Gulf Coast Shippers Limited Partnership et al v. DHL Express USA et al

Filing 449

MEMORANDUM DECISION AND ORDER-granting in part and denying in part #399 Motion for Summary Judgment ; granting in part and denying in part #400 Motion for Summary Judgment ; granting in part and denying in part #402 Motion for Partial Summary Judgment. See Order for Details. Signed by Judge Robert J. Shelby on 7/28/2015. (las)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

GULF COAST SHIPPERS LIMITED
PARTNERSHIP, et al.,

MEMORANDUM
DECISION & ORDER

Plaintiffs,
v.
Case No. 2:09-CV-00221
DHL EXPRESS (USA), INC., an Ohio
corporation,

Judge Robert J. Shelby

Defendant.
This case arises out of a commercial dispute between companies engaged in the business
of sending packages. Defendant DHL Express (USA), Inc. provided express shipping services.
At one time, Plaintiffs Gulf Coast Shippers Limited Partnership, Kasel Enterprises, LLC, Lake
County Logistics, and AEA Services, Inc. (collectively, Plaintiffs) relied on DHL to send
packages throughout the United States. Changes in the marketplace and DHL’s shipping services
triggered a dispute between the parties that led to this lawsuit.
Three motions for partial summary judgment are before the court. Plaintiffs seek
summary judgment on four discrete issues allegedly resolved in previous litigation1 and
summary judgment on three of DHL’s counterclaims.2 DHL moves for summary judgment on
three of Plaintiffs’ contract claims.3 For the reasons set forth below, the court GRANTS IN
PART and DENIES IN PART each of the motions for partial summary judgment.

1

Dkt. No. 400.

2

Dkt. No. 399.

3

Dkt. No. 402.

1

BACKGROUND
To provide context for the motions, the court will first discuss the shipping industry, the
underlying agreements between the parties, the events that gave rise to this case, and the parties’
prior litigation.
A.

The National Account Agreement
Plaintiffs are current and former franchisees of Unishippers Global Logistics, LLC. In

the shipping industry, companies that do not ship packages themselves but rather buy shipping
services at wholesale rates and then sell those services to customers who want to ship packages
are known as resellers. Unishippers is one such reseller. It obtains wholesale rates from more
recognizable shipping companies and then offers these rates to franchisees under individual
agreements.
In 1994, the predecessors to Unishippers and DHL entered into a contract, the National
Account Agreement (Agreement).4 The Agreement provided that Unishippers would promote
DHL’s services in exchange for specific rates that would be subject to periodic adjustment.5 The
Agreement required DHL to “provide to [Unishippers,] [Unishippers] Franchisees and
[Unishippers] Accounts Transportation Services subject to the conditions of [the] Agreement.”6
“Transportation Services” were defined as “door-to-door expedited pickup and delivery of time
sensitive documents and packages as described in the . . . Service Guide and this Agreement.”7
Under the subheading describing DHL’s obligations, the Agreement stated: “[DHL] will provide

4

Dkt. No. 401-1. Unishippers Association, Inc. (USA) and Airborne Freight Corporation signed the National
Account Agreement. In 2003, DHL acquired Airborne Freight Corporation and assumed its contractual
obligations. Similarly, USA became Unishippers Global Logistics, LLC in 2007.
5

See Dkt. No. 401-1, §§ 4.01, 4.04.

6

Id. § 3.01.

7

Id. § 1.04.

2

Transportation Services in accordance with, and to the full extent of, this Agreement and the
parameters of the general conditions of its Service Guide in effect at the time[.] Except as
otherwise provided, this Agreement will apply to all shipments tendered to [DHL] by
[Unishippers], [Unishippers] Franchisees, and [Unishippers] Customers.”8
Several provisions in the Agreement expressly refer to franchisees. For example, the
Agreement provided that neither Unishippers nor its franchisees would “knowingly market air
express services to Existing [DHL] Customers, unless authorized by [DHL].”9 Similarly, the
Agreement restricted franchisees’ ability to solicit sales, required franchisees to forward certain
requests to DHL, mandated franchisees follow advertising guidelines, and prohibited franchisees
from employing or providing direct compensation to DHL’s employees without approval.10
Sections 2.01 to 2.05 describe the general guidelines for shipping rates. Specifically,
Section 2.05 stated that DHL “guarantee[d] that no other reseller will have equal or lower rates
for comparable volume of business.”11 Section 2.04 provided that the parties “agree that certain
provisions pertaining to rates may be mutually decided upon as indicated by Attachment B,
attached hereto and made a party of this Agreement, and are subject to annual negotiation.”12
The remaining sections set out guidelines for the duration of rates and issues relating to rate
changes.13 Section 2.05 does not expressly refer to Unishippers, Plaintiffs, or any of the
franchisees.

8

Id. § 5.03.

9

Id. § 4.04 (“The parties agree the intent of the Customer Discount Program under this Agreement is to authorize
[Unishippers] and [franchisees] to engage in marketing activities to attract new customers.”).
10

Id. §§ 4.05, 4.06, 4.08, 4.09.

11

Id. § 2.05.

12

Id. § 2.04.

13

Id. §§ 2.01, 2.02.

3

Section 5.05 provided that DHL “agrees to deal with [Unishippers] and [Unishippers]
Franchisees in good faith in all aspects of this Agreement and to provide [Unishippers] shipping
rates consistent with market trends and conditions.”14
Finally, the Agreement contained provisions relating to billing and shipping charges.15
B.

Amendments
Consistent with the Agreement, DHL and Unishippers renegotiated shipping rates on

several occasions and amended the Agreement to reflect the changes.16
In 2001, DHL and Unishippers executed Amendment 9. Amendment 9 revised shipping
rates and made the new rates effective for one year. DHL and Unishippers also adopted a “Zip
Pricing Program,” which was “optional for the Franchisees.”17 Amendment 9 provided that,
except as amended, “all other terms and conditions of the Agreement shall remain in full force
and effect.”18
In 2002, DHL and Unishippers executed Amendment 10, which adopted a new price
structure based on growth and UPS rates.19 The parties again agreed that “all other terms and
conditions of the Agreement shall remain in full force and effect, including but not limited to
Section 2.05 of the Agreement.” Amendment 10 further stated: “Assessorial fees shall be
determined in advance of any increase by written agreement of the parties hereto. In the absence

14

Id. § 5.05.

15

See, e.g., id. §§ 5.06, 12.01, 12.02.

16

Id. at Amendment Nos. 1-9.

17

Id. at Amendment No. 9.

18

Id.

19

Id. at Amendment No. 10.

4

of any agreement, the assessorial fees shall be twenty (20%) below any customary [DHL]
rates.”20 The assessorial fee provision did not reference Unishippers or its franchisees.
White Space Restructuring

C.

In May 2008, DHL announced that it would reduce domestic shipping services in areas
with low population density. The parties refer to this initiative as the White Space Restructuring.
The White Space Restructuring affected 4,000 rural ZIP codes. DHL communicated this plan to
Unishippers in advance of the restructuring. Around that same time, Unishippers contacted
FedEx and UPS to inquire about alternate carrier service for its franchisees. There is evidence
that DHL’s White Space Restructuring affected Unishippers’ franchisees in different ways.21
The Reseller Agreement

D.

On October 6, 2008, DHL and Unishippers entered into the Reseller Agreement.22 In the
Reseller Agreement, DHL and Unishippers deleted Sections 8.02 and 8.03 from the Agreement.
This change permitted Franchisees to use companies other than DHL for shipping services.23 In
return, DHL obtained the right to terminate the Agreement, without cause, by giving 180 days
advance written notice to Unishippers.24 The Reseller Agreement also gave Unishippers the right
to terminate the parties’ contract, although the notice period was substantially shorter.25

20

Id. ¶ 11.

21

Dkt. No. 413-2, at 131-35; Dkt. No. 413-3, at 215-16.

22

Dkt. No. 401-2.

23

Id.

24

Id. §§ 6.02, 6.03.

25

Id.

5

Cessation of Domestic Services and Termination

E.

After signing the Reseller Agreement with DHL, Unishippers entered a separate reseller
contract with UPS on October 22, 2008. According to Unishippers, UPS agreed to provide rates
to Unishippers franchisees that were much higher than DHL’s guaranteed rate.
A few weeks later, on November 10, 2008, DHL announced that it would cease providing
guaranteed services within a week of the notice, and it would stop offering domestic services to a
portion of customers beginning December 10, 2008.26 DHL also stated it would stop providing
domestic services on January 30, 2009.27 DHL notified Unishippers that it was exercising its
right to terminate the Agreement pursuant to § 6.03 of the Reseller Agreement. According to
DHL, Unishippers received notice on November 11, 2008 that DHL was terminating the
Agreement and the Reseller Agreement, effective May 4, 2009 (later amended to May 10,
2009).28
DHL maintains it continued to provide shipping services to Unishippers and its
franchisees after sending the termination notice on November 10, 2008. Interrogatory responses
suggest that Plaintiffs last used DHL’s shipping services in early 2009, but Plaintiffs’ responses
do not make clear whether these services were domestic or international.29
F.

Demand Letters
In late 2008 and early 2009, DHL sent Plaintiffs Pre-Default and Final Demand Notices.

DHL claimed that Plaintiffs owed certain amounts for unpaid shipments.30 For example, Gulf

26

Dkt. No. 413-6.

27

Id.

28

Dkt. No. 412, at v.

29

Dkt. No. 413-7.

30

See, e.g., Dkt. Nos. 399-3, 399-4, 399-5.

6

Coast received letters in December 2008 and November 2009, in which DHL claimed that a
Baton Rouge office owed $40,483.77 and a Phoenix office owed $64,127.14.31 Plaintiff AEA
received letters in September 2008 and January 2009, in which DHL claimed it owed $75,319.41
and $132,102.59 for past due invoices.32 Kasel and Lake received similar notices.33
In turn, DHL received correspondence disputing the amounts claimed in the Pre-Default
and Final Demand Notices. As early as October 2008, Lake disputed the DHL invoices. In
November 2008, Unishippers sent a letter objecting to the notices and alleging DHL’s calculation
of the amount owed was incorrect.34 Gulf Coast emailed DHL an objection to the billing
invoices in January 2009.35 That same month, AEA notified DHL of its concern over the invoice
amounts,36 and Kasel questioned the validity of the billing and the invoice amounts.37 Indeed,
Unishippers franchisees filed suit in Louisiana state court in January 2009 contesting DHL’s
billing practices.38
Litigation History

G.
1.

The Unishippers Litigation

In November 2008, shortly after receiving notice of cessation of domestic services,
Unishippers sued DHL in this District (the Unishippers Litigation).39 Unishippers alleged that

31

Dkt. No. 399-2.

32

Dkt. No. 399-3.

33

See Dkt. Nos. 399-4, 399-5.

34

Dkt. No. 399-2, at Ex. 2C.

35

Id. at Ex. 2D.

36

Id. at Ex. 3C.

37

Id. at Ex. 4C.

38

Id. at Ex. 2E.

39

Unishippers Global Logistics, LLC v. DHL Express (USA), Inc., No. 2:08-cv-00894 (D. Utah Nov. 18, 2008).

7

DHL breached its contract with Unishippers by failing to provide domestic shipping services and
by overcharging for its services.40
The Honorable Dale A. Kimball presided over the Unishippers Litigation. In May 2011,
Judge Kimball resolved cross-motions for partial summary judgment on several claims and
defenses relating to the Agreement.41 Judge Kimball held that genuine issues of material fact
precluded summary judgment on overage and White Space claims. Judge Kimball granted
partial summary judgment to Unishippers insofar as “DHL breached the parties’ contract by
failing to provide 180 days advance notice of its cessation of U.S. domestic shipping services.”42
In July 2011, Judge Kimball presided over a jury trial on the issue of damages and to
adjudicate the remaining contract claims.43 The parties dispute the nature of the testimony
presented on damages. According to DHL, Unishippers “presented conflicting testimony
regarding overcharge damages at . . . trial that would not support a determination that $7 million
of the jury’s damages award was for past overcharges.” Unishippers’ expert, Rick Hoffman,
calculated Unishippers had suffered approximately $30 million in lost profit damages. This
calculation included damages for “past overcharges.”44 During cross-examination, Mr. Hoffman
testified that if DHL did not overcharge Unishippers, his damages calculation should be reduced
to $23 million.
Giving effect to his earlier ruling on the parties’ cross-motions for partial summary
judgment, Judge Kimball instructed the jury that DHL breached the contract by failing to provide

40

Dkt. No. 403-8.

41

Dkt. No. 401-6.

42

Id. at 7 (“In other words, contrary to DHL’s position, the court finds that ceasing domestic shipping services
constituted a ‘termination’ under the Agreement.”).
43

Dkt. No. 400, at xiii.

44

Dkt. No. 401-10, at 1060-62.

8

180-day advance notice to Unishippers before terminating the Agreement, and asked the jury to
determine damages. The jury returned a special verdict in which it awarded $3,000,000 for the
180-day notice period and $24,903,865 in damages for the years beyond the notice period.
The jury also found against DHL on the contract claims that had survived summary
judgment. Specifically, the jury decided DHL’s “White Space” reduction in shipping services
constituted a breach of contract and awarded $2,500,000 to Unishippers. The jury also
concluded DHL was equitably estopped from relying on the 180-day notice period in the contract
to limit damages. Finally, the jury found that DHL breached the contract by (a) failing to provide
Unishippers with the lowest reseller rates, and (b) failing to provide Unishippers a 20% discount
on assessorial fees. For both of these claims, however, the jury awarded no damages.
Notably, while DHL argued that Unishippers waived or should have been equitably
estopped from raising its breach of contract claims, the jury found that DHL failed to
demonstrate waiver or equitable estoppel by a preponderance of evidence. Shortly after the jury
verdict, DHL moved for judgment as a matter of law. The court denied its motion.
DHL appealed the court’s grant of summary judgment and denial of DHL’s motion for
judgment as a matter of law.45 The Tenth Circuit concluded that the trial court (a) correctly
granted summary judgment on the 180-day notice claim, (b) properly denied the motion for
judgment as a matter of law on the White Space claim, and (c) erred in instructing the jury that it
could award damages outside of the 180-day notice period.46 For this reason, the Tenth Circuit
affirmed in part, reversed in part, and remanded with instructions for the district court to vacate

45

Unishippers Global Logistics, LLC v. DHL Exp. (USA), Inc., 526 F. App’x 899, 901 (10th Cir. 2013); see also
Dkt. No. 414-2, at 3 (articulating DHL’s view of issues on appeal).
46

Id. at 901.

9

the jury’s award of $24,903,865.47 The jury’s award of $2,500,000 for the White Space
Restructuring and $3,000,000 for DHL’s failure to abide by the 180-day notice period remained
intact.48
On remand, Judge Kimball entered a Revised Judgment, which awarded $5,500,000 to
Unishippers, and reduced the award of attorney’s fees and costs to $1,350,000.
2.

Plaintiffs’ Lawsuit

While the Unishippers Litigation was pending, a group of 121 Unishippers franchisees
filed this lawsuit against DHL in March 2009.49 Pursuant to a court order, DHL selected four of
the Plaintiff franchisees for conducting discovery and a Phase One Trial.50
In April 2009, Plaintiffs moved to consolidate this case with the Unishippers Litigation.51
DHL opposed the motion, arguing consolidation would complicate the case and jeopardize dates
set in a March 2009 Scheduling Order.52 In July 2009, Judge Kimball denied Plaintiffs’ Motion
to Consolidate.53 Judge Kimball concluded that the cases “involve some of the same issues of
law and fact, [but] consolidation would add many more issues of law and fact to the instant
case.”54

47

Id. at 911.

48

Id. at 910.

49

Dkt. No. 2. The franchisees initially filed suit in Louisiana state court, but after the action was removed to
federal court, the franchisees dismissed and filed the instant action. See Dkt. No. 414-3.
50

See Dkt. No. 64.

51

Mot. Consolidate, Unishippers Global Logistics LLC v. DHL Express (USA), Inc., No. 2:08-cv-00894 (D. Utah
Apr. 13, 2009).
52

Opp. Mem., Unishippers Global Logistics LLC v. DHL Express (USA), Inc., No. 2:08-cv-00894 (D. Utah May
1, 2009).
53

Order, Unishippers Global Logistics LLC v. DHL Express (USA), Inc., No. 2:08-cv-00894 (D. Utah July 1,
2009).
54

Id. The Honorable Bruce S. Jenkins ordered consolidation of the two cases on October 2009. Three months
later, Judge Kimball ordered deconsolidation, but continued to preside over the case.

10

In the interim, Plaintiffs and DHL disputed the best manner for proceeding with complex
discovery. Plaintiffs sought and obtained an order that divided discovery into phases.55 After
DHL selected the first group of franchisees, Plaintiffs moved for and obtained an order granting
separate trials, staying discovery against other franchisees, and reserving the preclusive effect of
the Phase One trial for future motion practice.56
In August 2011, Plaintiffs filed a Fourth Amended Complaint.57 Relevant to the pending
motions, Plaintiffs alleged that DHL breached the Agreement in several ways: “(1) Withdrawing
shipping services to ‘White Spaces;’ . . . (5) Failing to provide at least 180 days notice prior to
terminating the National Account Agreement; . . . (9) Overcharging Plaintiffs for shipments; . . .
and (10) Giving [other parties] lower rates than Plaintiffs for shipping services and not giving
Plaintiffs a 20% discount on assessorial fees.”58 In a separate paragraph, which Plaintiffs later
identified as their “bad faith” claim, Plaintiffs alleged that “DHL breached the National Account
Agreement intentionally and in bad faith and is therefore liable for all damages, foreseeable or
not, that are a direct consequence of its actions.”59
DHL, in turn, filed counterclaims against Plaintiffs. Relevant to the instant motions,
DHL asserted that Plaintiffs failed to pay for shipping services. DHL sought to recover under

55

Dkt. No. 64.

56

Dkt. Nos. 81, 100.

57

Dkt. No. 251.

58

These allegations are similar but not identical to the jury instructions in the Unishippers Litigation. See Dkt.
No. 401-7. Specifically, the jury was instructed that Unishippers alleged the Agreement was breached in the
following ways: “(1) By ceasing to provide pickup and/or shipping services to various locations as part of its
Summer 2008 ‘White Space’ restructuring program; . . . (3) By violating Section 2.05 of the [Agreement,] which
states that ‘DHL guarantees that no other reseller will have equal or lower rates for comparable volume of
business;’ and (4) By violating paragraph 11 of the Amendment 10 to the [Agreement,] which provides that ‘in the
absence of any agreement, the assessorial fees shall be twenty percent (20%) below any customary DHL rates.’”
Id. at 16; see also Dkt. No. 251, at 31-32 (articulating similar but not identical grounds for declaratory relief).
59

Id. ¶ 132.

11

theories of account stated, quantum meruit, and open account. As in the Unishippers Litigation,
DHL asserted waiver as an affirmative defense. Specifically, DHL argued that Plaintiffs’ “claims
are barred, in whole or in part, by the doctrines of ratification and/or waiver.”60 According to
DHL, the waiver arguments in this litigation involve multiple individualized factual issues.
The amount DHL sought to recover for its account stated claim changed over time. In its
original counterclaim, DHL asserted that Plaintiffs owed “at least” the following: Gulf Coast,
$351,404; AEA, $505,052; Kasel, $226,736; and Lake, $98,173.61 Eighteen months later, DHL
moved to amend its counterclaim in order to “conform damages amounts alleged for each of the
four Phase One plaintiffs . . . to the amounts set forth in the expert report of DHL’s damages
expert, Dr. Greg Hallman.”62 The court granted DHL leave to amend. Under the Third Amended
Counterclaim, DHL asserted that Plaintiffs owed “at least” the following principal: Gulf Coast,
$1,324,088; AEA, $303,743; Kasel, $809,200; and Lake, $9,759.63
In September 2011, Judge Kimball resolved cross-motions for partial summary judgment
on the issue of whether Plaintiffs were third-party beneficiaries of the Agreement and Reseller
Agreement.64 Judge Kimball concluded, “[T]he unambiguous terms of the National Account
Agreement and the Reseller Agreement demonstrate that the contracting parties clearly intended
to provide benefits to Plaintiffs that were separate and distinct from those conferred upon

60

Dkt. No. 276, at 18.

61

Dkt. No. 48.

62

Dkt. No. 327, at 2. (“DHL does not seek to assert new or additional claims against the Plaintiffs, but merely to
correct the damage totals to reflect information produced in discovery and incorporated into Dr. Hallman’s
report.”).
63

Dkt. No. 397.

64

Dkt. No. 294.

12

Unishippers.”65 After citing examples, Judge Kimball stated, “Moreover, the [A]greements
expressly stated and acknowledged that the franchisees had rights under the Agreements and that
the franchisees had a direct contractual relationship with DHL.” Recognizing that a beneficiary
and contracting party may enforce overlapping duties, Judge Kimball held, “[B]oth Plaintiffs and
Unishippers can recover for DHL’s breach of the same covenants.” The decision acknowledged
the damages suffered by Plaintiffs or Unishippers may differ. Absent from the decision was any
express reference to Amendment 10 or Section 2.05 of the Agreement.
With this background in mind, the court will turn to the various motions for partial
summary judgment now pending.
ANALYSIS
STANDARD FOR SUMMARY JUDGMENT

I.

The court grants summary judgment when “there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.”66 “A material fact is one that
might affect the outcome of the suit under the governing law, and a genuine issue is one for
which the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.”67 When evaluating a motion for summary judgment, the court must “view the evidence
and make all reasonable inferences in the light most favorable to the nonmoving party.”68

65

Dkt. No. 294, at 3-4. (“For example, DHL agreed to provide its services directly to the franchisees for resale.
DHL agreed to allow the franchisees to resell DHL’s services. DHL gave specialized pricing directly to the
franchisees, billed the franchisees directly, collected payment directly from the franchisees, and had contractual
rights to default the franchisees individually and separately if the franchisees did not comply with their
obligations.”).
66

Fed. R. Civ. P. 56(a).

67

Pelt v. Utah, 539 F.3d 1271, 1280 (10th Cir. 2008) (internal quotation marks and citation omitted).

68

N. Natural Gas Co. v. Nash Oil & Gas, Inc., 526 F.3d 626, 629 (10th Cir. 2008).

13

MOTION FOR PARTIAL SUMMARY JUDGMENT ON ISSUE PRECLUSION

II.

Plaintiffs move for summary judgment on three contract claims under a theory of
nonmutual offensive collateral estoppel. According to Plaintiffs, a jury, a trial court, and the
Tenth Circuit have already concluded DHL breached the Agreement in the Unishippers
Litigation in at least three respects: “(1) by reducing its domestic services to White Space areas,
(2) by ceasing to provide domestic services, without adequate notice, and (3) by overcharging for
shipments and assessorials.”69 Plaintiffs maintain that this court should apply issue preclusion,
grant summary judgment in their favor, and ask a jury to fix damages for these breaches.
A.

Issue Preclusion Standard
Issue preclusion “bars a party from relitigating an issue once it has suffered an adverse

determination on the issue, even if the issue arises when the party is pursuing or defending a
different claim.”70 Issue preclusion applies when four elements have been met:
(1) the issue previously decided is identical with the one presented
in the action in question, (2) the prior action has been finally
adjudicated on the merits, (3) the party against whom the doctrine
is invoked was a party . . . to the prior adjudication, and (4) the
party against whom the doctrine is raised had a full and fair
opportunity to litigate the issue in the prior action.71
The Tenth Circuit has characterized issue preclusion as a doctrine “designed to prevent needless
relitigation and bring about some finality to litigation.”72 Issue preclusion may apply to “issues
of law and issues of fact if those issues were conclusively determined in the prior action.”73

69

Dkt. No. 400, at 2.

70

Park Lake Res. Ltd. Liab. v. U.S. Dep't Of Agr., 378 F.3d 1132, 1136 (10th Cir. 2004); see also Dodge v. Cotter
Corp., 203 F.3d 1190, 1198 (10th Cir. 2000) (“When an issue of ultimate fact has once been determined by a valid
and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit.”).
71

Park Lake, 378 F.3d at 1136.

72

Moss v. Kopp, 559 F.3d 1155, 1161 (10th Cir. 2009).

73

United States v. Stauffer Chem. Co., 464 U.S. 165, 170-71 (1984).

14

Additional considerations apply when a nonparty to the prior adjudication attempts to
invoke issue preclusion.74 Courts often refer to this strategy as “nonmutual offensive collateral
estoppel.”75 Trial courts have “broad discretion to determine when offensive, non-mutual
collateral estoppel should be applied.”76 Generally, nonmutual offensive collateral estoppel
should not be applied when a party could have participated in the underlying litigation but chose
not to, or where it would be unfair to the nonmovant.
Issue Preclusion Analysis

B.

DHL does not contest that it participated as a party in the prior litigation, but instead
argues that Plaintiffs cannot prove the three remaining issue preclusion elements: identity of
issues; final resolution on the merits; and a full and fair opportunity to litigate the issue in the
earlier action. The court will address the disputed elements in turn.
1.

Identity of Issues

The first question presented is whether the issues in the prior adjudication are identical to
the issues in the present case. Plaintiffs maintain that three contractual claims and a waiver issue
here are identical to those presented in the Unishippers Litigation. DHL disagrees, arguing that
DHL’s breaches of the Agreement as to Unishippers present different issues than the third-party
breach claims relating to the franchisees as third-party beneficiaries.
The Tenth Circuit has cautioned that issue preclusion applies when “the precise question
at issue [was] raised and determined in the prior suit.”77 Issue preclusion may be inappropriate if

74

Dodge v. Cotter Corp., 203 F.3d 1190, 1198 (10th Cir. 2000) (citing Parklane Hosiery Co. v. Shore, 439 U.S.
322, 331 (1979)).
75

See, e.g., United States v. Mendoza, 464 U.S. 154, 157-58 (1984).

76

Coburn v. Smithkline Beecham Corp., 174 F. Supp. 2d 1235, 1239 (D. Utah 2001).

77

Fulsom Const. Co. Inc. v. U.S. Fid. & Guar. Co., No. 04-6087, 2005 WL 2542860, at *3 (10th Cir. Oct. 12,
2005).

15

there is uncertainty about whether a specific issue was resolved.78 In evaluating whether the
issues are identical, courts often consider the previous jury instructions, special verdict form, any
findings of fact or conclusions of law, and the prior judgment.79
The Tenth Circuit’s decision in Dodge v. Cotter Corp. is instructive.80 In Dodge, a group
of plaintiffs sued a company for negligently operating a uranium mill over a forty-year period.
After a jury returned a verdict against the company, a second group of plaintiffs invoked issue
preclusion and attempted to use the jury’s verdict to establish negligence for personal injuries.
On appeal, the Tenth Circuit held that the trial court improperly applied issue preclusion because
it was “not possible to know the compass of the [prior] jury’s finding of negligence.”81
Specifically, the Tenth Circuit concluded that the “jury instructions, our blueprint for determining
the parameters of the first jury’s verdict, sabotage the existence of the first element.”82
The Tenth Circuit went on to explain that the prior complaint “contained eleven specific
allegations of negligence” and included a nonexhaustive “catalog of specific negligent acts.”83
Despite this level of detail, the jury received a general question for whether the company was
negligent. The Special Verdict Form failed to identify the particular duty that was breached or
“what negligent act formed the basis of the general finding of negligence.”84 On appeal, the
court rejected the plaintiffs’ argument that the specific acts of negligence could be inferred from

78

Id. (concluding court erred in determining liability was preclusive when verdict did not include a damages
award).
79

See, e.g., Dodge v. Cotter Corp., 203 F.3d 1190, 1198 (10th Cir. 2000); see also RecoverEdge L.P. v. Pentecost,
44 F.3d 1284, 1291 (5th Cir. 1995) (citing 18 Charles A. Wright et al., Federal Practice & Proc. § 4420 (2d ed.)).
80

203 F.3d 1190 (10th Cir. 2000).

81

Id. at 1197.

82

Id. at 1198.

83

Id.

84

Id.

16

references to releases, in part because the jury’s findings could have been based on negligent acts
unrelated to the releases.85 Accordingly, the court could not “say as a matter of law the issue
decided by the first jury is identical to the issue in controversy in this case.”86
After careful consideration, the court concludes that DHL’s failure to give a 180-day
termination notice and the White Space Restructuring claim present identical issues in this case
and the Unishippers Litigation. Comparison of the pleadings, jury instructions, and special
verdict form in the Unishippers legislation demonstrates that the jury in this case will be asked to
determine the same issues resolved in the Unishippers Litigation, namely whether DHL failed to
give notice 180 days before it terminated the Agreement by ceasing to provide domestic services,
and whether the White Space Restructuring constituted a breach. Although the precise damages
suffered will vary from franchisee to franchisee, DHL may not retest factual issues that have
already been determined against it. Moreover, DHL’s principal authority—the Dodge decision—
is distinguishable.87 Unlike in that case, the special verdict form in the Unishippers Litigation
specifically identified the basis for the contractual breach.88 This is precisely the liability issue
presented by Plaintiffs in this case.

85

Id. (“[O]ur concern is not that the jury did not find negligence on one or more specific allegations, but that the
general finding under the negligence instruction fails to identify what the jury found sustained by the evidence.”).
86

Id. at 1199 (rejecting argument that reference to “bellwether” suggested jury intended specific findings would
be binding on future plaintiffs).
87

DHL relied on Dodge during oral argument. In its briefing, DHL relied primarily on Resolution Trust Corp. v.
Keating, 186 F.3d 1110 (9th Cir. 1999). The Ninth Circuit’s decision is unpersuasive for two reasons. First, it is
factually distinguishable. Second, it hinged on the existence of fiduciary duties toward different parties. Id. at
1118. Insofar as DHL contends that the existence of a contract is “hotly contested,” the court concludes that
Plaintiffs’ third-party beneficiary status presents a legal issue, as discussed below.
88

DHL argues that issue preclusion should not apply because the jury in the Unishippers Litigation never
determined the existence of a prior breach or the damages suffered specifically by Plaintiffs. Dkt. No. 412, at 3-6.
DHL’s restrictive interpretation of the special verdict form and the doctrine of issue preclusion is unpersuasive.
As discussed above, the jury considered an identical liability issue in the Unishippers Litigation. And DHL has
not cited any authority for the proposition that the special verdict form in the prior adjudication must expressly
reference franchisees in order for issue preclusion to apply. Because the jury in this case will determine damages,

17

At the same time, however, the court concludes that Plaintiffs have not demonstrated that
the overcharge and waiver issues are identical in the two cases, at least at this stage of litigation.
The overcharge and waiver issues differ substantively from DHL’s failure to give adequate
termination notice or the White Space Restructuring. It would be inconsistent for this court to
find that DHL’s failure to give the contractually agreed upon notice or a significant change to the
range of domestic services constituted a breach of the Agreement as to Unishippers but not as to
the third-party beneficiaries. But this is not so for the overcharge claim or waiver defense
because these two issues may present legal and evidentiary issues unique to each of the
franchisees. For example, a jury could find that Unishippers did not waive its rights under the
Agreement, but at the same time find that one or more franchisees did waive rights through their
conduct.
Moreover, the overcharge and waiver issues present the same challenge that existed in the
Dodge decision, where lack of clarity surrounding the jury determination barred issue preclusion.
The jury in the Unishippers Litigation was asked to determine whether waiver applied to
Unishippers. There is no indication the jury considered whether the franchisees waived their
rights under the Agreement or whether Unishippers had the authority to waive the franchisees’
rights. For the overcharge and assessorial fee claims, it is not clear whether the jury found that
DHL breached Amendment 10 or Section 2.05. The jury did not expressly award damages for
these claims, which is a necessary element of breach of contract. And here, the parties present
reasonable but conflicting interpretations of the basis for the jury’s award of damages for the

DHL has not shown that these two contract issues—notice and the White Space Restructuring—are so different
between Unishippers and its franchisees as to preclude application of the doctrine.

18

other contract claims. Under Dodge, Plaintiffs failed to demonstrate sufficient identity of issues
for the overcharge claim and waiver defense.
In sum, the court finds that Plaintiffs’ and Unishippers’ claims arising out of DHL’s
failure to give 180-day notice and the White Space Restructuring present identical issues to those
previously determined. The overcharge and waiver issues, however, are not sufficiently identical
for issue preclusion.
2.

Resolution on Merits

The second issue is whether the prior adjudication resolved the issues on the merits.89 In
the Tenth Circuit, a party satisfies this element by demonstrating “that the adjudication [was]
necessary to the judgment.”90 In Murdock v. Ute Indian Tribe of Uintah & Ouray Reservation,
the Tenth Circuit observed that a judgment is conclusive when the facts and issues are essential
to the judgment.91 For example, the court held that issue preclusion applied to a discrete issue
because the court in the prior litigation had to reach the issue in order to resolve the claim.92 In
contrast, in Affiliated Ute Citizens of Utah v. Ute Indian Tribe of Uintah & Ouray Reservation,
the Tenth Circuit concluded that a trial court’s ruling on sovereign immunity would not be given
preclusive effect because the court later determined it lacked subject-matter jurisdiction, which
rendered moot the prior sovereign immunity ruling and made it irrelevant to judgment.93

89

Having concluded that the overcharge and waiver issues are not identical to the issues previously adjudicated,
the court constrains its analysis of the remaining issue preclusion elements to the 180-day notice and the White
Space Restructuring issues.
90

Murdock v. Ute Indian Tribe of Uintah & Ouray Reservation, 975 F.2d 683, 687 (10th Cir. 1992).

91

Id.

92

Id.

93

Affiliated Ute Citizens of State of Utah v. Ute Indian Tribe of Uintah & Ouray Reservation, 22 F.3d 254, 256
(10th Cir. 1994).

19

DHL maintains that disputed facts prevent this court from deciding whether issues were
resolved on the merits in the Unishippers Litigation. Specifically, DHL argues each individual
franchisee must prove the existence of damages and the particular effects of the White Space
Restructuring on each franchisee before issue preclusion can apply. This restrictive application
of the elements of issue preclusion is inconsistent with the doctrine, which serves to promote
judicial efficiency, prevent inconsistent outcomes, and protect parties from “the burden or
relitigating identical issues.”94 Here, a jury found that DHL breached the Agreement by failing
to provide notice and by adopting the White Space Restructuring.95 The court entered a
judgment based on its prior decisions and the jury’s verdict. The Tenth Circuit affirmed the basic
determination of liability.
In short, while the extent of the harm suffered may differ from franchisee to franchisee,
the issue of whether DHL breached the Agreement, at least insofar as the notice and White Space
claims are concerned, has been decided on the merits. Admittedly, the damages suffered by each
franchisee may vary in part depending on its location, business volume, and customers. But it is
not inconsistent with the doctrine of issue preclusion to instruct a jury that a breach occurred on a
particular date and then ask the jury to determine the amount of damages for each franchisee.
Despite the prior adjudication on the merits, DHL insists that a party seeking to prevail
on a breach of contract claim must demonstrate four elements, one of which is damages.96 In

94

Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979); cf. Nichols v. Bd. of Cnty. Comm'rs of Cnty. of La
Plata, Colo., 506 F.3d 962, 967 (10th Cir. 2007).
95

DHL briefly argues that the Unishippers Litigation did not determine the contract had terminated. Dkt. No.
412, at 7-8. The court disagrees. Similar to Murdock, the finding of termination was implicit, if not central, to
Judge Kimball’s partial summary judgment decision, the judgment, and the Tenth Circuit’s holding. Compare
Murdock, 975 F.2d at 688, with Dkt. No. 401-6, at 7.
96

Throughout its briefing, DHL characterizes the variation in damages as an individualized issue of fact and
argues that issues of disputed fact preclude summary judgment. The court finds that DHL has not created a

20

DHL’s view, parties cannot invoke issue preclusion until they demonstrate individualized
damages for each franchisee. This approach to issue preclusion is unpersuasive because it would
preclude the application of issue preclusion whenever damages were an element of a claim.
Possible variations in damages or possible defenses do not prevent finding that two of the
contract issues in this case—breach of the notice provision and the White Space Restructuring—
were identical to and resolved on the merits in the Unishippers Litigation.97
In sum, Plaintiffs satisfied the second element of issue preclusion for the notice claim and
the White Space Restructuring. The court will now consider whether DHL had a full and fair
opportunity to litigate these two issues.
3.

Full and Fair Opportunity to Litigate

The third issue presented is whether DHL had a “full and fair opportunity to litigate the
issue in the prior action.”98 Courts inquiring into this element “focus on whether there were
significant procedural limitations in the prior proceeding, whether the party had the incentive to
litigate fully the issues, or whether effective litigation was limited by the nature or relationship of

genuine issue of material fact. Even assuming the truth of these minor variations, it does not change the court’s
conclusion that Plaintiffs are entitled to issue preclusion on liability but not damages.
97

Similarly, DHL argues that (a) it continued to provide services after the termination of the Agreement and (b)
the White Space Restructuring affected each franchisee differently. In DHL’s view, this creates a factual issue on
the second element of issue preclusion. Dkt. No. 412, at 8-11. But these “disputed” facts and theory do not
change the fact that a prior adjudication concluded DHL breached the Agreement by failing give notice and
through the White Space Restructuring. Instead of affecting issue preclusion, DHL’s argument appears to be
directed at the scope of damages, its counterclaims, and possible defenses, all of which may still be raised at trial.
98

Park Lake Res. Ltd. Liab. v. U.S. Dep't Of Agr., 378 F.3d 1132, 1136 (10th Cir. 2004).

21

the parties.”99 This issue preclusion element also “centers on the fundamental fairness of
preventing the party from relitigating an issue he has lost in a prior proceeding.”100
Here, Plaintiffs argue DHL had a full and fair opportunity to litigate these issues because
DHL was actively involved in the summary judgment phase and participated in a jury trial. In
response, DHL argues that it could not explore “critical factual issues applicable to Plaintiffs” in
the prior litigation.101 Specifically, DHL believes that it should have been able to introduce and
explore franchisee agreements governing the relationship between Unishippers and Plaintiffs.
The court concludes that DHL had a full and fair opportunity to litigate whether its failure
to provide adequate notice and the White Space Restructuring breached the parties’ Agreement.
DHL participated in years of discovery, argued its claims and defenses in motion practice,
presented its case to a jury, and received the benefit of an appeal. Moreover, throughout the
Unishippers Litigation, DHL had an incentive to fully litigate the White Space Restructuring and
the notice claims—especially where, as here, DHL was aware of a related suit arising out of the
same subject matter.
DHL has not pointed to a significant procedural limitation in the Unishippers Litigation.
Even if there was no opportunity to introduce franchisee agreements in the prior suit, DHL has
not shown how a risk assumption agreement between franchisees and Unishippers has bearing on
whether DHL breached its obligations to Unishippers and third-party beneficiaries under an

99

Murdock v. Ute Indian Tribe of Uintah & Ouray Reservation, 975 F.2d 683, 689 (10th Cir. 1992) (quoting SILFLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1521 (10th Cir. 1990)).
100

SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1521 (10th Cir. 1990) (concluding party’s attempt to relitigate
choice of law issue merely because the party lost in the prior proceeding did not deprive party of full and fair
opportunity).
101

Dkt. No. 412, at 19.

22

entirely different agreement.102 Stated differently, DHL has not shown that specific procedural
limitations in the prior suit deprived it of a full and fair opportunity to litigate its failure to
provide adequate notice and the White Space Restructuring.103
For all these reasons, Plaintiffs satisfied the final element of issue preclusion. The only
remaining question is whether nonmutual offensive collateral estoppel should extend to this case.
C.

Nonmutual Offensive Collateral Estoppel
The final issue is whether the court should exercise its discretion and permit Plaintiffs to

invoke nonmutual collateral estoppel. In Parklane Hosiery Co., Inc. v. Shore,104 the Supreme
Court sanctioned the use of nonmutual offensive collateral estoppel. The Court cautioned that
the doctrine should not apply when “a plaintiff could easily have joined the earlier action” or
when “the application of offensive estoppel would be unfair to a defendant.”105 Discussing the
fairness inquiry, the Court suggested that courts should consider whether there was an incentive
for a party to “defend vigorously,” inconsistent judgments in multiple prior suits, or “procedural
opportunities unavailable in the first action that could readily cause a different result.”106
Under Parklane, this court’s first inquiry should be whether Plaintiffs could have joined
in the Unishippers Litigation. Here, the parties dispute the effect of a state case in another

102

DHL also argues that it did not have an opportunity to present evidence relevant to its waiver defense in the
underlying litigation. Because the court concludes that issue preclusion should not extend to waiver, it does not
reach this issue.
103

DHL briefly suggests Judge Kimball should have permitted it to file a sur-reply at the summary judgment stage
of the Unishippers Litigation. Yet, DHL fails to explain what prevented it from raising this issue during the
appeal to the Tenth Circuit. Accordingly, the court concludes that DHL’s waiver of this argument in the prior case
did not deprive it of a full and fair opportunity to litigate the issue.
104

439 U.S. 322, 331-32 (1979).

105

Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 331 (1979).

106

Id. (holding estoppel applied, where party probably could not have joined the litigation, the likelihood of
successive suits incentivized a vigorous defense, the prior judgment was not inconsistent with any other prior
judgment, and there were no new procedural opportunities).

23

jurisdiction, and the timeliness of Plaintiffs’ attempt to join the Unishippers Litigation. After
considering the parties’ arguments, however, the court concludes that Plaintiffs attempted to
participate in the Unishippers Litigation but were denied the opportunity to do so. The existence
of a related case, which was later abandoned, or an insignificant delay in attempting to join the
prior case does not change the fact that Plaintiffs attempted to join the Unishippers Litigation
relatively early in that case. Indeed, while DHL attempts to articulate litigation strategies that
Plaintiffs could have employed,107 the court notes that DHL opposed Plaintiffs’ motion to
consolidate, citing the complexity of the legal and factual issues. This strongly suggests that
DHL would have attempted to deny Plaintiffs the opportunity to participate in the prior litigation.
In any event, because Judge Kimball denied Plaintiffs’ motion to consolidate, the court cannot
conclude that Plaintiffs intended to adopt the type of “wait and see attitude” that would weigh
against estoppel.108 Accordingly, the procedural history of these two cases favors permitting
Plaintiffs to invoke issue preclusion.109
The second consideration is whether it would be unfair to DHL to permit invocation of
offensive collateral estoppel. As discussed above, DHL had a full and fair opportunity to litigate
identical issues in the prior suit. DHL has not persuaded the court that it could avail itself of any
procedural advantages that were unavailable in the Unishippers Litigation. And issue preclusion
in this case does not implicate any prior inconsistent judgments. In sum, DHL has not shown
that nonmutual offensive collateral estoppel would be unfair under Parklane, especially where,

107

Dkt. No. 412, at 21-22.

108

See Parklane Hosiery Co., 439 U.S. at 329-30 (discussing policy considerations).

109

In its papers, DHL also argues that Plaintiffs’ division of this case into phases weighs against nonmutual
offensive collateral estoppel insofar as it decreases judicial efficiency. This argument is unpersuasive. Plaintiffs’
attempt to make a complex case more manageable is irrelevant to (1) Plaintiffs unfairly participating in the prior
adjudication, or (2) whether DHL was denied a full and fair trial in the prior adjudication.

24

as here, DHL will still have an opportunity to try the issue of damages and present legal defenses
specific to the franchisees.
In response, DHL argues that nonmutual offensive collateral estoppel is inappropriate
when its application would not promote judicial efficiency.110 In doing so, DHL relies on cases
from other jurisdictions that arose in factually distinguishable contexts.111 In the court’s view,
none of these cases stands for the proposition that an inquiry into judicial efficiency supplants the
factors identified by the Supreme Court in Parklane and used in the Tenth Circuit. Moreover, the
court disagrees that the application of issue preclusion would undercut judicial efficiency or
confuse a jury. Issue preclusion in this case would reduce Plaintiffs’ evidentiary burden and
reduce the likelihood of inconsistent judgments. While Plaintiffs likely will present evidence of
other breaches of the Agreement and DHL will advance its defenses, there is no indication that
the application of issue preclusion in this case will involve such intertwined or complex issues
that the jury will be unable to apply the court’s instructions and resolve this dispute.
In sum, the court finds that the Parklane factors weigh in favor of permitting Plaintiffs to
invoke nonmutual offensive collateral estoppel respecting issues resolved in a prior adjudication.
D.

Summary
Plaintiffs’ Motion for Partial Summary Judgment on Issue Preclusion is granted in part.

Although the exact language of the jury instruction is reserved for trial, the court will instruct the
jury that DHL breached the Agreement by failing to provide notice within 180 days, and that the

110

Dkt. No. 412, at 22-25.

111

See Rodriguez-Garcia v. Miranda-Marin, 610 F.3d 756, 773 (1st Cir. 2010) (concluding trial court did not err
in declining to provide a jury instruction that would confuse the jury and not promote judicial economy in an
intertwined employment discrimination suit); Acevedo-Garcia v. Monroig, 351 F.3d 547, 577 (1st Cir. 2003)
(acknowledging that interrelated issues may provide a reason for denying issue preclusion but remanding for
consideration of the issue); S.E.C. v. Monarch Funding Corp., 192 F.3d 295, 304 (2d Cir. 1999) (discussing
whether sentencing findings should be given preclusive effect in civil case).

25

White Space Restructuring constituted a breach of the Agreement. At the same time, application
of issue preclusion does not preclude DHL from challenging the overcharge claims, presenting
affirmative defenses based on the franchisees’ conduct, or trying the issue of damages.112
Motion for Summary Judgment on Plaintiffs’ Contract Claims

III.

DHL moves for partial summary judgment on the franchisees’ contract claims.113 DHL’s
motion raises two issues: (1) whether Plaintiffs may proceed under a breach of contract theory
based on DHL’s purported bad faith; and (2) whether Plaintiffs’ claim for breach of Section 2.05
and Amendment 10 fails as a matter of law. The court considers each in turn.
A.

“Bad Faith” Breach of Contract Claim
The first issue is whether Plaintiffs may proceed on a claim for “bad faith” breach of

contract, where the Agreement contains a provision obligating DHL “to deal with” Unishippers
and its franchisees “in good faith in all aspects of this Agreement.”114
Under Utah law, a party may recover for an express breach of contract.115 Alternatively,
separate and apart from express provisions, a party may seek to recover for breach of the implied
covenant of good faith and fair dealing, which inheres in every contract.116 At the same time,

112

See Dkt. No. 424, at 1-3 (clarifying DHL may present affirmative defenses and litigate damages).

113

Dkt. No. 402.

114

Dkt. No. 403-2, § 5.05 (“[DHL] agrees to deal with [Unishippers] and [Unishippers] Franchisees in good faith
in all aspects of this Agreement and to provide [Unishippers] shipping rates consistent with market trends and
conditions.”).
115

Christiansen v. Farmers Ins. Exch., 116 P.3d 259, 261 (Utah 2005).

116

Id. at 261-62 (discussing differences between express provisions and the implied covenant of good faith and
fair dealing); see also Blakely v. USAA Cas. Ins. Co., 633 F.3d 944, 947 (10th Cir. 2011) (discussing breach of
contract under Utah law).

26

however, Utah courts do not permit recovery of punitive damages for “bad faith” or intentional
breach of contract.117
DHL’s motion presents two difficulties. First, the Agreement between the parties
contains a provision that obligated DHL to act in good faith. Utah does not recognize a tort
claim for bad faith breach of contract. But a party may recover for breach of an express
contractual provision. Second, Plaintiffs presented contradictory views of their claim during oral
argument and in their papers. At times, Plaintiffs characterize their claim as a breach of an
express provision that obligates DHL to act in good faith. At other times, Plaintiffs cast their
claim as a breach of the implied covenant of good faith and fair dealing.
After careful consideration of the pleadings, the court concludes that Plaintiffs’ Fourth
Amended Complaint alleges an express breach of Section 5.05 of the Agreement. Specifically,
Plaintiffs appear to allege DHL was contractually obligated to “deal with” Plaintiffs “in good
faith in all aspects of the agreement.”118 This claim includes more than mere negotiations of the
Reseller Agreement, incorporating allegations of driving away customers, refusing to provide
shipping guarantees, removing drop boxes, and refusing to accurately bill for services.119 Insofar
as these acts fall under Section 5.05, they are not barred by Utah law. Indeed, DHL has not cited
to any binding or persuasive precedent that prevents a party from seeking to recover under a
contractual provision negotiated by the parties, merely because that provision uses the phrase
“good faith.”

117

TruGreen Companies, L.L.C. v. Mower Bros., Inc., 199 P.3d 929, 933 (Utah 2008). In TruGreen, the Utah
Supreme Court discussed the policy reasons for limiting damages for breach of a “contractual non-competition,
non-disclosure, or employee non-solicitation provision.” Id. at 934. As part of this policy discussion, the court
stated: “[W]e do not wish to adopt a remedy for breach of contract that punishes the breaching party. . . . Contract
law is amoral and, therefore, appropriate in a business setting in which efficiency is valued.” Id. at 933.
118

Dkt. No. 401-1, § 5.05; Dkt. No. 411, at 9-10.

119

Dkt. No. 411, at 9-10.

27

At the same time, however, the court concludes that Plaintiffs have not asserted a claim
for breach of the implied covenant of good faith and fair dealing. Throughout their papers and at
the hearing, Plaintiffs treated the claim for breach of an implied covenant as interchangeable with
a breach of the express provision in the contract.120 This approach does not comport with Utah
law, which treats express provisions and the implied covenant as separate theories of recovery.121
The Fourth Amended Complaint contains a single paragraph for the bad faith claim.122 Neither
that paragraph nor the pleading references the implied covenant of good faith and fair dealing.
In this respect, the Fourth Amended Complaint failed to place DHL on adequate notice if
Plaintiffs intended to pursue an implied covenant claim. At best, the Fourth Amended Complaint
states a claim for breach of Section 5.05. At worst, it alleges a tort claim for bad faith breach of
contract, which would not be cognizable under Utah law. But this court is unable to construe the
relevant paragraph of the Fourth Amended Complaint to simultaneously state a claim for breach
of an express provision and an implied covenant.
In sum, DHL correctly asserts that Utah does not permit recovery of punitive damages for
an intentional breach of contract. To the extent that Plaintiffs seek recovery of punitive damages,
the “bad faith” claim is barred. But Plaintiffs may pursue their claim for breach of Section 5.05
at trial.123 In that respect, DHL’s motion for summary judgment is denied.

120

See, e.g., Dkt. No. 411, at 12; Dkt. No. 433, at 40-41.

121

See Christiansen v. Farmers Ins. Exch., 116 P.3d 259, 261 (Utah 2005).

122

Dkt. No. 251, ¶ 132.

123

In its reply, DHL briefly contends the court should grant summary judgment because Plaintiffs failed to present
evidence in support of the bad faith claim. Dkt. No. 427, at 3-4. This argument falls outside the scope of DHL’s
motion, which argued that summary judgment was appropriate because (1) Utah law does not recognize the claim
and (2) Plaintiffs did not participate in negotiations. Dkt. No. 402, at 15-17. DHL’s motion did not place
Plaintiffs on adequate notice of a challenge to the evidentiary sufficiency of its claim. Because it was raised for
the first time on reply, the court declines to consider the argument.

28

Overcharge Claims

B.

DHL also moves for summary judgment on contractual claims arising under Section 2.05
of the Agreement and Amendment 10. In its opening brief, DHL argues that (1) Plaintiffs are not
third-party beneficiaries of either of these provisions and (2) Plaintiffs cannot present sufficient
evidence of a claim for breach of Section 2.05.
1.

Third-Party Beneficiary

The parties dispute whether Plaintiffs were intended third-party beneficiaries under
Section 2.05 or Amendment 10, neither of which expressly references Unishippers or its
franchisees.
In Utah, courts determine whether an entity is a third-party beneficiary by examining the
contract at issue.124 “The written contract must show that the contracting parties clearly intended
to confer a separate and distinct benefit upon the third party.”125 For an unambiguous contract,
“the parties’ intentions are determined from the plain language of the contractual language.”126
But “if the language of the contract is ambiguous such that the intentions of the parties cannot be
determined by the plain language of the agreement, ‘extrinsic evidence must be looked to in
order to determine the intentions of the parties.’”127 Ambiguity exists only when the language is
“reasonably capable of being understood in more than one sense.”128

124

Wagner v. Clifton, 62 P.3d 440, 442 (Utah 2002); see also Broadwater v. Old Republic Sur., 854 P.2d 527, 537
(Utah 1993) (“A third party who benefits only incidentally from the performance of a contract has no right to
recover under the contract.”).
125

Wagner, 62 P.3d at 442 (internal quotation marks and citation omitted).

126

Id. (quoting WebBank v. Am. Gen. Annuity Serv. Corp., 54 P.3d 1139, 1145 (Utah 2002)).

127

WebBank, 54 P.3d at 1145 (internal quotation marks and citation omitted).

128

Cent. Florida Investments, Inc. v. Parkwest Associates, 40 P.3d 599, 605 (Utah 2002) (internal quotation mark
and citations omitted).

29

The court concludes the plain language of the Agreement demonstrates the contracting
parties intended to grant franchisees a separate and distinct benefit—namely, to receive lower
rates and discounted assessorial fees. Here, Unishippers and the predecessor of DHL entered
into a contract, the purpose of which was to maximize Unishippers’ and its franchisees’ use of
DHL’s services.129 The primary vehicle for accomplishing this goal was a set of contractual
provisions ensuring the rates DHL charged the franchisees remained predictable and
affordable.130 Unlike in other cases, the rate provisions were not incidental or indirect—the
Agreement reflects the parties’ intent to ensure that DHL charged Unishippers’ franchisees the
lowest rates and provided a discount on assessorial fees.131
DHL nonetheless insists that Section 2.05 and Amendment 10 were not intended to
confer a benefit on the franchisees because these provisions do not expressly refer to them. DHL
cites other provisions in the Agreement expressly referring to Unishippers and its franchisees.
DHL argues the failure to expressly reference franchisees must mean the provisions were
intended to benefit only Unishippers.132 DHL’s position is unpersuasive for two reasons.

129

Dkt. No. 401-1, §§ 2.01-2.05, 3.01, 4.01.

130

See Dkt. No. 401-1, § 2.01-2.05.

131

See Dkt. No. 294, at 3-4 (recognizing parties’ agreement envisioned a direct relationship between DHL and the
franchisees). Although his decision did not expressly discuss or analyze Section 2.05 or Amendment 10, Judge
Kimball concluded that, under the Agreement, “DHL gave specialized pricing directly to the franchisees, billed
the franchisees directly, collected payments directly from the franchisees, and had contractual rights to default the
franchisees individually and separately if the franchisees did not comply with their obligations.” While the court
declines Plaintiffs’ invitation to resolve DHL’s motion under the law of the case doctrine, the court is mindful of
Judge Kimball’s prior conclusions regarding the parties’ intent and the basic structure of the Agreement.
132

Throughout its briefing and at argument, DHL heavily relied on Wagner v. Clifton, a decision in which the Utah
Supreme Court held that a trial court could not exercise personal jurisdiction on the basis of a contract between
third parties. 62 P.3d 440, 442 (Utah 2002). While Wagner provides the standard for evaluating third-party
beneficiary status, the holding of the decision is distinguishable insofar as (1) the contractual provision at issue
expressly referred to specific parties, and (2) the court was able to distinguish between the forum selection clause
and provisions that addressed the relationships between parties and non-parties. Id. at 442-43. In the instant case,
neither Section 2.05 nor Amendment 10 expressly forecloses application to a non-party. Indeed, other provisions
in the Agreement extend rates to all shipments and suggest that the parties intended the benefit to flow to
franchisees.

30

First, while Section 2.05 and the relevant language in Amendment 10 do not specifically
reference the franchisees, they also do not specifically refer to Unishippers.133 In other words,
these provisions do not contain language that would suggest the parties intended the provision
should benefit only Unishippers. And in the absence of limiting language, the court concludes
that the Agreement, on whole, evinces the intent of the parties to apply the lowest rate and
assessorial fee provisions to all shipments, unless DHL entered into a separate agreement with
specific franchisees. In short, the structure and language of the Agreement demonstrates that the
parties intended for franchisees to receive the benefit of DHL’s lowest rates and an assessorial
fee discount.
Second, DHL’s narrow interpretation of Section 2.05 and Amendment 10 threatens to
render those provisions, along with the purpose of the Agreement, superfluous.134 The
Agreement applied to all shipments and created a shipping, billing, and rate relationship between
DHL and the franchisees. The court cannot see how DHL’s restrictive reading of Section 2.05
and Amendment 10 could be harmonized with the parties’ intent.135
For both of these reasons, the court concludes, based on the Agreement and the language
of Section 2.05 and Amendment 10, that the parties intended Section 2.05 and Amendment 10 to
confer separate and distinct benefits on the franchisees.
In its papers, DHL argues that the court should find in its favor because Section 2.05
refers to a reseller. At best, the brief reference to “reseller,” an otherwise undefined term,
suggests that there may be two reasonable interpretations of Section 2.05. On the one hand, the

133

Dkt. No. 401-1, § 2.05 (“[DHL] guarantees that no other reseller will have equal or lower rates for comparable
volume of business.”); Id. at Amendment No. 10, at 2 (“In the absence of any agreement, the assessorial fees shall
be twenty (20%) below any customary [DHL] rates.”).
134

See Encon Utah, LLC v. Fluor Ames Kraemer, LLC, 210 P.3d 263, 269 (Utah 2009).

135

See Dkt. 401-1, §§ 3.01, 5.03, 12.02.

31

term may be synonymous with Unishippers and thus suggest that only Unishippers was entitled
to certain rates. Alternatively, the term could refer collectively to Unishippers and its
franchisees, suggesting that both would receive lower rates depending on the comparable volume
of other resellers and their franchisees.136 If this creates two reasonable interpretations, Utah law
would require this court to evaluate extrinsic evidence presented by the parties to resolve the
ambiguity that arises out of the reference to resellers. Here, Plaintiffs submitted extrinsic
evidence the contracting parties intended to give franchisees the benefits of Section 2.05.137
DHL failed to controvert this testimony. For this reason, the court concludes extrinsic evidence
independently establishes the parties’ intent to make franchisees third-party beneficiaries of
Section 2.05.
As stated above, the court finds the Agreement’s language and structure demonstrate that
the franchisees are third-party beneficiaries of Section 2.05. But insofar as DHL’s interpretation
creates ambiguity as to the reach of the lowest rates provision, extrinsic evidence demonstrates
that the parties intended the franchisees to be third-party beneficiaries of Section 2.05.
2.

Sufficiency of Evidence

In its opening brief, DHL argues that Plaintiffs cannot demonstrate a breach of Section
2.05 because Plaintiffs cannot present evidence that DHL charged higher rates to a reseller with a
comparable volume of business.138 DHL’s motion challenges Plaintiffs’ ability to prove that (1)
individual franchisees had revenue that could be compared to the volume of other resellers, and

136

This interpretation is consistent with an argument advanced by DHL—that the Agreement uses Unishippers,
franchisees, and reseller separately and distinctly. Dkt. No. 402, at 19.
137

Dkt. No. 411-1, at 168-69; see also Dkt. No. 411, at xvi-xvii (describing testimony).

138

Dkt. No. 402, at 22.

32

(2) Unishippers, as a system, had comparable shipping volume to other resellers.139 Without this
evidence, DHL contends that Plaintiffs will be unable to show a breach of Section 2.05.
A party seeking to recover on a breach of contract theory bears the ultimate burden of
demonstrating a breach. In the Tenth Circuit, a party seeking summary judgment must “carry its
initial burden either by producing affirmative evidence negating an essential element of the nonmoving party’s claim, or by showing that the nonmoving party does not have enough evidence to
carry its burden of persuasion at trial.”140 If the movant satisfies its burden, “Rule 56(e) requires
the non-moving party to set forth specific facts showing there is a genuine issue for trial.”141 In
this case, DHL carried its initial burden of demonstrating that Plaintiffs could not present
evidence of comparable rates under Section 2.05.142 Accordingly, the burden of producing
evidence of a breach sufficient to survive DHL’s motion for summary judgment shifted to
Plaintiffs.
In their argument section, Plaintiffs failed to cite evidence sufficient to create a genuine
issue of fact for trial.143 Rather than cite or discuss specific evidence of rates given to
comparable resellers, as required by Rule 56(e), Plaintiffs rely primarily on their argument that
the overcharges issue was resolved in the Unishippers Litigation. But as the court discussed

139

Id.

140

Pelt v. Utah, 539 F.3d 1271, 1280 (10th Cir. 2008) (internal quotation marks and citation omitted).

141

Trainor v. Apollo Metal Specialties, Inc., 318 F.3d 976, 979 (10th Cir. 2002), as amended on denial of reh'g
(Jan. 23, 2003); cf. Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843, 850 (2014).
142

Plaintiffs briefly argue that DHL erroneously construes Section 2.05 because DHL argued that franchisees are
unable to demonstrate their individual volume compared to other resellers. According to Plaintiffs, Section 2.05
requires the parties to calculate the aggregate net volume of Unishippers, its franchisees, and account locations.
Plaintiffs’ argument, however, ignores the fact that DHL challenged Plaintiffs’ ability to present evidence
regardless of whether revenues were calculated individually or collectively. Even assuming Plaintiffs’
interpretation is correct, DHL’s motion shifted the burden to Plaintiffs to present evidence of a reseller who
received lower rates but had comparable volume to the Unishippers system.
143

See, e.g., Dkt. No. 411, at 19-20 (addressing challenge to evidence).

33

above, Plaintiffs are not entitled to the benefit of nonmutual offensive collateral estoppel on the
overcharge claims because the Unishippers Litigation did not definitively resolve whether DHL
overcharged franchisees.144 In short, Plaintiffs cannot carry their burden under a theory of issue
preclusion.
The fact section of Plaintiffs’ opposition memorandum briefly references testimony from
the Unishippers Litigation.145 Although it is not clear whether Plaintiffs intended to cite to the
pagination in the underlying transcript or the pagination created by CM/ECF, both sections may
be relevant to the issue of overcharge.146 Specifically, in the Unishippers Litigation, Joe Curtis, a
former DHL employee responsible for the company’s obligations under Section 2.05, testified
that the Agreement prohibited DHL from providing lower rates to smaller resellers.147 Mr. Curtis
testified that DHL continued to give some resellers discounted rates for existing customers, even
after Unishippers protested that it was not receiving the lowest rates.148
The difficulty with this testimony, at least for the Phase I Plaintiffs, is twofold. First, it is
not clear whether Plaintiffs intended to rely on Mr. Curtis’s testimony as an affirmative basis for
denying the motion for summary judgment, because Plaintiffs do not even reference the
testimony when arguing that they presented sufficient evidence.149 The failure to discuss the
testimony is problematic because his testimony refers generally to Unishippers, and it is unclear
whether Mr. Curtis intended to testify that Plaintiffs received higher rates. In this respect,
Plaintiffs have not shown that the prior testimony, which does not even discuss the rates charged

144

Supra Analysis, Part II.

145

Dkt. No. 411, at 2 (citing Dkt. No. 401-10, at 674-78).

146

Dkt. No. 401-10, at 664-68, 674-78.

147

Id. at 663-65.

148

Id. at 666-67.

149

Dkt. No. 411, at 19-20.

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to Plaintiffs during specific time periods, provides a sufficient basis upon which a reasonable
jury could find that DHL breached its obligation to Plaintiffs under Section 2.05.150 Second,
Plaintiffs do not provide a basis for concluding that the prior trial transcript is competent
evidence here.151 At least on the record presented, the excerpt appears to be hearsay.152 Plaintiffs
have neither argued nor cited any evidence or authority on which the court could find that an
exception or exclusion applies.153 For both of these reasons, the court concludes that Mr. Curtis’s
testimony alone does not create a genuine issue of material fact.
Because these four franchisees failed to create a genuine issue of material fact, DHL is
entitled to summary judgment on Plaintiffs’ claim of breach of Section 2.05 of the Agreement.154
During the hearing, DHL argued a similar evidentiary defect should result in summary
judgment on Plaintiffs’ assessorial fee claim.155 The court disagrees. DHL’s challenge to the
sufficiency of the evidence for the assessorial fee claim falls well outside the scope of DHL’s
motion, which challenged the assessorial fee claim solely on the basis of Plaintiffs’ status as
third-party beneficiaries.156 The court cannot grant relief to DHL on the basis of an evidentiary

150

See Dkt. No. 433, at 37-39 (challenging evidentiary record).

151

Gross v. Burggraf Const. Co., 53 F.3d 1531, 1541 (10th Cir. 1995) (holding inadmissible hearsay should not be
considered on summary judgment).
152

Fed. R. Evid. 801(c) (defining hearsay as statement not made “while testifying at the current trial or hearing”);
see Bailey v. S. Pac. Transp. Co., 613 F.2d 1385, 1389 (5th Cir. 1980) (treating prior trial testimony as hearsay but
admitting testimony under exception for unavailability).
153

For example, Plaintiffs have not asserted that Mr. Curtis was unavailable to provide a declaration in this case.
See Fed. R. Evid. 801(b)(1).
154

While DHL is entitled to summary judgment on claims asserted by Gulf Coast, AEA, Kasel, and Lake, the
court does not intend to foreclose the possibility that the other franchisees in this case may be able to come
forward with evidence supporting a breach of Section 2.05.
155

Dkt. No. 433, at 39.

156

See Dkt. No. 402, at i-ii, 22.

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challenge where Plaintiffs lacked notice and an opportunity to brief the issue or produce
evidence necessary to illustrate a genuine dispute of material fact.157
C.

Summary
DHL’s motion for summary judgment on Plaintiffs’ contract claims is granted in part and

denied in part. Although Plaintiffs may proceed on their claims that DHL breached Section 5.05
and Amendment 10, DHL is entitled to summary judgment on the lowest rate claim, which arises
under Section 2.05 of the Agreement.
MOTION FOR SUMMARY JUDGMENT ON DEFENDANT’S COUNTER-CLAIMS

IV.

Plaintiffs seek summary judgment on three of DHL’s counterclaims: account stated, open
account, and quantum meruit.158 According to Plaintiffs, a dispute over unpaid shipping services
precludes recovery under the doctrine of account stated, while the existence of a contract bars the
open account and quantum meruit counterclaims. The court will analyze the arguments in turn.
A.

Account Stated Counterclaim
An account stated is essentially a contract to pay a specified sum.159 In Utah, the term is

“defined as ‘an agreement between parties who have had previous transactions of a monetary
character that all the items of the account representing such transactions, and the balance struck,
are correct, together with a promise, express or implied, for the payment of such balance.’”160 To
prevail on an account stated claim, a party must satisfy three essential elements: (a) “previous
transactions between the parties giving rise to an indebtedness from one to the other”; (b) “an

157

DUCivR 7-1(b)(2); see, e.g., Montoya v. Apfel, 2000 WL 556582, at *1 n. 3 (10th Cir. May 8, 2000); 3Form
Holdings, Inc. v. Livinglass, Inc., No. 2006 WL 278454, at *1 (D. Utah Feb. 2, 2006) (“It is generally
inappropriate for a court to consider arguments raised for the first time in a reply memorandum.”).
158

Dkt. No. 399.

159

DeMentas v. Estate of Tallas, ex rel. First Sec. Bank, 764 P.2d 628, 634 (Utah Ct. App. 1988).

160

Id. (citation omitted).

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agreement between the parties as to the amount due and the correctness of that amount”; and (c)
“an express or implied promise by the debtor to pay the creditor the amount owing.”161
For example, if a board of directors internally resolves to pay a specific amount and the
company secretary later sends a letter to the creditor admitting the amount owed and promising
to make installment payments, a party may prevail on an account stated claim, even if the
company later disputes the basis of the agreement in litigation.162 In that type of case, an express
promise to pay a specific amount gives rise to a straightforward account stated claim.
More difficult issues arise out of disputes where one party insists the agreement to pay a
specific amount may be implied from the other’s conduct. Similar to a contract claim, a party’s
conduct may form the basis of an agreement that supports a claim for account stated. For
example, in the absence of express agreement between the parties, “assent may be inferred by
silence when an account rendered remains unquestioned a reasonable time after receipt.”163 In
this case, neither Plaintiffs nor DHL cite to any Utah authority that provides a metric for
evaluating whether the parties in this case failed to object or question the relevant invoices
within a reasonable time.164 Other jurisdictions, however, have held that a party’s failure to

161

Id. (citation omitted); see, e.g., Dale K. Barker Co., P.C. v. Valley Plaza, 541 F. App’x 810, 814 (10th Cir.
2013) (concluding plaintiff failed to demonstrate that defendant acknowledged an agreement of the amount due
and its correctness, even though parties signed boilerplate language and defendant sent periodic notices).
162

Hurd v. Central Water Co., 106 P.2d 775, 777-78 (Utah 1940).

163

Lantec, Inc. v. Novell, Inc., 2001 WL 1916256, at *9 (D. Utah May 8, 2001) (citing Hurd, 106 P.2d at 777).

164

DHL cites to Benites v. Hampton, 3 P. 206 (Utah Terr. 1884), appeal dismissed, 8 S. Ct. 254 (1887). In Benites,
the Supreme Court for the Territory of Utah recognized that failure to object to a bill for a specific amount within
a reasonable time may support a presumption of an account stated. Id. at 208 (“The same rule applies where a
party to an account sends it for payment to the other by mail, if the party to whom it is sent does not, after a
reasonable time has passed, express any objection to it, his silence, unexplained, is an implied admission that he
has none; that the account is correct, and truly, thought [sic] not conclusively, stated.”). But the court ultimately
affirmed dismissal of the case because the appellate record did not have enough information for the court to
measure whether a reasonable time had elapsed in between the mailing of the account and the commencement of
the suit. Id. at 209-210. The Utah Supreme Court later cited Benites in Scoville v. Kellogg Sales Co., 261 P.2d
933 (Utah 1953). In Scoville, the Court held, without much discussion, that the defendant was entitled to proceed

37

object to an account for an extended period, such as five months or two years, provided a basis
for inferring an agreement to pay a specific amount.165
Here, Plaintiffs are entitled to summary judgment on the account stated counterclaim
because DHL cannot prove Plaintiffs agreed to a pay a specific amount for past services.166 DHL
asserts that it can demonstrate the second element—an agreement as to the correct amount due—
through the terms of the Agreement and the fact that DHL continued to provide shipping services
in late 2008 and early 2009. In DHL’s view, Plaintiffs’ failure to object in a timely manner
constitutes an implied agreement to pay a specified amount. The court disagrees for two reasons.
First, no reasonable jury could conclude that Plaintiffs and DHL agreed to “to the amount
due and the correctness of that amount” for past services, as required by Utah law. At least as
articulated by the Utah Supreme Court, the account stated inquiry should focus on the parties’
conduct and any agreement after services have been rendered and an amount is owed. Here,
DHL admitted that it cannot provide an express agreement describing the specific amount owed
for past services in which Plaintiffs agree to the correctness of DHL’s invoices.167 Instead, DHL
attempts to establish the agreement through Plaintiffs’ silence.168 Yet, Plaintiffs’ actions in late
2008 and early 2009 demonstrate vocal disagreements about the correctness of the amount.
Even more problematically, DHL’s own view of the amounts owed by franchisees has
changed during the course of this case—the amounts in the notices sent by DHL differ from the

to the jury on an affirmative defense for account stated, when the plaintiff accepted a check and did not object for
eighth months. Id. at 935-36.
165

Freeland v. Heron, Lenox & Co., 11 U.S. 147, 151 (1812); Navimex S.A. De C.V. v. S/S N. Ice, 617 F. Supp.
103, 106 (S.D.N.Y. 1984).
166

See Dkt. No. 415, at 7-9.

167

Id. at v-vii.

168

Dkt. No. 433, at 14:13-17.

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original counterclaim, which in turn differs from the amounts in the operative pleading, which is
based on information obtained and analyzed during the course of this case. In other words, by
the time DHL finalized the amount owed, Plaintiffs had objected to DHL’s invoices and billing
practices by sending correspondence to DHL and by filing this lawsuit. In this respect, DHL has
not provided any evidence controverting Plaintiffs’ declarations that they never agreed to the
correctness of the amount purportedly owed.169 Under the undisputed facts of this case, DHL
will be unable to prove that these parties entered into a mutual agreement to pay an agreed upon
amount for past services.170
Second, the decisions cited by DHL are distinguishable. Unlike in First Union Discount
Brokerage Services, Inc. v. Milos171 or Freeland v. Heron, Lenox & Co.,172 where the debtor did
not contest the account, Plaintiffs objected to the invoices by ceasing payments and sending DHL
emails objecting to its calculation of the amount owed.173 And unlike in Navimex S.A. De C.V. v.
S/S Northern Ice,174 the delay in this case appears to be far less than five months. In this respect,
while DHL correctly asserts that failure to object within a reasonable time may give rise to an
implied agreement that would support an account stated claim, the undisputed facts of this case
do not support a finding that Plaintiffs unreasonably delayed when they stopped payment after
DHL began to limit its domestic services and then objected to the invoiced amounts. In the

169

Infra Background, Part F; see also Dkt. No. 399, at 3-5.

170

DHL relies heavily on the Agreement, the parties’ past practices, and the National Account Agreement. In
DHL’s view, an existing credit arrangement between two parties forms the basis of an account stated, even if a
party objects to the invoice. The difficulty with this approach, at least applied to this case, is that it makes the
second element—“an agreement between the parties as to the amount due and the correctness” of a past due
amount—irrelevant and blurs the distinction between account stated claims and contract or open account claims.
171

997 F.2d 835 (11th Cir. 1993).

172

11 U.S. 147 (1812).

173

Infra Background, Part F.

174

617 F. Supp. 103, 106 (S.D.N.Y. 1984).

39

absence of an unreasonable delay, no reasonable jury could conclude Plaintiffs’ conduct created
an implied agreement to pay the amounts listed in DHL’s invoices.
For both of these reasons, DHL failed to proffer evidence from which a reasonable jury
could find that Plaintiffs entered into an agreement “as to the amount due and the correctness of
that amount.”175 Accordingly, Plaintiffs are entitled to summary judgment on the claim.
B.

Open Account & Quantum Meruit Counterclaims
Plaintiffs seek summary judgment on DHL’s open account and quantum meruit claims.176

Plaintiffs maintain that these equitable claims are barred under Utah law because an express
contract covers the subject matter of the claims.177 DHL responds that neither Utah law nor the
Federal Rules of Civil Procedure prevent it from proceeding in the alternative.
In Utah, a party may recover in quantum meruit only after legal remedies have been
exhausted.178 This is because equitable doctrines provide an alternative basis of recovery where
a remedy “does not exist at law.”179 But “if a legal remedy is available, such as breach of an
express contract, the law will not imply” an equitable remedy.180 For this reason, “recovery
under [quantum meruit] is available only when ‘no enforceable written or oral contract

175

DeMentas v. Estate of Tallas, ex rel. First Sec. Bank, 764 P.2d 628, 634 (Utah Ct. App. 1988) (citation
omitted).
176

Dkt. No. 399, at i.

177

See Dkt. No. 423, at 7 (“Plaintiffs raise a single argument . . . that these equitable claims are not available when
there is a legal remedy such as breach of an express contract.”).
178

E & M Sales W., Inc. v. Diversified Metal Products, Inc., 221 P.3d 838, 841 (Utah Ct. App. 2009).

179

Am. Towers Owners Ass’n, Inc. v. CCI Mech., Inc., 930 P.2d 1182, 1193 (Utah 1996), abrogated on other
grounds by Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 221 P.3d
234 (Utah 2009); Davies v. Olson, 746 P.2d 264, 268 (Utah Ct. App. 1987) (“Recovery under quantum meruit
presupposes that no enforceable written or oral contract exists.”).
180

Am. Towers Owners Ass’n, Inc., 930 P.2d at 1193.

40

exists.’”181 The relevant inquiry is whether there is an express and enforceable “contract
covering the subject matter of the litigation.”182
In light of the parties’ disputes over the enforceability of the Agreement, the court cannot
grant summary judgment on DHL’s quantum meruit or open account counterclaims.183 Here, a
jury will be asked to determine who first breached the Agreement and whether the parties may
invoke defenses to recovery. Until the jury determines whether DHL may enforce the Agreement
against Plaintiffs, it would be inappropriate for this court to dismiss DHL’s equitable
counterclaims based on existing Utah case law,184 which often touches only briefly on the issue
of alternative legal and equitable claims.185 The court is also mindful of the general principle
that a party may plead claims in the alternative, even if the claims appear to be facially
contradictory.186

181

Wood v. Utah Farm Bureau Ins. Co., 19 P.3d 392, 396 (Utah Ct. App. 2001) (quoting Bailey–Allen Co. Inc. v.
Kurzet, 876 P.2d 421, 425 (Utah Ct. App. 1994)) (alterations in original).
182

Id.; Mann v. Am. W. Life Ins. Co., 586 P.2d 461, 465 (Utah 1978).

183

See Becker v. HSA/Wexford Bancgroup, L.L.C., 157 F. Supp. 2d 1243, 1253 (D. Utah 2001) (declining to
dismiss equitable claims until the jury determines “there was or was not a binding contract between the parties”);
Firestone Tire & Rubber Co. v. Pearson, 769 F.2d 1471, 1484 (10th Cir. 1985).
184

Plaintiffs rely primarily on language from TruGreen Companies, LLC v. Mower Brothers, Inc., 199 P.3d 929
(Utah 2008). In TruGreen, the Utah Supreme Court was asked to consider the appropriate measure of damages
for a breach of a covenant not to compete. Id. at 933. The court held that damages for breach of a
noncompetition agreement should not be measured by restitution or unjust enrichment, because recovery under
quantum meruit theories sounded in equity and are “used only when no express contract is present.” Id. The
TruGreen decision, however, did not hold that the mere existence of a contract automatically bars equitable
claims.
185

Similar to Trugreen, the decisions cited by Plaintiffs only indirectly address the issue raised in this case. See
Am. Towers Owners Ass’n, Inc., 930 P.2d at 1193 (concluding non-party to contract may not pursue unjust
enrichment remedy, when contracting parties “paid the contract price and accepted the work performed as meeting
their contract terms”); Diversified Metal Products, Inc., 221 P.3d at 841 (reversing summary judgment in favor of
defendant on unjust enrichment claim, despite the existence of a contract, where there was a factual dispute over
whether the “unjust enrichment claim arose from a separate agreement, a representation of payment, or a
misleading statement regarding payment, apart from the express contract and subcontracts”); Karapanos v.
Boardwalk Fries, Inc., 837 P.2d 576, 578 (Utah Ct. App. 1992) (barring quantum meruit claim, but only after
finding contract was enforceable); Mann, 586 P.2d at 465 (assuming existence of an express contract).
186

Fed. R. Civ. P. 8(b).

41

In response, Plaintiffs argue that DHL’s equitable claims should be dismissed because (1)
DHL did not expressly plead them in the alternative, and (2) DHL’s counterclaims incorporate
allegations that are applicable to its contract claim. Plaintiffs’ reading of DHL’s pleading and the
Federal Rules of Civil Procedure is overly technical and unpersuasive. Plaintiffs have not cited
any binding precedent for the proposition that a party must expressly plead in the alternative.187
And in federal court, parties often incorporate factual allegations throughout a pleading to ensure
that opposing parties have adequate notice of the alternative bases of their claims. Here, DHL
may reference factual allegations that support both a breach of contract and equitable claims, but
this does not mean that DHL should be barred from pursuing equitable remedies based on the
same events if a jury later concludes the Agreement is unenforceable and denies DHL a legal
remedy.
In sum, the court concludes that DHL may continue to pursue its legal and equitable
claims until a jury determines the enforceability of the Agreement. Plaintiffs’ request for
summary judgment on DHL’s quantum meruit and open account counterclaims is denied.
CONCLUSION
For the reasons stated above:


Plaintiffs’ Motion for Partial Summary Judgment on Issue Preclusion (Dkt. 400)
is GRANTED IN PART and DENIED IN PART;

187

In support of their argument, Plaintiffs also cite U.S. ex rel. Roach Concrete, Inc. v. Veteran Pacific, JV, 787 F.
Supp. 2d 851 (E.D. Wis. 2011). This decision is unpersuasive in two respects. First, the court assumed for the
purposes of its analysis that the underlying contract was enforceable. Here, questions remain as to the
enforceability of the Agreement. Second, although the court dismissed the claim, the court invited an amendment
to the pleadings if the contract was later found to be void or unenforceable. Id. at 859-60.

42



DHL’s Motion for Partial Summary Judgment on Plaintiffs’ Contract Claims
(Counts II, III, and IV) (Dkt. 402) is GRANTED IN PART and DENIED IN
PART; and



Plaintiffs’ Motion for Partial Summary Judgment on DHL’s Second, Third, and
Fourth Counterclaims (Dkt. 399) is GRANTED IN PART and DENIED IN
PART.

SO ORDERED this 28th day of July, 2015.
BY THE COURT:

________________________________________
ROBERT J. SHELBY
United States District Judge

43