Western Power, Inc v. Transamerican Power Products, Inc.
Filing
45
MEMORANDUM OPINION AND ORDER granting in part and denying in part 24 MOTION for Partial Summary Judgment , deferring 25 MOTION for Sanctions, granting 22 MOTION for Partial Summary Judgment as to Liability on Plaintiff's Breach of Contract Claim (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
WESTERN POWER,
INC.,
§
§
§
§
§
§
§
§
§
§
Plaintiff,
v.
TRANSAMERICAN POWER
PRODUCTS I INC. I
Defendant.
June 07, 2018
David J. Bradley, Clerk
CIVIL ACTION NO. H-17-1028
MEMORANDUM OPINION AND ORDER
Plaintiff
"Plaintiff")
Power
Western Power,
brings
Products,
Inc.
("Western Power,"
"WPI,"
or
this action against defendant TransAmerican
Inc.
( "TransAmerican,"
"TAPP,"
or
"Defendant")
asserting claims for breach of contract, quantum meruit, violation
of
the
Texas
Theft
Liability Act,
and
inducement. 1
fraudulent
Pending before the court are Plaintiff Western Power, Inc.'s Motion
for Partial Summary Judgment as to Liability on Plaintiff's Breach
of
Contract
Claim
("Plaintiff's
Motion
for
Summary
Judgment")
(Docket Entry No. 22), Defendant TransAmerican Power Products, Inc.
Motion for Partial Summary Judgment as to Plaintiff's Claims and
Memorandum
in Support Thereof
Judgment")
(Docket
Inc.'s Motion
Preserve
1
for
Evidence
Entry No.
Sanctions
("Defendant's
24) ,
Under
("Plaintiff's
Motion
for
Summary
and Plaintiff Western Power,
FRCP Rule
Motion
for
See
Plaintiff's
Original
Complaint
("Complaint"), Docket Entry No. 1, pp. 4-6.
37
for
Failure
Sanctions")
and
Jury
to
(Docket
Demand
For the reasons stated below, Plaintiff,s Motion
Entry No. 25).
for
Summary
Judgment
will
be
granted,
Defendant, s
Motion
for
Summary Judgment will be granted in part and denied in part, and a
ruling on Plaintiff,s Motion for Sanctions will be deferred until
trial.
I.
Western
Factual and Procedural Background
Power
is
a
manufacturer,s
representative
business consists of promoting its clients,
products. 2
whose
Western
Power and TransAmerican entered into a written agreement setting
forth
the
terms
TransAmerican. 3
and
which
Western
Power
would
represent
The Agreement states that "Seller agrees to pay
Representative a
II
under
sales commission on actual sales of products,
provides
a
commission
schedule. 4
The
commission
schedule provided that commission on net sales of $1,000,001 and
over were "[t]o be negotiated." 5
Western Power,s principal, Mikey
Kleineider, emailed TransAmerican,s controller, Hector de Uriarte,
requesting to "learn how the commissions are calculated" in March
of 2011. 6
2
Id.
TransAmerican terminated the Agreement on February 9,
at 2
~
6.
See Agreement,
Entry No. 1-1.
3
4
Id.
Exhibit A to Plaintiff, s
Complaint,
Docket
at 2-3.
6
Exhibit 2 to Declaration of Hector de Uriarte ("de Uriarte
Declaration"),
Exhibit A to Defendant,s Motion for Summary
Judgment, Docket Entry No. 24-1, p. 12.
-2-
2017. 7
Western Power filed this lawsuit on April 4, 2017. 8
Power
alleges
that
it
dutifully
and
properly
Western
represented
TransAmerican and sold its products, but that TransAmerican "failed
and refused to compensate Plaintiff in accordance with the terms of
the Agreement." 9
During discovery in July of 2017 Western Power
provided TransAmerican a spreadsheet indicating Western Power's
calculation of the "Underpaid Dollar Amount." 10
2017,
On September 16,
TransAmerican's information technology infrastructure fell
under
cyberattack
workstations. 11
that
affected
its
servers
and
personal
All systems shut down and TransAmerican halted
operations on September 18,
2017. 12
Other than some information
stored in paper format at TransAmerican's warehouse, most of the
information sought by Western Power in this action was
lost. 13
7
de Uriarte Declaration, Exhibit A to Defendant's Motion for
Summary Judgment, Docket Entry No. 24-1, p. 6.
8
See Complaint, Docket Entry No. 1.
9
Id. at 3
~~
8-9.
10
See
Plaintiff's
Underpayment
Calculation
Spreadsheet,
Exhibit 1 to Declaration of Robert J. Kruckemeyer, Docket Entry
No. 24-2, pp. 4-20; see also Plaintiff's Underpayment Calculation
Spreadsheet, Exhibit A to TransAmerican Power Products, Inc. 's
Motion for Leave to File a Supplement to its Motion for Partial
Summary Judgment as to Plaintiff's Claims and Memorandum in Support
Thereof, Docket Entry No. 28-2, pp. 4-20.
11
Declaration of Igor Lubisco, Exhibit A to Defendant's
Response to Plaintiff's Motion for Sanctions
("Defendant's
Response/Sanctions"), Docket Entry No. 34-1, p. 2.
12Id.
13
Declaration of Hector de Uriarte ("de Uriarte Declaration"),
Exhibit B to Defendant's Response/Sanctions, Docket Entry No. 34-2,
p. 2.
-3-
During mediation on October 17,
2017,
TransAmerican produced an
excel spreadsheet it had prepared in July of 2017 that shows its
calculations of commissions. 14
In April of 2018 the parties filed
the pending cross-motions for partial summary judgment, 15 responses
in opposition to the other party's motion, 16 and Western Power filed
a Motion for Sanctions. 17
The parties filed a Joint Pretrial Order
on May 31, 2018 (Docket Entry No. 42) . 18
II.
Summary Judgment Standard
Summary judgment is warranted if the movant establishes that
there is no genuine dispute about any material fact and that it is
14
Confidential Attorneys Eyes Only ("Defendant's Commission
Calculation Spreadsheet"), Exhibit F to Plaintiff Western Power,
Inc.'s Reply to Defendant's Response to Plaintiff's Motion for
Partial Summary Judgment (Docket Entry No. 38) , Docket Entry
No. 39; Defendant TransAmerican Power Products Inc.'s Response to
Plaintiff's Motion for Partial Summary Judgment ("Defendant's
Response/MSJ"), Docket Entry No. 31, p. 2.
15
Plaintiff' s Motion for Summary Judgment, Docket Entry No. 22;
Defendant's Motion for Summary Judgment, Docket Entry No. 24.
16
Defendant' s Response/MSJ, Docket Entry No. 31; Plaintiff
Western Power, Inc.'s Objection and Response to Defendant's Motion
for Partial Summary Judgment ("Plaintiff's Response/MSJ"), Docket
Entry No . 3 6 .
17
Plaintiff's Motion for Sanctions, Docket Entry No. 25.
18
TransAmerican filed TransAmerican Power Products, Inc.'s
Supplement to Joint Pretrial Order ("TransAmerican's Supplement to
Joint Pretrial Order"), Docket Entry No. 43, in which it re-urged
the same arguments it made in (1) its Motion for Summary Judgment
(Docket Entry No. 24) regarding the statute of limitations and
applicability of the Discovery Rule to the breach of contract
claim, and
(2) its Response to Plaintiff's Motion for Sanctions
(Docket Entry No. 34).
-4-
entitled to judgment as a matter of law.
An
examination
material.
(1986).
of
substantive
law
Fed. R. Civ. P. 56{c).
determines
to a
facts
are
Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505, 2510
Material facts are those facts
that
outcome of the suit under the governing law."
as
which
material
fact
exists
if
the
"might affect the
Id.
A genuine issue
evidence
is
such that
a
reasonable trier of fact could resolve the dispute in the nonmoving
party's favor.
Id. at 2511.
Where, as here, both parties have moved for summary judgment,
both "motions must be considered separately, as each movant bears
the burden of establishing that no genuine issue of material fact
exists and that it is entitled to judgment as a matter of law."
Shaw Constructors v.
ICF Kaiser Engineers,
538-39 (5th Cir. 2004).
Inc.,
395 F. 3d 533,
The movant must inform the court of the
basis for summary judgment and identify relevant excerpts from
pleadings, depositions, answers to interrogatories, admissions, or
affidavits
that
demonstrate
there
are
no genuine
Celotex Corp. v. Catrett, 106 S. Ct. 2548, 2553
fact
issues.
(1986); see also
Wallace v. Texas Tech Univ., 80 F.3d 1042, 1046-47 (5th Cir. 1996).
If a
defendant moves
for
summary judgment on the basis of an
affirmative defense, "it must establish beyond dispute all of the
defense's essential elements."
Bank of Louisiana v. Aetna U.S.
Healthcare Inc., 468 F.3d 237, 241
(5th Cir. 2006).
A defendant
may also meet its initial burden by pointing out that the plaintiff
has failed to make a showing adequate to establish the existence of
-5-
an issue of material fact as to an essential element of plaintiff's
case.
Celotex Corp., 106 S. Ct. at 2552.
its initial burden,
show
by
affidavits,
If the movant satisfies
the burden shifts to the nonmoving party to
depositions,
answers
to
interrogatories,
admissions on file, or other evidence that summary judgment is not
warranted because genuine fact issues exist.
Celotex Corp., 106
s. Ct. at 2552.
In reviewing the evidence "the court must draw all reasonable
inferences in favor of the nonmoving party,
credibility determinations
or weigh
Sanderson Plumbing Products,
Inc.,
the
and it may not make
Reeves
evidence."
120 S. Ct. 2097,
2110
v.
(2000).
But conclusory claims, unsubstantiated assertions, or insufficient
evidence will not satisfy the nonmovant's burden.
at 1047.
If
the nonmovant
fails
to present specific evidence
showing there is a genuine issue for trial,
appropriate.
1992) .
Topalian v.
Ehrman,
Wallace, 80 F.3d
summary judgment is
954 F.2d 1125,
1132
(5th Cir.
When a party chooses not to respond to all or part of a
summary-judgment movant's validly supported motion, the court will
not merely enter a "default" summary judgment, but it may accept as
undisputed the facts the movant provides in support of its motion.
See Eversley v. MBank Dallas, 843 F.2d 172, 173-74 (5th Cir. 1988)
(finding that when the plaintiff failed to oppose the defendant's
motion for summary judgment,
the district court "did not err in
granting the motion" because the motion established a prima facie
showing of the defendant's entitlement to judgment).
-6-
III.
A.
Analysis
TransAmerican's Motion for Summary Judgment
TransAmerican asserts that it is entitled to partial summary
judgment because the statute of limitations bars Western Power's
claims on jobs that accrued before April 4, 2013, four years before
Western Power filed its Complaint, and because Western Power cannot
recover commissions on its claims involving jobs with net sales of
$1, 000, 001 or more. 19
1.
Statute of Limitations
(a)
Applicable Law
The statutes of
limitations
for Western Power's state law
claims are governed by Texas law.
Kansa Reinsurance Co., Ltd. v.
Congressional Mortgage Corp. of Texas, 20 F.3d 1362, 1369 (5th Cir.
1994) .
"Under Texas
law,
the party asserting that a
claim is
barred by the statute of limitations bears the burden of proof on
this issue.
11
Capitol One,
N.A.
v.
Custom Lighting & Electric,
Inc., 2010 WL 4923470 at *3 (S.D. Tex. Nov. 29, 2010)
(citing KPMG
Peat Marwick v. Harrison County Houston Finance Corp., 988 S.W.2d
746, 748 (Tex. 1999)).
the
basis
of
"A defendant who seeks summary judgment on
limitations
must
plaintiff's cause of action accrued.
conclusively
11
prove
when
the
Seureau v. ExxonMobil Corp. ,
274 S.W.3d 206, 226 (Tex. App.--Houston [14th Dist.] 2008)
(citing
KPMG, 988 S.W.2d at 748).
19
See Defendant's Motion for Summary Judgment,
No. 24, pp. 10-17.
-7-
Docket Entry
{1}
Civil actions
Limitations Periods
for breach of contract,
quantum meruit,
and
fraudulent inducement must be commenced "not later than four years
after the day the cause of action accrues."
Tex. Civ. Prac. & Rem.
Code§ 16.004(a) (3)-(a) (4); Exxon Corp. v. Emerald Oil & Gas Co.,
L.C., 348 S.W.3d 194, 203 (Tex. 2011)
(breach of contract); Channel
Source Inc. v. CTI Industries Corporation, 2015 WL 13118198 at *3
(N.D. Tex. Oct. 26, 2015)
Inc.,
296
S.W.3d
687,
(fraudulent inducement)
(quantum meruit); Walker v. Presidium,
694
(Tex.
App.- -El
Paso
no pet.)
The statute of limitations for violation
Tex. Civ. Prac. &
of the Texas Theft Liability Act is two years.
Rem.
2009,
Code § 16.003(a); Wells Fargo Bank Northwest,
N.A.
v.
RPK
Capital XVI, L.L.C., 360 S.W.3d 691, 699 (Tex. App.--Dallas 2012,
no pet.).
{2}
Accrual Dates
Ordinarily a claim accrues "when [a] plaintiff has a complete
and present cause of action.
In other words,
the
limitations
period generally begins to run at the point when the plaintiff can
file suit and obtain relief."
Inc.,
134
omitted) .
S.
Ct.
1962,
"Under
the
1969
Petrella v.
(2014)
legal-injury
Metro-Goldwyn-Mayer,
(citations
rule,
a
and
cause
quotations
of
action
generally accrues when a wrongful act causes some legal injury,
regardless of when the plaintiff learns of the injury, and even if
all resulting damages have not yet occurred."
-8-
Seureau, 274 S.W.3d
at 226.
injury
Texas courts use different methods to decide when an
occurs
accrual.
S.W.3d
and
thus
See Rice v.
329,
336-41
have
reached
Louis A.
(Tex.
different
conclusions
Williams & Associates,
App.--Texarkana
2002,
Inc.,
pet.
on
86
denied)
(discussing Texas courts' various theories and applications of the
legal injury rule and the statute of limitations) .
First,
"[i] t
is well-settled that an action for breach of
contract accrues immediately upon breach."
227
(citing Barker v.
Second,
"a
claim
Seureau, 274 S.W.3d at
Eckman,
311
quantum
of
213 S.W.3d 306,
meruit
on
accrues
the
2006)).
date
the
Channel Source Inc.,
defendant accepts the services at issue."
2 0 15 WL 13 11819 8 at * 3 .
(Tex.
But " [w] hen a provider is to be paid
multiple times as services are provided,
a quantum meruit claim
accrues when the services are performed and claims for services
performed and claims for services performed outside the limitations
period are barred."
55 (Tex. 2007).
Id.
Third, generally a conversion claim accrues at the
time of the unlawful
S. W. 3d at
700.
(citing Quigley v. Bennett, 227 S.W.3d 51,
taking.
"However,
property is lawful,
if
Wells
the
Fargo Bank Northwest,
original
possession
of
360
the
the limitations period does not begin to run
until the return of the property has been demanded and refused, or
until the person in possession has unequivocally exercised acts of
domination over the property inconsistent with the claims of the
owner or the person entitled to possession."
Id.
Finally, a cause
of action for fraudulent inducement accrues on the date that the
-9-
defendant
made
the
allegedly
false
representations.
In
re
Travelers Property Casualty Company of America, 485 S.W.3d 921, 926
(Tex. App.--Dallas 2016)
However,
under the "Discovery Rule"
a claim accrues when the
plaintiff knows or has reason to know of the injury upon which the
claim is based.
S.V. v. R.V.,
933 S.W.2d 1, 4
(Tex. 1996).
The
rule applies only "if the injury is both inherently undiscoverable
and objectively verifiable."
K3C Inc. v. Bank of America, N.A.,
204 F. App'x 455, 462 (5th Cir. 2006)
(citing HECI Exploration Co.
v. Neel, 982 S.W.2d 881, 886 (Tex. 1998)).
At the summary judgment
stage the burden is on the movant to "negate the discovery rule
by proving as a matter of law that there is no genuine issue
of material fact about when the plaintiff discovered,
or in the
exercise of reasonable diligence should have discovered the nature
of its injury."
(b)
KPMG, 988 S.W.2d at 748.
Analysis
In its Motion for Summary Judgment TransAmerican states the
appropriate statute of limitations for each cause of action, but
does not distinguish between their accrual dates.
Instead, in its
Motion and its Reply TransAmerican provides accrual dates only as
to Western Power's breach of contract claim and cites only breach
of contract cases to support the contention that the causes of
action accrued before April 4, 2013. 20
20
Defendant' s Motion for Summary Judgment, Docket Entry No. 24,
pp. 11-12; Defendant TransAmerican Power Products, Inc.'s Reply to
(continued ... )
-10-
(1)
Breach of Contract
Western Power alleges that "Defendant failed to pay Plaintiff
justly owed under the Agreement" 21
sums
and that
" [t] here are
numerous projects and sales for which [] underpayments occurred. " 22
TransAmerican argues that "pursuant to the Underpayment Calculation
52 of the commission payments made by TAPP were
prepared by WPI,
made prior to April 4, 2013." 23
TransAmerican's alleged breaches
occurred when it failed to pay Western Power the amount it promised
to
pay
and
payment." 24
occurs
thus
"accrued
See Seureau,
when a
party
promised to do").
each
time
TAPP
274 S.W.3d at 227
fails
or
refuses
to
made
a
commission
("breach of contract
do
something he
has
Therefore, unless the Discovery Rule applies,
the breach of contract claims for payments made before April 4,
2013, are time-barred because Western Power filed this lawsuit more
than four years after the date the claim accrued.
Prac. & Rem. Code Ann.
20
§
See Tex. Civ.
16.051.
continued)
Plaintiff's Response to Defendant's Motion for Partial Summary
Judgment as to Plaintiff's Claims ("Defendant's Reply") , Docket
Entry No. 40, pp. 1-2.
( •••
~
21
Complaint, Docket Entry No. 1, p. 4
22
Id. at 3
23
Defendant' s Motion for Summary Judgment, Docket Entry No. 24,
~
11.
10.
p. 12.
24
Defendant's Reply, Docket Entry No. 40, p. 2.
-11-
(2}
Quantum Meruit
Plaintiff provided services from 2010 -- the year the parties
executed the Agreement -- to 2017 -- the year Defendant terminated
the Agreement.
The summary judgment record shows that from 2011 to
2017 Defendant paid Plaintiff a commission based on the net sale of
each project. 25
rendered
Therefore,
before
April
4,
quantum meruit
2013,
are
claims
barred
by
for
the
services
statute
of
limitations unless the Discovery Rule applies.
(3}
Texas Theft Liability Act
Plaintiff alleges that "Defendant has received funds paid to
it by customers who were sold products to them by Plaintiff and
then wrongfully kept and converted the commission portion of those
funds, essentially stealing them." 26
Plaintiffs do not allege that
it demanded payment of commissions, and the evidence reflects that
in 2011 Plaintiff merely asked for an explanation of how Defendant
calculated its commissions.
Defendant does not provide the court
with an accrual date for this cause of action.
The court concludes
that genuine issues of material fact as to the accrual date exist
that preclude the court from granting summary judgment.
25
Plaintiff's Underpayment Calculation Spreadsheet, Exhibit A
to Amended Order Granting TransAmerican Power Products, Inc. 's
Motion for Partial Summary Judgment ("Amended Order," Docket Entry
No. 33-1), Docket Entry No. 33-1, pp. 3-19.
26
Complaint, Docket Entry No. 1, p. 5
-12-
~
13.
(4)
Fraudulent Inducement
Plaintiff alleges
that
"Defendant
induced Plaintiff
into
entering into an agreement which Defendant had no intention of
living up to." 27
Because the representations must have been made
on or before the date Plaintiff and Defendant entered into the
Agreement,
the accrual date is no later than January 27,
Plaintiff filed this lawsuit in April of 2017.
2010.
28
Therefore, unless
the Discovery Rule applies, Plaintiff's fraudulent inducement claim
is time-barred by the statute of limitations.
2.
Application of the Discovery Rule
Western Power argues that the Discovery Rule applies because
it sought information about commission payments from TransAmerican
but that TransAmerican never provided that information. 29
Western
Power cites email correspondence between the representatives of the
parties
in
which
Western
Power
requested
payment
calculation
information. 30
Western Power argues that because "there was no way
for
to
Plaintiff
learn
the
final
sales
amounts,
payments,
or
deductions from which his commission could be calculated other than
27
Id. at 6
~
14.
28
p.
3
See Agreement, Exhibit A to Complaint, Docket Entry No. 1-1,
("This agreement shall be effective on January 27th, 2010,
." ) .
29
Plaintiff's Response/MSJ, Docket Entry No. 36, pp. 11-12.
30
Id. at 11; see also Exhibits D and
Response/MSJ, Docket Entry Nos. 36-4 and 36-5.
-13-
E
to
Plaintiff's
by asking Defendant
for
the
information
discovery rule
protects Plaintiff's claims because Plaintiff did not have--and
could not
by the
exercise of
reasonable
diligence
obtain--the
information necessary to determine the nature of its injury and the
likelihood that it was caused by the wrongful acts of another." 31
TransAmerican argues that the Discovery Rule does not save
Western
Power's
claims
from
being
barred
by
the
statute
of
limitations because Western Power could have discovered whether
TransAmerican
improperly
calculated
exercise of reasonable diligence. 32
commissions
through
the
TransAmerican cites the email
correspondence between the parties to argue that Western Power
could have discovered that information:
2011
WPI
was
asking
TAPP
for
commissions were calculated [,]"
an
"[A]s early as March 18,
explanation
and when Mr.
as
to
how
its
Kleineider visited
TransAmerican Power offices on March 24-25, 2011, one purpose was
to "learn how the commissions were calculated. " 33
TransAmerican
argues that "[a]lthough Mr. Uriarte has no specific recollection of
discussing the commission calculations with Mr. Kleineider on those
dates it can be inferred that whatever explanation was ever given
to WPI was satisfactory to Mr. Kleineider because the jobs that
Mr.
Kleineider
referenced
in
his
March
22,
2011
email
to
31
Plaintiff's Response/MSJ, Docket Entry No. 36, p. 13.
32
Defendant' s Motion for Summary Judgment, Docket Entry No. 24,
p. 13.
33
Id.
-14-
Mr.
Uriarte
are
prepared by WPI.
II
not
included
in
the
Underpayment
Calculation
34
The summary judgment evidence reflects that Mr. Kleineider of
Western
Power
calculated
Mr.
Uriarte
requested
commissions
explained
information
for
the
some
of
commission
about
the
paid
how
TransAmerican
projects
on
one
and
that
project. 35
Mr. Kleineider also repeatedly asked when TransAmerican would pay
the
commissions. 36
TransAmerican presents no evidence
that
it
provided Western Power with any of the remaining calculations, and
Mr.
Uriarte does not remember discussing the calculations with
Mr. Kleineider. 37 Although Mr. Kleineider visited the TransAmerican
office on several occasions,
Western Power and TransAmerican never
negotiated commissions on jobs of $1,000,001 or more. 38
At the
34
Id. In its Supplement to Joint Pretrial Order TransAmerican
repeats its arguments and contends that after receiving the first
commission check Western Power "could have insisted that TAPP
provide him with exacting calculations with respect to how TAPP
calculated the commission. Plaintiff could have informed TAPP that
he was not going to perform any more services for TAPP until the
calculation was provided.
TransAmerican' s Supplement to Joint
Pretrial Order, Docket Entry No. 43, p. 3.
11
35
Email re: NEXT WEEK, Exhibit D to
Docket Entry No. 36-4, p. 1.
Plaintiff's Response,
36
Emails from Kleineider re: FW: COMMISSION CHECK, Exhibit E
to Plaintiff's Response/MSJ, Docket Entry 36-5, pp. 1-13.
37
de Uriarte Declaration, Exhibit A to Defendant's Motion for
Summary Judgment, Docket Entry No. 24-1, pp. 5-6.
38
Id. at 6.
-15-
summary judgment stage the court will not infer that Mr. Kleineider
was
given
the
calculation
when
information
he
visited
TransAmerican's office, or that with reasonable diligence he, or
others from Western Power, could have discovered that information.
The summary judgment evidence gives rise to a genuine issue of
material fact as to whether Western Power knew or through "the
exercise of reasonable diligence" should have known of the injury
that forms the basis of Western Power's claims.
Royal v. CCC & R
Tres Arboles, L.L.C., 736 F.3d 396, 400 (5th Cir. 2013)
dispute
of
material
fact
means
that
'evidence
is
("A genuine
such that
a
reasonable jury could return a verdict for the nonmoving party.'"
(quoting Anderson, 106 S. Ct. at 2506)).
3.
Net Sales of $1,000,001 or More
TransAmerican argues that it is entitled to partial summary
judgment on Western Power's claims
for
jobs with net
sales of
$1,000,001 or more because the commission due on those jobs was "to
be
negotiated." 39
It
argues
that
because
there
was
"never a
negotiation that required TAPP to pay WPI any amount in excess of
the amount that TAPP paid to WPI[,]" Western Power is unable to
establish that TransAmerican breached the contract. 40 Western Power
responds that "[t]here was certainly an enforceable contract[,]"
39
Defendant' s Motion for Summary Judgment, Docket Entry No. 24,
pp. 14-17; Agreement, Exhibit 1 to Defendant's Motion for Summary
Judgment, Docket Entry No. 24-1, p. 10.
40
Defendant' s Motion for Summary Judgment, Docket Entry No. 24,
p. 14.
-16-
and
that
based
on
the
parties'
prior
course
of
dealing
TransAmerican owes 1% commission on those jobs. 41
(a)
Whether the Parties Had an Enforceable Agreement
"Whether an agreement is legally enforceable is a question of
law."
Yazdani-Beioky v. Sharifan, Civil Action No. 14-15-00702,
2018 WL 2050450 at
2018) .
*6
(Tex.
"To be enforceable,
App--Houston
[14th Dist.],
May 3,
a contract must address all of its
essential and material terms with 'a reasonable degree of certainty
and definiteness.'"
(Tex.
2016)
(Tex. 1955).
Fischer v. CTMI, L.L.C., 479 S.W.3d 231, 237
(quoting Pace Corp. v.
Jackson,
284 S.W.2d 340,
345
"[A] contract must at least be sufficiently definite
to confirm that both parties actually intended to be contractually
bound."
Id. (citing Fort Worth Independent School District v. City
of Fort Worth,
22 S.W.3d 831,
846
(Tex.
2000)).
Although both
parties assert that they entered into the Agreement and that it is
an enforceable contract,
"even when that
intent
is
clear,
the
agreement's terms must also be sufficiently definite to enable a
court
to
understand
the
parties'
obligations,
Id.
and
to
give
an
appropriate remedy"
for a breach.
(internal quotations and
citations omitted) .
The contract must be definite only as to the
terms that are material to the agreement, which are determined on
a case-by-case basis.
41
Id.
Plaintiff's Response/MSJ, Docket Entry No. 36, pp. 14-15.
-17-
"'It
is
well
settled
law
that
when
an
agreement
leaves
material matters open for future adjustment and agreement that
never
occur,
it
is
not
constitutes an agreement
binding
upon
to agree.'"
the
parties
Id.
(quoting Fort Worth
Independent School District, 22 S.W.3d at 846).
and
merely
An agreement to
agree is enforceable when it contains the material terms of the
future contract such that the court can determine and enforce the
parties' obligations.
Id.
Generally, the failure of the parties
to agree on a price or provide a method to determine payment is too
Id.
incomplete to be enforceable.
at 240
Delgado, 406 S.W.2d 897, 899 (Tex. 1966)).
(citing Bendalin v.
"But when the parties
'have done everything else necessary to make a binding agreement
their failure to specify the price does not leave the
contract so incomplete that it cannot be enforced.'"
id. at 900).
Id.
(quoting
In that case the court may presume that a reasonable
price was intended.
Id.
The Agreement states that "Seller agrees to pay Representative
a sales commission on actual sales of products,
commission shall be based on the
net
sales. " 42
The sales
The Agreement
specifies the percentage commission TransAmerican would pay Western
Power for jobs under $1,000,001. 43
Therefore, the language of the
Agreement as a whole indicates that the parties confirmed their
42
Agreement, Exhibit A to Complaint, Docket Entry No. 1-1, p. 2.
43Id.
-18-
mutual intent to reach a binding agreement that TransAmerican would
pay Western Power commission on net sales, even on jobs with net
sales of $1,000,001 and over.
be bound to its
agreement
Because TransAmerican intended to
to pay Western Power,
"the
law may
presume that a reasonable price was intended, even i f the price is
left to be agreed by the parties and they fail to agree."
Id. at
241 (internal citations and quotations omitted) .
The parties' prior dealings and performance in reliance on the
Agreement
also
support
the
conclusion
that
the
clause
is
enforceable.
As Plaintiff's Underpayment Calculation Spreadsheet
shows,
2011-2017
from
Western
Power
performed
services
TransAmerican and TransAmerican paid for those services.
at
242
("When
parties
have
already
rendered
some
for
See id.
substantial
performance or have taken other material action in reliance upon
their existing expressions of agreement, courts will be more ready
to
find
that
the
apparently
incomplete
agreement
was
in
fact
complete and required the payment and acceptance of a reasonable
price or a performance on reasonable terms.")
and citations omitted) .
Therefore,
(internal quotations
the court concludes that the
payment provision of the Agreement is enforceable.
(b)
How Much Commission is Owed
TransAmerican
argues
$1,000,001 and more
168-69,
173-74,
189,
that
for
jobs
with
net
sales
of
line items 64, 70, 78, 112, 126, 147, 154,
and
205
-19-
of
Plaintiff's
Underpayment
Calculation Spreadsheet -- Western Power will be unable to recover
any amount in excess of the amount that TransAmerican paid Western
Power. 44
that
of
Plaintiff's Underpayment Calculation Spreadsheet shows
the
13
jobs
with
net
sales
of
$1,000,001
and
over,
TransAmerican paid 1% commission on four of the jobs, slightly over
1% on three jobs, slightly lower than 1% on one job,
0.4% on one
job, and paid nothing to Western Power on four of those jobs. 45
44
Defendant' s Motion for Summary Judgment, Docket Entry No. 24,
p. 14.
45
Plaintiff's Underpayment Calculation Spreadsheet, Exhibit A
to Amended Order (attached to TransAmerican's Supplement to Its
Motion for Partial Summary Judgment as to Plaintiff's Claims) ,
Docket Entry No. 33-1, pp. 4-19.
Line
Item
Net Sales ($)
Paid ($)
Formula
Percent
Commission
Paid
64
$1,698,623
$17,999
17,999 I
1,698,623 X
100
1%-
70
1,700,554
6,541
6,541 I
1,700,554 X
100
0.4%
78
1,663,773
18,511
18,511 I
1,663,773 X
100
1%
112
1,767,067
16,616
16,616 I
1,767,067 X
100
0.94%
126
1,118,492
13,500
131500 I
1,118,492 X
100
1. 2%
147
1,040,921
11,004
11,004 I
1,040,921 X
100
1%
16,074
16,074 I
1,488,735 X
100
154
1,488,735
-20-
1%-
(f::ontinued ... )
Emails between TransAmerican and Western Power confirm that for
some
projects
commission. 46
of
$1,000,001
or
more
TransAmerican
paid
a
1%
Mr. Uriarte wrote "all projects above 1 million are
[i]n this particular case
subject to a different arrangement .
it has been agreed to commission payment of 1% over total value." 47
But
the
parties
TransAmerican
have
calculated
presented
the
no
evidence
explaining
commission payments
it
made
how
that
exceed 1% on projects of $1,000,001 or more.
Because the parties' Agreement required TransAmerican to pay
commission on net sales of $1,000,001 or more in an amount "to be
45
( •••
continued)
168
1,117,842
16,905
16,905 I
1,117,842 X
100
1. 5%
169
1,053,489
11,639
111 63 9 I
1,053,489 X
100
1.3%
173
18,325,454
0
0 I
18,325,454 X
100
0%
174
39,2995,649
0
0 I
39,2995,649 X
100
0%
189
2,758,985
0
0
I
2,758,985
0%
X 100
205
1,586,713
0
0
I
1,586,713
0%
X 100
Emails between Uriarte and Kleineider,
Exhibit c to
Plaintiff's Response/MSJ, Docket Entry No. 36-3, pp. 1-2 ("From the
2nd payment received in the amount of 8,109,236.71, I am sending you
46
$81,092.37")
47Id.
-21-
negotiated, " 48 because TransAmerican has paid nothing on four of
those jobs,
and because TransAmerican does not explain how the
parties negotiated the commissions paid on projects of $1,000,001
or more, the court concludes that TransAmerican is not entitled to
judgment as a matter of law.
A genuine issue of material fact
exists as to what commission Defendant owes under the Agreement:
A
jury
could
reasonably
find
that
based
on
prior
dealings
TransAmerican owed Western Power 1% commission on those sales,
evidence might reveal that the parties had negotiated a different
percentage for different jobs, or the jury could find that some
other reasonable payment was due.
(c)
Quantum Meruit
TransAmerican argues that because both parties entered into
the Agreement which sets out the commission structure,
Western
Under Texas
Power has no cause of action under quantum meruit.
common law a plaintiff seeking recovery under the theory of quantum
meruit must prove
materials
that
furnished
( 1)
( 2)
for
valuable services were rendered or
the
person
sought
to
be
charged,
(3) which services and materials were accepted by the person sought
to
be
charged,
used
circumstances
as
charged
the
that
and
enjoyed
reasonably
plaintiff
by
notified
in
him,
the
and
( 4)
person
performing
such
under
sought
to
services
expecting to be paid by the person sought to be charged.
48
such
be
was
Vortt
Agreement, Exhibit A to Complaint, Docket Entry No. 1-1, p. 3.
-22-
Exploration Co., Inc. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944
(Tex. 1990)
However, a party may not recover in quantum meruit if
an express contract exists that covers the plaintiff's services.
In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 740 (Tex. 2005).
Because the court concluded that the Agreement and the payment
provision are enforceable and because both parties agree that they
entered into a valid contract that established commission payments
for net sales of $1,000,001 or more -- though they disagree as to
what commission is due-- the court will grant Defendant's Motion
for Summary Judgment as to this claim.
(d)
Texas Theft Liability Act
Under the Texas Theft Liability Act,
"[a] person who commits
theft is liable for the damages resulting from the theft."
Civ. Prac. & Rem. Code
§
134.003(a).
Tex.
Western Power alleges that
TransAmerican wrongfully kept and converted commission owed to
Western Power. 49
TransAmerican argues that Western Power cannot
prove that Defendant wrongfully kept and converted the commission
owed on net sales of $1,000,001 or more because "there was never a
negotiation" that required Defendant to pay Plaintiff more than it
did. 5 °
For the same reason that the court will deny Defendant's
Motion for Summary Judgment on the breach of contract claim for
49
Complaint, Docket Entry No. 1, p. 5.
50
Defendant' s Motion for Summary Judgment, Docket Entry No. 24,
p. 16.
-23-
commission owed on net sales of $1,000,001 or more, the court will
deny TransAmerican's motion as to this claim.
material
fact
exists
as
to
whether
the
A genuine issue of
amount
of
money
that
TransAmerican paid Western Power on those sales complied with the
Agreement when the parties have provided no evidence about how
their commission payments were calculated.
(e)
To
Fraudulent Inducement
recover
on
an
action
for
fraudulent
inducement
the
Plaintiff must prove that
( 1)
a material representation was made,
( 2)
the
representation was false, (3) when the representation was
made, the speaker knew the representation was false or
made it recklessly without knowledge of the truth as a
positive assertion, (4) the representation was made with
the intention that it should be acted upon by the party,
(5) the party acted in reliance upon it, and (6) the
party thereby suffered injury.
Siddiqui v.
Houston
Fancy Bites,
[14th Dist.]
LLC,
2016,
504 S.W.3d 349,
pet.
denied).
369
(Tex.
App.--
Western Power alleges
that "Defendant induced Plaintiff into entering into an agreement
which Defendant had no intention of living up to. " 51
TransAmerican
argues that "WPI will be unable to prove that TAPP made a material
misrepresentation to WPI with respect to the commissions to be paid
on net sales over $1,000,001 as the Agreement explicitly states
that those commissions are
'to be negotiated. '" 52
Western Power
51
Complaint, Docket Entry No. 1, p. 6.
52
Defendant' s Motion for Summary Judgment, Docket Entry No. 24,
p. 17.
-24-
responds
that
"Defendant,
who
worked
at
concealing
how
the
commissions would be calculated and paid for years, never intended
to pay Plaintiff all amounts due" and that TransAmerican's silence
in response to requests for information "[i]s evidence from which
Defendant's
subjective
intent
to
deceive
Plaintiff
may
be
inferred. " 53
Western Power raises a genuine issue of material fact as to
this claim.
The summary judgment evidence establishes that Western
Power requested information about
commissions
and
repeatedly
commission payments. 54
asked
how TransAmerican calculated
about
when
it
would
receive
The evidence also shows that TransAmerican
paid different percentages of the net sales as commission on jobs
Although Western Power
with net sales of $1,000,001 or more.
provides
no
evidence
of
any
"material
misrepresentation,"
a
reasonable jury could find that TransAmerican induced Western Power
to agree to the Agreement's payment terms, including the amount "to
be negotiated."
Therefore, the court will deny Defendant's Motion
for Summary Judgment as to this claim.
will
grant
Defendant's
Motion
for
To summarize,
Summary
the court
Judgment
as
to
Plaintiff's claim for quantum meruit on jobs with net sales of
$1,000,001 or more,
and will deny Defendant's Motion as to the
remaining claims.
53
Plaintiff's Response/MSJ, Docket Entry No. 36, p. 19.
54
Emails from Kleineider re: FW: COMMISSION CHECK, Exhibit E
to Plaintiff's Response/MSJ, Docket Entry 36-5, pp. 1-13.
-25-
B.
Western Power's Motion for Partial Summary Judgment
Western
Power
moves
for
partial
summary
judgment
TransAmerican's liability on its breach of contract claim.
as
to
Western
Power argues that "Defendant admits Plaintiff and Defendant had a
contract under which Defendant owes Plaintiff commissions Defendant
has
not
paid. " 55
To
support
its
argument
that
TransAmerican
admitted liability Western Power attaches an excel spreadsheet that
TransAmerican
calculated
produced
Western
during
Power's
entitled "Owed to WP. " 56
mediation
commission
and
that
shows
includes
how
a
it
column
TransAmerican responds that Western Power
is not entitled to summary judgment because the excel spreadsheet
is
inadmissible
pursuant
to
Federal
Rule
of
Evidence
408. 57
TransAmerican does not dispute the other arguments presented in
Western
Power's
motion.
The
only portion
of
TransAmerican' s
Response that the court could interpret as an attempt to dispute
liability reads
"TAPP certainly would not have shown the Excel
Spreadsheet and extensively discussed its contents at the mediation
if TAPP believed that in so doing it was admitting liability to
Plaintiff on Plaintiff's breach of contract claim." 58
55
Plaintiff' s Motion for Summary Judgment, Docket Entry No. 22,
p. 3.
See Defendant's Commission Calculations,
Plaintiff's Motion for Summary Judgment, Docket
pp. 4, 6, 8, and 10.
56
Exhibit B to
Entry No. 23,
57
Defendant's Response/MSJ, Docket Entry No. 31, pp. 1-5.
58
Id.
at 5.
-26-
The
court
concludes
that
Western Power has
satisfied its
initial burden to show that no genuine issue of material fact as to
liability exists.
Nowhere in TransAmerican' s
Response does it
dispute its liability or present any evidence that raises an issue
of fact.
of
the
Because TransAmerican only challenges the admissibility
excel
establishing
spreadsheet
a
genuine
but
issue
has
for
summary judgment is appropriate.
failed
trial
to
on
present
liability,
evidence
partial
Topalian, 954 F.2d at 1132.
The
court will decide at trial on the admissibility of the spreadsheet,
which is relevant to the amount of Western Power's damages.
C.
Western Power's Motion for Sanctions
Western
Power
argues
that
TransAmerican's
sanctionable under Rules 37(e) (1) and 37(e) (2).
conduct
Rule 37(e) states:
(e)
Failure
to
Preserve
Electronically
Stored
Information.
If electronically stored information that
should have been preserved in the anticipation or conduct
of litigation is lost because a party failed to take
reasonable steps to preserve it, and it cannot be
restored or replaced through additional discovery, the
court:
(1)
upon finding prejudice to another party from
loss of the information, may order measures no
greater than necessary to cure the prejudice; or
(2)
only upon finding that the party acted with
the intent to deprive another party of the
information's use in the litigation may:
(A)
presume that the lost
unfavorable to the party;
information
was
(B)
instruct the jury that it may or must
presume the information was unfavorable to the
party; or
-27-
is
(C) dismiss
judgment.
Fed. R. Civ. P.
37(e).
the
action or
enter
a
default
The advisory committee notes to Rule 37
state:
Because the rule calls only for reasonable steps to
preserve, it is inapplicable when the loss of information
occurs despite the party's reasonable steps to preserve.
For example, the information may not be in the party's
control. Or information the party has preserved may be
destroyed by events outside the party's control -- the
computer room may be flooded, a "cloud" service may fail,
a malign software attack may disrupt a storage system,
and so on.
Courts may, however, need to assess the
extent to which a party knew of and protected against
such risks.
Fed.
R.
Civ.
P.
37,
Advisory Committee Notes,
2015 Amendment,
Subdivision (e) .
Western
Power
argues
that
invoices
and
other
documents
concerning commission or net sales were relevant to the dispute, in
TransAmerican's custody and control,
and
were
destroyed. 59
Western
should have been preserved,
Power
contends
that
even
if
TransAmerican's computer system was hacked on September 16, 2017,
destroying
the
sales
records
between
the
parties
TransAmerican should have taken reasonable steps to preserve and
protect the information since April 4, 2017, the date Western Power
filed its Complaint, or since June 5, 2017, the date TransAmerican
filed its Answer. 60
the
loss
and
Western Power argues that it was prejudiced by
that
"Defendant's
inaction
is
sufficient
59
Plaintiff's Motion for Sanctions, Docket Entry No. 25, p. 5.
60
Id.
at 5-6.
-28-
circumstantial evidence from which to infer that it intended to
deprive Plaintiff of the relevant data." 61
TransAmerican
responds
that
it
took
reasonable
steps
to
preserve the electronically stored information before and after the
cyberattack, that Western Power has not been prejudiced because it
already prepared its underpayment calculation, that it did not act
in
bad
faith
or
intend
to
deprive
Western
Power,
and
that
Rule 37(e) is inapplicable when the loss occurs due to a "malign
software attack." 62
TransAmerican argues that because all of its
servers and computers were affected by the cyberattack, any attempt
to
segregate
fruitless.
relevant
data
into
another
file
would
have
been
63
Although the advisory notes state that Rule 37(e)
does not
apply after a malign software attack, the court may assess whether
Defendant adequately protected against the risk of such an attack.
Fed.
R.
Civ.
P.
Subdivision (e) .
37,
Advisory Committee Notes,
Because
2015 Amendment,
the court's determination on whether
TransAmerican took reasonable steps to preserve the information
before the cyberattack is fact-intensive, the court will listen to
the evidence and if it concludes that TransAmerican did not take
61
Id.
at 8.
62
Defendant's Response/Sanctions, Docket Entry No. 34, pp. 5
and 10.
-29-
reasonable
steps
the
court
will
consider
giving
a
spoliation
instruction to the jury.
IV.
Conclusion and Order
Based on the foregoing analysis Defendant TransAmerican Power
Products,
Inc.'s
Motion
Plaintiff's Claims
DENIED in part;
for
Partial
(Docket Entry No.
Summary
24)
Judgment
as
to
is GRANTED in part and
and Plaintiff Western Power,
Inc.'s Motion for
Partial Summary Judgment as to Liability on Plaintiff's Breach of
Contract Claim
(Docket Entry No.
ruling on Plaintiff Western Power,
22)
is GRANTED.
The court's
Inc.'s Motion for Sanctions
Under FRCP Rule 37 for Failure to Preserve Evidence (Docket Entry
No.
25)
trial.
is DEFERRED until the court has heard the evidence at
Trial will be on damages alone.
The court will hear
evidence on whether Defendant's actions are sanctionable.
SIGNED at Houston, Texas, on this the 7th day of June, 2018.
UNITED STATES DISTRICT JUDGE
-30-
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