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Inmar Brand Solutions, Inc. v. Infinity Sales Group, LLC

United States District Court, M.D. North Carolina

October 30, 2019

INMAR BRAND SOLUTIONS, INC., Plaintiff,
v.
INFINITY SALES GROUP, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          Catherine C. Eagles, District Judge.

         Plaintiff Inmar Brand Solutions, Inc. and defendant Infinity Sales Group, LLC entered into a contract whereby Inmar arranged for ads for Infinity's client to be printed on customer receipts issued for purchases at Dollar General Stores, and Infinity was to pay Inmar based on the number of ads printed. While there are disputed questions of material fact as to whether Infinity breached the contract at the end of March 2018, the facts viewed in the light most favorable to Infinity establish that Infinity breached the contract at the end of April 2018, when it failed to timely pay for ads printed in earlier months. Infinity has not offered evidence sufficient to support its defense that Inmar breached the contract before Infinity. Therefore, Inmar's motion for summary judgment on its breach of contract claim will be granted in part and denied in part.

         Other issues raised by the parties' summary judgment motions will be discussed in turn.

         I. FACTS

         The facts are stated in the light most favorable to Infinity, the non-moving party in relevant part.[1] They are largely taken from emails between the parties and from the testimony of Laresa McIntyre, Infinity's co-president and CFO, who was the person at Infinity involved in the matters at issue.[2]

         In December 2017, Inmar's predecessor[3] and defendant Infinity entered into a contract. Doc. 65-5. In the contract, which the parties called an “insertion order, ” Inmar agreed to arrange to print ads for Infinity's customer, Dish, on receipts for purchases at Dollar General Stores. See Id. Infinity had to provide the artwork for the ads to Inmar, id.; Doc. 65-2 at 13 [100-101], [4] and Inmar would then arrange with Dollar General for the ads to be printed on the receipts. Doc. 65-4 at ¶ 4. The parties agreed to a minimum number of printed ads per month, and Infinity agreed to pay Inmar a specific per-thousand-receipts rate. Doc. 65-5 at 2. The contract was to run for eleven months beginning January 26, 2018, but Infinity could cancel on sixty days' notice after six months if it met the stated minimum number of prints. Id. There was no provision for early cancellation based on poor sales results. Inmar would bill Infinity monthly on the 15th for the previous month's ads, and Infinity would pay within 30 days. Id.

         Infinity was dissatisfied with the low number of sales inquiries it was receiving as a result of these ads, Doc. 77-2 at 5 [67], and Ms. McIntyre raised the issue of a price reduction with Inmar's Director of Print Receipts, John von Uffel, Doc. 65-4 at ¶ 1, as early as February 28. Doc. 77-4 at 17 [148]. At some point, she became concerned that the Dish ads were not being printed on the Dollar General receipts in the numbers Inmar had promised. Doc. 77-2 at 5 [67], 7 [102]. Ms. McIntyre called Mr. von Uffel to discuss these issues. Doc. 77-4 at 18 [151]. According to Mr. von Uffel's uncontradicted testimony, Ms. McIntyre said the program wasn't performing to her expectations; that Infinity “couldn't continue;” that she would cancel if there was no price break; and that she had told her art department not to provide Inmar with any finished art. Id. Mr. von Uffel did not understand her to cancel the contract at that time, but she threatened to do so unless there were price concessions. Id. at 18 [152].

         After this conversation, Ms. McIntyre sent Mr. von Uffel an email that said:

As a follow up to our conversation today, please find below the performance of the Dollar General campaign for 2017 when we were with [a previous company that provided the same services Inmar was now providing] and the subsequent performance once Inmar took over. Since all of the parameters under Infinity's control are the same, and the same stores are involved, the only logical conclusion we can come to is that there is a problem with Inmar's execution. Infinity cannot continue to shoulder significant financial losses. Infinity is willing to continue with the program until July 26th if Inmar is willing to make pricing concessions and offer us a rate of 50% of what we are currently paying (CPM = $1.40). Otherwise, we will have to cancel this campaign effective immediately. Please let me know how you would like to proceed by the end of the week.

Doc. 51 at 2. Ms. McIntyre knew that Infinity was obligated to pay for at least six months and that the contract did not have a provision for early cancellation based on poor sales results. Doc. 65-2 at 15 [163-64].

         Mr. von Uffel responded by email on Friday, March 30, 2018, that “[w]e are reviewing your pricing request, ” that Inmar was considering some “program enhancements, ” that he would get back to her on Thursday, and that “[u]ntil then, starting Sunday, 4/1, the program stop that you put in place with your team will obviously remain in place. Please confirm that this can work.” Doc. 65-11 at 2.

         Around this time, in late March 2018, Inmar sent invoices to Infinity for the January (pro rata), February, and March 2018 ads. Doc. 65-6; Doc. 65-7. As Ms. McIntyre promised, Infinity stopped providing artwork for the ads to Inmar, and Inmar could not run ads on the receipts without the approved artwork. E.g., Doc. 65-2 at 16 [171-73]; Doc. 65-4 at ¶ 6. Before the telephone conversation and March 28 email, Infinity had sent artwork for early April, Doc. 77-6; Doc. 77-7, but no ads were printed on any Dollar General receipts in April. Doc. 77-4 at 29 [208].

         On April 19, Ms. McIntyre and Jason Hazlewood from Infinity met in person with Mr. von Uffel and Roy Simrell of Inmar in Florida. Doc. 77-2 at 7-8 [105-106]. Mr. von Uffel told Ms. McIntyre that they found no “systems issues” related to the campaign. Doc. 65-2 at 19 [184], and that Inmar did not agree to the price reduction Ms. McIntyre had proposed in the March 28 email. Id. at 21 [190-91]. The parties discussed tests that Inmar could run to figure out why the campaign was not performing as expected. Doc. 77-2 at 17 [185]. However, Ms. McIntyre needed to discuss the matter with Infinity ownership and could not immediately agree. Id. at 18 [186].

         The parties did not meet again in person, id. at 20 [196], but they continued to discuss testing by email. Doc. 65-9; Doc. 65-12. On April 27, Mr. von Uffel reminded Ms. McIntyre that Inmar “stand[s] ready to print under the terms of our agreement!” Doc. 65-12 at 2. In a May 3 email that primarily concerned testing, Mr. von Uffel stated “[p]lease note that these tests are initiatives that are completely separate from our in-place insertion order and its terms.” Doc. 65-13 at 2.

         On May 7, 2018, Inmar sent Infinity an invoice for April. Doc. 65-8 at 3-4. Infinity had not yet paid the previous invoices. See Doc. 65-19 at ¶ 5. Ms. McIntyre objected to the April bill via email to Mr. von Uffel, asserting that Inmar “agreed to pause the campaign, ” and noting that Inmar did not circulate any advertising for April. Doc. 65-8 at 2. She referenced a meeting of unspecified date and asserted that “[i]t was understood the campaign would pause while this investigation was conducted . . . .” Id. She then stated that “Infinity is cancelling the contract with Inmar effective immediately and we do not want to proceed with the tests.” Id.

         Infinity paid the January-March invoices in April 2019 only after this lawsuit was filed. Doc. 65-18. Infinity has never paid the invoice for April, nor has it paid for May, June, or July, when the six-month minimum expired.

         II. OVERVIEW OF ISSUES AND CONTENTIONS

         Inmar contends it is entitled to summary judgment on its breach of contract claim, asserting that Infinity breached the contract at the end of March by anticipatory repudiation, at the end of April by failing to pay past due invoices, and in early May by its unilateral termination of the contract without cause. It further seeks summary judgment on Infinity's affirmative defenses of prior material breach and lack of standing and on its own claim for attorneys' fees.

         Infinity has also filed for summary judgment in its favor on Inmar's claim that it is entitled to attorneys' fees. Infinity seeks dismissal of Inmar's claim for quantum meruit/unjust enrichment.

         III. BREACH OF CONTRACT

         As the evidence summarized supra shows, it is undisputed that the parties entered into a valid contract where Inmar would place ads on Dollar General receipts and Infinity would pay for those ads. It is also undisputed that Infinity did not timely pay for ads run during the January-March time period and that Infinity did not place the orders required under the remainder of the contract period. The basic dispute in this case centers on who breached first and when.

         A. The End of March 2018 Events

         Inmar contends Infinity breached the contract at the end of March when Ms. McIntyre emailed Mr. von Uffel and told him she would cancel the insertion order unless Inmar gave a price concession and then refused to provide artwork. Infinity, on the other hand, asserts that Ms. McIntyre's email merely requested a change of pricing; the parties never treated the email as a cancellation; and both parties had agreed to a pause of the arrangement under the insertion order.[5]

         A party may breach a contract by anticipatory repudiation through a “distinct, unequivocal, and absolute” refusal to perform.[6]D.G. II, LLC v. Nix, 211 N.C.App. 332, 338, 712 S.E.2d 335, 340 (2011)[7]; see Millis Constr. Co. v. Fairfield Sapphire Valley, Inc., 86 N.C.App. 506, 511, 358 S.E.2d 566, 569 (1987) (noting that “if a party to the contract states that he cannot perform except on some condition which goes outside the terms of his contract then the statement will constitute a repudiation”). “[T]o result in a breach of contract, the refusal to perform must be of the whole contract or of a covenant going to the whole consideration.” D.G. II, 211 N.C.App. at 338, 712 S.E.2d at 340. Additionally, in order to constitute a breach, the ...


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