W.G. Barr Management, LLC v. ContekPro LLC

Filing 62

ORDER by Judge Thomas S. Hixson denying 47 Plaintiff's Motion for Summary Judgment; granting 48 Defendant's Motion for Summary Judgment. (tshlc1, COURT STAFF) (Filed on 6/5/2024)

Download PDF
1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 W.G. BARR MANAGEMENT, LLC, 8 Plaintiff, 10 Re: Dkt. Nos. 47, 48 CONTEKPRO LLC, Defendant. 11 United States District Court Northern District of California ORDER RE: CROSS-MOTIONS FOR SUMMARY JUDGMENT v. 9 Case No. 23-cv-02257-TSH 12 13 I. INTRODUCTION Plaintiff W.G. Barr Beverage Co. (d/b/a Two Pitchers Brewing Co., “Two Pitchers”) 14 15 alleges Defendant ContekPro, LLC breached their agreement for ContekPro to build and deliver a 16 pre-inspected, finished Kitchen Container to Two Pitchers’ taproom in Oakland. Pending before 17 the Court are the parties’ cross-motions for summary judgment. ECF Nos. 47 (Pl.’s Mot.), 48 18 (Def.’s Mot.). The Court finds the motions suitable for disposition without oral argument and 19 VACATES the June 13, 2024 hearing. See Civ. L.R. 7-1(b). For the reasons stated below, the 20 Court DENIES Two Pitchers’ motion and GRANTS ContekPro’s cross-motion.1 21 II. BACKGROUND Two Pitchers, located in Oakland, California, is a start-up company that brews and 22 23 distributes craft shandies, which are lagers mixed with natural fruit and fruit juices. First Am. 24 Compl. ¶ 8, 13, ECF No. 11. ContekPro, located in Tigard, Oregon, manufactures and delivers 25 commercial kitchen units built within shipping containers. Attahri Decl. ¶ 3, ECF No. 48-2. 26 On May 18, 2020, Two Pitchers entered into a contract with ContekPro for the 27 28 1 The parties consent to magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c). ECF Nos. 55, 60, 61. 1 manufacture and delivery of a commercial Kitchen Container to a taproom Two Pitchers would be 2 opening in Oakland. First Am. Compl. ¶ 13; Arghavani Decl., Ex. 1 (Contract), ECF No. 47-3. 3 The contract provided for a delivery date of approximately September 1, 2020, and the parties 4 subsequently agreed to a delivery date of March 1, 2021. Contract at 3; Arghavani Decl., Ex. 2 5 (Attahri Dep.) at 15:12-16:7, ECF No. 47-4. Two Pitchers made full payment to ContekPro under 6 the contract. Attahri Dep. at 15:6-11. Two Pitchers alleges there were four breaches of the contract, as summarized below. 7 United States District Court Northern District of California 8 A. California Manufactured Building Sticker 9 The contract specified that ContekPro “certifies that it will construct the buildings exactly 10 as detailed in the approved plans,” and “guarantees the buildings will receive a State of California 11 manufactured building sticker.” Contract at 4. A California manufactured building sticker 12 signifies that a building is pre-inspected and meets all California requirements for using the 13 building. Attahri Dep. at 19:7-10; Arghavani Decl., Ex. 5 (Hester Dep.) at 19:10-17, ECF No. 47- 14 7. ContekPro scheduled an inspection for the container to receive a California manufactured 15 16 building sticker on March 24, 2021. Arghavani Decl., Ex. 6 (Email re: Container Shipment 17 Timeline); id., Ex. 24 (Email re: Two Pitchers) at 3-8. However, the inspection never took place. 18 Attahri Dep. at 33:21-34:15; id., Ex. 3 at 3 (ContekPro Response to Interrogatories, 1); id., Ex. 7 at 19 3 (ContekPro Requests for Admission, 1). ContekPro never told Two Pitchers what happened 20 with the scheduled March 24 inspection, nor did it explain why it had not obtained the sticker. 21 Hester Dep. at 150:11-151:16. The container never received a California manufactured building 22 sticker. Attahri Dep. at 33:21-34:11; 74:3-5; id., Ex. 7 at 3 (ContekPro Requests for Admission, 23 1); Hester Dep. at 246:12-24. 24 B. Timing of Completion and Inspection 25 The container was shipped unfinished from ContekPro’s facility in Oregon to Two 26 Pitchers’ taproom site on or about April 6, 2021. Arghavani Decl., Ex. 8 (Email re: Two Pitchers 27 Container Shipment); Attahri Dep. at 46:20-22. The parties dispute the reasons why the container 28 was shipped unfinished and the degree of completion when it was shipped. However, it is 2 United States District Court Northern District of California 1 undisputed that the container was not pre-inspected, and because it was not finished when 2 delivered, the container was not ready for final inspections. Hester Dep. at 210:13-211:2; Attahri 3 Dep. at 38:4-5; 57:1-58:11; 74:3-5. In July, Attahri acknowledged the container was still 4 unfinished. Arghavani Decl., Ex. 16 (text messages from Yassine Attahri); id., Ex. 17 (same); 5 Attahri Dep. at 40:24-41:4; 62:8-19; 64:12-65:12. As of July 28, 2021, ContekPro’s work on the 6 container was not complete and it was not ready for final inspection. Attahri Dep. at 65:8-12; 7 Hester Dep. at 212:12-24. Two Pitchers subsequently hired other contractors to finish the work on 8 the container and to secure all final inspections. Arghavani Decl., Ex. 18 (email re: Recap Email); 9 id., Ex. 9 (Tallon Dep.) at 169:9-171:1. The container did not pass final inspections until 10 September 1, 2021. Id., Ex. 19 (email re: Container Delay Timeline). 11 C. Code Requirements The contract provides that “ContekPro tests all electrical, water, and gas components of the 12 13 product and ensures all components work and meet appropriate codes.” Contract at 5. Two 14 Pitchers contends ContekPro’s work did not meet appropriate codes and that the Container could 15 not pass Oakland city code inspections even by the end of July, four months after it was delivered. 16 Pl.’s Mot. at 6 (citing Attahri Dep. at 64:12-21; Hester Dep. at 83:7-85:6; 90:4-9; 245:18-246:11). 17 D. 18 Costs of Rectifying Deficiencies The contract provides that “[i]f the buildings are not constructed as planned, buyer/end 19 user may enter a claim for the cost of rectifying any issues.” Contract at 4. On September 9, 20 2021, Two Pitchers’ counsel sent a letter to ContekPro alleging that ContekPro had breached the 21 contract by failing to deliver a finished, pre-inspected container. Arghavani Decl., Ex. 20 at 2 22 (Email re: Breach of Contract Claim); Attahri Decl., Ex. B (same), ECF No. 48-4. That letter did 23 not include a claim for the cost of rectifying issues with the container. Arghavani Decl., Ex. 20; 24 Answer ¶ 24, ECF No. 16; Attahri Decl., Ex. B. 25 On April 25, 2023, Two Pitchers emailed ContekPro with an accounting for $98,622.70, 26 representing the costs that Two Pitchers alleges it incurred due to the deficiencies in the container. 27 Arghavani Decl., Ex. 20 (Email re: Breach of Contract Claim); id., Ex. 21 (Pl.’s Third Amended 28 Interrogatories) at 2-3; Hester Dep. at 247:6-249:15. 3 1 2 Procedural Background Two Pitchers filed its original complaint on May 9, 2023 and filed its First Amended 3 Complaint on June 26, 2023. It alleges three causes of action: (1) Breach of Contract; (2) 4 Promissory Estoppel; and (3) Breach of Implied Duty of Good Faith and Fair Dealing. It seeks 5 $98,622.70 in damages, as well as attorneys’ fees and costs. First Am. Compl. at 8-9. 6 As to its breach of contract claim, Two Pitchers alleges ContekPro breached the contract 7 because it failed to deliver a complete, finished Kitchen Container with all necessary approvals 8 and inspections required by applicable law. Id. ¶¶ 26-28. 9 United States District Court Northern District of California E. As to its promissory estoppel claim, Two Pitchers alleges it repeatedly conveyed to 10 ContekPro that it could not operate its newly constructed taproom without a functioning kitchen 11 and that, because ContekPro had not completed the container, it would need to pay other 12 contractors to complete it and to secure all necessary approvals and inspections. Id. ¶ 30. Two 13 Pitchers alleges it accepted delivery of the container in April 2021 “in express reliance on 14 ContekPro’s oral assurance that the Container would be fully inspected and approved shortly after 15 delivery of the Container,” and “relied to its detriment on the statement by ContekPro that it would 16 have the Container inspected and approved shortly after its delivery,” when “[i]n fact, ContekPro 17 never completed the work necessary for the Container to pass inspections; the Container was not 18 fully inspected and approved until August 2021, after Two Pitchers paid other contracts to engage 19 in extensive additional work to finish the Container and to secure the necessary approvals and 20 inspections.” Id. ¶ 31. It alleges that “[w]hen it became clear that ContekPro was not willing to 21 complete the work in a timely fashion, Two Pitchers acted in further reliance on ContekPro’s 22 position, including the terms of the written contract that it could ‘enter a claim for the cost of 23 rectifying any issues’ with the Container, and engaged other contractors to complete the work on 24 the Kitchen Container.” Id. Because Two Pitchers “acted in reliance on the position of ContekPro 25 and incurred the costs needed to complete the Kitchen Container,” it alleges ContekPro is required 26 to reimburse it for the costs of the work needed to complete it. Id. ¶ 32. 27 28 As to its breach of implied duty of good faith and fair dealing claim, Two Pitchers alleges ContekPro committed to deliver a completed container that had all necessary approvals under 4 1 California law, ContekPro was made fully aware that Two Pitchers would be unable to operate its 2 facility without a functioning kitchen, and ContekPro failed to complete the container or secure 3 the necessary inspections and approvals. Id. ¶ 34. It further alleges that, “[d]espite promising to 4 cure its breach after delivery, ContekPro never completed the work on the Container, and did not 5 undertake the work needed in order for Two Pitchers to obtain the necessary approvals for its 6 kitchen facilities.” Id. It alleges ContekPro’s conduct “paralyzed the operations of the newly 7 constructed taproom and prevented Two Pitchers from opening its operations.” Id. Two Pitchers 8 alleges ContekPro’s “failure to complete the work on the Container and its unfair use of leverage 9 to paralyze the operations of the newly constructed taproom was willful and a breach of its duty of 10 United States District Court Northern District of California 11 good faith and fair dealing.” Id. ¶ 35. Two Pitchers filed its motion for summary judgment on March 18, 2024, arguing there is 12 no genuine dispute as to any of its claims and summary judgment is appropriate. ContekPro filed 13 its cross-motion on April 8, 2024, arguing Two Pitchers’ claims are barred by the one-year 14 limitations period provided in its contract. 15 16 III. LEGAL STANDARD Summary judgment is proper where there is “no genuine dispute as to any material fact and 17 the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The party moving 18 for summary judgment bears the initial burden of identifying those portions of the pleadings, 19 discovery and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex 20 Corp. v. Catrett, 477 U.S. 317, 323 (1986). Material facts are those that may affect the outcome 21 of the case, and a dispute as to a material fact is genuine if there is sufficient evidence for a 22 reasonable jury to return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 23 U.S. 242, 248 (1986). 24 If the moving party meets its initial burden, the opposing party must then set forth specific 25 facts showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(c)(1); Anderson, 477 U.S. 26 at 250. All reasonable inferences must be drawn in the light most favorable to the nonmoving 27 party. Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 2004). However, it is not the 28 task of the Court “‘to scour the record in search of a genuine issue of triable fact.” Keenan v. 5 1 Allan, 91 F.3d 1275, 1279 (9th Cir. 1996). The nonmoving party has the burden “to identify with 2 reasonable particularity the evidence that precludes summary judgment.” Id.; Cafasso, U.S. ex rel. 3 v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1061 (9th Cir. 2011) (The nonmoving party “must 4 set forth non-speculative evidence of specific facts, not sweeping conclusory allegations.”) 5 (citations omitted). Thus, “[t]he district court need not examine the entire file for evidence 6 establishing a genuine issue of fact, where the evidence is not set forth in the opposing papers with 7 adequate references so that it could conveniently be found.” Carmen v. S.F. Unified Sch. Dist., 8 237 F.3d 1026, 1031 (9th Cir. 2001); Christian Legal Soc. Chapter of Univ. of Cal. v. Wu, 626 9 F.3d 483, 488 (9th Cir. 2010) (“Judges are not like pigs, hunting for truffles buried in briefs.”) United States District Court Northern District of California 10 (citations omitted). 11 “While the evidence presented at the summary judgment stage does not yet need to be in a 12 form that would be admissible at trial, the proponent must set out facts that it will be able to prove 13 through admissible evidence.” Norse v. City of Santa Cruz, 629 F.3d 966, 973 (9th Cir. 2010) 14 (citing Fed. R. Civ. P. 56(c) (“An affidavit or declaration used to support or oppose a motion must 15 be made on personal knowledge, set out facts that would be admissible in evidence, and show that 16 the affiant or declarant is competent to testify on the matters stated.”)). If the nonmoving party 17 fails to identify such evidence, or if it offers evidence that is “merely colorable, or is not 18 significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at 249–50 19 (citations omitted). 20 21 22 IV. A. DISCUSSION Choice of Law In determining the controlling substantive law, a federal court sitting in diversity must look 23 to the forum state’s choice of law rules. Patton v. Cox, 276 F.3d 493, 495 (9th Cir. 2002) (citing 24 Klaxon Co. v. Stentor Electric Mfg. Co., Inc., 313 U.S. 487, 496 (1941)). Under California law, a 25 choice of law provision will be enforced when: (1) the chosen state has a substantial relationship 26 to the parties or their transaction, or there is any other reasonable basis for the parties’ choice of 27 law; and (2) the chosen state’s law is not contrary to a fundamental policy of California. Nedlloyd 28 Lines B.V. v. Superior Court of San Mateo, 3 Cal. 4th 459, 464-66 (1992); Windsor Mills, Inc., v. 6 1 Collins & Aikman Corp., 25 Cal. App. 3d 987, 995-96 n. 6 (1972) (parties may expressly agree 2 what law shall govern their contract). ContekPro argues that Oregon law should govern this dispute. Def.’s Mot. at 4-5. Two 3 4 Pitchers takes the same position. Pl.’s Mot. at 16-17, Pl.’s Reply at 5 n.4. Where the parties agree 5 on the governing law, the Court need not engage in a choice-of-law analysis. See Baker v. 6 Cottrell, Inc., 2017 WL 6730572, at *3 n.1 (E.D. Cal. Dec. 29, 2017) (“[N]either party has argued 7 that any law other than California law should apply. The court therefore need not engage in a 8 choice of law analysis.”); Sullivan v. Certain Underwriters at Lloyds, 2016 WL 7422649, at *2 9 (D. Or. Dec. 22, 2016) (“Because the parties agree that Washington law applies . . . the Court will 10 not perform a choice of law analysis”). Accordingly, Oregon law governs this dispute. Oregon has adopted a version of the Uniform Commercial Code that applies to the sale of United States District Court Northern District of California 11 12 goods. Or. Rev. Stat. § 72.1010, et. seq. “Goods” include, inter alia, “all things (including 13 specially manufactured goods) which are movable at the time of identification to the contract for 14 sale other than money in which the price is to be paid, investment securities and things in action.” 15 Id. § 72.1060(1). There is no dispute that ContekPro’s container is a “good,” as it was movable at 16 the time of identification to the contract. See, e.g., Ritz-Craft Corp. v. Stanford Mgmt. Gr., 800 F. 17 Supp. 1312, 1317 (1992) (prefabricated housing units built to a buyer’s specifications fall within 18 the definition of moveable goods under the UCC, even when the contract requires the 19 manufacturer to arrange for the units’ delivery, foundation setting and finish work); Nw. Bank 20 Billings v. Murnion, 210 Mont. 417, 422-23 (1984) (holding that modular homes manufactured to 21 specification fall within the definition of movable goods provided by the UCC). 22 B. 23 Statute of Limitations Oregon’s Uniform Commercial Code provides that an action for the breach of any contract 24 for sale must be commenced within four years after the cause of action accrues. Or. Rev. Stat. § 25 72.7250(1). Parties to a contract may shorten that time period to not less than one year: “By the 26 original agreement, the parties may reduce the period of limitation to not less than one year but 27 may not extend it.” Id. “A cause of action for breach of any contract for sale accrues when the 28 breach occurs, regardless of the aggrieved parties’ knowledge of the breach.” Id. § 72.7250(2). 7 ContekPro argues that any breach of the contract occurred by this time, or by September 9, 1 2 2021 at the latest. Def.’s Mot. at 6. It notes that Two Pitchers’ letter sent on that date alleges 3 ContekPro “completely breached its agreement with Two Pitchers” and goes on to say that 4 because of the alleged breach, ContekPro failed to deliver “a pre-inspected, completed container 5 as it had committed to do.” ContekPro argues that “[s]ince the Kitchen Container had already 6 been completed when the letter was written, it is axiomatic that any breach of the Contract to 7 manufacture the Kitchen Container must have already occurred.” Id. (quoting September 9, 2021 8 letter). United States District Court Northern District of California 9 Two Pitchers argues its claims are timely because ContekPro breached multiple, separate 10 promises: (1) failing to deliver a pre-inspected, finished container with a California manufactured 11 building sticker, (ii) breaching its oral promise to complete the container and secure all final 12 inspections within a few weeks after delivery, (iii) breaching its written contract by failing to 13 supply Two Pitchers with a container that met all applicable code requirements, and (iv) breaching 14 its written contract by refusing to honor the claim that Two Pitchers submitted in March 2023 for 15 the costs incurred in rectifying deficiencies in the container. Pl.’s Mot. at 14. It maintains the 16 operative business transaction is ContekPro’s failure to reimburse Two Pitchers after it submitted 17 a claim pursuant to the terms of the contract in March 2023, two months before it filed this case 18 and well within one year. Id. 19 It is undisputed that the contract provides for a one-year statute of limitations: “Any legal 20 action with respect to any business transaction between ContekPro and its buyer/end users must 21 commence within one year after the cause of action occurs.” Contract at 5. “Unambiguous 22 contracts must be enforced according to their terms. Whether the terms of a contract are 23 ambiguous in the first instance is a question of law. If a contract is ambiguous, the trier of fact 24 will ascertain the intent of the parties and construe the contract consistent with the intent of the 25 parties.” Ristau v. Wescold, Inc., 318 Or. 383, 387 (1994). “For a term to be legally ambiguous, it 26 must be susceptible to two plausible interpretations when examined in the context of the contract 27 as a whole and the circumstances of contract formation, such as communications and overt acts.” 28 Milne v. Milne Construction Co., 207 Or. App. 382, 389 (2006)). “A contract provision is 8 1 ambiguous if it has no definite significance or is capable of more than one plausible — that is, 2 sensible and reasonable — interpretation.” Id. at 388. The Court finds the language of the contract is unambiguous, requiring any legal action United States District Court Northern District of California 3 4 within one year after the cause of action arose. There is also no dispute that the container was 5 completed by September 1, 2021. Arghavani Decl., Ex. 19 (Email re: Container Delay Timeline). 6 Each of Two Pitchers’ three causes of action (breach of contract, promissory estoppel and breach 7 of the implied covenant of good faith and fair dealing) seek damages for alleged expenses it 8 incurred to complete the container and to obtain a final inspection. Each of these causes of action 9 necessarily occurred before the container was completed and inspected at least by September 9, 10 2021, when Two Pitchers’ counsel provided notice of Two Pitchers’ claims. Arghavani Decl., Ex. 11 20 (Email re: Breach of Contract Claim) at 2. The letter specifically alleges that ContekPro 12 “completely breached its agreement with Two Pitchers.” Since the conduct establishing each of 13 the causes of action occurred by September 9, 2021, and this lawsuit was not commenced until 14 May 9, 2023, Two Pitchers’ claims appear to be barred by the one-year contractual limitations 15 period. 16 Two Pitchers argues the operative “business transaction” is ContekPro’s failure to 17 reimburse Two Pitchers after it submitted a claim in March 2023 “for the cost of rectifying any 18 issues” with the container. Pl.’s Opp’n at 8. It notes that ContekPro does not dispute that Two 19 Pitchers sent ContekPro a cost “accounting” on March 29, 2023, and it “believes that the term 20 ‘any business transaction’ has a clear meaning that encompasses the contractual provision 21 permitting it to ‘enter a claim for [] cost[s].’” Id. It further argues that, because ContekPro drafted 22 the contract, see Hester Dep. at 192:3-25, any ambiguity must be construed against ContekPro as 23 the drafting party. Pl.’s Opp’n at 8-9 (citing Heinzel v. Backstrom, 310 Or. 89, 96 (1990) (“Any 24 ambiguity in an agreement is resolved against the party who drafted it.”)). 25 In the “Quality Assurance” section, the contract provides that “If the buildings are not 26 constructed as planned, buyer/end user may enter a claim for the cost of rectifying any issues.” 27 Contract at 4. Based on this language, Two Pitchers argues it did not submit its claim to 28 ContekPro until it sent ContekPro the March 29, 2023 email following up on its September 9, 9 1 2021 notice, and that ContekPro’s failure to pay that claim was a second and distinct breach. Pl.’s 2 Opp’n at 8-9. However, there is no dispute that Two Pitchers’ counsel sent the first letter on 3 September 9, 2021, which specifically alleges that ContekPro “completely breached its agreement 4 with Two Pitchers.” Arghavani Decl., Ex. 20 at 2 (Email re: Breach of Contract Claim). In 5 response to interrogatories propounded by ContekPro, Two Pitchers admitted submitting a claim 6 for the costs of rectifying any issues to ContekPro on September 9, 2021: 7 8 9 10 United States District Court Northern District of California 11 12 13 14 INTERROGATORY NO. 3: Describe in detail, including dates, any and all actions YOU took between September 9, 2021, through March 29, 2023, to seek reimbursement for any and all sums YOU contend CONTEKPRO owes to YOU for materials or work performed within or in connection with the KITCHEN CONTAINER. RESPONSE TO INTERROGATORY NO. 3: Subject to and without waiving any of its Statements and Objections, Two Pitchers responds that on September 9, 2021, Two Pitchers submitted to CONTEKPRO “a claim for the cost of rectifying[ ] issues” with the KITCHEN CONTAINER, as provided by the CONTRACT. CONTEKPRO did not respond to this claim. On March 29, 2023, Two Pitchers offered to settle the claim for $57,125. CONTEKPRO did not respond to this settlement offer. 15 Two Pitchers provided this verified response three separate times: on December 22, 2023 in its 16 Verified Responses to Interrogatories, on January 9, 2024 in its Verified Amended Responses to 17 Interrogatories, and on February 12, 2024 in its Verified Second Amended Responses to 18 Interrogatories. O’Hare Dec., Exs. A-C, ECF No. 48-6, 48-7, 48-8. 19 In support of its claim that ContekPro’s failure to respond to the March 29, 2023 email is a 20 separate breach of the contract which started the limitations period anew, Two Pitchers cites 21 Association of Unit Owners of Inn at Otter Crest v. Far West Federal Bank, 120 Or. App. 125 22 (1993). In that case, the Oregon Court of Appeals held: “The cause of action for breach of 23 contract accrues when the contract is breached. If independent injuries were caused by 24 independent acts, each act is a separate breach and the statute of limitations begins to run 25 separately as to each alleged breach.” Id. at 134. However, the key here is that there must be an 26 independent injury caused by the later act. ContekPro’s failure to respond to Two Pitchers’ March 27 29, 2023 email did not cause any independent injury to Two Pitchers apart from the costs it 28 incurred to complete the container. Two Pitchers necessarily incurred these costs prior to 10 1 September 1, 2021, when it completed the container, and certainly by September 9, 2021, when its 2 counsel sent ContekPro a letter providing notice of its claim. See id. at 134-35 (“Although they 3 allege ongoing harm in the form of payments due under the sale and lease agreements, they do not 4 allege that the breach itself is ongoing. Consequently, unless the claim relates back to the filing of 5 the original complaint, or to the first amended complaint, it is time-barred.”). United States District Court Northern District of California 6 Two Pitchers also cites Tech 7 Systems, Inc. v. Vacation Acquisition, LLC, 594 F. Supp. 2d 7 76 (D.D.C. 2009). Pl.’s Mot. at 15. In that case, a software provider filed an action against its 8 customer’s successor in interest alleging breach of contract from the alleged unauthorized use of 9 the provider’s software. Tech 7 Sys., Inc., 594 F. Supp. 2d at 79. The D.C. District Court noted 10 that, under Oregon law, “‘[i]f independent injuries were caused by independent acts, each act is a 11 separate breach and the statute of limitations begins to run separately as to each alleged breach.’” 12 Id. at 82 (quoting Ass’n of Unit Owners of Inn at Otter Crest, 120 Or. App. at 134). The 13 customer’s successor in interest brought a motion for summary judgment contending that the 14 software provider knew of breaches by the customer more than six-years before the lawsuit was 15 commenced and therefore any claims for breach were barred by the statute of limitations. Id. In 16 denying the motion, the court found that the plaintiff may be entitled to relief if independent 17 injuries were caused by independent acts performed within the limitations period. Id. Here, in 18 contrast, it is undisputed that Two Pitchers’ March 2023 demand letter is for costs it incurred in 19 2021. There is no independent injury that was suffered within the limitations period. 20 The distinction between acts that cause independent injury and those that do not can be 21 seen by examining a case where the court found such an independent injury. In Alderson v. State, 22 judges in Oregon alleged that the State of Oregon wrongfully withheld retirement contributions 23 from their salaries rather than paying the contributions through an employer pickup. 105 Or. App. 24 574, 576 (1991). The alleged wrongful withholding began in August 1983 and continued until 25 1987. Id. An action was brought in October 1989, a little over six years after the wrongful 26 withholdings began. Id. In holding that the claims based on withholdings that occurred within six 27 years of the filing of the action were not time-barred, the Court reasoned that “not all of the harm 28 here was caused by the same act.” Id. at 580. Since each withholding was a new harm suffered by 11 1 the plaintiffs, each deduction was a separate breach with its own six-year limitations period. Id. 2 That is not the case here, where Two Pitchers alleges it incurred its damages in 2021. 3 4 ContekPro made to complete the container and secure all final inspections within a few weeks 5 after its delivery to Oakland—is not subject to the one-year limitations period of the contract 6 because it is derived from a separate oral promise, not the written contract. Pl.’s Mot. at 16. 7 United States District Court Northern District of California Two Pitchers also argues its promissory estoppel claim—based on the oral promise that Claims for promissory estoppel are subject to a six-year limitations period under Oregon 8 law. See Commc’n Mgmt. Servs., LLC v. Qwest Corp., 67 F. Supp. 3d 1159, 1176 (D. Or. 2014), 9 aff’d in part, rev’d in part on other grounds, 726 F. App’x 538 (9th Cir. 2018) (“The analogous 10 statute of limitations for a promissory-estoppel claim is six years.”). “Promissory estoppel is not 11 an independent cause of action. It is a substitute for consideration, and provides a basis for 12 enforcing a promise as a contract despite a lack of consideration, when the promisee has relied on 13 a promise to his or her detriment.” Natkin & Co. v. H.D. Fowler Co., 128 Or. App. 311, 314 14 (1994) (citing City of Ashland v. Hoffarth, 84 Or. App. 265, 270 (1987)). “A promise is 15 enforceable by reason of promissory estoppel if there is: (1) a promise; (2) which the promisor 16 could reasonably foresee would induce conduct of the kind that occurred; (3) actual reliance on the 17 promise; and (4) a substantial change in position by the party seeking to enforce the promise.” Id. 18 (citing Schafer et al v. Fraser et ux, 206 Or. 446, 472 (1956)). “The doctrine is applied if 19 “‘injustice can be avoided only by enforcement of the promise.’” Id. (quoting Restatement of 20 Contracts § 90 (1932)). 21 In support of its argument, Two Pitchers cites Natkin. In that case, defendants submitted 22 offers to plaintiff to provide certain pumps that varied from the contract specifications provided by 23 plaintiff. 128 Or. App. at 313. When plaintiff contacted defendants about the variations, 24 defendants provided oral assurances that the products would meet all the contract specifications. 25 Id. In reliance on these assurances, plaintiff included defendant’s offer in a bid to a third party, 26 who awarded plaintiff a subcontract. Id. Defendants then refused to provide pumps that complied 27 with the contract specifications. Id. Although plaintiff brought a claim for promissory estoppel, 28 the court held: “We need not consider whether plaintiff has stated a claim for breach of contract 12 1 based on a theory of promissory estoppel, because we conclude that plaintiff has sufficiently 2 alleged breach of an express contract.” Id. at 316 (“[Defendants] offered to supply plaintiff 3 conforming pumps. Plaintiff accepted. [Defendants] breached the parties’ agreement by failing to 4 supply those pumps and the plaintiff was damaged.”). Here, as in Natkin, the facts support a claim for breach of an express contract. ContekPro United States District Court Northern District of California 5 6 offered to sell Two Pitchers a completed kitchen container that would pass inspection, Two 7 Pitchers accepted, and it now alleges ContekPro breached the agreement by failing to supply a 8 completed container. Any oral agreement to complete the container is not separate and apart from 9 the written contract. Indeed, the damages Two Pitchers seeks to recover are the same damages 10 sought in its breach of contract claim. “[T]here is no colorable claim of promissory estoppel 11 where there is actual consideration.” Claus v. Columbia State Bank, 2019 WL 5624754, at *21 12 (D. Or. Oct. 30, 2019) (citing Hill v. Mayers, 104 Or. App. 629, 631-32 (1990) (“A promissory 13 estoppel presupposes that there is no actual consideration; the estoppel becomes a substitute for 14 consideration.”)). Because promissory estoppel is intended as a substitute for consideration, and 15 Two Pitchers’ claims are based on the same consideration, there is no separate claim for 16 promissory estoppel. See Neiss v. Ehlers, 135 Or. App. 218, 227 (1995) (“[P]romissory estoppel 17 can only become necessary as a remedy for an unperformed promise if no traditional contractual 18 remedy is available for the nonperformance.”) (emphasis in original) (citing Schafer, 206 Or. at 19 468-81); Claus, 2019 WL 5624754, at *22 (“[T]here are sufficient facts to conclude there was 20 actual consideration in the oral agreement, barring a claim of promissory estoppel.”). A traditional 21 contractual remedy was available to Two Pitchers but is time-barred by the contractual limitations 22 period. In sum, the undisputed material facts establish that Two Pitchers’ claims are time barred. 23 24 Summary judgment in ContekPro’s favor is therefore appropriate. 25 C. 26 Attorneys’ Fees As part of its motion, Two Pitchers argues it is entitled to attorneys’ fees, regardless of 27 whether it is the prevailing party. Pl.’s Mot. at 18-19. The parties’ contract provides that 28 “[s]hould Buyer/end user incur legal expenses or costs, including attorney’s fees, due to 13 1 ContekPro’s breach of any aspect of these Terms and Conditions, or to pursue Buyer/end user’s 2 remedies against ContekPro hereunder, ContekPro shall be responsible to Buyer/end user for all 3 such expenses, costs, and fees.” Contract at 6. However, as discussed above, Two Pitchers was 4 required to bring any such legal action within the one-year statute of limitations. Id. at 5. As it 5 failed to do so, it is not entitled to an award of attorneys’ fees. 6 V. CONCLUSION 7 Based on the analysis above, the Court hereby DENIES Two Pitchers’ motion for 8 summary judgment and GRANTS ContekPro’s cross-motion for summary judgment. The Court 9 shall enter a separate judgment, after which the Clerk of Court shall terminate the case. 10 IT IS SO ORDERED. United States District Court Northern District of California 11 12 Dated: June 5, 2024 13 THOMAS S. HIXSON United States Magistrate Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?