Bell Microproducts, Inc. v. Global-Insync, Inc.

Citations: 20 F. Supp. 2d 938; 42 Fed. R. Serv. 3d 452; 1998 U.S. Dist. LEXIS 14644; 1998 WL 640966Docket: 98-536-A

Court: District Court, E.D. Virginia; September 11, 1998; Federal District Court

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Bell Microproducts, Inc. (plaintiff) has filed a lawsuit against Global-Insync, Inc. and Global Intellicom, Inc. (defendants) to recover amounts owed for electronic and computer components shipped to Insync. The complaint includes three counts: (1) breach of contract against Insync for $784,556.43 plus interest and attorney's fees, (2) unjust enrichment against Insync for the same amount, and (3) breach of guarantee against Global for the same amount plus interest and attorney's fees. Bell is seeking a partial summary judgment for $631,279.89, while defendants acknowledge a liability of $560,867.89, disputing the total amount due based on alleged uncredited payments of $132,799.54. 

The parties' agreements establish that payment is due within 30 days of invoicing, with an interest rate of 12% per annum on overdue amounts. Insync executed a Security and Subordination Agreement prior to shipments, which granted Bell a security interest in Insync's inventory and accounts. Additionally, Global guaranteed Insync's payment obligations, allowing Bell to pursue claims against Global directly. Defendants have requested an extension until September 18, 1998, to respond to the motion for summary judgment and a hearing on September 25, 1998.

Defendants are subtracting several amounts from a total figure: outstanding Return Merchandise Authorizations (RMAs) of $11,831.45 and $788.50, RMA inventory valued at $7,850, and Bell Microproducts items at Insync valued at $70,412. The plaintiff concedes that summary judgment is not appropriate for the disputed payment amounts, RMAs not credited, and the outstanding defective inventory. However, the plaintiff contends that defendants have not provided valid grounds or evidence to support their claim regarding the title of the Bell items at Insync, arguing that summary judgment should be granted for that amount. Consequently, the undisputed total stands at $631,279.89, comprising $560,867.89 and the Bell inventory amount.

Regarding defendants' litigation conduct, two incidents are noteworthy. First, on June 5, 1998, Bell served discovery requests, and on June 22, defendants attempted to extend the deadline for objections to August 7, citing the need for new counsel. This motion was later withdrawn, and a new extension until July 6 was granted. Second, while responses to discovery were due on July 8, defendants provided incomplete responses on the due date and subsequently, leading to a $2,492 sanction for their failure to comply. A definitive response regarding the amount owed to Bell was not provided until August 5, 1998.

The court considered a motion for enlargement of time under Rule 6 of the Federal Rules of Civil Procedure, which allows the court discretion to extend time periods. The reasons given for an extension, including counsel's vacation and other commitments, were deemed unpersuasive due to defendants' previous dilatory conduct in discovery. Therefore, the motion for enlargement of time was denied. Additionally, under Rule 56(a), summary judgment can be granted for any part of a claim, allowing for a motion for partial summary judgment.

Rule 56(d) pertains to partial summary judgment, allowing a court to make rulings that shape the litigation without resolving the entire case. The court must identify uncontested material facts and specify those that are not in substantial dispute, including the extent of damages or relief. The ruling is typically non-final, permitting the court to revise it later with appropriate notice to avoid prejudice.

In this case, liability for Insync regarding Count I and Global regarding Count III is undisputed, with only the damages exceeding $560,867.89 contested, justifying a Rule 56(d) summary judgment for that amount. The situation surrounding approximately $70,000 in Bell inventory is more complex. Title to the products passed upon delivery to the carrier, and rejection of the shipment must have occurred within 30 days, which has long since passed. Defendants did not provide reasons to contest this amount and appeared to concede its validity during oral arguments. Thus, an additional partial summary judgment for $70,000 is deemed appropriate.

Liability for interest and attorneys' fees is also granted, although final judgments on these amounts will depend on the outcome of remaining claims and future litigation costs.

Regarding the Motion for Certification of Final Judgment under Rule 54(b), the court must first ensure that the judgment represents a final disposition of an individual claim in a multi-claim action. Secondly, it must ascertain that there is "no just reason for delay," taking into account factors such as the relationship between claims, potential mooting of the need for review by future developments, the risk of reviewing the same issue multiple times, and other relevant considerations like delay, economic factors, and the nature of competing claims.

Certification of a judgment under Rule 54(b) in multi-claim or multiparty cases is disfavored in the Fourth Circuit, as established in case law. Certification is only warranted in exceptional circumstances, and if appropriate, the district court must provide clear findings on the record. In this case, certification is not justified because there is no final judgment on any claim; the court has only granted summary judgment concerning liability and partial damages. This situation does not constitute an "ultimate disposition" of a claim, as reflected in Fourth Circuit precedents. The plaintiffs have received an interlocutory judgment regarding liability, but individual claims remain unresolved. Additionally, there is no compelling legal question to elevate this case above standard circumstances, leading to the denial of certification.

Supporting details include noted cash flow problems for both plaintiffs and defendants, with Insync having significant outstanding debts and Global facing NASDAQ investigations. The summary judgment motion seeks a total amount of $631,279.89, with a breakdown of various claims and credits. The document also references the presence of multiple attorneys from the defendants' law firm assigned to the case and discusses the appropriateness of partial summary judgment under established legal principles.

Rule 54(b) of the Federal Rules of Civil Procedure states that any order that resolves fewer than all claims or parties, and is not certified under Rule 54(b), can be revised at any time before a final judgment is entered. This principle was exemplified in the case of Lasercomb America, Inc. v. Holiday Steel Rule Die Corp., where an appeal was dismissed due to the partial summary judgment not being a final appealable order. Under Rule 56(e), once a motion for summary judgment is filed and supported, the burden shifts to the opposing party to present specific facts demonstrating a genuine issue for trial. Rule 56(c) permits the opposing party to submit affidavits before the hearing date. 

Rule 54(b) further allows for the entry of a final judgment on one or more claims or parties in cases involving multiple claims or parties, but only if the court explicitly determines that there is no just reason for delay and directs the entry of judgment. Cases like Bartolomeo v. S.B. Thomas, Inc. and Bond Distributing Co. v. Carling Brewing illustrate situations where partial summary judgments were affirmed following 54(b) certification. Notably, although partial summary judgments may not typically be appealable, those involving significant legal questions can be certified for appeal. Additionally, Rule 56(c) permits summary judgments to address liability alone, even when there is a genuine issue regarding damages.