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entertaining a motion for partial summary judgment: "Plaintiff does not seek summary judgment with respect to any single claim. Rather, Plaintiff seeks summary judgment only with respect to the fact that Plaintiff did not contractually guarantee to be financially responsible for Defendants' costs exceeding a specified rate
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CIVIL ACTION NO. 01-CV-0902
March 19, 2004
MEMORANDUM ORDER
Plaintiff Nutrition Management Services Company ("Nutrition Management") has brought this action under theories of breach of contract and tortious conduct against Harborside Healthcare Corporation and Harborside Healthcare Limited (collectively "Harborside"). Nutrition Management seeks damages for unpaid services, profits and costs related to the promised "long-term" relationship, fair value for use of proprietary information, and other consequential expenses due to Defendants' conduct. (Doc. No. 13.) Defendants have counterclaimed (Doc. No. 15), alleging breach of contract, breach of the covenants of good faith and fair dealing, and negligence. Presently before the Court are the Motion for Partial Summary Judgment, (Doc. No. 93), filed by Nutrition Management, and the Motion for Partial Summary Judgement filed by Harborside, (Doc. No. 94). Plaintiff seeks summary judgment with respect to Defendants' argument that it was entitled to withhold payments based upon an agreement between Nutrition Management and Harborside. Defendants ask for summary judgment with respect to Count IV, Count V and Count VI of Plaintiffs Complaint (Doc. No. 13), as well as judgment with respect to Count I and Count II of Plaintiff's Complaint with respect to any lost profits or damages suffered after February 2, 2001, the date upon which Nutrition Management terminated its service. For the following reasons, we will deny Plaintiff's motion, and grant Defendants' motion in part and deny Defendants' motion in part.
Nutrition Management filed a Supplemental Motion for Partial Summary Judgment Based on the Grant Thornton Deposition, (Doc. No. 92), along with its Motion for Partial Summary Judgment.
Both parties originally filed their respective motions for partial summary judgment in January of 2003. (Doc. Nos. 44, 45.) On March 17, 2003, these motions were denied without prejudice. Both parties, subsequently renewed their motions, and it is these motions and all papers filed in support thereof, and in opposition thereto, that we address now. (Doc. Nos. 93, 94.)
Plaintiff also seeks, by a motion in limine, to prevent Defendants from contending that the parties entered into an oral guaranty or capitation agreement. (Doc. No. 52.)
Defendants also filed a Motion to Strike Certain Statements Made in Plaintiff's Memorandum of Law in Support of Motion for Partial Summary Judgment. (Doc. No. 46.) Defendants argue that since many of Plaintiff s statements did not cite the affidavit or deposition in which they were made, they should not be considered. In response to this Motion, Plaintiff filed an amended memorandum of law that contained proper citations.
I. Factual Background
The entire dispute in this case centers on the question of whether Plaintiff and Defendants entered into an oral agreement, and the terms that such an agreement may have contained. Nutrition Management is a Pennsylvania corporation in the business of managing food service operations for healthcare institutions. (Am. Compl. ¶ 1.) Harborside is a Massachusetts corporation engaged in the business of owning and operating nursing homes. (Id. at ¶ 2.) Between 1993 and 1995, Defendants first hired Plaintiff to provide the food and dietary service at two of Defendants' facilities. (App. Pl.'s Mot. for Partial Summ. J. Tab 1 "Dell' Anno Dep. 1," at 116-24, 142, 153.) This initial relationship between the parties was successful. By 1998, Plaintiff was managing the dietary operations at eleven of Defendants' facilities. (Id. at 122, 125-26, 149.) During this time, Defendants continued to operate the dietary departments the remainder of its facilities. (Id. at 140.)
In some of the facilities that Plaintiff serviced, the relationship was based on an agreement in which Plaintiff was paid a monthly fee based on an agreed "rate per patient day". (Supp. App. Pl.'s Reply to Defs.' Mot. for Partial Summ. J. Tab 1 "Roberts Aff." at 2.) Under this "rate per patient day" arrangement Plaintiff did not pay the wages of the kitchen employees, however, it did guarantee to cap the number of "productive hours" worked by Defendants' employees and reimburse Defendants for the cost of any hours in excess of the cap. (Dell'Anno Dep. 1, at 128-31.) When these original contracts expired, the parties continued to do business based upon the terms of the existing arrangement without formally renewing the contracts.
In the summer of 1998, Defendants solicited proposals from food service management companies interested in managing the dietary operations at all of the Defendants' facilities. (App. Pl.'s Mot. for Partial Summ. J. Tab 7 "Manning Dep." at 30.) The request for proposal ("RFP") sought a different fee structure than the agreement under which Plaintiff had previously provided service. Defendants wanted proposals for an all-inclusive rate that would cover all of the costs associated with food and dietary service at the facilities. (Dell'Anno Dep. 1 at 162-62.) The significant change in charging an all-inclusive, or "capitated" rate is that it would include the cost of wage labor. (Id.) Plaintiff responded to the RFP. At the conclusion of the RFP process, Defendants did not act on any of the proposals submitted. (Id. at 184.)
In November of 1999, the parties began negotiating an agreement by which Plaintiff would provide dietary management at all forty-eight of Defendants' facilities. As a part of these negotiations, Plaintiff provided a proposed contract to use as a baseline for the negotiations. (Pl.'s Mem. in Supp. of Mot. for Summ. J. Ex. 8.) This proposed contract made no reference to a capitated rate or a guarantee by Plaintiff to achieve certain cost levels. (Id.) Defendants did not respond to this proposed contract with changes or by agreeing to its terms. (Pl.'s Mem. of Law in Supp. of Mot. for Partial Summ. J. at 9.) In the following months, the parties engaged in discussions about calculations for service based on a range of variables. (Roberts Aff. ¶ 11.) These calculations focused on determining Defendants' operating costs. Though there were extensive conversations, significant exchanges of information, and many disputes concerning the figures proposed, no finalized written agreement was ever completed and signed. See, e.g., (Pl.'s Mem. in Supp. of Mot. for Summ. J. Ex. 12.) Nevertheless, in early 2000, Plaintiff began providing dietary services at the additional facilities.
By June 19, 2000, the parties were already at odds over payments owed to Plaintiff. Defendants insisted that Plaintiff had guaranteed a cost of $12.75 per patient day, and had implicitly assumed the costs in excess of that figure. (Dell'Anno Dep. 1 at 257-29.) Plaintiff claimed that the figure of $12.75 was supplied solely for Defendants' edification, and was not guaranteed in any agreement. (App. Pl.'s Mot. for Partial Summ. J. Tab 4 "Stephan Dep." at 171-72.) Even after meeting to discuss the problem, no written agreement memorialized the rate Plaintiff would charge Defendants. (Dell'Anno Dep. 1 at 67-69.)
On July 28, 2000, Plaintiff sent Defendants another proposed contract. (Pl.'s Mem. in Supp. of Mot. for Summ. J. Ex. 13.) Defendants reviewed these materials, yet never responded to the proposed contract. (App. Pl.'s Mot. for Partial Summ. J. Tab 2 "Dell'Anno Dep. 2" at 92-93.) On November 21, 2000, an e-mail was sent from the Defendants' CEO, Stephen Guillard ("Guillard"), to Plaintiff's CEO, Joseph V. Roberts ("Roberts"), seeking to terminate the relationship "unless there is a clear, written, agreement on the terms going forward in all respects." (Pl.'s Mem. in Supp. of Mot. for Partial Summ. J. at Ex. 16.) No other discussions took place between the parties, and Defendants continued to refuse to pay the full invoices charged by Plaintiff. On February 2, 2001, Plaintiff ceased providing services to Defendants' nursing homes. (Roberts Aff. at /?/ 37.) Both parties now seek compensation for breach of contract and other related claims. Plaintiff also accuses Defendants of converting trade secrets and proprietary information after the termination of the relationship.
II. Standard of Review
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIv. P. 56(c). The party moving for summary judgment bears the initial burden of demonstrating that there are no facts supporting the non-moving party's legal position. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-324 (1986). The burden then shifts to the nonmoving party who "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). "The nonmoving party . . . cannot 'rely merely upon bare assertions, conclusory allegations or suspicions to support its claim." Townes v. City of Phila., No. Civ. A. OO-CV-138, 2001 WE 503400, at *2 (E.D. Pa. May 11, 2001) (quotingFireman's Ins. Co. v. DeFresne, 676 F.2d 965, 969 (3d Cir. 1982)). Rather, the party opposing summary judgment must go beyond the pleadings and present evidence through affidavits, depositions, or admissions on file to show that there is a genuine issue for trial. See Celotex. 477 U.S. at 324. When deciding a motion for summary judgment, the court must construe the evidence and any reasonable inferences therefrom in the non-movant's favor. See Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 255 (1986). A genuine issue of material fact exists only when "the evidence is such that a reasonable jury could return a verdict for the non-moving party."Anderson. 477 U.S. at 248.
III. Discussion
A. Plaintiff's Motion for Partial Summary Judgment
Plaintiff does not seek summary judgment with respect to any single claim. Rather, Plaintiff seeks summary judgement only with respect to the fact that Plaintiff did not contractually guarantee to be financially responsible for Defendants' costs exceeding a specified rate. Plaintiff proffers two theories for this assertion. First, Plaintiff claims that no contract was formed (written or oral) by which the parties agreed that Plaintiff would be liable for costs in excess of a guaranteed price. (Pl.'s Mot. for Partial Summ. J. at 2.) Second, Plaintiff asserts that in accordance with their "long-established course of dealing, Plaintiff agreed to provide the same services it provided in the eleven nursing homes for which it was already responsible." (Id.)
The existence of a contract is usually an issue for the trier of fact unless there is no genuine issue of material fact. York Excavating Co. v. Employers Ins. of Wausau v. E. Consol. Utils., Inc., 834 F. Supp. 733, 740 (M.D. Pa. 1993). It is the job of the fact finder to "determine the content of mixed oral and written contracts, or oral contracts alone, when there is conflicting evidence." Fort Washington Res., Inc. v. Tannen, 846 F. Supp. 354, 358 (E.D. Pa. 1994) (citing McCormack v. Jermvn. 40 A.2d 477, 479 (Pa. 1945) ("[I]t is the job of [the] jury to determine terms of disputed oral contracts and understanding of parties regarding those terms.").
Under Pennsylvania law, to establish that a contract was made, be it oral or written, a party must show that: (1) both parties manifested an intention to be bound by the terms of the agreement; (2) the terms of the agreement were sufficiently definite to be enforced; and (3) there was mutuality of consideration. York. 834 F. Supp. at 740 (citing Redick v. Kraft, Inc., 745 F. Supp. 296, 300 (E.D. Pa. 1990)). Plaintiff contends that no agreement including a guarantee was reached because the parties never mutually intended to be bound by the terms of the same contract, and the necessary terms of such a contract were never established so that there could be an implicit agreement. (Pl.'s Mem. in Supp. of Mot. for Partial Summ. J. at 38.)
While Plaintiff has provided thirty-five pages of factual support for its contention, we are satisfied that the facts surrounding the issue are not so conclusive as to merit granting summary judgment on this issue. The disagreement among the parties can be boiled down to one issue: whether Plaintiff was servicing Defendants' nursing homes under a capitated arrangement including labor wages and in which Plaintiff guaranteed a certain cost level, or under a fee-per-patient day arrangement in which Defendants were still responsible for the costs of wage labor. The evidence presented by Plaintiff paints a picture of two parties negotiating a contract that never contained a guarantee or a capitated rate. Plaintiff contends that the evidence establishes that any agreement that was reached was a continuation of the existing agreement between the parties in which Plaintiff provided service at eight of Defendants' facilities under a fee-per-patient day arrangement.
In response to Plaintiff's recitation of facts, Defendants have submitted almost thirty pages of facts, supported by evidence, that refute Plaintiffs factual conclusions. Defendants contend that the evidence establishes that the agreement between the parties contained a capitated rate as requested for in the RFP. After reviewing all of the evidence it is clear that Plaintiff was providing services to Defendants based upon some business arrangement or agreement. However, the exact terms of that business relationship cannot be conclusively determined by this Court as a matter of law. Genuine issues of fact exist that must be determined by a jury, and for that reason, a grant of summary judgment is inappropriate.
B. Defendants' Motion for Partial Summary Judgment
Defendants seek judgment on Counts IV, V, and VII of Plaintiff's Complaint, and partial judgment with respect to Counts I and II of the Complaint. With respect to Counts IV, V, and VII, Defendants contend that Plaintiff has adopted a "kitchen sink" approach to pleading this case and the facts of the core issue (breach of contract) simply do not support claims for fraud, conversion, or a violation of Chapter 93A of the Massachusetts Consumer Protection Act. With respect to the first two Counts, Defendants do not suggest that these claims can be completely dismissed, only that the facts do not support Plaintiff's entire damages claim.
1. Count IV (Fraud)
Defendants ask for judgment on Plaintiff's claim of fraud, but provide no arguments in support of such a claim. Defendants believe judgment on the fraud claim should be granted because the present conflict involved no misappropriation of trade secrets:
Although it has not set forth a separate cause of action relating to trade secrets, NMS' allegations that Harborside misappropriated purported trade secrets is central to NMS' claims in Count[s] IV (fraud), V (conversion) and VII (violation of Mass. Gen. Laws C.93A) of the Complaint. In those counts, NMS contends that Harborside misappropriated and/or has illegally used or is illegally using purported trade secrets belonging to NMS as the core basis for each of separate theories of relief. However, NMS has failed, in the first instance, to identify any information in this case that could be charitably characterized as a trade secret.
(Defs.' Mem. in Supp. of Mot. for Partial Summ. J. at 12.) If Plaintiff's fraud claim relied on the existence of trade secrets then Defendants' argument might be adequate. However, Plaintiff's fraud claim alleges that Defendants "knowingly and intentionally made the false promises, representations and agreements detailed above. . . . " (Am. Compl. ¶¶ 63-67.) Only one averment in the fraud complaint refers to trade secrets. (Id. ¶ 64e.)
Plaintiff is correct in asserting that its tort claims, as well as its Chapter 93 A claim, in no way hinge on the presence of trade secrets. Under Pennsylvania law, a plaintiff asserting a claim of fraud must show evidence of: (1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) the resulting injury was proximately caused by the reliance. Gibbs v. Ernst. 647 A.2d 882, 889 (Pa. 1994). Defendants' arguments and evidence do not address these elements. As a result, we conclude that Defendants have not satisfied the initial burden of demonstrating that there are no facts supporting the non-moving party's legal position. See Celotex, 477 U.S. at 322-324 (1986).
2. Count V (Conversion)
Plaintiff alleges that Defendants unlawfully used Plaintiff's physical property (computers, manuals, forms, etc.) as well as it proprietary and confidential information. (Am. Compl. ¶¶ 69-70.) Pennsylvania law defines conversion as "the deprivation of another's right of property in, or use or possession of, a chattel, or other interference therewith, without the owner's consent and without lawful justification." Stevenson v. Econ. Bank of Ambridge, 197 A.2d 721, 726 ( Pa. 1964). "A plaintiff has a cause of action in conversion if he or she had actual or constructive possession of a chattel or an immediate right to possession of a chattel at the time of the alleged conversion." Hembach v. Ouikpak Corp., No. Civ. A. 97-3900, 1998 WL 54737, * 6 (E.D. Pa. Jan. 8, 1998); Chrysler Credit Corp. v. Smith. 643 A.2d 1098, 1100 ( Pa. Super. 1994).
The facts do not support a claim of conversion. Plaintiffs claim is based on allegations that Defendants kept computers and other equipment unlawfully. (Am. Compl. ¶¶ 68-71.) Defendants contend that Plaintiff was not denied use of its property because all of Plaintiff's computers were returned within a few days after Nutrition Management left the facilities. (Hill Dep. at 89.) Moreover, the only materials that were kept by Defendants were related to patient care and Plaintiff had agreed to leave that information behind. (Id.) Plaintiff offers no evidence to rebut these facts. Rather, Plaintiff argues that the conversion claim does not rely on the fact that information was taken from the computers, but is based on the fact that "Harborside was only permitted to use these materials and incorporate them into the fabric of its facilities if it intended to and in fact paid for same, and because Harborside did not intend to do so, and did not do so, its exercise of dominion and control over these items constitute a conversion." (Pl.'s Mem. in Opp. to Defs.' Mot. for Partial Summ. J. at 29.) Plaintiff argues that it was fraudulently induced to give consent to use of these materials by Defendants. Plaintiff does not allege that Defendants possessed its property without its consent. Rather, the facts conclusively demonstrate that Plaintiff consented to Defendants' use of its property. If in fact this consent was gained fraudulently, then Plaintiff will recover under the fraud claim.
3. Count VII (Violation of Chapter 93A of Massachusetts General Laws)
"Chapter 93A 'was designed to encourage more equitable behavior in the marketplace and impose liability on persons seeking to profit from unfair practices.'" Little. Inc. v. Dooyang Corp., 147 F.3d 47, 55(1st Cir. 1998) (quoting Linkage Corp. v. Trs. of Boston Univ., 679 N.E.2d 191, 208 (Mass. 1997). To establish liability under this law, the plaintiff must prove: (i) that the defendant engaged in an act or practice that was deceptive or unfair; (ii) that the act occurred primarily and substantially in Massachusetts; and (iii) and that the act caused a loss of property or money. MASS. GEN. LAWS ch. 93A, § 11.
Primarily and Substantially within Massachusetts
The second requirement of a Chapter 93 A claim is that the "unfair or deceptive act or practice occurred primarily and substantially within the Commonwealth [of Massachusetts]." MASS. GEN. LAWS ch. 93A § 11. A three factor test has generally been used by the federal courts to determine whether an action occurred "primarily and substantially" within Massachusetts. These factors include: 1) where the defendant committed the deceptive acts and practices; 2) where the plaintiff received and acted upon the deceptive or unfair statements; and 3) the situs of the plaintiffs losses due to the unfair or deceptive acts or practices. Arthur D. Little Int'l, Inc. v. Dooyang Corp., 928 F. Supp. 1189, 1208 (D. Mass. 1996). Though three factors are used in this balancing test, the most important point of analysis is the situs of the claimed wrongdoing, or, as one court put it, "the locus of the recipient of the deception at the time of the reliance." Compagnie de Reassurance D'ile de France v. New England Reinsurance Corp., 57 F.3d 56, 90 (1st Cir. 1995) (citingClinton Hosp. Ass'n v. Corson Group. Inc., 907 F.2d 1260, 1265-66 (1st Cir. 1990).
Recently, in Kuwaiti Danish Computer Co. v. Digital Equip. Corp., the Supreme Judicial Court of Massachusetts reviewed this test. It concluded that the analysis:
should not be based on a test identified by any particular factor or factor. . . . Section 11 suggests an approach in which a judge should, after making findings of fact, and after considering those findings in the context of the entire § 11 claim, determine whether the center of gravity of the circumstances that give rise to the claim is primarily and substantially within the Commonwealth [of Massachusetts].781 N.E.2d 787, 799 (Mass. 2003). However, the courts that have applied this new test have come to the same result as that reached under the three factor test. Id.; see also Auto Shine Car Wash Sys., Inc. v. Nice "N Clean Car Wash. Inc.". 792 N.E.2d 682, 688-89 (Mass.App.Ct. 2003) ("we conclude that [the trial court] reached the correct result on the facts found and that the result would be the same regardless of which analytical standard is applied").
In the instant case, the facts support Plaintiff's contention that the acts occurred in Massachusetts. In June, July, August, September, and December of 2000, Plaintiff's personnel met with Defendants' representatives in Boston. (Roberts Aff. ¶¶ 27, 31 34.) From the evidence, it can be inferred that the alleged misrepresentations occurred at these meetings in Massachusetts. Under either the three factor test or the Kuwaiti approach, there exists a triable issue of fact as to whether the deceptive actions occurred primarily and substantially in Massachusetts.
Deceptive or Unfair Practice
Chapter 93A does not specifically define what constitutes "unfair" or "deceptive" behavior. Little. 147 F.3d at 55. see also Ahern v. Scholz, 85 F.3d 774, 798 (1st Cir. 1996) ("The statute does not contemplate an overly precise standard of ethical or moral behavior. It is the standard of the marketplace."); Linkage Corp., 679 N.E.2d at 209 ("A practice is unfair if it is within the penumbra of some common-law, statutory, or other established concept of unfairness; is immoral, unethical, oppressive, or unscrupulous; and causes substantial injury to other businessmen."); Levings v. Forbes Wallace. Inc., 396 N.E.2d 149, 153 (Mass App. Ct. 1979) ("The objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce."). In addressing this requirement, "courts have consistently emphasized the fact-specific nature of the inquiry." Little. 147 F.3d at 55. Past decisions have consistently held that "conduct in disregard of known contractual arrangements and intended to secure benefits for the breaching party constitutes an unfair act or practice for chapter 93A purposes." Id. (citing Anthony's Pier Four. Inc. v. HBC Assocs., 583 N.E.2d 806, 821 (Mass. 1991)). Where a party has breached a contract to gain an unfair advantage, "the breach has an extortionate quality that gives it the rancid flavor of unfairness."Little. 147 F.3d at 55. In addition, liability has been found where valid payments have been withheld to give some edge or advantage to the party that breached the contract. See Pepsi — Cola Metro. Bottling Co. v. Checkers. Inc., 754 F.2d 10, 17-19 (1st Cir. 1985) (finding defendant liable under Chapter 93A where a valid payment withheld as a "wedge" to enhance bargaining power); Community Builders. Inc. v. Indian Motorcycle Ass'n, Inc., 692 N.E.2d 964, 978 (Mass.App.Ct. 1998) (finding defendant liable under Chapter 93A because "defendants withheld payment, stringing plaintiff along . . . with a purpose of coercing plaintiff to settle for substantially less compensation than previously agreed upon."). A good faith dispute is an insufficient basis for liability under Chapter 93A.Little. 147 F.3d at 55 ("[T]his case did not involve a good faith dispute over billing or a simple breach of contract, which is an insufficient basis for 93A liability."). The articulated line between actionable and non-actionable claims is whether the "breach of contract" or "failure to pay" arose as a result of a party's "wrongful purpose". See Quaker State Oil Ref. Corp. v. Garrity Oil Co., 884 F.2d 1510, 1513-14 (1st Cir.) (holding that refusal to pay an invoice without "more" was not enough to constitute a Chapter 93A violation).
The Defendants contend that what is at issue is "a garden variety breach of contract action and nothing more." (Defs.' Mem. in Supp. of Mot. for Partial Summ. J. at 7.) Defendants "never concealed the fact that it was paying based upon the fixed price rate to which the parties agreed." (Id.) Plaintiff alleges that Defendants' behavior went beyond a "mere breach" because Dell'Anno "orchestrated" the under-payments in an effort to receive a larger bonus. (Pl.'s Answer to Defs.' Mot. for Partial Summ. J. at 3.) Allegedly, Dell'Anno knew Plaintiff was operating at a serious loss because of the under-payments, but "strung them along," promising that in 2001, they would be able to charge a premium allowing them to recoup their present losses. (Roberts Aff. ¶¶ 26, 27.) Plaintiff asserts that Dell'Anno's assurances were a lie. An e-mail to Dell'Anno on June 13, 2000, suggested that Defendant was preparing to terminate the relationship:
Please review the e-mail below at your convenience. I will leave closing remarks / summation to Steve — I thought I would forward the body of the e-mail to you at this time. I've tried to set the table for what may be a termination of our agreement with NMS by notifying the facility of our ongoing negotiations (to secure a long term guaranteed rate, revise GAP, etc.).
(Supp. App. Pl.'s Reply to Defs.' Mot. for Partial Summ. J. Ex. 4.) An e-mail sent by Dell'Anno on January 24, 2002, further discusses the termination of the relationship with Plaintiff:
Folks over the next several days Ms. Ellen Jean Butler HBR's new VP of Dietary Services will be contacting each and every one of you to get a gut check as to if we pull the plug on NMS how soon can we do so, and do you feel comfortable doing so? Please welcome her, as she joins our organization formerly [sic] January 31, however her and I have been working towards the elimination of the NMS gang since she excepted [sic] the position nearly six weeks ago. She comes to us with a tremendous amount of experience having spent the last 6 years as Sun HealthCare's VP of Dietary Services overseeing over 300 facilities and 36 Regional Dietitians. We have not formerly [sic] announced her coming on board because of all the back door work that has been taking place in preparation of the NMS dismissal. Mr. Haggerty will be sending out a formal notice by weeks end or early next week announcing her arrival."
(Id. Ex. 5.)
Neither of the e-mails suggest that Defendants had committed "unfair" or "deceptive" acts. Instead, they show that Defendants were simply preparing for the termination of the relationship. Plaintiff, citingLittle and Community Builders suggests that Chapter 93A liability has been found in similar cases. The instant case can be distinguished. InLittle, the court recognized that "it is how [the defendant] behaved in not paying the bills which became the basis for the unfair and deceptive practices claim." 147 F.3d at 51. In that case not only was the defendant promising to pay the plaintiff and then not doing so, but it also did little to hide its intentions stating "in its internal '1992 Business Report' that it had been delaying accounts payable associated with the Orinoco project by all possible means." Id. at 52. Community Builders can also be distinguished because Defendants' behavior cannot be characterized as "stringing [plaintiff] along in performing more services, . . . all with a purpose of coercing [plaintiff] to settle for substantially less compensation than the parties had agreed to before the services were performed." 692 N.E.2d at 978. In this case it is not clear whether there is even a contract by which "substantial payments" are owed. Thus, without a "smoking gun" like the internal report in Little, bad faith on the part of Defendants cannot be inferred. The instant facts do not support a claim for violation of Chapter 93 A and this claim will be dismissed.
4. Counts I and II: Losses, Lost Profits After February 2, 2001
Defendants ask the Court to limit Plaintiff's claims of losses or lost profits in relation to its claims of breach of contract and promissory estoppel to those incurred before February 2, 2001. This argument is based on the fact that Plaintiff conceded that it "would stop providing services as of the close of business on Friday, February 2, 2001." (Am. Compl. ¶ 39.) With respect to losses arising from the breach of contract, Plaintiff agrees with Defendants that, "Nutrition Management claims future damages in the form of lost profits and the lost opportunity to recoup start up and other costs, on the basis of promissory estoppel and fraud theories, not on the basis of breach of contract." (Pl.'s Mem. in Opp. to Defts.' Mot. for Partial Summ. J. at 21.)
Pennsylvania has adopted the theory of promissory estoppel established by section 90 of the Restatement (Second) of Contracts. Green v. Interstate United Mgmt. Serv. Corp., 748 F.2d 827, 830 (3d Cir. 1984). Under the doctrine of promissory estoppel, "[a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding, if injustice can be avoided only by enforcement of the promise"). Thatcher's Drug Store of W. Goshen, Inc. v. Consol. Supermarkets. Inc., 636 A.2d 156, 160 (1994). Viewing the facts in a light most favorable to Plaintiff, it can be inferred that statements were made to Plaintiff about future dealings that induced Plaintiff to perform. (Roberts Aff. ¶¶ 26, 27.) Defendants' Motion will be granted with respect to the breach of contract claim and denied with respect to the promissory estoppel claim.
An appropriate order follows.
ORDER
AND NOW, this 19th day of March, 2004, upon consideration of Plaintiff's Motion for Partial Summary Judgment (Doc. Nos. 92, 93), Defendants' Motion for Partial Summary Judgment (Doc. No. 94), and all documents in support thereof, and in opposition thereto, it is ORDERED as follows:1. Plaintiff's Motion (Doc. Nos. 92, 93) is DENIED;
2. Defendants' Motion (Doc. No. 94) as to Count IV is DENIED;
3. Defendants' Motion (Doc. No. 94) as to Count V is GRANTED;
4. Defendants' Motion (Doc. No. 94) as to Count VII is GRANTED;
5. Defendants' Motion (Doc. No. 94) as to Count I is GRANTED, Plaintiff's damages in Count I are limited to losses or lost profits prior to February 2, 2001;
6. Defendants' Motion (Doc. No. 94) as to Count II is DENIED; and
7. Defendants' Motion to Strike Certain Statements Made in Plaintiff's Memorandum of Law in Support of Motion for Partial Summary Judgment (Doc. No. 46) is DENIED as MOOT.
IT IS SO ORDERED.