HeiTech Services, Inc. v. Front Rowe, Inc. et al
Filing
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MEMORANDUM OPINION. Signed by District Judge James C. Cacheris on 12/19/2014. (rban, )
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
HEITECH SERVICES, INC.,
Plaintiff,
v.
FRONT ROWE, INC., et al.,
Defendants.
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M E M O R A N D U M
1:14cv739 (JCC/TCB)
O P I N I O N
This contract dispute is before the Court on Plaintiff
HeiTech Services, Inc.’s Motion for Summary Judgment, filed
pursuant to Rule 56 of the Federal Rules of Civil Procedure.
[Dkt. 31.]
The Court heard the motion on December 18, 2014.
appearance was made on behalf of Front Rowe, Inc. (“FRI”).
The
Court heard oral argument of Plaintiff’s counsel, who also
represented to the Court that FRI’s bankruptcy counsel did not
contest the amount owed, and did not contest this motion for
summary judgment.
Thereafter, the Court granted Plaintiff’s
uncontested motion for summary judgment.
This Memorandum
Opinion memorializes the Court’s reasons for doing so.
I. Background
On June 16, 2014, Plaintiff HeiTech Services, Inc.
(“Plaintiff”) filed a Complaint against Defendants FRI, Atron
Rowe (“Atron”), and Karen Rowe (“Karen”) (collectively
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“Defendants”) alleging Breach of Contract, as to FRI only, and
Fraud, as to all Defendants.
(Compl. [Dkt. 1] at 7-10.)
On
November 20, 2014, the parties appeared for a Final Pre-trial
Conference.
[Dkt. 28.]
The same day, defense counsel’s motion
to withdraw as attorney for all Defendants was granted (Order
[Dkt. 29] at 1), and the next day, Plaintiff filed the instant
motion for summary judgment [Dkt. 31], with a memorandum in
support (Pl.’s Mem. [Dkt. 34]).
Plaintiff’s counsel provided a
Roseboro Notice in accordance with E.D. Va. Local Civil Rule
7(K) and certified that all necessary briefs were delivered via
U.S. Mail to the now pro se individual Defendants and to FRI
through its registered agent, Horace McClerklin.
(Pl.’s Mot.
for Summ. J. [Dkt. 31] at 2-3; Pl.’s Mem. at 31.)
On December 4, 2014, Plaintiff filed a Notice of
Bankruptcy after being advised that individual Defendants Atron
Rowe and Karen Rowe have filed Chapter 13 bankruptcy petitions
in the United States Bankruptcy Court for the Eastern District
of Virginia.
[Dkt. 38.]
Consequently, the Court entered an
Order staying the case as to the two individual Defendants only.
[Dkt. 40.]
During the hearing on the summary judgment motion,
Plaintiff’s counsel represented through FRI’s bankruptcy counsel
that FRI was not filing for bankruptcy, that FRI did not oppose
the motion for summary judgment, and that FRI did not oppose the
judgment amount sought by Plaintiff.
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II. Standard of Review
Summary judgment is appropriate only if the record
shows that “there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of
law.”
Fed. R. Civ. P. 56(c); see also Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247-48 (1986); Evans v. Techs.
Applications & Serv., Co., 80 F.3d 954, 958-59 (4th Cir. 1996)
(citations omitted).
In reviewing the record on summary
judgment, “the court must draw any inferences in the light most
favorable to the non-movant [and] determine whether the record
taken as a whole could lead a reasonable trier of fact to find
for the non-movant.”
Brock v. Entre Computer Ctrs., 933 F.2d
1253, 1259 (4th Cir. 1991) (citations omitted).
However, once a motion for summary judgment is
properly made and supported, the opposing party has the burden
of showing that a genuine dispute exists.
See Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986);
see also Ray Commc’ns, Inc. v. Clear Channel Commc’ns, Inc., 673
F.3d 294, 299 (4th Cir. 2012) (stating the opposing party must
“come forward with specific facts showing that there is a
genuine issue for trial.”) (citations and internal quotations
omitted).
Generally, contract interpretation is a subject
particularly suited for summary judgment disposal.
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Bank of
Montreal v. Signet Bank, 193 F.3d 818, 835 (4th Cir. 1999)
(citation omitted)).
Specifically in this Court, on summary judgment, the
parties are required to list the undisputed material facts.
E.D. Va. Local Civil Rule 56(B).
“In determining a motion for
summary judgment, the Court may assume that facts identified by
the moving party in its listing of material facts are admitted,
unless such a fact is controverted in the statement of genuine
issues filed in opposition to the motion.”
Id.
Similarly,
“[i]f a party fails to properly support an assertion of fact or
fails to properly address another party’s assertion of fact as
required by Rule 56(c), the court may consider the fact
undisputed for purposes of the motion.”
Fed. R. Civ. P.
56(e)(2).
Here, because the non-moving Defendant failed to file
an opposition to Plaintiff’s statement of undisputed material
facts, the Court may deem those undisputed facts admitted.
JDS
Uniphase Corp. v. Jennings, 473 F. Supp. 2d 705, 707 (E.D. Va.
2007).
The undisputed material facts are summarized as follows.
(See Pl.’s Mem. at 2-11 (citations omitted).)
III. Undisputed Material Facts
Since 1997, Atron and Karen Rowe have owned and
operated FRI, a Virginia corporation with its principal place of
business in Fairfax County, Virginia.
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On May 1, 2012, FRI
entered into a Prime Contract with the United States Department
of Labor (“DOL”) for document preparation work (“the Prime
Contract”).
Under the Prime Contract, DOL would pay FRI based
on the number of pages scanned and digitized.
Two months later,
on July 1, 2012, FRI entered into a Subcontractor Agreement
(“the Subcontract”) with Plaintiff.
Under the Subcontract, FRI
would receive 51% of the revenue and Plaintiff would receive 49%
of the revenue, based on the production output that FRI charged
to DOL.
While FRI received payment directly from DOL, it agreed
to pay Plaintiff 49% of the revenue it received from DOL no
later than five business days after payment.
Under the
Subcontract, Plaintiff’s employees worked directly with FRI
employees and were managed by FRI employees.
Starting in July of 2012 and continuing through May of
2014, Karen Rowe submitted invoices on behalf of FRI to DOL for
work under the Prime Contract, based on the number of pages
processed and billed during that particular month.
During this
period of time, in response to Plaintiff’s request, Karen Rowe
sent via e-mail the purported production output for the
preceding month, but she did not send Plaintiff the Monthly
Status Report or the invoice ultimately submitted to DOL.
During the period of time at issue, for at least 16 of
the months, Karen Rowe knew the production output sent to
Plaintiff was not the same production output FRI charged to DOL
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under the Prime Contract rates.
For the months at issue, Karen
and Atron Rowe intentionally concealed from Plaintiff the true
production output, which FRI reported on the invoices to DOL.
Consequently, Plaintiff invoiced FRI for the lower, inaccurate
pages that Karen Rowe sent Plaintiff via e-mail.
From July of 2012 through March of 2014, FRI submitted
invoices to DOL in an amount totaling $1,404,563.86, and FRI
received the same amount in revenue from DOL.
But for the same
period of time, Plaintiff submitted to FRI invoices totaling
$404,124.49, or 28.8% of the total revenue earned by FRI under
the Prime Contract with DOL, when it was in fact entitled to 49%
under the Subcontract.
Plaintiff submitted these invoices to
FRI based on its reliance on the production output figures sent
by Karen Rowe via e-mail.
Beginning in late 2013, FRI failed to make timely
payments or failed to make payment at all to Plaintiff, despite
the Subcontract requirement that such payments be received
within five days of payment from DOL to FRI.
During this time,
FRI had timely received payment from DOL, but concealed this
fact from Plaintiff when it asked for timely payment.
To date, seven invoices, totaling $166,309.62 remain
unpaid from FRI to Plaintiff under the Subcontract.
Additionally, under the terms of the subcontract, FRI owes
Plaintiff an additional $284,111.81, or the unbilled portion of
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49% of the total revenue received from DOL.
On March 31, 2014,
the Subcontract was terminated due to FRI’s failure to pay
invoices owed and the concealment of its invoices to DOL.
At
the end of May of 2014, the Prime Contract terminated.
Plaintiff lost $55,337.20 in revenue for the months of April and
May of 2014 because of the termination of the Subcontract.
IV. Analysis
A. Breach of Contract
First, Plaintiff claims it is entitled to judgment as
a matter of law on its breach of contract claim in the amount of
$505,758.63.
(Pl.’s Mem. at 12.)
This includes: (1)
$166,309.62 in unpaid invoices; (2) $284,111.81 in underreported production outputs; and (3) $55,337.20 for Plaintiff’s
lost revenue expectancy in the months of April and May of 2014.
(Id.)
Plaintiff argues it is undisputed that FRI breached the
Subcontract by failing to pay Plaintiffs amounts owed, as
detailed above.
(Id.)
In Virginia, the elements of a breach of contract
claim are: (1) a legally enforceable obligation of a defendant
to a plaintiff; (2) the defendant’s violation or breach of that
obligation; and (3) resulting injury or harm to the plaintiff.
Filak v. George, 594 S.E.2d 610, 614 (2004).
Here, the
undisputed evidence shows Defendant FRI entered into the
Subcontract with Plaintiff.
(Pl.’s Mem. Ex. 3 [Dkt. 34-4].)
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FRI failed to pay amounts owed to Plaintiff under the
Subcontract, in violation of the Subcontract.
(Id. at 12.)
The
only question is the quantification of the resulting harm, or
damages, to Plaintiff.
1. Unpaid Invoices
FRI “admits that it has not paid HeiTech the invoiced
amount [for the seven invoices at issue].
Front Rowe admits
that DOL has paid Front Rowe for the full amount of the invoice
as alleged.
Front Rowe has acknowledged its responsibility to
pay the amount due HeiTech based upon payment from DOL, and
Front Rowe will pay that amount to HeiTech.”
(Answer ¶¶ 20-26
[Dkt. 9] (admitting authenticity of Exhibits 22-28 showing
unpaid invoice amounts).)
Moreover, FRI specifically admits
that it owes $166,309.62 for unpaid invoices.
(Id. at ¶ 38
(“Front Rowe, and not defendants Karen and Atron Rowe, admits
that it owes the amounts stated in paragraph 38
[$166,309.62].”).)
Accordingly, based on the undisputed
evidence in the record and FRI’s admissions, Plaintiff is
entitled to judgment as a matter of law for the breach of
contract claim in the amount of $166,309.62 for the seven unpaid
invoices.
2. Under-Reported Production Outputs
Similarly, FRI admits, and the undisputed evidence
shows, that Plaintiff is also entitled to judgment as a matter
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of law for the breach of contract claim in the amount of
$284,111.81 for under-reported production outputs.
Specifically, “Front Rowe admits that it owes HeiTech the
amounts stated in paragraph 40 [of the Complaint].”
40.)
(Answer ¶
In other words, FRI admits that “[a]s a result of FRI’s
failure to accurately report Subcontract production outputs,
HeiTech has incurred damages in the amount of $284,111.81, which
is properly owed to HeiTech under the Subcontract based on
actual production output.”
(Compl. [Dkt. 1] ¶ 40.)
evidence also supports this claim.
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(See Pl.’s Mem. Exs. 6-30,
99; see also Ex. 4 (conceding that FRI owed Plaintiff 49% of the
total production output billed to the DOL).)
Accordingly,
Plaintiff is entitled to judgment as a matter of law on this
claim in the amount of $284,111.81.
3. Lost Revenue Expectancy
After terminating the Subcontract on March 31, 2014,
FRI was still paid $112,933.16 by DOL for the months of April
and May of 2014.
(Pl.’s Mem. Exs. 5, 99.)
Plaintiff claims
that as a matter of law, but for FRI’s material breach,
Plaintiff would have continued to earn revenue under the
Subcontract; specifically 49% of the total revenue, or
$55,337.25.
(Id. at 17.)
Plaintiff is also entitled to this
revenue expectancy that was foreclosed by FRI’s material breach
and misrepresentation.
See, e.g., LaVay Corp. v. Dominion Fed.
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Sav. & Loan Ass’n, 830 F.2d 522, 529 (4th Cir. 1987) (“Lost
profits are, of course, generally available to a plaintiff as
damages in the successful prosecution of a claim for breach of
contract.”).
Accordingly, Plaintiff is entitled to judgment as
a matter of law on this claim in the amount of $55,337.20.
In sum, Plaintiff is entitled to judgment as a matter
of law in the amount of $505,758.63 on the breach of contract
claim for the reasons stated above.
The Court will enter
judgment in Plaintiff’s favor on this claim.
B. Fraud
Second, Plaintiff claims it is entitled to judgment as
a matter of law on its fraud claim.
In Virginia, the elements
of common law fraud are: “[A] false representation of a material
fact; made intentionally, in the case of actual fraud, or
negligently, in the case of constructive fraud; reliance on that
false representation to [Plaintiff’s] detriment; and resulting
damage.”
Anthony v. Verizon Virginia, Inc., 758 S.E.2d 527, 534
(Va. 2014).
The defrauded party’s reliance on the
misrepresentation must have been reasonable.
Id. (citation
omitted).
Here, Plaintiff again asks for monetary damages for
FRI’s failure to pay invoices and for FRI’s under-reporting of
production output numbers, just as it did for its breach of
contract claim, this time under a theory of fraud.
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(Pl.’s Mem.
at 18-26.)
“[I]t goes without saying that the courts can and
should preclude double recovery.”
Equal Emp’t Opportunity
Comm’n v. Waffle House, 534 U.S. 279, 297 (2002) (citation
omitted).
It is also well settled in this circuit that although
Plaintiff may plead multiple claims for money damages based on,
for instance, fraud and breach of contract, Plaintiff may only
ultimately succeed on one basis.
See X-It Prods., LLC v. Walter
Kidde Portable Equipment, Inc., 227 F. Supp. 2d 494, 524 (E.D.
Va. 2002) (“Federal law also prohibits multiple recovery for one
cause of action or set of injuries.”) (citing cases); see also
Winant v. Bostic, 5 F.3d 767, 775 (4th Cir. 1993).
Accordingly, because the Court has found that
Plaintiff is entitled to judgment as a matter of law on the
breach of contract claim as discussed above, it is not entitled
to double recovery for the same harm under a theory of fraud.
Thus, the Court will deny Plaintiff’s motion as to this claim.
C. Piercing the Corporate Veil
Lastly, Plaintiff asks the Court to pierce the
corporate veil of FRI and hold Karen Rowe and Atron Rowe
personally liable for the breach of contract judgment entered
against FRI.
(Pl.’s Mem. at 26-29.)
However, as of December 9,
2014, this matter is stayed against the individual Defendants,
Karen Rowe and Atron Rowe, who have filed for bankruptcy.
Therefore, because the Court cannot take action against
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defendants for which the instant litigation has been stayed, the
Court need not address this issue and defers such a ruling.
V. Conclusion
For the foregoing reasons, the Court will grant
Plaintiff’s motion for summary judgment and enter judgment in
its favor on the breach of contract claim in the amount of
$505,758.63 against FRI.
An appropriate Order will issue.
December 19, 2014
Alexandria, Virginia
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
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