United States District Court, D. Arizona
V.Wake Senior United States District Judge
CMS Mechanical Services, LLC (“CMS”) brought this
breach of contract action against PetSmart, Inc.
(“PetSmart”). On March 31, 2018, this Court
granted summary judgment in favor of Defendant PetSmart.
(Doc. 203.) Now before the Court are Defendant's Motion
for Award of Attorneys' Fees and Costs (Doc. 208), the
Response, and the Reply. The Court also requested a
supplemental affidavit for fees incurred in drafting the
Reply. (Doc. 214.) PetSmart submitted the affidavit (Doc.
216), and the deadline for CMS's optional reply has
Court described the minutiae of this case in its Summary
Judgment Order (Doc. 203). For ease of reference, it restates
key details here.
PetSmart entered into an agreement under which CMS was to
provide heating, ventilation, and air-conditioning
(“HVAC”) services to 1, 157 PetSmart store
locations. The agreement consisted of two separately executed
documents. The first, a Master Agreement, provided general
terms that would govern any working relationship between the
parties. The second, a Statement of Work, provided the
details of the HVAC servicing arrangement that was to last 60
months-subject to termination “for convenience”
by either party with 30 days' notice. Although executed
separately, the two documents formed a single contract. That
contract clearly and unambiguously listed in an exhibit the
service prices for each store down to the penny. The prices
in the list totaled roughly $505, 000 per month.
contended, contradicting the contract's clear language,
that the prices were intended to be estimates. It began to
bill PetSmart for all stores using the formula in the
Statement of Work that governed potential additional stores.
The invoices resulting from this breach of the contract well
exceeded $505, 000.
to maintain their relationship, the parties agreed to a
capped-billing arrangement. For the remaining months of 2014,
the bills were capped at $525, 000. CMS sought to raise the
billing cap for 2015, and PetSmart agreed to pay $550, 000
per month. In 2016, CMS began to bill for over $600, 000,
claiming the bills represented a return to the proper pricing
formula under the contract.
exercised its right to terminate. CMS then, for the first
time, sent PetSmart an invoice for amounts it had
“deferred” under the capped-billing arrangement.
The invoice totaled $2.6 million, a figure CMS calculated by
applying the additional-stores formula to all stores and
subtracting what had already been paid. CMS never identified
the deferrals in previous invoices. PetSmart had never
previously agreed to pay for any deferrals and refused to pay
when presented with the invoice.
filed this lawsuit to collect the $2.6 million. Over a year
into the litigation, it claimed to have miscalculated the
amount it was owed under the formula. It asserted the correct
amount was actually $3.5 million.
this the only time CMS changed its damages calculation.
Shortly before discovery closed, CMS asserted in its third
supplemental disclosure an entirely new theory of damages:
lost revenues for the remaining duration of the Statement of
Work. CMS calculated its damages under this theory “as
not less than $20, 654, 537.60.” (Doc. 93-1, Ex. A at
5.) A flurry of expensive additional discovery ensued.
PetSmart had to retain an expert to analyze CMS's
internal revenue/profits calculations. CMS continued to move
the goal post with respect to how it was calculating the
damages, and its sole supporting witness on damages was its
CEO. Ultimately, the Court excluded the lost revenue damages
theory. (Doc. 143.) As the Court noted, CMS was attempting to
effectuate, at the end of discovery, “a profound
transformation in the nature of the lawsuit.” (Doc. 151
at 54.) The disclosure of the damages theory was untimely and
“a serious violation of Rule 26.” (Id.
at 78.) In fact, the Court noted that it was unaware of
“anything post-discovery multiplying damages”
like CMS's new theory had in this case. (Id. at
moved for summary judgment, and the Court found in its favor
on all claims. CMS breached the contract in trying to apply
the additional-stores formula to all the stores. It offered
self-serving extrinsic evidence of the parties'
negotiations- evidence barred by the parol evidence rule
because it contradicted the only plausible reading of the
contract's clear price terms. The parties agreed to
billing caps that were fully performed. Despite all evidence
demonstrating that PetSmart sought price stability, CMS
contended that PetSmart was somehow on the hook for amounts
not properly invoiced and far above the contract price.
PetSmart did not breach by walking away from this
preposterous supposed arrangement and did not owe CMS for its
now moves for attorneys' fees and costs under the
contract and A.R.S. § 12-341.01.
Awarding Attorneys' Fees ...