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Arkansas Warehouse, Inc. v. Saint-Gobain Ceramics & Plastics, Inc.

United States District Court, W.D. Arkansas, Fort Smith Division

October 20, 2016




         Before the Court are cross motions for summary judgment. Plaintiff Arkansas Warehouse, Inc. (“Arkansas Warehouse”) filed a motion for summary judgment (Doc. 11) and supporting documents (Docs. 12, 13) on March 11, 2016. Defendant Saint-Gobain Ceramics & Plastics Inc. (“Saint-Gobain”) filed a response in opposition (Docs. 15, 16), to which Arkansas Warehouse replied (Doc. 20). Saint-Gobain has also filed a motion for summary judgment (Doc. 17) with supporting documents (Docs. 18, 19), to which Arkansas Warehouse has responded in opposition (Docs. 21-23), and Saint-Gobain replied (Doc. 24). Saint-Gobain filed a motion to continue the trial scheduled for November 7, 2016 (Doc. 25), and Arkansas Warehouse responded in opposition to a continuation. (Doc. 26). For the following reasons, the Court finds that Saint-Gobain's motion for summary judgment (Doc. 17) should be GRANTED, and Arkansas Warehouse's motion for summary judgment (Doc. 11) should be DENIED. The motion to continue trial (Doc. 25) will be DENIED AS MOOT.

         I. Background[1]

         Beginning in 2013, Oxane Materials, Inc. (“Oxane”) entered into three month-to-month oral contracts with Arkansas Warehouse for the lease of warehouse spaces in Fort Smith, Arkansas. (Doc. 13, ¶¶ 5, 7-10). Oxane used the Arkansas Warehouse space to store raw materials and byproducts (collectively, “the materials”) involved in its manufacturing processes. (Doc. 12, pp. 2-3). Arkansas Warehouse was consistently billing Oxane $52, 050 per month for the continued use of the warehouse spaces at issue before this case arose. (Doc. 13, ¶ 14). In May 2015, Oxane ceased making payments under the oral contract. (Doc. 13, ¶ 20). On May 13, 2015, Oxane entered into a written contract with Saint-Gobain to sell the materials to Saint-Gobain. (Doc. 13, ¶ 16). Under that contract Saint-Gobain obligated itself to ship and dispose of the materials, and agreed that it would “endeavor” to do so on or before July 15, 2015. (Doc. 23, Ex. 3, ¶ 2). Saint-Gobain did not remove the last of the materials until October 19, 2015. (Doc. 13, ¶ 26). For the period of time between May 13, 2015, and October 31, 2015, Arkansas Warehouse periodically billed Saint-Gobain for the use of the warehouse storage space. (Doc. 13, ¶¶ 27-34). Saint-Gobain refused to pay these bills, and to date has not paid any rent to Arkansas Warehouse. (Doc. 13, ¶¶ 36-37).

         II. Standard of Review

         Under Federal Rule of Civil Procedure 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.” The moving party bears the burden of proving the absence of a genuine dispute of material fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Nat'l Bank of Commerce of El Dorado, Ark. v. Dow Chem. Co., 165 F.3d 602 (8th Cir. 1999). When the moving party has met its burden, the non-moving party must “come forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita, 475 U.S. at 587 (quoting Fed.R.Civ.P. 56(c)). “The nonmoving party must do more than rely on allegations or denials in the pleadings, and the court should grant summary judgment if any essential element of the prima facie case is not supported by specific facts sufficient to raise a genuine issue for trial.” Register v. Honeywell Fed. Mfg. & Techs., LLC, 397 F.3d 1130, 1136 (8th Cir. 2005) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)).

         This same standard applies where, as here, the parties file cross motions for summary judgment. When the parties agree that there exists no genuine issue as to any material fact, “summary judgment is a useful tool whereby needless trials may be avoided, and it should not be withheld in an appropriate case.” United States v. Porter, 581 F.2d 698, 703 (8th Cir. 1978). Each motion should be reviewed in its own right, with each side “entitled to the benefit of all inferences favorable to them which might reasonably be drawn from the record.” Wermager v. Cormorant Twp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983). “[W]here conflicting inferences as to a material fact may reasonably be drawn from the materials before the court, the case is not appropriate for summary judgment.” Id.

         “A party cannot defeat a summary judgment motion by asserting the mere existence of some alleged factual dispute between the parties; the party must assert that there is a genuine issue of material fact.” Quinn v. St. Louis Cnty., 653 F.3d 745, 751 (8th Cir. 2011) (internal quotation omitted). “In order to show that disputed facts are material, the party opposing summary judgment must cite to the relevant substantive law in identifying facts that might affect the outcome of the suit.” Id.

         III. Discussion

         The Court will first analyze the existing lease contracts between Oxane and Arkansas Warehouse for the use of Arkansas Warehouse's facilities, and then look at the sales contract for the transfer of the materials from Oxane to Saint-Gobain. After reviewing these existing contracts, the Court will explain why there is no need to imply a contract as a matter of law because complete legal relief can be achieved under the express contracts that exist.

         A. Contracts for the Lease of Premises Between Arkansas Warehouse and Oxane

         Arkansas Warehouse and Oxane entered into three valid oral contracts for the lease of commercial facilities. (Doc. 11-3, ¶ 6). Arkansas Warehouse presented evidence suggesting that the rates used in the leases were “negotiated at arm's length” and “commercially reasonable in light of existing lease and storage rates in the Fort Smith area.” (Doc. 11-3, ¶ 16). These agreements went on for some time, and there is no indication that either party had any trouble with these leases until Oxane stopped paying rent. The leases represented a substantial source of income for Arkansas Warehouse, which billed Oxane $52, 050 each month. (Doc. 11-3, ¶ 25). The evidence of this ordinary course of dealing establishes that there was an express contract-albeit an oral one-between Arkansas Warehouse and Oxane.

         Arkansas Warehouse does not contest the validity, completeness, or fairness of the allocation of risk in its contract with Oxane. Instead, it urges the Court to find that this was not an express contract that would preclude Arkansas Warehouse's unjust enrichment claim because that contract was oral instead of written. (Doc. 12, p. 17). The case law on this point focuses its analysis on the completeness of the contract in dispute rather than its form. See Sparks Reg'l Med. Ctr. v. Blatt, 935 S.W.2d 304, 308 (Ark. 1996) (explaining that courts should look for an “underlying express contract [that] already exists and fairly distributes the risks among the parties involved”). While some Arkansas cases suggest that an express contract should be in writing to preclude an unjust enrichment action between the parties to the contract, there are also cases that do not state that the form of the contract should be dispositive.[2] That is, although Arkansas law regards reducing an express contract to writing as prudent, it is not required. Therefore, the Court will not ignore the contract between Arkansas Warehouse and Oxane solely because of its form. Furthermore, the statute of frauds is not at issue in this case. While this commercial contract between two businesses for the lease of several large warehouses resulting in monthly billing of $52, 050 would no doubt have been more comprehensive had it been in writing, the absence of a writing does not allow the avoidance of an oral contract the validity of which is not in dispute. The Court finds that the lease contract between Arkansas Warehouse and Oxane was a valid and complete contract regardless of the fact that it was oral instead of written.

         Legal relief may be available to Arkansas Warehouse under this contract. Arkansas Warehouse and Saint-Gobain dispute whether this contract was cancelled by Oxane, and if so, when it was cancelled. (Doc. 12, pp. 6-7; Doc. 18, pp. 8-9). There is also some dispute between the parties about the timing and legal effect of Oxane's bankruptcy proceedings. (Doc. 19, ¶ 3; Doc. 23, ¶ 3). These disputes are not dispositive, however, as they do not change the fact that Arkansas Warehouse has an avenue of relief against Oxane under their express contract. If the contract was not cancelled, then Arkansas Warehouse would have a breach of contract action against Oxane for continued occupation of the premises without payment of rent. If the contract was cancelled, then Arkansas Warehouse would have an action against Oxane to either compel Oxane to remove the materials or pay for the cost of removal to restore the premises to the condition before Oxane's occupation with the materials. If any of Oxane's obligations to Arkansas Warehouse were affected by Oxane's ...

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