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Robinson Mechanical Contractors, Inc. v. PTC Group Holdings Corp.

United States District Court, E.D. Missouri, Southeastern Division

September 8, 2017




         On September 1, 2017, in light of the approaching September 24, 2017 trial date and the voluminous motions and briefing filed with the Court, this Court denied defendant PTC's summary judgment motion (#113) in a Docket Text Order with memorandum to follow. This memorandum accompanies that Docket Text Order and amends the September 1 Order to grant summary judgment to PTC on Counts V and VI. Summary judgment is denied on each of the remaining counts.

         I. Background

         The following facts are undisputed except where indicated. PTC Group Holdings Corp. (“PTC”) is the parent company of its wholly-owned subsidiary PTC Seamless Tube Corp. (“Seamless”). PTC created Seamless as part of a plan to build a steel pipe manufacturing plant in Hopkinsville, Kentucky. Seamless was converted from a limited liability company known as PTC Alliance Pipe Acquisition Company, LLC into a corporation in 2013. In December 2012, before these companies existed, PTC executed agreements with Credit Suisse and Wells Fargo to borrow up to $195 million. Seamless would later become obligated under those agreements upon its creation.

         In 2012, PTC's board authorized PTC to purchase used equipment from a Croatian plant for $6.5 million. Alliance was created for the purpose of acquiring the Croatian assets and relocating them to North America. In June 2013, Alliance was converted into a corporation, and Seamless was formed by issuing $10.00 of capital stock at $0.01 per share to PTC. Seamless became an obligor under the $195 million in debt at that point. PTC directed another subsidiary to transfer the real estate for the Hopkinsville, Kentucky plant project to Seamless. Doug Wilkins, a PTC Vice President, oversaw the Hopkinsville plant construction.

         In early 2013, plaintiff Robinson Mechanical Contractors Inc. d/b/a Robinson Construction Company (“Robinson”) performed removal work at the Hopkinsville facility. Robinson entered into a Professional Services Agreement (“PSA”) and additional statements of work (“SOWs”) with Seamless (or, initially, Alliance), through which it was agreed that Robinson would be compensated for its work on a time and materials basis. Robinson's invoices were to be paid within 30 days of issuance.

         Although the parties dispute when exactly the construction project was supposed to be completed, the construction was ongoing in November 2014. At that time, PTC's Wilkins traveled to Robinson's main office in Perryville, Missouri and met with Robinson officials. Robinson's October 17 invoice for $1, 749, 974 was then past due. By November 30, Robinson's October 31 invoice for $2, 299, 579 would be past due. The parties continued negotiating into December. Although the negotiations were complicated, PTC essentially offered to pay the due invoices, but it wanted additional time to pay and sought 90 days in which to pay all future invoices. Robinson, for its part, wanted its past-due invoices paid by the start of the year so as not to affect its credit status with lenders.

         The parties began negotiating a “Letter Agreement” between PTC and Robinson as Robinson's invoices mounted. Robinson admits that its Vice President, Paul Findlay, at first wanted a formal written guaranty from PTC stating that PTC would pay Seamless's invoices. But Robinson says that PTC representatives said the parties did not have time to do that because it would require action by the PTC board. Robinson states (though PTC disagrees) that PTC Chief Financial Officer Thomas Crowley assured Robinson that PTC would stand behind the payments if Robinson agreed to extend the payment terms. The final terms of the Letter Agreement included that

As we agreed, you released payment of $1, 749, 974 on Friday 12-12-14, receipt of which is hereby acknowledged and we will accept payment of the balance of $6, 190, 472.42 on January 2, 2015 by wire transfer in return for the concessions below. As part of this agreement we would also be willing to extend your payment terms for all invoices sent after December 1, 2014 to 90 days.
We need you to understand that this extension of credit to PTC does require the commitment of a significant portion of our available line of credit for your use and that failure to pay on the part of PTC would be disastrous to Robinson Construction. As a result our offer is contingent upon the following conditions:
1) Your acknowledgement that the amount that we have agreed to postpone receipt of ($6, 190, 472.42) is due and payable prior to December 31, 2014 per the terms of our existing agreement, and that we have extended this credit and any future credit by way of payment terms allowed beyond 30 days expressly in return for the following considerations.

         2) Your assurance that Robinson:

a. Will complete Phase 1 construction under the terms of our existing agreement, except as the payment terms have been modified by this agreement for invoices sent after December 1, 2014.
b. Robinson will perform the phase 2 project for PTC on the same terms as we have executed Phase 1 (except as the payment terms have been modified by this agreement for invoices sent after December 1, 2014) if PTC elects to construct the Phase 2 portion in the next 36 months….

         3) The burn rate (cost incurred per week) must be reduced effective Jan 1, 2015 to a level below $750K per week and remain at that or below that level for the duration of both phase 1 and phase 2.

         4) Payments made on behalf of PTC Group Holdings Corp. and its subsidiaries, including PTC Seamless Tube Corp., are paid by PTC Group Holdings through its central cash management system. It is our intention that the payment of the remaining amount of $6, 190, 472.42 will be paid to Robinson Construction by wire transfer on January 2, 2015.

         5) If there is any delay in payment beyond the terms agreed to above Robinson shall have the right to cease work immediately until the payments are brought back to terms.

         (Letter Agreement at 1-2.) Robinson contends that Crowley replaced Robinson's request for a separate written guaranty with the condition shown in Paragraph 4, above, and that Crowley told Findlay that the language would provide the assurance Findlay needed to agree to the 90-day extension of credit. By that time (December 16), the December 12 payment had already been made, so there was only one other defined payment due (the $6, 190, 472.42 due on January 2). Crowley stated in his deposition that the word “payments” (plural) in that Paragraph 4 refers to that single $6 million payment, but he says he does not know why he inserted that provision.

         Robinson's first invoice after the Letter Agreement covered work between November 23, 2014 and December 6, 2014 and was dated December 12, 2014. Under the terms of the Letter Agreement, payment was due in 90 days --- on March 12, 2015.

         Robinson contends that PTC decided it would put the Hopkinsville project “on hold, ” but PTC allowed Robinson to continue working after making that decision. Then, Robinson claims, PTC planned to “start a war” to “delay the invoices” according to PTC's own documents.

         On March 11, one day before Seamless's payment was due, Seamless sent a letter to plaintiff advising plaintiff that Seamless disputed plaintiff's invoice and that it would not make the payment. The letter did not refer to any particular invoice and did not explain what Seamless disputed within the invoice. Robinson ceased work and removed its equipment from the job site on March 12. Since then, neither Seamless nor PTC has paid Robinson for its work done after November 23, 2014. Seamless applied for bankruptcy on April 26, 2015 and was dissolved, pursuant to Delaware law, on January 29, 2016.

         In the meantime, Robinson filed this lawsuit against PTC. PTC moved to dismiss plaintiff's first amended complaint for failure to state a claim. The Court partially granted PTC's motion on March 31, 2016 --- dismissing three of plaintiff's claims including breach of contract, breach of duty of good faith and fair dealing, and quantum meruit (#27). Plaintiff filed a motion to file a second amended complaint on October 31, 2016, seeking to add Seamless as a defendant, to add a new count to pierce the corporate veil between Seamless and PTC, and to reassert counts previously dismissed based upon new allegations in light of facts discovered since the filing of the first amended complaint (#40). The Court granted the plaintiff's motion on January 27, 2017 (#65).

         Since that time, the Court has denied PTC's subsequent motion to dismiss. Further, the Court entered default judgment against Seamless, as Seamless failed ...

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