DALZELL, District Judge.
As will be seen, this case provides a primer on how to procure multimillion dollar service contracts with the City of Philadelphia.
The dispute here arises out of a consulting agreement (the "Agreement") between Hiriam Hicks, Inc. ("HHI"), the plaintiff and counterclaim defendant, and Synagro WWT, LLC ("Synagro"), the defendant and counterclaim plaintiff. Synagro contracted with HHI to provide it with assistance in securing a major waste management contract (the "Contract") with the City of Philadelphia. By the terms of the Agreement, HHI was entitled to a monthly retainer before passage of certain bills through the City Council of certain bills regarding the Contract, a lump sum retainer upon Contract execution, and the option to provide valuable subcontracting services for the twenty-three year term of the waste management project after Contract execution — provided that the "Contract with the City [was] approved" by June 30, 2008.
Philadelphia City Council indeed passed the enabling bills relating to the Contract, but a burgeoning bribery scandal involving Synagro in Detroit led Mayor Michael Nutter to instruct Joan Markman ("Markman"), his Chief Integrity Officer, to scrutinize the proposed Contract between the City and Synagro. Synagro contends that in the course of Markman's investigation, HHI's principal, Hiriam Hicks ("Hicks"), breached the terms of the Agreement, leading Synagro to terminate the Agreement before HHI could lay claim to the retainer it was due upon execution of the Contract or exercise its option to provide subcontracting services for the term of the project. Synagro also claims "the Contract with the City [was not] approved" by June 30, 2008, so that HHI is not entitled to provide further services under the Agreement. Finally, Synagro argues that the City's renegotiation of the Contract following Markman's investigation frustrated
HHI asserts that, as a matter of law, the "Contract with the City" was approved by June 30, 2008. It further suggests that Hicks's behavior during the Markman investigation did not breach the Agreement, and that frustration of purpose does not apply here.
HHI asserts three claims against Synagro: (1) breach of contract, (2) anticipatory breach of contract, and (3) unjust enrichment. Synagro advances four counterclaims of its own: (1) breach of contract, (2) breach of common law duty, (3) conversion, and (4) fraud.
HHI has filed its own motion for partial summary judgment. It seeks a finding "that [its] right to provide services, and to be paid, under a portion of [its] Consulting Agreement with Defendant, Synagro WWT, Inc. has not `expired' within the meaning of Section 1 of the Consulting Agreement because the requisite `approval' of the City Council was timely obtained." Pl.'s Mot. Summ. J. at 1.
Synagro has also filed a motion to strike the Declaration Hicks submitted in opposition to Synagro's motion for summary judgment. HHI has filed a motion to amend this Declaration.
For the reasons set forth at length below, we will grant Synagro's motion to strike Hicks's declaration in part, deny Synagro's motion for summary judgment, and grant HHI's motion for partial summary judgment.
Synagro takes issue with HHI's submission of "a rambling, 43-page declaration from its principal, Hiriam Hicks." Def.'s Mot. Strike at 1. According to Synagro,
Id. at 2 (internal citations omitted).
HHI responds that (1) "the material objected to as argumentative ... was intended to provide context to the statement of facts, and to make clear how the facts in the Hicks Declaration tied in to the legal arguments," Pl.'s Resp. to Def.'s Mot. Strike at 1; (2) "short, non-argumentative statements as to the evidence to be found in the various exhibits to that declaration" are meant to act as "pointers to what the Court is asked to accept as fact based on the exhibits," id. at 2; and (3) "[t]he Hicks Declaration indeed refers to statements made by others," but "the out-of-court declarants are all named and can be produced at trial, and so those statements are admissible at this stage, even if they otherwise
Fed.R.Civ.P. 56(c) provides that
Without any doubt, Hicks's Declaration and proposed Declaration breach these rules. A party may "make clear how the facts in [a declaration] tied in to the legal arguments," Pl.'s Resp. to Def.'s Mot. Strike at 1, in a memorandum of law. It may provide "pointers to what the Court is asked to accept as fact based on the exhibits," id. at 2, in a statement of facts. Neither has any place in an affidavit or declaration, which are not baskets or braided pigtails through which "references to the exhibits" must be "woven." Id. at 4.
As for HHI's contention that the availability of declarants who might testify at trial permits introduction of their hearsay statements, this notion is preposterous. As our Court of Appeals has explained, "[h]earsay statements that would be inadmissible at trial may not be considered for purposes of summary judgment," Smith v. City of Allentown, 589 F.3d 684, 693 (3d Cir.2009), regardless of whether a declarant might later be persuaded to testify at trial.
We will accordingly grant Synagro's motion to strike and deny HHI's motion to amend declaration, and will ignore the portions of Hicks's Declaration that contain (1) legal argument, (2) summaries of exhibits, or (3) inadmissible hearsay. Where HHI refers to passages of Hicks's Declaration that cite to exhibits, we will consider the underlying exhibit in ascertaining whether the proposed fact is supported by "particular parts of materials in the record." Rule 56(c)(1)(A).
Under Fed.R.Civ.P. 56(a), "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law," where "[a] party asserting that there is a genuine dispute as to a material fact must support that assertion with specific citations to the record." Bello v. Romeo, 424 Fed.Appx. 130, 133 (3d Cir.2011). We will thus set out the undisputed material facts in this matter, as well as the disputed material factual assertions that the parties have supported with specific citations to the record. Because Synagro and HHI's respective statements of fact canvass essentially the same subjects, with Synagro's statement covering these facts in greater detail, we largely draw our account of the facts from Synagro's statement and HHI's response thereto.
Synagro engages in "biosolids reprocessing," or the process of treating and disposing of solid human waste. Def.'s Stmt. of Facts ("Def.'s Stmt.") ¶ 1; Pl.'s Resp. to
The proposed contractual relationship between the City and Synagro actually involved two "mirror" contracts: (1) a "Service Contract" between the City and the Philadelphia Municipal Authority ("PMA"), and (2) a "Service Agreement" between PMA and Philadelphia Biosolids Services, LLC ("PBS"), a joint venture that is 70% owned by Synagro and 30% owned by two minority business enterprises. Def.'s Stmt. ¶ 18; Pl.'s Resp. ¶ 18. For these contracts to be finalized, City Council needed to pass bills or ordinances authorizing them. Def.'s Stmt. ¶¶ 14, 16-17; Pl.'s Resp. ¶¶ 14, 16-17. The Philadelphia Home Rule Charter provides, however, that an ordinance passed by the City Council does not become effective until it has been either signed by the Mayor or passed by City Council "`by a vote of two-thirds of all of its members within seven days after the bill has been returned with the Mayor's disapproval.'" Def.'s Stmt. ¶ 16 (quoting Ex. FF to Def.'s Stmt. ("Charter") § 2-202); Pl.'s Resp. ¶ 16. After an ordinance authorizing a City contract becomes effective, the Mayor and other members of the executive branch must approve the project and negotiate its final terms before it can be finalized, Def.'s Stmt. ¶ 17; Pl.'s Resp. ¶ 17, presumably through formal execution.
Hicks is a music industry professional who modestly described himself in his deposition as a "very, very influential manager of big artists". Def.'s Stmt. ¶ 6 (quoting Ex. E to Def.'s Stmt. ("Hicks Dep.") at 4-11, 13-14, 16); Pl.'s Resp. ¶ 6. Before 2007, he had never done any work assisting anyone in obtaining municipal contracts. Def.'s Stmt. ¶ 7; Pl.'s Resp. ¶ 7. In 2007, Rayford Jackson ("Jackson"), a consultant working for Synagro in Detroit, introduced Hicks to officers at Synagro, telling them that Hicks was close to Fareed Ahmed ("Ahmed"), whom Jackson described as a community activist and lobbyist who was well-connected in the Philadelphia political community.
On July 12, 2007, Synagro entered into its Agreement with HHI, of which Hiriam Hicks is the CEO and principal. Def.'s Stmt. ¶¶ 9-10; Pl.'s Resp. ¶¶ 9-10. According to Hicks, Synagro drafted this
As amended, Section 1 of the Agreement provides:
Agreement § 1. We review the Schedules incorporated in this provision in greater detail in Section III.A below. For now, we note that Schedule B of the Agreement, describing "Consulting Services," provides in part that "[i]f these two bills are successfully voted out of both Sub Committees and obtain full City Council approval, then [HHI may provide] additional government and community relations and subcontracting (See Schedule D) services." Id. at Schedule B. In turn, the amended Schedule D permits HHI to "provide subcontract services for the term of the project," including conducting community and governmental relations programs, providing local and certified minority contractors, and administering chemical and polymer supply. Id. at Amended Schedule D. HHI stood to earn $400,000 for each of twenty-three years for these services, or $9.2 million (undiscounted). Id.
When Hicks began working for Synagro he was told that the most pressing issue was Synagro's inability to secure access to Matthews, President of AFSCME District Council 33. Hicks responded by calling Ahmed, who was close to Matthews and had worked as a consultant for AFSCME District Council 33 for several years. Ahmed arranged a meeting between Matthews and Synagro. Def.'s Stmt. ¶ 22; Pl.'s Resp. ¶ 22. Ahmed also spoke with Mayor Nutter about the Contract, and met either with City Council President Anna Verna or her staff member Charlie McPherson about the project, as well as with Janie Blackwell, the chairperson of the City Council subcommittee considering the Contract. Def.'s Stmt. ¶ 25; Pl.'s Resp. ¶ 25.
Hicks also testified that "`it was important for [him] under the terms of the consulting agreement to educate the community'" about Synagro's proposed Contract with the City. Def.'s Stmt. ¶ 27 (quoting Ex. E to Def.'s Stmt. ("Hicks Dep.") at 189-90); Pl.'s Resp. ¶ 27. To this end, Synagro provided Hicks with payments of $30,000 in January of 2008 and $25,000 in April of 2008 to engage in "`community
Ex. L to Def.'s Stmt. ("Ashley-Shah Dep.") at 33-35. Ashley-Shah testified that he kept about $14,000 of the $55,000 as his fee. Def.'s Stmt. ¶ 32; Pl.'s Resp. ¶ 32.
The City Council passed three bills relating to Synagro's proposed treatment facility — two on June 12, 2008, and one on June 19, 2008 — that accomplished the same ends as the bills referred to in the Agreement, though these bills bore different numbers and had been slightly revised. Def.'s Stmt. ¶¶ 33-34; Pl.'s Resp. ¶¶ 33-34. Mayor Nutter signed the first two bills on June 18, 2008, and signed the third — Bill No. 080498-A — on July 2, 2008. Def.'s Stmt. ¶ 35; Pl.'s Resp. ¶ 35.
On July 2, 2008, James Hecht, the Synagro developer responsible for the Philadelphia project, met with Markman and several other representatives of the City. Def.'s Stmt. ¶ 37; Pl.'s Resp. ¶ 37. Hecht testified that he had "got[ten] an email about an article or something" concerning "an investigation by the federal government relating to Synagro's efforts to obtain a contract in Detroit," Ex. C to Def.'s Stmt. ("Hecht Dep.") at 123, and that he had gone "to notify the city in the form of Bernie Brunwasser, the commissioner, the water commissioner, that there had been an event in Detroit with criminal, alleged criminal activity, and I wanted to make
Synagro claims that "[a]lmost immediately, Markman began focusing her investigation on Hicks and his involvement in the Philadelphia project" and "communicated this focus to William Winning, an attorney then acting on behalf of Synagro." Def.'s Stmt. ¶ 37. According to Synagro, Markman "stated that she wanted to know how it came about that Hicks had been retained by Synagro, what services he had performed for Synagro, and what he had done with the $30,000 and $25,000 payments he received in January and April 2008." Id. Curiously, Synagro supports these assertions with citations to its own Amended Objections and Responses to Plaintiff's First Set of Interrogatories to Defendant, id. (citing Ex. O to Def.'s Stmt. ("Def.'s Resp. to Interrog.")), apparently on the basis that
Def.'s Mem. in Supp. of Mot. Summ. J. ("Def.'s MSJ Mem.") at 12 n. 8 (citing Ex. P to Def.' stmt. ("Markman Dep.") at 110-112).
It is true that at Markman's deposition Synagro's counsel presented her with its objections and responses and suggested that "[a]s you go through, if there's anything in the paragraph that you are reading that you think is incomplete or inaccurate, please tell us," Markman Dep. at 111-12. Markman expressed concerns about the accuracy of paragraphs 16 through 20 of the objections and responses. Id. at 112-129. But Synagro has pointed to no portion of Markman's testimony in which she explicitly or affirmatively "adopted [the objections and responses] as her testimony." Def.'s MSJ Mem. at 12 n. 8.
We distrust Synagro's tactic of ambushing a witness at a deposition with a document, asking the witness if anything in the document is "incomplete or inaccurate," and then suggesting that the witness's failure to challenge a portion of the document means that she has essentially testified in support of it. In any event, Synagro's own objections and responses simply do not support the claim that "[a]lmost immediately, Markman began focusing her investigation on Hicks and his involvement in the Philadelphia project," Def.'s Stmt. ¶ 37. Instead, they merely state that Markman "had a lot of questions about the amount of money that Synagro had paid Mr. Hicks, the nature of the services that Mr. Hicks had performed for the money and his qualifications to perform future services described in the Consulting Agreement." Def.'s Resp. to Interrog. ¶ 4. We will accordingly reject as unsupported Synagro's assertion that Markman "focus[ed] her investigation on Hicks." Def.'s Stmt. ¶ 37.
The parties agree, however, that between July 2, 2008 and July 22, 2008, officers and attorneys for Synagro attempted to convene a meeting with Hicks
A week later, Alvin Thomas, Synagro's general counsel, sent a letter to Buchanan suspending all further payments to Hicks under the Agreement and demanding that Hicks provide Synagro with all documents relating to his work for the company. Def.'s Stmt. ¶ 44; Pl.'s Resp. ¶ 44. Hicks produced no documents in response to this demand. But in the course of this litigation Hicks produced emails relating to his activities under the Agreement between him and (1) Reverend Anthony Stevenson ("Stevenson"), a Philadelphia minister, and (2) Jackson. Def.'s Stmt. ¶¶ 46-47; Pl.'s Resp. ¶¶ 46-47.
Markman interviewed Robert Boucher, Synagro's CEO, on August 8, 2008, and then interviewed Hecht on September 2, 2008. Def.'s Stmt. ¶ 48; Pl.'s Resp. ¶ 48. Synagro stipulates that
Ex. T to Def.'s Stmt. ¶ 4(l). Synagro further stipulates that
Id. ¶ 4(n). The parties agree that this reduction in the price of the Contract corresponded to the amount HHI would be paid had it performed the services in Schedule D of the Agreement. They also agree that this reduction reflected Markman's conviction that Hicks's services were "`fat in the contract that I didn't want the City to pay for.'" Def.'s Stmt. ¶ 51 (quoting Markman Dep. at 114); Pl.'s Resp. ¶ 51. Markman agreed in her testimony that no one at Synagro "ever argue[d] with [her] about [her] view that this was a waste of money" or took "any steps to try and change [her] mind about this condition that [she was] suggesting be imposed."
The parties also agree that the City's changes were presented to Synagro as non-negotiable, and Synagro understood that if it did not consent to these changes the City "`wouldn't approve the Contract.'" Def.'s Stmt. ¶ 54 (quoting Ex. D to Def.'s Stmt. at 85-86); Pl.'s Resp. ¶ 54. The City and Synagro finally executed the Service Agreement on October 8, 2008. The definitive version of this Contract (1) reduced the total value of the Contract by the amount that HHI could receive under Amended Schedule D of the Agreement, and (2) provided that "`Company shall seek and must receive PMA's advanced written consent to use any particular broker or middle person if such broker or middle person is not acting in the ordinary course of his or her bona fide ongoing business concerns in brokering the services, goods, or equipment.'" Def.'s Stmt. ¶¶ 55-56 (quoting Ex. BB to Def.'s Stmt. § 9.4); Pl.'s Resp. ¶¶ 55-56.
On September 25, 2008, Markman interviewed Hicks, after she had already met with Boucher, Hecht, Stevenson, and Ahmed. Def.'s Stmt. ¶¶ 58-59; Pl.'s Resp. ¶¶ 58-59. In Hicks's deposition, he described this interview as follows:
Def.'s Stmt. ¶ 60 (quoting Hicks Dep. at 129-131) (emphasis omitted); Pl.'s Resp. ¶ 60.
For her part, Markman characterized this interview as follows:
Markman Dept. at 124 (quoted in Def.'s Stmt. ¶¶ 61, 63); Pl.'s Resp. ¶¶ 61, 63. Hicks did not mention Ashley-Shah in the interview. Def.'s Stmt. ¶ 62; Pl.'s Resp. ¶ 62. According to Synagro's attorney, Edward McDonald, "[o]n September 26, 2008, [he] had a telephone conversation with Ms. Markman in which Ms. Markman
On November 6, 2008, McDonald sent a letter to Buchanan in which he explained on Synagro's behalf that
Ex. DD to Def.'s Stmt. at 1. On November 21, 2008, Buchanan sent a letter in response in which she contended that
Ex. EE to Def.'s Stmt. at 4 (emphasis in original).
On a motion for summary judgment, "[t]he moving party first must show that no genuine issue of material fact exists," Adderly v. Ferrier, 419 Fed.Appx. 135, 136 (3d Cir.2011) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)), whereupon "[t]he burden then shifts to the non-moving party to set forth specific facts demonstrating a genuine issue for trial." Id. "`A disputed fact is "material" if it would affect the outcome of the suit as determined by the substantive law,'" J.S. ex rel. Snyder v. Blue Mountain Sch. Dist., 650 F.3d 915, 925 (3d Cir.2011) (quoting Gray v. York Newspapers, Inc., 957 F.2d 1070, 1078 (3d Cir.1992)), while a factual dispute is genuine "`if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.... The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be significantly probative evidence on which the jury could reasonably find for the plaintiff." Bialko v. Quaker Oats Co., 434 Fed.Appx. 139, 141 n. 4 (3d Cir.2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)) (brackets omitted). We "draw all reasonable inferences in favor of the nonmoving party, and [we] may not make credibility determinations or weigh the evidence." Eisenberry v. Shaw Bros., 421 Fed.Appx. 239, 241 (3d Cir.2011) (quotation marks omitted).
In response to HHI's claim for breach of contract, Synagro focuses on language
Id. at 22 (citations omitted).
HHI responds that "[t]he only reasonable reading of Section 1 of the Consulting Agreement is that obtaining City Council approval of the bills prior to June 30, 2008 was all that was required on Hicks' part. There is no disagreement that the City Council subcommittees and full council gave their approvals prior to June 30, 2008." Pl.'s Mem. in Supp. of Mot. Summ. J. ("Pl.'s MSJ Mem.") at 11. HHI thus contends that "Plaintiff is entitled to partial summary judgment that his right to provide services, and be paid, under Amended Schedule D of his Consulting Agreement has not `expired' as that term is defined in Section 1 of the Agreement because the requisite `approval' of the City Council was timely obtained." Id.
Bucks Orthopaedic Surgery Assocs., P.C. v. Ruth, 925 A.2d 868, 872 (Pa.Super.2007) (citations omitted). Synagro and HHI's interpretive dispute revolves around § 1 of the Agreement. We must therefore interpret the phrase "if the Contract with the City is not approved." Agreement § 1.
Essentially, Synagro urges that this phrase cannot mean "if bills authorizing the Contract with the City are not passed by City Council". Instead, Synagro contends that
Def.'s MSJ Mem. at 22-23. We first note that Synagro misrepresents the language of § 1. Nowhere does it condition the survival of the Agreement on approval of the Contract "by the `City' as a whole."
Synagro's arguments respecting the parties' explicit references elsewhere in the Agreement to "the passage of bills by the Council" appear appealing at first glance. It is true that "[c]ourts do not assume that a contract's language was chosen carelessly, nor do they assume that the parties were ignorant of the meaning of the language they employed," Murphy v. Duquesne Univ. of the Holy Ghost, 565 Pa. 571, 777 A.2d 418, 429 (2001). Thus, the use of specific language to denote a particular meaning in one part of a Contract may give rise to the inference that if such language is absent elsewhere in a Contract then that meaning is not intended.
But an even more foundational tenet of contract interpretation is that a "contract is to be considered as a whole," J.E. Faltin Motor Transp., Inc. v. Eazor Exp., Inc., 273 F.2d 444, 445 (3d Cir.1960) (summarizing basic contract principles). As a result, courts should "adopt that sense of the word which best harmonizes with the context." Reilly v. City Deposit Bank & Trust Co., 322 Pa. 577, 185 A. 620, 623 (1936). The provisions of the Contract to which Synagro cites — Schedule B and Schedule C — provide the context in which we must interpret this phrase. These Schedules are, after all, explicitly incorporated into § 1 of the Agreement.
As we have noted, § 1 of the Agreement provides that:
Schedule B describes the "Consulting Services" as follows:
And Schedule C describes "Compensation":
Schedule B describes the services that HHI was to provide to Synagro. Of these services, two specifically concern the passage of two bills through City Council, while the third conditions HHI's right to provide "additional government and community relations and subcontracting (See Schedule D) services" upon whether "these two bills are successfully voted out of both Sub Committees and obtain full City Council approval." Schedule C describes the compensation HHI was to receive. Of this compensation, two types were in exchange for "work on passage of Bills," while the third was conditioned upon the exchange of services following "passage of Bills through full City Council."
Section 1 of the Agreement thus incorporates by reference a set of services and compensation that was yoked to the passage of two bills by City Council. To be sure, some services (and compensation therefor) were linked to securing passage, while others were conditioned upon whether this passage had indeed occurred. As a matter of structure, the condition described in Section 1 — "[t]he Consulting Services and Compensation provided for under this Agreement shall expire on June 30, 2008, if the Contract with the City is not approved by this date" — would seem most naturally to be triggered by passage of these bills.
This conclusion is rendered inescapable by two additional clauses from Schedule B that clarify what Section 1 means by "if the Contract with the City is not approved." Of the two bills HHI was tasked with moving through City Council, Schedule B describes one as a bill "to authorize the Water Department and the Procurement Department to enter into a Service Contract for biosolids services with the Philadelphia Municipal authority (PMA)." Schedule B then describes the process whereby these bills pass through City Council: "these two bills are successfully voted out of both Sub Committees and obtain full City Council approval." Schedule B thus envisions that HHI would provide "additional government and community relations and subcontracting (See Schedule D) services" only if two bills "obtain full City Council approval," one of which must "authorize the Water Department and the Procurement Department to enter into a Service Contract." Given that approve means "[t]o give formal sanction to; to confirm authoritatively," Black's Law Dictionary 118 (9th ed. 2009), there is little doubt that "full City Council approval" of a bill "authoriz[ing] the Water Department and the Procurement Department
Another approach confirms how § 1 requires this result. If one substitutes the referenced language from Schedule B into the sentence from § 1 that we are interpreting, the substitution converts "[t]he Consulting Services and Compensation provided for under this Agreement shall expire on June 30, 2008, if the Contract with the City is not approved by this date" into the following language:
Reading this hypothesized passage makes clear that "if the Contract with the City is not approved" can only refer to the passage by City Council of a bill authorizing the City to enter into a Service Contract with PMA.
Because the meaning of this provision is unambiguous, we need not consider extrinsic evidence respecting the Agreement's formation. The parties agree that City Council passed a bill before June 30, 2008 authorizing the City to enter into a Service Agreement with the PMA. We will consequently deny Synagro's motion for summary judgment with respect to HHI's breach of contract claim, and grant HHI's motion for partial summary judgment.
Synagro does not rely solely upon its claim that the Agreement expired on June 30, 2008. It also asserts that even if the Agreement survived this date, HHI's multiple material breaches justified Synagro's termination of the Agreement. Def.'s MSJ Mem. at 2-3. HHI responds that not only did it not breach the Agreement, but that none of the claimed breaches are material.
According to Synagro,
Def.'s MSJ Mem. at 26 (bracketed material in Def.'s MSJ Mem.) (citations omitted). Synagro continues:
Id. at 27 (citations omitted) (emphasis in original).
HHI responds that "[t]he evidence is absolutely clear that the City had decided to reduce the contract by this amount [$9.2 million] well before Hicks ever met Markman," Pl.'s Resp. to Def.'s MSJ at 16-17, and that even if "Hicks hurt his own reputation with Markman ... there has not been the slightest showing of any adverse consequences to Synagro's goodwill or business reputation." Id. at 17. HHI further suggests — in a vivid turn of phrase — that "when Hicks was interviewed, Synagro had long been the subject of new [sic] coverage regarding the bribery investigation in Detroit. As far as the evidence shows, Hick's [sic] lack of cooperation in an informal private interview had the same impact on the public perception of Synagro as the impact on the Atlantic Ocean from the shedding of one single, salty tear." Id. at 6 (citation omitted).
HHI correctly notes that Synagro has pointed to no evidence that Hicks's conduct during his interview with Markman was "deleterious to the good will" of Synagro, "injure[d] the business reputation of the Company," or "reflect[ed] adversely on any of the foregoing or adversely affect[ed] their business reputation or goodwill." As HHI notes, Hicks's behavior may have harmed his own reputation (such as it was) in the eyes of Markman, a seasoned former federal prosecutor, but we have seen no evidence that it tarnished Synagro's reputation or goodwill.
Synagro next argues that HHI breached its obligations under § 7 by failing "to reasonably assist [Synagro] at any time in the future, with respect to all reasonable requests to testify in connection with any legal proceeding or matter relating to the [sic] each other, including but not limited to any federal, state or local audit, proceeding or investigation, other than proceedings relating to the enforcement of this Agreement." Agreement § 7. Synagro suggests that its "request that Hicks meet with the company's attorneys for the purpose of providing information or evidence concerning his activities on behalf of Synagro constituted a `request to testify' within the meaning of Section 7," Def.'s MSJ Mem. at 28-29, and further argues that "Markman's request to meet with Hicks unquestionably constituted a request that he `testify,' i.e., that he given [sic] evidence as a witness." Id. at 30.
HHI responds that "the everyday meaning of [`testify'], and what Mr. Hicks understood the word to convey, is being sworn formally as a witness to `testify' under oath," Pl.'s Resp. to Def.'s MSJ at 18. In support, HHI cites the Fifth Edition of Black's Law Dictionary. Synagro maintains that "[t]he primary definition of
Accepting Synagro's definition of testify — and its favored source — does not resolve our definitional dilemma, since to make sense of the definition of testify we must determine what a witness is. According to Synagro's favored dictionary, the term may be defined in two ways: (1) "[o]ne who sees, knows, or vouches for something," or (2) "[o]ne who gives testimony under oath or affirmation (1) in person, (2) by oral or written deposition, or (3) by affidavit." Black's Law Dictionary 1740 (9th ed. 2009). Given the ambiguity of this term, we must construe the provision against the draftsman,
Synagro's objection to applying this definition in context also fails given that a witness may offer evidence under oath or affirmation in connection with a proceeding, investigation, or audit. Since neither Synagro nor Markman requested that Hicks provide testimony under oath or affirmation, his refusal or delay to do so cannot have violated § 7 of the Agreement.
But Synagro has another argument on this subject: that "[r]egardless of the proper interpretation of the term `testify,' Synagro's termination of the Consulting Agreement was also proper because, as an agent of Synagro, Hicks possessed a common law obligation to provide Synagro with information concerning his activities." Def.'s MSJ Mem. at 30. HHI responds that
Pl.'s Resp. to Def.'s MSJ at 22.
It is true that Restatement (Second) of Agency § 381 provides that "[u]nless otherwise agreed, an agent is subject to a duty to use reasonable efforts to give his principal information which is relevant to affairs entrusted to him and which, as the agent has notice, the principal would desire to have and which can be communicated without violating a superior duty to a third person" — though we have found few cases in which Pennsylvania courts adopted or applied this section. See Ward v. Torchia, 49 Pa. D. & C. 4th 315
eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 23 (Pa.Super.2002) (emphasis in original) (quoting Basile v. H & R Block, 777 A.2d 95, 101 (Pa.Super.2001)); see also Valley Forge Convention & Visitors Bureau v. Visitor's Servs., 28 F.Supp.2d 947, 953 (E.D.Pa.1998) (Waldman, J.) ("There is a crucial distinction between surrendering control of one's affairs to a fiduciary or confidant or party in a position to exercise undue influence and entering an arms length commercial agreement, however important its performance may be to the success of one's business.").
Without reaching HHI's contentions that (1) Section 7 of the Agreement displaced any common-law duty it might have to inform Synagro, and (2) any request from Synagro to interview Hicks was unreasonable, it is evident that Synagro has not demonstrated that HHI acted as its fiduciary and agent. The mere existence of a contract for services between HHI and Synagro does not, by itself, make the law of agency applicable to HHI. Because we have no basis for applying § 381 to HHI, we will reject Synagro's claim that HHI violated its common law duty to inform by refusing to meet with Synagro's officers for an interview.
We therefore deny Synagro's motion for summary judgment to the extent it is predicated upon HHI's alleged breach of § 7 of the Agreement and Restatement (Second) of Agency § 381.
Synagro next argues that
Def.'s MSJ Mem. at 33 (emphasis in original). Since Synagro contends that "[t]here is no question that if Hicks had misappropriated the $55,000 that Synagro gave him, Synagro would be justified in terminating the Agreement," id. at 32, it argues that HHI is estopped from challenging this termination.
Markman Dep. at 124 (quoted in Def.'s Stmt. ¶ 61). Synagro also quotes the following testimony from Hicks's deposition:
Def.'s Stmt. ¶ 60 (quoting Hicks Dep. at 129-131). Finally, Synagro presents as an exhibit a November 21, 2008 letter from Buchanan, Hicks's lawyer, in which she characterizes as "[e]qually groundless ... your claim that Mr. Hicks stole $55,000 from Synagro." Ex. EE to Def.'s Stmt. at 4.
The gravamen of Synagro's argument thus seems to be that (1) Hicks shrugged, winked, or nodded in response to Markman's questions about what he did with the $55,000 Synagro entrusted to him; (2) Markman inferred from these gestures that Hicks kept this money for himself; and (3) when Synagro confronted Hicks with this accusation, he denied it. It is hard for us to imagine weaker grounds for equitable estoppel than a rumored gesture, perceived second-hand, whose presumed import was denied at the first opportunity by its maker. Because Synagro cannot reasonably rely upon Hicks's equivocal gestures to conclude that he stole $55,000, we will deny its motion for summary judgment to the extent that it depends upon what Hicks allegedly did with the $55,000 Synagro entrusted to him.
The final material breach that Synagro alleges is that Hicks failed to respond to a request from Synagro for documents pursuant to § 5 of the Agreement, although he later produced six hundred pages of documents relating to the Agreement and his activities on behalf of Synagro, including emails between Hicks and Stevenson and Jackson relating to those activities. Def.'s MSJ Mem. at 34. HHI denies that these emails qualify as "documents" under § 5, arguing that "[a]s the context makes clear, section 5 merely requires HHI to return to Synagro its `own property' — hard-copies of confidential business records, containing `secretive and competitive' information, which information was, and was to remain, the `exclusive property' of Synagro, and to be returned upon request." Pl.'s Resp. to Def.'s MSJ at 29 (quoting Agreement § 5).
Section 5 of the Agreement provides as follows:
According to Synagro's preferred dictionary, a document is "[s]omething tangible on which words, symbols, or marks are recorded," Black's Law Dictionary 555 (9th ed. 2009), where tangible means "[h]aving or possessing physical form; CORPOREAL." Id. at 1592. Notwithstanding Synagro's protestation that "[i]n this day of ubiquitous electronic communication, it is simply not reasonable for Hicks to claim that his obligation to provide `documents' only applied to `hard-copy' documents," Def.'s Reply at 5, the plain meaning of the contract Synagro drafted includes only physical documents within Section 5's ambit. See Fischer & Porter Co. v. Porter, 364 Pa. 495, 72 A.2d 98, 101 (1950) ("It is fundamental that `Technical terms and words of art are [to be] given their technical meaning unless the context or a usage which is applicable indicates a different meaning.' And this rule is especially applicable where the words of art used are legal terms.") (brackets in Fischer & Porter Co.) (citation omitted).
Synagro's final argument in opposition to HHI's breach of contract claim is that the City's renegotiation of the Contract frustrated the purpose of the Agreement with HHI:
Def.'s MSJ Mem. at 39-40. As Synagro notes, the definitive Service Contract between PMA and PBS explicitly provided that the fixed dewatering/utilization and fixed operating charges — which together would have equalled $2,184,986 per month, or $26,219,832 per year — "shall be reduced by $33,333.33 per Billing Period," Ex. BB to Def.'s Stmt. ("Service Contract") §§ 8.2.B(1), 8.3(4), four cents short of $400,000 per year. Section 9.4(A) of the Service Contract further provided that
Pennsylvania has adopted the Restatement (Second) of Contracts, which provides that "[w]here, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary." Restatement (Second) of Contracts § 265 (1981) (quoted in Step Plan Servs., Inc. v. Koresko, 12 A.3d 401 (Pa.Super.2010)). The commentary to § 265 elaborates that
Comment a to id. (quoted in Step Plan Servs., 12 A.3d at 413). As the Superior Court of Pennsylvania has explained, "a court can excuse performance under a contract upon the occurrence of a truly unexpected event that thwarts the purpose or performance of a contract," Step Plan Servs., 12 A.3d at 412, though "if the allegedly unforeseeable event was in reality a natural and fairly predictable risk arising in the normal course of business, then a court may not dissolve a[n] ... agreement." Id.
With this authority in mind, we may reject Synagro's first proffered "pillar" of the Agreement: the fact that the City reduced Synagro's yearly payout under the Service Contract by four cents short of $400,000, leaving Synagro unable to pass the costs of HHI's services on to the City, does not frustrate the purpose of the Agreement. As the Restatement emphasizes, "[i]t is not enough that the transaction has become less profitable for the affected party or even that he will sustain a loss." Comment a to Restatement (Second) of Contracts § 265.
The second "pillar" presents a closer question. Though HHI contends "that the principal purpose of the Consulting Agreement was the retention of Hicks to obtain the City Council's approval of the Contract in the City Council," Pl.'s Resp. to Def.'s MSJ at 35, it appears that Section D, at least, had as its purpose securing certain consulting and subcontracting services from HHI for Synagro. But even if we assume this is true, it is not apparent from the record that the City's renegotiation of the Contract frustrated this purpose inasmuch as the Contract binds only PBS to "seek and ... receive PMA's advance written consent to use any particular broker or middle person." Service Contract § 9.4(A). As HHI points out, "there are no restrictions on Synagro's ability to retain and pay HHI to perform the Schedule D services, whatever restrictions might apply to PBS," Pl.'s Resp. to Def.'s MSJ at 36 (emphasis in original) — though, to be sure, Synagro cannot bill the City for these services. To the extent one purpose of the Agreement was that "Plaintiff would actually be permitted to perform services on behalf of Synagro in connection with the biosolids reprocessing project," Def.'s MSJ Mem. at 40, that purpose has not necessarily been frustrated.
Two other problems exist with applying the doctrine of frustration of purpose to this second "pillar." Synagro argues that when it "entered into the Consulting Agreement with Plaintiff, it did so with the basic assumption that Plaintiff's activities would not so severely damage Synagro in the City's eyes that the City insisted on a $9.2 million reduction in the Contract value." Id. at 43. But Synagro has pointed to no activities on HHI's part that caused this reduction aside from a September 25, 2008 interview between Markman and Hicks that postdated the City's September 17, 2008 decision to renegotiate the Contract. In fact, it appears that it was media reports about an unfolding bribery scandal involving Synagro in Detroit that prompted the City's reassessment of the Contract. In any event, Synagro has stipulated that on September 5, 2008, its counsel communicated to Markman "that Synagro management was eager to make sure that Synagro would be awarded the Contract," Ex. T to Def.'s Stmt. ¶ 4(l), and HHI correctly notes that "Markman did not recall Synagro challenging her view that compensating Hicks was a waste of money, or taking any steps to change her mind about the conditions that the City was imposing." Pl.'s Resp. to Def.'s MSJ at 41. The frustration of purpose doctrine only applies when "a party's principal purpose is substantially frustrated without his fault." Restatement
Finally, Synagro has failed to demonstrate that the City's renegotiation of the Service Contract was "a truly unexpected event." Step Plan Servs., 12 A.3d at 412. While it is true, as Synagro notes, that "Markman testified at her deposition that she `absolutely' thought that paying Plaintiff anything under Schedule D was a `waste of money,'" Def.'s MSJ Mem. at 43 (quoting Markman Dep. at 114-15), this estimation does not appear to have been grounded in any particularly egregious or unexpected behavior on Hicks's part. Instead, the record supports the inference that Markman objected to Hicks because she felt he was an "operator," Markman Dep. at 124, whose services represented "fat in the contract that the City is not paying for." Id. at 115. Given that Synagro's Agreement with HHI essentially secured Hicks's services as a political operative,
Because genuine disputes of fact remain as to whether (1) the purpose of the Agreement between Synagro and HHI has been frustrated by the City's renegotiation of the Service Contract, (2) Synagro bore any fault in bringing about this renegotiation, and (3) the City's renegotiation was an unexpected event, we deny Synagro's motion for summary judgment to the extent it seeks to discharge the Agreement due to frustration of purpose.
Finally, Synagro argues that it is entitled to summary judgment on HHI's claim for unjust enrichment inasmuch as "there is no doubt that the legal relationship between Plaintiff and Synagro was created and governed by their written contract, and it is that contract that is the exclusive source of their obligations to each other and any remedies Plaintiff might claim against Synagro." Def.'s MSJ Mem. at 46. HHI responds that "if Synagro is successful in maintaining its frustration of purpose defense, the Consulting Agreement would be dissolved, but Hicks would be allowed a claim for restitution. Unjust enrichment is a quasi-contractual doctrine that incorporates the concept of restitution." Pl.'s Resp. to Def.'s MSJ at 44.
While it is true that "the doctrine of unjust enrichment is inapplicable when the relationship between parties is founded upon a written agreement or express contract, regardless of how harsh the provisions of such contracts may seem in the light of subsequent happenings," Wilson Area Sch. Dist. v. Skepton, 586 Pa. 513, 895 A.2d 1250, 1254 (2006) (quotations omitted), Pennsylvania courts have held that "where the party excused by impossibility has partly performed the contract on his side before the impossibility arises ... justice requires the imposition of a quasi-contractual obligation on the party receiving such performance to pay its fair value." West v. Peoples First Nat'l Bank & Trust Co., 378 Pa. 275, 106 A.2d 427, 433 (1954) (quotation marks omitted).
AND NOW, this 31st day of May, 2012, upon consideration of plaintiff and counterclaim defendant Hiriam Hicks, Inc.'s ("HHI's") motion for partial summary judgment (docket entry #22), defendant and counterclaim plaintiff Synagro WWT, LLC's ("Synagro's") motion for summary judgment (docket entry #23), Synagro's motion to strike declaration of Hiriam Hicks (docket entry #30), HHI's motion to amend or correct declaration (docket entry #33), and any memoranda, responses, replies, and exhibits filed regarding these submissions, and upon the analysis set forth in the accompanying Memorandum, it is hereby ORDERED that:
1. Synagro's motion to strike declaration of Hiriam Hicks (docket entry #30) is GRANTED;
2. Those portions of Hiriam Hicks' declaration (Ex. A to docket entry #26) setting forth (1) legal argument, (2) summaries of exhibits, or (3) inadmissible hearsay are STRICKEN;
3. HHI's motion to amend or correct declaration (docket entry #33) is DENIED;
4. HHI's motion for partial summary judgment (docket entry #22) is GRANTED;
5. Synagro's motion for summary judgment (docket entry #23) is DENIED;
6. In accordance with Loc. R. Civ. P. 72.1 and 28 U.S.C. § 636(b) (3), this case is REFERRED to Judge Jacob P. Hart to attempt to resolve this controversy; and
7. The parties shall COOPERATE in accordance with Judge Hart's instructions and shall make every effort to meet with him at his earliest convenience.
