L. W. Matteson, Inc. v. Sevenson Environmental Services, Inc.
Filing
73
DECISION AND ORDER ORDER GRANTING in part and DENYING in part Plaintiff's 30 Motion for Summary Judgment; DENYING Defendant's 52 Cross-Motion for Sanctions; DENYING as moot Plaintiff's 69 Motion for Status Conference and Suggesti ons in Support; REFERRING this matter back to Judge H. Kenneth Schroeder, Jr. for resolution of Defendant's 21 Motion to Extend Discovery and Amend/Correct Answer to Complaint. Signed by William M. Skretny, Chief Judge U.S.D.C. on 11/16/2011. (MEAL)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
L. W. MATTESON, INC.,
Plaintiff,
v.
DECISION AND ORDER
10-CV-168S
SEVENSON ENVIRONMENTAL
SERVICES, INC.,
Defendant.
I. INTRODUCTION
In this action, Plaintiff L. W. Matteson, Inc. (“Matteson”) brings suit against
Defendant Sevenson Environmental Services, Inc. (“Sevenson”) claiming that Defendant
breached its contract with Plaintiff by failing to pay the agreed upon amount following
Plaintiff’s completion of dredging services on Defendant’s behalf. Defendant counterclaims
alleging Plaintiff negligently misrepresented its ability to perform the contract. Defendant
also makes a cross-motion for sanctions claiming that Plaintiff destroyed evidence critical
to its defense. Presently before this Court is Plaintiff’s Motion for Summary Judgment on
its breach of contract and prompt payment claims.1 Also before this Court is Defendant’s
Cross-Motion for Sanctions.2 Additionally, this Court has before it Plaintiff’s Motion for
1
In support of its Motion for Sum m ary Judgm ent, Plaintiff filed a Statem ent of Facts, with Exhibits;
a Mem orandum of Law; and a Reply Mem orandum to Defendant’s Opposition. (Docket Nos. 30 - 40, 53 63.)
In opposition to this m otion, Defendant filed a Response to Plaintiff’s Statem ent of Material Fact,
with Exhibits; and a Mem orandum of Law. (Docket Nos. 44 - 52.)
2
In support of its Cross-Motion for Sanctions, Defendant filed a Mem orandum of Law; and the
Reply Affidavit of Sean J. MacKenzie, Esq., with attached Exhibits. (Docket Nos. 52, 66.)
In opposition to this m otion, Plaintiff filed a Mem orandum of Law, with attached Exhibits. (Docket
No. 64.)
Status Conference and Suggestions in Support.3 For the reasons discussed below,
Plaintiff’s Motion for Summary Judgment is granted in part and denied in part, Defendant’s
Cross-Motion for Sanctions is denied, and Plaintiff’s Motion for Status Conference and
Suggestions in Support is denied as moot.
II. BACKGROUND
A.
Facts
Plaintiff Matteson is an Iowa corporation with its principal place of business in
Burlington, Iowa. (Complaint (“Comp.”), Docket No. 1, ¶ 1.) Matteson is in the business
of dredging materials from waterways and major bodies of water throughout the United
States, in the role of general contractor, subcontractor, and lessor. (Plaintiff L. W.
Matteson’s Reply to Defendant’s Response to the Statement of Material Facts in Support
of Matteson’s Motion for Summary Judgment (“Statement”), Docket No. 54, ¶ 1.)
Defendant Sevenson is a New York corporation with its principal place of business in
Niagara Falls, New York. Sevenson is in the business of environmental remediation
projects and acts as a general contractor. (Id. at ¶ 2; Comp. ¶ 2.)
The TVA is a corporate agency and instrumentality of the United States engaged
in electrical power generation. (Statement ¶ 4.) The TVA had been storing fly ash waste
in a storage cell adjacent to the Emory River. (Id. ¶¶ 5, 6.) This storage cell failed on
December 22, 2008, releasing fly ash into the Emory River, prompting the TVA to issue a
3
Plaintiff m oves this Court to set a new trial date because of concerns regarding the age of one of
its prim ary expert and fact witnesses, Lawrence Matteson, Sr., founder and m ajority owner of L. W .
Matteson, Inc. Because this Decision and Order resolves Plaintiff’s Motion for Sum m ary Judgm ent and
returns this m atter to Judge Schroeder for further consideration, this Court does not reach Plaintiff’s
request to set a trial date.
2
Request for Proposal for dredging the Emory River of fly ash. (Id. ¶ 7, 9.)
Sevenson submitted a proposal which included the use of two dredging vessels, as
well as a third vessel as needed, to meet the TVA’s specifications that an average
minimum of 9,000 cubic yards be dredged per day, for a total of 1.5 million cubic yards
over the course of the project. (Id. ¶¶ 10, 11, 12.) Sevenson and the TVA entered into a
contract on July 15, 2009 for dredging operations in the Emory River, with an effective date
of July 1, 2009. (Id. ¶ 16.)
Prior to entering the contract with the TVA, Sevenson executed a Purchase Order
(“PO”) with Matteson, in which Matteson agreed to provide a dredging vessel, equipment,
and personnel, and perform dredging work as directed by Sevenson at a per hour unit
price.
(Id. ¶¶ 20, 23.)
The PO provided that Matteson would provide good and
merchantable equipment, and would repair and replace equipment that Sevenson found
faulty or defective. (Id. ¶ 23.) The PO also included a series of rental rates that set a
payment schedule dictating how Matteson would be paid. (Id. ¶ 24.) Pursuant to this
schedule, Matteson would be paid 100% “pay time” ($2,100) per hour its dredge was in
operation with the cutterhead turning and the main pump moving material through the
pipeline. (Id.) Matteson would be compensated 70% ($1,470) per hour while it was
moving anchors, cleaning swing lines, or other similar work. (Id.) Finally, Matteson would
only receive 40% ($840) per hour the dredge was down due to inclement weather, and 0%
for any time relating to operating repairs and mechanical breakdowns in excess of 2 hours
per event. (Id.) A similar percentage breakdown was calculated for use of a booster
pump. (Id. ¶ 26.) The PO estimated 2000 hours of dredging at a 100% payment rate, 500
hours at a 70% rate, and 200 hours at a 40% rate. (Id.) However, the PO also stated that
3
Matteson would be paid a unit price regardless of whether the final quantities were more
or less than the estimated quantities. (Id.) Additionally, Matteson was to receive lump
payments of $625,000 and $310,000 for mobilization and demobilization of the drill,
respectively. (Id. ¶ 25.)
Sevenson retained the right to terminate the contract for any reason and did so on
February 1, 2010 after dredging operations were completed. (Id. ¶ 35.) Matteson
calculated that the total hours of operation under the 100%, 70%, and 40% pay categories
added up to a final cost of $5,173,273.50. (Id. ¶ 44.) This included 1,709.96 hours at
100% pay time, 776.01 hours at 70% pay time, and 85.42 hours at 40% pay time. (Id.)
Sevenson reevaluated Matteson’s calculations and paid Matteson only $2,931,587.11. (Id.
¶¶ 44, 47.) Matteson brings this action to recover the difference, plus interest. (Comp. ¶
53.) Sevenson counterclaims alleging that Matteson misrepresented its ability to dredge
1.5 million cubic yards of fly ash at an average daily rate of 12,000 - 20,000 in situ cubic
yards. (Answer with Counterclaim, Docket No. 8, ¶ 15.) Sevenson also claims Matteson
was responsible for the destruction of evidence crucial to Sevenson’s defense.
(Memorandum of Law in Opposition to Plaintiff’s Motion for Summary Judgment and in
Support of Defendant’s Cross-Motion for Sanctions (“Def.’s Opp’n), Docket No. 52, 14.)
B.
Procedural History
Plaintiff commenced this action on March 2, 2010 by filing a complaint in the United
States District Court for the Western District of New York. On April 5, 2010, Sevenson filed
an Answer and Counterclaim. Matteson responded with its Reply on April 26, 2010 and
this Court referred non-dispositive pre-trial matters to the Honorable H. Kenneth
4
Schroeder, Jr., United States Magistrate Judge.
After a series of amended case
management orders, discovery was set to close by June 1, 2011. Immediately prior to the
close of discovery, Sevenson moved Judge Schroeder to grant an extension of time to
complete discovery, as well as a motion to amend/correct its Answer to include a recalculation of damages and clarification of its negligent misrepresentation counterclaim.
The motions were fully briefed. Before Judge Schroeder could issue a decision resolving
Sevenson’s motions, Matteson filed its Motion for Summary Judgment. This Court stayed
Judge Schroeder’s amended case management order of March 4, 2011 pending resolution
of Plaintiff’s motion. Sevenson filed its Opposition to Matteson’s motion on August 12,
2011, including a Cross-Motion for Sanctions. Matteson filed a reply to Sevenson’s
Opposition on September 2, 2011, and a Response to Sevenson’s cross-motion on
September 6, 2011. Sevenson filed an Affidavit in reply on September 16, 2011. Most
recently, on October 27, 2011 Matteson filed a Motion for Status Conference and
Suggestions in Support, requesting that this Court set a trial date.
III. DISCUSSION AND ANALYSIS
A.
Summary Judgment Standard
Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment
is warranted where the "pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.
Civ. P. 56(c). A "genuine issue" exists "if the evidence is such that a reasonable jury could
5
return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). A fact is "material" if it "might affect
the outcome of the suit under governing law." Id.
In deciding a motion for summary judgment, the evidence and the inferences drawn
from the evidence must be "viewed in the light most favorable to the party opposing the
motion." Addickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S. Ct.1598, 1609, 26 L.
Ed. 2d 142 (1970). "Only when reasonable minds could not differ as to the import of
evidence is summary judgment proper." Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.
1991). The function of the court is not “to weigh the evidence and determine the truth of
the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S.
at 249.
B.
Plaintiff’s Motion for Summary Judgment
Matteson’s dispositive motion raises three primary issues: (1) whether Sevenson
breached its contract with Matteson; (2) whether Sevenson’s affirmative defenses preclude
summary judgment in Matteson’s favor; and (3) whether Matteson is entitled to summary
judgment on Sevenson’s counterclaim. These issues are discussed below.
1.
The Existence of Disputed Issues of Material Fact Precludes Summary
Judgment in Plaintiff’s Favor on its Breach of Contract Claim
Matteson argues that it is entitled to summary judgment because the PO requires
payment according to the number of hours Matteson’s equipment is used. Matteson
asserts that on top of the $2,931,587.11 Sevenson previously paid, Matteson is entitled to
an additional $3,926,760.92, plus pre-judgment interest, for its work. Sevenson disputes
the accuracy of Matteson’s calculations and alleges that Matteson improperly charged a
6
100% payment rate anytime the dredge pumps were running, instead of reducing the
payment rate whenever the dredge pumps were only pumping water.
Under New York law, a plaintiff alleging a breach of contract must establish (1) the
existence of a contract; (2) performance of the contract by one party; (3) breach by the
other party; and (4) resulting damages. Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522,
525 (2d Cir. 1994).4 The parties do not dispute that the PO constitutes a contract between
them. The second element is the source of Sevenson’s affirmative defenses, and is
discussed later. Therefore the principal issue to resolve is whether Sevenson underpaid
Matteson, or whether Matteson inflated the payment rate it was due.
The parties’ agreement, detailed in the PO, calls for a 100% payment rate of $2,100
for every hour the dredge pumps were active and pumping material. (Statement ¶ 24.)
“Material” is defined as anything over the density of water. (Def.’s Opp’n 4.) Because the
density of water is 1.0 grams per cubic centimeter, anything over that number would
constitute material. (Id.) Fly ash, the specific material Matteson was dredging for, ranged
from 1.0001 to 1.4 grams per cubic centimeter. (Id.) The parties agree that whenever the
dredges were pumping water, or 1.0 grams per cubic centimeter, and not material, that a
reduced payment rate would be applied.
(Plaintiff L. W. Matteson, Inc.’s Reply to
Defendant’s Opposition to Plaintiff’s Motion for Summary Judgment (“Pl.’s Reply”), Docket
No. 53, 3-4.)
The parties dispute how the number of 100% payment rate hours should be
determined. Matteson argues that the hours should be measured according to the dredge
4
Neither party disputes the applicability of New York law. Furtherm ore, the disputed PO provides
that it is to be governed by, and interpreted under, New York law. (Statem ent ¶ 31.)
7
logs. Sevenson argues that the dredge logs are inaccurate, and that the proper record is
determined by a computer software program installed on Matteson’s dredge vessel called
WinOPS. (Def.’s Opp’n 7.)
The dredge logs were kept by Matteson’s dredge operators, or levermen, who
operated the dredge pumps and recorded when those pumps were started and stopped,
as well as the density of the material being pumped. (Pl.’s Ex. 20.) In addition, Sevenson
had personnel on Matteson’s vessel full-time to observe the effluent being discharged by
the dredging operation. (Pl.’s Ex. 19.) The logs were submitted to Sevenson’s Project
Manager, Joseph Burke, who allegedly compared Matteson’s pay applications with
Sevenson’s own records and resolved any discrepancies. (Plaintiff L. W. Matteson, Inc.’s
Memorandum in Support of Motion for Summary Judgment, Docket No. 40, 3-4.) Using
these records, Sevenson created a spreadsheet, identifying the number of hours dredged
by Matteson. (Statement ¶ 28.) Further, Matteson contends that charging on the basis of
the dredge logs constitutes the industry standard. (Pl.’s Reply 3.)
Sevenson disputes the accuracy of the dredge logs on a number of grounds.5
Sevenson’s principal challenge is that the dredge logs only track when the pumps are
active and do not track whether pumps are pumping water or material. As a result, the
5
Matteson accuses Sevenson of introducing various witness affidavits that conflict with the
respective witnesses’ deposition testim ony and that these affidavits were introduced after the close of
discovery. “To the extent that [a witness’s] earlier deposition testim ony is at odds with his declaration, we
follow the rule that a party m ay not create an issue of fact by subm itting an affidavit in opposition to a
sum m ary judgm ent m otion that, by om ission or addition, contradicts the affiant’s previous deposition
testim ony.” Ram os v. Baldor Specialty Foods, Inc., 10 Civ. 6271(RMB), 2011 W L 2565330, at *7 n.6
(S.D.N.Y. June 16, 2011) (quoting Raskin v. W yatt Co., 125 F.3d 55, 63 (2d Cir. 1995)). This Court notes,
however, that discovery in this case had not yet closed at the tim e Matteson filed its Motion for Sum m ary
Judgm ent. Rather, Judge Schroeder had before him Sevenson’s Motion for Extension of Tim e to
Com plete Discovery and Sevenson’s Motion to Am end/Correct Answer. Consequently, although this
Court will look to whether a witness’s deposition testim ony conflicts with his affidavit, it will not view
Sevenson’s actions as abusive.
8
dredge logs cannot provide an accurate measurement of when Matteson was entitled to
a lesser payment rate.
However, Sevenson’s argument ignores that the dredge logs do, in fact, show when
Matteson was pumping water and charging the agreed upon 70% payment rate. (See,
e.g., Pl.’s Ex. 17b.) Although Sevenson alleges that the dredge operator’s shift log only
shows when the pump was stopped and started, the dredge logs actually show, under a
column entitled “Lost Time,” the specific payment rate, variously listing 70%, 100%, and
0%. (Id.) Those entries recording 70% payment list multiple reasons for the reduced
payment rate, including whenever water was being pumped through the pipeline. (Id.)
The affidavits Sevenson submits do little to counter this fact.
For example,
Sevenson argues that Burke’s affidavit demonstrates that neither he nor anyone else kept
track of when Matteson was pumping material. Yet Burke’s deposition shows that he did
go over Matteson’s numbers, including downtime and standby time, and that he conferred
with Mahlon Vance Mangum, Matteson’s project superintendent, to ensure that the
numbers were in agreement.
Q:
A:
Q:
A:
Q:
A:
[I]t seemed to me that there was a first part where you would match up from
project records the actual hours that were being claimed on the Matteson
pay application?
Correct.
Okay. And then you would satisfy yourself that those were acceptable to
you?
Yes.
Okay. And then you would go through the second process of then adjusting
the invoice?
Correct.
(Pl.’s Ex. 12.)
Sevenson also selectively quotes from the deposition of L.W. Matteson, Jr.,
9
Matteson’s vice-president. Sevenson quotes the witness as saying that “[i]f the pump is
turning, that’s paytime, one hundred percent pay time,” as evidence that Matteson only
kept track of when the pump was on and off. (Def.’s Opp’n 5.) Sevenson neglects to
include the following sentence, which states “[w]hen the clutch is out and you are moving
anchors or cleaning debris, it’s at a lesser rate.” (Def.’s Ex. 9.) Sevenson continues to
cherry-pick later parts of the deposition, quoting “[i]f there is water coming out of the end
of the pipe, the clutch is engaged . . . . [i]f there’s not, the clutch wouldn’t be engaged . .
. . [t]hat’s the normal situation, yes.” (Def.’s Ex. 9.) But Sevenson ignores the intervening
testimony that rental agreements would typically also involve the parties agreeing on a
daily basis what the run time was, including that in this contract Sevenson had individuals
watching what was coming out of the pipe. (Def.’s Ex. 9.)
Sevenson has also submitted the affidavit of M.V. Mangum, who was Matteson’s
superintendent on the project, and responsible for preparing and submitting daily
production reports to Sevenson. (Def.’s Ex. 6.) Sevenson argues that Mangum was never
instructed to exclude from the levermen’s logs or daily reports the time that only water was
being pumped. Sevenson submits select pages from Mangum’s deposition in support of
this contention, but fails to include that testimony showing that Mangum would be
contacted from the shoreline regarding what type of material the pump was releasing.
(See Def.’s Ex. 14; Pl.’s Ex. 20.) Specifically, Mangum testified that:
Q:
A:
And did you find at times that it was just pumping water?
We would get calls from the rim ditch saying it was just – you know, it was
like – they had categorizes [sic], dark gray, gray, light gray and clear. They
would call us and let us know what was coming out of the pipes.”
(Pl.’s Ex. 20.) Mangum went on to testify that he “had reliable reports and the leverman
10
there to hopefully tell [him] the truth.” This was corroborated by Sevenson’s President,
Michael A. Elia, who testified that Sevenson’s personnel observed Matteson’s dredging
operations. (Pl.’s Ex. 19.) Mangum’s later affidavit testifies that Matteson failed to inform
its levermen that the dredge logs should only include time spent pumping material. (Def.’s
Ex. 6.) To the extent this affidavit conflicts with Mangum’s earlier deposition testimony that
the levermen were informed when only water was being pumped and that these reports
were reliable, Mangum’s affidavit is deemed inconsistent and will not be considered.
Golden v. Merrill Lynch & Co., No. 06 Civ. 2970(RWS), 2007 WL 4299443, at *9 (S.D.N.Y.
Dec. 6, 2007) (“Courts in this Circuit have rejected such attempts to rely on declarations
that contradict the witness’s prior deposition testimony and have granted summary
judgment even where the purported new evidence would otherwise create a triable issue
of fact.” (citing Brown v. Henderson, 257 F.3d 246, 252 (2d Cir. 2001)). This Court further
notes that, as discussed above, the dredge logs did show when only water was being
pumped.
Other affidavits submitted by Sevenson are no more availing. Richard Bradley, one
of Matteson’s engineers, now working for Sevenson, stated that levermen wrote in the
dredge logs when the dredge pump was started and stopped, which “included the time that
the dredge was pumping water in order to float lines and sink lines.” (Def.’s Ex. 2.) But
this corresponds exactly to what the dredge logs show, namely that the levermen would
record, under the column labeled “Reasons,” why payment at a reduced rate was
appropriate, including during those times when they would float and sink lines.
Nevertheless, summary judgment cannot be granted in Matteson’s favor because
the record contains enough evidence to challenge the accuracy of the dredge logs. For
11
example, Superintendent Mangum, during his deposition, described several problems with
the nighttime levermen. “The nighttime people, they would write down stuff and I didn’t
ever know what half of it meant. I mean, I don’t know whether they was [sic] just writing
down stuff to be writing it down or what . . . .” (Pl.’s Ex. 20.) Mangum further testified that
the density meter was inoperable at times and that levermen would not always record
gauge readings. (Id.) “They a whole lot of times just didn’t fill it out. You know, whether
it was working correctly or not, at times it was, at times it wasn’t. I would have the
levermen argue back and forth about it.” (Id.) Other testimony confirms that the dredge
reports were not entirely accurate. The affidavit of Timothy M. Donegan, a licensed
engineer previously with Matteson, shows that Matteson’s density gauge may not have
been working properly. (Def.’s Ex. 5; Pl.’s Ex. 25.) This was corroborated by the affidavit
of Timothy J. Harrington, a licensed engineer with a company called Hard Hat Services that
was retained by Sevenson to analyze the dredge production of Matteson. (Def.’s Ex. 4.)
Harrington’s analysis revealed that the density meter would read 1.01 or 1.02 even when
pumping only water. (Id.)
Further, although Matteson claims it proceeded in a manner consistent with the
industry’s standard, Matteson has not shown that the parties intended this standard to bind
their agreement, especially since the PO stipulated that Matteson would act “in strict
compliance” with the principal contract between the TVA and Sevenson. (Pl.’s Ex. 11.)
Indeed, the PO only refers to Matteson performing the dredging operations in “a good and
workmanlike manner.” (Id.) This Court finds instructive that “courts that have interpreted
contracts that require undefined ‘commercially reasonable’ conduct have not read industry
standards into that term without further evaluation of the parties’ circumstances and the
12
consequences of compliance with these standards.” Microboard Processing, Inc. v.
Creston Elec., Inc., No. 3:09cv708 (JBA), 2011 WL 1213177, at *2 (D. Conn. Mar. 29,
2011). Here, the only reference to the relevance of industry standards is a brief mention
by Matteson’s Vice-President of Operations Jon Nieman that billing based on the dredge
log is the industry standard. (Pl.’s Ex. 25.) Without more, this is not enough to grant
summary judgment in Matteson’s favor. Additionally, even if this Court were to find the
industry standard relevant, Sevenson has presented sufficient evidence of errors in the
dredge logs to raise a question of whether Matteson complied with its purported standard.
Consequently, “[t]he Court believes that it is best left to the jury to decide whether any
industry standards or practices have been violated.” Nygren v. Greater N.Y. Mut. Ins. Co.,
No. 3:07CV00462(DJS), 2009 WL 807470, at *5 (D. Conn. Mar. 27, 2009); see also
Fleetwood Agency, Inc. v. Berde Elec. Corp., 925 N.Y.S.2d 576, 578 (N.Y. App. Div. 2011)
(holding that summary judgment should have been denied where affidavits created triable
issues of fact as to whether pricing of services was in compliance with industry standards);
Mary Imogene Bassett Hosp. v. Cannon Design, Inc., 923 N.Y.S.2d 751, 754 (N.Y. App.
Div. 2011) (“Even if defendant complied with industry standards . . . defendant could still
be held liable for a breach of contract.”).
The Court also notes that Sevenson has argued in favor of an alternative means of
measuring Matteson’s hours of operation. (Def.’s Opp’n 8.) WinOPS is a software
program installed aboard dredging vessels, including Matteson’s, that monitors the
positioning of a dredge, as well as the density of material being pumped. (Pl.’s Ex. 25.)
Data from that program reflects that between August 25, 2009 and September 1, 2009
there were significant discrepancies between the total hours WinOPS recorded the pumps
13
processing material of a density in excess of 1.0 grams per cubic centimeter and the total
hours that Matteson billed at 100%. (Def.’s Ex. 5.) Specifically, between August 25, 2009
and September 1, 2009, WinOPS recorded a density in excess of 1.0 for a total of 79.3
hours. (Id.) By contrast, Matteson billed Sevenson at a 100% payment rate for 114.25
hours. (Id.) Considering the total time the pump was operating, reveals that Matteson was
only pumping material having a density greater than 1.0 for 53% of the time. (Id.)
Unfortunately, for reasons discussed later, WinOPS data is available for only this eight day
period.
Unsurprisingly, Matteson strongly contests the data’s significance. Matteson argues
that WinOPS is never used to calculate the amount of material dredged, or the number of
hours a dredge was pumping, and reiterates that the industry standard is to abide by the
dredge logs. (Pl.’s Ex. 25.) Of greater importance, is Matteson’s assertion that WinOPS
only records density data to a single decimal point. This means that a dredge pump could
be processing material at a density of 1.0001, while WinOPS would record a density of 1.0,
the density of water. (See Pl.’s Ex. 25.) WinOPS data in the record does indeed reflect
that density is measured only to a single decimal. (See, e.g., Def.’s Ex. 5b.) Further, the
density of fly ash in water ranges anywhere from 1.0001 to 1.3. (Pl.’s Ex. 25.) There is,
in short, substantial doubt as to whether WinOPS can accurately monitor the number of
hours a dredger pumps material. Nevertheless, resolving such doubts is a task better left
to the trier of fact at trial, and not this Court on motion. This is especially so given the
questionable accuracy of Matteson’s dredge logs.
Accordingly, Matteson’s Motion for Summary Judgment on its breach of contract
14
claim will be denied.6
2.
The Lack of Response to Plaintiff’s Arguments Results in the
Abandonment of Defendant’s Affirmative Defenses
Sevenson presents two affirmative defenses in its Answer. The first is that Matteson
breached the contract by failing to provide a sufficient number of skilled employees and
equipment in good working order. The second is that Matteson warranted that it would be
able to excavate an average rate of 12,000 in situ cubic yards per day of fly ash. In its
supporting memorandum, Matteson argues that neither of these defenses is sufficient to
preclude summary judgment. Matteson points to the PO which does not contain any
production requirements, and only specifies payment by hours of operation. Similarly, the
PO does not specify staff levels. The PO also contains a merger clause stating that “[t]his
agreement is the sole and entire agreement between the parties and supersedes all prior
communications, proposals, offers and agreements, whether written or oral,” which
Matteson argues precludes Sevenson’s affirmative defenses.
“Federal courts may deem a claim abandoned when a party moves for summary
judgment on one ground and the party opposing summary judgment fails to address the
argument in any way.” Dunkin’ Donuts Franchised Rests. LLC v. Tim & Tab Donuts, Inc.,
No. 07-CV-3662 (KAM)(MDG), 2009 WL 2997382, at *9 (E.D.N.Y. Sep. 15, 2009) (quoting
Taylor v. City of New York, 269 F. Supp. 2d 68, 75 (E.D.N.Y. 2003)).
Upon review of Sevenson’s responding memorandum, it is clear that Sevenson
6
Matteson also m oves for sum m ary judgm ent on its New York Prom pt Paym ent Law claim .
Sevenson contends, and Matteson does not dispute, that resolution of this claim depends on the outcom e
of Matteson’s breach of contract claim . Therefore, because this Court denies sum m ary judgm ent in favor
of Matteson on its breach of contract claim , the Court will also deny Matteson’s m otion as to its prom pt
paym ent claim .
15
disputes Matteson’s motion for summary judgment as to Sevenson’s counterclaim, but
makes no arguments responding to Matteson’s arguments against its affirmative defenses.
Specifically, Sevenson has no response to the fact that the PO does not contain minimum
staffing or production levels, that the merger clause precludes warranty defenses, that the
agreement already provided for pay exceptions for faulty equipment, and that Sevenson
failed to exercise its right to terminate Matteson until the dredging operations were
completed.
Although there may be some factual cross-over between Sevenson’s
affirmative defenses and its counterclaim, Sevenson has chosen to address these, if at all,
within the context of its counterclaim. “As a result of defendants’ failure to oppose
plaintiff’s motion as to their defenses . . . the court finds that the defendants abandoned
their affirmative defenses. . . . [and] grants plaintiffs’ motion for summary judgment as to
the affirmative defenses . . . .” Id. (citing Wecare Holdings, LLC v. Bedminster Int’l Ltd., 08cv-6213, 2009 U.S. Dist. Lexis 20080, at *28 (W.D.N.Y. Mar. 9, 2009)).
3.
The Failure to Show Reasonable Reliance Warrants Granting Plaintiff’s
Motion for Summary Judgment on Defendant’s Counterclaim for
Negligent Misrepresentation
In its Answer, Sevenson asserts a counterclaim for negligent misrepresentation.7
Sevenson alleges that Matteson misrepresented that its dredging equipment was capable
of removing fly ash from Emory River at an average daily rate of 12,000 - 20,000 in situ
cubic yards.
Sevenson further alleges that it relied upon these representations in
submitting its proposal to the TVA, in which it identified Matteson as a dredging
7
This Court acknowledges that, as a result of its order staying the m ost recent case m anagem ent
order, Judge Schroeder has not had the opportunity to rule on Sevenson’s Motion to Am end/Correct
Answer. Because this Court m ust m ake all inferences in favor of the non-m oving party, here Sevenson,
this Court will assum e, for purposes of resolving Matteson’s m otion, that Sevenson’s Answer has been
am ended.
16
subcontractor capable of removing ash at a daily rate of 12,500 in situ cubic yards. (Motion
to Amend/Correct Answer, Docket No. 21, Ex. E, ¶ 20.) Having relied on Matteson’s
alleged misrepresentations, Sevenson claims that it then incurred damages. Specifically,
because Matteson failed to complete its contractual duties, Sevenson was unable to
complete its work for the TVA by December 31, 2009. (Id. ¶ 28.) This meant not only that
Sevenson missed out on an early performance bonus of $71,429 per day, capped at
$2,000,000, but also that Sevenson incurred the cost of maintaining dredging operations
until February 1, 2010 in the amount of $3,813,445. (Id. ¶¶ 27, 28, 29.) Matteson
responds that Sevenson cannot establish the requisite reliance and that any statements
Matteson made were, in any case, non-actionable future statements.
“Under New York law, the elements for a negligent misrepresentation claim are that
(1) the defendant had a duty, as a result of a special relationship, to give correct
information; (2) the defendant made a false representation that he or she should have
known was incorrect; (3) the information supplied in the representation was known by the
defendant to be desired by the plaintiff for a serious purpose; (4) the plaintiff intended to
rely and act upon it; and (5) the plaintiff reasonably relied on it to his or her detriment. In
re Artrade Fin. Techs. Ltd., No. 02-16212 (ALG), 2007 WL 433358, at *5 (Bankr. S.D.N.Y.
Feb. 5, 2007) (quoting Hydro Investors, Inc. v. Trafalgar Power, 227 F.3d 8, 20 (2d Cir.
2000)).
Matteson argues that Sevenson cannot establish reasonable reliance on Matteson’s
alleged misrepresentations.
Even where there is a duty to disclose and a special
relationship between the parties, it is not necessarily the case that one party reasonably
relied on the misrepresentations or omissions of another. PPI Enters. (U.S.), Inc. v. Del
17
Monte Foods Co., No. 99 Civ. 3794(BSJ), 2003 WL 22118977 (S.D.N.Y. Sep. 11, 2003).
Here, there is conflicting testimony as to whether Sevenson relied on Matteson’s
representations regarding its ability to dredge 12,000 in situ cubic yards per day.
Sevenson argues that Matteson quoted it this figure, and that Sevenson relied on this
quote in making its June 15, 2009 bid, citing to excerpts of its president’s deposition.
(Def.’s Ex. 8.)
However, that excerpt does not mention any date.
Furthermore,
Sevenson’s reliance on a detailed cost summary by Matteson is misplaced because this
was an internal document, that was never provided to Sevenson until discovery. (Def.’s
Ex. 13.)
Mike Crystal, one of Sevenson’s vice-presidents, does recall asking Jon Nieman
prior to the proposal whether Matteson had a dredge available that could do work in the
12,000 yard volume range, to which Nieman responded in the affirmative. (Affidavit of
Sean J. MacKenzie, Docket No. 70, Ex. B.) But aside from this conversation, of which
Crystal remembers no further details, Crystal’s deposition reveals that Matteson stated that
it would have “no problem doing 12,000" only after Sevenson had already submitted its bid.
In any case, these testimonies are ultimately unavailing because the only actual
quote Matteson made to Sevenson, from June 12, 2009, does not state any production
requirements. Instead, it clearly states that “Pay hour quantities are estimated quantities.”
(Def.’s Ex. 15.) These estimates are backed up by the fact that the PO itself only lists
estimated hours. Additionally, the PO contains a merger clause stating that the PO is the
“sole and entire agreement between the parties and supersedes all prior communications,
proposals, offers and agreements, whether written or oral.” (Statement ¶ 31.) The PO also
specifies that Matteson would be paid at a unit price, “regardless of whether the final
18
quantities are more or less than the estimated quantities stated herein or in the Principal
Contract.” (Pl.’s Ex. 11.) These circumstances preclude Sevenson from establishing
reasonable reliance because any representations would have been replaced by the parties’
agreement which contained only an estimate of the hours, and did not bind Matteson to
any particular production number. See Harsco Corp. v. Segui, 91 F.3d 337, 342-43 (2d
Cir. 1996) (affirming district court’s holding that plaintiff failed to establish reasonable
reliance where contract contained merger clause and disclaimed all representations not
in the agreement).
Sevenson’s claim that it reasonably relied on Matteson’s assertions is further
undermined because the record primarily references conversations regarding Matteson’s
production capabilities occurring after Sevenson had submitted its bid, and before
execution of the PO. (Statement ¶ 38.) These meetings also reflect that Matteson was
making no guarantees regarding its ability to process 12,000 cubic yards. (Pl.’s Ex. 13.)
Accordingly, this Court concludes that Sevenson could not have reasonably relied
on any assertions Matteson allegedly made. Both parties are experienced business
entities that knowingly entered into a contract that expressly provided that it was the sole
agreement between them. (See Pl.’s Ex. 7.) That contract provided for an hour-based
payment schedule. It did not contain a daily production average. Similarly, the only clear
quote Matteson provided prior to Sevenson’s bid submission also does not include a daily
production average. Sevenson cannot now claim that a production schedule should be
read into the parties’ agreement. “[W]here, as here, an express provision in the written
contract contradicts the claimed oral representations in a meaningful fashion . . . . the
conflict between the provisions of the written contract and the oral representations negates
19
the claim of reliance upon the latter.” Bango v. Naughton, 584 N.Y.S.2d 942, 944, (N.Y.
App. Div. 1992). Matteson’s Motion for Summary Judgment on Sevenson’s counterclaim
will be granted.8
C.
Defendant’s Cross-Motion for Sanctions
Sevenson asserts it is entitled to sanctions for Matteson’s failure to retain WinOPS
data. Sevenson argues that the parties’ relationship provided Matteson with reasonable
notice of the potential for litigation as early as September 2009, as evidenced by
Sevenson’s Notice of Potential Default/Termination to Matteson.
(Def.’s Ex. 22.)
Sevenson further argues that, knowing that litigation was reasonably foreseeable,
Matteson failed to preserve the WinOPS data which allegedly included the only accurate
record of Matteson’s dredging operations. Matteson responds that it provided Sevenson
with the WinOPS data throughout their relationship and that Sevenson expressed interest
in this data only after Matteson filed its Motion for Summary Judgment.
A party seeking sanctions based on spoilation of evidence must establish that “(1)
the party having control over the evidence had an obligation to preserve it at the time it was
destroyed; (2) the records were destroyed with a culpable state of mind; and (3) the
destroyed evidence was relevant to the party’s claim or defense such that a reasonable
trier of fact could find that it would support that claim or defense.” Liberman v. FedEx
Ground Package Sys., Inc., No. 09 CV 2423(RML), 2011 WL 145474, at *2 (E.D.N.Y. Jan.
18, 2011) (citing Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 430 (S.D.N.Y. 2004)).
8
Because this Court finds that Sevenson could not have reasonably relied on Matteson’s
representations, it does not reach Matteson’s other argum ent that any m isrepresentations were prom ises
of future output, and hence non-actionable under Hydro Investors, Inc. See Stokes v. Lusker, 425 Fed.
Appx. 18, 21 (2d Cir. 2011) ( “An alleged m isrepresentations cannot be ‘prom issory or relating to future
events that m ight never com e to fruition.’” (quoting Hydro Investors, Inc., 227 F.3d at 20)).
20
Of these, only the third element is clearly met. “[T]he party seeking an adverse
inference must adduce sufficient evidence from which a reasonable trier of fact could infer
that ‘the destroyed [or unavailable] evidence would have been of the nature alleged by the
party affected by its destruction.” Residential Funding Corp. v. DeGeorge Fin. Corp., 306
F.3d 99, 109 (2d Cir. 2002) (quoting Kronisch, 150 F.3d at 127). Here the availability of
several days’ worth of WinOPS data is sufficient to show that the missing WinOPS data
would likely have yielded similar information. However, in consideration of the remaining
elements, this Court concludes that Sevenson’s cross-claim should be denied.
A party seeking sanctions for destroyed evidence must establish that “the party
having control over the evidence . . . had an obligation to preserve it at the time it was
destroyed.” Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998). The obligation
typically arises when a party is put on notice that the evidence is relevant to litigation, which
may be after or before suit is filed, depending on the circumstances. Liberman, 2011 WL
145474, at *3. Here, Sevenson alleges such an obligation attached as of August 25, 2009
and September 4, 2000 when Sevenson made Matteson aware that it was not satisfied
with Matteson’s performance. (Def.’s Exs. 18, 22.) However, although these letters
express Sevenson’s dissatisfaction, they do not contest the manner in which Matteson was
tracking its hours of operation. The letters refer to holes in the hull of Matteson’s vessel
and Matteson’s supply of spare parts, but does not reference the manner in which
Matteson recorded the number of hours it pumped material, or the accuracy of that
process. This does not create an obligation to save records from a software program that
kept track of a dredging vessel’s positioning.
Moreover, sanctions will not be imposed unless the party responsible had a
21
sufficiently culpable state of mind. In re WRT Energy Sec. Litig., 246 F.R.D. 185, 195
(S.D.N.Y. 2007). A culpable state of mind includes “knowingly, even if without intent to
breach a duty to preserve [the evidence], or negligently.” Liberman, 2011 WL 145474, at
*4 (quoting Residential Funding Corp., 306 F.3d at 108) (emphasis and alterations in
original). Here, there is no evidence that Matteson intended to destroy the data. Rather,
it appears that the data was lost because the computer on which it was stored does not
save the information, and deletes it when it begins a new job. (Pl.’s Ex. A.) Additionally,
it is undisputed that Matteson supplied the WinOPS data upon request by Timothy
Donegan on September 4, 2009 via email. (Def.’s Ex. 5.) Matteson has also submitted
testimony that it submitted further WinOPS data on a daily basis. (See Pl.’s Exs. A, B.)
Although Sevenson has presented contrary evidence, (Def.’s Ex. 3), this Court is not
persuaded that Sevenson has met its burden of establishing that Matteson acted
negligently. See Gutierrez-Bonilla v. Target Corp., No. CV 08-3985(JS)(AKT), 2009 WL
5062116, at *5 (E.D.N.Y. Dec. 16, 2009) (finding defendant had no obligation to preserve
footage where recycling tapes was part of normal business practice).
Therefore, Sevenson’s Cross-Motion will be denied.9
9
Even were Sevenson’s m otion granted, this Court would not im pose the penalties Sevenson
seeks. Sanctions should be designed to “(1) deter parties from engaging in spoilation; (2) place the risk of
an erroneous judgm ent on the party who wrongfully created the risk; and (3) restore ‘the prejudiced party
to the sam e position he would have been in absent the wrongful destruction of evidence by the opposing
party.’” Occhino v. Citigroup Inc., No. CV-03-5259, 2005 W L 2076588, at *11 (E.D.N.Y. Aug. 26, 2005)
(quoting Kronisch, 150 F.3d at 126). Sevenson asks this Court to prohibit Matteson from offering
evidence concerning when the dredge pum ps were engaged, as well as from contesting the W inOPS
data’s accuracy. However, this would effectively render a verdict in Sevenson’s favor. A m ore appropriate
sanction would perm it an inference that the available W inOPS data is representative of all otherwise
available data. This would perm it the parties to still contest whether the fact that W inOPS’ data is lim ited
to a single decim al point renders it an inaccurate m eans of tracking the hours Matteson spent pum ping
m aterial.
22
IV. CONCLUSION
For the reasons discussed above, Matteson’s Motion for Summary Judgment is
denied as to its breach of contract claim, and granted as to Defendant’s First Affirmative
Defense, Second Affirmative Defense, and Counterclaim. Sevenson’s Cross-Motion for
Sanctions is denied. Matteson’s Motion for Status Conference and Suggestions in Support
is denied as moot.
V. ORDERS
IT HEREBY IS ORDERED, that Plaintiff’s Motion for Summary Judgment (Docket
No. 30) is GRANTED in part and DENIED in part, in accordance with the Decision above.
FURTHER, that Defendant’s Cross-Motion for Sanctions (Docket No. 52) is
DENIED.
FURTHER, that Plaintiff’s Motion for Status Conference and Suggestions in Support
(Docket No. 69) is DENIED as moot.
FURTHER, that this matter is referred back to Judge H. Kenneth Schroeder, Jr. for
resolution of Defendant’s Motion to Extend Discovery and Amend/Correct Answer to
Complaint (Docket No. 21).
SO ORDERED.
Dated: November 16, 2011
Buffalo, New York
/s/William M. Skretny
WILLIAM M. SKRETNY
Chief Judge
United States District Court
23
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?