NTA Graphics South, Inc. v. Axiom Impressions, LLC

          MEMORANDUM OPINION & ORDER ^[1]

          STACI G. CORNELIUS, U.S. MAGISTRATE JUDGE

         This is a dispute between two commercial printers, NTA Graphics South, Inc., and Axiom Impressions, LLC. NTA Graphics commenced the action by filing a complaint asserting various state law claims against Axiom Impressions.^[2] Thereafter, Axiom Impressions filed a counterclaim asserting various state law claims against NTA Graphics.^[3] Federal subject matter jurisdiction is premised on diversity of citizenship. (Doc. 13 at ¶¶ 1, 3; Doc. 16). Pending before the undersigned are two motions for summary judgment filed by NTA Graphics: one seeking judgment in its favor on certain of Axiom Impressions' claims (Doc. 53) and one seeking judgment in its favor on certain of its own claims (Doc. 55). A hearing on the motions was held on July 23, 2019. For the reasons discussed below, the first motion is due to be granted in part and denied in part. The undersigned orally denied the second motion in its entirety during the July 23, 2019 hearing and sets forth the reasons for so doing herein.

         I. Material Facts^[4]

         A. Introduction

         NTA Graphics and Axiom Impressions print newspaper advertising inserts and circulars. (Doc. 55 at p. 2). NTA Graphics' printing facility is in Birmingham, Alabama. (Id.). Axiom Impressions has printing facilities in Portland, Tennessee and Liberty, Missouri. (Id.).

         On February 21, 2015, the roof of Axiom Impressions' Portland facility collapsed, causing a fire that rendered the facility and the four printing presses located inside unusable. (Id.). On February 25, 2015, Matt Duffield (Axiom Impressions' Chief Executive Officer) and Kevin Hendrix (Axiom Impressions' General Manager and Chief Operating Officer) met with Greg Klausing (NTA Graphics' President) and Rodney Parker (NTA Graphics' Vice President) to discuss whether NTA Graphics would be able to print jobs for Axiom Impressions pending remediation of the latter's Portland facility and repair of its equipment. (Id.).^[5] At that time, the parties reached an oral agreement, the duration of which they did not contemplate would be equal to or in excess of one year. (Id.; Doc. 65-2 at ¶ 8). The terms of that agreement and representations allegedly made during the February 25, 2015 meeting form the basis of this action.

         B. NTA Graphics' Performance

         The parties agree they contemplated NTA Graphics would print jobs for one of Axiom Impressions' customers, AG Florida, on a weekly basis and for other customers of Axiom Impressions depending on capacity at Axiom Impressions' Liberty, Missouri facility and NTA Graphics' Birmingham, Alabama facility. (Doc. 53 at p. 7; Doc. 56-1 at ¶ 4; Doc. 65-2 at ¶ 7; Doc. 65-3 at pp. 74-75). Axiom Impressions claims that during the February 25, 2015 meeting the parties discussed the approximate number of hours required each week to complete the AG Florida work, the schedule for that work, and expectations for print quality. (Doc. 65-2 at ¶ 5). According to Axiom Impressions, NTA Graphics represented it had the capacity to undertake the AG Florida work, and Axiom Impressions relied on this representation to the extent it would not have entered into an agreement with NTA Graphics absent such capacity. (Id. at ¶¶ 5-6). Nonetheless, there were occasions when NTA Graphics did not have enough labor to perform the AG Florida work, and Axiom Impressions had to send employees from its Portland facility to Birmingham, at its own expense, to help complete the work. (Id. at ¶¶ 25-26).

         What the parties refer to as the “Penn Dutch error” occurred when NTA Graphics included pages from a competing grocer's advertisement within the Easter advertisement for Penn Dutch, one of AG Florida's customers. (Doc. 65-2 at ¶¶ 27, 29). According to Axiom Impressions, this caused “tremendous” confusion amongst Penn Dutch's customers and came at a significant cost to Penn Dutch. (Id. at ¶ 30). AG Florida seriously considered ending its business relationship with Axiom Impressions because of the Penn Dutch error. (Id. at ¶ 31). Axiom Impressions claims the Penn Dutch error also came at a cost to Axiom Impressions, for two reasons. First, AG Florida demanded Axiom Impressions provide a credit for the error in the amount of approximately $24, 000, and Axiom Impressions complied with the demand for fear of losing AG Florida's business. (Id. at ¶ 31). Second, while Axiom Impressions had been planning to present AG Florida with a 5% price increase, it had to delay these plans because of the Penn Dutch error. (Doc. 54-3 at p. 66; Doc. 54-7 at pp. 20-21; Doc. 65-2 at ¶¶ 32-39; Doc. 65-18 at ¶¶ 3-6). Axiom Impressions did successfully implement price increases for five of its other customers in 2015 and 2016. (Doc. 65-2 at ¶¶ 42-46). Moreover, when Axiom Impressions finally did present a price increase to AG Florida on June 1, 2017, AG Florida accepted it. (Id. at ¶¶ 38-39). AG Florida accepted price increases on February 1, 2018, and May 1, 2018, as well. (Id. at ¶¶ 38-39).

         C. Axiom Impressions' Performance

         Axiom Impressions provided paper for 95% of the jobs NTA Graphics printed on Axiom Impressions' behalf, the graphics for the jobs, and instructions for printing the jobs. (Doc. 54-3 at p. 29; Doc. 65-2 at ¶¶ 20-21).^[6] Generally, paper is the most expensive commodity used by a printer, representing 40-50% of the cost of printing a job. (Doc. 65-2 at ¶ 22). By contrast, ink represents 4-5% of that cost. (Id. at ¶ 23). Moreover, the parties agree they contemplated Axiom Impressions would pay NTA Graphics for jobs it printed. However, they disagree on the payment terms.

         Axiom Impressions has submitted sworn testimony that for a given job, it agreed to pay NTA Graphics a sum no greater than the amount Axiom Impressions billed its customer, less paper and freight provided by Axiom Impressions. (See, e.g., Doc. 65-2 at ¶ 4; Doc. 54-4 at 22). NTA Graphics has submitted sworn testimony denying this was the parties' agreement. (Doc. 69-1 at ¶ 10). While NTA Graphics explains why it would not make business sense for it to have agreed to the price term articulated by Axiom Impressions (Doc. 53 at pp. 18-19), it does not propose an alternative price term to which the parties agreed. Instead, NTA Graphics essentially argues Axiom Impressions' conduct manifested its assent to amounts invoiced by NTA Graphics.

         NTA Graphics regularly printed jobs for Axiom Impressions between February 28, 2015, and September 12, 2015. (Doc. 55 at p. 3). NTA Graphics submitted invoices totaling $309, 885.96 to Axiom Impressions between April 2015, and either August or September 2015. (Doc. 56-1 at ¶¶ 6-7; Doc. 65-2 at ¶¶ 12-13; Doc. 69-1 at ¶ 4).^[7] Axiom Impressions paid these invoices in full. (Doc. 56-1 at ¶¶ 6-7; Doc. 65-2 at ¶ 12; Doc. 69-1 at ¶ 4).^[8] However, Axiom Impressions claims these payments do not indicate it had no objection to the amounts invoiced but, rather, merely that the discrepancies between the invoices and the corresponding invoices Axiom submitted to its customers were minimal and capable of resolution when it performed a final reconciliation at the conclusion of the parties' relationship. (Doc. 65-2 at ¶ 12).

         NTA Graphics submitted 88 or more invoices totaling $1, 304, 319.33 to Axiom Impressions between September or November 2015, and December 2015, for work performed during the course of the parties' business relationship. (Doc. 56-1 at ¶¶ 6, 8; Doc. 65-2 at ¶ 13; Doc. 69-1 at ¶ 5).^[9] NTA Graphics concedes the invoices were late and claims this was because it was trying to keep up with the “torrent” of print jobs sent to it by Axiom Impressions. (Doc. 53 at p. 12; Doc. 68 at p. 4).

         Axiom Impressions made the notation “OK to pay” or “OK per KH” on a number of the invoices after receiving them. (Doc. 59-1; Doc. 60-1; Doc. 61-1; Doc. 62-1). Hendrix testified he did not personally make the notation “OK per KH” on the invoices and that neither that nor any other mark or notation indicates the invoices were approved for payment. (Doc. 65-2 at ¶ 11). Rather, according to Hendrix, he noticed on receiving the invoices that the amounts NTA Graphics billed to Axiom Impressions were significantly different than the amounts Axiom Impressions billed its customers for the corresponding work. (Doc. 65-2 at ¶ 14). Hendrix testified he informed Parker that Hendrix needed to reconcile the invoices and this would take time given the volume of the invoices and time period they covered. (Id.). Moreover, according to Hendrix, fall is the busy season for printers, which prevented him from devoting his full attention to the invoices at that time. (Id. at ¶ 15). Hendirx claims to have maintained regular communication with Parker during January, February, and March 2016, regarding the need to reconcile NTA Graphics' invoices to Axiom Impressions with Axiom Impressions' invoices to its customers. (Id. at ¶ 16).

         NTA Graphics denies it had any communication with Axiom Impressions regarding invoicing discrepancies before March 14, 2016, when Hendrix sent an e-mail to Parker and Klausing, stating he planned to travel to NTA Graphics' Birmingham facility within the next two weeks “to go over invoicing differences.” (Doc. 56-1 at ¶ 6; Doc. 56-4 at 14; Doc. 69-1 at ¶ 5).^[10] NTA Graphics characterizes its e-mail exchanges with Axiom Impressions before March 14, 2016, either as indicating the latter would pay the former in full (Doc. 69-1 at ¶ 5), or as at least failing to object to the amounts invoiced. For example, on January 29, 2016, Klausing sent an e-mail to Duffield and Hendrix, stating he was extremely nervous about the sum Axiom Impressions owed NTA Graphics and needed to know when he could expect to receive payment. (Doc. 56-1 at ¶ 10). Klausing testified he never received a response to that e-mail. (Id.). On February 10, 2016, Klausing sent another e-mail to Duffield and Hendrix, stating he was entitled to know when NTA Graphics would receive payment on the outstanding invoices. (Id.). Klausing testified he never received a response to that e-mail, either. (Id.).

         On May 3, 2016, NTA Graphics received a wire transfer from Axiom Impressions in the amount of $749, 005.82, together with a spreadsheet “reconciling” the invoices Axiom Impressions submitted to its customers for jobs printed by NTA Graphics with the invoices NTA Graphics submitted to Axiom Impressions for those jobs. (Id. at ¶ 11). NTA Graphics claims it is still owed $555, 313.51 (together with interest at the rate of 18%) by Axiom Impressions (id. at ¶¶ 13-14), while Axiom Impressions disputes some portion of the balance owed (Doc. 56-4 at p. 28; Doc. 65-2 at ¶ 18).

         D. Claims

         NTA Graphics asserts various state law claims against Axiom Impressions based on the latter's failure to pay the outstanding invoices in full. (Doc. 13). Axiom Impressions asserts counterclaims for breach of contract, based on NTA Graphics' alleged failure to submit timely and accurate invoices and the Penn Dutch error; breach of express and implied warranty, based on the Penn Dutch error; fraud, based on NTA Graphics' representations regarding its capacity to perform the AG Florida work; negligence; and unjust enrichment. (Doc. 30). In its pending defensive motion, NTA Graphics seeks summary judgment in its favor on all but Axiom Impressions' unjust enrichment counterclaim. (Doc. 53). In its pending offensive motion, NTA Graphics seeks summary judgment in its favor on only its claims for open account and account stated. (Doc. 55). The claims on which NTA Graphics seeks judgment are addressed below, with the exception of Axiom Impressions' negligence claim, which Axiom Impressions concedes. (Doc. 65 at p. 8 n.1).

         II. Standard of Review

         Under Rule 56 of the Federal Rules of Civil Procedure, “[t]he [district] court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The party seeking summary judgment bears the initial burden of informing the district court of the basis for its motion and identifying those portions of the record the party believes demonstrate the absence of a genuine dispute as to a material fact. Celotex Corp., 477 U.S. at 323. If the moving party carries its initial burden, the non-movant must go beyond the pleadings and come forward with evidence showing there is a genuine dispute as to a material fact for trial. Id. at 324.

         The substantive law identifies which facts are material and which are irrelevant. Anderson, 477 U.S. at 248.^[11] A dispute is genuine if the evidence is such that a reasonable jury could return a verdict for the non-movant. Id. at 248. If the evidence is merely colorable or not significantly probative, summary judgment is appropriate. Id. at 249-50 (internal citations omitted). All reasonable doubts about the facts should be resolved in favor of the non-movant, and all justifiable inferences should be drawn in the non-movant's favor. Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993).

         III. Discussion

         A. Axiom ...