VETERAN CALL CENTER, LLC et al v. HAMMERMAN & GAINER, INC.
OPINION. Signed by Judge Jose L. Linares on 4/19/2016. (seb)
NOT FOR PUBLICATION
UNITED STA TES DISTRICT COURT
DISTRICT OF NEW JERSEY
VETERAN CALL CENTER, LLC, et al.,
Civil Action No.: 15-6257 (JLL) (JAD)
HAMMERMAN & GAINER, INC.,
LINARES, District Judge.
Presently before the Court are cross-motions for summary judgment filed by Plaintiffs
Veteran Call Center, LLC and Veteran Contact Center, Inc. (collectively "VCC") and Defendant
Hammerman & Gainer, Inc. ("HGI").
(ECF Nos. 13, 22.) The Court has considered the
submissions of the parties and heard oral argument on March 24, 2016. For the reasons set forth
below, the Court grants VCC's motion (ECF No. 13) and denies HGI's motion (ECF No. 22).
Plaintiff Veteran Call Center, LLC ("Veteran Call Center") is a Virginia company with its
principal place of business in Piscataway, New Jersey. (Compl.
Plaintiff Veteran Contact
Center, Inc. ("Veteran Contact Center") is a New Jersey corporation with its principal place of
business in Piscataway, New Jersey. (Id.
Plaintiffs are "a Certified Service Disabled Veteran
Enterprise and Minority Business Enterprise that services commercial customers and Government
agencies by employing physically disabled Veterans as call center managers." (Id.
HGI is a
Louisiana corporation with its principal place of business in New Orleans, Louisiana. (Id.
a risk services and claims management company that provides property and casualty
claims administration services nationwide." (Id. ii 9.)
On or about May 8, 2013, HGI entered into a three-year, $68 million contract (the "Prime
Contract") with the State of New Jersey, Department of Treasury, Division of Purchase and
Property (the "State") to administer the State's Superstorm Sandy Housing Incentive Program
("SSHIP"), a $1.6 billion program in which HGI would be responsible for, among other things,
development of an intake and application process, eligibility determination, loan closings,
disbursing of funds, monitoring and compliance and close out of the program. (Id. ii 11; ECF No.
13-1 VCC 56.l SMF ii I; ECF No. 22-2, HGI Responsive 56.l SMF ii 1.) In order to satisfy its
responsibility under the Prime Contract with New Jersey, HGI was required to set up a call center
"to receive calls from New Jersey homeowners victimized by Superstorm Sandy in order to assist
them with the application process for the Sandy housing programs." (Compl. iii! 13-14.) HGI
chose to fulfill its call center obligation by subcontracting the call center operations to a third party.
On August 23, 2013, Plaintiff Veteran Call Center contracted with Defendant HGI "to
operate and manage the [New Jersey] Call Center (the 'Subcontract')." (ECF No. 13-3, Magnelli
C (the "Subcontract"); VCC 56.1SMFii2; HGI Responsive 56.1 SMF ii 2.)
The Subcontract contains the following payment provision:
SUBCONTRACTOR shall be paid within fifteen (15) days of
PRIME's receipt of payment from the Client for
SUBCONTRACTOR'S services. Each invoice shall contain all
invoice data required in the prime contract as it relates to the
Services. No payment will be made unless PRIME receives
payment for SUBCONTRACTOR'S services from Client.
Id. § 8.5. The parties dispute whether, pursuant to the above provision, each subcontractor was
"put on notice that it would only be paid if HGI received payment from the State tied specifically
to the subcontractor's services." (ECF No. 22-2, HGI 56.1 CSMF if 4; ECF No. 23-2, VCC Reply
to CSMF if 4.)
In the Fall of 2013, the State stopped making payments under the Prime Contract
altogether, and on December 6, 2013, HGI and the State negotiated a termination agreement
whereby the Prime Contract was terminated by mutual agreement. (ECF No. 22-3, Oney Deel.,
("Termination Agreement").) The Termination Agreement provided that HGI would
continue to perform until January 6, 2014, with an option for the State to extend that term by an
additional two weeks, during which period HGI would continue to perform services required under
the Prime Contract and "transition services" related to the winding down of the Prime Contract in
order to provide an orderly transition of services to one or more successor contractor(s) or State
The Termination Agreement also provided for: (a) two lump sum payments, one for $7
million and one for $2 million, which funds remained subject to reconciliation or further
adjustment by the State and were not finally resolved until HGI and the State reached a settlement
of arbitration proceedings in May 2015; and (b) an agreement by the parties to submit to arbitration
for all remaining disputes arising out of, or relating to, the Prime Contract. (Id. §§ 4, 7.)
HGI contends that the State declined to perform an invoice-by-invoice review, such that
the $9 million paid pursuant to the Termination Agreement was not allocated to any particular
invoices or services. (HGI 56.l CSMF if 16.) VCC claims that the State identified 21 invoices
that the $9 million payment was intended to cover. (VCC Reply to CSMF if 16.) HGI elected to
make distributions from the $9 million payment to itself and its subcontractors, but no distribution
was made to VCC out of the $9 million interim payment. (Id. if 17, 18; HGI 56.1 CSMF
18.) Because the $9 million interim termination payment was subject to a final reconciliation and
possible claw back, HGI did not distribute the entire $9 million. (Id. if 19.)
February 2014, HGI commenced an arbitration to recover the remainder of monies
15) owed to it and its subcontractors, including Veteran Call Center, for services
performed pursuant to the Prime contract. (VCC 56.1 SMF if 5; HGI Responsive 56. l SMF if 5.)
The majority of the unpaid invoices were for work performed by HGI's subcontractors, including
Veteran Call Center. (Id. if 6.) In response to HGI's demand for payment, the State presented
counterclaims seeking damages in an amount in excess of both the $9 million interim termination
payment and the outstanding amounts still owed to HGI and its subcontractors. (HGI 56.1 CSMF
if 21 ·
Reply to CSMF if 21.) HGI contends that it expended over $2 million in legal fees and
costs litigating and negotiating with the State. (Id. if 22.)
On May 7, 2015, HGI and the State of New Jersey entered into a Settlement Agreement,
whereby the State agreed not to pursue its counterclaims and make a final lump sum payment of
$7,625,000 for the outstanding balance.
if 23; Magnelli Deel., Ex. A ("Settlement
Agreement").) Under the terms of the Settlement Agreement:
1.1. As full payment for all invoices and work performed by HGI
and any of HGI's subcontractors, whether submitted or retained,
allowed or disallowed, that in any way could be construed as an
obligation of the State to HGI under the terms of the Contract, within
seven (7) days after receipt of a fully executed copy of this
Settlement Agreement, the DCA shall pay HGI the sum of
$7 ,625,000.00 ("Settlement Payment"), such settlement to include
"other direct costs" and travel costs, to be held in escrow by
McCarter & English, LLP, as escrow agent ...
1.4. HGI represents and warrants that the subcontractors referenced
... consist of the following ...
Veteran Call Center, LLC
State of New Jersey paid HGI the Settlement Payment by wiring the funds to an escrow
account maintained by McCarter & English. (VCC 56. l SMF if 9; HGI Responsive 56. l SMF if
9.) The parties dispute whether the payment of the $7.625 million represented "payment in full."
HGI determined to pay the subcontractors pro-rata from the funds received from New
ifif 12, 13.) According to HGI, Veteran Call Center's share of the Settlement Payment
is $15 ,144.00, which is 26.7% of$566,083.00. (Id.
ifif 14, 15.) 1 Veteran Call Center rejected the
amount offered by HGI to settle its outstanding invoices, and instead has insisted on full payment
for all of its outstanding invoices for labor services. (HGI 56.1 CSMF if 30; VCC Reply to CSMF
if 30.) Thus, Veteran Call Center has not been paid its outstanding invoices even after payment to
New Jersey. (See Compl. ifif 34, 36, 38.)
As a result of the non-payment of amounts they allege are due and owing, VCC filed suit
in this Court against HGI on August 18, 2015, alleging breach of contract (Count 1), account stated
I book account (Count 2), quantum meruit (Count 3), unjust enrichment (Count 4), breach of the
implied covenant of good faith and fair dealing (Count 5), promissory estoppel (Count 6),
conversion (Count 7), and constructive trust (Count 8). (ECF No. 1.)
In lieu of an answer, HGI filed a motion to dismiss for improper venue, or in the alternative
HGI admits that there exists $566,083 in unpaid invoices owed to Veteran Call Center: "HGl's records reflect a
total amount invoiced by Veteran Call Center that remains unpaid of$566,083.00." (HGI Responsive 56.1 SMF iJ
to transfer, arguing that this action should have been filed in Louisiana. (ECF No. 10.) In addition
to opposing the venue motion (ECF No. 12), VCC filed a cross-motion for partial summary
judgment, requesting that the Court enter an Order that HGI is liable to VCC for at least the amount
of $566,083.00. (ECF No. 13.)
On December 15, 2015, the Court issued an Opinion and Order denying the motion to
dismiss for improper venue, finding that the case was properly filed in New Jersey. (ECF Nos. 20,
21.) VCC's cross-motion for partial summary judgment was refiled as a new motion. (See ECF
On January 4, 2016, HGI filed a cross-motion for partial summary judgment. (ECF No.
22.) VCC filed a brief in further support of its motion and in opposition to HGI's cross-motion
(ECF No. 23), and HGI (with leave of Court) filed a reply brief in further support of its crossmotion. (ECF No. 26.)
Summary judgment may only be granted where the moving party shows that there is no
genuine dispute as to any material fact, and that a judgment as a matter oflaw is warranted. Fed.
P. 56(a). Pursuant to Federal Rule of Civil Procedure 56, the court must enter summary
judgment against a party who fails to make a showing sufficient to establish an element essential
to his or her case, and on which he or she will bear the burden of proof at trial. Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). In evaluating the evidence, the court must interpret the facts in
the light most favorable to the nonrnoving party, drawing all reasonable inferences in his or her
favor. Watson v. Abington Twp., 478 F.3d 144, 147 (3d Cir. 2007). The burden is initially on the
moving party to demonstrate that the evidence contained in the record does not create a genuine
issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 140 (3d Cir. 2004).
A dispute is "genuine" ifthe evidence is such that a reasonable trier of fact could render a finding
in favor of the nonmoving party. McGreevy v. Stroup, 413 F.3d 359, 363 (3d Cir. 2005). Where
the nonmoving party will bear the burden of proof at trial, the moving party may meet its burden
by showing that the admissible evidence contained in the record would be insufficient to carry the
nonmoving party's burden of proof. Celotex Corp., 477 U.S. at 322. Once the moving party
satisfies its burden, the burden shifts to the nonmoving party, who must go beyond his or her
pleadings and designate specific facts by the use of affidavits, depositions, admissions or answers
to interrogatories showing that there is a genuine issue of material fact for trial. Id. at 324. The
nonmoving party cannot defeat a well-supported motion for summary judgment by simply
reasserting unsupported factual allegations contained in his or her pleadings. Williams v. Borough
of West Chester, 891 F.2d 458, 460 (3d Cir. 1989).
A court "can grant summary judgment on an issue of contract interpretation if the
contractual language being interpreted is subject to only one reasonable interpretation." Emerson
v. Orion Sales, Inc., 253 F.3d 159, 164-65 (3d Cir. 2001) (internal quotation marks
omitted). "Where ... a contract is unambiguous, it is appropriate for the court to determine its
meaning as a matter of law at the summary judgment stage." LeJeune v. Bliss-Salem, Inc., 85
F.3d 1069, 1073 (3d Cir. 1996). If a contract can reasonably be interpreted in two different ways,
then a contracting party is not entitled to summary judgment in a breach of contract action.
American Flint Glass Workers Union v. Beaumont Glass Co., 62 F.3d 574, 581 (3d Cir. 1995).
The standard is essentially the same under Louisiana law:
Interpretation of a contract is usually a legal question which can be
properly resolved in the framework of a motion for summary
judgment. Generally, legal agreements have the effect of law upon
the parties, and, as they bind themselves, they shall be held to a full
performance of the obligations flowing therefrom. In other words,
a contract between the parties is the law between them, and the
courts are obligated to give legal effect to such contracts according
to the true intent of the parties. This intent is to be determined by
the words of the contract when they are clear, explicit, and lead to
no absurd consequences. When the words of a contract are clear and
explicit and lead to no absurd consequences, no further
interpretation may be made in search of the parties' intent. The rules
of interpretation establish that, when a clause in a contract is clear
and unambiguous, the letter of that clause should not be disregarded
under the pretext of pursuing its spirit.
Ashland Oil, Inc., 96-1751 (La. App. 1 Cir. 6/20/97), 696 So. 2d 1031, 1036, writ
911 (La. 10/31/97), 703 So. 2d 29 (internal citations omitted); see also Olympia
Minerals, LLCv. HS Res., Inc., 2013-2637 (La. 10/15114), 171So.3d 878, 891 ("[W]hen a contract
can be construed from the four corners of the instrument without looking to extrinsic evidence, the
contractual interpretation is answered as a matter of law and summary judgment is
appropriate.") (quoting Sims v. Mulhearn Funeral Home, Inc., 07-0054, p. 11 (La. 5/22/07), 956
ANAL YSIS 2
HGI presents two general arguments in support of its claim that VCC is not entitled to the
full value of the invoices submitted by VCC. First, HGI argues that the Subcontract contains a
"pay-if-paid" provision, meaning that each subcontractor was "put on notice that it would only be
HGI received payment from the State tied specifically to the subcontractor's services."
(HGI 56.1 CSMF ~ 4; HGI Mov. Br. at 13-20.) HGI argues that because the Settlement Payment
did not reflect any payment made against any specific invoices, HGI could not determine which
Although the first issue briefed by HGI is whether New Jersey or Louisiana law applies, the parties conceded at oral
argument that the analysis is essentially the same under either, and that the main issue is whether the express terms of
the Subcontract were satisfied. (See ECF No. 30, Mar. 24, 2016 Tr. at 5:13-18, 11:23-25.) For purposes of this motion
only, the Court finds that Louisiana law applies, as HGI contends.
invoices were paid by the State as part of the settlement. Second, HGI argues that
because HGI settled its claim of over $21 million with the State for a Settlement Payment of $7 .625
million, VCC is not entitled to its full amount. HGI states that it relied on principles of good faith
and fair dealing in distributing the balance of the Settlement Payment on a pro-rata basis to all
subcontractors. (Id.) HGI argues that pursuant to the "pay-if-paid" provision, the parties agreed
to shift the risk of nonpayment from HGI to VCC and that VCC should bear its share of the State's
failure to pay by accepting only a pro-rata portion of the recovery. (Id.)
first argues that the Subcontract contains a "pay-when-paid" clause (as opposed to
"pay-if-paid") and that nothing in the Subcontract itself evidences the parties' intention to shift the
risk of nonpayment to VCC. (ECF No. 13-2 ("VCC Mov. Br.") at 3-7; VCC Opp. Br. at 13-19.)
VCC argues that intent to shift the risk of nonpayment must be clear and unequivocal, and that
merely utilizing the word "unless" is insufficient to demonstrate that intent. (Id.) Second, and
more fundamentally, VCC argues that it does not matter whether the Subcontract contains a "payif-paid" or "pay-when-paid" provision because HGI has been paid in full by the State for work
performed by HGI's subcontractors, including Veteran Call Center. (VCC Opp. Br. at 8-12.) VCC
contends that the implied covenant of good faith and fair dealing prevents HGI from unilaterally
altering the payment amounts and that the plain language of the Subcontract (in particular the
absence of a provision allowing HGI to proportionally reduce the amount owed to Veteran Call
Center) demonstrates that Veteran Call Center is entitled to full payment of at least $566,000.
The Court agrees with VCC. Even assuming that the provision at issue is a "pay-if-paid"
provision as HGI contends,3 the terms of the Subcontract have been satisfied. The Subcontract
The Court is not finding that the provision is in fact "pay-if-paid." Rather, for argument's sake only, it is assuming
it is "pay-if-paid" to demonstrate that the elements have nevertheless been satisfied. To be clear, the Court is reserving
relevant part: "[Veteran Call Center] shall be paid within fifteen (15) days of [HGI]'s
receipt of payment from the [State] for [Veteran Call Center's] services .... No payment will be
made unless [HGI] receives payment for [Veteran Call Center's] services from [the State]."
(Subcontract§ 8.5.) Even if this alleged "pay-if-paid" provision absolves HGI of any obligation
to make payment to Veteran Call Center unless HGI receives payment from the State for Veteran
Call Center's services, it is clear to the Court that HGI in fact received payment for Veteran Call
Center's services from the State. By its express terms, the Settlement Payment was ''full payment
invoices and work performed by HGI and any ofHGI's subcontractors" including Veteran
HG I's suggested interpretation is not supported by the plain language of the Subcontract,
which, again, merely states that "[n]o payment will be made unless [HGI] receives payment for
[Veteran Call Center's] services from [the State]." To find in its favor, HGI asks the Court to read
provision additional requirements, which was illuminated during oral argument during
questioning of HGI's counsel:
THE COURT: But aren't you acknowledging by saying we will pay
[Veteran Call Center] 23 percent or a pro-rate share, acknowledging
that even the if-paid provision has been met? . . . aren't you
acknowledging that even if I interpret [section 8.5 of the
Subcontract] to be an if-paid provision, that that provision has been
met, because you are agreeing that it should be paid. You are just
saying [HGI] should be paying less.
MR. MINTZ: Our position is that the "pay-if-paid" provision means
we don't-that [Veteran Call Center] [is] not entitled to be paid, that
our obligation to pay them isn't triggered unless THE COURT: Right. You are saying they are not entitled to be paid
decision on whether the provision is "pay-if-paid" or "pay-when-paid."
MR. MINTZ: Well, I think that would be unfair.
THE COURT: Let's assume for the sake of argument that I were to
read this as an intent by [Veteran Call Center] to enter into a contract
that said, I am only going to get paid, if you get paid. In light of the
facts in the case, where you did get paid, albeit not all of the money,
but you got paid some of the money, if I interpret it as an if-paid
provision, what is the difference? You are saying for you to win
under the if-paid theory, I would have to say they are not entitled to
any money because the State didn't designate what that money was
for, right, and that therefore they are not entitled to any money.
MR. MINTZ: No. I don't think that - I won't agree with that
completely, your Honor.... We have to be specifically paid for
[Veteran Call Center's] services. That is what they agreed to. And
I think while theoretically since we weren't paid specifically for
their services, you could argue that we never owed them any money,
but I think certainly from an equitable standpoint, it would be
completely unfair to then say we are not going to pay you anything,
and we never contemplated that for a second.
Fatal to HGI's position is that language relating to specifically identified invoices, or HGI's
ability to pro-rate amounts owed to subcontractors if full payment is not received, is glaringly
absent from section 8.5 of the Subcontract. Rather, all that is required under the express terms of
the Subcontract is receipt by HGI of "payment for [Veteran Call Center's] services from [the
State]." The Court finds that plain meaning of the provision is clear and explicit, is subject to only
one reasonable interpretation, and leads to no absurd consequences. See Sanders, 696 So. 2d at
1036. Again, because HGI received "full payment" for work performed by HGI's subcontractors
including Veteran Call Center (see Settlement Agreement§§ 1.1, 1.4), the terms of the Subcontract
have been satisfied. Accordingly, Veteran Call Center is entitled to payment, and in the absence
of further language permitting HGI to pro-rate the amount owed, the Court finds that Veteran Call
Center is entitled to summary judgment.
parties agree that invoices from Veteran Call Center in the amount of $566,083.00
remain unpaid (see VCC 56.1SMFif15; HGI Responsive 56.l SMF if 15), and VCC's motion
seeks an Order that HGI is liable to VCC for "at least" the amount of $566,083.00. (See ECF No.
oral argument, however, counsel for VCC acknowledged that there is a material fact
dispute as to the precise amount owed:
MR. MAGNELLI: ... There is a dispute over the entire amount
owed. VCC feels that they are entitled to approximately over
$600,000. However, there is no dispute that at least $566,000 is
owed because that 26 percentile, $566,000 would be what a hundred
percent is, so at least that first $566,000 is not disputed.
THE COURT: Even if you won, there would still be an issue of fact
as to the amount of damages.
MR. MAGNELLI: If we won, the client will sit back and make a
decision of whether or not it is worth continuing to fight for however
8.) Accordingly, the precise amount of damages remains open and Veteran Call Center
is left to their proofs on the issue. 4
In their brief in opposition to HGI's cross-motion for summary judgment, VCC raised for the first time the issue of
whether RGI is liable to Veteran Contact Center in addition to Veteran Call Center. (See ECF No. 23 at 20-21.) This
issue was not alleged in the Complaint and therefore is not properly before the Court. See Bey v. Daimler Chrysler
Am., No. 04-6186, 2006 WL 361385, at *11 (D.N.J. Feb.15, 2006) ("[C]laims [that] were not alleged in
the complaint [ ] cannot be raised for the first time in opposition to a motion for summary judgment"). Furthermore,
the Subcontract only lists Veteran Call Center as a party, and whether Veteran Contact Center could be considered a
third-party beneficiary is clearly a disputed fact issue. Accordingly, to the extent that VCC properly moved for
summary judgment on this point, such motion is denied.
the reasons above, VCC's motion is granted and HGI's motion is denied.
appropriate Order accompanies this Opinion.
ffED STATES DISTRICT JUDGE
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