Rust Consulting, Inc. v. Schneider Wallace Cottrell Konecky Wotkyns LLP
Filing
88
ORDER granting in part 61 Motion for Partial Summary Judgment. (Written Opinion) Signed by Senior Judge David S. Doty on 7/31/2019. (DLO)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 17-4981(DSD/TNL)
Rust Consulting, Inc.,
Plaintiff,
v.
ORDER
Schneider Wallace Cottrell
Konecky Wotkyns, LLP,
Defendant.
Michael R. Cunningham, Esq., Amy E. Erickson, Esq. and Gray
Plant Mooty, 80 South 8th Street, Suite 500, IDS Center,
Minneapolis, MN 55042, counsel for plaintiff.
Peter B. Schneider, Esq., William M. Hogg, Esq. and Schneider
Wallace Cottrell Konecky Wotkyns LLP, 3700 Buffalo Speedway,
Suite 300, Houston, TX 94608, counsel for defendant.
This matter is before the court upon the motion for partial
summary judgment by defendant Schneider Wallace Cottrell Konecky
Wotkyns LLP (Schneider Wallace).
Based on a review of the file,
record, and proceedings herein, and for the following reasons, the
motion is granted in part.
BACKGROUND
This
business
dispute
arises
out
of
Schneider
Wallace’s
alleged failure to pay plaintiff Rust Consulting, Inc. (Rust) for
services rendered, and Rust’s alleged failure to adequately render
those services.
The dispute centers on a mass tort litigation
project that the parties worked on together from 2011-2014 (the
Project).
I.
The Parties
Rust is a Minnesota corporation specializing in consulting,
call-center, data management, claims administration, and settlement
services.
Compl. ¶ 1; see also Supp. Blake Aff., ECF No. 80, ¶ 6.
Schneider
Wallace
is
a
California
law
firm
that
represents
consumers in mass tort cases involving defective medical devices
and pharmaceutical products.
II.
Compl. ¶ 2; Supp. Blake Aff. ¶ 6.
Master Services Agreement
In early 2011, Schneider Wallace decided to expand its mass
tort practice. Supp. Blake Aff. ¶ 4. Schneider Wallace asked Rust
to provide selected client services related to that effort, and
claims that Rust represented that it had substantial experience
working on mass tort cases.1
¶
5.
There
is
some
Id. ¶ 6; see also T. Schneider Decl.
dispute
as
to
the
accuracy
of
Rust’s
representation.
In early 2011, the parties drafted a Master Services Agreement
(MSA), which incorporated a Statement of Work, to govern their
rights and obligations with respect to the Project.2
ECF No. 21-1, ¶ 6.
Blake Aff.,
In the Statement of Work, Rust agreed to
provide, among other things: client consulting services; call
center services and scripting; training and staffing services;
1
Schneider Wallace and Rust first worked together in 2009 on
unrelated matters and still work together today. Blake Aff. ¶ 4.
2
The record does not establish which party drafted the
agreement so the court will assume it was jointly drafted.
2
client
website
reporting;
and
client
portal
design;
notifications;
data
services;
document
customized
capture;
settlement
distribution and tax services; and lien resolution services. Blake
Aff. Ex. A App’x A at 1-2.
Schneider Wallace, in turn, agreed to
pay Rust $2,500 for each resolved claim and to pay hourly fees for
certain services.
Id. at 7-8.
The Statement of Work establishes
criteria to determine when a claim is resolved and requires that
Schneider
resolution.
Wallace
Id.
notify
Rust
within
thirty
days
of
such
The Project was expected to last four years and
apply to 3,000 or more cases.
Id. at 7.
On March 2, 2011, Steven Stein executed the MSA and Statement
of Work for Schneider Wallace.
Ex. 4.
Work.
Id. ¶ 7; see also Holland Aff. ¶ 9;
It appears that Rust did not sign the MSA or Statement of
Holland Dep. at 19:23-20:4; see also Blake Aff. Ex. A at 2;
App’x A-1; Holland Aff. Ex. 4.
The record shows that the first case under the Project began
in May of 2011.
Supp. Blake Aff. ¶ 9.
Rust started billing
Schneider Wallace for its work in the spring of 2012. Holland Aff.
Ex. 2.
On November 12, 2013, Todd Schneider, a Schneider Wallace
partner, sent an email asking Rust to send him a copy of “our
contract” so he would not have to find it in his file.
Aff. Ex. 5 at 3.
Holland
In response, Rust indicated that it had an
unsigned MSA and Statement of Work.
not respond to Rust’s disclosure.
3
Id. at 2.
See id.
Todd Schneider did
At no time before this
litigation, did Schneider Wallace claim that the MSA or Statement
of Work were not effective or binding on the parties.
III. Disputed Charges
Rust asserts that it provided adequate services under the MSA
and maintained, among other things, a claims call-center, intake
services, consulting, data management services, form processing,
and reporting services for the Project.3
21.
Supp. Blake Aff. ¶¶ 18-
It also asserts that it created an online client portal to
facilitate claim processing.4
Id. ¶ 20.
Rust did, however, use third-party vendors to perform some of
the work.
Id. ¶ 17.
For example, Rust used FedEx and other
metered services to send client notifications and deliveries, and
used third parties for medical-record searches and other document
retrieval.
Id.
Rust also used third-party vendor LexiCode to
review medical records.
Id.
Schneider Wallace contends that it
was unaware that Rust used third parties to perform some of the
work and did not know that a third party had access to its clients’
medical records.
Vogel Dep. at 47:13-16; 202:8-10; see also T.
Schneider Decl. ¶ 8.
Schneider Wallace was also unaware that Rust
billed it for third-party work because the invoices did not include
itemized billing information.
Vogel Dep. at 34:24-35:2; 35:22-
3
The Project included nine separate mass tort cases.
Blake Aff. Exs. 7-15.
4
Supp.
The portal has since been archived, and cannot be retrieved.
Blake Dep. at 67:9-68:1.
4
36:3; 50:11-16; see also T. Schneider Decl. ¶ 14.
Schneider
Wallace further claims that Rust failed to perform all work
required under the MSA, namely, settlement distributions, website
design, and lien resolutions.
T. Schneider Decl. ¶ 9.
On March 28, 2012, Rust sent Schneider Wallace the first of
nine invoices.
Supp. Blake Aff. ¶ 17; Exs. 7-15.
In late 2013,
Schneider Wallace raised concerns that Rust had overcharged for
certain services and expenses.
Holland Aff. ¶ 5.
the invoice totals to address those concerns.
Decl. ¶ 12.
Rust adjusted
Id.; T. Schneider
Rust also offered to waive half of the resolved claim
fees over the next three years.5
Holland Aff. Ex. 5 at 4-7.
The
parties were unable to resolve the dispute at that time, however,
and Rust continued to invoice Schneider Wallace throughout 2013 and
into February 2014. Id. Ex. 2. Rust denies that Schneider Wallace
ever complained about the quality of its work.
Supp. Blake Aff. ¶
35.
In 2015, Schneider Wallace offered to settle the ongoing
dispute between the parties for $75,000.
Rust declined the offer. Id.
Holland Aff. Ex. 3 at 2.
Schneider Wallace then claimed that
“Rust utterly failed to deliver what it had promised” and that
Schneider Wallace had “incurred significant expense because of
Rust’s conduct.” Id.
To date, Schneider Wallace has not paid Rust
5
Rust also indicated that the resolved claim fee was $2,000,
not the $2,500 set forth in the MSA. Holland Aff. Ex. 5 at 6.
5
for any of its work on the Project.
T. Schneider Decl. ¶ 10.
Schneider Wallace asserts that it had to use an attorney to
complete Rust’s work and to correct its mistakes.
Id. ¶ 15.
Schneider Wallace claims that the attorney spent significant time
reviewing client intake documents and analyzing medical records.
Id. ¶ 15; see also P. Schneider Decl. ¶ 7.
the attorney $1,198,313.
Schneider Wallace paid
Ruemke Decl. Ex. A.
Rust disputes that the attorney’s work is related to the
Project. See Erickson Aff. Ex. 2. Rust also argues that Schneider
Wallace’s figure does not reflect its actual expenses.
IV.
This Action
On October 9, 2017, Rust commenced this action in Hennepin
County District Court raising breach of contract, account stated,
quantum meruit, and accounting claims.
It seeks $323,746.22 in
damages related to the unpaid invoices, an accounting of how many
claims Schneider Wallace resolved, and pre- and post-judgment
interest.
Schneider
Wallace
timely
removed
and
raised
negligent
misrepresentation, tortious interference with business expectancy,
implied-in-fact contract, and breach of the covenant of good faith
and
fair
dealing
counter-claims.
$1,198,313 in damages.
Schneider
Wallace
seeks
Schneider Wallace now moves for partial
summary judgment.
6
DISCUSSION
I.
Standard of Review
“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); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A fact is material only when its resolution affects the outcome of
the case.
(1986).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
A dispute is genuine if the evidence is such that it could
cause a reasonable jury to return a verdict for either party.
See
id. at 252 (“The mere existence of a scintilla of evidence in
support of the plaintiff’s position will be insufficient ....”).
On a motion for summary judgment, the court views all evidence
and inferences in a light most favorable to the nonmoving party.
Id. at 255.
The nonmoving party, however, may not rest upon mere
denials or allegations in the pleadings but must set forth specific
facts sufficient to raise a genuine issue for trial.
U.S. at 324.
Celotex, 477
A party asserting that a genuine dispute exists - or
cannot exist - about a material fact must cite “particular parts of
materials in the record.”
Fed. R. Civ. P. 56(c)(1)(A).
If a
plaintiff cannot support each essential element of a claim, the
court must grant summary judgment because a complete failure of
proof regarding an essential element necessarily renders all other
facts immaterial. Celotex, 477 U.S. at 324.
7
II.
Breach-of-Contract Claim
Schneider Wallace first moves for summary judgment on Rust’s
contract claim.
Schneider Wallace argues that the MSA which is
“effective upon execution,” was never signed by Rust and therefore
is unenforceable.
ECF No. 21-1 ¶ 1.
The court disagrees.
“It is well established that the party seeking to enforce a
written agreement need not have signed the agreement if he agreed
to the contract and acted in conformity therewith.”
Taylor Inv.
Corp. v. Weil, 169 F. Supp. 2d. 1046, 1056 (D. Minn. 2001) (citing
Poser v. Abel, 510 N.W.2d 224, 228 (Minn. Ct. App. 1994)); see also
Asbestos Prods., Inc. v. Healy Mech. Contractors, 235 N.W.2d 807,
809 (Minn. 1975) (“[W]here the parties have assented to all the
essential terms of the contract and proceed to perform in reliance
upon it, the mere reference to a future contract in writing will
not negative the existence of the present, binding contract.”).6
This is true even if a party’s signature could be considered a
condition precedent to a contract’s enforcement because “Minnesota
law provides that one party to a contract may waive a condition
precedent which exists for that party’s own benefit.”
Taylor, 169
F. Supp. 2d at 1056.
6
Schneider Wallace’s attempts to distinguish Taylor are
unpersuasive.
The fact that Taylor involved a signature
requirement for one party only is an immaterial distinction under
the circumstances.
8
Here, Rust as the non-signing party seeks to enforce the MSA.
Rust undisputably acted in conformity with the MSA while undergoing
work for the Project.
Thus, even if Rust’s signature were a
condition precedent, it waived that condition by performing under
the contract.
president,
See id.
Elizabeth
determination.
The declaration of Rust’s former vice
Graham,
does
not
affect
the
court’s
Graham stated that, to the best of her knowledge,
Rust did not sign the agreement because it was concerned that it
could not “perform all of the functions” promised in the MSA.
Graham Decl. ¶ 5.
But it is undisputed that Rust did in fact
perform under the MSA and considered the contract to be in full
force
and
effect,
as
did
Schneider
Wallace.
Under
these
circumstances, the MSA was a valid and enforceable contract between
the parties.
this claim.
The court must therefore deny summary judgment on
Whether Rust performed adequately under the MSA (in
other words, whether Rust breached the MSA) is separate question
reserved for the jury.
III. Account Stated and Quantum Meruit Claims
Because there is an express contract between the parties,
Rust’s quantum meruit claim is no longer viable and must be
dismissed.
an
See Taylor, 169 F. Supp. 2d at 1060 (“The existence of
express
theories
meruit.”).
contract
of
between
quasi-contract,
parties
unjust
precludes
recovery
enrichment,
or
under
quantum
The same is true for Rust’s account stated claim.
9
See
HomeStar Prop. Sols, LLC v. Safeguard Props., LLC, 370 F. Supp. 3d
1020, 1030 (D. Minn. 2019) (citations omitted) (“[B]ecause an
account
stated
claim
is
merely
‘an
alternative
means
of
establishing liability for a debt other than a contract claim,’
Minnesota courts have barred an account stated claim when ... a
written contract governs the disputed account.”).
IV.
Accounting Claim
Rust seeks an accounting of how many claims Schneider Wallace
resolved and a computation of how much it is owed in resolved claim
fees.
Schneider Wallace argues that this claim fails because Rust
cannot demonstrate that Schneider Wallace agreed to the resolved
claim fee.
The court disagrees.
Under Minnesota law, “the right to an accounting is the right
to have the defendant account for funds or other property.” Welk v.
GMAC Mortg., LLC, 850 F. Supp. 2d 976, 994 (D. Minn. 2012).
Accounting is an equitable remedy, which “compels the disclosure of
money or property held or obtained by a particular party but which
belongs to another.”
Id.
(internal citation omitted).
As discussed, the parties entered into a valid contract which
included a resolved claim fee.
The jury must determine whether
that fee was changed, waived, or unearned.
judgment on this claim is denied.
10
As a result, summary
V.
Damages
Schneider Wallace lastly moves for summary judgment on Rust’s
damages. Genuine issues of material fact preclude summary judgment
on this aspect of the case.
To
the
extent
Schneider
Wallace
also
moves
for
summary
judgment on certain aspects of its counterclaims, the motion is
denied.
CONCLUSION
Accordingly, IT IS HEREBY ORDERED that defendant’s motion for
summary judgment [ECF No. 61] is granted in part as set forth
above.
Dated: July 31, 2019
s/David S. Doty
David S. Doty, Judge
United States District Court
11
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?