Western Convenience Stores Inc v. Thielen
| Decision Date | 14 March 2011 |
| Docket Number | Civil Case No. 09-cv-02626-LTB-BNB |
| Parties | WESTERN CONVENIENCE STORES, INC., Plaintiff, v. MATTHEW THIELEN, INTERNATIONAL EXCHANGE SERVICES, LLC, a Delaware limited liability company, and TRADEIXS, LLC, a Florida limited liability company, Defendants. |
| Court | U.S. District Court — District of Colorado |
This matter is before me on motions for summary judgment filed by both parties. Defendants Matthew Thielen, International Exchange Services, LLC ("IES") and TradeIXS, LLC ("TradeIXS"), have filed a Motion for Partial Summary Judgment seeking judgment in their favor on six of the eight claims filed against them. [Doc # 31] Plaintiff Western Convenience Stores, Inc. ("Western"), filed its Motion for Summary Judgment seeking judgment in its favor on all three of Defendants' counterclaims against it. [Doc #32] Oral arguments would not materially assist me in the determination of these motions. After consideration of the parties' briefs and exhibits, I GRANT Western's motion and I GRANT IN PART AND DENY IN PART Defendants' motion.
It is undisputed that the parties agreed that Western would sell to Defendant IES a series of 2,722,782 Renewable Identification Numbers ("RINs")-from years 2008 and 2009-for $290,570.15. An RIN is a 38-character numeric code, generated by the producer or importer ofrenewable fuel, that represents each gallon of renewable fuel produced/imported for on-road motor vehicle use. RINs are used to track the amount of renewable fuel that is being produced. The transaction was handled by Defendant Matthew Thielen-as the sole officer, director and shareholder of Defendant IES-and Mr. Charles Dowden on behalf of Western.
This agreement was memorialized by a "Confirming Agreement Reached June 30, 2009" (the "Sales Agreement"). Although the actual date of the Sales Agreement is uncertain, it is undisputed that sometime between July 20 and 22, 2009, Western transferred the RINs to Defendant IES. At that time Western also sent an invoice with wire instructions for payment. The terms of the Sales Agreement were "Net 10 Business Days Upon R.O.I. [Receipt of Invoice] and Wire Transfer Instructions." Directly after receiving the RINs from Western, Defendants sold and transferred the RINs to a third-party on July 22, 2009.
On August 3, 2009, Mr. Dowden emailed Defendant Thielen inquiring about the status of payment for the RINs. In response, Thielen indicated that he was behind on payment. On August 17, 2009, IES wire transferred $75,000 to Western. A week later, on August 24, 2009, Mr. Dowden sent the following email to Thielen:
I tried last Friday, and again today, to reach you to discuss the balance due on the RINs. Our invoice was due on August 3rd, so it is now three weeks past due.
We feel that we have been very patient, but can wait no longer.
If we do not have payment in full of the balance of $215,532.84 by 12:00 p.m. MDST tomorrow, Tuesday August 25, 2009, we will be returning your payment of $75,000.00 and cancelling the sale of our RINs to your firm. Our preference is to complete the agreed upon sale, but we must have your payment by the designated time tomorrow.
Defendant Thielen responded, on August 25, 2009, via the following email:
Thank you for your patience with this issue. I sincerely apologize and wanted to let you know that we will not have the full balance by the stated deadline. I will be traveling back to the states today but have a layover at Heathrow and again at JFK. Please email me anything that you need as I will be checking my email during the layovers. Please see the below wire info:
The email then set forth wire information for Defendant IES including its bank name, account number and routing number, etc. It is undisputed that, to date, Western has not transferred or returned the $75,000 and Defendants have not transferred or returned the RINs to Western. After additional communications between the parties was unsuccessful in settling the dispute, Plaintiff filed this lawsuit.
Plaintiff Western asserts the following claims against Defendants: (1) Breach of Contract; (2) Unjust Enrichment; (3) Fraud; (4) Conversion; (5) Civil Theft; (6) Colorado Consumer Protection Act Violations; (7) Piercing the Corporate Veil against Defendant Thielen; and (8) Specific Performance. Defendants assert counterclaims for: (1) Breach of Contract; (2) Conversion; and (3) Civil Theft.
The purpose of a summary judgment motion under Fed. R. Civ. P. 56 is to assess whether trial is necessary. White v. York Int'l Corp., 45 F.3d 357, 360 (10th Cir. 1995). Summary judgment is appropriate if the record reveals that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). When applying this standard, I examine the factual record in the light most favorable to the party opposing summary judgment, extending to that party all reasonable factual inferences. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
If the movant carries its burden of showing the absence of a genuine issue of material fact, the non-movant must bring forward specific facts showing a genuine issue for trial as to those dispositive matters for which it carries the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Mares v. ConAgra Poultry Co., Inc., 971 F.2d 492, 494 (10th Cir. 1992). An issue of material fact is genuine if a reasonable jury could return a verdict for the non-movant. Jenkins v. Wood, 81 F.3d 988, 990 (10th Cir. 1996).
As a federal court with diversity-based jurisdiction, I apply the laws of the forum state in analyzing the underlying claims. See PayoutOne v. Coral Mortg. Bankers, 602 F.Supp. 2d 1219, 1223-24 (D.Colo. 2009)(applying Colorado contract law to breach of contract case); see also Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). It is undisputed that Colorado substantive law controls here.
I first address Western's motion seeking summary judgment in its favor on Defendants' counterclaims (for breach of contract, conversion and civil theft) which are based on Defendants' position that the parties agreed to cancel their Sales Agreement.
Western first seeks judgment in its favor on Defendants' breach of contract counterclaim. Defendants do not dispute the existence or terms of the initial Sales Agreement in which Defendant IES agreed to buy RINs from Western. As an affirmative defense, however, Defendants maintain that they are not liable to Western for any damages related to the uncompleted Sales Agreement because Western and Defendant IES subsequently agreed to cancel or unwind the Sales Agreement. Defendants aver that the agreed-upon terms of this"Cancellation Agreement" were that "Western was to return IES's $75,000 deposit, after which IES would return Western's RINs." Because Western has not yet returned the $75,000, IES has not yet returned Western's RINs. As such, Defendants assert that they are not liable to Western. In addition, Defendants assert counterclaims against Western-for breach of contract, conversion and theft-based on the same theory. Specifically, Defendants maintain that following the Sales Agreement, the parties negotiated a Cancellation Agreement that, in effect, unwound the Sales Agreement. Because Western did not perform its obligation under the Cancellation Agreement-by failing the return the $75,000-Western breached the Cancellation Agreement and, by retaining the $75,000, is liable for civil fraud and conversation.
At issue, then, is the legality and enforceability of the alleged Cancellation Agreement made by the parties in August of 2009 following the execution of the initial Sales Agreement, but before its completion. In Western's motion, it argues that the Cancellation Agreement is not an enforceable contract, as a matter of law, in that: 1) there was no meeting of the minds on the material and the essential terms; 2) it was not supported by consideration; and 3) Defendants couldn't have performed in that it is undisputed that the RINs at issue were no longer in their possession.
Mutual rescission of a contract requires assent to that rescission by both parties obligated under the contract. Esecson v. Bushnell, 663 P.2d 258, 261 (Colo. App. 1983)(citing Randall v. Carroll, 488 P.2d 250 (Colo. App. 1971)). In addition, an agreement to rescind requires a meeting of the minds with "the clear knowledge and understanding of the parties." Western Air Lines v. Hollenbeck, 235 P.2d 792, 796 (Colo. App. 1951). The same degree of proof of rescission is required as in the case of proof of the contract alleged to have been rescinded, andthe burden to prove an agreement to rescind is upon the party alleging it. Id. Thus "[t]he party asserting mutual termination has the burden of proof in Colorado." Coca-Cola Bottling Co. of Steamboat Springs v. Coca-Cola Co., 447 F.2d 635, 637-38 (10th Cir. 1971)(citing Western Air Lines v. Hollenbeck, supra).
Western first asserts that there was no meeting of the minds as to the alleged Cancellation Agreement. It argues that there was no discussion, let alone any agreement, on the essential terms of how and when Western would regain possession of its RINs. This is supported by the fact that following the August 24 & 25 email exchange, Thielen and Dowden continued communications on how to resolve the dispute over payment on the Sales Agreement. And Defendants did not begin the process of recalling the RINs from the third party it sold them to until March of 2010.
I agree that the undisputed facts reveal that the parties did not have a meeting of the minds sufficient to create a valid agreement to cancel their Sales Agreement. Defendants assert that the email exchange on August 24 & 25, as well as...
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