United States District Court, E.D. Texas, Sherman Division
DRIVELINE RETAIL MERCHANDISING, INC.
MEMORANDUM OPINION AND ORDER
L. MAZZANT UNITED STATES DISTRICT JUDGE
before the Court are Defendant PepsiCo, Inc.'s
(“PepsiCo”) Motion for Judgment on the Pleadings
(Dkt. #17), Plaintiff/Counterclaim-Defendant Driveline Retail
Merchandising, Inc.'s (“Driveline”) Motion
for Judgment on the Pleadings on
Defendant/Counterclaim-Plaintiff's Counterclaims (Dkt.
#23), Plaintiff/Counterclaim Defendant's Motion for
Partial Summary Judgment (Dkt. #39), and Defendant
PepsiCo's Motion for Summary Judgment (Dkt. #40). Having
reviewed the relevant pleadings and motions, the Court finds
that the parties' motions for judgment on the pleadings
should be denied as moot, PepsiCo's summary judgment
should be granted in part, and Driveline's partial
summary judgment should be granted in part.
is a corporation that is in the business of providing
merchandising services, technology services, and consulting
services to manufacturers and retailers. PepsiCo and its
affiliates are in the business of manufacturing food products
and distributing these products to various retail outlets
throughout the country. Driveline contracted with PepsiCo to
provide sales and retail merchandising assistance and
services to PepsiCo. Relevant to the current dispute, the
parties culminated their agreement into two contracts.
on January 1, 2015, the parties entered into the Master
Agreement for Sales and Merchandising Services (“the
2015 Agreement”), which was in effect from January 1,
2015 through December 31, 2016 (Dkt. #40, Exhibit 2 at p. 1).
Under the terms of the 2015 Agreement, Driveline would
perform sales and retail merchandising services for PepsiCo,
according to the requirements set forth in the contract, and
would send PepsiCo an invoice for such services (Dkt. #40,
Exhibit 2 at p. 1). The invoices were subject to acceptance
by PepsiCo and, if accepted, the “[p]ayment terms will
be net sixty (60) days from the latter of the date the
invoice is received by [PepsiCo].” (Dkt. #40, Exhibit 2
at p. 1). However, if PepsiCo reasonably disputed any of the
services reported on the invoice, PepsiCo had the right to
refuse payment until the dispute was resolved (Dkt. #40,
Exhibit 2 at p. 1). Moreover, the 2015 Agreement provided for
a rebate if PepsiCo paid a certain amount in invoices. Item
14 of Exhibit A to the 2015 Agreement dictated as follows:
14. Rebate (based on total annual spend):
Yes Total Spend is not rounded
$1 - $1.499MM 0%
$1.5MM - $3.99MM 1% Back to $1
$4 - $7.99MM 3% Back to $1-Amount are non- cumulative; only
one rebate (at the highest level based
>$7.99MM 5% upon total spend, will accrue)
(Dkt. #40, Exhibit 2 at p. 11).
2015 and 2016, while the 2015 Agreement was in effect,
Driveline sent PepsiCo invoices and PepsiCo made payments on
the invoices. In 2015, PepsiCo paid Driveline $5, 303,
050.48. In 2016, PepsiCo paid Driveline $4, 023,
478.03. Driveline did not make any credits or
payments in rebates to PepsiCo.
parties entered into its second Master Agreement for Sales
and Merchandising Services on February 1, 2017 (“the
2017 Agreement”). The terms of the 2017 Agreement were
much the same as the 2015 Agreement; however, the parties
made a few adjustments to the terms. Relevant to the case,
the parties changed the terms of the rebate to exclude from
rebate consideration “fulfillment & print charges
and undisputed payments made more than 7 business days after
the payment terms” (Dkt. #40, Exhibit 3 at p. 10). On
March 24, 2017, Driveline submitted an invoice to PepsiCo in
the amount of $390, 881.68 for services provided under the
2017 Agreement (“the 2017 Invoice”). PepsiCo paid
$105, 691.82 of the 2017 Invoice to Driveline and represented
that it was withholding the remaining $285, 189.86 as the
amount Driveline owed PepsiCo in rebates under the terms of
the 2015 Agreement.
on this alleged partial payment, on June 15, 2017, Driveline
filed suit for breach of the 2017 Agreement and, in the
alternative, unjust enrichment or quantum meruit (Dkt. #1).
PepsiCo answered suit and raised the affirmative defenses of
setoff and promissory estoppel (Dkt. #7 at pp. 7-8). PepsiCo
additionally asserted counterclaims against Driveline for
breach of the 2015 Agreement and declaratory judgment (Dkt.
#7 at pp. 8-12). Driveline filed an answer to the
counterclaims and asserted the affirmative defenses of
material breach of the 2015 Agreement, failure to comply with
conditions precedent, waiver, and offset (Dkt. #14 at pp.
October 16, 2017, PepsiCo filed its motion for judgment on
the pleadings (Dkt. #17) and on November 9, 2017, Driveline
filed its motion for judgment on the pleadings (Dkt.
#23).Then, on January 19, 2018, Driveline filed
it motion for partial summary judgment (Dkt. #39). On
February 9, 2018, PepsiCo filed its response (Dkt. #43) and
Driveline filed its reply on February 20, 2018 (Dkt. #46).
Additionally, on January 19, 2018, PepsiCo filed a motion for
summary judgment (Dkt. #40). On February 12, 2018, Driveline
filed a response (Dkt. #44) and PepsiCo filed a reply on
February 16, 2018 (Dkt. #45).
purpose of summary judgment is to isolate and dispose of
factually unsupported claims or defenses. Celotex Corp.
v. Catrett, 477 U.S. 317, 323-24 (1986). Summary
judgment is proper under Rule 56(a) of the Federal Rules of
Civil Procedure “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). A dispute about a material fact is genuine when
“the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson
v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986).
Substantive law identifies which facts are material.
Id. The trial court “must resolve all
reasonable doubts in favor of the party opposing the motion
for summary judgment.” Casey Enters., Inc. v. Am.
Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir.
party seeking summary judgment bears the initial burden of
informing the court of its motion and identifying
“depositions, documents, electronically stored
information, affidavits or declarations, stipulations
(including those made for purposes of the motion only),
admissions, interrogatory answers, or other materials”
that demonstrate the absence of a genuine issue of material
fact. Fed.R.Civ.P. 56(c)(1)(A); Celotex, 477 U.S. at
323. If the movant bears the burden of proof on a claim or
defense for which it is moving for summary judgment, it must
come forward with evidence that establishes “beyond
peradventure all of the essential elements of the
claim or defense.” Fontenot v. Upjohn Co., 780
F.2d 1190, 1194 (5th Cir. 1986). Where the nonmovant bears
the burden of proof, the movant may discharge the burden by
showing that there is an absence of evidence to support the
nonmovant's case. Celotex, 477 U.S. at 325;
Byers v. Dall. Morning News, Inc., 209 F.3d 419, 424
(5th Cir. 2000). Once the movant has carried its burden, the
nonmovant must “respond to the motion for summary
judgment by setting forth particular facts indicating there
is a genuine issue for trial.” Byers, 209 F.3d
at 424 (citing Anderson, 477 U.S. at 248-49). A
nonmovant must present affirmative evidence to defeat a
properly supported motion for summary judgment.
Anderson, 477 U.S. at 257. Mere denials of material
facts, unsworn allegations, or arguments and assertions in
briefs or legal memoranda will not suffice to carry this
burden. Rather, the Court requires “significant
probative evidence” from the nonmovant to dismiss a
request for summary judgment. In re Mun. Bond Reporting
Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1982)
(quoting Ferguson v. Nat'l Broad. Co., 584 F.2d
111, 114 (5th Cir. 1978)). The Court must consider all of the
evidence but “refrain from making any credibility
determinations or weighing the evidence.” Turner v.
Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir.
parties have moved for summary judgment in this case.
Driveline moved for partial summary judgment on PepsiCo's
liability for breach of the 2017 Agreement and on
PepsiCo's counterclaims for breach of the 2015 Agreement
and declaratory judgment. PepsiCo moved for summary judgment
on Driveline's claim for breach of the 2017 Agreement,
Driveline's claim for unjust enrichment or quantum
meruit, on its own claims for breach of the 2015 Agreement,
and its claim for declaratory judgment. Because the claims
are interrelated, the Court addresses the motions together.
Breach of the 2015 Agreement
addressing whether there is a breach of the 2015 Agreement,
the Court identifies what the contract requires. Neither
party contests the basic requirements of the
contract. The 2015 Agreement requires PepsiCo to
make payments for services rendered by Driveline within sixty
days of receiving an invoice from Driveline. Further, if
PepsiCo spends at least $1, 500, 000.00 based on total annual
spend, PepsiCo is entitled to a rebate.
filed a counterclaim against Driveline arguing that Driveline
breached the 2015 Agreement by failing to pay or credit
PepsiCo rebates that PepsiCo maintains it is owed. Driveline
asserts the affirmative defense that PepsiCo materially
breached the 2015 Agreement by failing to make timely
payments such that Driveline did not need to perform under
the 2015 Agreement.PepsiCo moved for summary judgment on its
counterclaim arguing that it has proven its breach of
contract claim as a matter of law. Additionally, Driveline
moved for summary judgment against PepsiCo's breach of
contract claim arguing that PepsiCo cannot prove the elements
of its claim. The Court will address each motion.
PepsiCo's Motion for Summary Judgment
argues that the evidence conclusively establishes all four
elements of its breach of contract claim. Thus, PepsiCo
asserts that it has proven its breach of contract claim as a
matter of law. Driveline maintains that there are genuine
issues of material fact surrounding its affirmative defense
that PepsiCo materially breached the 2015 Agreement and
accordingly, the Court should deny PepsiCo's motion.
Texas law, a breach of contract claim requires a party to
prove: (1) the existence of a valid contract; (2) performance
or tendered performance by the party; (3) breach of the
contract by the opposing party; and (4) damages sustained by
the party as a result of the breach. Smith
Int'l, Inc. v. Egle Grp., LLC, 490 F.3d 380, 387
(5th Cir. 2007) (citation omitted); Hackberry Creek
Country Club, Inc. v. Hackberry Creek Home Owners
Ass'n, 205 S.W.3d 46, 55 (Tex. App.- Dallas 2006,
pet. denied). Neither party disputes that the 2015 Agreement
is a valid contract. However, Driveline challenges the
remaining elements of PepsiCo's breach of contract claim.
PepsiCo avers that it has conclusively established all of the
Performance or Tendered Performance by PepsiCo
argues that this element is not met because PepsiCo
materially breached the 2015 Agreement by submitting late
payments. PepsiCo counters that it fully performed
its obligations under the 2015 Agreement and that any alleged
late payment is not relevant to whether or not Driveline owed
rebates under the 2015 Agreement because the payment ...