JOHN A. WOODCOCK, JR., Chief Judge.
A food wholesaler moves for summary judgment in its breach of contract claim
On March 30, 2010, Tate & Lyle Ingredients Americas, Inc. (Tate & Lyle) filed suit against Transport Distribution, LLC (Transport), alleging that Transport breached a warehousing contract and caused substantial economic damage to Tate & Lyle. Compl. (Docket # 1). On April 29, 2010, Transport answered and counterclaimed, making reciprocal claims that Tate & Lyle breached the contract. Answer and Countercl. (Docket # 6). On June 23, 2010, Tate & Lyle moved for summary judgment on its own claims and against Transport's claims. Mot. for Summ. J. of Pl. Tate & Lyle Ingredients Americas, Inc. (Docket # 9) (Pl.'s Mot.). On July 28, 2010, Transport responded. Opp'n of Def. Transport Distribution, LLC to Pl.'s Mot. for Summ. J. (Docket # 13) (Def.'s Opp'n.). Tate & Lyle replied on August 11, 2010. Reply Br. in Supp. of Mot. for Summ. J. of Pl. Tate & Lyle Ingredients Americas, Inc. (Docket # 17) (Pl.'s Reply).
On or about November 1, 2007, Tate & Lyle entered into a three-year written contract with Transport for the storage of Tate & Lyle product.
During the contract, Transport stored raw tapioca starch (the tapioca) valued in excess of $2 million for Tate & Lyle. PSMF ¶ 7; DOSMF ¶ 7. In March 2009, during the term of the Warehouse Agreement, the Maine Department of Agriculture, Food & Rural Resources and the United States Food and Drug Administration (collectively, "Government") inspected three Transport warehouses in Houlton, Monticello, and Hodgdon, Maine (Warehouses) that Transport was using to store the tapioca for Tate & Lyle. PSMF ¶¶ 8, 9; DOSMF ¶¶ 8, 9. As a result of the inspections, the Government issued Form FDA 483 reports concerning the Warehouses. PSMF ¶ 10; DOSMF ¶ 10. The Form FDA 483 reports contained a number of findings regarding the Houlton, Maine Warehouse (Hangar) including:
PSMF ¶ 12; DOSMF ¶ 12. Regarding the Monticello, Maine (Arrow) warehouse, the Form 483 Reports stated:
PSMF ¶ 12; DOSMF ¶ 12. Finally, regarding the Hodgdon, Maine (Hodgdon) Warehouse, the Form 483 Reports stated:
PSMF ¶ 12; DOSMF ¶ 12. After the inspections and issuance of the 483 Reports, the Government embargoed quantities of Tate & Lyle's tapioca that had been stored at one or more of the Warehouses. PSMF ¶ 13; DOSMF ¶ 13. Because of the embargo, Tate & Lyle was prohibited from at least March 22, 2009, until March 27, 2009, from moving, processing, or otherwise using the stored tapioca.
Once the Government embargoed Tate & Lyle's tapioca, Tate & Lyle expended employee hours and incurred other costs in negotiating and cooperating with the Government toward the release or other disposition of the tapioca.
Tate & Lyle uses tapioca for food applications only, and none of Tate & Lyle's manufacturing facilities is equipped to use tapioca as a raw material in non-food products, so any Government release of the tapioca for non-food applications was of no practical benefit to Tate & Lyle. PSMF ¶¶ 18, 19, 24; DOSMF ¶¶ 18, 19, 24. Tate & Lyle decided that the most cost-effective solution was to destroy the non-food tapioca.
Tate & Lyle first contends that there is no dispute about whether Transport breached its Warehousing Agreement. Pl.'s Mot. at 7. It points out that the Warehousing Agreement expressly requires that Transport comply with Governmental laws and regulations and that, after a Government inspection, the Government determined that Transport had violated certain laws and, as a consequence, it embargoed Tate & Lyle's stored product. Id.
Tate & Lyle next contends that, as a result of Transport's breach, it lost tapioca valued at $504,766.79 and incurred disposal costs of $92,788. Id. As Transport is required to pay Tate & Lyle and hold it harmless for damages caused by Transport, Tate & Lyle contends that Transport owes it for these damages and costs, and for its attorney fees as well. Id. It asserts that, as of the date it moved for summary judgment, these legal fees totaled "in excess of $365,090.00." Id.
Finally, Tate & Lyle assert that, because it must prevail against Transport for its breach of the terms of the Warehousing Agreement, Transport's counterclaim and affirmative defense of off-set must fail. Id. at 8.
In its response, Transport denies virtually all of Tate & Lyle's legal contentions, including "whether the parties had a written contract for the storage of raw tapioca, whether there was, in fact, a breach of that contract, what damages, if any, Plaintiff suffered on account of any breach, and whether Defendant is entitled to any offset for money owed to it for storage of raw
Transport goes on to say that, despite the Government embargo, it was always able to supply Tate & Lyle with an adequate supply of authorized tapioca and that Tate & Lyle, for independent reasons, took it upon itself to unnecessarily destroy super sacks of raw tapioca. Id. Transport contends that, if Tate & Lyle had been more patient, the tapioca it destroyed would have been released without qualification by the Government. Id.
Tate & Lyle replies that, despite Transport's denials, it is still entitled to summary judgment because "[i]n its opposition to Tate & Lyle's motion for summary judgment, Transport raises facts that are immaterial, and it attempts to create disputes of material facts without legitimate support." Pl.'s Reply at 1.
The arguments of the parties are long on facts and short on law. The only case law in Tate & Lyle's two memoranda and Transport's opposition memorandum is a formulaic recitation of the familiar standards for evaluation of a motion for summary judgment. Since Tate & Lyle's motion is premised on its claim that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law, a motion for summary judgment that argues facts and cites no law takes an ineffective approach. In evaluating the motion, the parties have left the Court to its own devices.
Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c)(2). For summary judgment purposes, "genuine' means that the evidence is such that a reasonable jury could return a verdict for the nonmoving party, and a material fact' is one which might affect the outcome of the suit under the governing law." Buchanan v. Maine, 469 F.3d 158, 166 (1st Cir.2006) (quoting Seaboard Sur. Co. v. Town of Greenfield, 370 F.3d 215, 218-19 (1st Cir.2004)) (internal quotation marks omitted). "Neither conclusory allegations [nor] improbable inferences are sufficient to defeat summary judgment." Carroll v. Xerox Corp., 294 F.3d 231, 236-37 (1st Cir.2002) (citation and internal quotation marks omitted).
The summary judgment analysis for a breach of contract case depends upon the nature of the contract language; where the language is unambiguous, contract interpretation is a question of law for the court, where ambiguous, it is a question of fact for the jury. FHS Props. Ltd. P'shp. v. BC Assocs., 175 F.3d 81, 87 n. 7 (1st Cir.1999) (citing Canal Elec. Co. v. Westinghouse Elec. Co., 973 F.2d 988, 992 (1st Cir.1992)). "[C]ontract language is ambiguous if the terms are inconsistent on
Under Maine law, to recover under a breach of contract claim, "a plaintiff must establish (1) breach of a material contract term; (2) causation; and (3) damages.'" Bluetarp Fin., Inc. v. E. Materials Corp., Civil No. 08-324-P-S, 2009 WL 2242617, at *13 (D.Me. July 24, 2009) (quoting Me. Energy Recovery Co. v. United Steel Structures, Inc., 1999 ME 31, ¶ 7, 724 A.2d 1248, 1250). Transport posited the following defenses to the breach of contract claim: 1) that the parties did not enter into a written contract for the storage of raw tapioca; and 2) that there was no breach of the contract. Def.'s Opp'n at 3.
The Court first considers whether storage of the tapioca was covered by the Warehousing Agreement. The contract states in part:
Warehousing Agreement at 1. The contract further defines "products" as "foodstuffs for human consumption." Id. at 2. Tate & Lyle asserts that these contractual provisions address "the storage of raw food products acquired by Tate & Lyle," PSMF ¶ 3, which would include storage of the tapioca.
Transport argues to the contrary: that the Warehousing Agreement "is a contract for the storage of palletized, finished product, and not for the storage of bulk super sacks of raw material"; and characterizes the contract as "relat[ing] to storage of foodstuffs and pallets' of products." DOSMF ¶¶ 1, 3 (emphasis in original). It therefore maintains that "[n]one of the raw tapioca product acquired by Tate & Lyle was foodstuffs' and none was ever transported or delivered to Transport on pallets." Id. ¶ 3.
Transport's argument that the written contract was for a "palletized finished product," draws no support from the terms of the contract itself. Id. ¶¶ 1, 3. Similarly, Transport's proffered fact that "None of the raw tapioca product acquired by Tate & Lyle was foodstuffs,'" Id. ¶ 3, has no basis in the contract language, Mr. McKenney's affidavit, or any other portion of the summary judgment record. Transport's insistence that the tapioca is not "foodstuffs" is perplexing given Transport's admission that the tapioca was used by Tate & Lyle "for food applications only," PSMF ¶ 18, DOSMF ¶ 18, and its assertion that "[t]here never was any non-food tapioca," DOSMF ¶ 26.
The Court finds the relevant contract terms straightforward and unambiguous. Transport's argument to the contrary is not based upon a reasonable reading of the contract. See Dorsk v. UNUM Life Ins. Cos. of Am., 8 F.Supp.2d 19, 22 (D.Me.1998) (Contract language was ambiguous where "the parties offer[ed] reasonable but differing interpretations of the [contract] language," and "both interpretations [were] plausible"). The Warehousing Agreement calls only for the warehousing of "products," which it defines as "foodstuffs for human consumption." Warehousing Agreement at 1. Tate & Lyle stated, and Transport admitted, that the
The Court turns to whether Transport breached the contract. At issue is the contractual provision requiring that Transport:
PSMF ¶ 4; DOSMF ¶ 4; Warehousing Agreement at 2. Again, as to this portion of the contract, the Court finds no ambiguity. Indeed, Transport presented no argument that the terms are anything other than clear. This conclusion is supported by Transport's admissions that the contract included the above provision, PSMF ¶ 4; DOSMF ¶ 4, that the Government inspected three of Transport's warehouses, PSMF ¶ 8; DOSMF ¶ 8, and that this inspection resulted in the issuance of Form FDA 483 reports which detailed multiple violations of Maine law.
Transport gives no explanation for why it should avoid responsibility for breaching its contractual obligation to comply with state law. The Court finds unavailing Transport's attempt to divert attention to Tate & Lyle by asserting that Tate & Lyle inspected and approved the Transport warehouses; the contract expressly places the burden of legal compliance on Transport alone. It does not provide that Tate & Lyle's inspection alleviates Transport's obligation to "comply with all applicable laws, rules, ordinances, and regulations."
The Court finds similarly unpersuasive Transport's attempts to misrepresent the findings in the Form FDA 483 reports. While admitting that the Government found certain violations, Transport characterizes the findings as revealing "the transportation and storage process utilized by Tate & Lyle to be contrary to the regulations of the Maine Department of Agriculture." Def.'s Opp'n at 2 (emphasis added). The reports say no such thing. Rather, the reports are silent as to Tate & Lyle's "transportation and storage process," and speak only to deficiencies in Transport's facilities. Moreover, to the extent that Tate & Lyle may have violated any laws in shipping the tapioca to Transport,
The Court concludes that: 1) Tate & Lyle demonstrated that it contracted with Transport to warehouse its product; 2) in the contract Transport expressly agreed to comply with all state laws; and, 3) Transport admitted that it failed to do so. In short, Transport breached the contract.
Despite Tate & Lyle's contentions to the contrary, there are multiple genuine issues of material fact regarding damages. Mr. McKenney asserts that the state of Maine began releasing some super sacks of raw tapioca from the Hodgdon warehouse on March 27, 2009 for use in food preparation, and that Transport was continuously able to supply Tate & Lyle's needs for tapioca. McKenney Aff. ¶¶ 18-20. He claims that Tate & Lyle, in effect, caused its own damage by unnecessarily and prematurely dumping tapioca in October. Id. ¶ 22.
Neither Tate & Lyle nor Transport fully developed their arguments on damages. Transport essentially denied all of Tate & Lyle's statements of material fact regarding damages. Faced with what appears to be genuine issues of material fact, Tate & Lyle urges the Court to reject Transport's denials contending that they are supported only by a bare sworn statement in the McKenney Affidavit. Pl.'s Reply at 5-6 (stating that Mr. McKenney's statement is "nothing more than opinion and supported by Mr. McKenney's affidavit by implication at best, reflects no personal knowledge of the decision-making process within Tate & Lyle that [led] to the destruction of the Tapioca").
The Court disagrees. By denying Tate & Lyle's assertions, Transport properly placed into question the nature, extent, and cause of Tate & Lyle's damages. Tate & Lyle's claims that there are deficiencies in Mr. McKenney's affidavit raise issues of credibility to be weighed by the jury. A party opposing a motion for summary judgment is entitled to rely on affidavits to demonstrate that there exist issues of material fact. Indeed, Rule 56 expressly contemplates the submission of affidavits to refute a motion for summary judgment. FED. R. CIV. P. 56(e)(2) ([A]n opposing party ... must—by affidavits or as otherwise provided in this rule—set out specific facts showing a genuine issue for trial." (emphasis added)). At the same time, conclusory allegations in an affidavit are insufficient to challenge a motion for summary judgment. "The object of [Rule 56] is not to replace conclusory allegations of the complaint or answer with conclusory allegations of an affidavit." Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888, 110 S.Ct. 3177, 111 L.Ed.2d 695 (U.S.1990). Rather, the affidavit must refute some specific fact rather than make a general allegation. Id. at 888-89, 110 S.Ct. 3177. Moreover, an "opposing affidavit must be made on personal knowledge...." FED. R. CIV. P.
Transport denies the damages alleged by Tate & Lyle, arguing that Tate & Lyle disposed of the tapioca prematurely and "without any clear understanding of the likely timetable for the release of the embargo...." DOSMF ¶ 25. Tate & Lyle is correct in observing that the sole basis for Transport's denial is Mr. McKenney's affidavit, but incorrect that Mr. McKenney lacks the requisite personal knowledge to make the affidavit.
First, Mr. McKenney's affidavit states that it is based on his own personal knowledge and in the context of a motion for summary judgment, the Court must credit his statement. McKenney Aff. (stating that Mr. McKenney "hereby make[s] the following statements on the basis of my personal knowledge"). Moreover, Tate & Lyle's own Statement of Material Fact further establishes Mr. McKenney's personal knowledge as to the Government's investigation and embargo timetable. Letters attached to Tate & Lyle's Statement of Material Fact demonstrate Mr. McKenney's personal involvement in both the investigation and the embargo; three of the letters were addressed directly to Mr. McKenney, PSMF at Attach. 4, 5, 7, and the final letter additionally references a meeting among the Government, Tate & Lyle, and Mr. McKenney during which the embargo was discussed. PSMF at Attach. 7 ("As discussed during our meeting of October 16, 2009 the Maine Department of Agriculture authorizes the release of all remaining product ... now housed at the Hodgdon warehouse to be used in a
In summary, Tate & Lyle's affidavit asserting damages is contradicted by Transport's affidavit denying them. All of this is grist for the fact-finder's mill. The adequacy of the foundation for Mr. McKenney's personal knowledge, the credibility of his opinions, the extent of Tate & Lyle's consequential damages, are all matters that cannot be resolved on this record. The Court is obligated to view the facts in the light most favorable to Transport and this obligation dooms Tate & Lyle's attack on Transport's view of the facts.
The Court GRANTS in part and DENIES in part Tate & Lyle Ingredients Americas, Inc.'s motion for summary judgment (Docket # 9). The Court GRANTS the motion insofar as it claims that Transport Distribution, LLC breached its Warehousing Agreement with Tate & Lyle Ingredients Americas, Inc. and DENIES the motion insofar as it claims that it sustained damage as a result of Transportation Distribution, LLC's breach.
SO ORDERED.
At the Arrow warehouse, the Government found, inter alia, that Transport "does operate an unlicensed food establishment in the form of a food storage warehouse in violation of 22 M.R.S., § 2167," and that "[f]ood is being held under unsanitary conditions, which meet the definition of contaminated with filth' under 22 M.R.S., Chapter 551, § 2152 causing the food to be adulterated as defined under 22 M.R.S., Chapter 551, § 2156." PSMF ¶ 12; DOSMF ¶ 12.
At the Hodgdon warehouse, the Government found that "the facility was not licensed pursuant to Chapter 344, Food Storage Warehouses." PSMF ¶ 12; DOSMF ¶ 12.
