CAG Food Services, LLC v. Shaver Foods, LLC
Filing
121
OPINION AND ORDER granting in part and denying in part 68 Motion for Partial Summary Judgment on Count II of the Amended Complaint. The Court GRANTS the motion as to Shaver's liability and DENIES the motion as to damages. Counts I, IV, V, V II, and VIII remain pending in this litigation, as does Shaver's motion for summary judgment on those counts. The Court STAYS further adjudication on the issue of damages to be awarded under Count II until it rules on Shavers motion for summary judgment. Signed by Judge Steven D. Grimberg on 9/24/2020. (bdb)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
CAG FOOD SERVICES, LLC, f/k/a
CORRECTIONAL ADVISOR’S GROUP, LLC,
Plaintiff,
Civil Action No.
1:18-cv-02753-SDG
v.
SHAVER FOODS, LLC,
Defendant.
OPINION AND ORDER
This matter is before the Court on Plaintiff’s Motion for Partial Summary
Judgment [ECF 68]. For the reasons stated below, the Court GRANTS IN PART
AND DENIES IN PART Plaintiff’s motion.
I.
Background
Unless otherwise noted, the following facts are not disputed by the parties
or are supported by undisputed evidence in the record. Plaintiff CAG Food
Services, LLC, f/k/a Correctional Advisor’s Group, LLC (CAG) and Defendant
Shaver Foods, LLC (Shaver) entered into a Supply Agreement in 2007.1 The parties
signed an Amended Supply Agreement (ASA) in 2008.2 Under the ASA, Shaver
1
ECF 22-1.
2
Id.; ECF 22-2.
agreed to be the primary supplier of food services to CAG’s clients.3 In exchange,
CAG received 5% of the total amount paid on those invoices.4 The ASA also
allowed for the possibility that the parties could tailor their agreements for specific
clients by entering into a separate supply agreement that would supersede the
ASA.5
On May 2, 2018, Ashley White, President and CEO of Shaver, sent an email
to CAG purporting to terminate the ASA.6 The email states that Shaver is
terminating the current arrangement “effective immediately” because it is no
longer profitable.7 It goes on to state:
CAG is due a check for April 2018, based on the
arrangements prior to this notification, and that will be
paid. Because it is the end of the program, we need to
make sure all credits, debits, and sales adjustments are
processed since they all effect the final payment. When
3
ECF 22-2.
4
Id. (“In exchange [CAG] will receive a commission of 5% of the total amount
paid for each future invoice by a client managed by [CAG] within the purview
of this supply agreement.”).
5
Id. (“This agreement is meant to serve as a framework agreement for most
facilities. However, [CAG] and [Shaver] recognize the need to tailor separate
supply agreements for some clients based on various circumstances to be
determined as they arise. In such cases, those agreements will supersede this
agreement for the client in question with respect to the area of the separate
agreement that is in conflict with this supply agreement.”).
6
ECF 68-2.
7
Id.
the program was active and ongoing, such things were
captured by the rolling nature of the transactions, but
starting or stopping the program requires that all
transactions that are pending be entered and updated so
they are reflected in the final check. I will make sure this
is dealt with quickly so it does not delay your payment.
If you would like me to send part of the payment and
hold back a reserve to deal with adjustments, etc…I am
certainly willing to do so.8
Despite White’s acknowledgment that Shaver still owed a “final payment” to CAG
for sales through April 2018, Shaver never paid CAG its April commissions.9
CAG claims Shaver still owes CAG 5% commissions on all April 2018
invoices and some invoices from the end of March 2018, totaling $168,766.42.10
Shaver disputes that it owes CAG anything and, to the extent it does, it disputes
the amount claimed.11
8
Id.
9
ECF 68-3, ¶¶ 7–9.
10
Id. ¶¶ 7–8.
11
ECF 71-1, ¶¶ 7–9.
II.
Procedural History
On May 16, 2018, CAG filed this action in the Superior Court of Cobb
County.12 On June 5, 2018, Shaver removed the case to this Court.13 CAG amended
its pleading on July 3, 2018.14
The Amended Complaint asserts the following claims: Count I: breach of
contract for March 2018 commissions; (2) Count II: breach of contract for April
2018 commissions; (3) Count III: breach of contract for commissions from May
2018 onward; (4) Count IV: unjust enrichment, argued in the alternative; Count V:
tortious interference with contractual and business relations; Count VI: unfair
competition under the Lanham Act, 15 U.S.C. § 1125(a)(1)(A); Count VII:
attorneys’ fees and expenses; Count VIII: breach of covenant of good faith and fair
dealing.15 Shaver moved to dismiss Count I, III, IV, V, VI, and VIII of the Amended
12
ECF 1-1.
13
ECF 1.
14
ECF 22.
15
Due to a typographical error in the Amended Complaint, the good faith and
fair dealing count is listed as Count VIII and the attorneys’ fees count is listed
as Count VII. ECF 22.
Complaint.16 The Court granted the motion as to Counts III and V and denied the
motion as to the remaining counts.17
On May 2, 2019, Shaver filed its Answer, Affirmative Defenses, and
Counterclaims to the Amended Complaint.18 Shaver’s counterclaims assert the
following: Count I: breach of contract, contingent on the Court’s finding that the
ASA is an enforceable contract; Count II: trademark infringement and false
designation of origin; and, Count III: attorneys’ fees.19 CAG moved to dismiss
Counts I and III of the Counterclaim for failure to state a claim.20 The Court granted
CAG’s motion as to Count I and denied it as moot as to Count III based on Shaver’s
preemptive withdrawal of that claim.21
16
ECF 24.
17
ECF 31.
18
ECF 33.
19
Id. at 19–33.
20
ECF 41.
21
ECF 88. The parties have also jointly stipulated to dismiss, with prejudice,
Count VI of CAG’s Amended Complaint and Count II of Shaver’s
counterclaim. ECF 101. Accordingly, there are no remaining counterclaims.
Prior to the Court ruling on CAG’s motion to dismiss Shaver’s
counterclaims, CAG filed the present motion for partial summary judgment as to
Count II of the Amended Complaint.22
III.
Summary Judgment
a.
Legal Standard
Summary judgment is appropriate when “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). A fact is “material” only if it can affect the outcome of the lawsuit
under the governing legal principles. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). A factual dispute is “genuine . . . if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.” Id.
A party seeking summary judgment has the burden of informing the district
court of the basis for its motion and identifying those portions of the record that
demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). If a movant meets its burden, the party opposing summary
judgment must present evidence showing either (1) a genuine issue of material
fact or (2) that the movant is not entitled to judgment as a matter of law. Id. at 324.
22
ECF 68.
In determining whether a genuine issue of material fact exists, the evidence
is viewed in the light most favorable to the party opposing summary judgment,
“and all justifiable inferences are to be drawn” in favor of that party. Anderson, 477
U.S. at 255; see also Herzog v. Castle Rock Entm’t, 193 F.3d 1241, 1246 (11th Cir. 1999).
“Credibility determinations, the weighing of the evidence, and the drawing of
legitimate inferences from the facts are jury functions,” and cannot be made by the
district court. Anderson, 477 U.S. at 255. See also Graham v. State Farm Mut. Ins. Co.,
193 F.3d 1274, 1282 (11th Cir. 1999). Summary judgment for the moving party is
proper “[w]here the record taken as a whole could not lead a rational trier of fact
to find for the non-moving party.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986).
b.
Discussion
Both parties assert that Georgia law controls this action. In Georgia, “[t]he
essential elements of a breach of contract claim are (1) a valid contract; (2) material
breach of its terms; and (3) damages arising therefrom.” Brooks v. Branch Banking
& Tr. Co., 107 F. Supp. 3d 1290, 1295 (N.D. Ga. 2015). CAG argues that the evidence
shows that a valid contract existed between the parties, that a material term of that
contract was the payment of commissions, that Shaver failed to pay CAG its April
commissions, and that CAG was harmed therefrom in the amount of the
commissions owed plus interest.23
In response, Shaver does not dispute the existence of a valid contract or its
breach. Rather, it argues that it does not owe CAG for the April 2018 commissions
because: (1) the ASA only requires payment to CAG for clients “managed by”
CAG and CAG either breached the ASA or failed to comply with a condition
precedent to its payment when it did not perform those management services;
(2) CAG’s claim is barred by its prior breach of the ASA relating to Shaver’s
customer, Elior;24 (3) the amount claimed by CAG is wrong; (4) the amount should
be reduced by payments CAG received in a purportedly related action between
CAG and Elior.25
For the reasons stated below, the Court finds that the evidence does not
support Shaver’s claim that CAG failed to comply with a condition precedent
under the ASA or breached the ASA. Therefore, Shaver’s breach is not excused.
However, the Court finds that Shaver has presented evidence of a genuine dispute
of material fact regarding CAG’s calculation for damages. As such, the Court
23
ECF 68-1, at 4–5.
24
ECF 71.
25
Id.
GRANTS the motion for summary judgment on Count II as to liability and
DENIES the motion as to damages.
i.
Liability
As a preliminary matter, the Court finds that CAG has presented evidence
to support each requirement of its breach of contract claim under Georgia law.
CAG provided a copy of the ASA, showing that the parties entered into a
contract.26 Under the contract, absent a superseding agreement tailored to a
specific client, Shaver was required to pay CAG a 5% commission on sales to
CAG’s clients.27 As acknowledged by White, Shaver owed CAG April 2018
commissions.28 However, Shaver has never paid CAG for those commissions.29
Accordingly, CAG has shown that Shaver materially breached the ASA.
Shaver does not dispute the above. Rather, Shaver argues that it is not liable
for its breach of the ASA because CAG either failed to perform a condition
precedent or committed its own breach of the ASA prior to Shaver’s breach. The
Court addresses each in turn.
26
ECF 22-2.
27
Id.
28
ECF 68-2 (“CAG is due a check for April 2018, based on the arrangements prior
to this notification, and that will be paid.”).
29
ECF 68-3, ¶¶ 5–9; ECF 68-4.
The Court rejects Shaver’s claim that CAG failed to satisfy a condition
precedent purportedly established under the ASA’s “managed by” language or
otherwise breached the ASA by not providing management services.30 As
explained in the Court’s Order dismissing Shaver’s breach of contract claim,
Shaver’s argument improperly attempts to read into the contract certain
management services to be performed by CAG that are contrary to the plain
language of the contract and the contract as a whole.31 Since CAG was not required
to provide management services for Shaver, CAG’s failure to do so does not excuse
Shaver’s breach.
Shaver’s contention that, “at the very least, a question of fact is presented as
to the question of whether (as Shaver contends) the [ASA] required the
performance of an actual service on CAG’s part,” is unavailing.32 The ASA shows
that CAG’s role under the ASA was to bring in business for Shaver by directing
CAG’s clients to Shaver.33 This is supported by Shaver’s own testimony regarding
30
ECF 71, at 11.
31
See ECF 88, at 10–13.
32
ECF 71, at 12.
33
ECF 22-2 (“[Shaver] will be the primary supplier of all foodservice food and
food related products . . . to clients managed by [CAG] . . . In exchange [CAG]
will receive a commission of 5% . . . .”).
its reasoning for entering into the ASA. In White’s declaration, he states the
following:
A chief assumption underlying the negotiation and
execution of the amended Supply Agreement was the
notion that CAG would introduce Shaver’s model to new
clients and generate new business for Shaver through
existing customers where CAG could leverage their
credibility and relationships with corporate officers.
When Shaver entered into the [ASA] with CAG, Shaver
believed that the principals of CAG (Rich Adams and
W.T. Ross) had a meaningful understanding of
correctional food service, a network of relationships
created through years of industry work, and the trust of
many people who had worked with them through the
years that would grow Shaver’s sales.
…
CAG was brought in principally because its principals
(Rich Adams and W.T. Ross) had extensive contacts in
the industry, but over time, it became obvious that CAG
had few contacts left as the industry consolidated and
many of CAG’s contacts began to retire or otherwise left
the industry.34
It is undisputed that CAG brought in new clients and increased sales from its
clients who had previously worked with Shaver.35 Thus, it is undisputed that CAG
performed “an actual service” under the ASA.
34
ECF 71-2, ¶¶ 7, 10.
35
Id. ¶ 8.
The Court also rejects Shaver’s argument that CAG’s claims are barred by
its prior breach of the ASA through its alleged mishandling of the Elior order. As
a preliminary matter, Shaver has not shown that CAG breached the ASA in its
handling of the Elior order.36 Moreover, the Court finds that even if CAG had
breached the ASA, Shaver waived the breach by continuing under the contract. “A
party’s right to pursue remedies for breach must be asserted promptly.” Clower v.
Orthalliance, Inc., 337 F. Supp. 2d 1322, 1331 (N.D. Ga. 2004) (citing Crawford v.
Etheridge, 248 Ga. App. 429, 432 (2001)). “At the point of breach, a party may
continue the contract or refuse to perform.” Id. (citing Southern Sav. Bank v. Dickey,
58 Ga. App. 718, 722 (1938) and 13 Williston on Contracts § 39.32 (4th ed. 2003)).
The non-breaching party terminates its right to refuse to perform under the
contract if it continues to perform and receive benefits under the contract after it
learns of the breach. Id.
According to Shaver, the alleged mishandling of the Elior order occurred in
mid-2017.37 However, Shaver continued to perform under the contract and did not
36
See ECF 88, at 12–14 (finding that Shaver failed to sufficiently allege that CAG’s
handling of the Elior order breached a term of the ASA).
37
ECF 71-1, ¶ 12.
terminate it until May 2, 2018.38 As such, even if CAG had breached the ASA in its
handling of the Elior order, Shaver waived the right to stop payments on account
of this breach.
Since it is undisputed that Shaver committed a breach of the ASA and there
was no condition precedent or prior breach that could excuse Shaver’s conduct,
the Court finds that Shaver is liable for the April 2018 commissions under Count II
of the Amended Complaint.
ii.
Damages
CAG calculated the amount it is allegedly owed from Shaver’s breach by
applying a 5% commission to Shaver’s April 2018 invoices from CAG’s clients.39
However, Shaver argues that CAG’s calculation was incorrect for multiple
reasons.
First, Shaver argues that the ASA allowed the parties to modify the ASA’s
terms with regard to specific clients.40 Shaver provided evidence that the parties
38
Id. ¶ 7; ECF 68-2, at 2.
39
ECF 68-6, ¶ 3; ECF 68-7.
40
ECF 71, at 3; see ECF 22-2 (“[CAG] and [Shaver] recognize the need to tailor
separate supply agreements for some clients based on various circumstances
to be determined as they arise. In such cases, those agreements will supersede
this agreement for the client in question with respect to the area of the separate
agreement that is in conflict with this supply agreement.”).
modified the 5% commission rate with regard to at least some clients in the form
of emails between the parties discussing the adjustments for Trinity, A’viands,
Summit, and Aladdin.41 CAG denies that the commission rates were permanently
altered for any clients, or that any such clients were included in its damages
calculation.42 However, contrary to CAG’s assertion, three of those clients are
included in the table outlining its commission calculation.43 Accordingly, Shaver
has raised a dispute of material fact regarding whether CAG accurately calculated
the damages to be awarded through its blanket use of the 5% commission rate.
Second, Shaver argues that CAG’s calculation is incorrect because it does
not account for credits, debits, and sales adjustments or negative transactions.44
Shaver alleges that there are at least 46 negative transactions from April 2018.45
CAG did not respond to this argument; it has not provided any evidence disputing
that such adjustments must be considered or claiming that they were properly
41
ECF 71-2, ¶¶ 20–21 (citing ECF 71-4 and ECF 71-5).
42
ECF 75, ¶ 6 (citing ECF 68-7 and ECF 68-6).
43
See ECF 68-7 (listing invoices from Trinity, Summit, and Aladdin).
44
ECF 71 (citing ECF 71-2, ¶ 24). The necessity to account for these adjustments
is also supported by White’s May 2, 2018 email that notes: “Because it is the
end of the program, we need to make sure all credits, debits and sales
adjustments are processed since they all effect the final payment.” ECF 68-2.
45
ECF 71-2, ¶ 24.
considered in its calculation. Therefore, Shaver has raised a dispute of material fact
as to the accuracy of CAG’s calculation to the extent it does not consider such
adjustments.
Third, Shaver argues that the award must be offset by a Settlement
Agreement entered into by Elior and CAG stemming from CAG’s breach of
contract action against Elior.46 However, the Complaint filed in that action
(provided to the Court by both parties),47 shows that CAG’s action against Elior
was for breaches occurring after July 2, 2018.48 Accordingly, such damages could
not offset Shaver’s non-payment of CAG’s April 2018 commissions under
Count II.
While the Elior settlement agreement is inapplicable to the damages
calculation, Shaver’s arguments that the 5% commission was improperly applied
across the board and that CAG failed to consider appropriate adjustments raises
genuine issues of material fact as to the accuracy of CAG’s damages calculation.
46
ECF 71, at 16–17; see ECF 72-1 (filed under seal).
47
See ECF 71-8 and ECF 74.
48
Compl., CAG Food Services, LLC v. Elior, Inc., No. 1:19-CV-00791-WMR
(N.D. Ga. Feb. 14, 2019), ECF 1, ¶ 46.
Consequently, the Court DENIES summary judgment on the issue of damages
under Count II of the Amended Complaint.
IV.
Conclusion
The Court GRANTS IN PART AND DENIES IN PART CAG’s motion for
partial summary judgment on Count II of the Amended Complaint [ECF 68]. The
Court GRANTS the motion as to Shaver’s liability and DENIES the motion as to
damages.
Counts I, IV, V, VII, and VIII remain pending in this litigation, as does
Shaver’s motion for summary judgment on those counts. The Court STAYS
further adjudication on the issue of damages to be awarded under Count II until
it rules on Shaver’s motion for summary judgment.
SO ORDERED this the 24th day of September 2020.
Steven D. Grimberg
United States District Court Judge
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