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Luna Innovations Inc. v. Verner Science, Inc.

United States District Court, W.D. Virginia, Roanoke Division

April 25, 2017

LUNA INNOVATIONS INCORPORATED Plaintiff,
v.
VERNER SCIENCE, INC. Defendant.

          MEMORANDUM OPINION

          MICHEL F. URBANSKI DISTRICT JUDGE

         This is a contract dispute, centering on defendant Verner Science, Inc.'s ('Verner") rejection of plaintiff Luna Innovations Incorporated's ("Luna") shipment of certain electronic equipment. This matter is before the court on Verner's Amended Motion for Judgment on the Pleadings. ECF No. 23.[1] Verner argues that Luna has failed as a matter of law to state a claim, because Verner made timely objection to Luna's shipment. See ECF No. 23, at 4. For the reasons that follow, the court converts Verner's motion to a motion for summary judgment, and concludes that a material factual dispute remains, which prevents the court from granting Verner judgment as a matter of law. Accordingly, Verner's motion, ECF No. 23, is DENIED.

         I.

         Luna is a "leading manufacturer of optical technologies, " ECF No. 24, at 6, while Verner is a merchant that deals in electronic test equipment in Taiwan, ECF No. 23, at 6. In late 2015, Verner entered into negotiations to purchase fiber-optic testing equipment from Luna.[2] ECF No. 24, at 5. Pursuant to these negotiations, on December 15, 2015, Luna provided Verner with a price quote, identifying a price of $119, 500.00 for the requested equipment and accompanying software ("the Quote"). See ECF No. 1-2. The Quote provided for a discount of $24, 500.00 (bringing the total cost to $95, 000.00) if "the purchase order is received by close of business 12/16/2015." Id. No shipping date was specified.

         In response, Verner sent Luna a Purchase Order the next day.[3] ECF No. 1-3. The Purchase Order differed in several respects from the Quote. It omitted the "Desktop Analysis Software" and "Spot Scan feature" that had been included in the Quote, and accordingly authorized a purchase price of only $78, 000.00. Id. Moreover, the shipping date was specified as "by advice, " and the purchase order asked that Luna "[e]nter this order in accordance with the prices, terms, delivery method, and specifications listed above." Id.

         Luna and Verner continued to negotiate the terms of the sale. During these ensuing negotiations, Luna made clear that, in order to effectuate the sale at the discussed price, "[it] need[ed] to ship by year end." ECF No. 24-2, at 24, 26. Verner re-sent its Purchase Order on December 30, 2015. Id. at 24. In response, Luna sent Verner a Sales Order.[4] ECF No. 1-4. The Sales Order specified that the shipping date as "on or before 01/15/2016, " which accommodated Luna's insistence on shipment before the end of the year. Id. Moreover, it reincorporated the standard terms and conditions from Luna's Quote, and asked that Verner notify Luna immediately of any term of the Sales Order "is not correct in any way, " so that Luna "may make the needed corrections before [the] order is processed." LL at 2.

         Verner responded immediately, and asked that Luna "[p]lease ship the goods by our notice, not on or before 01/15/2016." ECF No. 24-2, at 22. Luna protested, "We need to ship your instrument today in order to meet our year-end commitments and, therefore, in order to provide your discount." ECF No. 3-1, at 5. Over the next day the parties continued in this vein: Luna maintained that shipping must take place before the New Year, and Verner was equally adamant that shipping should be by notice. Luna offered delayed payment terms; Verner's position did not change. Eventually, after informing Luna that its customer "will cancel the [Purchase Order] if we need the confirmation today, " ECF No. 24-2, at 21, Verner offered Luna an ambiguously worded alternative, in lieu of cancellation of the Purchase Order: "Or you can accept return good [sic] if there is problem with our customer." Id. at 20.

         In its Counterclaim, Verner clarified that it intended to inform Luna that "acceptance of the shipment by Verner would be by reservation of right to return." ECF No. 3, at 4. However, Luna "understood this email to be accepting Luna's condition that the [e]quipment had to be shipped on December 31, 2016." ECF No. 24-1, at 4. The provision that Luna could "accept return good, " was thought by Luna to denote a potential return in the event of a warranty defect-a prospect envisioned by Luna's standard terms and conditions. Id; see ECF No. 1-2, at 3 (Section 5: "Warranty; Restrictions on Use").

         Luna shipped the equipment on the last day of 2015. On January 4, 2016, Verner contacted Luna to request "the info regarding if we have to return the [equipment]." ECF No. 24-2, at 20. Luna responded that any return, "would require [a] reason/explanation." Id. at 19. Verner received the equipment on January 20, 2016. ECF No. 24, at 10. The parties dd not correspond again until March 9, 2016, when Verner indcated that it would need to return the equipment because Verner's customer found it unsuitable. ECF No. 24-2, at 7. Despite Luna's warning that it would not accept the return, Verner returned the unused equipment to Luna. ECF No. 3, at 4.

         Luna filed suit on June 30, 2016, asking the court to require Verner to pay the $78, 000.00 price of the equipment. ECF No. 1. On August 25, 2016, Verner filed its Answer and Counterclaim, in which it asked for "incurred expenses for inbound airfreight, customs clearance, outbound airfreight charges and other costs, " incurred in connection with returning the equipment to Luna. ECF No. 3, at 4.

         In February 2017, Verner filed its Amended Motion for Judgment on the Pleadngs.[5]ECF No. 23. Luna responded, ECF No. 24, and the court conducted a hearing on February 28, 2017. ECF No. 27.

         II.

         Rule 12(c) of the Federal Rules of Civil Procedure allows a party to move for judgment on the pleadings "[a]fter the pleadings are closed." "A motion for judgment on die pleadings pursuant to Rule 12(c) is analyzed under the same standard as a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss." Mendenhall v. Hanesbrands. Inc.. 856 F.Supp.2d 717, 723 (M.D. N.C. 2012) (citing Burbach Broad. Co. of Del, v. Elkins Radio Corp.. 278 F.3d 401, 405-06 (4th Cir. 2002)).

Therefore, a motion for judgment on the pleadings "should only be granted if, after accepting all well-pleaded allegations in the plaintiffs complaint as true and drawing all reasonable factual inferences from those facts in the plaintiffs favor, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief."

Drager v. PLIVA USA. Inc.. 741 F.3d 470, 474 (4th Cir. 2014) (quoting Edwards v. City of Goldsboro. 178 F.3d 231, 244 (4th Cir. 1999)); see Booker v. Peterson Cos.. 412 Fed.App'x 615, 616 (4th Cir. 2011) ("In order to survive a motion for judgment on the pleadings, the complaint must contain sufficient facts 'to raise a right to relief above the speculative level' and 'state a claim to relief that is plausible on its face.'" (quoting Bell Atl. Corp. v. Twombly. 550 U.S. 544, 555 (2007))).

         But, motions to dismiss and motions for judgment on the pleadings are not identical: '"[u]nlike on a Rule 12(b)(6) motion ... on a Rule 12(c) motion the [C]ourt may consider the Answer as well.'" Mendenhall. 856 F.Supp.2d at 724 (brackets and ellipsis in original) (quoting Alexander v. City of Greensboro. No. 1:09-CV-293, 2011 WL 3360644, at *2 (M.D. N.C. Aug. 3, 2011)). "The 'factual allegations in the [A]nswer are taken as true to the extent they have not been denied or do not conflict with the [C]omplaint."' Id. (brackets in original) (quoting Farmer v. Wilson Hous. Auth., 393 F.Supp.2d 384, 386 (E.D. N.C. 2004)). Moreover, "[i]n 'determining a motion for judgment on the pleadings, the [C]ourt may consider documents incorporated by reference into the pleadings.'" Id. (second brackets in original) (quoting Farmer. 393 F.Supp.2d at 386). However, "[i]f, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56." A. S. Abell Co. v. Baltimore Typographical Union No. 12. 338 F.2d 190, 193 (4th Cir. 1964) (quoting Fed.R.Civ.P. 12(c)). The decision to exclude matters outside the pleadings is "discretionary with the court." Id.

         Should the court consider matters outside the pleadings, the motion for judgment on the pleadings may be treated as a motion for summary judgment. Pursuant to Federal Rule of Civil Procedure 56(a), the court must "grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett. 477 U.S. 317, 322 (1986); Glynn v. EDO Corp.. 710 F.3d 209, 213 (4th Cir. 2013). When making this determination, the court should consider "the pleadings, depositions, answers to interrogatories, and admissions on file, together with . . . [any] affidavits" filed by the parties. Celotex. 477 U.S. at 322. Whether a fact is material depends on the relevant substantive law. Anderson v. Liberty Lobby. Inc.. 477 U.S. 242, 248 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Li (citation omitted). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex. 477 U.S. at 323. If that burden has been met, the non-moving party must then come forward and establish the specific material facts in dispute to survive summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp.. 475 U.S. 574, 586-87 (1986).

         In determining whether a genuine issue of material fact exists, the court views the facts and draws all reasonable inferences in the light most favorable to the non-moving party. Glynn. 710 F.3d at 213 (citing Bonds v. Leavitt. 629 F.3d 369, 380 (4th Or. 2011)). Indeed, "[i]t is an 'axiom that in ruling on a motion for summary judgment, the evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.'" McAirlaids. Inc. v. Kimberly-Clark Corp.. No. 13-2044, 2014 WL 2871492, at *1 (4th Cir. June 25, 2014) (internal alteration omitted) (citing Tolan v. Cotton. 134 S.Ct. 1861, 1863 (2014) (per curiam)). Moreover, "[credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ." Anderson. 477 U.S. at 255. However, the non-moving party "must set forth specific facts that go beyond the 'mere existence of a scintilla of evidence, '" Glynn. 710 F.3d at 213 (quoting Anderson, 477 U.S. at 252), and show that "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Res. Bankshares Corp. v. St. Paul Mercury Ins. Co.. 407 F.3d 631, 635 (4th Cir. 2005) (quoting Anderson. 477 U.S. at ...


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