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Crestwood Capital Corp. v. Andes Industries, Inc.

United States District Court, D. Arizona

August 30, 2017

Crestwood Capital Corporation, Plaintiff,
v.
Andes Industries, Inc., Defendant. Devon Investment Inc., Plaintiff,
v.
Andes Industries, Inc., Defendant. Preston Collection Inc., Plaintiff,
v.
Steven Youtsey, Defendant. Andes Industries, Inc.; and PCT International, Inc., Plaintiffs,
v.
EZconn Corporation; and eGtran Corporation, Defendants. Andes Industries, Inc.; and PCT International, Inc., Plaintiffs,
v.
Cheng-Sun Lan; Kun-Te Yang; Chi-Jen Dennis Lan; Polar Star Management Ltd., Defendants. EZConn Corporation, Plaintiff,
v.
PCT International, Inc., Defendant.

          ORDER [RE: NO. CV-16-00508-PHX-NVW]

          NEIL V. WAKE SENIOR UNITED STATES DISTRICT JUDGE.

         Before the Court is EZconn Corporation’s Motion for Summary Judgment (Doc. 155). In this action, EZconn Corporation alleged one claim of breach of contract against PCT International, Inc., for product PCT ordered, received, accepted, and did not pay for. EZconn seeks an award against PCT of $6,629,046.55 for unpaid invoices; prejudgment interest, including at least $2,283,535.87 accrued through October 31, 2016, plus additional interest accrued through the date of judgment; and post-judgment interest.

         I. LEGAL STANDARD

         Summary judgment is proper if the evidence shows 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). The moving party must produce evidence and show there is no genuine issue of material fact. Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). If the burden of persuasion at trial would be on the nonmoving party, the party moving for summary judgment may carry its initial burden of production under Rule 56(c) by producing “evidence negating an essential element of the nonmoving party’s case,” or by showing, after suitable discovery, that the “nonmoving party does not have enough evidence of an essential element of its claim or defense to carry its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1106 (9th Cir. 2000).

         The party seeking summary judgment bears the initial burden of identifying the basis for its motion and those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which demonstrate the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the moving party has carried its burden, the nonmoving party must produce evidence to support its claim or defense by more than simply showing “there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). To defeat a motion for summary judgment, the nonmoving party must show that there are genuine issues of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A material fact is one that might affect the outcome of the suit under the governing law. Id. at 248. A factual issue is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         On summary judgment, the nonmoving party’s evidence is presumed true, and all inferences from the evidence are drawn in the light most favorable to the nonmoving party. Eisenberg v. Ins. Co. of North America, 815 F.2d 1285, 1289 (9th Cir. 1987); Baldwin v. Trailer Inns, Inc., 266 F.3d 1104, 1117 (9th Cir. 2001). But it is not the Court’s task “to scour the record in search of a genuine issue of triable fact.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996). The evidence presented by the parties must be admissible. LRCiv 56.1(a), (b); see Fed. R. Civ. P. 56(e). Conclusory and speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and to defeat summary judgment. Thornhill Publ’g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). “If a party fails to properly support an assertion of fact or fails to properly address another party’s assertion of fact as required by Rule 56(c), the court may . . . consider the fact undisputed for purposes of the motion.” Fed. R. Civ. 56(e)(2).

         II. UNDISPUTED MATERIAL FACTS

         EZconn manufactures communications products, including coaxial cable connectors. Beginning in the late 1990’s, EZconn and PCT developed a business relationship, which included contracts for EZconn to manufacture and provide products to PCT. On March 28, 2014, PCT informed EZconn that it had suspended business with EZconn.

         During 2012 and 2013, PCT ordered products from EZconn, EZconn manufactured the products that PCT ordered, EZconn delivered the products to PCT, and PCT accepted the products. In connection with their purchase and sale transactions, EZconn provided invoices to PCT, which correspond to the products that EZconn manufactured for and supplied to PCT. PCT accepted the products identified in the invoices, did not reject them as defective or for other reasons, and did not return or attempt to return them to EZconn. As documented in the invoices, EZconn supplied $7,144,467.67 worth of product to PCT. PCT made partial payments toward certain invoices and did not pay all of the invoices in full. After credit for partial payments and offsets, the total unpaid amount of outstanding invoices is $6,629,046.55. PCT does not dispute the amount owed for the unpaid invoices.

         When PCT would send a purchase order to EZconn, EZconn would send a proforma invoice to PCT. Beginning in 2011, EZconn’s proforma invoices stated, “Buyer shall pay EZCONN a delinquency charge on all amounts payable to EZCONN pursuant hereto which are past due at a rate equal to 1.9% per whole or partial month.” PCT would cross out that provision and return the proforma invoice to PCT with that provision crossed out. PCT never agreed to pay interest, delinquency charges, or late charges. PCT routinely maintained an outstanding balance with EZconn, and EZconn required PCT to make quarterly reductions of its outstanding balance and occasional payments as PCT’s cash flow would permit. Other than sending the invoices, EZconn did not demand payment of interest or payment in full before filing this lawsuit on February 24, 2016.

         When EZconn shipped the ordered products to PCT, it would issue an invoice. PCT’s purchase orders commonly specified payment terms of “Net Due in 90 Days.” It was EZconn’s regular practice to consider payment of an invoice to be due within 120 days of that invoice. Applying a “Net Due in 120 Days” payment term and a 10% annual interest rate to each invoice, the accrued interest through October 31, 2016, on PCT’s unpaid balance is $2,283,535.87. PCT does not dispute the amount of accrued interest EZconn claims on the unpaid invoices.

         Some of the purchase orders PCT sent to EZconn over the course of their business relationship included a second page containing PCT’s “Terms and Conditions.” In CV-15-01810, PCT alleged that EZconn violated the “Terms and Conditions” by disclosing PCT’s confidential and proprietary information, by using PCT’s technical information to seek patents on EZconn’s own behalf, and by using PCT’s technical information to manufacture goods for sale by parties other than PCT. The record does not include evidence that the unpaid invoices at issue here included PCT’s “Terms and Conditions” or evidence that the alleged violations occurred in connection with performance of the unpaid invoices at issue here.

         III. RELEVANT PROCEDURAL BACKGROUND

         This case, CV-16-00508, is one of six cases sharing common questions of law and fact that were consolidated in CV-15-00600. (Docs. 51, 76.) On June 22, 2016, all of the affirmative defenses pled by PCT in CV-16-00508 were stricken as insufficient or redundant, and the factual allegations pertaining to the affirmative defenses were stricken as immaterial. (Doc. 100.) As one of its affirmative defenses, PCT alleged that EZconn’s claim for damages related to the unpaid invoices is limited or barred because the damages are subject to set-off for PCT’s claims against EZconn, which were pled by PCT and Andes Industries, Inc., in CV-15-01810 and CV-15-02549 (Doc. 102, First Amended Complaint).[1] Because PCT’s claims had been pled in a pending action before this action was filed, the claims were preserved without being pled in a counterclaim or affirmative defense. The June 22, 2016 Order further stated: “At most, the set-off duplicates claims already pled by ...


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