Barkley, Inc. v. Gabriel Brothers, Inc. et al
Filing
95
ORDER denying, subject to further consideration at trial 52 motion to exclude testimony of plaintiff's expert; denying 54 plaintiff's motion for summary judgment on affirmative defense of accord and satisfaction; denying 67 motion t o enforce judicial admission; and granting 70 defendants' motion for partial summary judgment on the breach of contract claim in Count 1, but denying defendants' motion for partial summary judgment in all other respects. Signed on 11/20/14 by Magistrate Judge John T. Maughmer. (Alexander, Pam)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
BARKLEY, INC.
Plaintiff and Counterclaim-Defendant,
v.
GABRIEL BROTHERS, INC. and
RUGGED WEARHOUSE, INC.,
Defendants and Counterclaimants.
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Civil Action Number
13-01013-CV-W-JTM
ORDER
On October 5, 2012, Gabriel Brothers, Inc. (“Gabriel Brothers”) entered into a sevenpage Master Services Agreement (“MSA”) with Barkley, Inc. (“Barkley”). Pursuant to the
MSA, Barkley agreed to provide certain marketing and advertising services to Gabriel Brothers
(and its affiliated company, Rugged Wearhouse, Inc.) on a project-by-project basis. The MSA
provided that all services to be covered by the agreement had to “be designated in a written
Statement of Work” 1 that had to contain the following specific language:
This Statement of Work is incorporated into, and made a part of,
that certain Master Services Agreement (“Agreement”) between
the parties dated Oct. 5, 2012, which Agreement governs the
relationship of the parties. All terms and conditions provided in
the Agreement shall apply to this Statement of Work.
The MSA further provided two situations whereby Gabriel Brothers would compensate Barkley:
(1)
1
in consideration for services on a project, Gabriel Brothers would
“pay Barkley those fees agreed to by the parties and designated in
a project’s Statement of Work,” and
The use of statements of work is common in the advertising industry and such
documents are utilized to avoid confusion and uncertainty regarding the scope of work to be
performed and the amount that will be paid for such work.
(2)
Gabriel Brothers would reimburse Barkley “for all reasonable outof-pocket expenses pursuant to [an agreed upon explanation of
terms] so long as such expenses are pre-approved in advance by
[Gabriel Brothers] in writing.”
In addition, the MSA provided that either Barkley or Gabriel Brothers could terminate the MSA
with 90 days written notice.” Such a termination would not affect previously agreed upon
projects “then in effect.”
The business relationship between Barkley and Gabriel Brothers was short-lived and has
led to the current needlessly contentious litigation before the Court. Specifically, the litigation
was instituted by Barkley on September 4, 2013, when Barkley sued Gabriel Brothers (and
Rugged Wearhouse, Inc.) in three counts: (1) an alleged breach of the MSA, (2) breach of an
alleged agreement between the parties on April 5, 2013, and (3) unjust enrichment. In response,
Gabriel Brothers (and Rugged Wearhouse, Inc.) counterclaimed asserting claims against Barkley
for (1) breach of the MSA, and (2) unjust enrichment.
With discovery concluded and a trial date approaching, Gabriel has filed a motion with
the Court seeking a summary judgment against Barkley on Barkley’s claims for breach of the
MSA and breach of the alleged agreement of April 5, 2013. In addition, Gabriel Brothers seeks a
partial summary judgment in its favor on its counterclaim against Barkley for breach of the
MSA. The Court grants in part and denies in part the pending motion.
With regard to Barkley’s claim against Gabriel Brothers for breach of the MSA, the
dispute centers on the parties’ dealings in the first quarter of 2013. 2 Barkley contends that the
parties agreed to a Statement of Work “from January 2013 forward” 3 and that Gabriel Brothers
2
The parties had previously entered into an agreed Statement of Work for the
fourth quarter of 2012.
3
On March 26, 2013, Gabriel Brothers, in writing, informed Barkley that it was
terminating the MSA.
2
has not paid the monthly fee of $58,333 per month due on this Statement of Work. Gabriel
Brothers asserts that there was no such agreed upon Statement of Work under the MSA
obligating it to make such payments to Barkley. The Court agrees.
Barkley argues that an agreed upon Statement of Work between the parties was finalized
on February 21, 2013. Prior to that date, there were several exchanges between the parties
regarding a potential Statement of Work. Ultimately, on February 13, 2013, Barkley wrote to
Gabriel Brothers:
With proposal, the fee will drop to 58,333.33 per month (Feb–
Dec). [] We have tightened our fees to work with your budget, and
feel we can accomplish this with a disciplined approach to the prescheduled events. We would like to set up a call to walk through
the attachment together and get our agreement finalized.
Thereafter, on February 21, 2013, Barkley sent Gabriel Brothers an email with an “updated
budget document” attached. The attachment was labeled as “Statement of Work.” After further
discussions between the parties, Barkley made further revisions to its proposed Statement of
Work and emailed it to Gabriel Brothers on March 1, 2013, with the note:
If you feel good about this, we will get a contract drafted so we can
get this finalized and keep moving on our events.
However, the parties continued negotiations and, after Gabriel Brothers asked for additional
work to be included, on March 8, 2013, Barkley made further changes, including increasing the
proposed monthly fee to $60,000. Barkley indicated that if the revisions were acceptable then it
would “send over the final paper work to be signed.” The email concluded:
Please let me know if you have any questions on these changes. I
am hopeful we can get this approved soon. I am starting to draft
the contract now based on this latest agreement. Once it is
finished, we will send it over to you for final approval.
3
Gabriel Brothers did not approve the proposed Statement of Work and, as previously noted,
terminated the MSA in writing on March 19, 2013.
In Count I of its petition, Barkley contends that, pursuant to the MSA, Gabriel Brothers
owes it “the $58,333 monthly fee for February, and March (while work was continuing to be
performed) and for April, May, and June (the 90 day notice and transition period).” 4 As per the
terms of the MSA, however, Gabriel Brothers would be obligated to pay the aforementioned
monthly fees only if “those fees [had been] agreed to by the parties and designated in a project’s
Statement of Work.” The Court concludes that the parties did not have a meeting of the minds
on any Statement of Work for the first quarter of 2013 and the parties did not enter into a
binding, enforceable Statement of Work for that time period that met the strict but unambiguous
requirements of the MSA – an MSA that was freely entered into by these two sophisticated and
knowledgeable business entities.
In Count II of its petition, Barkley contends that, following the termination of the MSA
by Gabriel Brothers, the parties reached an alternative contractual arrangement that Gabriel
Brothers subsequently breached. Following the termination, the parties entered into negotiations
on a separation agreement. According to Barkley, an oral agreement was reached on April 5,
2013, whereby:
[Gabriel Brothers] rather than paying the January [2013] Invoice
and the monthly retainer for February, March 2013 plus the 90 day
notice period under the 2013 Statement of Work [would] pay
Barkley for the actual hours worked on various projects for
[Gabriel Brothers].
It is undisputed that on or about April 5, 2013, Barkley sent to Gabriel Brothers several thirdparty invoices as well as invoices for work actually done for Gabriel Brothers in February and
4
The petition also references some 2012 charges and a January 2013 invoice but
indicates that Gabriel Brothers has paid those amounts.
4
March of 2013. Gabriel Brothers paid the third party vendors directly. However, Gabriel
Brothers questioned some of the invoices for Barkley’s work and paid Barkley only $228,677.13
of the $366,900.65 that Barkley claimed it was owed. Barkley seeks the remaining balance
alleging that Gabriel Brothers breached the April 5 oral agreement.
It does appear to be beyond dispute that the parties were working on an agreement to
resolve their differences and that the agreement would entail Gabriel Brothers paying Barkley for
“actual costs.” 5 Gabriel Brothers believes that it has paid such actual costs by paying all thirdparty invoices and by paying those parts of Barkley’s invoices that adequately reflected work
done for Gabriel Brothers. 6 Barkley, on the other hand, believes that the payment of anything
less than 100% of its invoiced amount is a failure to pay actual costs. The resolution of such a
contract dispute is resolved by examining the agreed upon terms of the underlying contract.
Unfortunately, in this case, there is no clearly defined contract.
An action for breach of contract requires a plaintiff to demonstrate: “(1)
the existence and terms of a contract; (2) that plaintiff performed or tendered performance
pursuant to the contract; (3) breach of the contract by the defendant; and (4) damages suffered by
the plaintiff.” Keveney v. Missouri Military Academy, 304 S.W.3d 98, 104 (Mo. 2010) (en
banc). It is axiomatic that “[t] he existence of a contract necessitates a ‘meeting of the minds'
which the court determines by looking to the intention of the parties as expressed or manifested
5
This is the phrase used by Gabriel Brothers’ CEO Ken Seipel in an April 16, 2013
email to other Gabriel Brothers’ employees regarding his phone discussion with Barkley’s CEO
Daniel Fromm. The email [Doc. 80, Exhibit 16] states: “Dan [Fromm] and I have agreed we are
paying for actual costs versus the monthly fee and he will waive the cancellation fees on the back
side. Deposition testimony of Daniel Fromm [Doc. 71, Exhibit A at 190, 195-196.] corroborates
this conversation and agreement.
6
After reviewing the Barley invoices, Gabriel Brothers noted repeated invoicing
for general services not related to an approved project and some charges with no explanation of
the work performed.
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in their words or acts.” J.H. v. Brown, 331 S.W.3d 692, 701–02 (Mo. App. [W.D.] 2011).
The essential terms of the contract must be capable of certain interpretation. Ketcherside v.
McLane, 118 S.W.3d 631 636 (Mo. App. [S.D.] 2003). “That is, [the] terms of agreement must
be sufficiently definite to enable the court to give it an exact meaning.” Id. At issue here is
whether the parties have “a mutuality of assent or a meeting of the minds on the essential terms
of a contract.” Id.
In this case, whether there was a meeting of the minds on the essential elements of a
separation agreement is a close call. However, the Court is mindful:
Determination that an agreement is sufficiently definite is favored
in the courts, so as to carry out the reasonable intention of the
parties if it can be ascertained. A contract is sufficiently definite if
it contains matter which would enable the court under proper rules
of construction to ascertain its terms, including consideration of the
general circumstances of the parties and if necessary relevant
extrinsic evidence.
Property Assessment Review, Inc. v. Greater Missouri Builders, Inc., 260 S.W.3d 841, 846 (Mo.
App. [E.D.] 2008). In this case, there was an agreement that Gabriel Brothers would pay
Barkley’s “actual costs.” Keeping in mind that every agreement is overlain with implied duties
of good faith and fair dealing, the Court concludes that there is a legitimate jury question as to
the exact amount of what Barkley’s “actual costs” were, and whether Gabriel Brothers’ partial
payment covered such costs (i.e., whether Gabriel Brothers in fact breached any agreement to
pay actual costs).
With regard to Gabriel Brothers’ motion for partial summary judgment on its own
counterclaims, the Court denies the motion. The rationale for the motion largely depends on the
Court accepting Gabriel Brothers’ argument that Barkley has admitted crucial matters because it
did not file a response to Gabriel Brothers’ FIRST AMENDED ANSWER, AFFIRMATIVE DEFENSES,
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AND COUNTERCLAIM
[Doc. 21]. It is correct that FED. R. CIV. P. 8 provides that “[a]n allegation
– other than one relating to the amount of damages—is admitted if a responsive pleading is
required and the allegation is not denied.” It is also true that a counterclaim is an allegation
requiring a responsive pleading.
However, in this case, Barkley did respond to the counterclaim when it was first raised in
Gabriel Brothers’ original answer. The counterclaim in the amended answer is seemingly
identical to the first pleading. To that end, “[t]he failure to respond to an amended [pleading
does] not result in admissions under Rule 8(d) . . . when the answer to the original [pleading] had
the effect of denying the crucial allegations in the amended pleading.” WRIGHT, MILLER, ET AL.,
FEDERAL PRACTICE AND PROCEDURE § 1279. See also Stanley Works v. Snydergeneral
Corp., 781 F.Supp. 659, 664-65 (E.D.Cal. 1990) (“From the court’s research, the option to file an
Answer to a First Amended Complaint lies with the defendant. . . [and the] defendant can do so
if the First Amended Complaint makes allegations that change the theory or scope of the case”).
As summarized by another court:
[C]ase law exists for the proposition that an answer to the original
complaint may also suffice as an answer to an amended
complaint. That proposition appears to be limited to instances in
which a defendant seeks to rely upon an affirmative defense
asserted in its answer to the complaint but not in an answer to an
amended complaint or in which the averments of the amended
complaint are substantially similar to averments in the original
complaint and, therefore, a denial in the answer to the original
complaint suffices as a denial to a substantially similar averment in
the amended complaint
Whittaker v. Morgan State University, 2011 WL 4072193, op. at 2 (D.Md. Sept. 12, 2011).
Given this law, and in light of the fact that Gabriel Brothers never sought nor was granted leave
to file its FIRST AMENDED ANSWER, AFFIRMATIVE DEFENSES, AND COUNTERCLAIM
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in the first instance, the Court will not deem Barkley to have admitted the allegations contained
in the latter filed pleading.
Finally, the Court briefly addresses three additional motions pending in this case. First is
Gabriel Brothers’ MOTION TO EXCLUDE TESTIMONY OF PLAINTIFF’S EXPERT SAM MEERS
PURSUANT TO FEDERAL RULE OF EVIDENCE 702 [Doc. 52]. At the present time, the motion is
denied. While it is clear to the Court that the parameters of Mr. Meers should be stricter than
those set forth in his expert report, the Court will consider objections to Mr. Meers’ testimony at
trial and (if necessary) hear portions of his testimony initially outside the hearing of the jury.
The next motion, Barkley’s MOTION TO ENFORCE JUDICIAL ADMISSION [Doc. 67] strikes the
court as odd, at best. The statement in paragraph 13 of Gabriel Brothers’ FIRST AMENDED
ANSWER 7 speaks for itself and is subject to evaluation and consideration by the fact finder in
addition to any other evidence presented. Finally, Barkley’s MOTION FOR SUMMARY JUDGMENT
ON AFFIRMATIVE DEFENSE OF ACCORD AND SATISFACTION [Doc.
54] is denied. The statement of
Barkley’s in-house counsel that the payment received from Gabriel Brothers was not an accord
and satisfaction and the mere response of Gabriel Brothers’ in-house counsel’s “I understand,”
7
Paragraph 13 of the FIRST AMENDED ANSWER, AFFIRMATIVE DEFENSES, AND
COUNTERCLAIM OF GABRIEL BROTHERS, INC. AND RUGGED WEARHOUSE, INC., [Doc 21] reads as
follows:
After the issuance of the January Invoice, the parties agreed upon the
terms of the 2013 Statement of Work for a monthly fee of $58,333 from
February 2013 forward, with the January Invoice being due and payable.
ANSWER:
Gabriel Brothers and Rugged Wearhouse admit that they
agreed to a monthly fee of $58,333 from February 2013
forward after the issuance of the January Invoice. Gabriel
Brothers and Rugged Wearhouse lack sufficient
information or knowledge to form a belief as to the
truth of the remaining allegations contained in Paragraph
13 and, therefore, deny the same.
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do not establish that there are no genuine issues of material facts regarding accord and
satisfaction.
Accordingly, in light of the foregoing discussion, it is
ORDERED that the MOTION TO EXCLUDE TESTIMONY OF PLAINTIFF’S EXPERT SAM
MEERS PURSUANT TO FEDERAL RULE OF EVIDENCE 702 [Doc 52] is DENIED at this time, subject
to further consideration at trial. It is further
ORDERED that Barkley’s MOTION FOR SUMMARY JUDGMENT ON AFFIRMATIVE
DEFENSE OF ACCORD AND SATISFACTION [Doc. 54] is DENIED. It is further
ORDERED that Barkley’s MOTION TO ENFORCE JUDICIAL ADMISSION [Doc. 67] is
DENIED. It is further
ORDERED that DEFENDANTS AND COUNTER-CLAIMANTS’ MOTION FOR PARTIAL
SUMMARY JUDGMENT [Doc 70] is GRANTED with regard to Barkley’s claims for breach of the
parties’ Master Service Agreement (Count 1) but DENIED in all other respects.
/s/ John T. Maughmer
John T. Maughmer
United States Magistrate Judge
9
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