Arrow Electronics, Inc v. United Connectivity Solutions, Inc. et al
Filing
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MEMORANDUM OPINION AND ORDER that plaintiff's motion for summary judgment isGRANTED and costs are taxed to defendants, as more fully set out in order. Signed by Judge C Lynwood Smith, Jr on 7/24/2013. (AHI)
FILED
2013 Jul-25 AM 08:28
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
ARROW ELECTRONICS, INC.,
Plaintiff,
vs.
UNITED CONNECTIVITY
SOLUTIONS, INC., JAMES D.
CAUDLE, SR., and HELEN W.
CAUDLE,
Defendants.
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Civil Action No. CV-13-S-954-NE
MEMORANDUM OPINION AND ORDER
This action arises from a commercial dispute between plaintiff, Arrow
Electronics, Inc., and defendant United Connectivity Solutions, Inc. (“United”).1
Plaintiff alleges that United breached a purchase contract and subsequently breached
a forbearance agreement by failing to pay plaintiff in accordance with the terms of
either contract.2 Plaintiff asserts state-law claims for breach of the forbearance
agreement, breach of the purchase agreement, unjust enrichment, account stated, and
promissory estoppel against United.3 Plaintiff also asserts state-law claims for breach
of guaranty and promissory estoppel against the President of United, James D. Caudle,
1
Doc. no. 1 (Complaint) ¶¶ 10-11.
2
Id. ¶¶ 11, 17.
3
Id. ¶¶ 22-59.
Sr., and his wife, Helen W. Caudle (collectively, “the Caudles”).4
Plaintiff
commenced this action in the Northern District of Alabama pursuant to 28 U.S.C. §
1332(a)(1), based upon the parties’ complete diversity of citizenship and the requisite
amount in controversy.5 Accordingly, “state substantive law and federal procedural
law” apply. Hanna v. Plumer, 380 U.S. 460, 465 (1965).
This action is before the court on plaintiff’s motion for summary judgment.6
This court ordered that “any response to the motion for summary judgment is due by
July 19, 2013.”7 Defendants have not responded to the motion. Even so, this court
cannot enter summary judgment by default. The Eleventh Circuit has observed that:
“the district court cannot base the entry of summary judgment on the
mere fact that the motion was unopposed but, rather, must consider the
merits of the motion.” [United States v. One Piece of Real Property
Located at 5800 SW 74th Ave., 363 F.3d 1099,] 1101 [(11th Cir. 2004)].
. . . Fed. R. Civ. P. 56(e) provides that where “‘the adverse party does not
respond, summary judgment, if appropriate, shall be entered against the
adverse party.’” Id. at 1101 (quoting Fed. R. Civ. P. 56(e)) (emphasis in
the original).
Trustees of the Central Pension Fund of the International Union of Operating
Engineers and Participating Employers v. Wolf Crane Service, Inc., 374 F.3d 1035,
1039 (11th Cir. 2004) (alterations supplied). Upon consideration of the pleadings and
4
Id. ¶¶ 60-73.
5
Id. ¶ 5.
6
See doc. no. 10 (Motion for Summary Judgment).
7
Unnumbered order entered June 25, 2013.
2
plaintiff’s brief and evidentiary submissions, this court will grant plaintiff’s summary
judgment motion.
I. STANDARD OF REVIEW
Federal Rule of Civil Procedure 56 indicates that the court “shall grant
summary judgment if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a). “[T]he plain language of [that rule] mandates the entry of summary
judgment, after adequate time for discovery and upon motion, against a party who
fails to make a showing sufficient to establish the existence of an element essential to
that party’s case, and on which that party will bear the burden of proof at trial.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (alterations supplied).
In making this determination, the court must review all evidence and
make all reasonable inferences in favor of the party opposing summary
judgment.
[However,] [t]he mere existence of some factual dispute will not
defeat summary judgment unless that factual dispute is material to an
issue affecting the outcome of the case. The relevant rules of substantive
law dictate the materiality of a disputed fact. A genuine issue of material
fact does not exist unless there is sufficient evidence favoring the
nonmoving party for a reasonable [factfinder] to return a verdict in its
favor.
Chapman v. AI Transport, 229 F.3d 1012, 1023 (11th Cir. 2000) (en banc) (internal
citations omitted) (alterations and emphasis suppled).
3
If the moving party bears the burden of proof on an issue, if the case proceeded
to trial, then that party must satisfy not only the initial Rule 56(c) responsibility of
informing the court, by reference to materials on file, that there are no genuine issues
of material fact that should be decided at trial, but that party also must carry its
ultimate burden by showing that it would be entitled to a directed verdict at trial. See
Celotex, 477 U.S. at 323-25; Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th
Cir. 1993). Once the moving party makes such a showing, the burden shifts to the
non-moving party to produce significant, probative evidence demonstrating a genuine
issue of material fact to be resolved at trial.
In other words, the moving party must show that, on all the essential
elements of its case on which it bears the burden of proof at trial, no
reasonable jury could find for the non-moving party. If the moving party
makes such an affirmative showing, it is entitled to summary judgment
unless the non-moving party, in response, come[s] forward with
significant, probative evidence demonstrating the existence of a triable
issue of fact.
United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir. 1991)
(en banc) (citations and internal quotation marks omitted) (alteration supplied).
II. SUMMARY OF FACTS
Plaintiff, Arrow Electronics, Inc., is a worldwide seller of electronic products.8
8
Doc. no. 11-1 (Declaration of Douglass P. Christensen) ¶ 2.
4
Defendant United Connectivity Solutions, Inc. (“United”) is an Alabama corporation.9
Defendant James D. Caudle, Sr. is the president of United, and the husband of
defendant Helen W. Caudle.10 The Caudles are citizens of the State of Alabama.11
United began ordering certain products from plaintiff in June of 2012.12
Plaintiff delivered all of the products purchased to United on credit.13 Plaintiff then
sent United 124 separate invoices for the cost of its purchases, which totaled
$220,837.75.14
The Terms and Conditions of Sale state that the “terms of payment are net thirty
(30) days from [the] invoice date,” and that “any past due balance will accrue interest
at the monthly rate of one and one-half percent.”15 The Terms and Conditions also
state that: “[United] is responsible for all costs and expenses incurred by Arrow in
collecting any sums owed by [United] (which may include, but are not limited to,
9
See doc. no. 9 (Answer) ¶ 2 (admitting this fact).
10
See id. ¶ 3 (admitting the fact that Mr. Caudle is the president of United); doc. no. 11-3
(Guarantee), at 10 (referring to the Caudles as “a married couple”). Document number 11-3 actually
contains three separate documents: i.e., the Terms and Conditions of Sale (pages 1-3); the
Forbearance Agreement (pages 4-8); and the Guaranty (pages 9-12).
11
See doc. no. 9 (Answer) ¶¶ 3-4 (admitting these facts).
12
See id. ¶ 10 (admitting this fact).
13
See id. (admitting this fact).
14
See id. (admitting the fact that Plaintiff sent invoices to United); doc. no. 11-2 (Invoices);
doc. no. 11-3 (Forbearance Agreement), ¶ 2 (acknowledging that United was indebted to Arrow in
the principal amount of $220,837.75 under the invoices).
15
Doc. no. 11-3 (Terms and Conditions of Sale) ¶¶ 1, 4 (alteration supplied).
5
collection agency and reasonable attorneys’ fees); “[a]ll transactions are governed by
the laws of the State of New York”; and “[t]he parties waive any right to trial by
jury.”16
United admits that plaintiff delivered, and United accepted, the products
purchased.17 Further, United does not allege that the products were defective.18
However, United failed to pay for the products as the invoices became due, and
thereby materially breached the terms of the invoices.19
In lieu of litigation, plaintiff and United entered into a Forbearance Agreement
on February 27, 2013.20 Mr. Caudle, the President of United, signed the Agreement
on its behalf.21 United acknowledged that it was indebted to plaintiff in the principal
amount of $220,837.75 under the terms of the invoices, and agreed to pay the debt in
twelve monthly installments.22
The Forbearance Agreement provides that if United fails to comply with its
payment obligations, plaintiff is entitled to recover the indebtedness, minus any
payments received under the Agreement, plus interest on the unpaid amount of the
16
Id. ¶ 4 (alterations supplied).
17
See doc. no. 9 (Answer) ¶ 10 (admitted these facts).
18
See generally id. (omitting such allegations).
19
See doc. no. 9 (Answer) ¶ 11 (admitting these facts).
20
See doc. no. 11-3 (Forbearance Agreement).
21
Id. at 6.
22
See id. at 5.
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debt at the rate of 18% per annum from the date of the Agreement, plus reasonable
attorneys’ fees incurred by plaintiff to collect the debt.23
Concurrently with the execution of the Forbearance Agreement, Mr. and Ms.
Caudle executed a Guaranty in order to secure the payment of the indebtedness.24 The
Guaranty provides as follows:
This Guaranty, made this 27th day of February, 2013 by Jimmy
D. Caudle Sr. and Helen W. Caudle, a married couple, (“Guarantor”) and
having a home address of . . . guarantess [sic] the indebtedness of United
Connectivity Solutions Inc. (“Customer”) for the benefit of Arrow
Electronics, Inc. (“Arrow”).
....
1. Obligations. As an inducement for to Arrow to grant credit,
or assume a credit risk, from time to time, in respect of the sale or sales
of goods made by Arrow to the Customer, or in respect of any other type
of transaction by which Arrow may become the creditor of the Customer,
the Guarantor shall pay to Arrow promptly when due, or upon demand
thereafter, with interest, and without deduction or regard for any claim
of setoff or counterclaim of the Customer, or any other defense, the full
amount of all the value of the invoices due. Payment to Arrow will also
include costs and expenses of Arrow’s collection of such obligations or
indebtedness or of the obligations or indebtedness arising under this
Guaranty, including reasonable attorneys’ fees up to the
beforementioned amount.
2. Term of Guaranty. This is a continuing guaranty that will
remain intact and is an irrevocable Guaranty except as agreed to in
writing by Arrow and the Guarantor. This gauranty [sic] will remain
23
Id. at 6.
24
See doc. no. 11-3 (Guaranty), at 9-12.
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intact until the full outstanding debt is paid in full.
....
4. Character of obligation. The obligation of Guarantor is a
primary and unconditional obligation, and covers the debt to Arrow.
This obligation shall be enforceable before, or after, proceeding against
Customer, or against any security held by Arrow, and shall be effective
regardless of the solvency, or insolvency, of Customer at any time, the
extension or modification of the indebtedness of Customer by operation
of law, or the subsequent incorporation, reorganization, merger,
consolidation, or other change in the composition, nature, personnel, or
location of Customer.
....
5. Choice of Laws, Consent to Jurisdiction and Service of
Process. This Guaranty shall for all purposes be deemed to be made in,
and shall be governed by the laws of, the State of New York . . . .25
After the parties executed the Forbearance Agreement and Guaranty, United
made two payments totaling $10,000, but failed to make any additional payments in
material breach of the Agreement.26
III. CLAIMS AGAINST UNITED
A.
Breach of the Forbearance Agreement
“The elements of a breach-of-contract claim under Alabama law are (1) a valid
contract binding the parties; (2) the plaintiffs’ performance under the contract; (3) the
25
Id. at 10-11 (emphasis in original).
26
See doc. no. 9 (Answer) ¶ 17 (admitting those facts); doc. no. 11-1 (Declaration of
Douglass P. Christensen) ¶ 11.
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defendant’s nonperformance; and (4) resulting damages.” Reynolds Metals Co. v.
Hill, 825 So. 2d 100, 105-06 (Ala. 2002) (citing State Farm Fire & Casualty Co. v.
Slade, 747 So. 2d 293, 303 (Ala. 1999)). With regard to the first element of a breach
of contract claim, United does not allege in its Answer that the Forbearance
Agreement lacks the requisite elements of a valid contract.27 With respect to the
second element, it is undisputed that plaintiff performed its obligations under the
Forbearance Agreement by not taking legal action to collect United’s dept under the
invoices so long as United remained in compliance with the Forbearance Agreement.
With regard to the third element, United admits that it made two payments totaling
$10,000, but failed to make any additional payments in material breach of the
Agreement.28 Thus, with respect to the fourth element, plaintiff has suffered damages
equal to the balance due under the Forbearance Agreement.29 Accordingly, plaintiff
has established all four elements of its breach of contract claim against United.
Further, the Forbearance Agreement provides that if United fails to comply with
its payment obligations, plaintiff is entitled to recover the indebtedness, minus any
payments received under the Agreement, plus interest on the unpaid amount of the
27
See doc. no. 9 (Answer).
28
See doc. no. 9 (Answer) ¶ 17 (admitting those facts); doc. no. 11-1 (Declaration of
Douglass P. Christensen) ¶ 11.
29
See doc. no. 11-3 (Forbearance Agreement), at 5.
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debt at the rate of 18% per annum from the date of the Agreement, plus reasonable
attorneys’ fees incurred by plaintiff to collect the debt.30 When United signed the
Forbearance Agreement, it acknowledged its debt to plaintiff in the principal amount
of $220,837.75.31 After the execution of the Agreement, United made two payments
totaling $10,000,32 thus reducing the amount of the debt to $210,837.75. Between the
execution of the Forbearance Agreement on February 27, 2013 and the entry of this
order on July 23, 2013, the $210,837.75 in principal has accrued $15, 141 in interest.33
Further, plaintiff has incurred $10,715 in attorneys’ fees, among other things: to
investigate, draft, and file a complaint against United; to attempt to settle the action;
and, when the attempt to settle proved unsuccessful, to research, draft, and file the
instant motion for summary judgment.34 Thus, plaintiff is entitled to recover from
United a total amount of $236,693.75, calculated as follows:
(a) $210,837.75 in principal;
(b) $15,141 in accrued interest on the unpaid principal at a rate of 18%
per annum; and
30
Id. at 6.
31
See id. at 5.
32
See doc. no. 9 (Answer) ¶ 17 (admitting that fact); doc. no. 11-1 (Declaration of Douglass
P. Christensen) ¶ 11.
33
See doc. no. 11-1 (Declaration of Douglass P. Christensen) ¶ 14 (stating that interest under
the Forbearance Agreement accrues at a rate of $103 per diem).
34
Doc. no. 11-4 (Declaration of Justin B. Palmer) ¶ 7.
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(c) $10,715 in attorneys’ fees.
B.
Breach of the Purchase Agreement
Plaintiff argues that “[i]f, for any reason, the Court were to determine that
United is not liable to Arrow under the Forbearance Agreement, the undisputed facts
unequivocally demonstrate that United is liable to Arrow under the invoices for
purposes of the breach of contract claim set forth in the Second Cause of Action of the
Complaint.”35
Because this court holds that United is liable to plaintiff for
$210,837.75 in principal, $15,141 in interest, and $10,715 in attorneys’ fees under the
Forbearance Agreement, it need not address the alternative argument that United is
also liable to plaintiff for the same sums under the Purchase Agreement.
IV. CLAIM AGAINST THE CAUDLES
The Guaranty Agreement executed by United President James D. Caudle, Sr.
and his wife, Helen W. Caudle, provides that it “shall for all purposes be deemed to
be made in, and shall be governed by the laws of . . . the State of New York.”36 Like
the elements of a breach of contract claim under Alabama law, the elements of such
a claim under New York law are: “(i) the formation of a contract between the parties;
(ii) performance by the plaintiff; (iii) failure of defendant to perform; and (iv)
35
Doc. no. 11 (Brief in Support of Motion for Summary Judgment), at 11 (alteration
supplied).
36
Doc. no. 11-3 (Guaranty), at 11.
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damages.” Johnson v. Nextel Communications, Inc., 660 F.3d 131, 142 (2d Cir. 2011)
(citing Eternity Global Master Fund Ltd. v. Morgan Guaranty Trust Co. of New York,
375 F.3d 168, 177 (2d Cir. 2004)) (additional citations omitted). Plaintiff has
established: that the Caudles executed an agreement guaranteeing the payment of
United’s debt;37 that plaintiff has complied with the terms of the agreement;38 that the
Caudles have not paid United’s debt in accordance with the agreement;39 and that
plaintiff has, thus, suffered damages equal to the balance due under the Guaranty
Agreement.40 Accordingly, plaintiff has established all four elements of its breach of
contract claim against the Caudles. Thus, in the event that United does not pay the
amount of $236,693.75 as discussed in Section III(A), supra, plaintiff is entitled to
recover that amount from James D. Caudle, Sr. and Helen W. Caudle, jointly and
severally.
V. CONCLUSION
For the reasons explained above, plaintiff’s motion for summary judgment is
GRANTED. A final judgment against defendants consistent with this memorandum
opinion and order will be entered contemporaneously herewith. Costs are taxed to
37
Id.
38
See doc. no. 9 (Answer) (omitting allegations that plaintiff failed to perform under the
Guarantee Agreement).
39
40
See doc. no. 9 (Answer) (omitting allegations that United has been paid).
See generally id.
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defendants. The clerk is directed to close this file.
DONE and ORDERED this 24th day of July, 2013.
______________________________
United States District Judge
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