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Sharp Mexican Partners LP v. Republic Waste Services of Texas Ltd.

United States District Court, N.D. Texas, Dallas Division

July 23, 2019

SHARP MEXICAN PARTNERS, LP, d/b/a MANNY'S UPTOWN and SHARP MEXICAN #8, LLC d/b/a MANNY'S LAKEWOOD, Plaintiffs,
v.
REPUBLIC WASTE SERVICES OF TEXAS, LTD. d/b/a REPUBLIC SERVICES OF DALLAS & d/b/a ALLIED WASTE SERVICES OF DALLAS, Defendant.

          FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          DAVID L. HORAN, UNITED STATES MAGISTRATE JUDGE

         This case has been referred to the undersigned United States magistrate judge for pretrial management under 28 U.S.C. § 636(b) and a standing order of reference from United States District Judge Karen Gren Scholer. See Dkt. No. 108.

         Four motions are pending before the Court:

• Plaintiffs' Motion for Class Certification [Dkt. No. 90];
• Plaintiffs' Motion for Leave to Amend to Add Plaintiffs [Dkt. No. 99];
• Defendant's Amended Motion for Summary Judgment [Dkt. No. 101]; and
• Plaintiffs' Amended Motion for Continuance of Defendant's Motion for Summary Judgment/Motion for Protection [Dkt. No. 109].

         The parties disagree as to the order in which the Court should decide these motions. Because the amended motion for summary judgment may be dispositive of the case, the undersigned will first address the two motions concerning summary judgment.

         Background

         This is a breach-of-contract case in which the Court must determine whether the contracts are ambiguous or unambiguous and, if they are unambiguous, to interpret them as a matter of law. The contract terms at issue concern a “container refresh” charge.

         Plaintiffs Sharp Mexican Partners, LP d/b/a Manny's Uptown (“Manny's Uptown”) and Sharp Mexican #8, LLC d/b/a Manny's Lakewood (“Manny's Lakewood”), two restaurant entities, contracted with Defendant Republic Waste Services of Texas Ltd. d/b/a Republic Services of Dallas and d/b/a Allied Waste Services of Dallas, a waste collection service provider, for the collection, transportation, and disposal of all of Plaintiffs' non-hazardous waste materials. To be eligible for waste-collection services from Republic, Plaintiffs were required to sign Customer Service Agreements (the “Agreements”). See Dkt. No. 18.

         Manny's Uptown contracted with Republic for waste removal services in a July 2014 contract (the “2014 CSA”). The 2014 CSA's first page listed costs under headings, including headings for “monthly” costs and “additional charges.” Dkt. No. 18; Dkt. No. 103 at 4. The second page included a provision that allowed for the modification of the contract rates:

RATE ADJUSTMENTS - [Republic] may, from time to time by notice to Customer, increase the rates provided in this Agreement to adjust for any increase in: (a) disposal costs; (b) transportation costs due to a change in location of Customer or the disposal facility used by [Republic]; (c) the Consumer Price Index for all Urban Customers; (d) the average weight per cubic yard of Customer's Waste Materials above the number of pounds per cubic yard upon which the rates provided in this Agreement are based as indicated on the cover page of this Agreement; or (e) [Republic's] costs due to changes in Applicable Laws. [Republic] may increase rates for reasons other than those set forth above with Customer's consent, which may be evidenced verbally, in writing or by the parties' actions and practices.

Dkt. No. 103 at 5.

         In January 2016, Republic provided Manny's Uptown with written notice regarding the addition of the Container Refresh service. See Id. at 10. In the “Important Information” section of the January invoice sent to Manny's Uptown, Republic explained that future invoices would include a $9 monthly rate for the service:

Your future invoices will include a charge for Container Refresh. This lets you swap your container once a year for a low $9 monthly rate. Plan and opt-out details enclosed, or by email if you are paperless.

Id. Republic asserts that it also provided a separate Notice of Service Change, Rate Adjustment & Contract Modification (the “Insert Notice”) with additional details:

         Service Change, Rate Adjustment & Contract Modification details and opt-out information:

• Customer is automatically enrolled in Container Refresh and enrollment will be automatically renewed each month until customer cancels participation.
• Customer is required to call Republic Services at the customer service number noted on customer's invoice to opt out of Container Refresh or to cancel participation in the program. The decision to opt out will not affect any other terms of customer's existing contract/service agreement.
• Customer is required to call and request the container exchange and is eligible for one container exchange for every 12 months of enrollment.
• Payment of the $9 monthly participation rate is required for 12 consecutive months from date of enrollment if customer requests and receives a container exchange.
• Republic Services reserves the right to cancel Container Refresh at its discretion, in which case a customer who has not received a container exchange may request a credit.
• Customer's contract/service agreement may require that customers consent to the charge for this service. Under such contracts/agreements, customer's payment of the monthly charge for Container Refresh provides such consent.
You will receive this notice twice. The first notice will be sent 30 days before the first charge will appear on your invoice to allow you time to opt out of the program. The second notice will accompany an invoice that will include the first monthly charge for participation in the program unless you previously opted out. Because of the processing time involved, a charge may appear on your bill after you have decided to opt out of this program. If that occurs, please contact customer service to confirm your opt-out was received and the charge was removed from your account.

Id. at 12; see also Id. at 2 ¶¶ 6, 10-12; 215-226; 227-230.

         The February 2016 invoice included a notice of the rate change and additional service in the “Important Information” section:

The invoice includes a charge for Container Refresh in which you are automatically enrolled. Plan and opt-out details are enclosed or in a separate email if you are paperless.

Id. at 13. Republic asserts that the Insert Notice was provided to Manny's Uptown a second time with the February 2016 invoice. See Id. at 2 ¶¶ 6, 10-12; 215-226; 227-230.

         The February 2016 invoice charged Manny's Uptown for the $9 Container Refresh Fee as a separate line item and designated the $9 as a charge for the upcoming month of March: “Container Refresh (03/01/16 - 03/31/16).” Id. at 13. Each invoice subsequently submitted to Manny's Uptown included a similar line item for the Container Refresh charge. See Id. at 15-46. Manny's Uptown paid Republic the $9 Container Refresh charge for March 2016 and the remaining eight months under the 2014 CSA.

         On October 21, 2106, Republic entered into a new Customer Service Agreement with Manny's Uptown (the “2016 Uptown CSA”) and Manny's Lakewood (the “2016 Lakewood CSA”; together with the 2016 Uptown CSA, “the 2016 CSAs”). See Id. at 6-7, 8-9. The first page of both the 2016 Uptown CSA and the 2016 Lakewood CSA listed costs under headings, including headings for “monthly service, ” “additional charges, ” and “one time charges.” Id. at 6, 8. It listed “Container Refresh” as an “additional charge” of $9. Id. On the second page of each of the 2016 CSA's, the Container Refresh charge is explained:

If service to Customer includes Container Refresh, Customer is limited to requesting one exchange of each participating container every twelve months of paid enrollment; any additional exchange is subject to Company's standard container exchange fee. Customer agrees that during any enrollment year in which Customer receives an exchange under the program, any service change request by Customer to Cancel Container Refresh will not be effective until Customer completes payment for twelve (12) consecutive months of enrollment in the program. Company reserves the right, in its sole discretion, to suspend or cancel the Container Refresh program.

Id. at 7, 9.

         As a new customer, Manny's Lakewood obtained six months' free enrollment in the Container Refresh program. The Comments section of the first page of the 2016 Lakewood CSA provides: “Container Refresh Promotional Period: 6 months free.” Id. at 8.

         Republic invoiced both Plaintiffs $9 each month for Container Refresh. See Id. at 13-14, 15046, 47-62. The invoices listed the Container Refresh charge on each invoice and specifically designated the month to which the fee applied. See Id. The Lakewood CSA invoices also reflected a $9 credit each month for Container Refresh for the first six months of the CSA in compliance with the promotional period. See Id. at 8-9, 47-58.

         Plaintiffs sued Republic over the Container Refresh charges. In their Second Amended Complaint and Class Action, filed after Republic removed the case based on diversity jurisdiction, see Dkt. No. 1, Plaintiffs assert claims for breach of contract, fraud by nondisclosure, and fraudulent inducement. See Dkt. No. 18 at 4-9. The Court dismissed Plaintiffs' fraud by nondisclosure and fraudulent inducement claims. See Dkt. No. 57. Only the breach-of-contract claim remains.

         Plaintiffs allege that Republic unilaterally added a Container Refresh fee onto Manny's Uptown's monthly invoice in 2014 and that, after paying the Container Refresh charge for nine months without a contractual agreement, they were fraudulently induced into signing new contracts with Republic that contained ambiguous language regarding the Container Refresh program and that Republic failed to disclose that the Container Refresh fee was a monthly charge. They allege that they never requested enrollment in the Container Refresh program and never requested a container exchange. Nevertheless, they have paid and continue to pay the Container Refresh fee to Republic. See id. at 4.

         Republic deposed Plaintiffs' designated corporate representative, Maria Ann Espinoza. See Dkt. No. 103 at 66. Ms. Espinoza testified that the Insert Notice and the Important Information sections of the January and February 2016 invoices are not ambiguous. See Id. at 100-03, 109-11, 114-18. She also testified that the Insert Notice and all of the invoices from January 2016 through June 2017 unambiguously show that the $9 Container Refresh charge is a monthly charge. See Id. at 100-03, 109-11, 114-24, 131-32.

         Republic filed a motion for summary judgment, see Dkt. No. 60, which the Court denied without prejudice without opinion, see Dkt. No. 84. Republic states that the Court told the parties that Republic could refile the motion for summary judgment if mediation between the parties was unsuccessful - which it was. See Dkt. No. 97.

         Plaintiffs filed a motion for class certification before mediation, see Dkt. No. 90, and, after mediation, filed a motion to amend their complaint to add two additional parties, see Dkt. No. 99.

         Republic filed an amended motion for summary judgment based on the argument that the contracts between the parties are unambiguous and may be construed by the Court as a matter of law. See Dkt. No. 101. Plaintiffs filed a response, see Dkt. No. 110, and Republic did not file a reply.

         Plaintiffs then filed a motion to continue the amended motion for summary judgment, see Dkt. No. 104, which they amended, see Dkt. No. 109. Plaintiffs ask the Court to decide their motion for class certification before it decides Republic's amended motion for summary judgment. Plaintiffs also assert that they need additional discovery to provide a full and complete response to the amended motion for summary judgment. Republic filed a response to Plaintiffs' Amended Motion for Continuance of Defendant's Motion for Summary Judgment/Motion for Protection, see Dkt. Nos. 105 & 113, and Plaintiffs did not file a reply.

         Legal Standards

         Under Federal Rule of Civil Procedure 56, summary judgment is proper “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 factual “issue is material if its resolution could affect the outcome of the action.” Weeks Marine, Inc. v. Fireman's Fund Ins. Co., 340 F.3d 233, 235 (5th Cir. 2003). “A factual dispute is ‘genuine,' if the evidence is such that ...


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