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Level One Technologies, Inc. v. Penske Truck Leasing Co., L.P.

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

January 25, 2018

LEVEL ONE TECHNOLOGIES, INC., Plaintiff,
v.
PENSKE TRUCK LEASING CO., L.P., and PENSKE LOGISTICS LLC, Defendants.

          MEMORANDUM AND ORDER

          RODNEY W. SIPPEL UNITED STATES DISTRICT JUDGE.

         Plaintiff Level One Technologies, Inc. (“Level One”) claims that Defendants Penske Truck Leasing Co., L.P. and Penske Logistics LLC (collectively referred to herein as “Penske”) failed to fulfill certain promises and duties concerning its use of Level One's transportation payment services. Penske submitted a motion for partial summary judgment on five of six of Level One's contractual and equitable claims. Based upon a review of the record before me, I will grant in part and deny in part Penske's motion for partial summary judgment. I will grant summary judgment as a matter of law and dismiss Level One's volume-based contract, fraud, negligent misrepresentation, and good faith and fair dealing claims under Counts II, III, and IV and Subparagraphs 101(a), 101(b), 101(c), and 101(g) of Count I of Level One's Second Amended Complaint (the “SAC”). However, I will deny summary judgment as to Level One's unjust enrichment claim under Count VI of the SAC.

         I. Background

         The following facts in this matter are undisputed. Penske provides services including transportation leasing, shipping services, and supply chain management. Level One develops and markets software products. Level One developed Epay Manager (“Epay”), a web-based electronic payment system that allows transportation companies to send invoices and pay bills electronically. In early 2008, Level One and Penske representatives began discussing the possibility of arranging for Penske using Epay to manage and process shipping transaction payments for its customers. The parties met and exchanged various communications concerning the terms of their potential business engagement.

         On November 7, 2008, Level One and Penske Truck Leasing Co., L.P. entered into a written Services Agreement (the “Services Agreement”), which includes the following relevant terms. Under paragraph 1, the parties agree to an initial term of sixty (60) months, unless earlier terminated by the parties, with automatic renewal every two years. Under paragraph 5, Penske agrees to receive electronic communications regarding Epay. Under paragraph 7, the parties agree that Penske will pay Level One a nonrefundable fee of $1.55 per transaction, or $1.90 for each transaction processed through the ACH network. Under paragraph 14, Penske agrees to pay Level One a “termination penalty” of $150, 000 if Penske terminates the agreement prior to the processing of 100, 000 transactions or two years of processing time from the date of the agreement, whichever comes first. Under paragraph 18, Penske may cancel its Epay membership at any time upon prior written notice to Level One, and Level One may cancel the service at any time. Under paragraph 27, the parties agree that the Services Agreement “embodies the entire understanding among all of the parties with respect to its subject matter and supersedes all previous communications, representations or understanding, either oral or written.”

         Following the execution of the Services Agreement, Penske began using Epay to process transactions. In December 2008, Level One and Penske representatives exchanged a series of communications concerning the scope of the engagement. Jason Kirkpatrick of Level One requested that Penske provide volume and scheduling projections for customers being moved to Epay, stating “[o]bviously we won't hold you to any of these schedules. Estimates are fine.” Penske provided the requested estimates in a spreadsheet showing annual transaction volumes for each customer to be moved to Epay. The total estimated number of items was 913, 846. Raymond Gaspari of Penske emailed, “[w]e need to drill down on these more, so don't hold me to this yet, but for a first cut it should work. As you know with all the variables in the marketplace right now, things could change rather quickly.” In February 2009, Level One's President, Thomas Whaley, sent an email complaining of Penske's average volume of 264 transactions per week. Penske representative Andrew Avtjoglou responded that “[t]he volumes were never going to be guaranteed because we did not have experience in the marketplace.” The parties amended the Services Agreement by a First Amendment dated March 31, 2009. The First Amendment, inter alia, provides for Penske to pay Level One a $250, 000 advance against future transaction fees, which is partially returnable to Penske if the agreement terminates before the advance is fully used. The parties further amended the Services Agreement by a Second Amendment dated November 17, 2009. The parties continued to communicate about the transition of Penske customers to Epay and estimated volumes. Penske processed thousands of transactions through Epay over the next few years. However, the transaction volumes that Level One had anticipated failed to materialize. Moreover, Penske developed its own electronic payment system, known as “POPS.”

         Level One brought this suit against Penske in June 2014. Penske moved for partial summary judgment as a matter of law on five of six of Level One's contractual and equitable claims - Counts I, II, III, IV, and VI of the SAC.[1] Each claim is discussed in more depth below.

         II. Legal Standard

         Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Lynn v. Deaconess Medical Center, 160 F.3d 484, 486 (8th Cir. 1998) (citing Fed.R.Civ.P. 56(c)). The party seeking summary judgment bears the initial responsibility of informing the court of the basis of its motion and identifying those portions of the affidavits, pleadings, depositions, answers to interrogatories, and admissions on file which it believes demonstrates the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When such a motion is made and supported by the movant, the nonmoving party may not rest on his pleadings but must produce sufficient evidence to support the existence of the essential elements of his case on which he bears the burden of proof. Id. at 324. In resisting a properly supported motion for summary judgment, the plaintiff has an affirmative burden to designate specific facts creating a triable controversy. Crossley v. Georgia Pacific Corp., 355 F.3d 1112, 1113 (8th Cir. 2004).

         III. Discussion

         Penske moved for summary judgment as a matter of law on Level One's claims for breach of contract, fraud, negligent misrepresentation, breach of the duty of good faith and fair dealing, and unjust enrichment. After a review of the record before me and based upon the reasons that follow, I find that Level One's volume-based contract, fraud, negligent misrepresentation, and good faith and fair dealing claims fail as a matter of law. However, viewing the facts in the light most favorable to the nonmoving party, Level One's unjust enrichment claim survives. As a result, I will grant in part and deny in part Penske's motion for summary judgment.

         a. Count I: Breach of Contract - Volume Claims

         Level One asserts that Penske is contractually liable for: (i) failing to use Epay for all transactions and all customers; (ii) failing to use Epay for a minimum of 913, 846 transactions annually for certain identified customers; (iii) failing to timely transition its customers to Epay; (iv) failing to pay Level One amounts due under the Services Agreement; and (v) inappropriately directing its carriers to stop using Epay (collectively referred to herein as the “Volume Claims”).[2] The Volume Claims primarily rely upon Level One's assertion that Penske made, and breached, enforceable promises to process a higher volume of transactions using Epay than it actually processed. Penske moves for summary judgment as to the Volume Claims.[3] For the reasons that follow, I will grant summary judgment in Penske's favor as a matter of law with respect to the Volume Claims.

         To state a cause of action for breach of contract under Missouri law, a plaintiff must allege “(a) the making and existence of a valid and enforceable contract between the plaintiff and defendant, (b) the right of the plaintiff and obligation of the defendant thereunder, (c) a violation thereof by defendant, and (d) damages resulting to the plaintiff from the breach.” Union Elec. Co. v. Consolidation Coal Co., 188 F.3d 998, 1001 (8th Cir. 1999) (quoting Gilomen v. Southwest Mo. Truck Center, 737 S.W.2d 499, 500-01 (Mo.Ct.App.1987)). Both parties acknowledge that the Services Agreement is valid, but they disagree as to the scope of their agreement and intention. With respect to the Volume Claims, Level One asserts that the Services Agreement is either silent or ambiguous as to the parties' agreed-to transaction volumes. Additionally, Level One suggests that the parties may have entered into at least one ...


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