Mastaba Inc v. Lamb Weston Sales Inc et al

Filing 63

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT LAMB WESTONS MOTION FOR PARTIAL SUMMARY JUDGMENT; GRANTING PLAINTIFF MASTABAS MOTION FOR PARTIAL SUMMARY JUDGMENT; AND GRANTING PLAINTIFF MASTABAS MOTION FOR RELIEF FROM LIMITATION ON DISCOVERY. La mb Westons Motion for Partial Summary Judgment ECF No. 32 is GRANTED IN PART and DENIED IN PART. Mastabas Motion for Partial Summary Judgment ECF No. 39 is GRANTED. Mastabas Motion from Limitation on Requests for Production ECF No. 37 is GRANTED. Signed by Senior Judge Edward F. Shea. (LLH, Courtroom Deputy)

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1 2 3 4 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 5 6 7 MASTABA, INC, a Philippine corporation, CASE NO. CV-13-5049-EFS 8 Plaintiff, 9 v. 10 11 12 13 14 15 16 LAMB WESTON SALES, INC., a Delaware corporation; LAMBWESTON, INC., a Delaware corporation; CONAGRA FOODS, INC., a Delaware corporation; CONAGRA FOODS LAMB WESTON, INC., a Delaware corporation; MICHAEL L. NEAL, individually and as to his marital community, and KENNETH SOH, individually and as to his marital community, ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT LAMB WESTON’S MOTION FOR PARTIAL SUMMARY JUDGMENT; GRANTING PLAINTIFF MASTABA’S MOTION FOR PARTIAL SUMMARY JUDGMENT; AND GRANTING PLAINTIFF MASTABA’S MOTION FOR RELIEF FROM LIMITATION ON DISCOVERY 17 Defendants. 18 A hearing occurred in the above-captioned matter on May 13, 19 20 2014. Plaintiff Mastaba, Inc. was represented by Kyle Silk-Eglit. 21 Gerald Kobluk appeared on behalf of Defendants Lamb West Sales, Inc., 22 Lamb-West, Inc., ConAgra Foods Lamb Weston, Inc., Michael Neal, and 23 Kennth Soh (collectively, “Lamb Weston”). 24 Weston’s Motion for Partial Summary Judgment, ECF No. 32. 25 the 26 Summary Judgment, ECF No. 39, and Mastaba’s Motion from Limitation on Court ORDER - 1 without oral argument was Before the Court was Lamb Mastaba’s Motion Also before for Partial 1 Requests for Production, ECF No. 37. 2 relevant authority and listening to the arguments of counsel, the 3 Court was fully informed. 4 denies 5 Mastaba’s motion for summary judgment, and grants Mastaba’s Motion 6 from Limitation on Requests for Production. in part and After reviewing the record and For reasons set forth below, the Court grants in part Lamb Weston’s motion, grants I. Factual Background1 7 Mastaba 8 handles the sale of frozen potato products in the 9 Philippines. Lamb Weston produces potato products for sale worldwide. 10 Between 1998 and 2012, Mastaba and Lamb Weston entered into letter 11 agreements, each with a one-year term, from January 1 to December 31 12 of each year.2 13 Mastaba’s sole supplier of potato products and paid Mastaba a fee per 14 net pound of French fry sales. Under the one-year service agreements, Lamb Weston was 15 1 Undisputed facts are not cited to the record. When considering 16 the summary judgment motions and drafting this background section, 17 the Court 1) took as true all undisputed facts; 2) viewed all 18 evidence and drew all justifiable inferences therefrom in nonmoving party’s favor; 3) did not weigh the evidence or assess 19 credibility; and 4) did not accept assertions made that were 20 flatly contradicted by the record. 21 372, 380 (2007); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, See Scott v. Harris, 550 U.S. 255 (1986). 22 2 The parties propose different descriptive names for the 23 letter 24 agreement” while Mastaba a “Sales Representation Contract.” agreement. Lamb Weston refers to it as a 2011 “service For purposes of this order, it will be called a service agreement, 25 although the name has no effect on this Court’s analysis. 26 ORDER - 2 Beginning 1 in 2011, Mastaba and Lamb Weston entered into 2 discussions regarding their business relationship. 3 2011, Lamb Weston sent two employees to the Philippines, new Director 4 of 5 Kenneth Soh to meet with Mastaba. 6 meeting 7 investments, including a “test kitchen,” hiring of additional sales 8 staff, and creating a succession plan. 9 contends that Patrick Johnson, Mastaba’s General Manager, expressed 10 concern over the price of the test kitchen, and informed Lamb Weston 11 that in order to make such an investment, it would need a long-term 12 contract. 13 responded that Mastaba’s “long term position as Lamb Weston’s broker 14 is secure” and if Mastaba made the investments, he “would get Mastaba 15 a long term contract.” Sales and Lamb Businesses Weston Development Michael On February 18, Neal and Sales Agent Mastaba alleges that at this encouraged Mastaba to commence ECF No. 49 ¶ 10. capital Mastaba Id. ¶ 17. According to Mr. Johnson’s declaration, Mr. Neal Id. ¶ 19. Mastaba proceeded to undertake the capital investments, building 16 17 a test kitchen over the course of 2011. 18 Lamb 19 construction. 20 in 21 professional looking kitchen.” 22 directed 23 florescent lights. 24 Soh the reason for the purchase of such an expensive model for a 25 fryer, and Mr. Soh replied because “it is a long term investment.” 26 ECF No. 49 ¶ 8. In addition to other specific requests, Lamb Weston Weston an e-mail ORDER - 3 oversaw much of the ECF No. 49 ¶¶ 22-30. to Mastaba Mr. to Johnson, buy Id. a ECF No. 33 ¶ 8; ECF No. 42. test kitchen’s planning and On February 28, 2011, Mr. Neal, instructed Mastaba ECF No. 49, Ex. A. commercial 50lb fryer to “build a Mr. Neal then and daylight In response, Mr. Johnson inquired from Mr. 1 requested Mastaba send weekly reports informing Lamb Weston of details 2 on the test kitchen’s progress. Id., Ex. F. 3 e-mail exchange relating to the test kitchen between Mr. Johnson and 4 he to Mr. Neal and Mr. Howe writing, “not bad, he is working fast 5 now…” Mr. Soh also forwarded an Id. In an e-mail written on June 5, 2011, Mr. Neal congratulated 6 7 Mastaba on its good work, ending with “we look forward to your 8 continued support for the year of 2011/2012 & many more years…” ECF 9 No. 49, Ex. P. 10 On September 7, 2011, as a result of the completion of the test 11 kitchen, Mr. Johnson sent Mr. Neal a letter regarding the long-term 12 contract as one for a term of five years. 13 49, 14 “accurately states the current state of affairs.” 15 However, Mr. Neal indicated to Mr. Johnson that he may not possess the 16 authority to enter into a 5-year agreement, stating “I do not know if 17 we can do a 5-year agreement? 18 its brokers/agents?” 19 the first time it had heard Mr. Neal lacked such authority. 20 49 ¶ 71. Ex. R. Mr. Neal responded in ECF No. 51 ¶ 17; ECF No. agreement, saying the letter ECF No. 49, Ex. S. Don’t think ConAgra allows such with ECF No. 49, Ex. S. Mastaba contends this was ECF No. In November 2011, Lamb Weston offered three iterations of a 21 22 limited term service agreement. Mastaba contends these new agreements 23 had Mastaba 24 agreements. 25 2.1% to 1% and deprived Mastaba of commission on post termination 26 sales. less favorable Id. ORDER - 4 terms for than the previous service Id. ¶ 56. The proposed agreements reduced commission from One agreement would also have allowed termination without 1 cause after sixty days. 2 agreements would have made its business unprofitable. 3 9. 4 On April 25, 2013, ECF No. 49, Ex. T. Mastaba filed this Mastaba contends these ECF No. 51 ¶ lawsuit. It asserts 5 claims of breach of contract, promissory estoppel, quantum meruit, 6 unjust enrichment, negligent misrepresentation, and fraud. ECF No. 1. 7 Lamb Weston filed a motion for partial summary judgment, ECF No. 8 32, on March 10, 2014. Mastaba filed a motion for partial summary 9 judgment, ECF No. 49, on March 17, 2014, and a Motion from Limitation 10 on Requests for Production on March 12, 2014. II. 11 Summary Judgment Standard 12 Summary judgment is appropriate if the record establishes "no 13 genuine dispute as to any material fact and the movant is entitled to 14 judgment as a matter of law.” 15 opposing summary judgment must point to specific facts establishing a 16 genuine dispute of material fact for trial. 17 477 U.S. 317, 324 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio 18 Corp., 475 U.S. 574, 586-87 (1986). 19 make such a showing for any of the elements essential to its claim for 20 which it bears the burden of proof, the trial court should grant the 21 summary judgment motion. III. 22 Fed. R. Civ. P. 56(a). The party Celotex Corp. v. Catrett, If the non-moving party fails to Celotex Corp., 477 U.S. at 322. Lamb Weston’s Motion for Summary Judgment 23 Lamb Weston requests partial summary judgment for dismissal of 24 Mastaba’s claims for damages related to a) an unwritten long-term 25 contract, b) future sales or services beyond 2011 service agreement, 26 ORDER - 5 1 and c) Mastaba’s 2011 operating expenses and capital investments. 2 No. 32. 3 A. Damages Relating to Unwritten Long-Term Contract At 4 ECF the heart of Lamb Weston’s motion for partial summary 5 judgment is whether there is sufficient evidence that Lamb Weston 6 informed Mastaba it would enter into a long-term contract in exchange 7 for 8 investments. 9 during this discussion. Mastaba building a test kitchen and making other capital Mastaba’s claims rely on occurrence of this commitment ECF No. 1. Lamb Weston requests summary 10 judgment on any damages relating to this discussion, asserting there 11 is no evidence of any such promise or agreement being made and that 12 any discussions were merely mutual expressions of an expectation of a 13 long-term business relationship. In addition to Mr. Johnson’s declaration detailing multiple oral 14 of a promise,3 the existence of such a promise or 15 conversations 16 agreement is supported by e-mails between Mastaba and Lamb Weston. 17 For example, e-mails from Mr. Soh and Mr. Neal indicate that Lamb 18 Weston took a hands-on approach to the test kitchen’s development, 19 directing Mastaba to take specific actions for its construction and 20 providing consistent input over meticulous details. ECF No. 49, Ex. A- 21 F. Further, Mastaba spent a year’s worth of gross revenue to construct 22 the test kitchen. ECF No. 48 ¶ 9. Mastaba’s performance based on the 23 24 3 Lamb Weston argues that this evidence is inadmissible hearsay. However, this statement qualifies 25 admission. 26 ORDER - 6 Fed. R. Evid. 801(d)(2). as a statement of party 1 alleged discussions is evidence of such an agreement, as is Lamb 2 Weston’s awareness and approval that such a significant investment was 3 being made. 4 The Court now turns to Lamb Weston’s affirmative defenses and 5 Mastaba’s claims relating to the promise or agreement for a long-term 6 contract which will be analyzed separately. 7 1. 8 Lamb Weston contends that enforcement of the promise for a long- 9 Statute of Frauds term contract would violate the statute of frauds. 10 The statute of frauds is governed by RCW 19.36.010: 11 In the following cases, specified in this section, any agreement, contract, and promise shall be void, unless such agreement, contract, or promise, or some note or memorandum thereof, be in writing, and signed by the party to be charged therewith, or by some person thereunto by him or her lawfully authorized, that is to say: (1) Every agreement that by its terms is not to be performed in one year from the making thereof. 12 13 14 15 RCW 19.36.010 16 The Washington Supreme Court addressed similar facts in Klinke 17 v. Famous Recipe Fried Chicken, Inc., 94 Wn.2d 255 (1980). Klinke 18 brought action against Famous for breach of an oral contract that 19 Famous would register and issue a franchise agreement to Klinke. Id. 20 at 257. Famous raised the statute of frauds as a defense. Id. at 258. 21 Klinke countered by pleading promissory estoppel. Id. The Washington 22 Supreme Court ruled, “a party who promises, implicitly or explicitly, 23 to make a memorandum of a contract in order to satisfy the statute of 24 frauds, and then breaks that promise, is estopped to interpose the 25 statute as a defense to the enforcement of the contract by another who 26 ORDER - 7 1 relied on it to his detriment.” 2 85 Wn.2d 602 (1975)). 3 Id. (citing In re Estate of Nelson, (E.D. Wash. 2013). See also BKWSpokane v. FDIC, 12-CV—521-TOR 4 As discussed, there is a genuine issue of material fact as to 5 whether Lamb Weston broke an oral contract or promise to enter into a 6 five-year written contract. 7 Mastaba, Lamb Weston would be estopped from asserting the statute of 8 frauds as a defense to the oral contract under Klinke. 9 indicated by the parties’ prior dealings, such a contract would have entered into within If that question is resolved in favor of the year, which would Further, as 10 been have fulfilled 11 performance of the parties’ alleged agreement within the year. ECF No. 12 40, Exs. F-I. 13 this regard. 14 2. 15 Mastaba asserts a claim for promissory estoppel on the basis of Lamb Weston’s motion for summary judgment is denied in Promissory Estoppel 16 the alleged promise for a long-term contract. 17 summary judgment in its favor on this claim. 18 To obtain recovery in promissory Lamb Weston seeks estoppel, Mastaba must 19 establish “(1) a promise which (2) the promisor should reasonably 20 expect to cause the promisee to change his position and (3) which does 21 cause the promisee to change his position (4) justifiably relying upon 22 the promise, in such a manner that (5) injustice can be avoided only 23 by enforcement of the promise.” Corbit v. J. I. Case Co., 70 Wn.2d 24 522, 538 (1967) (citation omitted). 25 intention to act or refrain from acting in a specified way, so made as 26 ORDER - 8 A promise is “a manifestation of 1 to justify a promisee in understanding that a commitment has been 2 made.” Havens v. C & D Plastics, 124 Wn.2d 158, 172 (1994). Lamb 3 Weston argues that its alleged statements do not 4 constitute a clear and defined promise sufficient for a promissory 5 estoppel claim, but were merely confirming the expectation of a long- 6 term, mutually satisfactory relationship. 7 cites to Havens v. C & D Plastics, 124 Wn.2d 158 (1994). 8 fired 9 alleging that the employer made a number of statements that amounted 10 to a promise that the plaintiff could only be fired for just cause. 11 Id. The Washington Supreme Court found no promise on the basis that 12 the statements were typical of those made in the job application and 13 hiring process. 14 situations naturally want a “long term relationship” of employment. 15 Id. 16 employee brought suit Id. at 174. on a claim In support, Lamb Weston of In Havens, a promissory estoppel, The court reasoned that parties in such Lamb Weston’s reliance on Havens is misplaced. The Washington 17 Supreme Court specifically qualified, “where the terminable at will 18 doctrine is concerned, the promise for promissory estoppel must be a 19 ‘clear and definite promise.’” Id. (emphasis added). 20 not involve an employment relationship. 21 relating to construction of a test kitchen is not a “typical” exchange 22 between business associates; rather, it was specific to each party’s 23 unique circumstances and required significant detriment on behalf of 24 Mastaba equaling a year’s worth of Mastaba’s revenue. This matter does Further, the interaction ECF No. 48 ¶ 9. 25 Mastaba in turn cites to Hellbaum v. Burwell & Morford, 1 Wn. 26 App. 694 (1969). In Hellbaum, the Washington appeals court held “the ORDER - 9 1 doctrine of promissory estoppel has been applied to render enforceable 2 a gratuitous or somewhat indefinite promise to obtain insurance.” Id. 3 This Court accepts that, if proven, a promise for a long-term 4 contract in exchange for specific capital investments is definitive 5 enough to support a promissory estoppel claim. 6 contends that but for this promise, the capital investments would not 7 have been undertaken, 8 justifiable on account of the respective parties’ long-term business 9 relationship and Lamb Further, if as Mastaba ECF No. 49 ¶¶ 8-20, then this reliance could be Weston’s oversight of the construction and 10 planning of the test kitchen. ECF No. 49 Exs. A-F. 11 there is a factual dispute as to each of the first four elements of a 12 promissory estoppel claim as well as the fifth and final element: 13 whether injustice can be avoided without enforcing the promise. 14 Weston’s motion for summary judgment is denied in this regard. 3. 15 The Court finds Lamb Mastaba’s Claim for Fraud Pursuant to Promise of Long-Term Contract4 16 Mastaba additionally seeks damages for fraud on the basis that 17 18 Lamb 19 Mastaba that it would be its long-term sales representative. knowingly communicated false, material information to To recover for fraud, the following elements must be proved by 20 21 Weston clear, cogent, and convincing evidence: 22 23 24 4 Although Mastaba’s arguments for fraud are primarily addressed in this section, they may also be relevant to Lamb Weston’s defense 25 under the Independent Duty Doctrine in Section B. 26 ORDER - 10 (1) a representation of an existing fact; (2) its materiality; (3) its falsity; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted on by the person to whom it is made; (6) ignorance of its falsity on the part of the person to whom it is made; (7) the latter's reliance on the truth of the representation; (8) his right to rely upon it; [and] (9) his consequent damage. 1 2 3 4 5 Markov v. ABC Transfer & Storage Co., 76 Wn.2d 388, 394 (1969). 6 Lamb Weston cites to Shook v. Scott, 56 Wn.2d 351 (1960), to 7 support its argument that the alleged assurance of a long-term 8 relationship was not a representation prediction. ECF No. 32. of existing fact but a 9 In Shook, the Washington Supreme Court 10 stated that predictions, without an express or implied undertaking to 11 make them come true, do not constitute such representations or 12 promises as will support actionable fraud. 76 Wn.2d at 362-63. 13 The Washington Supreme Court in Markov stated two theories in 14 which the rule that mere predictions do not necessarily constitute 15 representations is inapplicable. Markov, 76 Wn.2d at 396. The first, 16 “if a promise is made for the purpose of deceiving and with no 17 intention to perform, it constitutes such fraud as will support an 18 action for deceit.” Id. Additionally, “if the promise is made 19 without care or concern whether it will be kept, and the promisor 20 knows or under the circumstances should know that the promisee will be 21 induced to act or refrain from acting to his detriment, the promise 22 will likewise support an action by the promisee.” Id. 23 Disputed evidence indicates that Lamb Weston was seeking direct 24 solicitation with Philippine purchasers while simultaneously directing 25 26 ORDER - 11 1 and overseeing Mastaba’s construction of the test kitchen.5 Further, 2 despite Mr. Neal informing Mastaba he would “look into” a five-year 3 contract, Mr. Neal did not ask for a long-term agreement from another 4 Lamb Weston employee, but only a standard broker agreement. ECF No. 51 5 ¶ 17; & ECF No. 51 Ex. X. 6 Alternatively, evidence additionally supports that Mr. Neal made 7 a promise that induced Mastaba to take actions to Mastaba’s detriment 8 without care for whether it was kept. 9 promise of a long-term contract, Mr. Despite Mr. Neal’s alleged Neal may not have had the 10 authority to enter into such a contract. ECF No. 51 ¶ 1 & ECF No. 49 ¶ 11 55. 12 Mr. Neal revealed this lack of authority. 13 Neal had worked closely with Mastaba on the construction of the test 14 kitchen. Mr. Johnson contends that it wasn’t until September 9, 2011, that Id. This was after Mr. Id. 15 Thus, this Court finds sufficient evidence to present a genuine 16 issue of material fact as to whether Lamb Weston committed fraud. 17 Accordingly, Lamb Weston’s motion for summary judgment is denied in 18 this regard. 19 20 21 5 During long-term contract negotiations, Mr. Neal wrote in an email to Mastaba “our intent is to directly service accounts that 22 request it but we can deal with this on an annual basis each year 23 as we work to renew for the upcoming year.” 24 Mastaba additionally alleges Lamb Weston had engaged directly with ECF No. 51, Ex. W. Philippine purchaser “PTC” to avoid paying commission to Mastaba. 25 ECF No. 51 ¶ 13. 26 ORDER - 12 1 4. Obligation to Negotiate in Good Faith 2 Lamb Weston contends that Mastaba’s assertion of an alleged oral 3 promise that Lamb Weston would “enter into a written, long-term sales 4 representation contract,” even if assumed for arguendo purposes, is an 5 agreement to agree which is unenforceable in Washington. 6 Both Mastaba and Lamb Weston cite heavily to Keystone Land & 7 Development v. Xerox Corp. 152 Wn.2d 171 (2004), in support of their 8 positions. In Keystone, the Washington Supreme Court distinguished 9 between unenforceable an to agree and an enforceable 10 contract to negotiate. 11 formed, 12 contractual obligation to negotiate further agreements in good faith.” 13 Id. at 174. Forming a contract to negotiate requires mutual assent to 14 be bound with sufficiently definite terms supported by consideration. 15 Id. at 178. 16 for the fact finder. Washington Id. agreement courts In the latter, “when a contract has been have recognized that there can be a Mutual assent to be bound is typically a question of fact Id. 17 As discussed, whether the parties had reached the required terms 18 to form a contract to negotiate in good faith remains a question of 19 fact. 20 to arrange for this long-term contract would constitute a breach to 21 negotiate the further terms in good faith. 22 X. 23 contract to negotiate in good faith as a matter of law is denied. 24 /// 25 // 26 / Moreover, the evidence that indicates Mr. Neal never attempted ECF No. 51 ¶ 17-20 & Ex. Lamb Weston’s motion to dismiss Mastaba’s claim for a breach of a ORDER - 13 1 B. Mastaba’s Claims Relating to its 2011 Expenses and Capital 2 Investments and Future Sales or Services Beyond 2011 Service 3 Agreement 4 Lamb Weston argues that summary judgment dismissal of Mastaba’s 5 claims for damages relating to its 2011 capital investments and future 6 sales 7 expressly controls the disputes. First, Lamb Weston argues that the 8 2011 agreement terminated by its own terms on December 31, 2011, which 9 precludes any damages for future sales.6 or services is proper because the 2011 service agreement Next, Lamb Weston points to 10 the following portions of the 2011 service agreement which it contends 11 explicitly resolve Mastaba’s claims for damages relating to capital 12 investments and operating expenses: [Mastaba] shall also be responsible and liable for any and all expenses incurred by [Mastaba] while performing the Services. Extraordinary expenses (such as sales shows, meetings outside the Philippines and customers’ factory visits) that are pre-approved by me in writing and in advance will be reimbursed by LW. 13 14 15 16 ECF No. 1, Ex. A. 17 [t]his Agreement represents the entire agreement between LW and [Mastaba] and also supersedes all prior negotiations, representations or agreements, either written or oral. 18 19 Id. 20 21 22 6 23 The 2011 service agreement states in pertinent part, “effective as of January 24 25 1, 2011, and shall terminate on December 31, 2011 unless extended by a written agreement signed by both parties at least ninety (90) days before the termination.” ECF No. 1, Ex. A. 26 ORDER - 14 However, Mastaba argues it has claims that would warrant damages 1 2 arising independently of this 2011 service agreement that create a 3 question of fact. 4 parties created a separate implied in fact contract to which the 2011 5 service agreement’s terms would be inapplicable. 6 1. 7 Mastaba Further, Mastaba alleges that dealings between the Negligent Misrepresentation Independent of Contract makes a claim for negligent misrepresentation 8 independent of the 2011 service agreement relating to damages incurred 9 from its capital investments. ECF No. 1 ¶¶ 90-93. Lamb Weston seeks 10 dismissal of this claim on the basis of the independent duty doctrine. 11 The independent duty doctrine was formerly called the “economic 12 loss rule.” Elcon Const., Inc. v. E. Wash. Univ., 174 Wn.2d 157, 165 13 (2012). 14 where a contractual relationship exists and the losses are economic 15 losses. If the economic loss rule applies, the party will be held to 16 contract remedies, regardless of how the plaintiff characterizes the 17 claims.” Alejandre v. Bull, 159 Wn.2d 674, 683 (2007). The Washington 18 Supreme 19 “misnomer” and 20 doctrine.” Jackowski 21 present test is “whether the injury is traceable also to a breach of a 22 tort 23 Eastwood v. Horse Harbor, 170 Wn.2d at 380, 393 (2010). This rule barred “recovery for alleged breach of tort duties Court law duty has has of recently adopted v. care pronounced in its Borchelt, arising the stead 174 economic the Wn.2d rule “independent 720, independently loss 729 of the (2012). a duty The contract.” 24 The Washington Supreme Court stated “in Eastwood we directed 25 lower courts not to apply the [independent duty] doctrine to [bar] 26 tort remedies ORDER - 15 ‘unless and until this court has, based upon 1 considerations of common sense, justice, policy and precedent, decided 2 otherwise.’” Elcon Const., Inc., 174 Wn.2d at 157, (quoting Eastwood, 3 170 4 Engineers, Inc., 179 Wn.2d 84, 95 (2013) (Washington Supreme Court 5 held a “duty to avoid misrepresentations that induce a party to enter 6 into a contract arises independently of the contract.”). Wn.2d at 417). See also Donatelli v. D.R. Strong Consulting 7 Based on the foregoing authority, this Court finds Mastaba’s 8 claim of a duty not to engage in negligent misrepresentation arises 9 independently of the 2011 service agreement. The prior discussion 10 relating to fraud also applies here to the extent that a claim for 11 fraud may arise independent of a contract. 12 Industries, Inc., 127 Wn. App. 13 (2005) (holding that a plaintiff is 13 able to base a claim on negligent misrepresentation when a promise is 14 made with no intention of performing). See Flower v. T.R.A. 15 Although Lamb Weston did not address the merits of Mastaba’s 16 negligent misrepresentation claim in its initial motion for summary 17 judgment, Mastaba contends that Lamb Weston has liability because Mr. 18 Neal 19 engagement with Mastaba. 20 summary 21 misrepresentation is denied. lacked the judgment authority to commit Lamb ECF No. 44. dismissal of Weston to a long term Lamb Weston’s motion for Mastaba’s claim for negligent 22 2. 23 Mastaba seeks damages on claims of quantum meruit and unjust 24 enrichment. While Washington courts historically used quantum meruit 25 and unjust enrichment synonymously, the Washington Supreme Court has 26 recently clarified that they are legally distinct, with “distinct ORDER - 16 Mastaba’s Quantum Meruit and Unjust Enrichment Claims 1 approaches founded on discrete legal theories.” 2 Wn.2d 477, 483 (2008). 3 purposes of this motion. 4 a. Young v. Young, 164 These claims will be addressed separately for Unjust Enrichment 5 Mastaba claims it is entitled to unjust enrichment because it 6 conferred a benefit to Lamb Weston by 1) negotiating sales and sales 7 contracts on its behalf, and 2) establishing the Philippine frozen 8 potato market which Lamb Weston took advantage of by engaging in 9 direct sales to Philippine purchasers. ECF No.1 ¶¶ 83-85. 10 Unjust enrichment is the method of recovery for the value of the 11 benefit retained absent any contractual relationship because notions 12 of fairness and justice require it. 13 elements that must be proven by the plaintiff are 1) the defendant 14 receives a benefit, 2) the received benefit is at the plaintiff’s 15 expense, and 3) the circumstances make it unjust for the defendant to 16 retain the benefit without payment. 17 Lamb Weston contends that Young, 164 Wn.2d at 484. The Id. unjust enrichment does not apply 18 because the 2011 service agreement covers the dispute. Specifically, 19 Mastaba was to provide “certain services during the term of this 20 Agreement 21 forecasting and order coordination in the Philippines, as reasonably 22 requested and defined by [Lamb Weston].” 23 provisions existed in the one-year service agreements between Lamb 24 Weston and Mastaba from 1998-2010. 25 26 in Because the field Mastaba and of frozen Lamb potato sales and marketing, ECF No. 1, Ex. A. Similar ECF No. 34, Ex. 1A-1M. Weston were in a contractual relationship relating to Mastaba selling Lamb Weston potato products ORDER - 17 1 in the Philippines from 1998-2011, Mastaba may not make an unjust 2 enrichment claim relating to “establishing the potato market.” 3 Chandler v. Wash. Toll Bridge Auth., 17 Wn.2d 591, 604 (1943) (finding 4 no contract implied in law because it related to an expressed contract 5 plaintiff was operating under when performing services to which he 6 based 7 necessarily done pursuant to Mastaba’s service agreements with Lamb 8 Weston for which Mastaba received payment. 9 have unjust an enrichment unjust claim). enrichment claim Establishing for the See market was Finally, Mastaba does not “negotiating sales and sales 10 contracts” due to this Court’s decision holding Lamb Weston liable to 11 pay commission for sales negotiated under the 2011 service agreement. 12 Accordingly, 13 requesting dismissal of Mastaba’s unjust enrichment claims is granted. Lamb b. 14 Weston’s motion for partial summary judgment Quantum Meruit 15 Mastaba requests quantum meruit because Lamb Weston requested 16 Mastaba make capital investments, Mastaba expected payment or exchange 17 of 18 investments.7 19 claim. value in return, and Lamb Weston failed to pay for said Lamb Weston seeks summary judgment in its favor on this 20 21 22 23 7 Mastaba makes an 25 quantum meruit claim on the basis of negotiating sales and sales contracts on Lamb-Weston’s behalf for which it failed to make 24 additional payment. ECF No. 1 ¶¶ 73-77. This claim is not considered in light of this Court’s decision holding Lamb Weston liable for payment of commission relating to sales made pursuant to the 2011 service agreement. 26 ORDER - 18 1 Quantum meruit is the method of recovering the reasonable value 2 of services provided under a contract implied in fact. Young, 164 3 Wn.2d at 485. 4 defendant requests work, 2) the plaintiff expects payment for the 5 work, and 3) the defendant knows or should know the plaintiff expects 6 payment for the work. Lamb 7 The elements of an implied in fact contract are 1) the Weston which Id. at 486. contends cannot be the 2011 negated by service a agreement contract covers implied in the 8 dispute fact. 9 However, “the conduct of one or more parties to an express contract 10 may be such that performance is removed from the confines of the 11 express contract.” Pierce County v. State, 144 Wn. App. 783, 830 12 (2008). See also Modern Builders, Inc. of Tacoma v. Manke, 27 Wn. App. 13 86 (1980) (allowing quantum meruit claim when parties’ conduct was 14 removed from express contract). The 2011 service agreement has no mention of a test kitchen. 15 16 ECF No. 1, Ex. A. 17 such a significant investment in its years of prior dealings. 18 51. 19 relating to Mastaba’s services being within its “sole control and 20 discretion,” ECF No. 1, Ex. A, Lamb Weston was heavily involved in the 21 process 22 kitchen. 23 Lamb Weston detailing Lamb Weston’s directions on what to order, and 24 requesting weekly updates). 25 26 Mastaba alleges Lamb Weston never before requested ECF No. Further, despite the provision in the 2011 service agreement of overseeing and directing the construction of the test ECF No. 49, Exs. A-F (e-mail exchanges between Mastaba and There is sufficient evidence that the parties deviated from their 2011 service agreement in the construction of the test kitchen, ORDER - 19 1 creating a factual dispute as to whether an implied in fact contract 2 existed. See Kilthau v. Covelli, 17 Wn. App. 460, (1977) (holding that 3 an existence of an implied contract is a question for the trier of 4 fact). 5 meruit claims is denied in this regard. 6 C. Lamb Weston’s request for dismissal of Mastaba’s quantum Conclusion In light of the foregoing analysis, Lamb Weston’s motion for 7 8 partial summary judgment is denied in part and granted in part. 9 are genuine issues of fact relating to whether Lamb There Weston gave 10 assurances that a long-term contract would be given to Mastaba in 11 exchange for capital investments. 12 agreement would support damages arising from claims for breach of 13 contract, promissory estoppel, and fraud. 14 The existence of this promise or Further, Mastaba has established a genuine issue of fact as to 15 whether the parties 16 allegedly requesting and then overseeing the construction of a test 17 kitchen, which creates a question of fact for a quantum meruit claim. 18 However, Mastaba’s unjust enrichment claim seeks recovery based on 19 establishing the potato market, which is not distinct from Mastaba’s 20 duties under applicable contracts, and is therefore dismissed as a 21 matter of law. IV. 22 23 Mastaba from the 2011 service agreement by Mastaba’s Motion for Summary Judgment requests amounts partial owed summary under the judgment 2011 on service the issue agreement. of 24 liability 25 parties disagree as to the particular sales for which Lamb Weston must 26 pay fees to Mastaba under this agremeent. ORDER - 20 for deviated The 1 2 A. Background The 2011 6 Services: [Mastaba] will perform services during the term of this Agreement in the field of frozen potato sales and marketing, forecasting and order coordination in the Philippines, as reasonably requested and defined by myself, or my designee (“Services”). Fees: As full payment for the performance of [Mastaba’s] Services and the other agreements made herein, [Lamb Weston] will pay Mastaba a fee equal to 2.1%, per net pound of ALL non-McDonald’s LW French fry sales delivered to the Philippines, upon receipt of invoice. For example, the fee will be paid to [Mastaba] for sales to Jollibee, Leysam, Multi M, or other distributers developed by Mastaba. 13 The 2011 from sales fees. The applicable portions of the 2011 service agreement are: 12 2011. were 5 11 31, dates agreement did not specifically address payment of post-termination 10 December term 4 9 through effective January 8 2011, agreement’s 3 7 1, service service ECF No. 40, Ex. A. 14 Mastaba, on behalf of Lamb Weston, negotiated sales contracts 15 with IFFSI, QSR, and Jollibee foods in 2011 for the sale of Lamb 16 Weston frozen potato products. 17 October 6, 2011, for the sale of Lamb Weston products from November 1, 18 2011, through December 31, 2012. 19 this period were made pursuant to the contract. A contract was entered with IFFSI on All sales by Lamb-Weston to IFFSI in 20 Mastaba, on behalf of Lamb Weston, negotiated a sales contract 21 on October 11, 2011, for sale of Lamb Weston frozen potato products to 22 QSR from November 1, 2011, through October 31, 2012. 23 2012, Lamb Weston made sales pursuant to the QSR contract in excess of 24 $3,281,8320.80. In 2011 and 25 Lamb Weston paid Mastaba for a limited number of sales made 26 pursuant to the QSR and IFFSI contracts that were ordered in 2011 and ORDER - 21 1 2012 and delivered to the Philippines in early 2012. Lamb Weston has 2 not paid Mastaba for all other sales made pursuant to these contracts 3 that were ordered and delivered in 2012. The Jollibee contract was executed in December 2011 and covered 4 5 all 6 contract in excess of $3,613,116. 7 limited number of sales made pursuant to the Jollibee sales contract 8 that were ordered in 2011 and 2012 and delivered in 2012. 9 has not paid for all other sales pursuant to this sales contract that 10 sales in 2012, and Lamb Weston made sales pursuant to this Lamb Weston paid Mastaba for a Lamb Weston were ordered and delivered in 2012. 11 Mastaba negotiated a sale of Lamb Weston “mini crisscut French 12 fries” to Jollibee to be shipped in 2012. Lamb Weston completed sale 13 and shipment as provided by Mastaba’s negotiation, but has not paid 14 fees to Mastaba. 15 B. Authority and Analysis 16 Mastaba argues that it is entitled to commission for the sales 17 made through the contracts it negotiated under the procuring cause of 18 sale doctrine. 19 “Under the procuring cause of sale doctrine, when a party is 20 employed to procure a purchaser and does procure a purchaser to whom a 21 sale 22 regardless of who makes the sale.” 23 Estate LLC v. Young, 163 Wn. App. 800, 809 (2011) (citations omitted). 24 Because the 2011 service agreement does not explicitly cover fees for 25 post-termination sales made pursuant to the 2011 service agreement, 26 ECF No. 1, Ex. A, a discussion of the procuring cause doctrine is is eventually ORDER - 22 made, that party is entitled to a commission Washington Professional Real 1 warranted. See Poggi v. Tool Research & Eng’g Corp., 75 Wn.2d 356 2 (1969) (applying procuring cause doctrine to post-termination sales 3 because contract for commission of sales did not specify that the 4 remittances need be received prior to termination). Lamb Weston first argues that the procuring cause doctrine is 5 6 inapplicable because Mastaba was not its broker, but instead was 7 contracted for services as requested. 8 defines a broker as “one who is engaged for others, on a commission, 9 to negotiate contracts relative to property with the custody of which The Washington Supreme Court 10 he has no concern.” Gile v. Tsutakawa, 109 Wn. 366, 375 (1920). 11 succinctly put, “a broker is a middle man between parties.” 12 More v. Kirkpatrick, 142 Wn. 630, 634 (1927). Chambers In Lamb Weston’s “brokerage documents” attached to Mr. Johnson’s 13 14 declaration, Mastaba is listed as “Broker 240.” See ECF No. 40, Exs. 15 F-I. 16 Mastaba is additionally described as a “broker” in an e-mail exchange 17 between 18 Mastaba’s role is indicative of a broker relationship, as it acted as 19 the “middle man” between Philippine buyers and Lamb Weston, in which 20 it negotiated the sales contracts. 21 conclusively indicate Mastaba operated under a “broker” arrangement 22 for Lamb Weston. In ECF No. 54 ¶ 22, Mr. Neal describes Mastaba as its “broker.” Lamb Weston employees. ECF No. 50, Ex. C. Finally, ECF Nos. 21 & 39. The facts 23 Lamb Weston next argues that even if Mastaba was its broker, 24 Mastaba was not the procuring cause of the sales at issue because 25 Mastaba 26 procuring cause of a sale if it sets in motion a series of events had ORDER - 23 a limited negotiation-based role. “A broker is a 1 culminating in the sale and, in doing so, accomplishes what the broker 2 undertook under the agreement.” 3 Young, 163 Wn. App. 800, 810 (2011). Wash. Prof'l Real Estate LLC v. 4 Lamb Weston has admitted that its 2012 sales contracts with 5 IFFSI, QSR, and Jollibee were entered into pursuant to negotiations 6 with Mastaba acting at Lamb Weston’s direction. ECF No. 21 ¶¶ 38, 42, 7 & 46. 8 agreement expired runs counter to its argument that the end of the 9 2011 term ends a requirement to pay Mastaba fees. Lamb Weston’s payment of fees to Mastaba after the 2011 service Mastaba arranged 10 for the sales and should not be precluded from the fees pursuant to 11 the 2011 service agreement merely because the delivery took place in 12 2012. 13 2012 sales made pursuant to the three at issue contracts, in addition 14 to the sale of “crisscut fries” to Jollibee in 2011 separate from the 15 Jollibee 16 pursuant to the 2011 service agreement for these sells. Thus, Mastaba as a matter of law was the procuring cause of the contract. Mastaba is entitled to the applicable fees 17 Mastaba’s motion for partial summary judgment that Lamb Weston 18 is liable for amounts owed under their 2011 brokerage contract is 19 granted. V. Mastaba’s Motion for Relief from Limitation on Requests For 20 21 Production 22 On October 15, 2013, this Court issued a Scheduling Order that 23 “Requests for Production shall be limited to 30 requests, including 24 subsections.” 25 filed this 26 ORDER - 24 ECF No. 26 (emphasis added). On March 12, 2014, Mastaba motion for requested relief from the order limiting 1 Requests for Productions (RFPs) to allow it an additional seven RFPs. 2 ECF No. 37. 3 A. Factual Background On October 11, 2013, Mastaba issued a first set of RFPs on Lamb 4 5 Weston. The 6 accounting, and other related documents” concerning “Lamb Weston’s 7 failure to pay commission.” ECF No. 37 at 3. 8 did not address document production related to “issue 2.” 9 2” regards first the claims set existence of contained of fraud, a 45 RFPs long-term negligent seeking “shipping, Mastaba claims this set business Id. “Issue contract misrepresentation, and 10 Mastaba’s quantum 11 meruit, promissory estoppel, and breach of a unilateral contract. 12 Id. 13 because the existence of a long-term contract is a distinct claim from 14 the breach of contract claim addressed in the first set and it was not 15 aware a limitation would be placed. Mastaba asserts that it did not include these in the first set Id. 16 Mastaba claims that RFPs 45-50 address issues of material fact 17 since the RFPs “seek disclosure of documents related to Lamb Weston’s 18 misrepresentations and assurances that Mastaba’s long-term position 19 was secure and that Lamb Weston would provide a long term contract.” 20 ECF No. 37. 21 damages relating to Lamb Weston’s sales volume in the Philippines 22 after Mastaba’s brokerage agreement was terminated. Mastaba additionally contends that RFPs 51 and 52 concern As is set forth below, Lamb Weston requests a denial for the 23 24 additional RFPs. 25 // 26 / ORDER - 25 1 B. Lamb Weston contends that the additional RFPs 46-50 would be 2 3 repetitive and are unnecessary. RFPs 46-50 read as follows: RFP 46: Provide all documents that refer or relate to the construction of the Test Kitchen by Mastaba. RFP 47: Provide all documents that refer or relate to Lamb Weston’s entry into a long term business relationship with Mastaba. RFP 48: Provide all documents that refer or relate to Defendants’ efforts to negotiate a multi-year contract with Mastaba beginning on or about January 1, 2012. RFP 49: Provide all documents that refer or relate to the February 18, 2011, meeting between Kenneth Soh, Michael Neal and Patrick Johnson. RFP 50: Provide all documents that refer or relate to Lamb Weston’s desire that Mastaba increase its business investments in 2011, including but not limited to any documents received or reviewed by Kenneth Soh or Michael Neal prior to their meeting with Patrick Johnson on February 18, 2011. 4 5 6 7 8 9 10 11 12 13 RFPs 46-50 ECF No. 37 Federal Rule of Civil Procedure 34 allows a party to request 14 15 documents “within the scope of Rule 26(b).” 16 the 17 relevant to any party’s claim or defense.” 18 However, courts maintain broad discretion to limit discovery, even 19 when the materials are within the scope of Rule 26(b). Fed. R. Civ. P. 20 26(c). 21 balancing of plaintiff's need for the information and the possible 22 prejudice 23 Corp., 389 F.Supp. 1348, 1351 (D. Haw. 1975). scope of To to discovery determine to be whether defendant if “any nonprivileged discovery discovery Rule 26(b)(1) outlines is matter that is Fed. R. Civ. P. 26(b)(1). is appropriate allowed. requires Vollert v. a Summa 24 While Mastaba clearly outlines why it needs the information, ECF 25 No. 37 at 4, Lamb Weston did not explain why the information sought is 26 burdensome. ORDER - 26 ECF No. 44. As the Advisory Committee Notes to the 2006 1 Amendment to Rule 26 point out, “the responding party must show that 2 the identified sources of information are not reasonably accessible 3 because of undue burden or cost.” Fed R. Civ. P. 26 Advisory Notes 4 (2006). Further, Lamb Weston states that it is already performing 5 another search relating to additional documents that pertain to the 6 RFPs 46-50 request, which is indicative of a low burden. 7 at 2. ECF No. 44 8 Considering the complex nature of Mastaba’s claims, the multiple 9 annual service agreements spanning over years, and various third-party 10 client business transactions in dispute, a large set of RFPs appears 11 reasonable. 12 documents 13 reasonable 14 Mastaba’s requested additional RFPs 46-50 are granted. 15 C. 16 Moreover, separating the specific 2011 disputes from the that due relate to the to long-term distinct nature business of the relationships claims involved. RFPs 51 and 52 Mastaba contends the RFPs 51 and 52 seek to address material 17 facts relating to damages. 18 follows: 19  20 21 22 23 24 is  ECF No. 37 at 5. The RFPs read as RFP 51: Provide all accounting documents that evidence Lamb Weston’s total sales volume of frozen potato products in the Philippines (excluding sales to McDonald’s) from January 1, 2012, through March 12, 2014. RFP 52: Provide all documents that Lamb Weston has relied upon or will rely upon in projecting its future sales volume of frozen potato products in the Philippines. ECF No. 37 at 5. 25 26 ORDER - 27 1 Lamb Weston not viable Mastaba’s as a RFPs matter 51 of and law 52 relate because none to claims 3 Mastaba’s theories allow Mastaba to enforce against Lamb Weston an 4 unwritten long-term contract, as laid out in Lamb Weston’s motion for 5 summary judgment. Given the foregoing decision denying Lamb Weston’s 6 partial motion for summary judgment relating to an unwritten long-term 7 contract, Mastaba’s requested additional RFPs 51 and 52 are granted. 9 are that 2 8 that argues of It does not appear from the facts that Mastaba has acted in bad faith or that it is abusing the discovery process in any way. Mastaba 10 has shown that the information sought is critical to the issues in 11 contention. 12 burdensome, 13 requests. 14 granted. Lamb nor has Weston it has not purported shown that that the the RFPs RFPs are would overly be broad Mastaba’s motion for relief from limitation on discovery is VI. 15 CONCLUSION 16 For the above-given reasons, IT IS HEREBY ORDERED: 17 1. Lamb Weston’s Motion for Partial Summary Judgment, ECF No. 18 32, is GRANTED IN PART and DENIED IN PART as follows: 19  20 Lamb Weston’s request for dismissal of damages relating to an unwritten long-term contract is DENIED.  21 Lamb Weston’s request for dismissal of all Mastaba’s 22 claims for damages under a theory of unjust enrichment 23 is 24 relating to future sales or services is DENIED. 25 26 ORDER - 28 GRANTED. Dismissal of Mastaba’s other claims  1 Lamb Weston’s request for dismissal of Mastaba’s claims 2 for 3 investments is DENIED. 4 2. damages for 2011 operating expenses and capital Mastaba’s Motion for Partial Summary Judgment, ECF No. 39, 5 is GRANTED. 6  Lamb-Weston, Inc., ConAgra Foods, Inc., ConAgra Foods 7 Lamb 8 (collectively, “Lamb-Weston”) are liable to Mastaba in 9 the amount of 2.1% per net pound for all sales made Weston, Inc., and Lamb-Weston Sales, Inc. 10 pursuant 11 International Family Foods Services, Inc. on or about 12 October 6, 2011. 13  to the contract Lamb-Weston signed with Lamb-Weston is liable to Mastaba in the amount of 2.1% 14 per 15 contract Lamb-Weston signed with QSR/Express Commissary, 16 Inc. on or about October 11, 2011. 17  18 net contract 20 pound for all sales made pursuant to the Lamb-Weston is liable to Mastaba in the amount of 2.1% per 19 net pound for all Lamb-Weston sales signed made with pursuant Jollibee to the Foods Corporation on or about December 13, 2011. 21  Lamb-Weston is liable to Mastaba in the amount of 2.1% 22 per net pound for all sales of Mini Crisscut French 23 fries to Jollibee Foods 24 Mastaba’s negotiation. 25 26 ORDER - 29 Corporation as provided by 1 3. Mastaba’s Motion from Limitation on Requests for 2 Production, ECF No. 37, is GRANTED. 3 relief from the limitation on requests for production as 4 stated in the Scheduling Order (ECF No. 26 ¶ 5(b)), and is 5 permitted to propound the seven requests for production in 6 the form attached as Exhibit B to the Declaration of Kyle 7 J. Silk-Eglit, ECF No. 38, in Support of Plaintiff Mastaba 8 Inc.’s Motion for Relief from Limitation on Requests for 9 Production. 10 11 12 IT IS SO ORDERED. Mastaba is granted The Clerk’s Office is directed to enter this Order and provide copies to all counsel. DATED this 27th day of May 2014. 13 s/Edward F. Shea EDWARD F. SHEA Senior United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 Q:\EFS\Civil\2013\5049.cross.msjs.lc1.docx ORDER - 30

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