United States District Court, N.D. Mississippi, Oxford Division
MSC PIPELINE, LLC, a Mississippi, Limited Liability Company Plaintiff,
MSC PIPELINE, LLC, an Arkansas, Limited Liability Company, now known as LONGHORN CONSTRUCTION, LLC, et al. Defendants,
NEAL B. BIGGERS, Jr., District Judge.
Presently before the court is Plaintiff's motion for partial summary judgment. Upon due consideration of the motion, responses, exhibits, and supporting and opposing authority, the court is ready to rule.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff, MSC Pipeline, LLC, (hereinafter "MSC Mississippi"), entered into an Asset Purchase Agreement ("APA") with Defendants, Longhorn Construction, LLC, Michael Simpson, and Michael Alan Alvey.
Pursuant to the APA, Plaintiff agreed to buy all assets of Defendants' pipeline business including the equipment, contracts, works in progress, and goodwill. The parties agreed on an "Estimated Purchase Price" which was to be calculated according to the book value of the assets at the time of closing, minus any liabilities, plus one million dollars. Using this method of calculation, Plaintiff paid Defendants $3, 599, 344 at closing.
The parties included a provision within the APA whereby a "true up" process would occur within ninety days of works in progress being completed. According to this provision, Plaintiff would provide Defendants with an adjusted final balance sheet which would include any increase or reduction in the book value based on any changes in the estimated profits from works in progress. Based on any increase or reduction in the book value, Plaintiff would either owe Defendants more money or, conversely, Defendants would return a portion of the payment received. This provision allowed Defendants a fifteen-day time frame within which they could make any objections to the adjusted balance sheet. Pursuant to the provision, if no objection was made, Defendants were "deemed to have accepted" the balance sheet. If Defendants did make a timely objection, the parties would negotiate in good faith to resolve the dispute. The parties then agreed to submit the sheet to a mutually agreed upon neutral third-party accounting firm whose determination would be final and binding, if negotiations proved unsuccessful.
In accordance with the terms of the APA, Plaintiff provided Defendants with an adjusted balance sheet indicating a reduction in the book value of the assets. Specifically, calculations revealed that Plaintiff had overpaid by $795, 916. No objections were made by Defendants within the fifteen-day time period. In fact, Defendants failed to respond at all, neither indicating approval or disapproval. After a period of silence, Plaintiff attempted to acquire Defendants' approval in consulting with a neutral third-party accountant. Plaintiff's attempt failed.
The parties executed Employment Agreements simultaneously with the APA whereby Plaintiff agreed to employ Simpson and Alvey. MSC Mississippi employed Simpson as its President and Alvey as its Vice President. Though they were given management roles, the Employment Agreements stipulated their employment was on an at-will basis. Simpson's and Alvey's employment could thus be terminated at any time as long as they received thirty days' notice. MSC Mississippi dismissed Alvey after only two weeks as a result of Alvey's arrest for driving under the influence and possession of marijuana. Simpson's employment lasted a little over five months. MSC Mississippi dismissed Simpson following an incident in which he incurred a safety violation on behalf of the company. This safety violation caused Plaintiff to lose its one and only client at the time. Neither Alvey nor Simpson were given the requisite thirty days' notice.
On April 26, 2013, Plaintiff filed its complaint in the Chancery Court of Lafayette County, Mississippi, asserting a claim for breach of contract. Defendants timely removed the case to this court. Following removal, Defendants filed a counterclaim against MSC Mississippi, Sean Carothers, CCI Holdings, LLC, and Carothers Construction, Inc., alleging that Counter-Defendants made fraudulent misrepresentations which induced them to execute the APA and Employment Agreements. Further, Counter-Claimants assert claims of breach of the implied covenant of good faith and fair dealing and breach of the employment agreements. They also seek a declaratory judgment in which they ask the court to declare that Defendants are not liable to MSC Mississippi for any alleged breach of the APA. In response to this counterclaim, Counter-Defendants filed an amended complaint containing additional allegations against Simpson. Plaintiffs later filed this motion for partial summary judgment on its claims and Defendant's counterclaims contending the only claims proper for trial are Plaintiff's allegations asserted against Simpson.
STANDARD OF REVIEW
A party is entitled to summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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." Fed.R.Civ.P. 56(c). Courts have placed the burden upon the moving party to show an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once a movant has made this showing, the burden then shifts to the non-movant. Id. at 324. The non-movant must then demonstrate an existence of specific facts showing a genuine issue proper for trial. Id. The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. V. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
A motion for summary judgment may be granted only if the court finds "no genuine issue of material fact" has been presented. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "Substantive law will identify which facts are material." Id. A fact is material if it "might affect the outcome of the suit, " and any facts which would be irrelevant to the potential outcome are immaterial. Id. Not only must a fact be material to avoid summary judgment, there must also be a genuine dispute about a material fact. Id. A genuine issue exists "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Id. Before finding that no genuine issue for trial exists, the court must first be satisfied that no rational trier of fact could find for the non-movant. Matsushita, 475 U.S. at 587 (1986).
When deciding a motion for summary judgment, the court must view the underlying facts in the "light most favorable to the party opposing the motion." United States v. Diebold, Inc., 369 U.S. 654, 655 (1962). As such, all reasonable inferences must be drawn in favor of the nonmovant. Id. The Supreme Court has made it clear that "at the summary judgment stage, the trial judge's function is not himself to weigh the evidence and determine the truth of the matter." Anderson, 477 U.S. at 249. The inquiry performed by the trial judge is a "threshold inquiry" of whether a trial is needed. Id. at 250. "Summary judgment, ...