TransPacific Tire & Wheel Inc. v. Orteck International, Inc.. et al, No. 8:2006cv00187 - Document 70 (D. Md. 2010)
Court Description: MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 3/30/10. (sat, Chambers)
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND : TRANSPACIFIC TIRE & WHEEL, INC. : v. : Civil Action No. DKC 2006-0187 : ORTECK INTERNATIONAL, INC., : MEMORANDUM OPINION Presently pending and ready for resolution in this commercial contract case is the motion by Plaintiff TransPacific Tire & Wheel, Inc. for summary judgment on counts 1, 2, and 11 of its amended complaint. (Paper 62). The issues have been briefed fully and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, Plaintiff s motion will be granted. I. Background The following facts are either undisputed or viewed in the light most favorable International, Tire & Wheel, Inc. Inc. In to the December non-moving 2002, ( TransPacific ) corporation under California law. party, Plaintiff was Orteck TransPacific established as a TransPacific was created to purchase certain brands of tires from China and distribute them in North America. Defendant Orteck International, Inc. ( Orteck ) is a tire distributor that is incorporated and has its sole place of business in Maryland.1 matter jurisdiction because the The court has subject parties are citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest, legal fees, and costs. 28 U.S.C. §§ 1332 and 1334(b). Orteck was one of TransPacific s February 2003 to March 2005. customers from about As a customer, Orteck bought tires from TransPacific and sold them to a number of downstream tire distributors. (Orteck, Paper 58 ¶ 1; Orteck, Paper 112, Attach. 7, Chan Dep., at 77:17-18). In 2003, TransPacific and Orteck entered into an arrangement under which Orteck was to send purchase orders to TransPacific for the particular quantity and type of tires it sought to purchase. TransPacific Factory Direct Agreement. 1 calls this agreement the (Orteck, Paper 112, Attach. 3, ¶ On October 21, 2005, Orteck and another company, Venetian Investments, LLC, filed a separate case against TransPacific in the United States District Court for the District of Maryland. That case is Orteck Int l, Inc. et al. v. TransPacific Tire & Wheel, Inc., et al., No. 05-2882 (D.Md. filed Oct. 21, 2005) ( Orteck ). The cases have not been consolidated but have proceeded on parallel tracks for discovery and scheduling purposes. Here, TransPacific refers to the same Defendants Statement of Undisputed Material Facts ( DSUMF ) it filed in Orteck. (Orteck, Paper 112, Attach. 3). Likewise, Orteck refers to the same Plaintiffs Statement of Material Facts ( PSMF ) it filed in Orteck, although it also filed that document in this case. (Paper 67, Attach. 3). In DSUMF and PSMF, the term Defendants includes TransPacific and the term Plaintiffs includes Orteck. 2 114). Under the Factory Direct Agreement, TransPacific was supposed to deliver the tires Orteck ordered with an invoice that indicated the amount due to TransPacific for the tires. (Orteck, Paper Subsequently, 112, Orteck Attach. was tires to TransPacific. 21, obligated DeIorio to Decl., remit payment ¶ 9). for the Orteck began to purchase tires from TransPacific in 2003 on a purchase order basis. (Id. at 10). TransPacific fulfilled the orders, arranged for delivery of the tires, and issued invoices to Orteck. (Id. at 11, 21; Orteck, Paper 112, Attach. 7, Chan Dep., at 179:16-180:9; Attach. 14, DeIorio Dep., at 156:1-157:1). During 2003 and part of 2004, Orteck issued purchase orders for tires to California. TransPacific s customer service department in TransPacific calls this arrangement the California Warehouse Agreement. (Paper 68, at 3). Under the California Warehouse Agreement, TransPacific was supposed to deliver the tires Orteck ordered from its California warehouse and send Orteck an invoice indicating the amount due to TransPacific for the tires. (Id.). Throughout 2004, Orteck submitted purchase orders to TransPacific for tires from TransPacific s California warehouse. TransPacific then delivered the tires from its Carson, California warehouse to locations designated by Orteck 3 along with an invoice indicating the amount due. (Paper 68, at 3; Paper 112, Attach. 21, DeIorio Decl. ¶ 13). In early 2004, Sonny Veen ( Veen ), Orteck s executive vice president of purchasing, attended a meeting at TransPacific s headquarters in California. Dep., at 290:3-6). (Orteck, Paper 112, Attach. 5, Veen TransPacific s representatives Brian Chan ( Chan ) and Vic DeIorio ( DeIorio ) were also present at the meeting. (Orteck, Paper 112, Attach. 7, Chan Dep., at 276:2-20; Attach. 14, DeIorio Dep., at 153:11-21). At the meeting, Veen, Chan, and DeIorio discussed a possible arrangement whereby each company would Maryland Orteck (the could pay half of Maryland both the expenses Warehouse ) store tires. for where There a warehouse TransPacific was never a in and written agreement regarding the Maryland Warehouse. (Orteck, Paper 112, Attach. 5, Veen Dep., at 301:16-19, 337:13-20). TransPacific alleges that although the parties did not reach an agreement on the Maryland Warehouse itself, they agreed that TransPacific could ship tires it owned to the warehouse and Orteck could sell TransPacific s tires on a consignment basis and thereafter pay TransPacific for the tires. (Orteck, Paper 112, Attach. 9, Chan Decl., ¶ 41; Attach. 14, DeIorio Dep., at 226:12-227:3; Attach 21, DeIorio Decl., ¶ 45). calls this agreement the Consignment 4 TransPacific Agreement. Bruce Campbell ( Campbell ), who also attended the meeting in California, testified that it was agreed that Orteck could sell tires that TransPacific stored in the warehouse and Orteck would have to pay for them once they were sold. Attach. 17, Campbell Dep., at 178:15-22). Orteck consultant and later a (Orteck, Paper 112, Campbell was a former TransPacific employee.2 Additionally, Campbell and Veen both testified that there was no agreement that TransPacific would be limited as to what tires it could store in the warehouse. (Id. at 177:3-178:14; Orteck, Paper 112, Attach. 5, Veen Dep., at 302:11-13). Veen testified that the terms concerning the Consignment Agreement were never finalized. Orteck would order the tires. tires as per the order. business. All was [sic] finalized was [TransPacific] would ship the We would sell the tires and grow the (Orteck, Paper 112, Attach. 5, Veen Dep., at 301:20- 302:6). On February 13, 2004, Veen wrote to Chan to propose using a warehouse located at 12201 Old Columbia Pike, Silver Spring, Maryland 20904. Veen and Chan exchanged emails over the following days regarding the warehouse rent and other costs. Chan wrote to Veen regarding potential risks to TransPacific, 2 Orteck deposed Campbell on September 22, 2008. Paper 112, Attach. 17, Campbell Dep.). 5 (Orteck, and Veen replied in an email on February 17th, which stated, in relevant part: Every business venture has risks. Orteck has to invest 150,000 in warehouse racking and equipment, have overall payroll of $250,00 [sic] per year. Just in the first year we have to spend $500,000. Orteck will make profit to cover the expenses, but the long term benefit goes to [TransPacific] as Primewell is your brand. If you were making Orteck brand then the deal would be different. [TransPacific] has NO RISK. Even if the tires are not sold they are still your asset and fully insured, what is your risk?? (Orteck, Paper 112, Attach. 26, at 1-2). Orteck negotiated and signed the lease for the Maryland Warehouse. (Orteck, Paper 112, Attach. 27, Maryland Warehouse Lease; Attach 5, Veen Dep., at 321:2-21). After the meeting in California, TransPacific began to ship tires to the Maryland Warehouse. 21, Ex. CC). (Orteck, Paper 112, Attach. Orteck asserts that TransPacific sent surplus and unwanted tires to the Maryland Warehouse. Attach. 5, Veen Dep., at 327:16-328:2). (Orteck, Paper 112, Orteck admitted through Veen s testimony, however, that these tires were surplus and unwanted only 329:5-330:3). a finalized because Veen had not ordered them. (Id. at Veen also admitted that the parties did not have agreement, written or 6 otherwise, that prohibited TransPacific from shipping tires to the warehouse if Orteck had not ordered them. periodically (Id. audited the at 331:9-332:13). Maryland Warehouse to TransPacific determine amount of consignment sales that had taken place. the (Orteck, Paper 112, Attach. 17, Campbell Dep., at 180:21-181:4, 20-24). In October and November of 2004, Orteck sold the surplus and unwanted tires at fire sale prices. (Orteck, Paper 112, Attach. 5, Veen Dep., at 356:14-358:6, 538:14-20; Attach. 14, DeIorio Dep., at 214:5-215:13). Veen stated that fire sale meant a deep discount . Dep., at 582:9). (Orteck, Paper 112, Attach. 5, Veen Veen testified that he could not remember how much Orteck realized from the sales of TransPacific s tires at the fire sale prices. (Id. at 538:21-539:2). Veen also testified that Orteck had not come to an internal estimate of the value of declaration, the filed tires. after (Id. Veen s at 598:7-601:12). deposition was taken, Veen s states that the total amount that Orteck realized from the fire sale of TransPacific tires was $547,089. Decl., ¶ 41). (Paper 67, Attach 15, Veen TransPacific alleges that it was never paid for the tires that were sold in the fire sale. Orteck terminated the Maryland third or fourth quarter of 2004. 5, Veen Dep., at 396:3-18). On 7 (Paper 68, at 17). Warehouse lease in the (Orteck, Paper 112, Attach. October 28, 2004, Orteck invoiced TransPacific for twelve months of rent at the Maryland Warehouse. (Id. at 391:13-399:1; Attach. 28, Warehouse Rent Invoice). The monthly rent for the warehouse was $11,500. Orteck billed TransPacific $7,500 per month for rent which in total was $90,000 for the year. (Orteck, Paper 112, Attach. 28, Warehouse reliance Rent Invoice). TransPacific issued Orteck TransPacific. owed a In credit of on $90,000 (Orteck, Orteck s invoice, against the 112, Attach. Paper amount 29). Orteck does not dispute that Orteck received a credit for an entire year s worth of rent even though it had sold all the tires in the Maryland Warehouse, had not paid TransPacific for the tires, and terminated the lease on the Maryland Warehouse short of a year in the third or fourth quarter of 2004. (Orteck, Paper 112, Attach. 5, Veen Dep., at 348:9-19). On March 3, representative, 2005, Ronny DeIorio Hoseada, met and another with Veen TransPacific in Maryland. (Orteck, Paper 112, Attach. 5, Veen Dep., at 581:6-582:9). the meeting, the parties representatives discussed At Orteck s late payments and the need for Orteck to catch up on payments for its outstanding invoices. Veen admitted that Orteck owed TransPacific money, but stated that the parties had not agreed on the amount of money owed. (Id. at 596:21-598:1). 8 On April 15, 2005, TransPacific sent a letter to Orteck that detailed TransPacific s outstanding (Orteck, Paper 112, Attach. 29). account balance. On May 10, 2005, Veen faxed to TransPacific the first page of the April 15th letter, which was marked with Veen s notes. (Orteck, Paper 112, Attach. 5, Veen Dep., at 552:18-553:7; Attach. 40). information about one invoice Veen requested additional and asked numbers for three consignment invoices. about (Id.). container On May 23, 2005, TransPacific sent a letter to Orteck, which provided the information Veen requested. (Orteck, Paper 112, Attach. 41). In June 2005, the parties continued their communications regarding Orteck s outstanding invoices. TransPacific sent Orteck a letter on June 20, 2005 concerning Orteck s overdue account balance. (Orteck, Paper 112, Attach. 42). TransPacific rejected Veen s proposal of a payment plan and instead suggested that it would accept six monthly equal payments of $367,069.53 starting on July 1, 2005. (Id.). TransPacific informed Orteck that Orteck could resume placing orders if Orteck made those payments. TransPacific outstanding bills. alleges that Orteck never paid the (Paper 68, Attach. 1, at 9). TransPacific filed a complaint against Orteck in the United States District Court for the Central District of California on August 17, 2005 (Paper 1) and filed an amended complaint on 9 January 20, 2006. (Paper 12). In January 2006, this case was transferred to the United States District Court for the District of Maryland. After a period of discovery, TransPacific filed a motion for summary judgment on June 19, 2009.3 (Paper 62). TransPacific asks the court to enter judgment as a matter of law on counts 1, 2, and 11 of its amended complaint. II. Orteck s Closed-Door Statute Argument As a threshold matter, Orteck asks the court to dismiss TransPacific s suit because Md. Code Ann., Corps. & Assn s § 7301 (the Closed-Door Statute ) allegedly bars TransPacific from bringing this suit in Maryland. (Paper 67, at 6). Orteck argues that the Closed-Door Statute bars unqualified foreign corporations from bringing suit in any Maryland court. (Paper 67, at 6). Orteck asserts that TransPacific is an unqualified corporation because the charter authorizing it to do business in Maryland was forfeited on July 1, 2006. Attach. 3, forfeiture ¶ of 190). its Orteck charter contends triggers the that (Paper 67, TransPacific s application Closed Door Statute and the dismissal of this case. of the (Paper 67, at 7). 3 Later, TransPacific filed an amended memorandum in support to its motion for summary judgment, in which citations to DSUMF have been corrected. (Paper 68). 10 The Closed-Door Statute states: § 7-301. Noncomplying corporation, maintenance of suit. If a foreign corporation is doing or has done any intrastate, interstate, or foreign business in the State without complying with the requirements of Subtitle 2 of this title, neither that corporation nor any person claiming under it may maintain a suit in any court of this State unless it shows to the satisfaction of the court that: (1) The foreign corporation or the person claiming under it has paid the penalty specified in §7-302 of this subtitle; and (2) Either: (i) The foreign corporation or a foreign corporation successor to it has complied with the requirements of Subtitle 2 of this title; or (ii) The foreign corporation and any foreign corporation successor to it are no longer doing intrastate, interstate, or foreign business in this State. Md. Code Ann., Corps. & Assn s § 7-301. Orteck s request to dismiss TransPacific s suit under the statute after Orteck successfully moved to transfer the case to this court is disingenuous and Orteck s understanding of the Closed-Door Statute is misguided. First, judicial estoppel weighs against Orteck s argument. Judicial estoppel prevents a party who successfully pursued a 11 position in a prior legal proceeding from asserting a contrary position in a later proceeding. Gordon v. Posner, 142 Md.App. 399, 369 424 (2002), marks omitted). California cert. denied, Md. 180 (2002)(quotation TransPacific originally filed this action in a court. On Orteck s motion, which TransPacific opposed, the case was transferred to the District of Maryland. Because Orteck first argued that the case should be transferred to Maryland, it may not later argue that the Closed-Door Statute prevents the court from hearing TransPacific s suit, which was not originally brought in Maryland. Furthermore, the Closed-Door Statute would not apply to bar TransPacific s suit even if the case had originated in Maryland. [U]nder §7-301, corporation that an unregistered engages in either or unqualified interstate or foreign foreign business activity in Maryland is barred from suing in the courts of this State only if the corporation also engages in localized business activity in Maryland such that it is doing business here. Yangming Marine Transport Corp. v. Revon Prods. U.S.A, Inc., 311 Md. 496, 505 (1988). unregistered or unqualified The party asserting that an foreign corporation is doing business within the state carries the burden of proof. S.A.S. Personnel Consult., Inc. v. Pat-Pan, Inc., 286 Md. 335, 339 (1979). The Court of Appeals of Maryland has declined to grant 12 a motion to dismiss filed pursuant to the Closed-Door Statute when the plaintiff had ceased doing business in Maryland before its qualification lapsed. See J.I. Case Credit Corp. v. Insley, 293 Md. 483, 494 (1982). Orteck has not met its burden to prove that TransPacific is or was doing business in Maryland as an unregistered or unqualified corporation. TransPacific asserts that it has not done any business in Maryland since its charter was forfeited in 2006. (Paper 69, at 6; Attach. 1, Lawu Decl., ¶ 3). TransPacific only seeks to recover in this suit for that business Maryland was charter. transacted Because before TransPacific it has forfeited its not any done intrastate business in Maryland without complying with Section 2 as referenced in § 7-301, the Closed-Door Statute does not apply and TransPacific s suit will not be dismissed. III. Motion for Summary Judgment A. Standard of Review TransPacific has moved for summary Federal Rule of Civil Procedure 56. judgment pursuant to It is well established that a motion for summary judgment will be granted only if there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(f); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008). 13 In other words, if there clearly exists factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party, summary judgment is inappropriate. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); JKC Holding Co. LLC v. Washington Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001). When ruling on a motion for summary judgment, the court must construe the facts alleged in the light most favorable to the party opposing the motion. See Scott v. Harris, 127 S.Ct. 1769, 1774 (2007); Emmett, 532 F.3d at 297. A party who bears the burden of proof on a particular claim must factually support each element of his or her claim. 323. Celotex Corp., 477 U.S. at As summarized by the Fourth Circuit: The party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials of his pleading, but must come forward with specific facts showing that there is a genuine issue for trial. Matsushita [Elec. Indus. Co. v. Zenith Radio Corp.], 475 U.S. [574 (1986)] at 587, 106 S.Ct. 1348 (internal quotation marks & emphasis omitted); see Rivanna Trawlers Unlimited v. Thompson Trawlers, Inc., 840 F.2d 236, 240 Cir. 1988). Mere unsupported (4th speculation is not sufficient to defeat a summary judgment motion if the undisputed evidence indicates that the other party should win as a matter of law. Francis v. Booz, Allen & Hamilton, Inc., 452 F.3d 299, 308 (4th Cir.2006); see Ash v. UPS, 800 F.2d 409, 411-12 (4th Cir. 1986) (per curiam) ( [U]nsupported speculation ... is not 14 sufficient to defeat a summary judgment motion. ). Nor can the nonmoving party create a genuine issue of material fact through mere speculation or the building of one inference upon another. Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.1985). When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. Matsushita, 475 U.S. at 586, 106 S.Ct. 1348 (footnote omitted). Emmett v. Johnson, 532 at 297. B. Analysis 1. Breach of Contract (Counts 1 and 2) TransPacific argues that it should be granted summary judgment on its two breach of contract claims, count 1 (Breach of Contract re: Factory Direct Agreement) and count 2 (Breach of Contract amended breached re: California complaint. several TransPacific. between the purchase contracts, Warehouse TransPacific contracts for TransPacific parties orders and for because tires, TransPacific fulfilling Orteck s orders. Agreement), alleges its Orteck which that purchases contends that sent of of first Orteck has tires from contracts existed TransPacific written constituted accepted its those offers contracts for by (Paper 68, Attach. 1, at 11-12). TransPacific alleges that Orteck breached those contracts by not remitting payment to TransPacific for the tires. 15). 15 (Id. at 14- TransPacific contends that the following amounts, reflected in invoices ordered by and delivered to Orteck, are due pursuant to the Factory Direct Agreement: ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice No. No. No. No. No. No. No. No. No. No. No. No. 5199O 5190O 51910 5193O 5196O 5197O 5201O 5202O 5203O 5204O 5208O 5209O / / / / / / / / / / / / Order Order Order Order Order Order Order Order Order Order Order Order No. No. No. No. No. No. No. No. No. No. No. No. (Paper 68, at 14)(citations omitted). seeks for these invoices is 5333 5283 5304 5307 5311 5312 6015 6016 6017 6019 6137 6139 - $35,910.41 $37,206.97 $36,123.41 $27,108.04 $36,123.41 $37,882.17 $36,385.75 $36,385.75 $36,385.75 $38,414.73 $36,123.41 $35,949.41 The total TransPacific $429,999.21, plus prejudgment interest. Additionally, TransPacific argues that it is entitled to payment for an invoice Warehouse Agreement. in connection with the California TransPacific states, Orteck has not paid TransPacific $45,130.50 reflected in Invoice No. 100656Z, which was issued after TransPacific filled Orteck s Order No. W8007. (Id. at 15)(citation omitted). TransPacific seeks $45,130.50 for this invoice, plus prejudgment interest. Orteck counters that summary judgment should not be granted on TransPacific s breach of contract claims because disputes of material fact exist as to whether TransPacific delivered the 16 tires as claimed. Orteck contends that TransPacific needs to present a very specific paper trail to show that TransPacific delivered the tires (Paper 67, at 8). valid contracts Orteck requested to Orteck s customers. Orteck asserts that in order to establish for the Factory Direct Agreement invoices, TransPacific would have to produce the documents of transfer (including a signed receipt). [a]ppropriate documentary (Id. at 9). proof [for Orteck asserts that container sales or shipments claimed under the oral consignment agreement ] should consist of an Invoice, Packing List, Arrival Notice, Bills of Lading, and Proof of Delivery signed by Orteck s customer. (Id.). Orteck argues documentation 0051990 and to that establish 0051930, admitted liabilities off. (Id. at TransPacific liability although are 10). In for Orteck subject to has provided only two contrast, invoices, that asserts Orteck s proper [t]hese claims Orteck for states set that TransPacific has not presented sufficient documentation for the rest of 0051900, the invoices. 052040, First, 052080, and documented by TransPacific. asserts properly that invoices documented. Orteck 052090 states have 051960, Orteck and alleges 17 invoices been not (Id. at 11-12). 051910, that properly Second, Orteck 051970 that were the not tires corresponding to those invoices were sent to the Maryland Warehouse and that TransPacific attempts to count them twice for damages under its breach of contract and conversion claims. Third, Orteck asserts that TransPacific has produced no paper trail of the shipment from the port to Orteck s customer and have no signed proof of delivery by Orteck s customers and have no proof of delivery to the Maryland Warehouse for invoices 052010, 052020, alleges that and 052030. TransPacific (Id. has at 14). not Finally, provided any documents support that a shipment was made for invoice 100656Z. 15). Orteck concludes motion should be TransPacific s denied that TransPacific s because documentation of of the all two to (Id. at summary alleged but Orteck judgment defects of the in tire shipments related to its breach of contract claims. Under Maryland Law, a contract for a sale governed by the Uniform Commercial Code ( UCC ). Ann., Com. Law §§ 2-101 et seq. The UCC of goods is See Md. Code provides that a contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both recognizes the existence of such a contract. 204(1). Unless otherwise unambiguously parties which Id. at § 2- indicated by the language or circumstances, [a]n offer to make a contract shall 18 be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances. Id. at § 2-206(1)(a). The UCC does not define the term offer. Maryland Supreme Corp. v. Blake Co., 279 Md. 531, 538-39 (1977). look to the common law and the whether an offer has been made. definite and certain. Id. law Maryland courts merchant Id. at 539. to determine An offer must be To be capable of being converted into a contract of sale by an acceptance, it must be made under circumstances evidencing an express or implied intention that its acceptance shall constitute a binding contract. Id. [I]n its final determination, the question of whether an offer was made seems to be one dependent on the intention of the parties, and, being such, it depends on the facts and circumstances of the particular case. Id. at 540. Courts have typically regarded a written purchase order as an offer to buy. See USEMCO, Inc. v. Marbro Co., 60 Md.App. 351, 362 (1984)(finding that a purchase order constitute[d] an offer Corp., to buy ); 210 F.3d Audio 254, Visual 259 (4th Assocs., Cir. Inc. v. Sharp 2000)(noting in Elecs. a case interpreting Maryland contract law, Typically, a seller s price quotation is an invitation for an offer, and the offer usually takes the form of a purchase order, providing product choice, quantity, price, and terms of delivery. ). 19 When an offer is made by one party, a contract may only be formed if acceptance of the offer is expressed by another party. Blake, 279 Md. At 541 ( The mutual assent which is the essential feature of every knowing and offer. ). contract sufficient is crystallized acceptance to a when certain there and is a definite The UCC provides that the seller can accept such an offer in any of several ways, often determined by custom and practice. 208. See Md. Code Ann., Com. Law §§ 2-204(1), 2-206(1), 2- Unless otherwise indicated by the offeror, [a]n order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or nonconforming goods. . . . current shipment of conforming or Id. at § 2-206(1)(b). Once a contract has been formed, [t]he obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance with the contract. Com. Law § 2-301. Md. Code Ann., A buyer s failure to pay for goods is a material breach of contract that entitles the seller to damages. Id. at §§ 2-607, 2-709. UCC Section 2-709(1)(a) provides that [w]hen the buyer fails to pay the price as it becomes due the seller may recover . . . the price . . . [o]f goods accepted. Id. Thus, a seller is entitled to recover damages for the 20 purchase price of goods when a buyer breaches a contract for the sale of goods by failing to pay the purchase price. In addition to damages, a seller may also recover prejudgment interest when a buyer breaches a contract for a sale of goods by failing to pay the invoice price for goods ordered and delivered. Pre-judgment interest is allowable as a matter of right when the obligation to pay and the amount due had become certain, definite, and liquidated by a specific date prior to judgment so that the effect of the debtor s withholding payment was to deprive the creditor of the use of a fixed amount as of a known date. Buxton v. Buxton, 363 Md. 634, 656 (2001)(quoting First Virginia Bank v. Settles, 322 Md. 555, 564 (1991)). The statutory rate for prejudgment interest is six percent per annum. Here, Orteck TransPacific. order for Md. Const. art. III, § 57. entered into several contracts with For each contract, Orteck sent a written purchase tires to TransPacific. Orteck s purchase order constituted an offer to enter into a contract. In response, TransPacific contract accepted Orteck s offer for each by shipping the tires described in Orteck s purchase order and by issuing an invoice to Orteck. TransPacific arranged for the delivery of tires pursuant to Orteck s instructions for each of the orders. To support its breach 21 of contract claims, TransPacific has provided as evidence documents created by Orteck indicating that Orteck placed the orders, TransPacific invoices, shipped and from California bills of either the warehouse. lading showing factory While in Orteck that China the or tires were TransPacific s disputes the type of documents TransPacific needs to produce to meet its burden for summary judgment, Orteck does not dispute that the tires for each invoice were delivered. Orteck has not produced any evidence to refute the inference that the tires underlying any of the invoices at issue were delivered. has not presented any evidence to Furthermore, Orteck show that Orteck paid TransPacific the amounts specified in the invoices.4 Accordingly, Orteck has not raised a genuine issue of material fact and will be liable to TransPacific for the invoice price of the tires in following invoices, plus prejudgment interest: 4 Orteck contends that invoices 51910, 51960, and 51970 were double counted by TransPacific as proof of damages for conversion. (Paper 67, at 12). The container numbers holding these shipments (UCMU8952949, ECMU9022245, and ECMU9265353), however, do not appear on TransPacific s list of consignment containers that were shipped to Maryland, which is the list used as the basis for TransPacific s conversion claim. (Compare Orteck, Paper 112, Attach. 21, DeIorio Decl., Ex. F, at TP001973 with Orteck, Paper 112, Attach. 21, DeIorio Decl., Ex. O, at ORTECK 001279; Ex. R, at ORTECK 001283; Ex. T, at ORTECK 001288). Thus, Orteck s assertion of double counting is without evidentiary support. 22 ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice No. No. No. No. No. No. No. No. No. No. No. No. 5199O 5190O 51910 5193O 5196O 5197O 5201O 5202O 5203O 5204O 5208O 5209O / / / / / / / / / / / / Order Order Order Order Order Order Order Order Order Order Order Order No. No. No. No. No. No. No. No. No. No. No. No. 5333 5283 5304 5307 5311 5312 6015 6016 6017 6019 6137 6139 - $35,910.41 $37,206.97 $36,123.41 $27,108.04 $36,123.41 $37,882.17 $36,385.75 $36,385.75 $36,385.75 $38,414.73 $36,123.41 $35,949.41 No. W8007 and ¢ Invoice No. $45,130.50 Accordingly, TransPacific in 100656Z judgment the / will amount of Order be entered $475,129.71 in in - favor damages of plus prejudgment interest of 6% accruing between 30 days after the invoice date and the date of final judgment. 2. Conversion (Count 11) TransPacific argues that it should be granted summary judgment on its conversion claim, count 11 of its first amended complaint. TransPacific alleges that Orteck sold all of the tires owned by TransPacific that were stored at the Maryland Warehouse, but did not pay TransPacific for those tires. 68, Attach. 1, at 17). TransPacific argues that (Paper Orteck is liable for conversion as a matter of law because: 1) Orteck was a consignee who failed to return or pay for consigned goods; and 23 2) even invalid, if the Orteck parties alleged intentionally Consignment exerted Agreement was control over unlawful TransPacific s property in denial of TransPacific s right to the property. (Id. at 16-18). As proof of the quantity of the tires that were in the warehouse, TransPacific offers invoices generated after physical audits of the warehouse (Orteck, Paper 112, Attach containers 22, Ex. shipped to D, the at TP002007), Maryland a list Warehouse on of all the consignment (Id., Ex. F, at TP001973), and the bills of lading showing all of the containers that were shipped from China. (Id., Ex. CC). TransPacific seeks to be awarded the fair market value of the tires shipped by TransPacific to the Maryland Warehouse for six invoices: ¢ ¢ ¢ ¢ ¢ ¢ Invoice Invoice Invoice Invoice Invoice Invoice No. No. No. No. No. No. 300002O - $1,388.91 300003O - $70,929.97 300004O - $120,272.11 300005O - $548,198.61 300011O - $547,634.81 INVDC00000707 - $538,776.33 (Paper 68, at 20). TransPacific notes: Measured by invoice prices, the total fair market value of the converted tires is actually $1,827,150.74. In closing out its relationship with Orteck, however, TransPacific applied several credits, including the generous credit for the warehouse rent . . . . Accounting for these credits results in a reduction of the amount 24 of damages that TransPacific conversion to $1,725,231 . . . . seeks for (Paper 68, at 20, n.1)(citation omitted). Thus, TransPacific seeks summary judgment on its conversion claim and an award of $1,725,231 in damages, plus prejudgment interest. TransPacific s amended complaint also seeks punitive damages on TransPacific s conversion claim. Orteck responds that TransPacific is not entitled to summary judgment on its conversion claim because Orteck properly rejected the tires and disposed of reasonable manner under the UCC. them in a commercial, (Paper 67, at 16). Citing Md. Code Ann., Com. Law § 2-601, the Perfect Tender rule, Orteck contends shipments of Warehouse. that it unwanted (Id. at 19). rightfully or rejected surplus tires TransPacific s to the Maryland Section 2-601(a) states, . . . if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may (a) Reject the whole . . . . Id. Orteck asserts that it rightfully rejected TransPacific s shipments of unwanted or surplus tires to the Maryland Warehouse because the tires failed to conform to the contract between about the the TransPacific parties and rejection of delivered because the Orteck tires them. a notified reasonable (Paper 67, TransPacific time at after 18-19). Additionally, Orteck contends that its sale of the tires does 25 not amount to conversion because Orteck held the tires for a time sufficient TransPacific for instead TransPacific abandoned to them. remove (Id. at them, and 20-21, 23). Finally, Orteck disputes TransPacific s calculation of damages and asserts that the amount Orteck realized from selling the tires is the fair market value of the tires. Orteck concludes that in addition to (Id. at 26-29). denying TransPacific s motion for summary judgment on its conversion claim, the court should award Orteck its rightful relief of a ten percent commission on the tires it sold from the Maryland Warehouse in addition to expenses and other costs. Conversion is an intentional (Id. at 23). tort, consisting of two elements, a physical act combined with a certain state of mind. Darcars Motors of Silver Springs, Inc. v Borzym, 379 Md. 249, 261 (2004). The physical act can be summarized as any distinct act of ownership or dominion exerted by one person over the personal property of another in denial of his right or inconsistent with it. Id. (quoting Allied Investment Corp. v. Jasen, 354 Md. 547, 560 (1999). In addition to the physical act of exerting unlawful control, . . . there is an intent element to the tort of conversion, and a wide range of different states of mind qualify. At a minimum, a defendant liable of conversion must have an intent to exercise a dominion or control over the goods which is in fact inconsistent 26 with the plaintiff s rights. Keys v. Chrysler Credit Corp., 303 Md. 397, 414, 494 A.2d 200, 208 (1985). The defendant may have the requisite intent even though he or she acted in good faith and lacked any consciousness of wrongdoing, as long as there was an intent to exert control over the property. Darcars, 379 Md. at 262. A defendant s level of intent may also rise to the level of actual malice, or consciousness of the wrongdoing, in which case the defendant s conduct may justify a jury s imposition of punitive damages. Id. at 263-64. Conversion may occur in a variety of circumstances. For example, [a] purchaser of stolen goods or an auctioneer who sells them in the utmost good faith becomes a converter, since the auctioneer s acts are an interference with the control of the property. Id. 262-63. Additionally, a consignee who fails to return or pay for consigned goods may be held liable for conversion. See, e.g. Bacon & Assocs, Inc. v. Rolly Tasker Sails (Thailand) Co., 154 Md.App. 617, 632 (2004). Here, Orteck is liable for the tort of conversion. TransPacific made several shipments of tires to the Maryland Warehouse.5 (Orteck, Paper 112, Attach 22, Ex. D, at TP002007; Ex. F, at TP001973; Ex. CC). 5 Orteck admitted through Veen s Orteck s assertion that TransPacific has not included the proper documentation to establish that the tires were delivered is incorrect. To the contrary, Orteck has not presented any evidence to refute the evidence that the tires were delivered. 27 testimony that, in October and November of 2004, Orteck sold the tires stored by TransPacific at the Maryland Warehouse in a fire sale. (Orteck, 356:14-358:6, 538:14-20). Paper 112, Attach. 5, Veen Dep., at Orteck admitted that it had sold or otherwise disposed of tires TransPacific stored in the Maryland Warehouse by March 3, 2005. (Orteck, Paper 112, Attach 44, ¶ 21). that Orteck s permission support. to suggestion hold the fire TransPacific sale is without gave Orteck evidentiary Orteck did not pay TransPacific for the tires it sold in the fire sale. at 357:7-358:6). subsequent (Orteck, Paper 112, Attach. 5, Veen Dep., Orteck s sale of TransPacific s tires, without payment for those tires, is a distinct act of ownership or dominion exerted over TransPacific s property in denial of TransPacific s right to the tires. While it is an issue for the jury whether Orteck acted with actual malice when it held the fire sale and later did not pay for the tires, Orteck at least acted with good faith intent to exert control over TransPacific s property. Thus, Orteck has committed the tort of conversion. Orteck s arguments regarding the Perfect Tender rule are unpersuasive. To repeat, the rule states, . . . if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may (a) Reject the whole. . . . 28 Md. Code Ann., Com. Law § 2-601(a). TransPacific does not argue that it delivered the tires at issue for its conversion claim pursuant to a contract. While Orteck contends that TransPacific should have sent an appropriate mix of Steer Tires to service GCR, not the unmarketable and space consuming allotment of drive tires dumped upon Orteck by TransPacific, Orteck has not presented any evidence of an agreement between the parties that required TransPacific only to ship an appropriate mix. 18; Paper 68, at 16-17). Orteck (Paper 67, at admitted through Veen s testimony that the parties did not have a finalized agreement, written or otherwise, that prohibited TransPacific from shipping tires to the warehouse even if Orteck had not ordered them. (Orteck, Paper Additionally, 112, a Attach. rejection 5, is seasonably notifies the seller. 602(1). Although rejected the Maryland warehouse Orteck non-conforming because Veen ineffective at 331:9-332:13). unless the buyer Md. Code Ann., Com. Law § 2- contends tires it Dep., that that promptly Orteck were rightfully shipped notified to the TransPacific that they were not conforming . . . ., it has not presented evidence of its rejection of any shipment. 15, Veen Decl., ¶ 93). (Paper 67, Attach Therefore, the Perfect Tender rule does not apply in this case to shield Orteck from liability for conversion. 29 The measure of damages in an action for conversion of personal property is the fair market value of the property at the time of conversion, with legal interest thereon to the date of the verdict. Keys v. Chrysler Credit Corp., 303 Md. 397, 415 (1985). TransPacific claims that the following invoices, reflecting wholesale prices, establish the fair market value of the tires shipped by TransPacific to the Maryland Warehouse before Orteck converted and sold the tires: ¢ ¢ ¢ ¢ ¢ ¢ (Paper 68, TransPacific Invoice Invoice Invoice Invoice Invoice Invoice at No. No. No. No. No. No. 3000020 - $1,388.91 3000030 - $70,929.97 3000040 - $120,272.11 3000050 - $548,198.61 3000110 - $547,634.81 INVDC00000707 - $538,776.33 20)(citations seeks for these omitted). invoices The is total $1,725,231 amount plus prejudgment interest. Orteck asserts that there is a genuine issue of material fact as to the fair market value for the tires because its calculation of the value of the tires sold at the fire sale is $547,089. (Paper 67, Attach 15, Veen Decl., ¶ 41). The evidence Orteck has presented as to the value of the tires, however, is inconsistent and therefore does not raise a genuine issue of fact regarding the value of the tires. 30 Orteck did not attempt to value the tires sold at the fire sale until Veen s declaration was TransPacific s submitted motion for with Orteck s summary judgment. opposition In fact, to Veen testified on an earlier date that Orteck could not arrive at an amount for the tires without TransPacific s input, but that the amount was much less than TransPacific claimed. Paper 112, Attach. 5, Veen Dep., at 597:8-601:12). that fire sale meant a deep discount . asked specifically show much Orteck Veen s declaration, which values contradicts his own prior testimony. Veen stated (Id. at 582:9). realized sale, Veen testified, I don t recall. (Orteck, from the When fire (Id. at 538:21-539:2). the tires at $547,089, If a party who has been examined at length on deposition could raise an issue of fact simply by submitting an affidavit contradicting his own prior testimony, this would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact. Barwick v. Celotex Corporation, 736 F.2d 946, 960 (4th Cir. 1984)(quoting Perma Research & Dev. Co. v. Singer Co., 410 F.2d 572, 578 (2d Cir. 1969)). Accordingly, [a] genuine issue of material fact is not created where the only issue of fact is to determine which of the two conflicting versions of the . . . testimony is correct. Id. Therefore, Orteck s valuation of the tires, as stated in Veen s declaration, is not sufficient to 31 raise a genuine factual dispute as to the fair market valuation of the converted tires. Accordingly, TransPacific in judgment the will amount be of entered $1,725,231 in in favor damages of plus prejudgment interest of 6% accruing between March 3, 2005 and the date of final judgment.6 IV. Conclusion For the foregoing reasons, Plaintiff s motion for summary judgment will Plaintiff s be granted amended as complaint. to counts 1, Plaintiff 2, will and be 11 of awarded damages in the amount of $475,129.71 plus prejudgment interest for its breach of contract claims and prejudgment interest for its conversion claim. $1,725,231 plus A separate Order will follow. /s/ DEBORAH K. CHASANOW United States District Judge 6 TransPacific also seeks punitive damages on its conversion claim, but correctly notes that entitlement to punitive damages and the amount of punitive damages is an issue to be determined by a jury. (Paper 68, at 19, n.9). 32
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