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Ningbo Bonny Decorative Material Co., Ltd. v. East Systems, Inc.

United States District Court, N.D. Mississippi, Aberdeen Division

October 1, 2019

NINGBO BONNY DECORATIVE MATERIAL CO., LTD PLAINTIFF
v.
EAST SYSTEMS, INC., and GEORGE K. EAST DEFENDANTS

          ORDER AND MEMORANDUM OPINION

          SHARION AYCOCK, UNITED STATES DISTRICT JUDGE

         Ningbo Bonny Wallcovering Co. Ltd[1], filed its Complaint [1] against East Systems, Inc. and George K. East in this Court on July 27, 2017, premising federal jurisdiction on the basis of diversity of citizenship. Ningbo Bonny is a Chinese limited corporation, and Defendants East Systems and George East are both Mississippi citizens. George East is the president of East Systems. The Defendants filed an Answer and Counterclaim [12] on October 13, 2017. Now before the Court is the Defendants' Motion for Partial Summary Judgment [57], requesting summary judgment in their favor on several of the Plaintiff's claims. Also before the Court is the Plaintiff's Motion for Summary Judgment [59], requesting summary judgment in its favor on all of the Defendants' counterclaims. The issues are fully briefed and ripe for review.

         Factual and Procedural Background

         The claims in this case arise from an agreement between Ningbo Bonny, and George East and East Systems to modify a large industrial machine. East is the president of East Systems, located in Columbus, Mississippi. Prior to his employment at East Systems, East worked for a company called Omnova Solutions. During his employment at Omnova, East was involved in the purchase of the Rotomec, a large commercial grade printer. Omnova Solutions later went out of business and held an auction in Columbus, Mississippi, in April 2013 at which it auctioned off various pieces of commercial printing equipment, including the Rotomec.

         Prior to the auction, Ming Hu, Vice President of Ningbo Bonny, traveled to Columbus to survey the equipment to be auctioned. The day before the auction, Ming Hu and Shaobo Lou, another representative for Ningbo Bonny, traveled to Columbus and expressed their interest in purchasing the Rotomec. Although the machine was in general working condition, the Rotomec needed to be repaired and refurbished, shipped to China, and re-assembled for use in Ningbo Bonny's commercial wallpaper business.

         The Rotomec is over 100 feet long and consists of two major parts: a mechanical unit and an electrical unit. Of particular interest here, the control unit, a sub-component of the electrical unit, was out of date and needed to be rebuilt. Individuals at the auction told Hu to contact East with any questions regarding the Rotomec because of East's experience with the operation and maintenance of the machine.

         According to Ningbo Bonny, East represented that he could completely repair and restore the Rotomec, including the rebuilding of the control unit, in order to make it fully functional for Ningbo Bonny's purposes. According to Ningbo Bonny, it relied on East's assurances when it successfully bid on the Rotomec for $231, 322.50. Ningbo Bonny contracted with Glenn Machine works to dissemble the mechanical parts of the Rotomec and ship them to China.

         East traveled to China on June 19, 2013 to inspect the layout and mechanical parts for the Rotomec and to discuss various upgrades. After his visit, East emailed Ningbo Bonny a quote on July 9, 2013 that proposed three phases related to the rebuilding and handling of the Rotomec's control unit. Phase I consisted of removing, staging, and packaging the control unit of the Rotomec. Phase II consisted of building controls to upgrade and modify the Rotomec's electrical system. Phase III involved sending the Rotomec back to China and training Ningbo Bonny employees on how to use the machine.[2]

         East emailed Hu on November 4, 2013 and attached banking information and the first set of invoices requesting $164, 130.85. Ningbo Bonny paid East Systems $164, 130.85 on December 4, 2013. The payment included $51, 180 for the completion of Phase I, $16, 004.54 for cleaning the Rotomec in order for the machine to pass Chinese customs, and $96, 949.31 for 35% of the Phase II Order. East emailed Hu on December 6, 2013 notifying Hu that he had received the payment and was moving ahead with the project.

         The parties discussed four design proposals before deciding on the design that was to be used to complete the project. First, in late 2013, the Defendants planned to upgrade the Rotomec to convert it to Chinese power and then install the Rotomec in the form in which it otherwise existed when Plaintiff purchased the printer at the auction. In May 2014, East suggested separating the Rotomec into two different sections. This second proposal, however, would require Plaintiff to purchase an additional six-color printer that was part of the design.

         East traveled to China in May and August of 2014 to discuss upgrades and modifications to the Rotomec. East made a third proposal on October 26, 2014 because he was unsure if Plaintiff could purchase the used six-color printer and knew that Plaintiff's print format would only use four colors. After making the third proposal, East sent Ningbo Bonny invoices that totaled $118, 276.17. In November 2014, Ningbo Bonny representatives traveled to Columbus to discuss the proposals and the changes to the designs with East. According to Ningbo Bonny, during this visit East represented to Ningbo Bonny that not only could he rebuild the control unit, but he could also reassemble the mechanical parts of the Rotomec which Glenn Machine Works shipped to China. Ningbo Bonny and East agreed that East would reassemble the mechanical and electrical parts of the Rotomec.

         East emailed Hu on December 4, 2014 to inform him that East Systems would not be going forward with the design because the invoices from October 2014 had not yet been paid. Hu responded and asked for a revised invoice that reflected the additions and deletions from the design changes. East emailed the requested invoices in addition to an invoice for a fourth design proposal on December 9, 2014. East emailed Hu again on December 12, 2014 stating he had not yet received the requested payment and that as a result the work on Plaintiff's project would be delayed.

         On January 6, 2015, Ningbo Bonny submitted payments to bring their account current. Work resumed, and East emailed Hu on July 16, 2015 stating he and an assistant would travel to China in August 2015 and would return every 6-8 weeks until the work was complete.

         East traveled to China as planned from August 18-24, 2015. Ningbo Bonny shipped the sixth unit of the Rotomec to East Systems in Columbus to be upgraded and modified. East emailed Hu on August 27, 2015 indicating he would finish the work on the Rotomec. According to Ningbo Bonny, communications with East started to become difficult in the fall of 2015. Ningbo Bonny continually pressed East to complete the project as the Parties agreed. In any event, some work continued and there were some discussions around December 2015 between the Parties about a timeline for shipping some of the parts back to China.

         East emailed Hu on July 12, 2016 and stated that he would be ready to ship the control unit back to China in December 2016. East emailed Hu again on October 4, 2016 indicating that they would make a big push to finish the machine in November/December. In this email, East also stated that he would need to purchase approximately $100, 000 worth of parts one month before shipment. East asked Hu if he thought there would be a problem with payment. The Parties acknowledge that this statement led to a miscommunication as Plaintiff interpreted the statement as a request for an additional $100, 000, and Defendants contend that they intended the statement to be a request for assurances.

         East and Hu spoke on the phone at which point East asserts Hu told him that Ningbo Bonny did not agree to an additional $100, 000 and wanted to return to the design to which the Parties originally agreed.[3] At this point, communications totally fell apart. Hu emailed East on November 12, 2016 requesting an update on the progress and expressing his dissatisfaction with East's failure to communicate and failure to perform the work as the parties agreed. Hu continued to email East, but East stopped responding.

         To date, Ningbo Bonny has paid the Defendants a total of $437, 879.02, and asserts that Phases II and III have not yet been completed. The Defendants maintain possession of both the sixth unit and control unit of the Rotomec. Although the Plaintiff requested an update on the performance of the Parties' agreement, East failed to respond or contact Ningbo Bonny despite repeated efforts to communicate regarding the status of the project.

         In its Complaint [1], Ningbo Bonny alleges claims against East in his personal capacity, and against East Systems, Inc. for breach of contract, tortious breach of contract, breach of the duty of good faith and fair dealing, unjust enrichment, promissory estoppel, misrepresentation, and an accounting. Now before the Court is the Defendants' Motion [57] seeking partial summary judgment as to all of Ningbo Bonny's claims against East in his individual capacity, and on its claims against East Systems for tortious breach of contract, and misrepresentation. In response, Ningbo Bonny filed a Motion [59] requesting summary judgment in its favor on all of the Defendants' remaining counterclaims: breach of contract, breach of the duty of good faith and fair dealing, and quantum meruit.[4]

         Summary Judgment Standard

         Summary judgment is warranted when the evidence reveals no genuine dispute regarding any material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The rule “mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

         In reviewing the evidence, factual controversies are to be resolved in favor of the non-movant, “but only when . . . both parties have submitted evidence of contradictory facts.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When such contradictory facts exist, the Court may “not make credibility determinations or weigh the ...


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