The opinion of the court was delivered by: Dalzell, J.
As will be seen, this case provides a primer on how to procure multimillion dollar service contracts with the City of Philadelphia.
The dispute here arises out of a consulting agreement (the "Agreement") between Hiriam Hicks, Inc. ("HHI"), the plaintiff and counterclaim defendant, and Synagro WWT, LLC ("Synagro"), the defendant and counterclaim plaintiff. Synagro contracted with HHI to provide it with assistance in securing a major waste management contract (the "Contract") with the City of Philadelphia. By the terms of the Agreement, HHI was entitled to a monthly retainer before passage of certain bills through the City Council of certain bills regarding the Contract, a lump sum retainer upon Contract execution, and the option to provide valuable subcontracting services for the twenty-three year term of the waste management project after Contract execution --provided that the "Contract with the City [was] approved" by June 30, 2008.
Philadelphia City Council indeed passed the enabling bills relating to the Contract, but a burgeoning bribery scandal involving Synagro in Detroit led Mayor Michael Nutter to instruct Joan Markman ("Markman"), his Chief Integrity Officer, to scrutinize the proposed Contract between the City and Synagro. Synagro contends that in the course of Markman's investigation, HHI's principal, Hiriam Hicks ("Hicks"), breached the terms of the Agreement, leading Synagro to terminate the Agreement before HHI could lay claim to the retainer it was due upon execution of the Contract or exercise its option to provide subcontracting services for the term of the project. Synagro also claims "the Contract with the City [was not] approved" by June 30, 2008, so that HHI is not entitled to provide further services under the Agreement. Finally, Synagro argues that the City's renegotiation of the Contract following Markman's investigation frustrated the purposes of the Agreement, so that Synagro's obligation to HHI under the Agreement is discharged.
HHI asserts that, as a matter of law, the "Contract with the City" was approved by June 30, 2008. It further suggests that Hicks's behavior during the Markman investigation did not breach the Agreement, and that frustration of purpose does not apply here.
HHI asserts three claims against Synagro: (1) breach of contract, (2)
anticipatory breach of contract, and (3) unjust enrichment. Synagro
advances four counterclaims of its own: (1) breach of contract, (2)
breach of common law duty, (3) conversion, and (4) fraud.*fn1
Synagro has filed a motion in which it urges us to grant
summary judgment in its favor on each of HHI's claims.
HHI has filed its own motion for partial summary judgment. It seeks a finding "that [its] right to provide services, and to be paid, under a portion of [its] Consulting Agreement with Defendant, Synagro WWT, Inc. has not 'expired' within the meaning of Section 1 of the Consulting Agreement because the requisite 'approval' of the City Council was timely obtained." Pl.'s Mot. Summ. J. at 1.
Synagro has also filed a motion to strike the Declaration Hicks submitted in opposition to Synagro's motion for summary judgment. HHI has filed a motion to amend this Declaration.
For the reasons set forth at length below, we will grant Synagro's motion to strike Hicks's declaration in part, deny Synagro's motion for summary judgment, and grant HHI's motion for partial summary judgment.
I. Synagro's Motion to Strike Hicks's Declaration
Synagro takes issue with HHI's submission of "a rambling, 43-page declaration from its principal, Hiriam Hicks." Def.'s Mot. Strike at 1. According to Synagro,
The mandate of Rule 56(c)(4) is clear: all statements in a declaration submitted in support of or in opposition to a motion for summary judgment must be based on personal knowledge. Hicks concedes in Paragraph 1 of his Declaration that numerous statements he makes are not based on such knowledge. . . . Hicks's Declaration is also replete with argument and legal conclusions, neither of which is appropriate in a declaration from a purported fact witness.
Id. at 2 (internal citations omitted).
HHI responds that (1) "the material objected to as argumentative . . . was intended to provide context to the statement of facts, and to make clear how the facts in the Hicks Declaration tied in to the legal arguments," Pl.'s Resp. to Def.'s Mot. Strike at 1; (2) "short, non-argumentative statements as to the evidence to be found in the various exhibits to that declaration" are meant to act as "pointers to what the Court is asked to accept as fact based on the exhibits," id. at 2; and (3) "[t]he Hicks Declaration indeed refers to statements made by others," but "the out-of-court declarants are all named and can be produced at trial, and so those statements are admissible at this stage, even if they otherwise would constitute hearsay."
Id. at 3. HHI nonetheless explains that "[i]n an effort to avoid unnecessary motion practice, plaintiff has submitted with the Proposed Order a proposed amended declaration from which argumentative statements have been surgically removed, while maintaining the flow of Mr. Hicks' summary of his own direct knowledge, into which is woven references to the exhibits." Id. at 4.
Fed. R. Civ. P. 56(c) provides that
(2) Objection That a Fact Is Not Supported by Admissible Evidence. A party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.
(4) Affidavits or Declarations. An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.
Without any doubt, Hicks's Declaration and proposed Declaration breach these rules. A party may "make clear how the facts in [a declaration] tied in to the legal arguments," Pl.'s Resp. to Def.'s Mot. Strike at 1, in a memorandum of law. It may provide "pointers to what the Court is asked to accept as fact based on the exhibits," id. at 2, in a statement of facts. Neither has any place in an affidavit or declaration, which are not baskets or braided pigtails through which "references to the exhibits" must be "woven." Id. at 4.
As for HHI's contention that the availability of declarants who might testify at trial permits introduction of their hearsay statements, this notion is preposterous. As our Court of Appeals has explained, "[h]earsay statements that would be inadmissible at trial may not be considered for purposes of summary judgment," Smith v. City of Allentown, 589 F.3d 684, 693 (3d Cir. 2009), regardless of whether a declarant might later be persuaded to testify at trial.
We will accordingly grant Synagro's motion to strike and deny HHI's motion to amend declaration, and will ignore the portions of Hicks's Declaration that contain (1) legal argument, (2) summaries of exhibits, or (3) inadmissible hearsay. Where HHI refers to passages of Hicks's Declaration that cite to exhibits, we will consider the underlying exhibit in ascertaining whether the proposed fact is supported by "particular parts of materials in the record." Rule 56(c)(1)(A).
Under Fed. R. Civ. P. 56(a), "[t]he 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," where "[a] party asserting that there is a genuine dispute as to a material fact must support that assertion with specific citations to the record." Bello v. Romeo, 424 Fed. Appx. 130, 133 (3d Cir. 2011). We will thus set out the undisputed material facts in this matter, as well as the disputed material factual assertions that the parties have supported with specific citations to the record. Because Synagro and HHI's respective statements of fact canvass essentially the same subjects, with Synagro's statement covering these facts in greater detail, we largely draw our account of the facts from Synagro's statement and HHI's response thereto.
A. Synagro's Proposed Project
Synagro engages in "biosolids reprocessing," or the process of treating and disposing of solid human waste. Def.'s Stmt. of Facts ("Def.'s Stmt.") ¶ 1; Pl.'s Resp. to Def.'s Stmt. ("Pl.'s Resp.") ¶ 1. In 2004, the City issued a Request for Proposals ("RFP") regarding the provision of reprocessing services to the City. The City's treatment process then consisted only of "dewatering" waste into a paste (known as "sludge") and hauling it away from the City's plant, located near the Philadelphia International Airport. Def.'s Stmt. ¶¶ 1-2; Pl.'s Resp. ¶¶ 1-2. Synagro responded to the City's RFP and proposed adding a "drying" facility at the plant that would dry the "sludge" into solid pellets that could be used as fertilizer or fuel. Def.'s Stmt. ¶¶ 1-2; Pl.'s Resp. ¶¶ 1-2. By 2007, however, Synagro's efforts to provide treatment services to the City had run aground, as opposition from the American Federation of State, County and Municipal Employees ("AFSCME") -- the union representing the workers who operated the City's treatment plant -- and Pete Matthews ("Matthews"), President of AFSCME District Council 33, caused the project to be held up in a City Council subcommittee. Def.'s Stmt. ¶ 3; Pl.'s Resp. ¶ 3.
The proposed contractual relationship between the City and Synagro actually involved two "mirror" contracts: (1) a "Service Contract" between the City and the Philadelphia Municipal Authority ("PMA"), and (2) a "Service Agreement" between PMA and Philadelphia Biosolids Services, LLC ("PBS"), a joint venture that is 70% owned by Synagro and 30% owned by two minority business enterprises. Def.'s Stmt. ¶ 18; Pl.'s Resp. ¶ 18. For these contracts to be finalized, City Council needed to pass bills or ordinances authorizing them. Def.'s Stmt. ¶¶ 14, 16-17; Pl.'s Resp. ¶¶ 14, 16-17. The Philadelphia Home Rule Charter provides, however, that an ordinance passed by the City Council does not become effective until it has been either signed by the Mayor or passed by City Council "'by a vote of two-thirds of all of its members within seven days after the bill has been returned with the Mayor's disapproval.'" Def.'s Stmt. ¶ 16 (quoting Ex. FF to Def.'s Stmt. ("Charter") § 2-202); Pl.'s Resp. ¶ 16. After an ordinance authorizing a City contract becomes effective, the Mayor and other members of the executive branch must approve the project and negotiate its final terms before it can be finalized, Def.'s Stmt. ¶ 17; Pl.'s Resp. ¶ 17, presumably through formal execution.
B. The Agreement Between The Parties
Hicks is a music industry professional who modestly described himself in his deposition as a "very, very influential manager of big artists". Def.'s Stmt. ¶6 (quoting Ex. E to Def.'s Stmt. ("Hicks Dep.") at 4-11, 13-14, 16); Pl.'s Resp. ¶6. Before 2007, he had never done any work assisting anyone in obtaining municipal contracts. Def.'s Stmt. ¶ 7; Pl.'s Resp. ¶ 7. In 2007, Rayford Jackson ("Jackson"), a consultant working for Synagro in Detroit, introduced Hicks to officers at Synagro, telling them that Hicks was close to Fareed Ahmed ("Ahmed"), whom Jackson described as a community activist and lobbyist who was well-connected in the Philadelphia political community.*fn2 Def.'s Stmt. ¶¶ 5, 8; Pl.'s Resp. ¶¶ 5, 8.
On July 12, 2007, Synagro entered into its Agreement with HHI, of which Hiriam Hicks is the CEO and principal. Def.'s Stmt. ¶¶ 9-10; Pl.'s Resp. ¶¶ 9-10. According to Hicks, Synagro drafted this Agreement though Hicks proposed amendments to § 1 and Schedule B of this Agreement that Synagro accepted. Ex. A. to Pl.'s Facts ("Hicks Decl.") ¶¶ 10, 15, 17-18. The parties amended the Agreement in October of 2007 to change a critical date from December 31, 2007 to March 31, 2008, and added an amended Schedule D. They amended the Agreement yet again in early 2008 to change the date in question from March 31, 2008 to June 30, 2008. Def.'s Stmt. ¶ 10; Pl.'s Resp. ¶ 10.
As amended, Section 1 of the Agreement provides: Consulting Services. The Company hereby retains Consultant*fn3 as a consultant reporting to the Vice President Business Development [sic] to provide the advice and services for the Company described in Schedule B (the 'Consulting Services'). The Consultant shall not engage in any conduct or make any statement, which in the reasonable opinion of the Company, would be deleterious to the good will or would injure the business reputation of the Company or corporations affiliated with the Company. Consultant shall comply with the ethics requirements outlined in Schedule A. The Consulting Services and Compensation provided for under this Agreement shall expire on June 30, 2008, if the Contract with the City is not approved by this date, unless extended by mutual agreement. . . .
Agreement § 1. We review the Schedules incorporated in this provision in greater detail in Section III.A below. For now, we note that Schedule B of the Agreement, describing "Consulting Services," provides in part that "[i]f these two bills are successfully voted out of both Sub Committees and obtain full City Council approval, then [HHI may provide] additional government and community relations and subcontracting (See Schedule D) services." Id. at Schedule B. In turn, the amended Schedule D permits HHI to "provide subcontract services for the term of the project," including conducting community and governmental relations programs, providing local and certified minority contractors, and administering chemical and polymer supply. Id. at Amended Schedule D. HHI stood to earn $400,000 for each of twenty-three years for these services, or $9.2 million (undiscounted). Id.
C. Hicks's Efforts On Behalf Of Synagro
When Hicks began working for Synagro he was told that the most pressing issue was Synagro's inability to secure access to Matthews, President of AFSCME District Council 33. Hicks responded by calling Ahmed, who was close to Matthews and had worked as a consultant for AFSCME District Council 33 for several years. Ahmed arranged a meeting between Matthews and Synagro. Def.'s Stmt. ¶ 22; Pl.'s Resp. ¶ 22. Ahmed also spoke with Mayor Nutter about the Contract, and met either with City Council President Anna Verna or her staff member Charlie McPherson about the project, as well as with Janie Blackwell, the chairperson of the City Council subcommittee considering the Contract. Def.'s Stmt. ¶ 25; Pl.'s Resp. ¶ 25.
Hicks also testified that "'it was important for [him] under the terms of the consulting agreement to educate the community'" about Synagro's proposed Contract with the City. Def.'s Stmt. ¶ 27 (quoting Ex. E to Def.'s Stmt. ("Hicks Dep.") at 189-90); Pl.'s Resp. ¶ 27. To this end, Synagro provided Hicks with payments of $30,000 in January of 2008 and $25,000 in April of 2008 to engage in "'community outreach,'" an enterprise entrusted to Sultan Ashley-Shah ("Ashley-Shah"), a Philadelphia community organizer. Def.'s Stmt. ¶¶ 28-29 (quoting Hicks Dep. at 109-10); Pl.'s Resp. ¶¶ 28-29. Ashley-Shah, in turn, used some of this money to pay people -- most of whom from homeless shelters -- to attend a subcommittee hearing in June of 2008. Def.'s Stmt. ¶ 32; Pl.'s Resp. ¶ 32. Ashley-Shah described the ensuing dramatic events that he made possible:
Q: So a number of people actually went to the City Council hearing, right?
A: About 175 people, close to 200 people were there. . . . And when we got down there, it was a ruckus. It was just total chaos. We weren't able to actually get our people into City Council, but we refused to go. We refused to not get our message across. So we began our march around Council and began to start protesting making sure that folks knew and could hear the message that we came down there to present relative to our position on Synagro.
Q: Do you know an individual by the name of
A: Yeah, I think he's a labor leader. . . .
We got into confrontations with some of his people.
Q: When you say confrontation, what do you mean?
A: Physical confrontations where the police actually had to come on the scene. . . .
Q: Were people throwing punches at each other?
A: It came to that. . . .
Q: Was it one or two isolated instances?
A: It was a couple of isolated instances. .
. . The entire atmosphere, the entire day was a scene of chaos, inside and out.
Ex. L to Def.'s Stmt. ("Ashley-Shah Dep.") at 33-35. Ashley-Shah testified that he kept about $14,000 of the $55,000 as his fee. Def.'s Stmt. ¶ 32; Pl.'s Resp. ¶ 32.
D. Synagro's Contract With The City
The City Council passed three bills relating to Synagro's proposed treatment facility -- two on June 12, 2008, and one on June 19, 2008 -- that accomplished the same ends as the bills referred to in the Agreement, though these bills bore different numbers and had been slightly revised. Def.'s Stmt. ¶¶ 33-34; Pl.'s Resp. ¶¶ 33-34. Mayor Nutter signed the first two bills on June 18, 2008, and signed the third -- Bill No. 080498-A -- on July 2, 2008. Def.'s Stmt. ¶ 35; Pl.'s Resp. ¶ 35.
E. Joan Markman's Investigation*fn4
On July 2, 2008, James Hecht, the ...