Cypress Insurance Company v. SK Hynix America, Inc.

MOTION for Partial Summary Judgment For Breach of Contract & Dismissal of Defendant's Thirteenth Affirmative Defense

W.D. Wash.September 18, 2018

MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 1 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE CYPRESS INSURANCE COMPANY, as subrogee of Microsoft Corporation Plaintiffs, vs. SK HYNIX AMERICA INC. Defendant. ) ) ) ) ) ) ) ) ) ) ) ) Case No. 2:17-cv-00467-RAJ PLAINTIFF CYPRESS INSURANCE COMPANY’S MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT & DISMISSAL OF DEFENDANT’S THIRTEENTH AFFIRMATIVE DEFENSE NOTE ON MOTION CALENDAR: October 12, 2018 ORAL ARGUMENT REQUESTED I. RELIEF REQUESTED Now Comes Plaintiff, Cypress Insurance Company (“Cypress”), as subrogee of Microsoft Corporation (“Microsoft”), by counsel, pursuant to Fed. R. Civ. P. 56, and moves for partial summary judgment against Defendant SK Hynix Inc. (“SK Hynix”) on the following claims and issues: The August 19, 2004 Microsoft Component Purchase Agreement (the “Agreement”) and the April 1, 2013 Ninth Amendment (“Ninth Amendment”) obligated SK Hynix to perform the following contractual duties, which SK Hynix breached as a matter of law: Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 1 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 2 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 a. To supply DRAM chips to Microsoft and to not discontinue or restrict the supply of DRAM chips to Microsoft pursuant to Paragraph 1.1; b. To allocate DRAM chips in sufficient quantities to meet Microsoft’s then-current Forecast pursuant to Paragraph 4.2; c. To give Microsoft priority allocation in the event of any capacity constraints pursuant to Paragraph 4.2; d. To establish and maintain sufficient Buffer Inventory pursuant to Paragraphs 4.2 and 7; e. To maintain a written Disaster Recovery Plan to ensure the supply of the DRAM chips to Microsoft in the event of a force majeure or other similar disruption pursuant to Paragraph 12.1; f. To apply the prices for the DRAM chips in accordance with Table 2 Pricing Table pursuant to Ninth Amendment; and g. To meet the capacity requirements for the DRAM chips in accordance with Table 3 Capacity Table pursuant to Ninth Amendment. Each of these provisions were breached by SK Hynix. In addition, SK Hynix attempts to plead an affirmative defense based upon the voluntary payment doctrine. As set forth herein, that affirmative defense is not viable as a matter of law. SK Hynix has not come forth with any evidence to support the affirmative defense, despite the overwhelming, contrary evidence that demonstrates Cypress was not a voluntary payor. II. CERTIFICATION On September 11, 2018, counsel for the parties conducted a telephonic meet and confer in compliance with the Chamber Procedures for the General Motions Practice of Judge Jones to discuss the motion for partial summary judgment and the arguments that Cypress would be asserting in the motion. The parties discussed the substantive nature of the motion for partial summary judgment, but were unable to come to agreement regarding the motion. Accordingly, Cypress brings the following motion. Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 2 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 3 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. INTRODUCTION Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 3 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 4 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. MATERIAL STATEMENTS OF UNDISPUTED FACTS A. The Agreement and the Ninth Amendment 1. SK Hynix Was Obligated to Supply DRAM Chips to Microsoft and to Not Discontinue or Restrict the Supply of Dram Chips to Microsoft 1 All of the cited exhibits are attached to the accompanying Affidavit of Mark S. Anderson. Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 4 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 5 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 meet Microsoft’s anticipated requirements as set forth in the Forecast, according to Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 5 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 6 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2. SK Hynix Was Obligated to Allocate DRAM Chips to Meet Microsoft’s Then- Current Forecasts Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 6 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 7 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3. SK Hynix Was Obligated to Provide Microsoft Priority Allocation in the Event of a Capacity Constraint Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 7 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 8 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4. SK Hynix Was Obligated to Maintain Sufficient Buffer Inventory Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 8 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 9 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5. SK Hynix Was Obligated to Maintain a Written Disaster Recovery Plan to Ensure the Supply of DRAM Chips to Microsoft in the Event of a Disruption 6. SK Hynix Was Obligated to Apply the Pricing for the DRAM Chips in accordance with the Pricing Table Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 9 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 10 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7. SK Hynix Was Obligated to Meet the Capacity Requirements for the DRAM Chips in accordance with the Capacity Table Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 10 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 11 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. SK Hynix’s Voluntary Payment Affirmative Defense Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 11 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 12 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 12 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 13 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 13 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 14 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 V. EVIDENCE RELIED UPON Cypress relies on the record and files herein, as well as the Declaration of Mark S. Anderson and the exhibits attached thereto. VI. LEGAL AUTHORITY A. The Rules of Contractual Interpretation Washington law governs the interpretation of the Agreement and the Ninth Amendment.2 In Washington, contract interpretation is a question of law. Zenwork, Inc. v. Avalara, Inc., Case No. 16-01325, 2017 WL 4167986, *2 (W.D. Wash. Sept. 19, 2017), citing Tanner Elec. Coop.v.Puget Sound Power & Light, 128 Wash.2d 656 (Wash. 1996). The Washington Supreme Court set forth the contractual interpretation rules in International Marine Underwriters v. ABCD Marine, LLC, 179 Wash.2d 274 (2013). During the interpretation process, “a court’s primary goal 2 Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 14 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 15 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 is to ascertain the parties’ intent at the time they executed the contract.” Id. at 282, citing Berg v. Hudesman, 115 Wash.2d 657, 663, 801 P.2d 222 (1990). Washington follows the “objective manifestation theory” of contract interpretation, under which determining the parties’ intent begins with a focus on the reasonable meaning of the contract language. Linden v. X2 Biosystems, Inc., Case No. C17-0966, 2018 WL 2129729, *4 (W.D. Wash. May 9, 2018). To determine this intent, courts should consider “only what the parties wrote, giving words in a contract their ordinary, usual, and popular meaning unless the agreement, as a whole, clearly demonstrates a contrary intent.” Grant County Port District No. 9 v. Washington Tire Corp., 187 Wash.App. 222, 233, 349 P.3d 889 (Wash. Ct. App. 2015), citing Paradiso v. Drake, 135 Wash.App. 329, 336, 143 P.3d 859 (2006). The fact that a term is undefined or subject to two different meanings does not automatically render a provision ambiguous. Wm. Dickson Co. v. Pierce Cnty., 128 Wash.App. 488, 493-94, 116 P.3d 409 (2005); see also Zenwork, Inc. v. Avalara, Inc., Case No. 16-01325, 2017 WL 8727856, *1 (W.D. Wash. Dec. 4, 2017), citing Lynott v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 123 Wash. 2d 678, 692 (stating that it was “helpful to examine legal dictionaries” when interpreting the definition of the word “acquisition” in a contract); see also Wm. Dickson Co. v. Pierce Cty., supra. at 493, 116 P.3d at 413 (the meaning of undefined terms “may be ascertained by reference to standard English dictionaries.”) B. Summary Judgment Standard in a Contract Case Summary judgment is appropriate when, viewing the facts in the light most favorable to the nonmoving part, there is no genuine dispute as to any material fact that would preclude the entry of judgment as a matter of law. L.A. Printex Indus., Inc. v. Aeropostale, Inc., 676 F.3d 841, 846 (9th Cir. 2012). The party seeking dismissal of the case “bears the initial responsibility of Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 15 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 16 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 informing the district court the basis for its motion,” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), and identifying those portions of the materials in the record that show the absence of a genuine issue of material fact. Fed.R.Civ.P. 56(c)(1). Once the moving party has satisfied its burden, it is entitled to summary judgment if the non-moving party fails to identify specific factual disputes that must be resolved at trial. Hexcel Corp. v. Ineos Polymers, Inc., 681 F.3d 1055, 1059 (9th Cir. 2012). The mere existence of a scintilla of evidence in support of the non-moving party’s position will not preclude summary judgment, however, unless a reasonable jury viewing the evidence in the light most favorable to the nonmoving party could return a verdict in its favor. U.S. Arango, 670 F.3d 988, 992 (9th Cir. 2012). Washington courts have noted that in a contract case: Summary judgment is proper “if the written contract, viewed in light of the parties’ objective manifestations, has only one reasonable meaning.” Wm. Dickson Co. v. Pierce Cnty., 128 Wash.App. 488, 492 (2005). Where interpretation “depend[s] on the use of extrinsic evidence,” or the extrinsic evidence admits more than one “reasonable inference,” the court cannot interpret the contract as a purely legal matter. Brotherson v. Prof’l Basketball Club, L.L.C., 604 F. Supp. 2d 1276, 1286 (W.D. Wash. 2009). Zenwork, supra. at *2. VII. ARGUMENT A. SK Hynix Breached Paragraph 1.1 of the Agreement by Failing to Supply DRAM Chips to Microsoft and Discontinuing or Restricting the Supply of DRAM Chips to Microsoft after September 4, 2013 Accordingly, as a matter of law, SK Hynix Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 16 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 17 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 breached Paragraph 1.1 of the Agreement by failing to supply the minimum amount of DRAM chips demanded by Microsoft. (ECF No. 34, ¶ 19.a. of the Am. Cmplt.). B. SK Hynix Breached Paragraph 4.2 of the Agreement by Failing to Allocate DRAM Chips in Sufficient Quantities to Meet Microsoft’s Then-Current Forecast after September 4, 2013 C. SK Hynix Breached Paragraph 4.2 of the Agreement by Failing to Give Microsoft Priority Allocation in the Event of Capacity Constraints Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 17 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 18 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The phrase “priority allocation” is not ambiguous. The fact that a term in a contract is undefined or is subject to two different meanings does not render the provision ambiguous. See Wm. Dickson Co. v. Pierce Cnty., 128 Wash.App. at 493-94, 116 P.3d 409. When construing contracts as a matter of law, courts may resort to dictionaries to interpret the word in a plain, ordinary sense. See Zenwork, Inc. v. Avalara, Inc., Case No. 16-01325, 2017 WL 8727856 at *1. This interpretation is supported by the definition of “priority” on the website Dictionary.com which provides that “priority” means: 1. the state or quality of using earlier in time, occurrence, etc. 2. the right to precede others in order, rank, privilege, etc.; precedence. 3. the right to take precedence in obtaining certain supplies, services, facilities, etc., especially during a shortage. 4. something given special attention. (Palonsky Dep. Ex. 56 (Exhibit Q)) (emphasis added). In addition, the Merriam-Webster dictionary defines “priority” as: 1 a (1): the quality or state of being prior (2): precedence in date or position of publication - used of taxa b (1); superiority in rank, position, or privilege (2): legal precedence over the same subject matter 2 : preferential rating; especially : one that allocates rights to goods and services usually in limited supply • that project has top priority * * * (Palonsky Dep. Ex. 57 (Exhibit R)) (Emphasis added). Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 18 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 19 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Both definitions of “priority” found in general use dictionaries address the specific situation that is at issue in this litigation - In other words, the plain, ordinary meaning of the phrase “priority allocation” means that Microsoft had the right to precede others, “especially during a shortage” of supplies and/or had the “top priority.” (Palonsky Dep. Ex 56 (Exhibit Q) and Palonsky Dep. Ex. 57 (Exhibit R)). . Accordingly, as a matter of law, SK Hynix breached Paragraph 4.2 of the Agreement by failing to provide Microsoft with priority allocation in the event of a capacity constraint. (ECF No. 34, ¶ 19.c. of the Am. Cmplt.). D. SK Hynix Breached Paragraphs 4.2 and 7 of the Agreement by Failing to Establish and Maintain Sufficient Buffer Inventory Accordingly, as a matter of law, SK Hynix breached Paragraphs 4.2 and 7 of the Agreement by failing to establish and maintain sufficient buffer inventory. (ECF No. 34, ¶ 19.d. of the Am. Cmplt.). Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 19 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 20 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 E. SK Hynix Breached Paragraph 12.1 of the Agreement by Failing to Maintain a Written Disaster Recovery Plan to Ensure the Supply of DRAM Chips to Microsoft in the Event of a Force Majeure or Similar Disruption Accordingly, as a matter of law, SK Hynix breached Paragraph 12.1 of the Agreement by failing to maintain a written disaster recovery plan in the event of a disruption, such as the fire in this case. (ECF No. 34, ¶ 19.e. of the Am. Cmplt.). F. SK Hynix Breached Pricing Table 2 of the Ninth Amendment by Failing to Apply the Prices for the DRAM chips in Accordance with the Table Accordingly, as a matter of law, SK Hynix breached the Table 2 Pricing Table of the Ninth Amendment by failing to adhere to the prices set forth in the table for the fourth quarter of 2013. (ECF No. 34, ¶ 19.f. of the Am. Cmplt.). Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 20 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 21 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G. SK Hynix Breached Capacity Table 3 of the Ninth Amendment by Failing to Meet the Capacity Requirements for the DRAM Chips in Accordance with the Table Accordingly, as a matter of law, SK Hynix breached the Table 3 Capacity Table of the Ninth Amendment by failing to meet the capacity requirements for DRAM chips in accordance with the table. (ECF No. 34, ¶ 19.g. of the Am. Cmplt.). H. The Thirteenth Affirmative Defense Asserted by SK Hynix Should be Dismissed as a Matter of Law because Cypress Was Not A Voluntary Payor to Microsoft . Under Washington law, “[o]ne is a volunteer and not entitled to subrogation if, in making payment, he has no right or interest of his own to protect and acts without obligation, moral or legal, and without being requested to do so by a person liable on the obligation.” Hartford Ins. Co. v. Ohio Cas. Ins. Co., 145 Wash.App. 765, 189 P.3d 195 (2008) citing Newcomer v. Masini, 45 Wash.App. 284, 288-89, 724 P.2d 1122 (1986). The testimony of the claims personnel tasked Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 21 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 22 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 with investigating the loss on behalf of Cypress and its Reinsurers demonstrate that the fire was a covered claim and they had no information that the shortage of DRAM chips was for any reason other than the fire. (Dep. of Bennett (Exhibit L, pp. 38:18-39:2; Dep. of Price (Exhibit M), p. 138:3-17; Dep. of Field (Exhibit N), pp. 126:15-19, 127:3-19). VIII. CONCLUSION The undisputed material facts establish multiple breaches of the Agreement and the Ninth Amendment between Microsoft and SK Hynix, for which SK Hynix should be held liable as a matter of law. Undisputed testimony and admissions from SK Hynix’s own witnesses and discovery answers and responses establish the following breaches of contract as a matter of law: a. SK Hynix breached Paragraph 1.1 of the Agreement by discontinuing or restricting the supply of DRAM chips to Microsoft; b. SK Hynix breached Paragraph 4.2 of the Agreement by failing to allocate sufficient quantities of DRAM chips to meet Microsoft’s then-current forecast; Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 22 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 23 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 c. SK Hynix breached Paragraph 4.2 of the Agreement by failing to give Microsoft priority allocation of DRAM chips following the fire; d. SK Hynix breached Paragraphs 4.2 and 7 of the Agreement by failing to establish and maintain a buffer inventory of DRAM chips; e. SK Hynix breached Paragraph 12.1 of the Agreement by failing to create and maintain a written disaster recovery plan; f. SK Hynix breached the Pricing Table 2 in the Ninth Amendment by failing to provide prices for DRAM chips in accordance with the Pricing Table; and g. SK Hynix breached the Capacity Table 3 in the Ninth Amendment by failing to meet the capacity requirements for the DRAM chips according to the Capacity Table. As a result, Cypress’ Motion for Partial Summary Judgment for SK Hynix’ breach of contract should be granted. In addition, the undisputed evidence and applicable law establish that SK Hynix’s Thirteenth Affirmative Defense should be dismissed or stricken as a matter of law. Cypress paid Microsoft not on a voluntary basis but because of the contractual and legal obligation to do so as Microsoft’s insurer under Microsoft’s policy of insurance with Cypress. As such, SK Hynix’s Thirteenth Affirmative Defense fails as a matter of law. WHEREFORE, Cypress respectfully requests that the Court grant partial summary judgment in Cypress’ favor and against SK Hynix finding that SK Hynix breached the Agreement and Ninth Amendment as follows: a. SK Hynix breached Paragraph 1.1 of the Agreement by discontinuing or restricting the supply of DRAM chips to Microsoft; b. SK Hynix breached Paragraph 4.2 of the Agreement by failing to allocate sufficient quantities of DRAM chips to meet Microsoft’s then-current forecast; c. SK Hynix breached Paragraph 4.2 of the Agreement by failing to give Microsoft priority allocation of DRAM chips following the fire; Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 23 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 24 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 d. SK Hynix breached Paragraphs 4.2 and 7 of the Agreement by failing to establish and maintain a buffer inventory of DRAM chips; e. SK Hynix breached Paragraph 12.1 of the Agreement by failing to create and maintain a written disaster recovery plan; f. SK Hynix breached the Pricing Table 2 in the Ninth Amendment by failing to provide prices for DRAM chips in accordance with the Pricing Table; and g. SK Hynix breached the Capacity Table 3 in the Ninth Amendment by failing to meet the capacity requirements for the DRAM chips according to the Capacity Table. Cypress further requests that the Court enter an order dismissing or striking SK Hynix’s Thirteenth Affirmative Defense based upon the voluntary payment doctrine, and for any further relief deemed appropriate by the Court. DATED this 18th day of September 2018. COZEN O’CONNOR By: /s/ Mark S. Anderson Mark S. Anderson, WSBA 17951 999 Third Avenue Suite 1900 Seattle, WA 98104 Telephone: 206.340.1000 Toll Free Phone: 800.423.1950 Facsimile: 206.621.8783 Email: manderson@cozen.com James B. Glennon (Pro Hac Vice) George D. Pilja (Pro Hac Vice) FORAN GLENNON PALANDECH PONZI & RUDLOFF PC 222 North LaSalle Street, Suite 1400 Chicago, Illinois 60601 Phone: (312) 863-5000 Facsimile: (312) 863-5099 Email: jglennon@fgppr.com Email: gpilja@fgppr.com Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 24 of 27 MOTION FOR PARTIAL SUMMARY JUDGMENT FOR BREACH OF CONTRACT - 25 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Diana R. Lotfi (Pro Hac Vice) FORAN GLENNON PALANDECH PONZI & RUDLOFF PC 450 Newport Center Drive, Suite 630 Newport Beach, California 92660 Phone: (949) 791-1060 Facsimile: (949) 791-1070 Email: dlotfi@fgppr.com Attorneys for Plaintiff Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 25 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LEGAL\38337654\1 CERTIFICATE OF SERVICE I hereby certify that on this day I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following: Alex A. Baehr, WSBA No. 25320 Summit Law Group PLLC 315 Fifth Avenue South, Suite 1000 Seattle, WA 98104-2682 alexb@summitlaw.com Timothy B. Hoo, CA Bar No. 254332 Ekwan E. Rhow,CA BAR No. 174604 Jennifer C. Won, CA Bar No. 307807 Bird, Marella, Boxer, Wolpert, Nessim Drooks, Lincenberg & Rhow, P.C. 1875 Century Park Wast, 23rd Floor Los Angeles, CA 90067-2561 tyoo@birdmarella.com dchao@birdmarella.com erhow@birdmarella.com Attorneys for Defendant Dated: this 18th day of September, 2018 /s Renita Cook Renita Cook Legal Assistant Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 26 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LEGAL\38337654\1 CERTIFICATE OF SERVICE I hereby certify that on this day I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following: Alex A. Baehr, WSBA No. 25320 Summit Law Group PLLC 315 Fifth Avenue South, Suite 1000 Seattle, WA 98104-2682 alexb@summitlaw.com Timothy B. Hoo, CA Bar No. 254332 Ekwan E. Rhow,CA BAR No. 174604 Jennifer C. Won, CA Bar No. 307807 Bird, Marella, Boxer, Wolpert, Nessim Drooks, Lincenberg & Rhow, P.C. 1875 Century Park Wast, 23rd Floor Los Angeles, CA 90067-2561 tyoo@birdmarella.com dchao@birdmarella.com erhow@birdmarella.com Attorneys for Defendant Dated: this 18th day of September, 2018 /s Renita Cook Renita Cook Legal Assistant Case 2:17-cv-00467-RAJ Document 47 Filed 09/18/18 Page 27 of 27