Keith v. J.D. Byrider Systems, LLC, et al
Filing
70
MEMORANDUM OPINION AND ORDER denying 62 Motion for Summary Judgment filed by Byrider Sales of Indiana S, LLC, J.D. Byrider Systems, LLC. (Ordered by Judge Sidney A Fitzwater on 10/20/2016) (Judge Sidney A Fitzwater)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
MARVIN KEITH,
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§
Plaintiff,
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§ Civil Action No. 3:14-CV-1317-D
VS.
§
§
J.D. BYRIDER SYSTEMS, LLC F/K/A §
J.D. BYRIDER SYSTEMS, INC., et al., §
§
Defendants. §
MEMORANDUM OPINION
AND ORDER
Defendants J.D. Byrider Systems, LLC f/k/a J.D. Byrider Systems, Inc. and Byrider
Sales of Indiana S, LLC f/k/a Byrider Sales of Indiana S, Inc. (collectively, the “Byrider
Entities”) move for summary judgment on plaintiff Marvin Keith’s (“Keith’s”) quantum
meruit claim. For reasons that follow, the court denies the motion.
I
Because the background facts and procedural history are set out in the court’s prior
memorandum opinions and orders, Keith v. J.D. Byrider Systems, LLC, 2014 WL 5148124,
at *1 (N.D. Tex. Oct.14, 2014) (Fitzwater, C.J.) (“Keith I” ), and 2015 WL 3539555, at *1
(N.D. Tex. June 5, 2015) (Fitzwater, J.) (“Keith II”), the court will focus on what is pertinent
in the present decision.
Keith is a consultant who advises businesses on financing strategies for acquisitions
and large-scale debt refinancing projects.1 In 2007 Keith began working with the Byrider
Entities, nonparty Manchester, Inc. (“Manchester”), and James F. DeVoe, Jr. (“DeVoe”),
who was then the Chief Executive Officer of the Byrider Entities, to negotiate Manchester’s
purchase of the Byrider Entities’ existing components.
The Byrider Entities were concerned that Manchester would not be able to secure
adequate financing for the acquisition, and DeVoe requested to meet with the financing
sources whom Manchester intended to use. Keith helped arrange a meeting between
executives of the Byrider Entities, including DeVoe, and Keith’s contacts at Greenwich
Capital (“Greenwich”), which later became RBS Securities, Inc. (“RBS”), who were
potential financiers for Manchester’s acquisition.
During this time, Keith discussed with DeVoe the possibility that another entity might
acquire the Byrider Entities if Manchester’s attempt failed. In connection with this
contingency, Keith developed financing plans that involved entities other than Manchester.
According to Keith’s summary judgment evidence, he also explained to the Byrider Entities
representatives features of asset-backed securitizations, and he explicitly discussed
compensation that he expected in return for this information and for introducing his financing
sources.
1
In deciding the Byrider Entities’ summary judgment motion, the court views the
evidence in the light most favorable to Keith as the summary judgment nonmovant and draws
all reasonable inferences in his favor. See, e.g., Owens v. Mercedes-Benz USA, LLC, 541
F.Supp.2d 869, 870 n.1 (N.D. Tex. 2008) (Fitzwater, C.J.) (citing U.S. Bank Nat’l Ass’n v.
Safeguard Ins. Co., 422 F.Supp.2d 698, 701 n.2 (N.D. Tex. 2006) (Fitzwater, J.)).
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In January 2008 Keith entered into a Non-Circumvention Agreement (the “Written
Agreement”) with the Byrider Entities. The Written Agreement’s Confidentiality and NonCircumvention Term (“Confidentiality/ Non-Circumvention Clause”) provides:
If Byrider does not consummate the Acquisition with
Manchester or its assignee for a period of twenty four (24)
months from the date of this agreement, Byrider and those of its
affiliates to whom the Financiers are disclosed will not contact
or deal with or otherwise be involved in any transaction with
any Financier introduced to Byrider pursuant to the terms of this
Agreement without the express written approval of Consultant,
which approval may be withheld by Consultant in his sole and
absolute discretion.
D. App. 155.
In 2011 nonparty Altamont Capital Partners acquired the components of the Byrider
Entities then in existence. In April 2012 the Byrider Entities refinanced and restructured
large amounts of debt using Keith’s financing contacts and restructuring proposals, without
Keith’s involvement. The Byrider Entities restructured $145 million in receivables, made
possible in part by financing from RBS.
Keith brought this lawsuit against the Byrider Entities and Devoe, asserting claims for
breach of contract and quantum meruit. In Keith II the court dismissed all of Keith’s claims
against DeVoe for lack of in personam jurisdiction. Keith II, 2015 WL 3539555, at *1. The
court dismissed Keith’s breach of contract claims against the Byrider Entities, id. at *9, *11,
and it declined to dismiss his quantum meruit claim, id. at *13. The Byrider Entities now
move for summary judgment as to Keith’s remaining quantum meruit claim, contending that
Keith has not submitted sufficient evidence to prove any element of his quantum meruit
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claim, and that his claim is barred by the statute of limitations.
II
The Byrider Entities’ summary judgment burden depends on whether they are moving
for relief on a claim or defense for which they will have the burden of proof at trial. To be
entitled to summary judgment on a matter for which they will have the burden of proof, they
“must establish ‘beyond peradventure all of the essential elements of the claim or defense.’”
Bank One, Tex., N.A. v. Prudential Ins. Co. of Am., 878 F. Supp. 943, 962 (N.D. Tex. 1995)
(Fitzwater, J.) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)). This
means that they must demonstrate that there are no genuine and material fact disputes and
that they are entitled to summary judgment as a matter of law. See Martin v. Alamo Cmty.
Coll. Dist., 353 F.3d 409, 412 (5th Cir. 2003). “The court has noted that the ‘beyond
peradventure’ standard is ‘heavy.’” Carolina Cas. Ins. Co. v. Sowell, 603 F.Supp.2d 914,
923-24 (N.D. Tex. 2009) (Fitzwater, C.J.) (quoting Cont’l Cas. Co. v. St. Paul Fire & Marine
Ins. Co., 2007 WL 2403656, at *10 (N.D. Tex. Aug. 23, 2007) (Fitzwater, J.)).
When the summary judgment movant will not have the burden of proof at trial on a
specific claim or defense, the party need only point the court to the absence of evidence of
any essential element of the opposing party’s claim or defense. See Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). Once the moving party does so, the nonmovant must go beyond
his pleadings and designate specific facts demonstrating that there is a genuine issue for trial.
See id. at 324; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per
curiam). An issue is genuine if the evidence is such that a reasonable jury could return a
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verdict for the party with the burden of proof. See Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). The nonmovant’s failure to produce proof as to any essential element
renders all other facts immaterial. TruGreen Landcare, L.L.C. v. Scott, 512 F.Supp.2d 613,
623 (N.D. Tex. 2007) (Fitzwater, J.).
Summary judgment is mandatory where the
nonmoving party fails to meet this burden. Little, 37 F.3d at 1076.
III
The court turns first to the Byrider Entities’ contention that Keith has not submitted
sufficient evidence to prove any element of his quantum meruit claim.
A
Quantum meruit is an equitable remedy that does not arise out of a contract, but is
based on an equitable agreement to pay for benefits received. Keith I, 2014 WL 5148124,
at *6 (quoting MetroplexCore, L.L.C. v. Parsons Transp., Inc., 743 F.3d 964, 975 (5th Cir.
2014) (per curiam)).
Generally, a party may recover under quantum meruit only when
there is no express contract covering the services or materials
furnished. This remedy “is based upon the promise implied by
law to pay for beneficial services rendered and knowingly
accepted.” Recovery in quantum meruit will be had when non
payment for the services rendered would “result in an unjust
enrichment to the party benefited by the work.”
Id. (quoting MetroplexCore, 743 F.3d at 975). To recover on his quantum meruit claim,
Keith must prove that: “1) valuable services and/or materials were furnished, 2) to the party
sought to be charged, 3) which were accepted by the party sought to be charged, and 4) under
such circumstances as reasonably notified the recipient that the plaintiff, in performing,
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expected to be paid by the recipient.” Id. (quoting MetroplexCore, 743 F.3d at 975).
B
1
The Byrider Entities contend that Keith did not furnish valuable services to them.
Keith maintains that he provided a valuable service by introducing the Byrider Entities to his
financing contacts at Greenwich (which later became RBS). The Byrider Entities posit that
this introduction was not actually their first contact with Greenwich, and thus not valuable
to them; that the financing later received from RBS was not a novel arrangement, but a tested
method in RBS’s portfolio; and that Keith made the introduction, first, in his role as a
consultant for Manchester, and then for himself as a potential purchaser, not as a service to
the Byrider Entities. The Byrider Entities also maintain that this introduction was covered
by the Confidentiality/Non-Circumvention Clause of the Written Agreement, so that any
service Keith furnished was pursuant to that contract, not to an implied contract that can
support a quantum meruit claim.
The second valuable service that Keith maintains he provided is information about
securitized financing. The Byrider Entities maintain that Keith did not provide any formal
planning materials and had no actual experience with asset-backed securitization. The
Byrider Entities contend that, without these, the information that Keith provided to them
could not have been a valuable service leading to the 2012 financing with RBS.
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2
The court concludes that there is a genuine issue of material fact concerning whether
Keith furnished a valuable service to the Byrider Entities. For example,2 Keith has
introduced evidence that would enable a reasonable jury to find that he shared with
representatives of the Byrider Entities financial strategies related to securitized transactions.
He has also introduced proof that, at various times, he explained to executives of the Byrider
Entities the potential of securitized financings in the Byrider Entities’ circumstances. A
reasonable jury could find that Keith has met his burden on this element of his quantum
meruit claim.
C
The Byrider Entities also move for summary judgment on the ground that they were
not reasonably notified that Keith expected to be paid for any services rendered. With regard
to the introduction to Greenwich, the Byrider Entities maintain that this meeting was covered
by the Confidentiality/Non-Circumvention Clause of the Written Agreement, and thus could
not simultaneously be the subject of an agreement implied by quantum meruit. The Byrider
Entities also contend that, in the meetings with Greenwich, Keith acted as a consultant to
Manchester or as an independent investor, not as a consultant to the Byrider Entities.
2
“When this court denies rather than grants summary judgment, it typically does not
set out in detail the evidence that creates a genuine issue of material fact.” Valcho v. Dall.
Cnty. Hosp. Dist., 658 F.Supp.2d 802, 812 n.8 (N.D. Tex. 2009) (Fitzwater, C.J.) (citing
Swicegood v. Med. Protective Co., 2003 WL 22234928, at *17 n.25 (N.D. Tex. Sept. 19,
2003) (Fitzwater, J.)).
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The court concludes that there is a genuine issue of material fact concerning whether
the Byrider Entities were reasonably notified that Keith expected to be paid for his services.
For example,3 Keith has introduced summary judgment evidence that some services were
separate from the Greenwich meetings, which could fall outside the scope of the
Confidentiality/Non-Circumvention Clause. Keith has also submitted evidence that he
discussed his compensation with DeVoe on multiple occasions, including after Keith’s
involvement with Manchester concluded. A reasonable jury could find that Keith has met
his burden on this element of his quantum meruit claim.
IV
The court now turns to the Byrider Entities’ contention that Keith’s claim is barred
by the statute of limitations.
Under Texas law, the statute of limitations for quantum meruit is four years. See
Quigley v. Bennett, 256 S.W.3d 356, 361 (Tex. App. 2008, no pet.). The Byrider Entities
maintain that the limitations period commenced when Keith performed his services. See
NorthPark Partners, LP v. Macy’s Retail Holdings, Inc., 2014 WL 462623, at *2 (N.D. Tex.
Feb. 4, 2014) (Lynn, J). They posit that beginning the limitations period at any other time
would apply a discovery rule that is not supported by these circumstances. See Quigley, 256
S.W.3d at 361-62. The Byrider Entities contend that, because this case was filed in 2014,
no services performed by Keith before 2010 are compensable.
3
See supra note 2.
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Keith responds that the limitations period did not begin to run until a legal injury
arose. See Seureau v. ExxonMobil Corp., 274 S.W.3d 206, 226 (Tex. App. 2008, no pet.).
He posits that, because a quantum meruit claim is based on unjust enrichment, he was not
injured until the Byrider Entities benefited from the services he rendered. See Lamajak, Inc.
v. Frazin, 230 S.W.3d 786, 795-96 (Tex. App. 2007, no pet.). According to Keith, his legal
injury did not occur until 2012, when the Byrider Entities completed a securitized financing
transaction with RBS—a transaction that Keith contends was enabled by his services.
When payment is contingent on some future condition, the limitations period for
quantum meruit begins to run at the time payment becomes due, not the times when services
were rendered. See Lamajak, 230 S.W.3d at 795-96 (“[The plaintiff] did not expect to be
paid until he had worked the entirety of 1998 and [defendant’s] profits for that year had been
calculated. [Plaintiff’s] claim is based on [defendant’s] failure to pay him after its profits for
1998 were determined. Thus, the earliest date his claim could have accrued is January 1,
1999.”). Because a reasonable jury could find that Keith did not expect to be paid unless a
deal was consummated, it could also find that the limitations period did not accrue until the
2012 securitized financing transaction with RBS was completed, and that Keith’s quantum
meruit claim is not time-barred. This result is not in conflict with NorthPark Partners, as the
Byrider Entities suggest. See NorthPark Partners, 2014 WL 462623, at *2 (“For completed
jobs, a quantum meruit claim accrues when a project is completed.” (emphasis added)).
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*
*
*
Accordingly, the court concludes that a reasonable jury could find in favor of Keith
on his quantum meruit claim and could find that the claim is not barred by limitations. The
court therefore denies the Byrider Entities’ motion for summary judgment.
SO ORDERED.
October 20, 2016.
_________________________________
SIDNEY A. FITZWATER
UNITED STATES DISTRICT JUDGE
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