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International Auto Logistics, LLC v. Vehicle Processing Center of Fayetteville, Inc.

United States District Court, S.D. Georgia

May 16, 2017

INTERNATIONAL AUTO LOGISTICS, LLC, Plaintiff,
v.
VEHICLE PROCESSING CENTER OF FAYETTEVILLE, INC.; BRETT HARRIS; and BRETT HARRIS CONSULTING; Defendants.

          ORDER

          LISA GODBEY WOOD, DISTRICT JUDGE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF GEORGIA

         Plaintiff International Auto Logistics, LLC ("IAL") was within its rights when it terminated Defendant Vehicle Processing Center of Fayetteville, Inc.'s ("VPCF") Subcontract after VPCF violated the Service Contract Act, and IAL correctly calculated how much it owed VPCF. Summary judgment will be granted to IAL.

         BACKGROUND

         IAL Subcontracts with VPCF to Process and Store Vehicles

         IAL is a government contractor that transports and stores the personal vehicles of Department of Defense personnel. Dkt. No. 44-3 ¶¶ 3-4. In early 2013, IAL approached VPCF to run a vehicle-processing and -storage center. Dkt. No. 44-2 ¶ 8; Dkt. No. 44-4 at 26:14-22, 32:9-11. According to VPCF, IAL offered to pay it 90-95% of what the government paid IAL for storing vehicles. Id. at 38:20-39:16, 42:5-44:24. VPCF does not present any documents as a memorial of this other than the parties' Subcontract. Id. at 42:5-44:24.

         The parties signed that Subcontract on different days: VPCF on March 28, 2014, and IAL on April 9, 2014. Dkt. No. 44-5 at 12. The Subcontract, "including any and all Exhibits [t]hereto which [we]re incorporated [t]herein by reference, constitute[d] the entire agreement and understanding between the Parties." Id. ¶ 24. Because the Subcontract was for government work, it obligated VPCF to adhere to "the labor practices and wage determinations . . . [of] the Service Contract Act." Id. at 13. More generally, it bound VPCF to obey all federal laws, dkt. no. 44-5 ¶ 27, and authorized IAL to terminate the Subcontract for default if VPCF "fail[ed] to perform any of the . . . provisions of [the Subcontract] or so fail[ed] to make progress as to endanger performance of the [underlying government] contract." Id. ¶ 16(a)(ii).

         VPCF's contractual duty was to "[p]erform the necessary functions to establish, staff and operate" the vehicle center. Dkt. No. 44-5 at 13. It was burdened with "[a] 11 necessary cost to fulfill [its] obligations." Id. at 15.

         Its compensation was detailed in Exhibit B, completed sometime between April 9, 2014 and May 1, 2014. Id. at 16; Dkt. No. 44-4 at 42:2-44:24; Dkt. No. 45 ¶¶ 16-17, 24. Exhibit B had a page dated April 9, 2014, named "VPCF Rates." Dkt. No. 44-5 at 17. It specified that IAL would pay VPCF $73.41 per vehicle for storage. Id. The next page summarized VPCF's anticipated "costs" as Of April 9, 2014, including 5% for contingency and $425, 000 in profit. Id. at 18. The total came out to $3, 597, 484. Id. Following that was a page labeled "VPCF Rate Calculations, " also dated April 9, 2014. Id. at 19. Halfway down the page was a breakdown of how VPCF's rates were calculated (included in full because of its significance to the present dispute):

CLINS 200 & 201 (Processed In & Processed Out)

4.5% Storage Processing In/Out

$161, 887

Annual Processed Vehicles

3, 900

Amount/Vehicle Processed In or Processed Out (Initial

Sub [unclear])

$41.5l[1]

Per Unit Rate (Cost excluding Facilities Lease)

$14.70

Per Unit Rate (Contingency)

$0.56

Per Unit Rate (Facilities Lease)*

$21.35

Per Unit Rate (Profit)

$4.90

Per Unit Rate Check Total

$41.51

CLIN 202 (Monthly Rate)

95.5% to Vehicle/Month Rate

$3, 435, 598

Car/Months (3900*12)

46, 800

Monthly Rate

$73.41

Per Unit Rate (Cost excluding Facilities Lease)

$25.99

Per Unit Rate (Contingency)

$1.00

Per Unit Rate (Facilities Lease)*

$37.75[2]

Per Unit Rate (Profit)

$8.67

Per Unit Rate Check Total

$73.41

Id. (emphases added); see also Dkt. No. 44-4 at 95:7-16 (stating vehicle estimates were historical and never guaranteed), 96:15-97:18 (identifying meaning of "CLINs"). The Court notes that the $161, 887 beside "4.5% Storage Processing In/Out" is 4.5% of VPCF's anticipated "costs"; likewise, the $3, 435, 598 for "95.5% to Vehicle/Month Rate" is 95.5% of the cost-contingency-profit total.

         IAL Terminates VPCF's Subcontract for Labor Violations

         VPCF started operating the center on May 1, 2014. Dkt. No. 45 ¶ 24; Dkt. No. 51-1 ¶ 24. It did not pay its employees fringe benefits mandated by the Service Contract Act. Dkt. No. 44-4 at 107:22-08:12 (attributing this to ignorance). IAL sent a cure notice on October 9, 2014, noting also that employees were not being timely paid. Dkt. No. 44-6 at 2; see also Dkt. No. 45 ¶ 32 n.4 (noting internal concern because "IAL . . . had paid VPCF $544, 934.26 . . . [a]nd yet VPCF still was not paying its employees or its vendors."). VPCF responded by admitting that July payroll was briefly delayed, but October 15's was not, [3] and conceding its failure to pay fringe benefits. Dkt. No. 44-7 at 2, 4-6.

         IAL sent out an auditor. Dkt. No. 44-9 at 2. On November 4, 2014, IAL expressed continued concern about VPCF's payroll delays, initial misunderstanding of its fringe-benefit duties, failure to properly maintain the vehicles in its care, and possible misuse of funds. Id. at 2-3; see also Dkt. No. 44-4 at 73:16-75:25 (claiming maintenance was ''impossible" due to IAL's choice of an inadequate facility), 112:5-6 (calling wage violations "an oversight on our part."). IAL warned that it was considering terminating the Subcontract. Id. at 4. VPCF replied on November 14, 2014, claiming to have corrected its labor-law violations. Dkt. No. 44-10 at 2-3. It also said it had made maintenance-related hires. Id. at 3-4.[4]

         On December 3, 2014, IAL terminated the Subcontract. Dkt. No. 44-11 at 2. It identified the causes as improper personnel payments and payroll delays, plus IAL's "continu[ing] to receive complaints that while checks [were] being distributed timely, employees [were being] asked to hold checks because they [would not] clear and those that refuse[d] to do so ha[d] had the checks returned for non-sufficient funds." Io\ at 4-5; see also Dkt. No. 44-4 at 121:21-22:8 (admitting to asking employees to hold paychecks and having paychecks bounce, but blaming IAL for not paying VPCF), 124:9-24 (admitting IAL had paid VPCF about $545, 000). IAL also complained about vehicle maintenance and records. Id. at 5.

         IAL and VPCF Disagree as to VPCF's Due

         Upon termination, IAL estimated that it would pay VPCF $130, 147.93 for debt owed through November 30, 2014, plus "a pro rata basis" determined by "the monthly rate identified in . . . Exhibit B" for debt through December 5, 2014. Id. at 5-6. On October 13, 2015, IAL characterized its final amount due as $56, 446.58. Dkt. No. 44-3 ¶¶ 29-37; Dkt. No. 44-12 at 2-74. (It has since adjusted that amount upward to $59, 446.58. Dkt. No. 44-3 ¶ 42; Dkt. No. 45 ¶ 38.)

         VPCF contested this on December 15, 2015. Dkt. No. 44-13. It claimed a storage-compensation rate of "95.5% of the total monies that IAL was to receive for storage" from the government, based on alleged agreements as of October 25, 2013 and March 28, 2014. Id. at 2-3. VPCF claimed IAL wrongly altered this rate when IAL signed the Subcontract on April 9, 2014. Id. at 3. VPCF demanded $3, 144, 450.70. Id. at 6. It also complained about IAL's facility selection and said its ability to cure its fringe-benefit violation was hindered by IAL's withholding a monthly payment. Id. at 4-6.

         The Parties Come to Court

         On January 15, 2016, IAL sought declaratory judgment as to the debt. Dkt. No. 1 ¶¶ 22-25. VPCF counterclaimed breach of contract on March 11, 2016. Dkt. No. 18 ¶¶ 36-39. IAL moved for summary judgment on October 31, 2016. Dkt. No. 44. That motion has been fully briefed and is now ripe for disposition. Dkt. Nos. 45-46, 51, 57-58, 62, 66.

         LEGAL STANDARD

         Summary judgment is required where "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 fact is "material" if it "might affect the outcome of the suit." FindWhat Inv'r Grp. v. FindWhat.com, 658 F.3d 1282, 1307 (11th Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A dispute is "genuine" if the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. The court must view the evidence most favorably to the nonmovant and draw all ...


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