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Benchmark Electronics, Inc. v. Cree, Inc.

United States District Court, M.D. North Carolina

March 5, 2019

CREE, INC., Defendant.



         Presently before the court is a post-judgment motion filed by counterclaim plaintiff Cree, Inc. (“Cree”) seeking to amend or alter the judgment pursuant to Fed.R.Civ.P. 52(a), 54(c) and 59(e) and, alternatively, requesting a new trial pursuant to Fed.R.Civ.P. 59(a). (Doc. 61.) Counterclaim defendants Benchmark Electronics, Inc. and Benchmark Electronics de Mexico, S. de R.L. de C.V. (collectively, “Benchmark”) have responded in opposition, (Doc. 65), and Cree has filed a reply, (Doc. 67). Cree's motion is now ripe for resolution, and, for the reasons stated herein, Cree's motion will be denied.


         On June 27, 2018, judgment was entered in favor of Benchmark on its claim for breach of contract, against Benchmark on its unjust enrichment claim, and against Cree on all of its counterclaims, including breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, violation of the Unfair and Deceptive Trade Practices Act (“UDTPA”), and conversion. (See Doc. 57.)

         Cree's motion asks this court “to correct evidentiary and legal errors” and find that Cree proved Benchmark's liability for conversion and breach of contract or, in the alternative, unjust enrichment. (Cree's Mem. in Supp. of Mot. to Am. or Alter Judg. (“Cree's Mem.”) (Doc. 62) at 5.) Cree contends that it “prov[ed] the essential terms of a bailment contract.” (Id. at 6.) As a result, Cree also argues that the parties had a “special relationship” as generally required to prevail on a claim for breach of the covenant of good faith and fair dealing. (Id. at 7-8.)

         Alternatively, Cree asserts that it “put on evidence of industry standards regarding maximum allowable scrap in the parties' agreement” and the court erred in finding that Cree did not prove the existence of such an industry standard that would be “presumptively included” in the contract. (See id. at 6, 8- 10.) Even if such a standard was not presumptively included, Cree contends it proved that a maximum allowable scrap rate is a “background norm” that automatically constitutes part of the parties' agreement unless it is specifically renounced. (Id. at 10-11.)

         Next, Cree argues that this court's conclusion that there is no industry standard of imposing financial liability for scrap above a certain rate belies common sense and is contradicted by “unrebutted testimony . . . that the purpose of having a maximum allowable component scrap rate is to reduce the cost to the contract manufacturer of manufacturing finished goods.” (Id. at 11.) Cree states that, because Benchmark received documents listing the cost incurred by Cree for each LED, this court should “amend its findings to hold that Benchmark understood that the LEDs that it scrapped in excess of the maximum allowable rate had value for which Benchmark would be liable to Cree.” (Id. at 12-13.)

         Cree further argues that Calvin Clemons, Benchmark's witness, lacked direct knowledge regarding Benchmark's reporting and that “Clemons' lack of personal knowledge of the subjects of his testimony - notwithstanding its proven inconsistency - is fatal to his credibility.” (Id. at 14-15.) Cree, having asserted that this court erred in not finding a contractual agreement regarding maximum allowable scrap rate, argues that this court “implie[d]” that Cree had waived Benchmark's breach, when Cree could not have waived this breach because “Benchmark did not report excessive scrap of XB-G LEDs until the last two months of the parties' relationship . . . .” (Id. at 15-17.)

         As to Cree's unjust enrichment claim, Cree contends that “Benchmark did not overcome the presumption that Cree expected payment for its LEDs.” (Id. at 17.) Cree also argues that “the fact that the parties mutually referred to their agreement as a ‘consignment' is compelling evidence that Cree expected payment for its consigned goods, either in the form of LEDs returned to it in finished goods or money.” (Id. at 18.) Next, Cree argues that this court based “its unjust enrichment conclusions on a finding that Cree did not expect payment for consigned LEDs until the end of the parties' relationship . . . .” (Id. at 19.) Cree claims that this finding is unsupported by any evidence and that Cree simply did not know it had any right to payment until it became aware of the high scrap rate. (Id. at 19-20.)

         Finally, Cree contends that the court erred in dismissing Cree's conversion claim because the court's finding was unsupported by the evidence. (Id. at 20.) Cree contends that Benchmark's shipping documentation is “unreliable” and that “[t]he only reasonable conclusion is that the shipment did not contain individual LEDs, but instead finished goods.” (Id. at 21-22.) Cree also contends that this court should disregard any explanation based on “frozen” reporting because Clemons lacked personal knowledge. (Id. at 22.)

         Benchmark argues in response that this court correctly determined that Cree did not show an industry-wide maximum scrap rate that would be automatically included in the contract. (Doc. 65 at 8-9.) Next, Benchmark argues that Cree is barred from asserting any bailment-based claim at this stage because the claim was not properly pled; even if Cree could assert this claim, Benchmark contends that it must fail because it is an attempt to impose tort liability based on the breach of a contractual agreement. (Id. at 10-12.) Benchmark further argues that Cree's bailment argument is precluded by contributory negligence because “Cree admits that it also contributed to the higher scrap rates.” (Id. at 12.) Finally, Benchmark asserts that this court correctly dismissed Cree's UDTPA, unjust enrichment and conversion claims in its original post-trial order. (Id. at 12-17.)

         In reply, Cree asserts that it is entitled to recover in either contract or tort if the court found the necessary elements of a bailment, “even if the legal theory upon which the Court enters judgment is different than that which Cree included in its complaint.” (Doc. 67 at 7-8.) Cree further argues that it cannot be held contributorily negligent because it took reasonable steps to address manufacturing issues that increased the scrap rate and because these issues did not meaningfully impact the rate itself. (Id. at 8-9.) Finally, Cree asserts that its unjust enrichment claim was wrongfully dismissed because “Cree demonstrated that it provided valuable goods[, ] . . . Benchmark understood it was responsible for[] payment for wasted LEDs” and Benchmark did not present conclusive evidence regarding its return of any LEDs. (Id. at 11-12.)


         A. Rules 59(e) & 52(b)[1]

         Rule 59(e) of the Federal Rules of Civil Procedure provides for a motion to alter or amend a judgment. Rule 59(e) “permits a district court to correct its own errors, ‘sparing the parties and the appellate courts the burden of unnecessary appellate proceedings.'” Pac. Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998) (quoting Russell v. Delco Remy Div. of Gen. Motors Corp., 51 F.3d 746, 749 (7th Cir. 1995)). “Rule 59(e) motions will be granted in three circumstances: (1) to accommodate an intervening change in controlling law; (2) to account for new evidence not available at trial; or (3) to correct a clear error of law or prevent manifest injustice.” Ingle ex rel. Estate of Ingle v. Yelton, 439 F.3d 191, 197 (4th Cir. 2006) (citation and internal quotation marks omitted). “In general reconsideration of a judgment after its entry is an extraordinary remedy which should be used sparingly.” Pac. Ins. Co., 148 F.3d at 403 (citation omitted).

         Rules 52(b) and 59(e) “together enable a court to amend its findings and conclusions made in conjunction with a bench trial and amend the judgment accordingly.” Westchester Surplus Lines Ins. Co. v. Clancy & Theys Constr. Co., No. 5:12-CV-636-BR, 2015 WL 12803655, at *1 (E.D. N.C. Oct. 22, 2015); see also Fed.R.Civ.P. 52(b); Fed.R.Civ.P. 59(e). For example, after a bench trial, Rule 52(b) provides that “the court may amend its findings - or make additional findings - and may amend the judgment accordingly.” Fed.R.Civ.P. 52(b). Neither rule permits a party “to relitigate old matters or to raise arguments that could have been raised prior to entry of the judgment from which relief is sought.” Life Advocates, Inc. v. City of Asheville, 197 F.R.D. 562, 563 (W.D. N.C. 2000); accord Goodwin v. Cockrell, Civil Action No. 4:13-cv-199-F, 2015 WL 12851581, at *1 (E.D. N.C. Dec. 30, 2015).

         B. ...

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