Superior Composite Structures, LLC v. Abersham Commercial Services, Ltd. et al
Filing
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ORDER denying 45 Motion for Discovery; denying 58 Motion for Summary Judgment; granting 73 Motion for Extension of Time. Signed by Chief Judge Karen E. Schreier on 11/10/2011. (KC)
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
SUPERIOR COMPOSITE
STRUCTURES, LLC,
Plaintiff,
vs.
MALCOLM PARRISH,
Defendant.
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Civ. 10-4066-KES
ORDER
Plaintiff, Superior Composite Structures, LLC, brought suit against
defendant, Malcolm Parrish, who is proceeding pro se, and alleges breach of
contract, negligent misrepresentation, fraudulent misrepresentation, and deceit
causes of action. Superior Composite moves to deem admitted “Plaintiff’s
Requests for Admissions to Defendant Malcolm Parrish.” Docket 45. Parrish
moves to admit his late responses to Superior Composite’s requests for
admissions. Docket 73. Superior Composite resists. Docket 74. In addition,
Superior Composite moves for summary judgment, Docket 58, which Parrish
resists. Superior Composite’s motion to deem admitted its requests for
admissions is denied. Parrish’s motion to admit his late responses is granted.
Superior Composite’s motion for summary judgment is denied.
BACKGROUND
The pertinent facts to this order, in the light most favorable to Parrish,
the nonmoving party on the summary judgment motion, are as follows:
Parrish is the chief executive officer for Abersham Commercial Services
Ltd, which is involved in producing modular housing panels out of high-tech
materials made from recycled glass. Superior Composite, through its managers
Lee Celske and Rick Ostergaard, expressed interest in selling these houses.
Abersham stated that it could provide a “turn key” Ambiente Housing Plant,
which could produce 500 modular houses a year.
Superior Composite and Parrish entered into a series of written
agreements, including an “Agreement in Principal” dated August 12, 2008.
Docket 1-1. Superior Composite agreed to purchase an Ambiente Housing
Plant from Abersham with a production capacity of 500 houses per year for
$9 million, with $500,000 due at the end of year one, $500,000 due at the end
of year two, and the remaining $8 million paid in cash in progress payments
“defined in the Plant Design Build contract.” Docket 1-1 at 1. The August 12
agreement included phases for building the Ambiente Plant and stated that
Abersham would receive a technology licensing fee in the amount of 8 percent
of each house’s sale price. In return, Superior Composite would receive an
exclusive territory within the United States to sell the houses. Superior
Composite paid an initial $250,000 deposit to Abersham.
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On June 9, 2008, Abersham provided a firm order to buy 100,000 square
feet of housing from Superior Composite, reserved the right to purchase
another 100,000 square feet of housing, and stated that Abersham wanted to
receive the houses at a rate of ten per month. Docket 1-2. Abersham stated
that firm dates and costs for these houses would be determined at a later date.
On April 2, 2009, Parrish wrote to Rick Ostergaard and Lee Celske, two
of Superior Composite’s executive officers, and stated that Superior Composite
needed “to increase the deposit by 100k.” Docket 1-3. Superior Composite paid
an additional $100,000 to Abersham. The contractual relationship eventually
disintegrated, and Superior Composite brought this action against Abersham
and Parrish on June 14, 2010.
After Abersham’s counsel withdrew and the company was unable to
secure substitute counsel, the clerk of court entered default against Abersham
because corporations cannot proceed pro se in court. Dockets 29, 32. After
holding a hearing on damages, where Abersham did not appear, the court
granted Superior Composite’s motion for default judgment against Abersham in
the amount of $849,895.98. Docket 57. Only Parrish remains as a defendant in
this action.
On May 19, 2011, Superior Composite served its requests for admissions
on Parrish. In its requests for admissions, Superior Composite informed
Parrish that if he failed to answer, the requests for admissions would be
deemed admitted. Docket 46-1 at 1. Four months later, on September 13,
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2011, Parrish submitted his proposed responses to the requests for
admissions.
DISCUSSION
I.
Requests for Admissions
Federal Rule of Civil Procedure 36(a)(3) controls when a request for
admissions is deemed admitted:
A matter is admitted unless, within 30 days after being served, the
party to whom the request is directed serves on the requesting
party a written answer or objection addressed to the matter and
signed by the party or its attorney. A shorter or longer time for
responding may be stipulated to under Rule 29 or be ordered by
the court.
If a party does not timely respond to a request for admissions, the propounding
party may move the court for an order deeming the admissions admitted. Am.
Petro, Inc. v. Shurtleff, 159 F.R.D. 35, 36 (D. Minn. 1994) (citations omitted).
The district court has broad discretion in discovery matters, including whether
to permit the filing of answers to responses for admissions that otherwise are
untimely. Gutting v. Falstaff Brewing Corp., 710 F.2d 1309, 1312 (8th Cir.
1983).
If a party files a late reply to a request for admissions, he is effectively
moving to withdraw the admissions under Rule 36(b). Quasius v. Schwan Food
Co., 596 F.3d 947, 952 (8th Cir. 2010). While Parrish did not explicitly move
under Federal Rule of Civil Procedure 36(b), the court will construe his filing as
a Rule 36(b) motion. See Dodd v. United States, 614 F.3d 512, 515 (8th Cir.
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2010) (reasoning that courts should be “[m]indful of the need to construe pro
se motions liberally. . . .” (citing Earl v. Fabian, 556 F.3d 717, 723 (8th Cir.
2009))).
Rule 36(b) employs a two-factor test in deciding whether late responses
to a request for admissions should be allowed: “Subject to Rule 16(e), the court
may permit withdrawal or amendment if it would promote the presentation of
the merits of the action and if the court is not persuaded that it would
prejudice the requesting party in maintaining or defending the action on the
merits.” Fed. R. Civ. P. 36(b); see also Gutting, 710 F.2d at 1313 (requiring
courts to engage in the Rule 36(b) analysis if a party files a late response to a
request for admissions).
A.
Merits
Under the first factor, the court may permit withdrawal “if it would
promote the presentation of the merits of the action . . . .” Fed. R. Civ. P. 36(b).
In order to grant a motion to admit late responses, “the mistaken admission”
must “ ‘practically eliminate any presentation of the merits of the case.’ ”
Furminator, Inc. v. Munchkin, Inc., N0. 08-cv-00367, 2009 WL 1140117, at *2
(E.D. Mo. Apr. 28, 2009) (quoting Hadley v. United States, 45 F.3d 1345, 1348
(9th Cir. 1995)).
In his responses, Parrish disputes the reasons behind the disintegration
of the parties’ contractual relationship. Superior Composite asserts that the
contractual relationship fell apart because Parrish could not complete his side
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of the bargain. Parrish, on the other hand, asserts that the relationship fell
apart because Superior Composite could not secure the necessary financing.
See Docket 73 at ¶¶ 4, 5, 11, 13, 20, 26, 35, 40, 50, 52, 53, 59, 60, 73, 76-79,
82, 86, and 96.
Superior Composite claims that the parties reached an oral agreement at
a December 13, 2009, meeting. Docket 46-1 at ¶ 24. Superior Composite
provided a written memorandum dated December 14, 2009, memorializing the
terms allegedly reached at the meeting. Docket 1-4. Parrish disputes that the
parties reached an oral agreement in December of 2009. Docket 73 at ¶ 24.
Parrish also disputes Superior Composite’s claim for damages. As
damages in this action, Superior Composite requests, among other items, the
return of the $350,000 that it paid to Parrish under the parties’ agreement.
Superior Composite maintains that the $350,000 was for a down payment on
the contract that would have been subtracted from the total purchase price.
Docket 46-1 at ¶ 80. Parrish responds that the $350,000 was for a feasibility
determination and because Superior Composite failed to uphold its end of the
agreement, it is not entitled to a refund of the $350,000: “Had the Plaintiff
acquired the necessary funding, then the $350,000.00 would have reduced the
final price as the feasibility was part of the total cost. However, since the
Plaintiff was unable to uphold their end of the Agreement by securing
financing, the credit no longer applies.” Docket 73 at ¶ 80.
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Parrish’s responses to Superior Composite’s requests for admissions,
including why the parties’ contractual relationship collapsed, whether an oral
agreement was reached, and whether Superior Composite is entitled to the
$350,000 or any other damages, would aid in determining the merits of this
action. Thus, factor one weighs in favor of granting Parrish’s motion.
B.
Prejudice
Prong two of the Rule 36(b) test requires a showing of prejudice to the
nonmoving party. Fed. R. Civ. P. 36(b). The party who obtains the mistaken
admissions has the burden to prove that granting a Rule 36(b) motion would
prejudice him. F.D.I.C. v. Prusia, 18 F.3d 637, 640 (8th Cir. 1994) (citations
omitted). “The prejudice contemplated by [Rule 36(b)] relates to the difficulty a
party may face in proving its case because of a sudden need to obtain evidence
required to prove the matter that had been admitted.” Gutting, 710 F.2d at
1314 (citations omitted).
Superior Composite argues that it will be prejudiced by the late
responses because it prepared its summary judgment motion based on
Parrish’s non-responses to its requests for admissions. Even though Parrish
moved to admit his late responses almost four months after Superior
Composite served its requests for admissions, “preparing a summary judgment
motion in reliance upon an erroneous admission does not constitute
prejudice.” Prusia, 18 F.3d at 641 (citations omitted). Superior Composite also
argues that it will be prejudiced by the late responses because the discovery
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deadlines have already passed. But if Superior Composite believes that
discovery is necessary, it can move to modify the court’s Rule 16 scheduling
order.1 Because Superior Composite has not shown prejudice, factor two
weighs in favor of granting Parrish’s motion. Thus, Parrish’s motion to admit
his late responses is granted, and Superior Composite’s motion to deem
admitted its requests for admissions is denied.
II.
Summary Judgment Motion
A.
Standard of Review
Federal Rule of Civil Procedure 56(a) provides that “[t]he court shall grant
summary judgment if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”
Only disputes over facts that might affect the outcome of the case will preclude
summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Summary judgment is inappropriate if a dispute about a material fact is
genuine, that is, if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party. Id.
The moving party bears the burden of bringing forward sufficient
evidence to establish that there are no genuine issues of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986). The court views the facts “in the
1
A rule 16 scheduling order can be modified “only for good cause and
with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). Given the unique
circumstances of this case, the court would find good cause to modify the
scheduling order.
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light most favorable to the party opposing the motion.” Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (internal citation omitted).
The nonmoving party also receives “the benefit of all reasonable inferences to
be drawn from the underlying facts” in the record. Vette Co. v. Aetna Cas. &
Sur. Co., 612 F.2d 1076, 1077 (8th Cir. 1980) (citing Adickes v. S. H. Kress &
Co., 398 U.S. 144, 158-59 (1970)).
B.
Discussion
Superior Composite must meet three elements to establish a breach of
contract claim: “(1) an enforceable promise; (2) a breach of the promise; and
(3) resulting damages.” Gul v. Cntr. for Family Med., 762 N.W.2d 629, 633 (S.D.
2009) (citing Guthmiller v. Deloitte & Touche, LLP, 699 N.W.2d 493, 498 (S.D.
2005)). Parrish alleges that he did not breach the contract because Superior
Composite failed to meet its end of the agreement by securing the necessary
financing. He also alleges that the parties never reached an oral agreement.
Furthermore, Superior Composite seeks damages resulting from the breach of
the contract “including but not limited to” the $350,000. Docket 1 at ¶ 42.
Superior Composite’s entitlement to the $350,000, however, is disputed.
Because genuine issues of material fact remain on the breach of contract
claim, summary judgment is denied on that claim.
Superior Composite also alleges that Parrish provided false information
to it during the course of their business relationship and asserts negligent
misrepresentation, fraudulent misrepresentation, and deceit causes of action.
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A negligent misrepresentation occurs when a party makes (1) a
misrepresentation; (2) without reasonable grounds for believing the statement
to be true; (3) with the intent to induce a particular action by the other party;
(4) the other party changes its position with actual and justifiable reliance on
the statement; and (5) the other party suffers damages as a result. Ehresmann
v. Muth, 757 N.W.2d 402, 406 (S.D. 2008) (citing Fisher v. Kahler, 641 N.W.2d
122, 126 (S.D. 2002)). In order to prove a fraudulent misrepresentation claim,
Superior Composite must show that Parrish (1) made a representation as a
statement of fact; (2) that representation is untrue; (3) Parrish “intentionally
recklessly made” that statement; (4) Parrish intended “to deceive for the
purpose of inducing the other party to act upon it;” (5) Superior Composite
relied on the untrue statement of fact; and (6) that reliance resulted in injury or
damage. N. Am. Truck & Trailer, Inc. v. M.C.I. Commc’n Servs. Inc., 751 N.W.2d
710, 714 (S.D. 2008) (internal quotation omitted). In South Dakota, deceit
occurs in one, or more, of four scenarios:
(1) The suggestion, as a fact, of that which is not true, by one who
does not believe it to be true; (2) The assertion, as a fact, of that
which is not true, by one who has no reasonable ground for
believing it to be true; (3) The suppression of a fact by one who is
bound to disclose it, or who gives information of other facts which
are likely to mislead for want of communication of that fact; or (4)
A promise made without any intention of performing.
SDCL 20-10-2.
In order for Superior Composite to succeed on any of these three causes
of action, Parrish must have made at least one false statement. Superior
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Composite asserts, among other allegations, that Parrish “supplied false
information to Superior Composite regarding its ability to provide a ‘turn key’
Ambiente Housing Plant with a production capacity of 500 houses per year.”
Docket 60 at 9. But in his responses to the requests for admissions, Parrish
repeatedly states that he can provide the “turn key,” but he has not done so
because Superior Composite is unable to pay for it. If a fact-finder believed
Parrish’s versions of the facts, then Superior Composite’s claims would fail.
Because there are genuine disputes of material facts, summary judgment is
denied on the negligent misrepresentation, fraudulent misrepresentation, and
deceit causes of action.
CONCLUSION
Superior Composite moves to deem its requests for admissions admitted.
In response, Parrish moves to submit his responses late. Because Parrish’s
responses would aid in determining this case’s merits and Superior Composite
has not shown prejudice from the late responses, Parrish’s motion is granted
and Superior Composite’s motion is denied. Superior Composite’s motion for
summary judgment is also denied because genuine issues of material fact
remain on all claims. Accordingly, it is
ORDERED that Superior Composite’s motion to deem admitted
“Plaintiff’s Requests for Admissions to Defendant Malcolm Parrish” (Docket 45)
is denied.
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IT IS FURTHER ORDERED that Parrish’s motion to admit his late
responses to Superior Composite’s requests for admissions (Docket 73) is
granted.
IT IS FURTHER ORDERED that Superior Composite’s motion for
summary judgment (Docket 58) is denied.
Dated November 10, 2011.
BY THE COURT:
/s/ Karen E. Schreier
KAREN E. SCHREIER
CHIEF JUDGE
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