Coleman Consulting LLC v. Domtar Corp.

605 F.Supp.3d 1138

COLEMAN CONSULTING LLC, Plaintiff

v.DOMTAR CORPORATION and Domtar A.W. LLC, Defendants

Case No. 4:18-cv-4123

United States District Court, W.D. Arkansas, Texarkana Division.

Signed June 6, 2022

David S. Mitchell, Jr., Andrew J. Rittenhouse, Ty Ramsey Bordenkircher, Rose Law Firm, a Professional Association, Little Rock, AR, for Plaintiff.

Joseph Cotten Cunningham, Adam D. Franks, Jerry D. Garner, Barber Law Firm PLLC, Little Rock, AR, Mark Evan Stallings, Barber McCaskill Jones Hale P.A., Little Rock, AR, for Defendants.

MEMORANDUM OPINION

Susan O. Hickey, Chief United States District Judge

Before the Court is Defendants’ Motion for Summary Judgment. ECF No. 92. Plaintiff has filed a response. ECF No. 119. Defendants have filed a reply. ECF No. 121. The Court finds this matter ripe for consideration.

I. BACKGROUND

This is an action asserting two claims related to consulting services provided by Plaintiff Coleman Consulting LLC at a pulp mill facility in Ashdown, Arkansas ("Ashdown Mill"), which is owned by Defendant Domtar A.W. LLC.¹ Farnsworth Coleman, Sr. ("Coleman"), the sole member of Coleman Consulting LLC, traveled to the Ashdown Mill to provide consulting services related to the Chemi-Washer. Coleman, on behalf of Plaintiff, drafted a one-page document entitled "Confidentiality Agreement Between Coleman Consulting LLC and Domtar Ashdown Mill" ("the Agreement"), which is the document at issue in this case. ECF No. 1-1.

Coleman presented the Agreement to John Borowitz, the Ashdown Mill Superintendent, who signed the Agreement along with Coleman on November 11, 2016. ECF No. 1-1. The Agreement states that Plaintiff "agrees to consult for Domtar Ashdown mill" in several different areas related to the Chemi-Washer.² ECF No. 1-1. The Agreement also includes a provision regarding the confidential nature of Plaintiff's procedures and recommendations. The Agreement also includes the following paragraph regarding compensation:

Coleman Consulting will be compensated to included expenses and hourly rate ($250.00/hr) along with (Retainer fee, based on a percentage of NPS (net profit savings). Such fee will be verified and agreed upon based on Customer Savings, and increased production.

ECF No. 1-1. The Agreement contains no durational provision. Coleman visited the Ashdown Mill on four different occasions. He then prepared and emailed a list of Chemi-Washer recommendations to Borowitz.

Plaintiff asserts that at some point during the consulting process, Coleman and Borowitz met in person to discuss the details of the Agreement. Plaintiff alleges that, at this meeting, Coleman and Borowitz agreed to orally modify the Agreement to specify that Plaintiff would receive 30% of the increased "net profit savings" and to include a durational term of ten years. Defendants deny that this meeting ever took place and maintain that Borowitz never agreed to a 30% profit-sharing provision or a ten-year durational term. According to Defendants, Coleman and Borowitz never modified the contract any way.

Plaintiff submitted invoices to Domtar A.W. LLC, which included charges for a "retainer fee,"³ fees of $250.00 per hour, and expenses. The invoices totaled $30,929.40, and Domtar A.W. LLC paid the invoices in full in December 2016. On May 22, 2017, Borowitz sent an email to Coleman stating that his "services [were] no longer needed." ECF No. 103. Borowitz explained that Plaintiff was one of three companies that were invited to consult about the runnability of the Ashdown Mill and that the recommendations from the three companies were consolidated and prioritized based on "ROI and feasibility." ECF No. 1-3. Borowitz further explains that there were "a lot of consistent recommendations." ECF No. 1-3. Defendants assert that Plaintiff's recommendations were not implemented at the Ashdown Mill and that most of the recommendations were routine maintenance procedures that were already in place before Coleman was hired. ECF No. 93, ¶ 54. Plaintiff, however, maintains that the "majority of the improvement items were first implemented as a result of Coleman." ECF No. 118, ¶54.

In this lawsuit, Plaintiff claims that Defendants breached the Agreement by refusing to pay the "retainer fee" based on 30% of any actual savings or increased profits realized by the Ashdown Mill resulting from the implementation of Coleman's recommendations. ECF No. 1-1, ¶ 32. Alternatively, Plaintiff makes an unjust enrichment claim, arguing that Defendants received the benefit of Plaintiff's consulting services without paying for those services. Defendants argue that they are entitled to summary judgment as to both claims.

II. LEGAL STANDARD

"Summary judgment is proper if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Torgerson v. City of Rochester , 643 F.3d 1031, 1042 (8th Cir. 2011) (quotation omitted). A fact is material only when its resolution affects the outcome of the case. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. Id. at 252, 106 S.Ct. 2505. "There is no genuine issue of material fact when the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." Zimmerli v. City of Kansas City, Missouri , 996 F.3d 857, 862-63 (8th Cir. 2021) (quotation omitted).

The Court must view the evidence and the inferences that may be reasonably drawn from the evidence in the light most favorable to the nonmoving party. Enter. Bank v. Magna Bank , 92 F.3d 743, 747 (8th Cir. 1996). "The party moving for summary judgment generally has the burden of demonstrating the absence of any genuine issues of material fact." Zimmerli , 996 F.3d at 863. A party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials but must set forth specific facts showing that there is a genuine issue for trial. Anderson , 477 U.S. at 256, 106 S.Ct. 2505. "When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of a ruling on a motion for summary judgment." Scott v. Harris , 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007).

III. DISCUSSION

In its complaint, Plaintiff makes claims for both breach of contract and unjust enrichment. Defendants assert that they are entitled to summary judgment on both claims. The Court will first address the breach of contract claim and then, if necessary, will move to the alternative unjust enrichment claim.

A. Breach of Contract

Plaintiff claims that Defendants breached the Agreement by failing to pay Plaintiff the retainer fee, which Plaintiff asserts is 30% of any net profit savings resulting from the implementation of Coleman's recommendations and services. Defendants argue that Plaintiff's breach of contract claim is barred by the statute of frauds. Plaintiff counters that the statute of frauds does not apply because the Agreement is capable of performance within one year, the Agreement is an employment contract terminable at will, and the Agreement fits within two exceptions to the statute of frauds.

1. Incapable of Performance Within One Year

Although not expressly stated, both parties appear to agree that Arkansas law governs the Agreement and subsequent purported oral modification of the Agreement. The statute of frauds, in relevant part, requires a contract, promise, or agreement to be in writing if the contract is incapable of performance within one year from the making of the contract. See Ark. Code Ann. § 4-59-101(a)(6).⁴ A contract is "not within the provisions of the statute of frauds where the proof demonstrate[s] that the contract [i]s capable of performance within one year." Township Builders, Inc. v. Kraus Const. Co., Inc. , 286 Ark. 487, 491, 696 S.W.2d 308, 310 (1985). The general rules regarding the statute of frauds are the same today as they were over 125 years ago:

In determining when contracts come within the one-year statute of frauds, courts have been governed by the words, "not to be performed." They have treated them as negative words. In construing them it is said: "It is not sufficient to bring a case within the statute that the parties did not contemplate the performance within a year, but there must be a negation of the right to perform it within the year." ... [I]t is well settled that the statute only includes those contracts ... which, according to a fair and reasonable interpretation of their terms in the light of all the circumstances which enter into their construction, do not admit of performance in accordance with their language and intention within a year from the time they were made; and that it includes no agreement if, consistently with its terms, it may be performed within that time.

Township Builders , 286 Ark. at 491, 696 S.W.2d at 310 (citing Railway v. Whitley , 54 Ark. 199, 15 S.W. 465 (1891) ). In sum, the statute of frauds only applies to contracts that are incapable of performance within a year, even if there is a possibility or probability that it might require a longer time. Id. at 492, 696 S.W.2d at 310. Further, the written agreement relied upon for compliance with the statute of frauds must contain all the essential terms of the agreement. Jackson v. Crump , 2022 Ark. App. 136, at 8, 643 S.W.3d 788 ; Van Dyke v. Glover , 326 Ark. 736, 742, 934 S.W.2d 204, 208 (1996) ; Davis v. Patel , 32 Ark. App. 1, 4, 794 S.W.2d 158 (1990).

In the instant case, at issue are the written Agreement and the oral modification of the Agreement. The written Agreement states that Plaintiff "will be compensated to include expenses and hourly rate ($250.00/hr) along...