Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

HomeStar Property Solutions, LLC v. Safeguard Properties, LLC

United States District Court, D. Minnesota

February 27, 2019

HomeStar Property Solutions, LLC, Plaintiff,
v.
Safeguard Properties, LLC, and Bank of America, N.A., Defendants, and Safeguard Properties, LLC, Counterclaim Plaintiff,
v.
HomeStar Property Solutions, LLC, Counterclaim Defendant.

          Andrew D. Parker, Anthony G. Edwards, Christopher M. Daniels, Russell M. Spence, Jr., and Elizabeth S. Wright, Parker Daniels Kibort LLC, and Todd C. Pearson, for Plaintiff and Counterclaim Defendant.

          Joseph J. Santoro and Markus E. Apelis, Gallagher Sharp, and Brian A. Wood, Lind Jensen Sullivan & Peterson, PA, for Defendants and Counterclaim Plaintiff.

          MEMORANDUM OPINION AND ORDER

          SUSAN RICHARD NELSON, UNITED STATES DISTRICT JUDGE

         As the Court noted in its recent Order addressing this same case, this is a complicated commercial litigation matter between two businesses that “preserve properties” on behalf of banks while those properties are in foreclosure: Plaintiff Homestar Property Solutions LLC (hereinafter “Homestar”) and Defendant Safeguard Properties LLC (hereinafter “Safeguard”). (See also Feb. 6, 2019 Counterclaim Order [Doc. No. 254] (“Counterclaim Order”).)[1] Homestar, which served as an independent contractor for Safeguard for approximately two years, accuses Safeguard of failing to pay it (and/or underpaying it) for services it provided, thereby causing it to fall behind on its bills and, eventually, go out of business. Safeguard adamantly rejects this narrative, and, in turn, accuses Homestar of failing to abide by the companies' contract regarding mechanics' liens, which it alleges caused it to incur damages.

         After years of on-and-off again discovery, punctuated by a final settlement and judgment that was later vacated (see generally Doc Nos. 127-54), Safeguard moved for summary judgment on the following claims: (1) Homestar's breach of contract claim; (2) Homestar's unjust enrichment claim; (3) Homestar's promissory estoppel claim; (4) Homestar's account stated claim; and (5) Safeguard's breach of contract counterclaim against Homestar. (See Safeguard's Br. in Support of Summ. J. [Doc. No. 163] (“Safeguard Primary Br.”); Safeguard's Br. in Support of Summ. J. on its Counterclaim [Doc. No. 168] (“Safeguard Counterclaim Br.”).) In addition, Bank of America, also represented by Safeguard's counsel, per an indemnification agreement between the two companies, moved for summary judgment on (6) Homestar's solo unjust enrichment claim against it. (See Bank of America's Summ. J. Br. [Doc. No. 173] (“BANA Br.”); see id. at n.7 (noting this indemnification agreement).) Homestar opposed all of these motions. (See Homestar's Br. in Opp. to Summ. J. [Doc. No. 189] (“Homestar Primary Opp. Br.”); Homestar's Br. in Opp. to Counterclaim Summ. J. [Doc. No. 207] (“Homestar Counterclaim Opp. Br.”); Homestar's Br. in Opp. to Bank of America Summ. J. [Doc. No. 209] (“Homestar BANA Opp. Br.”).)[2]

         On September 20, 2018, following an extensive oral argument on Safeguard's primary summary judgment motion (i.e., counts 1-4 listed above), the Court denied summary judgment from the bench. (See Sept. 20, 2018 Minute Entry [Doc. No. 223].) The Court then took Safeguard's counterclaim summary judgment motion and Bank of America's unjust enrichment summary judgment motion under advisement (i.e., counts 5-6 listed above), to be decided on the papers. (Id.)[3]

         On February 6, 2019 the Court granted in part Safeguard's counterclaim summary judgment motion and granted in full Bank of America's summary judgment motion. (See Counterclaim Order.) The Court will now render its written decision as to Safeguard's primary summary judgment motion. Although the Court orally denied this motion from the bench with limited explanation, the Court will now take this opportunity to clarify that it is granting Safeguard's motion in part and denying it in part. The Court hopes this ruling clarifies, for both parties, what issues remain in play for trial.[4]

         I. BACKGROUND

         This case centers around arguably hundreds of disputed work orders, fees, and account statements, and to what extent those disputes cumulatively led Homestar to incur lost profits and other consequential damages. Although both sides agree that the Safeguard-Homestar relationship was governed by a series of written contracts (see Compl. [Doc. No. 1] ¶ 81; Am. Answer [Doc. No. 17] ¶ 81), they do not agree if Safeguard properly paid Homestar for all the work Homestar did on Safeguard's behalf between 2012 and 2014 pursuant to those written contracts. Specifically, Homestar produced an “Accounts Receivable” spreadsheet during discovery (the “AR Spreadsheet”) that detailed 578 allegedly unpaid and/or underpaid work orders, totaling $1, 752, 435.40 in direct damages. (See Safeguard Ex. A-1 [Doc. No. 164-2] (“AR Spreadsheet”).) The work orders detailed in this spreadsheet lie at the heart of this dispute.

         In support of its summary judgment motion, Safeguard, by way of its Assistant Vice President of High Risk and Investor Compliance, Steve Meyer, reviewed the AR Spreadsheet alongside Safeguard's relevant internal records and produced a countervailing, detailed spreadsheet. Safeguard's spreadsheet alleges that, in fact, Safeguard only owes Homestar $129, 123.86, arising out of 89 work orders. (See Safeguard Ex. A-2 [Doc. Nos. 164-4 to 164-9] (“Safeguard AR Analysis”).) Safeguard does not contractually owe Homestar money for the other 489 work orders, Safeguard argues, because either (a) it paid Homestar's invoice in full (145 work orders); (b) Safeguard properly applied “chargebacks” to Homestar's invoices “based on Homestar's failure to comply with Safeguard's policies, procedures, and guidelines, including failing to provide photographs showing work was completed, failing to complete the approved scope of work, and/or Safeguard application of a bill penalty due to Homestar's failure to timely complete the repairs” (85 work orders); (c) Safeguard adjusted Homestar's invoices to reflect “reasonable pricing standards, ” in accordance with the contract (22 work orders); (d) the invoice listed on the AR Spreadsheet was duplicative of another invoice on the Spreadsheet (74 work orders); (e) Safeguard approved payment of certain work orders but ultimately did not pay those work orders because of “uncollected and outstanding chargebacks applied to Homestar's account” (11 work orders); or (f) “other” reasons justified Safeguard not paying the invoice (152 work orders). (See Safeguard Primary Br. at 13-14 (describing categories detailed in Safeguard AR Analysis).)

         Homestar, in turn, agrees that Safeguard owes it money for the aforementioned 89 work orders, and also concedes that it cannot contest either the 145 work orders that Safeguard contended it had “paid in full” (i.e., $349, 120.07 in claimed direct contract damages, per Mr. Meyer's analysis), or 19 of the 74 work orders Safeguard listed as “duplicative” (i.e., approximately $17, 365 in claimed direct contract damages, per the Court's analysis of Mr. Meyer's “duplicates spreadsheet” [Doc. No. 164-10]). (See Homestar Primary Opp. Br. at 19.) However, Homestar does contest Safeguard's accounting for a substantial number of the remaining 325 work orders. As such, with respect to direct contract damages, Homestar appears to allege approximately $1, 256, 826.47 in payments owing, in comparison to Safeguard's proposed $129, 123.86.

         In particular, Homestar argues that (a) Safeguard's penalties for lack of photographic documentation are factually wrong, either because Homestar did in fact upload the photo documentation actually required by the contract, or, if it did not, that was because “Safeguard's own website often malfunctioned” (69 work orders); (b) Safeguard had no right to assess penalties for alleged untimeliness, either because the overarching contract (see Safeguard Ex. E [Doc. No. 164-15] (“Safeguard Policy Manuals”)) did not describe such penalties, or because a Safeguard employee, Paul Dinehart, allegedly agreed with Homestar's co-owner, Michael Breese, to withhold those penalties (see Breese Aff. [Doc. No. 208] ¶ 12) (28 work orders); (c) Safeguard inappropriately reduced Homestar's invoices for being “in excess of industry standards” without any support for that determination, and in contradiction to Mr. Dinehart's alleged 2014 representation to Mr. Breese that Homestar was Safeguard's “least expensive contractor” (id. ¶ 13) (70 work orders); (d) Safeguard incorrectly asserted that Homestar's work was “not authorized, not actually performed, or not documented, ” when, in fact, “all work billed by Homestar was directed by Safeguard, or, in a few instances, performed in the interest of safety and [making] homes [HUD-complaint]” (id. ¶ 14) (102 work orders); (e) Safeguard failed to establish a basis for the “chargebacks” it assessed on the eleven work orders listed in category “e” of Safeguard's analysis above, and, indeed, contradicted Mr. Dinehart's alleged representation to Mr. Breese that “Safeguard would refrain from taking chargebacks, and that Safeguard would repay Homestar for any chargebacks it had taken in the past” (id. ¶ 22) (11 work orders); (f) Safeguard inaccurately reduced certain “special projects” payments based on an “reconciliation meeting” in summer 2014 that, according to Homestar employee Keegan Wallace, did not result in the reductions Safeguard listed (see Wallace Aff. [Doc. No. 205] ¶ 3) (90 work orders); and (g) 55 of the work orders Safeguard claims are “duplicates, ” are not, in fact, duplicates because “they have different work order numbers, invoice numbers, and/or billed amounts” (Homestar Primary Opp. Br. at 19) (55 work orders).[5]

         Importantly, though, Homestar also asserts two other forms of “contractual” damages. First, Homestar argues that Safeguard owes it consequential and/or “reputational” damages because, Homestar alleges, Safeguard's “slow paying” caused Homestar to default on its credit obligations, which in turn “ruined Homestar's reputation in the industry, ” “fractured [Homestar's] relationships with its subcontractors, ” and “took Homestar from being a company worth more than $16, 000, 000 (based on an offer to purchase Homestar received in 2013) to being an insolvent entity.” (Breese Aff. ¶ 21; accord Compl. Prayer for Relief (requesting damages for harm done to Homestar's “business reputation”).) However, in contrast to the specific work orders it cited in support of its direct damages claim, Homestar does not introduce any specific evidence of Safeguard's “slow paying, ” nor does it point to a contractual provision Safeguard breached by “slow paying.” (See also Safeguard Reply Br. at 4 n.3 (noting that Homestar's invoices “did not contain a payment due date or payment deadline, ” and citing examples).)

         Second, Homestar argues that, regardless of whether it can prove its direct contractual damages of $1, 256, 826.47, Safeguard owes it $1, 700, 000 (i.e., approximately the amount listed on the AR Spreadsheet), under a “promissory estoppel” theory. (See Homestar Primary Opp. Br. at 22-23.) This is so because, in summer of 2014, Safeguard, through Mr. Dinehart, allegedly promised to pay Homestar that amount “in satisfaction of” Safeguard's contractual obligations. (See Breese Aff. ¶¶ 18-19; but cf. Safeguard Reply Br. at 24-26 (noting that Mr. Breese's deposition ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.