JD Solar Solutions, LLC v. Trabant Solar, Inc. et al

Filing 56

ORDER - the court DENIES JD Solar's motion for summary judgment concerning its claims and DENIES as moot JD Solar's motion concerning defendants' counterclaims [D.E. 46]. The parties shall engage in a settlement conference with United States Magistrate Judge Gates. The court will set the case for trial by separate order. Signed by District Judge James C. Dever III on 7/9/2019. (Sellers, N.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. S:16-CV-166-D
JD SOLAR SOLUTIONS, LLC,

)
)

Plaintiff,

)
)
)
)

v.

TRABANT SOLAR, INC., and
ROVSHAN SADE a/k/a RON SADE,

ORDER

)
)
)

Defendants.

)

On April 11, 2016, JD Solar Solutions, LLC ("JD Solar" or ''plaintiff'') filed a complaint

against Trabant Solar, Inc. ("Trabant") and Rovshan Sade a/k/a Ron Sade ("Sade"; collectively,

"defendants';) for breach of contract, piercing the corporate veil, and violation ofNorth Carolina's
UnfairandDeceptiveTradePracticesAct("UDTPA"),N.C. Gen.·Stat. § 7S-1 et~ [D.E.1]. On
June 3, 2016, defendants answered and alleged counterclaims for breach of contract and a UDTPA
violation [D.E. 14]. On June 24, 2016, JD Solar answered defendants' counterclaims [D.E. 16]. On
March 23, 2017, the court struck Trabant's answer and counterclaims because Trabant, a
corporation, failed to retain counsel [D.E. 30].
On March lS, 2018, defendants answered the complaint [D.E. 36]. On February 4, 2019, JD

Solar moved for summary judgment [D.E. 46], filed a statement ofmaterial facts [D.E. 47], and filed
. a memorandum. in support [D.E. 48]. On March 7, 2019, defendants responded in opposition [D.E.
SO-S2]. On April 1, 2019, JD Solar replied [D.E. SS]. On April 1, 2019, Sade voluntarily dismissed
his counterclaims with prejudice [D.E. S4]. As explained below, the court denies JD Solar's motion
for summary judgment.

I.
JD Solar, a limited liability company formed under Connecticut law, sells solar panel

technologies for both residential and commercial applications. See [D.E. 47] ~ 1; Dean Deel. [D.E.
48-1] ~ 3. Sade resides in North Carolina See [D.E. 47]

~

2; [D.E. S2]

~ 2.

Trabant is a North

Carolina corporation. See [D.E. 47] ~ 3; [D.E. S2] ~ 3. Trabant develops and sells "solar trackers,"
which enable solar panels to rotate hi response to or ''track" the sun's movements to maximize solar
energy intake. See Sade Deel. [D.E. SO] ~ 2.
In July 2014, James Dean ("Dean"), a founding member of JD Solar, inquired online about

Trabant' s solar tracker products. See [D.E. 47] ~ S; Dean Deel. [D.E. 48-1] mf 1, 4. Sade responded
to Dean's inquiry. See [D.E. 47] ~ 6; Sade Deel. [D.E. SO] mf 3-4. In July 2014, JD Solar alleges,
but defendants deny, that Sade sent a non-binding quotation to Dean to purchase 13 solar trackers.
See [D.E. 47] ~ 7; [D.E. S2] ~ 7. JD Solar claims that it planned to use one tracker for a residential
project in Connecticut and the remaining twelve for a commercial project in Connecticut. See [D.E.
47] ~ 7. On October 2, 2014, Sade sent a binding quotation for 12 trackers at a price of $13,000 per
tracker and $9SO for a gravel pan for each tracker. See [D.E. 47] ~ 7; [D.E. S2] ~ 13. This price
included shipping, installation, and a warranty. See [D.E. 47] ~ 8. JD Solar alleges that Sade told
Dean that he could deliver the 12 trackers within 12 weeks, which is a standard time-frame in the
industry. See id. ~ 9.
Sade claims that Dean came to Fort Lauderdale, Florida, to view some of Trabant's solar
trackers installed on the campus ofFloridaAtlantic University. See Sade Deel. [D.E. SO]~ 6. They
met at the rental car center, but because Sade "had problems renting the car'' with his dC?,bit card,
Dean rented the car. See id. Sade alleges that Trabant's solar trackers impressed Dean, and Dean
spoke positively about Trabant' s work to one of JD Solar' s clients. See id. ~ 7. Sade claims .that,
2

at this initial meeting, he told Dean that Trabant, as a small start-up, had limited funds and therefore
would require 100% payment up-front. See id. ft 8, 10-12. JD Solar alleges, instead, that Sade
promised to send a payment and delivery schedule and that JD Solar agreed to make a down
payment. See [D.E. 47] ~ 10.
JD Solar made a series of payments between October 3, 2014, and December 22, 2015. See
id.~

11; [D.E. 52] ~ 11. The payments totaled $217,170.00. See [D.E. 47] ~ 11. JD Solar claims

that it sent the last three payments as loans. See id. ~ 12; [D.E. 48-4]. Defendants claim they ''never
agreed to any loans." [D.E. 52]

~

11. Rather, defendants contend that JD Solar did not provide

sufficient funding for Sade to complete the commercial project because JD Solar told Sade to divert
funds from the commercial project to the residential project. See id. ~ 12.
The parties dispute numerous facts concerning the initial negotiations. First, Sade claims that
JD Solar originally requested a quote for 13 solar trackers to be used for the commercial project. See
''

Sade Deel. [D.E. 50]

~

16. Because JD Solar's plan allegedly ''failed to take into account the

installation matrix requested by'' JD Solar' s client (i.e., the physical arrangement of the trackers in
three or four equal rows), defendants claim that JD Solar eventually "gave up" on the 13-tracker plan
and changed the order for the commercial project to 12 trackers. Id. ft 18-19. Sade claims that the
binding quotation did not include any provision for trackers at the residential project and only
included 12 trackers forthe commercial installation and that delivery would occur a few months after
payment. See id. ft 21, 23. Second, defendants contend that if Trabant had known that JD Solar
would not agree to purchase solar panels and inverters, the per unit price of the trackers would have
been higher than $13,000. See

id.~

22. Sade also claims that JD Solar changed the physical

arrangement ofthe trackers for the commercial project in a manner that increased the project's costs
beyond the original price. See id. ~ 36.
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Eventually, JD Solar began to pressure defendants to explain the delays in delivering the
trackers for the commercial project. See [D.E. 47]

~

13. In June 2015, Sade sent two trackers for

the residential project that JD Solar characterizes as "smaller, used[,] and mismatched." Id.
Defendants claim that JD Solar instructed them to provide the two trackers for the residential project
and to divert funds from the commercial project to the residential project. See [D.E. 52] ~ 13. In
contrast, Dean claims that he "discussed one tracker to be used" for the residential project, but that
the ''mainprojecf' was the commercial project. Dean.Aft'. [D.E. 48-1] ~ 7. Defendants claim that
the goods and services provided for the residential project totaled $150,533.15 in value. See [D.E.
52] ~ 12. Defendants also claim that these two trackers were functional and that JD Solar accepted
them. See id. ~ 13. Defendants never delivered the 12 trackers for the com.niercial project.
See [D.E. 47]

~

13; cf. [D.E. 52] ~ 13.

JD Solar claims that Sade attempted to charge more money for items that were originally

included in the unit price. See Dean Aff. [D.E. 48-1] ~ 10. Defendants respond that the unit price
would have been higher if additional items had been included. See [D.E. 52] ~ 13. Defendants also
claim that, as for the residential project, JD Solar increased the costs for the delivery and installation
ofthe two trackers by turning the trackers in different directions and using A/C, ~d not DIC, power.
See id.
JD Solar asserts that defendants' bank records from Wells Fargo show that defendants did

not pay for the manufacture of the solar trackers ordered by JD Solar. See [D.E. 47] ~ 14. JD Solar
contends thatthe bank records show that, after each progress payment from JD Solar, Sade withdrew
funds that he then used for personal expenses unrelated to JD Solar or Trabant' s business. See id.

W14-16, 19.

Defendants dispute whether Sade used funds wired from JD Solar's accounts for his

personal expenses. See [D.E. 52] ~ 14. Instead, defendants assert that Sade used the money
4

withdrawn to pay Trabant's general operating expenses, including expenses for JD. Solar's orders
of solar trackers for the commercial and residential projects. See id. ft 14, 19. Defendants claim
that, although they had "some copies" of cashier's checks used to pay Trabant business expenses,
they ''no longer have copies of others and Wells Fargo was unable to provide copies" to either party.
Id.~

19.
The parties also dispute the events leading to defendants' use of a Polish manufacturer.

Defendants claim that Trabant initially arranged for a fabricator in Trinity, Texas, to make the 12
trackers that JD Solar ordered for the commercial project. See [D.E. SO] ~ 43. Defendants claim that
the fabricator required advance paymentof$120,000 to manufacture the trackers within two or three
months. See id. Because JD Solar did not pay in full up front, defendants were unable to make this
advance payment·. See id. ~ 44. Although Sade "tried every imaginable route to identify another
fabricator who would be willing to make the [t]rackers at [a] price and tinieframe suitable" to
complete the commercial project, his efforts proved unsuccessful.

Id.~

45. Consequently, Sade

arranged for a Polish manufacturer, Telemond Holdings ("Telemond"), to make the trackers. See

....
id. ft 48-49. According to defendants, JD Solar refused to tender an additional $60,000 needed to
'

manufacture the trackers and contacted Telemond directly to cut out Trabant entirely. See id. ·ft
.;

,•

·:.'·

49--51.
In contrast, JD Solar claims that Sade emphasized that the manufacturer was domestic in the
initial negotiations. See Dean Deel. [D.E.. 48-1] ~ 13. Dean claims that, when he pressured Sade to
allow him to go to the Texas manufacturer, Sade said that the ''welds were bad" and that he had to
use Telemond instead. See id. JD Solar claims that when Dean visited Telemond in early 2016, "it
'.

was .obvious that the .trackers had not been manufactured" and that the meeting was merely
. ;··~

. . . ...

s

hitrod~ctory. Dean A:ff. [D.E. 55-1] 7-8; see Dean Deel. [D.E. 48-1] ~ 16.1 ~support, JD Solar
cites contemporaneous e-mails in which Sade told Telemond employees not to ''provide details" to
JD Solar's ~esentatives about progress on the manufacturing order for the traCkers. See [D.E. 48-

3] 2; see Dean Deel. [D.E. 48-1] ~ 17. JD Solar claims that defendants, at that time, had not made
any progress on the 12 trackers for the commercial installation and that Sade's representations of
progress were "lies."

Id.~

15.
II.

Summary judgment is appropriate when, after reviewing the record as a whole, the court
deten:nines that no genuine issue ofmaterial fact exists and the moving party is entitled to judgment
asamatteroflaw. See Fed. R. Civ. P. 56(a);Andersonv. Liberty Lobby.Inc., 477U.S.242,247-48
_...

. .

:

·,

;

..

·

.

(1986). 'The party seeking summary judgment must initially demonstrate the absence of a genuine
issue ofmaterial fact or the absence of evidence to support the nonmoving party's case. See Celotex
Corp. v.

Catr~

477 U.S. 317, 325 (1986). Once the moving party has met its burden, the

noninoving party may not rest on the allegations or denials in its pleading, see Anderso~ 477 U.S.
at 248-49, but ''must come forward with specific facts showing that there is a genuine issue for
trial." Matsushita.Blee. Indus. Co. v. Zenith.Radio Corp., 475 U.S. 574, 587 (1986) (emphasis and
quotation omitted). A trial court reviewing a motion for summary judgment should determine
whether a genuine issue of material fact exists (or trial. See Anderso~ 477 U.S. at 249. In: making
this determination, the court must view the evidence and the inferences drawn therefrom in the light
most favorable to the nonmoving party. See Scott v. Harris, 550 U.S. 372, 378 (2007).

1

JD Solar claims that, because Sade did not have enough money to pay for his travel
expenses to Poland, JD Solar paid for his flight and other expenses futaling $7,127.12. ·See Dean
Deel. [D.E. 48-1] mf 14, 18; Sade Deel. [D.E. SO] ~ 6. JD· Solar seeks damages for these expenses.

6

A genuine issue ofmaterial fact exists ifthere is sufficient evidence favoring the nonmoving
party for a jury to return a verdict for that party. See Anderson, 477 U.S. at 249. ''The mere
existence of a scintilla of evidence in support ofplaintiff's position [is] insufficient ...." Id. at 252.;
see Beale v. Hardy. 769 F.2d 213, 214 (4th Cir. 1985) ("The nonmoving party, however, cannot
create a genuine issue of material fact through mere speculation or the building of one inference
upon another."). Only factual disputes that affect the outcome under substantive law properly
preclude summary judgment. See Anderson, 477 U.S. at 248.
Subject-matter jurisdiction is based on diversity of citizenship, and the court applies state
substantive law and federal procedural rules. See Erie R.R. v. Tompkins, 304 U.S. 64, 78-80
(1938); Dixon v. Edwards, 290 F.3d 699, 710 (4th Cir. 2002). North Carolina law applies.
Accordingly, this court must predict how the Supreme Court of North Caroliria would rule on any
disputed state-law issues. See Twin Ci1y Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of S.C.,
433 F.3d 365, 369 (4th Cir. 2005). Jn doing so, the court must look first to opinions ofthe Supreme
Court ofNorth Carolina. See Stahle v. CTS Corp., 817 F.3d 96, 100 (4th Cir. 2016). If there are
no governing opinions from that court, this court may consider the opinions of North Carolina Court
of Appeals, treatises, and ''the practices of other states." Twin Ci1y Fire Ins. Co., 433 F.3d at 369
.

..

.

-

(quotation omitted).2 Jn predicting how the highest court of a state would address an issue, this court
"should not create or expand a [s]tate's public policy." Time Warner Entm't-Advance/Newhouse
P;ship v. Carteret-CravenElec. Membership Corp., 506 F.3d 304, 314 (4th Cir.2007) (alteration and
quotation omitted); see Wade v. Danek Med.. Inc., 182 F.3d 281, 286 (4th Cir. 1999). Moreover,
in analyzing an issue not yet resolved by a state's highest court, this court must ''follow the decision

2

North Carolina does not have a mechanism to certify questions of state law to its Supreme
Court. See Town ofNags Head v. Toloczk:o, 728 F.3d 391, 397-98 (4th Cir. 2013).
7

ofan intermediate state appellate court unless there [are] persuasive data that the highest court would ·
decide differently." Toloczko, 728 F.3d at 398 (quotation omitted).

A.
As for JD Solar's breach of contract claim, see Compl. [D.E. I]

mf 30-32, under North

Carolina law, a breach of contract claim involves two elements: (I) the existence of a valid contract
and(2) breach of the terms ofthat contract. SeeMcLambv. T.P. Inc., I73 N.C. App. S86, S88, 6I9
S.E.2d S77, S80 (200S); Poor v. Hill, I38 N.C. App. I9, 26, S30 S.E.2d 838, 84S (2000). ''Nonperformance of a valid contract is a breach thereof unless the person charged shows some valid
reason which may excuse the non-performance; and the burden of doing so rests upon him." Cater
v.Barker, I72N.C.App. 44I,447, 6I7 S.E.2d II3, II7 (200S),aff'd, 360N.C. 3S7,()2S S.E.2d 778
(2006) (quotation and alterations omitted); see, e.g., Blount-Midyette v. Aeroglide Corp., 2S4 N.C.
484, 488, II9 S.E.2d 22S, 228 (I96I); Abbington SPE. LLC v. U.S. Bank. Nat'l Assoc., 3S2 F. ,
Supp. 3d S08, SI 7 (E.D.N.C. 20I6), aff'd, 698 F. App'x 7SO (4th Cir. 20I 7) (per curiam)
(unpublished). "[T]he terms of a contract are to be interpreted according to the expressed intent of
the parties unless such intent is contrary to law." O:ffiss. Inc. v. First Union Nat'l Bimk, ISO N.C.
App. 3S6, 363, S62 S.E.2d 90S, 9IO (2002); see Lane v. Scarborough, 284 N.C. 407, 4I0-11, 200
S.E.2d 622, 624 (I973); Duke Power Co. v. Blue Ridge Blee. Membership Corp., 2S3 N.C. S96, 602,
I I 7 S.E.2d 8I2, 8I6 (I96I).
A contract existed between the parties; however, the parties dispute the terms ofthat contract
and whether each party performed or breached its obligations under the contract. Genuine issues of
material fact exist concerning JD Solar' s breach of contract claim. Accordingly, the court denies JD
Solar's motion for summary judgment on its breach of contract claim.

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B.
As for JD Solar's UDTPA claim, see Compl. [D.E. 1] mf 38-43, to prevail on a UDTPA

claim, a plaintiff must establish that "(1) [the] defendant committed an unfair or deceptive act or
practice, (2) the action in question was in or affecting commerce, and (3) the act proximately caused
injury to the plaintiff." Dalton v. Camp, 353 N.C. 647, 656, 548 S.E.2d 704, 711 (2001); Gray v.
N.C. Ins. Underwriting Ass'n, 352 N.C. 61, 68, 529 S.E.2d 676, 681 (2000); Spartan Leasing Inc.
v. Pollard, 101 N.C. App. 450, 460--61, 400 S.E.2d 476, 482 (1991). Whether an act or practice is
unfair or deceptive is a question oflaw for the court. See Gray, 352 N.C. at 68, 529 S.E.2d at 681.

A practice is deceptive "ifit has the tendency to deceive." Id.; see Marshall v. Miller, 302 N.C. 539,
548, 276 S.E.2d 397, 403 (1981 ). A practice is unfair ''when it offends established public policy as
well as when the practice is immoral, unethical, oppressive, unscrupulous, or substantially injurious
to customers." Marshall, 302 N.C. at 548, 276 S.E.2d at 403.

Under North Carolina law, a ''mere breach of contract, even if intentional, is not an unfair
or deceptive acf' by itself. Bob Timberlake Collection. Inc. v. Edwards, 176 N.C. App. 33, 42, 626
S.E.2d 315, 323 (2006); see PCS Phospate Co. v. Norfolk S. Co., 559 F.3d212, 224 (4th Cir. 2009);
Walker v. Fleetwood Homes ofN.C.• Inc., 362 N.C. 63, 72, 653 S.E.2d 393, 399 (2007); Gray, 352
N.C. at 75, 529 S.E.2d at 685; Branch Banking & Tr. Co. v. Thompson, 107 N.C. App. 53, 62, 418
S.E.2d 694, 700 (1992). North Carolina law "does not permit a party to transmute a breach of
contract claim into a ... UDTPA claim ... because awarding punitive or treble damages would
destroy the parties' bargain." PCS Phosphate, 559 F.3d at 224; see Broussard v. Meineke Discount '
Muffier Shops. Inc., 155 F.3d 331, 346-47 (4th Cir. 1998) (collecting cases). If substantial
aggravating circumstances accompany a breach of contract, then those circumstances can give rise
to a UDTPA claim. See Bartolomeo v. S.B. Thomas. Inc., 889 F.2d 530, 535 (4th Cir. 1989); United
9

Roasters. Inc. v. Colgate-Palmolive Co., 649 F.2d 985, 992 (4th Cir. 1981); Burrell v. Sparkkles
Reconstruction Co., 189 N.C. App. 104, 111, 657 S.E.2d 712, 717 (2008); Branch Banking & Tr.
Co., 107N.C. App. at 62, 418 S.E.2d at 700.
Genuine issues of material fact exist concerning whether defendants committed an unfair
or deceptive act and whether substantial aggravating circumstances exist. Thus, the court denies ID
Solar's motion for summary judgment on its UDTPA claim.

c.
ID Solar also moves for summary judgment on defendants' counterclaims. See [D.E. 46].
On March 23, 2017, the court struck Trabant's counterclaims [D.E. 30]. On April 1, 2019, Sade

voluntarily dismissed his counterclaims with prejudice [D.E. 54]. Accordingly, the court denies as
moot ID Solar's motion for summary judgment on defendants' counterclaims.

m.
In sum, the court DENIES ID Solar's motion for summary judgment concerning its claims
and DENIES as moot ID Solar's motion concerning defendants' counterclaims [D.E. 46]. The
parties shall engage in a settlement conference with United States Magistrate Judge Gates. The
court will set the case for trial by separate order.
SO ORDERED. This _!1_ day of July 2019.

United States Distric~)udge

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