United States District Court, D. Minnesota
Amanda J. Rome, Michael F. Cockson, and Staci L. Perdue, Faegre Baker Daniels LLP, for Plaintiff.
Kyle A. Eidsness and Douglas J. McIntyre, Foley & Mansfield, PLLP, for Defendant.
MEMORANDUM OPINION AND ORDER
SUSAN RICHARD NELSON, District Judge.
This matter is before the Court on Plaintiff's Motion for Summary Judgment [Doc. No. 38]. For the reasons set forth below, the Court grants, in part, Plaintiff's motion.
Plaintiff Datalink Corp. ("Datalink") brought this suit against Defendant Perkins Eastman Architects, P.C. ("Perkins Eastman") alleging breach of contract and unjust enrichment. (See Notice of Removal, Ex. A, "Compl." ¶¶ 16-27 [Doc. No. 1-1].) Datalink is a "data center solutions company that provides information technology services." (See id. ¶ 2.) Perkins Eastman is an international planning, design, and consulting firm with multiple offices in the United States and around the world. (See id. ¶ 3.)
In early 2012, Alan Ho, Perkins Eastman's Senior Associate Director, Systems, and Kim Lam, Associate Principal Director, Technology, contacted a North Carolina corporation, Stratech, regarding issues with Perkins Eastman's data backup solution. (See Aiello Decl. ¶ 2 [Doc. No. 13].) Over the course of the following few months, the parties analyzed Perkins Eastman's backup system, and Stratech ultimately recommended replacing it with Symantec NetBackup ("NBU") and Symantec NBU appliances. (Id.)
In October 2012, Stratech was acquired by Datalink. (Id. at ¶ 3.) At that time, Datalink's New York-based account executive, John Aiello, presented an overview of the company to Ho and Kim, and explained that Datalink was headquartered in Minnesota, where its operations were also managed. (Id.) Subsequent to that meeting, Perkins Eastman decided to follow Datalink's recommendation to replace their legacy data backup system with Symantec NBU and NBU appliances. On December 27, 2012, Lam sent a signed Purchase Order to that effect to Aiello via e-mail, who then forwarded it to Datalink headquarters in Minnesota for processing. (Id. at ¶¶ 5, 6.)
Upon receipt of the Purchase Order, Datalink obtained the various hardware, software, and personnel resources needed to complete the project, confirmed Defendant's creditworthiness, and began ordering the necessary equipment and pre-configuring it based on specifications provided by Defendant. (Id. at ¶¶ 7, 8, 10, 11.) After the NBU appliances were configured, Datalink warehouse employees re-packaged and shipped the hardware from Minnesota to Perkins Eastman's data center locations across the United States in early March 2013. (Id. at ¶ 11.) Datalink also sent invoices to Defendant totaling $761, 849.06. (See Compl., Ex. E, "Invoices" [Doc. No. 1-1].)
According to the President and COO of Perkins Eastman, J. David Hoglund, when the NBU appliances arrived to Defendant's office locations, several of the boxes were opened and one of the appliances was installed. (See Hoglund Dep. 60:17-22, 73:19-25, Jan. 26, 2015 [Doc. No. 41-1].)
Defendant contends that Lam lacked actual and apparent authority to sign the purchase agreement for the NBU equipment. (See Def.'s Mem. at 3 [Doc. No. 46].) In fact, Perkins Eastman contends that its "Board of Directors was unaware of the signed [P]urchase [O]rder until Lam revealed he had signed an agreement in an email to [President] David Hoglund on April 25, 2013." (See id. at 4) (citing McIntyre Decl., Ex. F, "Emails Between Lam and Hoglund" [Doc. No. 48-6]). On May 13, 2013, Defendant informed Plaintiff that it no longer wanted the NBU equipment. (See Cockson Decl., Ex. Q, "Email from Frank Giannelli to John Aiello" [Doc. No. 41-17]; Hoglund Dep. 134:25-135:14 [Doc. No. 41-1].) Perkins Eastman subsequently refused to pay any of the invoices sent by Datalink for work performed under the NBU Purchase Order. (Compl. at ¶ 13 [Doc. No. 1-1].)
The purchase agreement between Datalink and Symantec prohibited Datalink from reselling used Symantec equipment. (See Rome Decl. Ex. F, "Symantec Agreement" § 2.3(vi) (stating that "[r]eseller shall not... resell the Symantec Offerings to Individuals or entities other than the applicable End User [Perkins Eastman] for which such items were ordered.") [Doc. No. 50-1]; Westenfield Dep. 100:4-19 [Doc. No. 41-2].) Although the NBU equipment could not be resold, the contract did not prohibit Symantec from accepting returned hardware and software. Ultimately, Symantec agreed to refund the NBU software and related costs, but it did not accept return of the hardware. (See id. at 52:10-15, 95:19-96:2.) Accordingly, Symantec credited Datalink $276, 721.34 for the software, maintenance, and training credits. (See Cockson Decl., Ex. R, "Symantec Credit" [Doc. No. 41-18].) Perkins Eastman remains in possession of the NBU hardware, and has refused to pay for the goods and services delivered. (See Hoglund Dep. 210:18-211:2 [Doc. No. 41-1]; Cockson Decl., Ex. S, "Def.'s Resp. to Pl.'s Requests for Admission" at 3-4 [Doc. No. 41-19].) Defendant contends that the terms of the NBU contract are ambiguous. Specifically, Perkins Eastman argues that because there was no signed statement of work ("SOW"), Plaintiff cannot hold Defendant liable for the unpaid invoices. (See Def.'s Mem. at 4 [Doc. No. 46].)
After Datalink was unsuccessful in collecting the past-due amounts from Perkins Eastman, Plaintiff commenced this action in Minnesota state court in September 2013. In Count I, Plaintiff alleges that Defendant breached the contract between the parties by failing to pay the delinquent balance of $761, 849.06, in addition to interest, fees, and costs associated with collecting these amounts. (See Compl. ¶ 19 [Doc. No. 1-1].) Although no signed SOW exists between the parties, Plaintiff claims that the Purchase Order between Datalink and Perkins Eastman constitutes an enforceable, written contract. (See id. ¶ 17.) In Count II, Plaintiff alleges that Defendant was unjustly enriched because it received a significant benefit for which it had not paid. (See id. ¶ 23.) Datalink explains that "it would be inequitable and unjust for Perkins Eastman to retain the benefit of Datalink's goods and services without paying." (See id. ¶ 26.) On October 30, 2014, Perkins Eastman removed the action to this Court on diversity grounds. (See Notice of Removal [Doc. No. 1].) Plaintiff filed its Motion for Summary Judgment on February 6, 2015 [Doc. No. 38]. In support of its motion, Datalink filed a memorandum [Doc. No. 40], a declaration [Doc. No. 41], and numerous exhibits, including deposition transcripts, emails, invoices, and letters exchanged between the parties. On February 27, 2015, Defendant filed its response brief [Doc. No. 46], a declaration and several supporting exhibits [Doc. No. 48]. Plaintiff filed its reply on March 13, 2015 [Doc. No. 49]. The Court heard oral argument on Plaintiff's motion on March 20, 2015.
A. Standard of Review
Summary judgment is proper if, drawing all reasonable inferences in favor of the non-moving party, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986). "Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action.'" Celotex Corp., 477 U.S. at 327 (quoting Fed.R.Civ.P. 1).
The party moving for summary judgment bears the burden of showing that the material facts in the case are undisputed. Id. at 323. However, "a party opposing a properly supported motion for summary judgment may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Id. at 248. Moreover, summary judgment is properly entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp., 477 U.S. at 322. Plaintiff moves for summary judgment on both its breach of contract and unjust enrichment claims. Both claims are discussed in detail below.
B. Count I: Breach of Contract
Under Minnesota state law, Datalink must prove the following four elements to succeed on its breach of contract claim: (1) a contract was formed, (2) the plaintiff performed the conditions precedent, (3) the defendant breached the contract, and (4) damages resulted from the defendant's breach. See Thomas B. Olson & Assocs., P.A. v. Leffert, Jay & Polglaze, P.A., 756 N.W.2d 907, 918 (Minn.Ct.App. 2008), review denied (Minn. Jan. 20, 2009); Border State Bank of Greenbush v. Bagley Livestock Exchange, Inc., 690 N.W.2d 326, 335-36 (Minn.Ct.App. 2004), review denied (Minn. Feb. 23, 2005).
Plaintiff contends that no genuine issue of material fact exists about the aforementioned elements of its breach of contract claim. Additionally, Datalink argues that Defendant has failed to raise a fact issue as to whether Perkins Eastman is entitled to a rescission defense. The Court agrees, and grants Plaintiff's Motion for Summary Judgment with respect to Defendant's liability for Plaintiff's Count One.
1. Formation of Contract
As to the formation of the contract, Defendant argues that substantial uncertainty exists about the scope of the work because the parties did not sign a SOW. (See Def.'s Mem. at 7 [Doc. No. 46].) Perkins Eastman claims that the lack of a signed SOW demonstrates "Defendant's reluctance to consummate a deal in writing." (See id.) The Court disagrees, and finds that no genuine issue of material fact exists as to whether the parties formed a contract. See Thomas B. Olson & Assocs., P.A., 756 N.W.2d at 918.
"Summary judgment is inappropriate where terms of a contract are at issue and those terms are ambiguous or uncertain.'" Toll Bros. v. Sienna Corp, No. 06-cv-4378 (DSD/JJG), 2008 WL 2986685, at *3 (D. Minn. July 30, 2008) (quoting Bank Midwest, Minn., Iowa, N.A. v. Lipetzky, 674 N.W.2d 176, 179 (Minn. 2004)). "The construction and effect of a contract" is a question of law, "unless the contract is ambiguous." Denelsbeck v. Wells Fargo & Co., 666 N.W.2d 339, 346 (Minn. 2003). "Where there is a written instrument, the intent of the parties is determined from the plain language of the instrument itself." Travertine Corp. v. Lexington-Silverwood, 683 N.W.2d 267, 271 (Minn. 2004). "A contract is ambiguous if, based upon its language alone, it is reasonably susceptible of more than one interpretation.'" Denelsbeck, 666 N.W.2d at 346 (quoting Art Goebel, Inc. v. N. Suburban Agencies, Inc., 567 N.W.2d 511, 515 (Minn. 1997)). "Basic contract principles instruct that [w]here a writing refers to another document, that other document, or the portion to which reference is made, becomes constructively a part of the writing, and in that respect the two form a single instrument. The incorporated matter is to be interpreted as part of the writing.'" Halbach v. Great-W. Life & Annuity Ins. Co., 561 F.3d 872, 876 (8th Cir. 2009). Even a mere reference, within a signed document, to an unsigned document is "sufficient as a legal matter to incorporate the attached [document]." Id.
Here, a signed, unambiguous written instrument exists between the parties. See id.; Travertine Corp., 683 N.W.2d at 271. On behalf of Perkins Eastman, Lam, signed a Purchase Order with Datalink for the NBU Project. (See Rome Decl., Ex. R, "Purchase Confirmation and Approval" [Doc. No. 50-1].) According to the Purchase Order, the parties agreed that Datalink would install Symantec NBU hardware and software, and that Datalink would provide training for the NBU equipment. (See id. at 1.) The agreement also references, and thus incorporates, an earlier SOW that was initially created between Stratech and Perkins Eastman. (See id. at 3) (referencing "SOW #14"); Halbach, 561 F.3d at 876.
The fact that the Stratech SOW between the parties was unsigned has no legal significance. Because the Purchase Order was signed, and it referenced the Stratech SOW, that reference alone is sufficient to legally incorporate the Stratech SOW. See id. Also, as Plaintiff correctly notes, it is irrelevant that the SOW, "bears the name Stratech rather than Datalink." (See Pl.'s Reply at 19 [Doc. No. 49].) Once Datalink acquired Stratech in 2012, Datalink assumed Stratech's duties and obligations, including those set forth in the Purchase Order and the incorporated SOW. (See Westenfield Dep. 28:1-9 [Doc. No. 41-2]); Minn. Stat. § 302A.661, subd.4 (stating that "transferee is liable for the debts, obligations, and liabilities of the transferor only to the extent provided in the contract or agreement between the transferee and transferor or to the extent provided by this chapter or other statutes of this state.") (2015). Therefore, it is immaterial that the SOW incorporated into the Purchase Order was unsigned and bears Stratech's name.
Once Datalink began to work directly with Perkins Eastman, the parties created four successive, updated versions of the SOW. (See Rome Decl., Exs. G, H, I, J "Datalink SOWs" [Doc. No. 50-1].) Each of these versions of the SOW, however, did not at all alter the NBU Project hardware and software requirements. Because these requirements were fixed in the signed Purchase Order, the portion of the SOWs that summarized the hardware and software necessary for the project necessarily remained the same. (See id. § 2.1 "Scope Boundaries.") Rather, the Datalink SOWs only fine-tuned the service component of the NBU Project. (See generally id.) Therefore, even if these successive SOWs adequately modified the Stratech SOW,  they did not alter the signed Purchase Order, and therefore, the material terms of the contract pertaining to the hardware and software requirements did not change.
Additionally, the Court notes that insofar as Defendant contends that the successive SOW drafts are evidence of a lack of mutual assent between the parties to agree to the NBU Project at all, the Court disagrees. The parties clearly assented to the NBU Project by signing a Purchase Order, which incorporated the Stratech SOW. While the successive SOWs demonstrate that the parties continued to "fine-tune the project's service needs, " that fine-tuning "is evidence, if anything, of an intent to proceed with the project, " rather than evidence of a lack of agreement between the parties. (See Pl.'s Reply at 6 (emphasis original) [Doc. No. 49].) In fact, Perkins Eastman clearly intended to proceed with the project because Datalink even hosted a "Project Kickoff" with Defendant on February 14, 2013, about two months after the Purchase Order was signed. (See Ho Decl., Ex. A, "Datalink Project Kickoff Presentation" [Doc. No. 15-1].) In sum, the Court holds that no genuine issue of material fact exists as to the existence of a binding contract, which required Plaintiff to deliver NBU equipment and provide training and service, and also required Defendant to pay for this equipment and service.
2. Plaintiff Performed Conditions Precedent
The Court also finds that no genuine issue of material facts exists as to whether Plaintiff performed the conditions precedent set forth in the contract. See Thomas B. Olson & Assocs., P.A., 756 N.W.2d at 918. "A condition precedent is any fact or event, subsequent to the making of a contract, which must exist or occur before a duty of immediate performance arises under the contract.'" Krogness v. Best Buy Co., Inc., 524 N.W.2d 282, 287 (Minn.Ct.App. 1994) (citing National City Bank v. St. Paul Fire & Marine Ins. Co., 447 N.W.2d 171, 176 (Minn. 1989)). In order to trigger Defendant's obligation to pay for the goods and services, the contract between the parties required Plaintiff to purchase the hardware and software from Symantec, deliver the equipment to Perkins Eastman, and provide Perkins Eastman with relevant training for the NBU Project. (See Rome Decl., Ex. R, "Purchase Confirmation and Approval" [Doc. No. 50-1].)
Datalink satisfied all of the required conditions above, but stopped short of providing all of the hours of service it intended to provide because Perkins Eastman informed Datalink, on May 13, 2013, that it no longer wanted to continue with the NBU Project. First, Datalink paid Symantec for the NBU Project equipment. (See Westenfield Dep. 56:19-57:1 [Doc. No. 50-1].) By March 27, 2013, Datalink had also delivered all of the NBU equipment to Perkins Eastman. (See Hoglund Dep. 60:17-22; 73:11-18 [Doc. No. 40-1].) Perkins Eastman does not dispute that Datalink delivered the NBU Project equipment. (See Cockson Decl., Ex. S, "Def.'s Resp. to Pl.'s Requests for Admission" at 3 [Doc. No. 41-19].) In fact, Perkins Eastman unpacked the equipment and even partially installed it. (See Hoglund Dep. 73:19-25; 210:18-211:2; Rome Decl., Ex. P, "Emails Between Douglas Hall and Alan Ho" [Doc. No. 50-1].) By March 27, 2013, Datalink had rendered thirty hours of professional services, which amounted to $7, 734.88. (See Pl.'s Reply at 13 n.5 [Doc. No. 49]; Cockson Decl., ...