Navigant Consulting, Inc. v. Modernica, Inc.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
NAVIGANT CONSULTING, INC.,
C.A. No. K16C-07-003 WLW
Plaintiff, : Kent County
v.
MODERNICA, INC.,
Defendant.
Submitted: August 25, 2017
Decided: October 26, 2017
ORDER
Upon Defendant’s Motion for Summary Judgment.
Dem`ed.
Patrick Scanlon, Esquire and Darlene Wyatt Blythe, Esquire of LaW Offlce of Patrick
Scanlon, P.A., Milford, Delaware; attorneys for Plaintiff.
Christos T. Adamopoulos, Esquire of Connolly Gallagher, LLP, Wilmington,

Delaware and Victor K. Sapphire, Esquire of Gerard Fox LaW, P.C., Los Angeles,
California (of counsel); attorneys for Defendant.

WITHAM, R.J.

Navigant Consulting, Inc. V. Modernica, Inc.
C.A. No. K16C-07-003 WLW
October 26, 2017

Before the Court is Defendant Modernica, Inc.’s (“Modernica”) Motion for
Summary Judgment and Plaintiff Navi gant Consulting, Inc. ’ s (“Navigant”) Response
in opposition. As an issue of fact remains, Modernica’s motion is hereby denied.

FACTS

This lawsuit arises out of three separate agreements, Whereby Navigant
contracted With Modernica to provide consulting services to Modernica.

Pursuant to the agreements, Navigant billed Modernica $248,990.31 for
Navigant’S purported services performed from December 4, 2014, to May 27, 2015.

From January 25, 2015, to September 22, 2015, Modernica paid Navigant $59,
666.34 for its services, leaving a balance of $189,323.37 still due to Navigant.

On October 19, 2015, Modernica tendered $100,000 to Navigant. The amount
Was divided into three separate checks. Each check contained the following
statement: “fmal accord and satisfaction.” Navigant deposited the checks and has not
returned the funds conferred to it.

On July 7, 2016, Navigant filed its Complaint in this Court, seeking to recover
the purportedly outstanding balance of $89,323.37.

THE PARTIES’ CONTENTIONS

Modernica contends that it Was overcharged for Navigant’s services.
Modernica claims that it repeatedly inquired about the charges through email and
telephone conversations, but Navi gant failed to respond substantively to Modernica’ s
concerns. Although Modernica did not provide a single email to support its

allegations, it relies upon an email attached as Exhibit “I” to Navigant’s Response to

Navigant Consulting, Inc. V. Modernica, Inc.
C.A. No. K16C-07-003 WLW
October 26, 2017

Modemica’s Motion for Summary Judgment. The email provides in pertinent part:
“If it is Modemica’s position that they [sic] do not intend to pay the invoices, please
state so.” This language, according to Modernica, apparently shows that Navigant
was aware of Modemica’s dispute of the amount due before Modernica tendered the
final payment checks. Therefore, Navigant’s deposit of the checks labeled “final
accord and satisfaction” allegedly extinguished the debt owed by Modemica.

Navigant contends that Modernica never communicated its objections to
Navigant. In support of this contention, Navigant provided email correspondence
between the parties discussing further payment of amounts owed by Modemica.
According to Navigant, even as late as October 9, 2015, Modernica promised further
payments Without mention of a dispute. In regards to the email included as Exhibit
“I” in Navigant’s Response, Navigant alleges that it sought clarification as to whether
Modernica intended to make further payments to Navigant. Thus, Navigant argues
that it was not on notice that Modernica disputed the amount owed for Navigant’s
purported services.

In the altemative, Navigant contends that even if it was on notice of the
dispute, Modemica’s payment cannot constitute satisfaction of Modemica’s debt
because Navigant requested that communications regarding the debt be sent to a
specific employee of Navigant. As a result, according to California Code Section
331 l(c)(l), Navigant contends that the checks delivered to Navigant by Modernica
should have been sent to the specific employee rather than the lock box Modernica

deposited them in.

Navigant Consulting, Inc. V. Modernica, Inc.
C.A. No. Kl6C-07-003 WLW
October 26, 2017

Navigant also claimed that Modernica failed to meet its burden of proof for
summary judgment because, according to Navigant, the affidavit attached to
Modemica’s motion was not based on the personal knowledge of the affiant and
would therefore be considered hearsay. In response, Modernica provided the Court
With an additional affidavit in support of the original affidavit. The additional
affidavit was based upon the personal knowledge of the affiant. As Navigant has not
alleged that it suffered prejudice as a result of the delayed filing, Navigant’s objection
to the first affidavit, therefore, is moot.

STANDARD OF Rli_`.VIEWl

This Court may grant summary judgment only when no genuine issues of
material fact exist and the moving party is entitled to judgment as a matter of law.2
In ruling on such a motion, the Court must view the facts in a light most favorable to

the non-moving party.3 Initially, the moving party bears the burden of establishing

1 Interpreting a choice of law provision nearly identical to the one in this case, the Court of
Chancery determined in Maloney-Refaie v. Bridge at School, Inc., that DelaWare law governed
procedural aspects of the case even though Maryland law governed the court’s interpretation of the
agreement in that case. See Maloney-Refaie v. Bridge at School, Inc., 958 A.2d 871, 879 (Del. Ch.
2008). The Court relied upon its prior decisions stating that “[i]t is well established that the law of
the forum governs question of remedial or procedural law.” See, e.g., Taylor v. LSI Logic Corp.,
1998 WL 51742, at *4 n. 19 (Del. Ch. Feb. 3, 1998); Lutz v. Boas, 176 A.2d 853, 857 (Del. Ch.
1961)

2 Super. Ct. Civ. R. 56(c).

3 Norse Petroleum A/S v. LVO Int’l, Inc., 389 A.2d 771, 774 (Del. Super. 1978).

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Navigant Consulting, Inc. V. Modernica, Inc.
C.A. No. Kl6C-07-003 WLW
October 26, 2017

the non-existence of material issues of fact by a preponderance of the evidence,4 The
moving party meets this burden “by identifying those ‘pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits, if any’
which it believes demonstrates the absence of a genuine issue of material fact.”5

Once the moving party meets its’ burden, the burden shifts to the non-moving
party to establish, by a preponderance of the evidence, the existence of material issues
of fact.6 Where the moving party produces an affidavit or other evidence sufficient
under Superior Court Civil Rule 56 in support of its motion and the burden shifcs, the
non-moving party may not rest on its own pleadings, but, must provide evidence
showing a genuine issue of material fact for trial.7 If the non-moving party cannot
make a sufficient showing of the existence of an essential element of his or her case,
summary judgment must be granted.8 If, however, a material issue of fact exists or

if the Court determines that it does not have sufficient facts to enable it to apply the

law to the facts before it, summary judgment is not appropriate9

4 Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979).
5 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
6 Moore, 405 A.2d at 681.

7 Super. Ct. Civ. R. 56(e); Celotex, 477 U.S. at 322-23. The Court must add that marginalia
information does not help the non-moving party’s cause.

8 Id.
9 Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del. 1962).

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Navigant Consulting, Inc. V. Modernica, Inc.
C.A. No. Kl6C-07-003 WLW
October 26, 2017

DISCUSSION
As the parties have made clear, the doctrine of “accord and satisfaction” is
central to the Court’s decision in this matter. The parties agree that Califomia law
governs the Court’s interpretation of the doctrine due to the choice of law provision
contained in each of the three service contracts entered into by the parties.10 The
doctrine as provided by Califomia Commercial Code Section 3311, states that:

(a) If a person against whom a claim is asserted proves that (l) that
person in good faith tendered an instrument to the claimant as full
satisfaction of the claim, (2) the amount of the claim was unliquidated
or subject to a bona fide dispute, and (3) the claimant obtained payment
of the instrument, the following subdivisions apply.

(b) Unless subdivision (c) applies, the claim is discharged if the person
against whom the claim asserted proves that the instrument or an
accompanying written communication contained a conspicuous
statement to the effect that the instrument was tendered as full
satisfaction of the claim,

(c) Subject to subdivision (d), a claim is not discharged under
subdivision (b) if either of the following applies:

(l) The claimant, if an organization, proves that (A) within a reasonable
time before the tender, the claimant sent a conspicuous statement to the
person against whom the claim is asserted that communications
concerning disputed debts, including an instrument tendered as full
satisfaction of a debt, are to be sent to a designated person, office, or
place, and (B) the instrument or accompanying communication was not

10 Each agreement provides in part that it “shall be governed by and construed in accordance
With the laws of the State of Califomia without regard to its conflict of laws principles.”

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Navigant Consulting, Inc. V. Modernica, Inc.
C.A. No. Kl6C-07-003 WLW
October 26, 2017

received by that designated person, office, or place.11
The question of whether an accord and satisfaction to a claim was reached is

t.12 Because the doctrine of accord and satisfaction operates as an

a question of fac
affirmative defense, the burden of proof rests on the defendant.13 Therefore, in order
to meets its initial burden for summary judgment, defendant must provide admissible
evidence so that a reasonable finder of fact would determine that all of the elements
of accord and satisfaction are met.14

After a careful review of the evidence presented, the Court is unable to grant
summary judgment because a question of fact remains as to whether a bona fide
dispute existed prior to Modernica’ s tender of the final payment checks to Navigant.15
The Court’s decision relies upon two separate, logically inconsistent, pieces of
evidence provided by the parties. On one hand, Modernica provided an affidavit of

its employee which specifically states that Modernica, on numerous occasions

through email and telephone conversations, disputed the amounts owed to Navigant.

11 The statute is a codification of the common law doctrine of accord and satisfaction, and
so where the code is ambiguous courts look to common law for clarification Jones v. Baltimore Life
Ins. Co., 2007 WL 1713250, at *10 (E.D. Cal. 2007).

12 Bii Fin. Co. v. U-States Forwarding Servs. Corp., 95 Cal. App. 4th 111, 126, 115 Cal.
Rptr. 2d 312 (2002).

13 Rabinowitz v. Kandel, l Cal. App. 3d 961, 965, 81 Cal. Rptr. 897 (1969).
14 See Aguilar v. Atlantic Richfield Co., 24 P.3d 493 (Cal. 2001).

15 Lucky Um'ted Properties Inv., Inc. v. Lee, 185 Cal. App. 4th 125, 151 (Cal. Ct. App. 2010)
(clarifying that a dispute must exist before money is tendered).

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Navigant Consulting, Inc. V. Modernica, Inc.
C.A. No. K16C-07-003 WLW
October 26, 2017

On the other hand, Navigant provided an email, attached as Exhibit “I” to Navigant’s
Response, that apparently contradicts Modemica’s contention. The email, sent the
day before Modernica tendered the final payment checks, provides in pertinent part:

If it is Modemica’s position that they do not intend to pay, please state
so. If it is the company’s intention to pay the invoices and it is a matter
of structuring a specific payment schedule for the purposes of cash flow,
please send me a proposed repayment schedule. I am unclear what you
wish to discuss. These services date back to nearly a year. If there were
questions or objections to any of the billed time, those should have been
voiced many, many months ago (as the terms of the contract dictate).
All of the time incurred on these projects is supported by emails,
telephone conversations, [and] in-person meetings with both the owners
and their external counsel. Navigant already discounted our rates at the
beginning of the projects - all three of them. Please let me know
Modemica’s position specifically about these invoices so I can inform
Navigant’s legal and accounting departments

When read in a light most favorable to Navigant, the Court finds that the email
provided is likely intended to clarify if a dispute existed, rather than to confirm that
a dispute already existed. The key words the Court relies upon are, “if it is
Modemica’s position that they [sic] do not intend to pay.” Modernica contends this
language supports its argument that a dispute existed. However, it seems
counterintuitive for Navigant to question Modemica’s position for payment of the
debt if Modernica had already communicated its disagreement As Navigant sent the
email the day before Modernica tendered the final payment checks, the Court finds
that it is unlikely that Modernica communicated any dispute prior to tendering the

checks.

Navigant Consulting, Inc. V. Modernica, Inc.
C.A. No. Kl 6C-07-003 WLW
October 26, 2017

In sum, although the affidavit provided by Modernica indicated that it had
repeatedly communicated its objections to Navigant regarding the debt owed, the
email provided by Navi gant indicates that it Was unaware if a dispute actually existed.
As these facts directly contradict each other, the Court is unable to determine whether
a bona fide dispute existed prior to Modemica’s tender of the final payment checks
to Navigant. In essence, the parties have left the Court with a question of fact that is
inappropriate for determination of summary judgment.

CONCLUSION

As a question of fact remains as to whether a bona fide dispute existed prior to
Modernica’s tendering of the final payment checks, Modemica’s motion is hereby
DENIED, without prejudice as to Modemica’s right to re-file at the close of
discovery.

IT IS SO ORDERED.

/s/ William L. Witham Jr.
Resident Judge

WLW/dmh