Carson Industries, Inc. v. American Technology Network, Corp.

Filing 142

ORDER GRANTING PLAINTIFF'S SUPPLEMENTAL MOTION FOR SUMMARY JUDGMENT. Re: Dkt. No. 116 . Signed by Judge Nathanael Cousins. (lmh, COURT STAFF) (Filed on 12/24/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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CARSON INDUSTRIES, INC.,
Plaintiff,

United States District Court
Northern District of California

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v.

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AMERICAN TECHNOLOGY
NETWORK, CORP.,

Case No. 14-cv-01769 NC
ORDER GRANTING PLAINTIFF’S
SUPPLEMENTAL MOTION FOR
SUMMARY JUDGMENT
Re: Dkt. No. 116

Defendant.
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In this contract dispute over payment for night vision goggle kits, plaintiff Carson

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moves for summary judgment on the remainder of the disputed transactions in the case.

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Because defendant ATN has not presented evidence to create a triable issue of material

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fact as to Carson’s claims or its own proposed counterclaims, and instead openly states its

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strategic decision not to litigate in front of this Court but instead to seek appellate review,

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the Court GRANTS Carson’s motion for summary judgment.

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I.

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BACKGROUND
This case is about the sale of night vision goggle kits between two parties, Carson

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Industries Inc. and American Technology Network Corp. Carson sold night vision goggle

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kits to ATN. Carson shipped 880 goggle kits to ATN in December 2010. The price of the

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kits was $599.45 per unit. The parties agree that ATN paid $50,000 for the goggle kits.

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ATN returned parts of some of the goggle kits to Carson, asserting that the goggles were

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defective.
Case No. 14-cv-01769 NC

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The Court granted partial summary judgment to Carson on its sale to ATN of 463

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goggle kits and 10 lenses in the total amount of $280,795.35, “because ATN did not give

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Carson notice of breach.” Dkt. No. 81, 9/25/2015 order. Subsequently, the Court granted

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summary judgment in favor of Carson on ATN’s counterclaim asserting that ATN paid for

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but did not receive 90 goggle kits in September 2010. Dkt. No. 103, 10/6/2015 order.

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The remaining issues are as follows. First, there is a dispute about the number of

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kits that ATN returned to Carson. See Dkt. No. 111 at 2, 10/9/2015 order Defining Issues

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to Be Tried And Setting Briefing Schedule. Carson claims that ATN returned parts of 327

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kits to Carson. Id. ATN claims that it returned parts of 419 kits to Carson.

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Second, there is a dispute over the value of the parts of the kits that ATN returned

United States District Court
Northern District of California

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and did not return to Carson. Carson credited $75,778.98 to ATN for the parts of the

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returned kits. As to the 327 goggle kits it says ATN returned, Carson claims that ATN still

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owes $120,241.17 [$196,020.15 minus $75,778.98]. Therefore, the total contract damages

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that Carson still seeks from ATN is $120,241.17, plus interest. Id.

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On the other hand, ATN denies that it owes Carson any money for the partially
returned goggle kits. ATN has filed a counterclaim against Carson.
First, ATN asserts that the goods provided by Carson were defective, so Carson

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breached the warranty and is not entitled to payment from ATN on the 419 kits ATN says

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it returned. Second, ATN claims that it is entitled to damages of a still unknown amount

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as an offset for the losses it suffered in repairing the defective goggle kits. Carson denies

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that ATN is entitled to damages as an offset.

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In the October order granting summary judgment solely as to 90 goggle kits ATN

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claimed it paid for but did not receive, the Court stated, “the Court finds that ATN both

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received and paid for the goods it ordered. Finally, while ATN has not presented

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admissible facts to rebut summary judgment, it has made repeated arguments that the

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evidence presented by Carson is fraudulent . . . In the absence of a genuine factual dispute,

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summary judgment is appropriate.” Id. at 2. The Court therefore granted partial summary

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judgment in favor of Carson and against ATN on ATN’s counterclaim that it paid for but
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did not receive 90 goggle kits referenced in invoice number 3245 in September 2010. Id.

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The Court also set a briefing schedule on the current supplemental motion for summary

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judgment by Carson. Dkt. No. 111. Carson filed its motion as scheduled. Dkt. No. 116.

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ATN’s opposition was due October 23. ATN did not filed a response, a statement of non-

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opposition, or a motion requesting leave to modify the schedule. The Court accordingly

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issued an order to show cause on October 27, warning ATN that if it did not respond by

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October 28, it was forewarned that the Court may grant Carson’s motion. Dkt. No. 119 at

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1. On November 2, 2015, ATN filed a motion for leave to file a late opposition to

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Carson’s supplemental motion for summary judgment as well as 13 Exhibits related to
ATN’s need for more time, an opposition brief, and proffered evidence to support its

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United States District Court
Northern District of California

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claims. Dkt. No. 123, Exhibits 1-13.

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ATN also failed to identify the evidence (expected witness testimony and proposed

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trial exhibits) to support its proposition that it returned 419 (rather than 327) goggle units

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to Carson, as required by October 23. Dkt. No. 119 at 1. Because no response had been

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filed by October 27, the Court gave ATN the opportunity to respond by October 28 or run

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the risk of having its evidence excluded. Id. Currently before the Court are Carson’s

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motion for summary judgment on the remainder of the case and the November 2 filings

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that ATN considered responsive to Carson’s motion and the Court’s October 27 order to

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show cause.

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II.

LEGAL STANDARD

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Summary judgment may be granted only when, drawing all inferences and

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resolving all doubts in favor of the nonmoving party, there is no genuine dispute as to any

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material fact. Fed. R. Civ. P. 56(a); Tolan v. Cotton, 134 S. Ct. 1861, 1863 (2014);

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Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under

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governing substantive law, it could affect the outcome of the case. Anderson v. Liberty

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Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is genuine if “the

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evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

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Bald assertions that genuine issues of material fact exist are insufficient. Galen v. Cnty. of
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L.A., 477 F.3d 652, 658 (9th Cir. 2007).
The moving party bears the burden of identifying those portions of the pleadings,

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discovery, and affidavits that demonstrate the absence of a genuine issue of material fact.

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Celotex, 477 U.S. at 323. Once the moving party meets its initial burden, the nonmoving

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party must go beyond the pleadings, and, by its own affidavits or discovery, set forth

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specific facts showing that a genuine issue of fact exists for trial. Fed. R. Civ. P. 56(c);

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Barthelemy v. Air Lines Pilots Ass’n, 897 F.2d 999, 1004 (9th Cir. 1990) (citing Steckl v.

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Motorola, Inc., 703 F.2d 392, 393 (9th Cir. 1983)). All justifiable inferences, however,

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must be drawn in the light most favorable to the nonmoving party. Tolan, 134 S. Ct. at
1863 (citing Liberty Lobby, 477 U.S. at 255).

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United States District Court
Northern District of California

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III. DISCUSSION

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Following the Court’s previous orders granting summary judgment in favor of

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Carson on (1) Carson’s sale to ATN of 463 goggle kits and 10 lenses in the total amount of

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$280,795.35, and (2) on ATN’s counterclaim that it paid for but did not receive 90 goggle

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kits referenced in invoice number 3245 in September 2010, Carson now moves for

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summary judgment on the remainder of the disputed transactions in the case. Specifically,

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Carson seeks: “(1) an order adjudicating in Carson’s favor ATN’s counterclaim for

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$230,000 for its alleged repair costs for 920 goggle kits at $250 per unit; (2) for avoidance

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of doubt, an order confirming that Carson is entitled to payment on all 880 goggle kits it

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shipped to ATN on December 15, 2010 and invoiced ATN for $527,516 on December 17,

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2010, invoice number 3402; and (3) an order that there is no triable issue as to ATN’s

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remaining counterclaim for $50,000, because the $50,000 ATN paid in February 2012 was

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credited to invoice number 3402 for the 880 units.” Dkt. No. 116 at 2.

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A.

Carson’s Contract Claim

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This Court has granted summary judgment for Carson on its sale to ATN of 463

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goggle kits and 10 lenses in the total amount of $280,795.35 because Carson produced

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admissible evidence that ATN contracted to purchase the goods and accepted them without

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returning them. Dkt. No. 103. Carson now moves for summary judgment on the
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“remainder of the 880 shipment of kits, for a total liability of $527,516, plus prejudgment

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interest, less payments and credits.” Dkt. No. 116 at 2.

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ATN does not argue that it did not receive these goods. The Court’s order granting

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Carson’s earlier motion for partial summary judgment makes clear that without rejecting

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the goods or providing notice that it found the goods deficient, ATN is not excused from

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paying for them. Dkt. No. 81 at 9 (“defenses and counterclaims as to the 463 kits and 10

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lenses fail as a matter of law because ATN did not give Carson notice of breach”).

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Following its order granting Carson’s motion for partial summary judgment as to
the 463 goggle kits and 10 lenses at docket 103, the Court issued an order Defining Issues

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to Be Tried And Setting Briefing Schedule. See Dkt. No. 111 at 2, 10/9/2015 order. In the

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United States District Court
Northern District of California

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order, the Court explained that “the total contract damages that Carson seeks from ATN is

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$120,241.17,” because “Carson credited $75,778.98 to ATN for the parts of the returned

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kits. As to the 327 goggle kits it says ATN returned, Carson claims that ATN still owes

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$120,241.17 [$196,020.15 minus $75,778.98].” Id.

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The Court also ordered ATN to identify “the evidence (expected witness testimony

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and proposed trial exhibits) that support the proposition that it returned 419 (rather than

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327) goggle units to Carson.” Id. at 3. ATN has failed to produce evidence that it returned

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419 goggle kits or the value of the parts of the kits it returned, and the Court accordingly

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GRANTS Carson’s motion for summary judgment on its claims for the remaining

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$120,241.17. Dkt. No. 111 at 2.

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B.

ATN’s Counterclaims

Carson also moves for summary judgment on ATN’s two declared counterclaims.

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First, Carson requests that “the Court issue an order denying ATN’s counterclaim for a

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$230,000 offset for alleged repairs of 920 goggle kits by Hitek International.” Dkt. No.

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116 at 8. ATN’s counsel suggested at a hearing on October 7, 2015, before the Court that

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ATN did not return the 880 units because “Carson insisted that we get an RMA number

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and that they had to agree to pay for the cost of the return before we shipped them.”

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DeGroot Decl., Ex. 2 at 22:11-19. However, ATN has not provided admissible evidence
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to support this assertion. Moreover, Carson puts forward evidence that “ATN’s Munn

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specifically contradicted it when he testified that ATN never asked to return these units

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and was never told that they could not return the units.” Id.; see DeGroot Decl., Ex. 1 at

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118:25-119:10 and 120:15-121:3.

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Second, Carson requests summary judgment against ATN on ATN’s claim for
$50,000 for a payment ATN made towards the goggle kits. Dkt. No. 116 at 2. ATN’s

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counsel stated at the October 7, 2015 hearing that ATN had two affirmative claims, one for

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$230,000 in alleged repair costs and one for return of the $50,000 payment it made.

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DeGroot Decl., Ex. 2 at 32:7-11 and 42:5-15. Carson argues that there is no remaining

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issue “because Carson has already credited ATN’s February 2012 payment of $50,000

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United States District Court
Northern District of California

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against the overdue invoice number 3402 toward the 880 units.” Dkt. No. 116 at 8.

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Accordingly, “ATN would not be entitled to recover that payment again, because it already

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received a credit for money it actually owed. Thus, ATN would have no damages on its

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remaining counterclaims because the only damages it asserts is for the return of that

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payment.” Id. Carson argues that because it already credited the $50,000 payment to

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ATN’s overdue balance, there is no live dispute for trial. Id. The Court agrees with

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Carson.

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ATN has responded with a series of emergency requests for stays and continuances.

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See Dkt. Nos. 120, 23, 124, 130, 134, 138. ATN did file an opposition to Carson’s

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supplemental motion for summary judgment, which is filed as Exhibit 2 to a motion for an

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extension of time to file a response. See Dkt. 123-2. In the opposition, ATN directs the

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Court to various inapposite cases and attempts to reargue that it sufficiently revoked the

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880 kits, but does not present admissible evidence that could cause a reasonable jury to

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find in its favor at trial. Dkt. No. 123, 123-2.

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Additionally, John Hartford, attorney for ATN, has filed multiple notices stating his

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inability to attend a scheduled settlement conference and the pretrial conference,

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requesting a continuance of trial, stating that he does not have access to a working

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telephone or the internet, and stating that he is not “able to prepare and file any more
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documents herein, though it is important for Defendant to file a series of motions to vacate

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or modify various orders and file a motion for sanctions.” Dkt. Nos. 124 at 7; 138. In an

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emergency declaration, Hartford also stated that his client “decided that it was futile to

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oppose the supplemental motion for summary judgment.” Dkt. No. 124 at 3.

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ATN’s decision not to oppose Carson’s latest motion for summary judgment is
premised on “the fact that the Court did not vacate its original order granting partial

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summary judgment to Plaintiff on Issue #1. As a result, any legal argument to be

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presented by Defendant with regard to the notice requirements of UCC Sections 2-607 and

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2-717 would be futile because Plaintiff’s legal argument in support of the supplemental

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motion is predetermined by the Court’s prior ruling while exposing Defendant to larger

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United States District Court
Northern District of California

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damages.” Id. at 3-4. As such, ATN concedes that much of this case has been resolved in

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Carson’s favor already. ATN goes on to object to the Court’s previous ruling, see docket

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103, as violating ATN’s “right to due process that is analogous to issuing a default

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judgment exceeding the amount requested in a complaint . . . [also,] allowing Plaintiff to

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file a supplemental motion for summary judgment is too indefinite in violation of

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Defendant’s right to due process, which has resulted in Plaintiff’s definition of issues

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presented by its supplemental motion for summary judgment to be unintelligible.” Dkt.

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No. 124 at 4; see also Dkt. No. 123-1 at 4 (Declaration of Marc Vayn) (describing this

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Court’s orders as “an unbroken chain of rulings which were one-sided in favor of Plaintiff

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and revealed such a degree of favoritism to Plaintiff and/or its counsel as to make fair

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judgment impossible for Defendant”).

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As a result, ATN’s stated strategy is that “opposing the supplemental motion for

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summary judgment would be futile and [instead ATN will] rely on the court of appeal in

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the likely event the supplemental motion is granted.” Dkt. No. 124 at 4. ATN goes on to

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describe this Court’s treatment of the parties as “not evenhanded but arbitrary and one-

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sided,” and states that it will “give this Court an opportunity to demonstrate its ability to

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overcome any prejudice it may have against Defendant by presenting to the Court the

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evidence and legal arguments which would enable the Court to reconsider its rulings and
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correct errors, if any, regardless of what happened in prior proceedings.” Id. at 6.
As the nonmoving party, it is ATN’s responsibility to go beyond the pleadings, and,

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by its own affidavits or discovery, set forth specific facts showing that a genuine issue of

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fact exists for trial. Fed. R. Civ. P. 56(c). ATN has made clear its strategy to decline to

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oppose Carson’s motion for summary judgment. ATN states, “[u]nder the circumstances,

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it seemed that having a new erroneous order on the supplemental summary judgment

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motion would bring Defendant closer to a successful appeal.” Declaration of Marc Vayn

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at 4. While ATN has been reluctantly “convinced to give this Court an opportunity to

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reverse itself . . . [q]uite honestly, [ATN has] no reason yet to trust this Court will change
its prejudice to Defendant.” Id. at 4-5. Because the filings by ATN have been

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United States District Court
Northern District of California

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unresponsive to the Court’s orders to produce evidence it intends to put on at trial, it has

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failed to set forth a triable issue of material fact left in this case. Its inability or

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unwillingness to bring forward evidence to support its claims leads to the conclusion that

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ATN apparently seeks: judgment in favor of Carson, which ATN may appeal.

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In sum, ATN has not presented facts establishing a material dispute in regards to

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Carson’s claim for the remaining $120,241.17, or for ATN’s stated counterclaims that it is

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entitled to (1) $230,000 for its alleged repair costs for 920 goggle kits at $250 per unit and

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(2) $50,000 that ATN paid to Carson in February 2012. Accordingly, the Court GRANTS

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Carson’s motion for summary judgment as to all three claims.

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This is the Court’s third and final summary judgment order in this case. Carson has

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successfully moved for $280,795.35. Dkt. No. 81. The Court then narrowed the

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remaining issues in the case for trial, including the remaining contract claim for Carson of

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$120,241.17. Dkt. No. 111 at 2. Carson’s present motion for summary judgement

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presents evidence to support its contract claim for the remainder of the case that would

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have been presented at trial. However, it does not give evidence of a contractual term for

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prejudgment interest or propose what prejudgment interest should be. Therefore, the final

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judgment award for Carson will be $401,036.52. ATN is not entitled to judgment on any

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of its counterclaims. The Court hereby terminates the case and orders the clerk of court to
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enter final judgment.

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IT IS SO ORDERED.

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Dated: December 24, 2015

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_____________________________________
NATHANAEL M. COUSINS
United States Magistrate Judge

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United States District Court
Northern District of California

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