Traxys North America, LLC v. Fila Oilfield Services, LLC et al

Filing 58

MEMORANDUM OPINION AND ORDER denying 30 MOTION to Exclude Testimony of Charles Mazur; granting 31 MOTION for Partial Summary Judgment on the Pleadings; denying 32 MOTION for Summary Judgment ; granting 33 MOTION to Amend Answer; granting 34 MOTION for Leave to File Amended Answer; denying 38 MOTION for Summary Judgment on Damages and denying in part 39 MOTION for Summary Judgment . Case is well-suited for mediation. 50 Order granting Motion to Continue Docket Call is vacated and a new amended docket control order will be entered. (Signed by Judge Sim Lake) Parties notified.(gclair, 4)

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United States District Court Southern District of Texas ENTERED September 12, 2017 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIV ISION David J. Bradley, Clerk TRAXYS NORTH AMERICA , LLC, Plaintiff, CIVIL ACTION NO . H-16-0721 FILA OILFIELD SERV ICES , LLC ; FILA -MAR ENERGY SERVICES, LLC; NST TRANSLOAD OPERATING COMPANY, LLC ( d/b/a NORTHSTAR MIDSTREAM); and NORTHSTAR M IDSTREAM , Defendants . MEMODAHRUM OPIN ION AND ORDER Pending before the court are Defendants Fila Oilfield Services, LLC and Fila-Mar Energy Services, LLC'S ('Fila' Motion ' ') Exclude Testimony of Charles Mazur (nFila's Motion to Exclude') ' ( Docket Entry No . 30); Defendants Fila Oilfield Services, LLC and Fila-Mar Energy Services, LLC 'S Motion for Partial Judgment on the Pleadings CA Fila's Motion for Partial Judgment on the Pleadings') ' ( Docket Entry No. Defendant NST Transload Operating Company , LLC d/b/a Northstar Midstream's (I ') Motion for Summary Judgment ' NST' (' % NST'S MSJ' ') ( Docket Entry No. 32); Defendants Fila Oilfield Services , LLC and Fila-Mar Energy Services , LLC'S Motion for Leave to Amend Answer C' Fila's Motion for Leave to Amend' ( ') Docket Entry No. Defendant NST Transload Operating Company, d/b/a Northstar M idstream 's Motion for Leave to File an Amended Answer (' ' NST'S Motion for Leave to Amend' ') ( Docket Entry No . 34)7 Defendant NST Transload Operating Company, LLC d/b/a Northstar Midstream's Motion for Summary Judgment on Damages (' ' NST's MSJ on Damages') ( ' Docket Entry No . 38); and Defendants Fila Oilfield Services , LLC and Fila-Mar Energy Services , LLC 'S Motion for Summary Judgment ('Fila's MSJ' ( ' ') Docket Entry No. 39). For the reasons stated below , Fila's Motion to Exclude will be denied , Fila 's Motion for Partial Judgment on the Pleadings will be granted, NST 'S MSJ will be denied, Fila 's Motion for Leave to Amend will be granted, NST 'S Motion for Leave to Amend will be granted , NST 'S MSJ on Damages will be denied , and Fila 's MSJ is ripe for decision insofar as will be denied . Factual and Procedural Backqround In the spring of 2014 an associate trader w ith plaintiff Traxys North America, LLC l' ' Traxys/ 'l, Scott Musser, visited North Dakota in an attempt to locate indoor warehousing suitable for ceramic proppant x While there Musser saw an advertisement for storage at the NST transloading facility and contacted NST about the possibility of storing proppant .z NST could not meet Traxys' l videotaped Deposition of Scott Musser taken March 31 , 2017 ( hereinafter n Musser Depo' '), at 242:2-7, Exhibit 1 to Plaintiff's Response in Opposition to Fila 's Motion for Summary Judgment (uTraxys' Response in Oppositionz' Docket Entry No . 54), Docket ' Entry No . 55 , p . 6 . z Musser Depo at 241 :10-242 :1 , Exhibit l to Traxys ' Response in Opposition , Docket Entry No . 55 , pp . 5-6 . storage needs because did not have indoor facilities.3 NST referred Musser to Fila , which was planning to construct indoor storage facilities at the NST term inal .4 Fila had an agreement with NST, titled the Commodity Transloading Services Agreement, under which it could store goods at the NST terminalx But per that agreement, Fila's right to access the storage facility was not substantially interfere with or diminish E NST'S) complete control and responsibility for the operation the ( storage facility! and the performance of the ( transloading servicesl.' 'E Traxys eventually entered into an agreement w ith Luoyang Aoxiang Ceramics Co., Ltdw to purchase 6,000 metric tons of 20/40 ISP ceramic proppant to be shipped from Qingdao , China . ? On August 28, 2014 , Traxys entered into an agreement with Fila for the delivery of the 6,000 metric tons of ceram ic proppant in 4,000 bulk bags, each containing 1 .5 metric tons of proppant .8 3 See Declaration of Mar Het k heri ngton at f Fila agreed Exhib it A to NST 'S MSJ , Docket Entry No . 32-1, p . 2 . 4 . Id s commodity Transloading Services Agreement , dated July 2 , 2014 , Exhibit 4 to Traxys' Response in Opposition , Docket Entry No . 55, pp . 21-36 . 6 Id. at 29 î 13. ? Email with Traxy s and Luoyang contract attached , Exhibit 5 to Traxys? Response in Opposition , Docket Entry No . 55, pp . 37-38 . B Agreement between Traxys and Fila , dated August 28, 2014 ( hereinafter uFila Agreement' '), Exhibit 3 to Traxys' Response in Opposition , Docket Entry No . 55 , pp . 19-20 . that it would be responsib le for the loading , ocean transport , discharging , load ing onto ra ilcars , and rail freight from Qingdao , China to the Bakken Shale p lay in North Dakota , and the discharging of railcars to a warehouse .g The agreement between Traxys and Fila also included the following term : BWarehouse storage at Northstar Terminal is $5.00 per 1. MT super-sack after 30 free days.'l 5 'o The proppant was loaded at the Port of Qingdao on or about October 23 , 2014 .11 The vessel carrying the proppant arrived in Everett , Washington , on or around November 12 , 2014 .1 2 A Fila - ordered survey of the proppant completed upon arrival found that moisture levels in the proppant ranged from 9 to 11% .1 3 In mid-December of 2014 the proppant began to be transported by rail from the port and to NST'S terminal in North Dakota x4 When 9'a rm ,- a l 'a 0r l Email from Dom Pere to Scott Musser, dated October 24 , 2014 , l Exhibit 5 to Traxys ' Response in Opposition , Docket Entry No . 55, pp . 37-38. HEmail from Dom Pere to Scott Musser , dated November 6, 2014 , Exhibit 8 to Traxys' Response in Opposition , Docket Entry No . 55 , p . 69 . Hsurvey Report dated November 18, 2014 , from Cullen Maritime Services , Inc ., Exhib it 9 to Traxys' Response in Opposition , Docket Entry No . 55 , pp . 70-87 . MEmail from Lambert Arceneaux to Scott Musser, dated December 12, 2014, Exhibit 12 to Traxys ' Response in Opposition , Docket Entry No . 55, p . 102 ; Survey Report conducted by Vericlaim Inc w dated November 4, 2015, Exhib it 13 to Traxys ' Response in Opposition , Docket Entry No . 55, pp . 103-15. Traxys v isited the NST facility on May condition of the bags, 2015, to check on the found that only 1,090 of the 4,000 bags had been moved inside the warehouse x s A moisture probe analysis conducted by Scott Musser in May of 2015 revealed that some of the bags had moisture readings up to 29 .9: .1 Traxys w ithheld storage 6 payments from February of 2015 through June 2015 .1 7 Fila eventually sent an invoice reflecting a reduced rate of $3 per bag to cover the months of outdoor storage , which Traxys paid .l8 Fila 's later invoices reverted to the rate of $5 per bag . 9 l As of September of 2015, approximately 1,000 bags remained outside xo A number of the bags had been damaged during attempts to move them by forklift .z On September l 2015, Fila notified Traxy s that Fila l Email from Scott Musser to Fila , dated May 11, 2015 , s Exhibit 18 to Traxys ' Response in Opposition , Docket Entry No . 55 , pp . 122-24 . l Email from Scott Musser to Fila Accounting Support , dated 6 May 11 , 2015, Exhibit 20 to Traxys' Response in Opposition , Docket Entry No . 55 , pp . 126-27 . UEmail dated March 4, 2015 , from Fila to Scott Musser , Exhibit 15 to Traxys ' Response in Opposition , Docket Entry No . 55 , pp . 118-19 . l lnvoice #1521 dated May 28, 2015, Exhibit 16 to Traxys' B Response in Opposition , Docket Entry No . 55 , p . 120 . l Email from Scott Musser to Fila Accounting Support , dated g May 11, 2015, Exhibit 20 to Traxys ' Response in Opposition, Docket Entry No . 55 , pp . 126-27 . M Email dated September 8, 2015 , from Fila to Scott Musser, Exhibit 21 to Traxy s' Response in Opposition , Docket Entry No . 55 , pp . 128-31. z lEmail from Scott Musser to Todd Frank , dated October 6 , 2015, Exhibit 23 to Traxys' Response in Opposition , Docket Entry No . 55, pp . 133-34 . was defaulting on its storage agreement with NST that required Fila to move a specified quantity of m aterial through facility monthly .2 2 the storage Traxys subsequently sold the proppant for salvage . Traxys sold 828,000 pounds of proppant to Rockpile Energy Services at $O. O6/1b for a total of $46,368,2 and Traxys sold 3 12,387,720 pounds of proppant to Kelly Supply at $0.009/15 for a total of $111, 489. 2 48. 4 On March l8, 2016, Traxys sued NST and Fila asserting breach of-contract and negligence claims in connection with damages to the ceram ic proppant stored on NST 'S property . Defendants have moved for summary judgment several issues, moved to amend their original answers, and moved to exclude Traxys' expert testimony . II. Choice of Law As a prelim inary matter , defendants argue that North Dakota law controls . A federal court sitting in diversity applies the forum state 's choice-of-law rules to determ ine which sub stantive law will apply . See Erie Railroad Co . v . Tompkins , 58 S . Ct . 817 2 Email from Scott Musser to Todd Frank , dated November l9, 2 2015, Exhib it 22 to Traxys' Response in Opposition , Docket Entry No . 55, p . 132 ; Email from Scott Musser to Todd Frank , dated October 6 , 2015 , Exhibit 23 to Traxy s' Response in Opposition , Docket Entry No . 55 , pp . 133-34 . H purchase order for Rockpile Energy Services , LLC , dated December 29, 2015, Exhibit 29 to Traxys' Response in Opposition , Docket Entry No . 55 , pp . 162-67 . M purchase order for Kelly Supply LLC, dated December 14 , 2015 , Exhibit 30 to Traxys ' Response in Opposition , Docket Entry No . 55 , pp . 167-71 . - 6- ( 1938); Klaxon Co . v . Stentor Electric Manufacturing Co ., Inc ., 61 - S. 1020 ( 1941). state 's 1aw Texas courts resolve the issue of which app lies in a contract dispute by looking to the Restatement ( Second) of Conflict of Laws ( 1971). Maxus Exploration Co . v . Moran Brothers, Incw S. W.2d ( Tex. 1991). If the contract does not stipulate the law to be applied in the event of a dispute , as is the case here , the general rule of section 188 of the Restatement controls . See id .; see also Desantis v . Wackenhut Corp ., 793 S. . 670, 677-78 ( W 2d Tex . 1990), cert. denied, 111 S. Ct. 755 ( 1991) Under that rule uE tlhe rights and duties of the parties with respect to an issue in contract are determined by the local 1aw of the state which , with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated Restatement ( Second) of Conflicts of Laws 5 188( 1) ( 1971). State contacts are evaluated not by their number, but by their quality . Minnesota M ininq and Manufacturing Co. v . Nishika Ltd w 955 S . .2d 853, 856 ( W Tex . 1996) ( citations omitted). In applying this test, the court considers uthe place of contracting,' ( uthe place of negotiation of ' 2) the contractz' ' uthe place of performance,' ( nthe location ' 4) of the subject matter of the contract,' and ( uthe domicile, ' 5) residence , nationality , place of incorporation and place of business of the parties .' Bailey v . Shell Western E&P, Inc ., 609 ' F. 710, 723 (5th Cir. 2010). 3d The parties' contract does not stipulate which 1aw is to be applied the event of a dispu te . Defendants argue that the balance of factors supports application of North Dakota law . Fila notes that the proppant at issue was to be delivered to and stored in North Dakota . The remaining factors do not clearly indicate a more significant relationship with another state . Traxy s does not dispute the significance of the relationship w ith North Dakota but argues that no choice of 1aw analysis is required because it has withdrawn its claims for pun itive damagesz and thereby removed the s conflict Fila identified between the applicable law of Texas and that of North Dakota . But Fila identifies another conflict between North Dakota and Texas law in its Reply .26 Moreover , the alleged torts and the resulting damage occurred in North Dakota . clarity and consistency , the court will therefore For apply North Dakota 1aw to al1 state 1aw issues . 111. A. Fila Motions Motion to Exclude Fila asks the court to exclude the testimony of Traxys' expert witness , Charles Mazur . Fila argues that Mazur's references to the facts and data he relied upon do not satisfy the notice z splaintiff's Response in Opposition to Fila 's Motion for Partial Judgment on the Pleadings, Docket Entry No . 42, p . 5 . MDefendants Fila Oilfield Serv ices, LLC and Fila-Mar Energy Services , LLC 'S Reply in Support of Motion for Summary Judgment with Objections, Docket Entry No. 57, p. 5, n.l. - 8- requirements of Federal Rule of Civil Procedure 26 , that Mazur lacks the requ isite background , that Mazur 's testimony is based on sources not reasonably relied upon by experts in the relevant fields, and that Mazur offers impermissible legal op inions . Traxys argues that Mazur's experience valuing projects in the oil and gas industry qualifies him uto testify on the market conditions of ceramic proppant , as well as other related matters , including logistics .' 1 '2 Unless an expert is clearly unqualified to render an opinion , the court's usual practice is to rule on such motions because counsel frequently testimony at trial , predicates for limit their scope of experts ' counsel often establish more extensive experts' testimony sometimes modify the trial opinions at trial, and trial . Having experts carefully considered the parties ' arguments the court is not persuaded that Mazur should be excluded . A lthough there is no indication that Mazur is an expert on proppant from a materials standpoint, his experience as a valuation expert for oil and gas projects may qualify him to op ine on relevant aspects of the proppant market . At any rate, the court is not persuaded that Mazur is clearly unqualified . Questions regarding the sources relied upon by an expert typically go to credibility rather than admissib ility . For z7 plaintiff 's Response in Opposition Exclude Mazur , Docket Entry No . 43, p . 9. - 9- to Fila 's Motion to the reasons stated above , the court will decide on the adm issibility of specific portions of Mazur's testimony at trial . Accordingly , Fila 's Motion to Exclude w ill be denied . Traxys should , however , supplement Mazur's report with the specific identities of sources upon which Mazur relies . Specifically , Traxys must identify the records and information on which Mazur relied, the identity of the source from Carbo Ceramics w ith whom Mazur or his organization discussed moisture testing of ceram ic proppant , the industry sources on which Mazur relied for his pricing distressed ceramic proppant , and the identifying information of the Carbo Ceramics report on the value of undamaged proppant . Traxys will have 14 days from the entry of this Memorandum Opinion and Order to provide that in formation to al1 defendants . B. Motion for Partial Judgment on the Pleadings Once a responsive pleading has been filed , a motion to dismiss for failure to state a claim is treated as a motion for judgment on the pleadings under Rule l2 ( c). Jones v . Greninqer, 188 F. 322, 3d ( 5th 1999) ( per curiam). motion brought pursuant to FED. R. Cl P. 12( v. c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts.'' ' Derivative & In re Enron Corp. Securities, 'ERISA ' Litiqation , ' ' 439 F . Supp . 2d 692, 695 ( D . Tex . 2006) ( S. quoting Great Plains Trust Co. v . Morqan Stanley Dean Witter & Co ., 313 F .3d 305, ( 5th Cir. 2002) and Herbert Abstract Co . v . Touchstone Properties , Ltd w 914 F .2d 76 (5th Cir. 1990) ( per curiaml). U motion for judgment on the pleadings A under Rule 12( is subject to the same standard as a motion to c) dismiss under Rule l2( 6) b)( 4l8 ( 5th Doe v . Myspace, Inc w 528 F.3d 413, 2008) ( citing Johnson v . Johnson, 385 F . 3d ( 5th Cir. 2004)) Accepting the plaintiff's factual allegations as true , the court considers whether the comp laint states a plausible claim for relief . See Young v . City of Houston , 599 F . App 'x 553 , 554 ( 5th Cir. 2015). Fila seeks judgment as a matter of 1aw as to Traxys' tort claim s .2 8 Fila argues that a breach contract , without more, cannot support a tort claim , such as negligence . Traxys responds by citing Texas cases involv ing parties who were not in a contractual relationship . Under North Dakota 1aw u E clonduct that constitutes a breach of contract does not subject the actor to an action in tort for negligence , unless the conduct also constitutes breach an independent duty that did not arise from the contract .' Dakota Grain Co ., Inc . v . Ehrmantrout, 502 N .W .2d 234, ' 236-37 ( . . 1993). Accepting Traxys' factual allegations as true, N D Traxys has not identified any independent duty that did not arise 2 The remaining arguments addressed in Fila 's Motion for 8 Partial Judgment on the Pleadings--choice of 1aw and punitive damages--are addressed in Section II, supra . from its contract with Fila . See Olander Contractinq Co . v . Gail Wachter Investments, 643 N . W.2d 29, 39 ( . 2002). Fila's Motion N D. for Partial Judgment on the Pleadings will therefore be granted , and Traxys' tort claims against Fila will be dismissed . Motion for Leave to Amend Under Rule 16( b) uE alfter a scheduling order deadline has passed, a party must show good cause ( orderq to obtain leave to in amend the operative pleadings .' Meaux Surface Protection , Inc . v . ' Fogleman, 607 F.3d 161, 167 ( 5th 2010). The court's discretion to grant such leave is nguided by the following factors : the explanation for the failure to timely move for leave to amend; ( the importance of the amendment; 2) potential prejudice in availability allowing continuance the to amendment; and cure such ( 4) the prejudice.'' ' Id. of a ( quoting S&W Enterprises, L .L .C . v . SouthTrust Bank of Alabama , NA , 3l5 F .3d 533, 536 ( 5th Cir . 2003)). Once the Rule l6( 4) standard has b)( been met, the court applies the more liberal Rule l5( standard by a) which uleave amend 'shall be freely given when justice so requires.z' S&W Enterprises, 315 F. at 535 ( ' 3d quoting FE R. Cl D. v. l5 ( )) a Leave may be denied under Rule 15 ( a) only for a 'substantial reason .' ' ' In re Southmark Corp w 88 F .3d 314-15 ( 5th Cir. 1996) Fila asks the court to modify its September 23 , 2016, deadline for amended pleadings to perm it Fila to amend its answer to include counterclaims for breach of contract and quantum meruit . Fila argues that there is good cause to amend the scheduling order because the amendment is of critical importance , will not suffer prejudice by the amendment, but prejudiced, a continuance could cure the Traxys if Traxys is prejudice, and litigation had not begun in earnest as of the deadline for motions to amend . Fila 's argument regarding the status of the litigation at the time of the deadline for amendments constitutes an adequate excuse for Fila 's failure to timely amend its answer . The court encourages parties to attempt early resolution , and the fact that no parties had begun conducting discovery as of the court 's initial deadline for amendment suggests that all parties were working toward that end . The court concludes that the delayed start of discovery also minimizes the potential prejudice to Traxy s. When Fila filed its motion , it had only deposition and Traxys had taken none . taken one The court also concludes that the amendment is important as it may constitute a dispositive defense and allow the suit to serve as a 'final accounting' between ' ' the parties.9 Moreover, a continuance would cure any prejudice 2 Traxys may suffer from the amendment . Rule 16 factors weighs in Because the balance of favor of permitting amendment, and because the court is not aware of any substantial reason to deny 2 9Fila 's Motion for Leave to Amend , Docket Entry No . 33 , pp . 3-4 . the amendment , Fila 's Motion for Leave to Amend will be granted . Fila will not , however , be permitted to re-depose any w itness . D. Motion for Summary Judgm ent Fila seeks summary judgment on Traxys' breach-of-contract claim , on damages, on Traxys' gross-negligence claim , and on counterclaims for breach of contract and quantum meruit .3o Because Traxy s' tort claim s will be dism issed for the reasons stated Section III .B ., Fila 's motion is moot as to those claims . Summary judgment is appropriate the movant establishes that there is no genuine dispute about any material fact and the movant is entitled to judgment as a matter of law. FED. R. CI P. 56( V. a) 'The movant ' accomp lishes this by inform ing the court of the basis for its motion , and by identifying portions of the record which h ighlight the absence of genuine factual issues .' ' F .2d 1125 , BIn order to Topalian v . Ehrman, 954 ( 5th Cir . 1992) ( citing Fed. 56 ( c)). avoid summary judgment, the nonmovant must identify specific facts within the record that demonstrate the ex istence of a genuine issue of material fact .' CO , Inc . v . TXU Mininq Comoany , ' L. P., 565 F.3d 268, 273 ( 5th Cir . 2009). reviewing the evidence uthe court must draw al1 reasonable inferences in favor of the nonmoving party , and it may not make credibility determ inations or weigh the ev idence .' ' Reeves v . 3Fila also objects to portions of Traxys' summary-judgment 0 evidence. Because the court does not rely on the objectionable evidence, it does not decide those objections at this time. Sanderson Plumbinq Products, Incw 120 S. Ct. 2097, 2110 ( 2000). The court resolves factual controversies in favor of the nonmovant , nbut only when there is an actual controversy , that is, when both parties have subm itted evidence of contradictory facts .' Little v . ' Liqu id Air Corp ., F.3d 1069, 1075 ( 5th Cir. 1994). 'Unsubstantiated assertions are not competent summary judgment ' evidence .' Huqh Svmons Grour , r1c v . Motorola , Inc w 292 F .3d 466, ' 468 ( 5th Cir. 2002) ( citing Celotex Corp. v . Catrett, 106 2548, 2553 ( 1986)). And ' mqere conclusory allegations are not 'E competent summary judgment evidence.' Id. ( ' citing Eason v . Thaler, 73 F. 1322, 1325 ( 3d 5th Cir. 1996)). Traxys ' Breach-of-contract Claim Fila argues that Traxys' breach-of-contract claim should be dismissed on the basis contractual rights or that either Traxys waived its the parties modified the contract .3 Fila l argues that by initially withholding payment and then pay ing a reduced amount for outside storage of a portion of the proppant Traxys voluntarily and intentionally relinqu ished its contractual rights or , alternatively , agreed to modify the existing contract a 'novation' under North Dakota law . ' ' hWaiver a voluntary and intentional relinquishment or abandonment of a known advantage , benefit , claim , privilege, or 3 For summary purposes, Fila does not argue that it did not l breach the original agreement . - 15 - right .' Hanson v . Cincinnati Life Insurance CQ- , 57l N . .2d 363, ' W ( D . 1997) ( N. citations omitted). waiver may be established either by an express agreement , or by inference from acts or conduct .' ' Id . at The existence of waiver generally is a question of fact , but if circumstances of an alleged waiver are clearly established and reasonab le persons can draw only one conclusion from those circum stances, the existence of waiver is a question of law . Id . is elementary that an innocent party may waive a breach of a contract and continue performance on his part . If such performance is continued with no conditions attached, the innocent party has made an election and waived the breach.'' Dangerfield v . Markel, 252 N . ' W.2d 184, l9l ( . 1977) N D. ( quoting Western Transmission Corp . v . Colorado Mainline, Inc ., 376 F.2d 470, ( 10th Cir . 1967)). The court is not persuaded that Traxys voluntarily and intentionally relinquished its contractual rights as a matter of law . Traxys did not continue performance under the original agreement . Instead , Traxys withheld payments . When Traxys eventually agreed to pay a lesser amount, it was on the condition that Fila have the remaining proppant moved indoors , a condition which Fila allegedly never fulfilled . There is therefore a genuine dispute as whether Traxys ' actions manifest an intention to relinquish its contractual rights after the initial alleged breach . The court also is not persuaded that there was sufficient meeting of the minds to show a modification or novation as a matter of law . A 'novation' under North Dakota 1aw is uthe substitution ' ' a new obligation between the same parties with intent to extinguish the o1d obligation.' N . . CE ' D NT. CO 5 9-13-10(1). 'To DE ' have a novation , the parties must intend to extinguish the obligation , there must be mutual assent , and there must be sufficient consideration .' Schmitt v . Berwick Township , 488 N .W .2d ' 398, 400 ( . . 1992). N D Traxys argues that it never intended to extinguish Fila 's original obligation to store the proppant indoors and that was acting in good faith by paying the $3 per bag outside rate with the understanding that Fila would move the remaining bags indoors. Fila 's reversion to the original rate upon being notified that the proppant had been moved indoors supports the position that the parties intended to return to the term s of the original agreement . But even assuming arquendo that the parties did modify the contract , Fila does not cite any authority supporting the position that by modifying the contract Traxys waived its right to recover damages caused by the previous breach .3 2 Damages uThe elements of a prima facie case for breach of contract are : and the existence of a contract; breach of the contract; damages which flow from the breach .' ' WFND , LLC v . Fargo 32 At least one court has held to the contrary : 'The ' modification of a contract after its breach does not waive damages for the past breach unless the terms of the modification expressly or by implication show such waiver .' ' Peak v . International Harvester Company of America, l86 S. 574, 576 (1916). W. Marc, LLC, 730 N . . 841, 848 ( . 2007). W 2d N D. 'Under North Dakota ' law , uncertainty as to the amount of damages , as opposed to the fact of damages , w ill not prevent recovery .' ' Hardrives, Incw 85 F . 3d 343, 347 ( 8th Triton Corp . v . 1996) ( citing Bergguist-Walker Real Estate , Inc . v . William Clairmont , Inc w 333 N .W .2d 42O ( . . 1983)) N D Instead, î a) party who proves a 1( breach of a contractual duty , but who fails to prove damages resulting from the breach , is entitled to nom inal damages on ly .' ' Hummel v . Mid Dakota Clinic, P.C., 526 N . . 704, 709 ( . . 1995) W 2d N D ( citing 11 Williston on Contracts 5 1339A ( ed. 1968)7 5 Corbin 3d on Contracts 5 1001 ( 1964); Restatement ( Second) of Contracts 5 346 ( 1981)). Traxys has shown that an actual controversy exists as to ( whether Fila breached its contract with Traxys and ( the fact 1) 2) of damages , however minimal , to Traxys ' proppant as a resu lt of the alleged breach . If Traxys prevails on its breach-of-contract claim , it may at least be entitled to nominal damages . Summary judgment will therefore be denied as to damages for Fila's alleged breach of contract . Counterclaim s Because the court only now granting Fila 's Motion for Leave to Amend , and because Traxys has not yet been given the opportunity to respond to Fila's summary judgment arguments in support of its counterclaims, the court will refrain from deciding them at this time . As explained below , the parties will be required to mediate . - 1 8- Traxy s will be given an opportunity to respond to Fila 's MSJ on its counterclaims if and when the mediator declares an impasse . IV . NST Motion s A. Motion for Summary Judgment NST moves for summary judgment on both of Traxys' claims against NST argues that Traxy s' breach of bailment contract claim fails because Traxys had no contract, express or implied , with NST . NST argues that Traxys' negligence claim fails because NST owed no duty to Traxys, the econom ic loss rule bars Traxys' tort claim, and ( NST did not breach any duty it may have 3) owed to Traxys . is undisputed that NST had no express contract with Traxys . Traxys argues that , by storing the proppant , NST entered into an implied bailment contract with Traxys . Traxy s argues that NST uassumed possession of E the proppantl' so as to create a contract ' of bailment as a matter of law .3 3 NST did not reply to this argument . Whether NST 'S contract with Fila gave rise to a bailment or merely a landlord and tenant relationship is a question of fact . The North Dakota Supreme Court has adopted the following test to distinguish the two : the test is whether the person leav ing the property has made such a delivery to the owner of the premises as to amount to a relinquishment , for a time , of h is exclusive possession , control, and dominion over the property , so H plaintiff's Response in Opposition to Summary Judgment , Docket Entry No . 44 , p . 20 . NST 'S Motion for that the latter can exclude , within the lim its of the agreement , the possession of a1l others . If he has , the general rule is that the transaction is a bailment . If there is no such delivery and relinquishment of exclusive possession , and control and dominion over the goods is dependent in no degree upon the co -operation of the owner of the premises, and access to the goods is in no wise subject to the latter's control, it is generally held that the owner of the goods is a tenant or lessee of the space upon the prem ises where they are left . Great Plains Supply Co . v . Mobil Oil Co ., N . . 241, 245 ( . . W 2d N D 1969) ( quoting 8 Am . Jur . 2d, Bailments 5 elaborated that p . 926). The court constitute a bailment , there must be such a full transfer , actual or constructive , of the property to the bailee as to exclude the possession of owner and other persons and give the bailee the sole custody and control of the goods.' Id . ( ' citations omitted). Record evidence shows that NST had u Acomplete control and responsibility for the operation of the E storage facilityq and the performance of the E transloading servicesl.''3 Drawing al1 reasonable inferences in favor of the '4 non-movant , there is at least a genuine issue of material fact as to the ex istence of an implied bailment . Even if there were no contractual relationship between Traxys and NST , Traxys may yet prevail on its tort claim against NST . NST argues that it owed no ex tracontractual duty to Traxys . Traxys argues that , as a sub -bailee, NST may be liable for damages. North Dakota law supports Traxys ' argument . In answer to the question of whether a bailor may maintain an action against a stranger to the 3 4Fi1a 's MSJ , Docket Entry No . 39, p . l1 , n .26 and accompanying text ( citing Docket Entry No. 32-3 at $$ 7. 13) 4, - 20 - bailment for negligently damaging a bailed chattel, the North Dakota Supreme Court 'unquestionably ' be ' stated maintained . that such Grossman an action Chevrolet may Co . v . Enockson, 86 N . . 644, 646-47 ( . 1957) ( W 2d N D. citations omitted). The court cited the 'well-settled' rule that 'where any permanent ' ' ' injury is done to a chattel, the bailor may maintain an action against a third person for injury to the reversionary interest and where the bailor may , at his option , terminate the bailee's possession , he may recover the entire amount of damages to the property.' Id. ( ' citing Roval Stein Inc . v. B . C. U . Holding Corp w l27 N . . 2d 886, 887 ( Y S. 1954)). Record evidence raises a genuine issue of material fact as to whether NST damaged the proppant when attempting to move by forklift . NST argues that the econom ic loss ru le bars Traxys' tort claim s. But the econom ic loss rule only app lies the proppant was the subject of an implied contract between NST and Traxys , an allegation that NST denies and that the court will submit to the finder of fact . Dismissal of Traxys ' tort claim on the basis of the econom ic loss rule wou ld therefore be premature . NST argues that, even assuming it owed an independent duty to Traxys, Traxys unab le to show that NST breached that duty . The essence of NST 'S argument is that it performed its obligations under its eontract with Fila and that, as a result , Traxys is uestopped from arguing that NST should have acted different from or contrary to the Fila/NST Agreement by failing to contract or communicate directly with NST knowing full well that NST would be handling the Proppant .' s NST argues that Traxy s 'impliedly waived '3 ' any right to complain over how NST performed .' 6 NST does not cite '3 to specific facts or authority in support of its argument , and the court is not persuaded that NST 'S estoppel defense en titles it to dismissal of Traxys' claims as a matter of law . B. Motion for Leave to Amend Because the reasons stated above in Section III .C . also apply to NST 'S Motion for Leave to Amend , NST 'S motion will be granted . C. MSJ on Damages NST 'S arguments in support of its MSJ on Damages have been rendered moot or rejected as a result of the court's decisions on the issues discussed above . NST 'S motion will therefore be denied . V. For the reasons Conclusions and Orders stated above , Defendants Fila Oilfield Services, LLC and Fila-Mar Energy Services , LLC 'S Motion to Exclude Testimony of Charles Mazur Defendants Fila Oilfield Services , LLC'S Motion ( Docket Entry Serv ices , D EN IED ; and Fila-Mar Energy for Partial Judgment on the Pleadings ( Docket Entry No. 3l) is GRANTED ; Defendant NST Transload Operating Company, LLC d/b/a Northstar Midstream's Motion for Summary 3 NST 's MSJ , Docket Entry No . 32 , 5 3 yd . 6 l8 . Judgment ( Docket Entry No. 32) is DENIED; Defendants Fila Oilfield Services , LLC and Fila-Mar Energy Services, LLC 'S Motion for Leave to Amend Answer ( Docket Entry No. is GRANTED; Defendant NST Transload Operating Company, LLC d/b/a Northstar Midstream's Motion is for Leave to File an Amended Answer ( Docket Entry No . GRANTED; Defendant NST Transload Operating Company, LLC d/b/a Northstar Midstream 's Motion for Summary Judgment on Damages ( Docket Entry No. 38) is DENIED ; and Defendants Fila Oilfield Services, LLC and Fila -Mar Energy Services, LLC 'S Motion Summary Judgment ( Docket Entry No . for is DENIED in part as to Traxys ' breach -of-contract claim and damages and is not yet ripe for decision as to Fila 's counterclaims . The court mediation . believes that this case is well-suited for If the parties are unable to settle the case in the next 30 days , they will adv ise the court and will provide the name and contact information of an agreed mediator . If the mediation is not successful , the court will enter an amended docket control order . The court's Order ( Docket Entry No. 50) is VACATED as to the dates for filing the joint pretrial order and for docket call. SIGNED at Houston , Texas, on this 12th day of Sep tember , 2017 . e S IM LA KE UNITED STATES DISTRICT JUDGE - 23 -

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