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Keystone Dedicated Logistics v. Flexaust Co.

August 31, 2010


The opinion of the court was delivered by: Magistrate Judge Lisa P. Lenihan


I. Summation

The Motion for Reconsideration of Summary Judgment filed by Defendant Flexaust Company, Inc. ("Flexaust") will be denied.

II. Factual and Procedural History

As fully set forth in this Court's Opinion on Motion for Summary Judgment, Plaintiff ("KDL") alleges that Flexaust breached the parties' Transportation Services Agreement (hereafter the "TSA") and obtained improper benefit from KDL's product transportation-related efforts. The parties' written agreement provides that "KDL [was] authorized to negotiate rates on behalf of Flexaust and Flexaust agree[d] to utilize those freight companies when said freight companies provide[d] a cost savings over current programs and [met] expected service levels defined by Flexaust." Schedule A at ¶ 2 (emphasis added). Agreed-upon carriers were referred to as "compliant carriers". Id. KDL was to "process Flexaust freight bills weekly"; invoice Flexaust and distribute funds to KDL/compliant carriers; and "track all non-compliance carriers and provide cost of non-compliance usage." Id. at ¶ 3. Anticipated freight savings (the "transportation cost savings") were to be divided between the parties. Flexaust was to "compensate KDL by [a specified] formula . . . for all recognized freight savings" and KDL was to "calculate transportation savings defined as 'Benchmark Rate Calculation' less KDL transportation arrangements or other transportation arrangements that are less than 'Benchmark Rate Calculations.'" Schedule A at ¶ 4 (emphasis added). But "IF THERE [WERE} NO SAVINGS THEN THERE [WERE] NO FEES DUE TO KDL" other than weekly processing fees and expense reimbursements. Id. (emphasis in original).

The TSA further provided for an initial term of 48 months "from the date that the parties agree on carrier pricing", but permits a "one year trial period - early termination" pursuant to which Flexaust could elect to terminate during the 12th to 15th months of the contract. TSA at ¶ 4. Early termination required that Flexaust "deliver a written cancellation notice" and provide KDL an "opportunity to meet Flexaust in person." Id. And cancellation under this provision would take effect ninety (90) days from the date of notice. Id. A party might also terminate "for cause", provided that it permitted a thirty (30) day window for remedy of any default. Id.

Finally, the "Exclusivity" paragraph of the TSA provided that for the term of the TSA and, if early termination were elected, for one year thereafter, Flexaust "agrees not to directly solicit the services of any transportation companies that KDL has introduced to service Flexaust." Id. at ¶ 5.

The parties began performance under the contract in January, 2008. See Opinion on Motion for Summary Judgment at 4. This action was transferred to this Court in May, 2009.

In April, 2010, this Court granted Defendant's October, 2009 Motion for Summary Judgment on claims of unjust enrichment and quantum meruit, and denied said Motion as to Plaintiff's claims for breach of contract. As to the latter, the Court concluded that material fact questions regarding (a) Flexaust's use of other transportation services and obligation to pay KDL for savings obtained on shipments made through "non-compliance" carriers; (b) the effective date, if any, of Flexaust's termination of the TSA; and c) Flexuast's relationship with UPS, precluded summary judgment. On August 20, 2010, Defendant moved for Reconsideration of that Opinion.By a separate Motion of the same date, Defendant also moved for Leave to Amend its Answer to include an additional affirmative defense of waiver. The Court has granted Defendant's request to amend.*fn1

III. Summary Judgment Standard

Summary judgment is to be granted only when "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 . . . the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). A fact is "material" if proof of its existence or non-existence might affect the outcome of the suit under applicable law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And a dispute is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id.

All doubts as to the existence of a genuine issue of material fact are resolved against the moving party, and the entire record is examined in the light most favorable to the nonmoving party. Continental Ins. Co. v. Bodie, 682 F.2d 436, 438 (3d Cir. 1982). However, the nonmoving party may be subject to summary judgment under Rule 56 if, after adequate time for discovery, it "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

IV. Analysis

A. Entitlement to ...

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