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Zen42 LLC v. Washington and Lee University

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

October 10, 2017

ZEN42 LLC, Plaintiff,
v.
Washington and Lee University. Defendant.

          MEMORANDUM OPINION

          NORMAN K. MOON UNITED STATES DISTRICT JUDGE.

         This diversity case involves a contract dispute between the supplier of water treatment systems, Plaintiff ZEN42, LLC (“Zen42”) and a purchaser, Defendant Washington and Lee University (“W&L”). Zen42 asserts a single breach of contract count based on two theories- that W&L prematurely terminated the contract on May 19, 2016 and that it failed to make monthly payments to Zen42 after that date. (Complaint ¶¶ 30-31). Zen42 now seeks judgment on the pleadings, claiming W&L's answer to the Complaint admitted facts that prove W&L's liability as a matter of law. But the pleadings construed in W&L's favor do not entitle Zen42 to judgment, so the motion will be denied.

         STANDARD OF REVIEW

         Federal Rule of Civil Procedure 12(c) permits a party to “move for judgment on the pleadings” after “the pleadings are closed.” “The federal courts have followed a fairly restrictive standard in ruling on motions for judgment on the pleadings” because “hasty or imprudent use of this summary procedure by the courts violates the policy in favor of ensuring to each litigant a full and fair hearing on the merits of his or her claim or defense.” 5C Wright and Miller et al., Federal Practice and Procedure § 1368 (3d ed. Westlaw). In one sense, a Rule 12(c) motion is the mirror image of a Rule 12(b) motion. Whereas a defendant moves to dismiss under Rule 12(b) after the plaintiff files a complaint, Rule 12(c) affords the plaintiff a chance to obtain judgment after the defendant files his answer.[1]

         A “party moving for a judgment on the pleadings impliedly admits [for purposes of the motion] the truth of its adversary's allegations and the falsity of its own assertions that have been denied by that adversary.” 5C Wright and Miller et al., Federal Practice and Procedure § 1370 (3d ed.); see Volvo Const. Equip. N. Am., Inc. v. CLM Equip. Co., Inc., 386 F.3d 581, 588 n.4 (4th Cir. 2004) (noting that facts are viewed on a motion for judgment on the pleadings “in the light most favorable to the nonmoving party”). So when “the plaintiff moves for judgment on the pleadings, the motion should be granted if, on the undenied facts alleged in the complaint and assuming as true all the material allegations of fact in the answer, the plaintiff is entitled to judgment as a matter of law.” Walker v. Liberty Mut. Ins. Co., No. 4:16-CV-01388-RBH, 2017 WL 1020884, at *1 (D.S.C. Mar. 16, 2017); see Smurfit-Stone Container Enterprises, Inc. v. Nat'l Interstate Ins. Co., No. 3:08CV093-HEH, 2008 WL 4153762, at *4 (E.D. Va. Sept. 5, 2008); see, e.g., A. S. Abell Co. v. Baltimore Typographical Union No. 12, 338 F.2d 190, 192-93 (4th Cir. 1964) (affirming plaintiff's motion for judgment “since the pleadings raised no issue of fact”). Accordingly, the Court first reviews the allegations in Zen42's complaint before considering them vis-à-vis the answer.

         THE COMPLAINT AND ATTACHMENTS

         Zen42 alleges that, in September 2012, it and W&L entered into a Water Services Agreement, or WSA, which Zen42 attached to the Complaint. (Complaint ¶¶ 5-6). Amendments to the WSA were made on March 13, 2013, and June 30, 2015. (Id. ¶ 5). Zen42 asserts that the “WSA constitutes an enforceable contract” between the parties. Many of Zen42's allegations consist of quotations from the purported contract.

         The WSA had a 60-month term beginning on July 1, 2014. (Id. ¶¶ 7-8). Zen42 quotes § 8(b)(ii), which gave Zen42 60 days to correct noncompliance with the WSA's “minimum performance standard.” (Id. ¶¶ 10). After the 60-day cure period, W&L was permitted to terminate the WSA with 20-days written notice. (Id. ¶ 11).

         Zen42 asserts W&L terminated the contract by letter on May 19, 2016. (Complaint ¶ 12). The letter is attached to the Complaint. (Dkt. 1-2 at ECF 2). It first thanks Zen42 for providing two documents from April 2016, although those documents are not presently in the record. (Id.). It then recounts issues dating back to April 2014 with “seed crystals” in Zen42's water treatment system. (Id.). For instance, the letter references and attaches an email where a representative of Zen42 acknowledged the system was not performing well. (Id. at ECF 2, 12). The letter concludes by stating “it's in the best interest of the University to discontinue our reliance on this system for condenser water management. To that end, this letter constitutes written notice of termination of our contract with Zen42LLC.” (Id. at ECF 2; Complaint ¶ 14).

         Zen42 alleges W&L did not have grounds to terminate the contract, and thus the termination was a breach. (Complaint ¶ 15). It quotes the WSA's “minimum performance standard” as stating that “[c]ycles of concentration will be controlled at a minimum set point of 1250 PPM TDS.” (Id. ¶ 17). Zen42 does not explain this jargon, but it does allege conclusorily that “the presence or absence of ‘seed crystals'” is nowhere mentioned in the WSA. (Id. ¶ 18).

         Additionally, Zen42 contends W&L breached the contract by failing to allow Zen42 a 60-day cure period and by failing provide the requisite 20-days written notice of termination after the cure period. (Complaint ¶¶ 19-20).

         Finally, Zen42 alleges that W&L “made no further monthly payments” to Zen42 after the May 19, 2016 letter, and that the failure to do so was an event of default under the WSA. (Complaint ¶¶ 24-25).

         THE ANSWER

         W&L's answer denies most of these allegations. Three admissions are key ...


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