisions, and not having heard back from Wall or Smith for over a month, responded to Wall's proposed 10% reduction penalty with a May 30 email as follows:

I am following up on this loose end to get this document signed as we move closer. As you may recall, our intentions are not that far apart. We are happy to comply with a delivery penalty as long as you take equal responsibility for timely completion on your responsibilities to insure a timely installation.

No huge rush here, but let's see if we can dust this off and bring acceptable closure.

(Doc. 52-1 at 2 (emphasis added).)^[3] Smith responded about an hour later, “Yes, I think we were very close to agreement - I've been buried in other projects so I apologize for the delay. Let me chat with Dan about this and I'll get a response to you.” (Doc. 40 at 8 (emphasis added).)^[4] Unfortunately, Smith never responded, and Wall terminated Smith's employment thereafter, although not until November 2019. (Doc. 41-2 at 132:12-16.) Neither Dan Wall nor anyone at Wall ever sent a response to Padula.^[5] Between May and early October 2019, Padula informed Dan Wall of numerous delays in the production of the NEXT shredder. (Doc. 51-1 at 6 ¶ 19.) Despite these delays, Padula insisted that the Shredder was “almost done” and that it would be “ready shortly.” (Id.) On October 3, Wall confronted Jonathan Maly, a sales representative for Granutech-Saturn Systems, an owner of 3TEK, at a trade show and complained about his dealings with 3TEK, Padula, and Morrison. (Doc. 51-1 at 7 ¶ 24.)

On October 9, 2019, citing 3TEK's failure to meet the June date noted in the February Agreement and the shipment date in September stated in Padula's April 18 email, Wall emailed Padula, “I am requesting my deposit back in full.” (Doc. 52-3 at 4.) Dan Wall explained, “[a]ll in all, I think you are making a great machine and I will definitely keep you and 3Tek [sic] in mind for the future, but at this point I cannot afford to wait any longer.” (Id.) He added: “Please get me in touch with the appropriate person and I will provide my wiring instructions. Thank you very much and I wish you guys the best of luck.” (Id.)

After not receiving an acknowledgement of his cancellation from 3TEK, Dan Wall emailed Padula on October 16, stating, “I have not heard back from you [sic] please answer me so I can get you my wiring info for the deposit to be sent back to [sic]. Thank you.” (Id. at 2.) 3TEK's president, Morrison, responded with an email to Dan Wall the next day, stating:

Please find attached the acknowledgement of your order cancellation with 3TEK for the 6280 Shredding System. Please send your wiring instructions to me so we can begin reimbursing your deposit per the attached letter.

(Id. at 2 (emphasis added).) An attached letter from Morrison provided:

3TEK regretfully accepts your request to cancel the Sales Order from Wall Recycling dated February 21, 2019 regarding the purchase of a 6280 Shredding System per your email to Bill Padula on Wednesday October 9, 2019. 3TEK will reimburse the deposits made toward this purchase totaling $459, 900.00 . . .

(Id. at 5.) The letter went on to explain that 3TEK had invested over $1, 000, 000 in work-in-process toward the manufacture of Wall's shredding system and was thus unable to return Wall's full deposit at that time. (Id.) However, the letter stated 3TEK would wire $100, 000 of Wall's $459, 900 deposit to Wall immediately “once wiring instructions are confirmed, ” with the...