Idrive Logistics LLC v. Integracore LLC ( 2018 )

2018 UT App 40THE UTAH COURT OF APPEALS
IDRIVE LOGISTICS LLC,
Appellee,
v.
INTEGRACORE LLC,
Appellant.
Amended Opinion1
No. 20150857-CA
Filed March 15, 2018
Fourth District Court, Provo Department
The Honorable Fred D. Howard
No. 130400386
Jeffery S. Williams, Edwin C. Barnes, Aaron D.
Lebenta, and Bryan L. Quick, Attorneys
for Appellant
David R. Parkinson, Christopher B. Sullivan, and
Ronald F. Price, Attorneys for Appellee
JUDGE DAVID N. MORTENSEN authored this Amended Opinion, in
which JUDGES GREGORY K. ORME and MICHELE M. CHRISTIANSEN
concurred.
MORTENSEN, Judge:
¶1 iDrive Logistics LLC contracted with IntegraCore LLC to
provide IntegraCore with services designed to optimize its
1. This Amended Opinion replaces the Opinion in Case No.
20150857-CA issued on December 7, 2017. Paragraphs 69 and 70
have been revised to specifically address issues IntegraCore
raised in a petition for rehearing, and we hereby grant the
petition to that limited extent. See Utah R. App. P. 35(j). The
petition for rehearing is denied in all other respects.
iDrive Logistics v. IntegraCore
shipping and transportation costs. iDrive sued IntegraCore for
breach of the agreement and IntegraCore counterclaimed. Both
iDrive and IntegraCore alleged breach of contract and breach of
the covenant of good faith and fair dealing. On competing
motions for partial summary judgment, the district court
concluded that iDrive performed under the contract and
IntegraCore did not. Accordingly, the court granted summary
judgment in favor of iDrive and denied IntegraCore’s motion for
summary judgment. IntegraCore, on interlocutory appeal,
challenges those decisions. We affirm in part and reverse in part.
BACKGROUND
¶2 This saga of business contractual dysfunction began when
iDrive and IntegraCore entered into a 2009 agreement. Soon
thereafter, each claimed the other had breached the agreement
and the impasse was resolved by way of a new agreement in
2010. Another dispute arose shortly thereafter that was resolved
by yet a third agreement in 2011 (the Agreement)—the subject of
this interlocutory appeal. Once again each side claims breach
and so the complicated history of the Agreement and the parties’
attempts to operate under the Agreement must be understood.
The Parties
¶3 IntegraCore is a logistics company that provides supply
chain management, warehousing, packaging, and distribution
services to its clients. iDrive is a consulting firm that uses its
industry expertise to help reduce its clients’ shipping costs.
The Lawsuit
¶4 iDrive filed this action in March 2013, alleging, among
other things, (1) “IntegraCore failed to flow all significant
logistics decisions through iDrive”; (2) “IntegraCore failed to
timely provide iDrive with information regarding changes in its
arrangements with Carriers”; (3) “IntegraCore failed to
20150857-CA 2 2018 UT App 40iDrive Logistics v. IntegraCore
compensate iDrive for changes in its arrangements with Carriers
as required by the terms of [the Agreement]”; and (4)
“IntegraCore diverted USPS shipments that were required to be
made on the iDrive negotiated USPS contract, and instead
secretly and without iDrive’s knowledge or consent made those
shipments using a different USPS contract rate.”
¶5 IntegraCore filed an answer and counterclaim in May
2013, raising claims of breach of contract and breach of the
implied covenant of good faith and fair dealing based on
“iDrive’s failure to fulfill its contractual obligations as Vice
President . . . of Logistics for IntegraCore and to provide pricing
optimization services for IntegraCore.”
The Agreement
¶6 Even though the parties had experienced significant
difficulties, or perhaps because of them, the Agreement provides
for substantial entanglement between the two entities. Of note is
a requirement in the Agreement that iDrive’s president, or
another mutually agreed upon person, be appointed as vice
president of logistics at IntegraCore. The obligations for iDrive’s
designee as the vice president of logistics were to spend two
days in IntegraCore’s operations learning logistics practices; help
recruit a director of logistics; provide recommendations for
logistics changes; work directly with carriers regarding carrier
agreements, services, and changes; conduct two additional visits
over the next two quarters after the Agreement was executed;
and monitor transportation cost trends.
¶7 The Agreement further outlines the “pricing optimization
services” that iDrive contracted to provide to IntegraCore,
referred to in the Agreement as CUSTOMER:
As VP of logistics, iDrive will also manage the
contract negotiation/optimization process with
Carrier(s), as well as the contract maintenance
20150857-CA 3 2018 UT App 40iDrive Logistics v. IntegraCore
process, on CUSTOMER’S behalf. This process
includes collecting and analyzing CUSTOMER’S
current parcel shipping data, pricing and Carrier
contracts; establishing negotiation parameters with
the CUSTOMER; issuing Request For Proposals
(RFP) to the Carriers; collecting and analyzing the
Carriers’ responses to the RFP; negotiating pricing,
terms and conditions with the Carriers; presenting
analysis on Carrier proposals to the CUSTOMER.
Final selection of a Carrier(s) is the CUSTOMER’S
decision.
Although the final selection of carriers rests with IntegraCore,
the Agreement also provides that “[a]ll significant logistics
decisions will flow through iDRIVE for review.”
¶8 The Agreement also contains a compensation provision,
which includes when and how iDrive’s compensation was to be
calculated and paid:
iDRIVE shall receive a retainer of two thousand
one hundred and eighty-five dollars ($2,185) per
month for seven (7) months beginning February 1,
2011. iDRIVE shall receive thirty-eight percent
(38%) of savings that the CUSTOMER derives from
iDRIVE’S optimization service. All improvements
made to any of CUSTOMER’s contract(s) with
Carrier(s) between the signature date on this
Agreement and the end of the Agreement term are
considered to be the result of iDRIVE’S
optimization service. For the purposes of
calculating savings from iDRIVE’S optimization
efforts with the Carrier(s), iDRIVE and
CUSTOMER agree that CUSTOMER’S current
rates, incentives and terms will be used as the
benchmark. CUSTOMER’S benchmark data will be
used as the basis for calculating savings
20150857-CA 4 2018 UT App 40iDrive Logistics v. IntegraCore
attributable to iDRIVE’S Pricing Optimization
service.
¶9 Compensation is also addressed in two other sections of
the Agreement—the “General” section and the “Agreement
Term” section. The General section states,
Savings attributed to iDRIVE’S contract negotiation
with the carriers will be determined by comparing
incentives currently being offered to CUSTOMER
under the contract(s) from the Carrier(s) in effect
on the date of this Agreement, less the new
incentives achieved from the Carrier(s) after the
date hereof and will be calculated based on
CUSTOMER’S actual shipping data.
The Agreement Term section states, “Any new Carrier
agreement signed by CUSTOMER during a period of 3 years
after the execution date of this agreement shall be deemed to be
based on iDRIVE’s optimization efforts, whether negotiated
directly with the Carrier(s) by iDRIVE, CUSTOMER or any other
party[.]”2
¶10 The Agreement further provides that “iDrive operates as
an independent contractor and agent, not as an employee of”
IntegraCore. The term of the Agreement is for three years. The
Agreement defines the term “carriers” as including United
Parcel Service (UPS), Federal Express (FedEx), United States
Postal Service (USPS), DHL International (DHL), and “any other
identified local, regional, national, or international carriers.”
2. The compensation provision, “General” provision, and
“Agreement Term” provision are worded differently but are
materially identical; each section provides that new carrier
agreements signed after the execution of the Agreement were to
be used to calculate iDrive’s commissions.
20150857-CA 5 2018 UT App 40iDrive Logistics v. IntegraCore
¶11 The Agreement also contains an integration clause and an
exculpatory clause. The integration clause provides:
This Agreement, including the Attachments hereto
and iDRIVE policies referenced herein, constitutes
the entire Agreement between iDRIVE and
CUSTOMER concerning the subject hereof and
supersedes all prior and contemporaneous
Agreements between the parties, whether written
or oral. This Agreement may not be waived,
repealed, altered or amended in whole or in part
except by an instrument in writing executed by
authorized representatives of each of the parties.
The exculpatory clause provides, in part:
Notwithstanding anything else in this Agreement
or otherwise, iDRIVE will not be liable with respect
to any subject matter of this Agreement under any
contract, negligence, strict liability or other legal or
equitable theory (I) for any amounts or (II) for any
punitive, special, incidental or consequential
damages or lost data or (III) for costs of
procurement of substitute goods, technology or
services or (IV) for loss or corruption of data or
interruption of use.
The History of Performance/Non-performance
¶12 IntegraCore appointed Stephen Chase (iDrive President)
as IntegraCore’s vice president of logistics. In January 2011,
Shaun Rothwell (iDrive CEO), sent Ted Broman (IntegraCore
CEO) a resume for Thad Haderlie (Director of Logistics), whom
IntegraCore then hired as its director of logistics.
¶13 iDrive President spent two days in meetings at
IntegraCore’s office in February 2011. Included in those various
20150857-CA 6 2018 UT App 40iDrive Logistics v. IntegraCore
meetings were meetings between iDrive President, Director of
Logistics, and representatives from UPS and FedEx. Despite the
Agreement’s requirement that iDrive President make at least
two additional visits, he did not visit IntegraCore’s office again
after the February 2011 meetings. Also in February 2011, iDrive
sent a memorandum to IntegraCore analyzing IntegraCore’s
agreements with UPS and FedEx and outlining strategies for
improving IntegraCore’s contracts with these carriers.
¶14 Between February 2011 and May 2011, iDrive President
communicated with a representative from FedEx and a
representative from UPS on multiple occasions. During these
communications, iDrive President discussed the respective
carriers’ contracts with IntegraCore. The FedEx representative
indicated to iDrive President that IntegraCore’s shipping
volumes with FedEx did not merit a change to IntegraCore’s
agreement with FedEx.
¶15 In May 2011, iDrive President emailed a memorandum to
the UPS representative requesting price adjustments and
requesting that UPS provide a proposal to change surcharges
and discounts offered to IntegraCore. Whether this request
constitutes a Request for Proposal (RFP), which the Agreement
required iDrive to submit as part of its pricing optimization
services, is disputed. The UPS representative testified that she
interpreted the email as requesting “incentive changes” rather
than an RFP because the request lacked the formality normally
present in an RFP.3 The UPS representative acknowledged that
the memorandum indeed requested improvements on UPS
pricing for IntegraCore and specifically requested a proposal in
response. In June 2011, the UPS representative sent an email to
iDrive President informing him that “based upon the
3. In contrast, the FedEx representative testified generally about
RFPs, saying that an RFP can be very simple and “can come in
the form of any mode of communication.”
20150857-CA 7 2018 UT App 40iDrive Logistics v. IntegraCore
characteristics of [IntegraCore’s] business, . . . [UPS] would not
be making any changes to their current agreement.”
¶16 Around the same time, Director of Logistics requested
that iDrive CEO, not iDrive President, be Director of Logistics’s
point of contact between himself and iDrive. As a result, iDrive
CEO had several meetings with Director of Logistics, some of
which took place at IntegraCore.4 Accordingly, iDrive stepped
back to allow Director of Logistics to “run point” on those
negotiations.
¶17 In July 2011, after Director of Logistics missed a regularly
scheduled phone call with iDrive, iDrive President asked
Director of Logistics for an in-person meeting between Director
of Logistics and an iDrive employee to receive an update on the
status of Director of Logistics’s progress with UPS and FedEx
regarding the requested price adjustments. In October 2011,
iDrive President sent another email to Director of Logistics
requesting to “catch up” on any progress with UPS and FedEx
and offering to help facilitate progress.
¶18 Director of Logistics stated that, in October or November
2011, he informed IntegraCore CEO that he was going to contact
UPS and FedEx to see if there were any negotiations occurring
on IntegraCore’s contracts. The UPS representative testified that,
in the “first . . . five or ten days of October,” she had a
conversation with Director of Logistics in which he asked, “My
contract is three years old, c’mon my business has grown
4. iDrive President, iDrive CEO, and an iDrive employee also
testified that Director of Logistics informed iDrive that he would
take the lead in the negotiations with UPS. IntegraCore disputes
this fact but, other than making legal arguments and pointing
out different dates that the witnesses testified that Director of
Logistics made the request, IntegraCore does not point to any
facts directly contradicting that the request was made.
20150857-CA 8 2018 UT App 40iDrive Logistics v. IntegraCore
substantially, what can you do about that?” Director of
Logistics’s request resulted in a new UPS contract effective at the
end of October 2011. While IntegraCore timely paid iDrive the
retainer amount, it did not compensate iDrive for any savings
realized under its new UPS contract.
¶19 IntegraCore did not complain to iDrive about its
performance in 2011 or 2012. After October 2011, iDrive
continued to perform auditing services under the Agreement
through July 2013.
¶20 IntegraCore also continued to use iDrive’s USPS account
to ship packages between October 2011 and August 2013.
However, in early 2012, IntegraCore began using a different
account operated by Move Method, another shipping broker, to
ship items via USPS. IntegraCore did not inform iDrive of its
decision to use the Move Method account, nor did IntegraCore
CEO believe he needed to involve iDrive to determine which
account to use. IntegraCore claims the underlying carrier
contract with USPS was unaffected by a change of use of the
account. When iDrive CEO asked Director of Logistics about the
decreased volumes in USPS shipments, Director of Logistics
mischaracterized the situation, telling iDrive CEO that the
decrease resulted from customers pulling their USPS volumes
from IntegraCore.
The Partial Summary Judgment Rulings
¶21 Both parties filed motions for partial summary judgment.
iDrive filed a motion for partial summary judgment on its claims
of breach of contract and breach of good faith and fair dealing,
excluding its claims pertaining to the USPS contracts from its
motion. IntegraCore sought summary judgment in its favor on
iDrive’s motion and also sought summary judgment on iDrive’s
USPS contract claims. iDrive also moved for partial summary
judgment against IntegraCore’s breach of contract and breach of
good faith and fair dealing counterclaims.
20150857-CA 9 2018 UT App 40iDrive Logistics v. IntegraCore
¶22 The district court heard argument and issued its rulings
from the bench. Those rulings were memorialized in three
orders. When IntegraCore objected to the form of the orders, the
district court issued an eleven-page ruling clarifying the court’s
earlier decisions. In the first order, the district court granted
iDrive’s motion regarding breach of contract and breach of the
covenant of good faith and fair dealing arising from the 2011
UPS Agreement.5 The district court determined that IntegraCore
had breached the Agreement by negotiating and entering into
the October 2011 carrier contract with UPS in secret and by
failing to remit thirty-eight percent of the savings that had been
realized by entering into the new contract. The district court
determined that no genuine issues of material fact existed,
explaining that the Agreement precludes IntegraCore from
entering into any agreement with any carrier without iDrive’s
knowledge and that IntegraCore did not respond to iDrive’s
inquiries about IntegraCore’s contact with UPS and did not
otherwise involve iDrive in the discussions that lead to the new
UPS contract. The district court further determined that the
Agreement “unambiguously requires [IntegraCore] to pay
[iDrive] for 38% of savings achieved with any new carrier
agreement entered into during the term of [the Agreement],
regardless of whether [iDrive] participates in the negotiation of
such new agreement.” (Emphasis in original.)
¶23 Specifically responding to IntegraCore’s assertion that
iDrive failed to perform under the Agreement, the district court
stated: “[T]he Court finds[6] that as of the date of [IntegraCore’s]
5. The district court made no distinction and provided no
separate analysis between the breach of contract and breach of
the covenant of good faith and fair dealing, and therefore we
treat them as combined or redundant in this decision.
6. Of course, on summary judgment the district court was not
actually making findings of fact from disputed evidence. Any
(continued…)
20150857-CA 10 2018 UT App 40iDrive Logistics v. IntegraCore
breaches of contract in October, 2011, iDrive had either
performed, or was in the process of performing, as required by
the terms of [the Agreement].” The district court further rejected
IntegraCore’s defense for its nonperformance because the
Agreement “did not provide that time was of the essence for
performance,” that IntegraCore “was . . . obligated to provide
notice to [iDrive]” if it “believed that time had expired for
[iDrive] to perform,” and that IntegraCore “continued to accept
[iDrive’s] performance . . . long after [IntegraCore] now asserts it
had a known excuse for nonperformance.” Thus, the district
court concluded that IntegraCore’s failure to provide notice and
its continued acceptance of performance constituted
independent bases “to reject IntegraCore’s argument of lack of
performance.”
¶24 In the second order, the district court granted iDrive’s
motion for partial summary judgment on IntegraCore’s
counterclaims for breach of contract and breach of the covenant
of good faith and fair dealing. Incorporating its ruling on
iDrive’s claim against IntegraCore, the district court concluded
that IntegraCore breached the Agreement. The district court
further determined, “Under the first to breach rule,
[IntegraCore’s] breaches of [the Agreement] relieved [iDrive] of
further obligations . . . and [IntegraCore’s] claims are barred for
this independent reason.” The court also concluded that, as of
October 2011, iDrive had “performed, or was in the process of
performing” under the Agreement.
(…continued)
dispute of material fact would have required the court to deny
the summary judgment motion to which the factual dispute
pertained. Despite its choice of verb, the district court was
merely stating its conclusions as to what the undisputed
evidence showed.
20150857-CA 11 2018 UT App 40iDrive Logistics v. IntegraCore
¶25 As an independent and alternative basis upon which to
grant summary judgment, the district court concluded that “the
language in the liability limitation [section of the Agreement] is
unambiguous and bars [IntegraCore’s] counterclaims for breach
of contract and breach of the covenant of good faith and fair
dealing.”
¶26 Next, in the district court’s third order, the court denied
IntegraCore’s cross-motion for partial summary judgment on
iDrive’s contract claims, incorporating “the same rationale set
forth in the Order Granting [iDrive’s] Motion for Partial
Summary Judgment Regarding Breach of Contract and Breach of
Covenant of Good Faith.” Although IntegraCore had expressly
raised the issue of iDrive’s breach of contract claims related to
using an alternative account to facilitate an underlying USPS
contract, the district court’s order is silent on that issue.
¶27 Finally, the district court issued a ruling on IntegraCore’s
objection to the form of the orders wherein it also clarified its
previous rulings. In that order, the district court made clear that
“[t]he question of causation in connection with damages was not
ruled on” and that “[c]ausation needs to be proven along with
damages at trial.” Further, while explaining its interpretation of
the word “derives,” a term found in the compensation
provisions of the Agreement, the court stated, “Since all
agreements entered into by IntegraCore are deemed to be the
work of iDrive, the Court reads the Agreement as allowing
iDrive to collect 38% of savings from all contract improvements
regardless of whether or not iDrive actually performed optimization
services.” (Emphasis added.) And explaining its conclusions
regarding iDrive’s performance of its obligations as
IntegraCore’s vice president of logistics, the court pointed out
that iDrive “made visits” and that “the purposes of the
additional visits were fulfilled.” As to the USPS account issue the
district court stated:
20150857-CA 12 2018 UT App 40iDrive Logistics v. IntegraCore
iDrive’s claim with respect to USPS damages was
not raised as part of its motion for summary
judgment. IntegraCore filed a motion for summary
judgment incorporating a claim related to USPS.
IntegraCore’s motion for summary judgment was
denied, effectively preserving the issue for future
litigation and trial.
¶28 IntegraCore filed a petition for interlocutory appeal from
the summary judgment orders and the order on IntegraCore’s
objection to the form of the summary judgment orders, which
we granted.
ISSUES AND STANDARDS OF REVIEW
¶29 The issue before us is whether the district court correctly
granted iDrive’s motions for partial summary judgment and
denied IntegraCore’s motion for partial summary judgment. The
primary questions presented by this appeal are (1) whether the
district court correctly interpreted the Agreement between the
parties, refusing to consider external evidence of the parties’
intent, and (2) whether disputed material facts exist that
preclude summary judgment on the various motions.
¶30 “Questions of contract interpretation which are confined
to the language of the contract itself are questions of law, which
we review for correctness.” Mellor v. Wasatch Crest Mutual Ins.
Co., 2009 UT 5, ¶ 7, 201 P.3d 1004. “An appellate court reviews a
[district] court’s legal conclusions and ultimate grant or denial of
summary judgment for correctness, and views the facts and all
reasonable inferences drawn therefrom in the light most
favorable to the nonmoving party.” Orvis v. Johnson, 2008 UT 2,
¶ 6, 177 P.3d 600 (citations and internal quotation marks
omitted). Summary judgment should be granted only “if the
moving party shows that there is no genuine dispute as to any
material fact and the moving party is entitled to judgment as a
20150857-CA 13 2018 UT App 40iDrive Logistics v. IntegraCore
matter of law.” Utah R. Civ. P. 56(a). “[I]t is not true that once
both parties move for summary judgment the court is bound to
grant it to one side or another.” Diamond T Utah, Inc. v. Travelers
Indem. Co., 441 P.2d 705, 706 (Utah 1968). “Rather, cross-motions
[for summary judgment] may be viewed as involving a
contention by each movant that no genuine issue of fact exists
under the theory it advances, but not as a concession that no
dispute remains under the theory advanced by its adversary.”
Wycalis v. Guardian Title of Utah, 780 P.2d 821, 825 (Utah Ct. App.
1989).
ANALYSIS
I. Interpretation of the Agreement
¶31 As a preliminary matter, it is necessary to bring
IntegraCore’s contentions into focus. IntegraCore frames its
appeal by asserting that the district court concluded that iDrive
was not required to perform at all under the contract.
IntegraCore misapprehends the district court’s ruling; the
district court did not rule that the Agreement allowed iDrive to
do nothing. In actuality, the district court expressly held that
iDrive “either performed or was in the process of performing its
pricing optimization obligations,” and this was the basis of the
court’s ruling on whether iDrive performed under the contract. 7
7. In its ruling on IntegraCore’s objections to the form of its
summary judgment orders, the district court listed the questions
that IntegraCore submitted and provided clarification on each
one. Each time IntegraCore asked for clarification on iDrive’s
obligations, the court responded that iDrive “had either
performed, or was in the process of performing, as required by
the terms of [the Agreement],” or that iDrive had “fulfilled its
obligations.” When directly asked about iDrive’s obligations, the
(continued…)
20150857-CA 14 2018 UT App 40iDrive Logistics v. IntegraCore
Thus, the district court did not relieve iDrive from any duty to
perform.
¶32 Instead, the district court applied a plain-reading analysis
to a fully integrated contract. As referenced above, the district
court interpreted the compensation clause of the Agreement,
which provides:
iDRIVE shall receive a retainer of two thousand
one hundred and eighty-five dollars ($2,185) per
month for seven (7) months beginning February 1,
2011. iDrive shall receive thirty-eight percent (38%)
of savings that the CUSTOMER derives from
iDRIVE’S optimization service. All improvements
made to any of CUSTOMER’s contract(s) with
Carrier(s) between the signature date on this Agreement
and the end of the Agreement term are considered to be
the result of iDRIVE’S optimization service. For the
purposes of calculating savings from iDRIVE’S
optimization efforts with the Carrier(s), iDRIVE
and CUSTOMER agree that CUSTOMER’S current
rates, incentives and terms will be used as the
benchmark. CUSTOMER’S benchmark data will be
used as the basis for calculating savings
attributable to iDRIVE’S Pricing Optimization
service.
(Emphasis added.)
¶33 The district court focused on two sentences in this
provision. The first provides that iDrive will receive thirty-eight
percent of “savings” that IntegraCore “derives” from iDrive’s
(…continued)
district court never stated that iDrive was under no obligation to
perform.
20150857-CA 15 2018 UT App 40iDrive Logistics v. IntegraCore
optimization services. Second, in calculating “savings” from
iDrive’s efforts “[a]ll” improvements to IntegraCore’s Carrier
contract “are considered to be the result of iDRIVE’S
optimization service.” The district court construed these
provisions to mean that, during the term of the Agreement, if
IntegraCore experienced any savings on Carrier contracts, those
savings would be deemed to have been derived from iDrive’s
services whether or not the savings actually were the result of
iDrive’s efforts.
¶34 While explaining its interpretation of the word “derives,”
the district court stated, “Since all agreements entered into by
IntegraCore are deemed to be the work of iDrive, the Court
reads the Agreement as allowing iDrive to collect 38% of savings
from all contract improvements regardless of whether or not iDrive
actually performed optimization services.” (Emphasis added.) The
district court’s explanation of the term “derives” says nothing of
iDrive’s overall obligations to perform under the Agreement but
demonstrates that iDrive’s compensation is calculated from all
savings during the term of the Agreement, not only savings that
are the clear result of iDrive’s services. The district court did not
thereby relieve iDrive of its duties to perform under the contract,
and IntegraCore’s insistence on appeal that the district court did
so is needlessly distracting. Because the district court did not
relieve iDrive of the obligation to perform, we decline to
consider IntegraCore’s arguments that are premised on that
interpretation.8
8. These arguments are that iDrive owed fiduciary obligations,
that the district court should have entertained evidence of the
parties’ intent for the Agreement, and that the court’s
interpretation rendered the optimization provisions illusory.
IntegraCore incorporates its fiduciary-duties argument
elsewhere in its appeal, which we address below. See infra
¶¶ 68–70.
20150857-CA 16 2018 UT App 40iDrive Logistics v. IntegraCore
¶35 Even so, embedded within IntegraCore’s misapprehension
of the district court’s ruling is the general contention that the
Agreement must be understood to mean that iDrive is paid only
for contract improvements that it clearly generated through its
performance and that we must consider the parties’ after-the-fact
testimony to understand the intent of the parties. We disagree
and see no error in the district court’s interpretation of the
Agreement.
¶36 “In interpreting a contract, we look to the writing itself to
ascertain the parties’ intentions, and we consider each contract
provision . . . in relation to all of the others, with a view toward
giving effect to all and ignoring none.” WebBank v. American Gen.
Annuity Service Corp., 2002 UT 88, ¶ 18, 54 P.3d 1139 (omission in
original) (brackets, citation, and internal quotation marks
omitted). “If the language within the four corners of the contract
is unambiguous, the parties’ intentions are determined from the
plain meaning of the contractual language, and the contract may
be interpreted as a matter of law.” Id. ¶ 19 (citation and internal
quotation marks omitted). No ambiguity exists where “the
language of the contract . . . [is] not susceptible to contrary,
tenable interpretations.” See Daines v. Vincent, 2008 UT 51, ¶ 30,
190 P.3d 1269 (citation and internal quotation marks omitted).
“When the existence of a contract and the identity of its parties
are not in issue and when the contract provisions are clear and
complete, the meaning of the contract can appropriately be
resolved by the court on summary judgment.” Morris v.
Mountain States Tel. & Tel. Co., 658 P.2d 1199, 1201 (Utah 1983).
¶37 Determining which terms fall within the four corners of
the contract is a straightforward task when a contract contains
an integration clause, as is the case here. As our supreme court
explained in Daines:
Consistent with our line of contract analysis cases,
we first determine whether or not [the contract]
constitutes an integrated agreement before
20150857-CA 17 2018 UT App 40iDrive Logistics v. IntegraCore
considering whether the evidence offered by [a
party] supports a finding of facial ambiguity.
2008 UT 51, ¶ 22. The Daines court further explained that
extrinsic evidence “is not admissible on the question of
integration where the contract at issue contains a clear
integration clause.” Id. (quoting Tangren Family Trust v. Tangren,
2008 UT 20, ¶ 19, 182 P.3d 326). The Agreement in this case
contains a clear integration clause. Thus, any arguments
regarding ambiguity are properly limited to the construction of
ambiguous terms used in the integrated contract.
¶38 The Agreement imposes obligations on iDrive. These
obligations include managing contract negotiations and
optimization processes with carriers, performing auditing
services, analyzing IntegraCore’s shipping data, issuing RFPs to
carriers, working with IntegraCore’s designee as vice president
of logistics and so forth. The Agreement also explains what
triggers iDrive’s compensation:
All improvements made to any of CUSTOMER’s
contract(s) with Carrier(s) between the signature
date on this Agreement and the end of the
Agreement term are considered to be the result of
iDRIVE’S optimization service.
Similar language appears in two other places in the four-page
agreement. The “Agreement Term” provision states,
Any new Carrier agreement signed by
CUSTOMER during a period of 3 years after the
execution date of this agreement shall be deemed
to be based on iDRIVE’s optimization efforts,
whether negotiated directly with the Carrier(s) by
iDRIVE, CUSTOMER or any other party.
The “General” provision term states,
20150857-CA 18 2018 UT App 40iDrive Logistics v. IntegraCore
Savings attributed to iDRIVE’S contract negotiation
with the carriers will be determined by comparing
incentives currently being offered to CUSTOMER
under the contract(s) from the Carrier(s) in effect
on the date of this Agreement, less the new
incentives achieved from the Carrier(s) after the
date hereof.
The Agreement could not be more clear; during the Agreement
term, no matter how a new carrier agreement came into being
that new carrier agreement’s existence would be “deemed”
and/or “considered” the result of iDrive’s services. In retrospect
these provisions appear quite prescient.
¶39 IntegraCore fails to show how iDrive’s obligations and
the payment terms under the Agreement are incompatible or
ambiguous, which would necessitate the analysis of evidence
outside of the four corners of the document. IntegraCore’s
argument ignores the scenario where iDrive does perform its
obligations and IntegraCore still finds its way into a new carrier
contract without iDrive’s involvement. Under that scenario, the
Agreement unambiguously provides, in multiple provisions,
that iDrive will be paid for that contract improvement. Likewise,
the fact that a surprise carrier contract is considered “the result
of iDRIVE’S optimization service” does not itself mean that
iDrive can shirk its duty to perform; IntegraCore could challenge
iDrive’s right to commissions if iDrive signed the Agreement,
went AWOL for the contract term, and subsequently claimed a
right to commissions on new carrier contracts created during the
term of the Agreement. IntegraCore’s interpretation effectively
changes multiple key terms of the Agreement that are otherwise
internally consistent and therefore is not a “tenable”
interpretation. See Daines, 2008 UT 51, ¶ 30 (citation and internal
quotation marks omitted).
¶40 Instead of highlighting an actual contractual ambiguity,
IntegraCore argues that this interpretation is at odds with the
20150857-CA 19 2018 UT App 40iDrive Logistics v. IntegraCore
intentions of the parties as reflected by their after-the-fact
testimony. However, as explained above, supra ¶ 37, where the
court is faced with an integrated document, IntegraCore’s
arguments about extrinsic evidence are limited to construing
contractual ambiguity. Consequently, having determined that
there is no contractual ambiguity within the four corners of the
Agreement, evidence of the parties’ intentions otherwise is
simply irrelevant.
¶41 In light of the plain language of the Agreement, we see no
error in the district court’s interpretation.
II. Partial Summary Judgment Rulings
¶42 We now turn to the district court’s other partial summary
judgment determinations.
¶43 “The court shall grant summary judgment if the moving
party shows that there is no genuine dispute as to any material
fact and the moving party is entitled to judgment as a matter of
law.” Utah R. Civ. P. 56(a). Whether a party performed under a
contract or breached a contract is a question of fact. See Saunders
v. Sharp, 793 P.2d 927, 930–31 (Utah Ct. App. 1990), remanded on
other grounds, 806 P.2d 198 (Utah 1991) (per curiam). We view
“the facts and all reasonable inferences drawn therefrom in the
light most favorable to the nonmoving party.” Orvis v. Johnson,
2008 UT 2, ¶ 6, 177 P.3d 600 (citations and internal quotation
marks omitted). Our supreme court has explained,
In determining whether a factual dispute exists, we
apply an objective standard. The objective standard
asks whether reasonable jurors, properly
instructed, would be able to come to only one
conclusion, or if they might come to different
conclusions, thereby making summary judgment
inappropriate. But where there could be no
reasonable difference of opinion on a question of
20150857-CA 20 2018 UT App 40iDrive Logistics v. IntegraCore
fact in light of the available evidence, the decision
is one of law for the trial judge or for an appellate
court.
Heslop v. Bear River Mutual Ins. Co., 2017 UT 5, ¶ 20, 390 P.3d 314(brackets, citations, and internal quotation marks omitted).
¶44 Here, IntegraCore and iDrive both filed motions for
partial summary judgment, each claiming that the other had
breached the Agreement. The district court made clear that
“[t]he question of causation in connection with damages was not
ruled on” and that “[c]ausation needs to be proven along with
damages at trial.” Therefore, our analysis is limited to the
Agreement and whether it can be said that the terms were
performed as a matter of law.
A. iDrive’s Motion Regarding Breach Arising from the
October 2011 UPS Agreement
¶45 iDrive’s initial motion was quite focused. iDrive sought
partial summary judgment on its claim that IntegraCore had
breached the Agreement by entering into the October 2011 UPS
agreement. The district court concluded that, under the
Agreement, IntegraCore “is precluded from entering into any
agreement with any carrier without [iDrive’s] knowledge,
review and input[.]” Accordingly, the district court first
determined that IntegraCore breached the Agreement by
negotiating and entering into the October 2011 carrier contract
with UPS in secret. Secondly, the court also determined that
IntegraCore breached the Agreement by failing to remit thirty-
eight percent of the savings that had been realized by entering
into the new contract.
¶46 In addition to raising the contract-interpretation
argument as outlined above, which we reject, supra Part I,
IntegraCore also raised other defenses. IntegraCore asserted that
iDrive had failed to perform and therefore was precluded from
20150857-CA 21 2018 UT App 40iDrive Logistics v. IntegraCore
claiming breach. “[P]erformance by the party seeking recovery”
is an essential element for a breach of contract claim. Bair v.
Axiom Design, LLC, 2001 UT 20, ¶ 14, 20 P.3d 388. As part of its
failure-to-perform assertion, IntegraCore maintained that
iDrive’s time to perform had expired. The district court rejected
these defenses and we examine these conclusions in five parts.
¶47 First, we examine the district court’s conclusion that
“iDrive had either performed, or was in the process of
performing, as required by the terms of [the Agreement].”
Second, we review the district court’s conclusion that, since the
contract did not provide that time was of the essence,
IntegraCore could not raise a timeliness defense. Third, we
review the district court’s determination that, if IntegraCore had
believed that iDrive was in breach, IntegraCore could not claim a
breach until a demand for performance had been made. Fourth,
we analyze the district court’s conclusion that IntegraCore’s
defense of nonperformance was lost by continuing to accept
ongoing partial performance. And fifth, we examine other
arguments IntegraCore made in relation to iDrive’s summary
judgment motion on iDrive’s claim that warrant discussion.
1. The District Court’s Determination That iDrive Performed
or Was in the Process of Performing
¶48 As noted above, the Agreement provides certain
obligations that iDrive is required to perform, including issuing
RFPs to carriers, spending two days with IntegraCore learning
its procedures, negotiating with carriers, and providing auditing
services. Supra ¶ 6. We note here that the facts argued in
conjunction with these obligations are material facts because
they are essential to determine whether obligations are
performed in a claim for breach of contract.9 See Alliant
9. This is not to say that any disputed fact that is determinative
of iDrive’s performance of some obligation under the Agreement
(continued…)
20150857-CA 22 2018 UT App 40iDrive Logistics v. IntegraCore
Techsystems, Inc. v. Salt Lake County Board of Equalization, 2012 UT
4, ¶ 31, 270 P.3d 441 (“A disputed fact is material if it affects the
rights or liabilities of the parties.” (citation and internal
quotation marks omitted)); Bair, 2001 UT 20, ¶ 14 (noting that
“performance by the party seeking recovery” and “breach of the
contract by the other party” are elements of a breach of contract
claim).
¶49 First, whether iDrive issued any RFPs to any carriers is a
disputed fact. IntegraCore argues that iDrive never issued any
RFPs to any carriers, noting specifically the UPS representative’s
testimony that she never received an RFP from anyone on behalf
of IntegraCore, and that the email she received from iDrive
President could not be characterized as an RFP but was instead
“a request for incentive changes.” This testimony alone made
this issue a disputed one. See Lucky Seven Rodeo Corp. v. Clark, 755
P.2d 750, 752 (Utah Ct. App. 1988) (“One sworn statement under
oath is all that is needed to dispute the averments on the other
side of the controversy and create an issue of fact, precluding the
entry of summary judgment.”). The UPS representative
(…continued)
is necessarily a material breach of the Agreement. See Cross v.
Olsen, 2013 UT App 135, ¶ 27, 303 P.3d 1030 (“A rescission is not
warranted by a mere breach of contract not so substantial and
fundamental as to defeat the object of the parties in making the
agreement.” (citation and internal quotation marks omitted)).
Further, to conclude on summary judgment that any particular
failure to perform constitutes a material breach is also
problematic because it is a question of fact that is generally
resolved by a factfinder. See id. ¶ 29 (“Whether a breach of a
contract constitutes a material breach is a question of fact . . . .
Therefore, the issue will ordinarily be resolved by the fact finder,
and summary judgment should be granted with great caution.”
(brackets, citations, and internal quotation marks omitted)).
20150857-CA 23 2018 UT App 40iDrive Logistics v. IntegraCore
acknowledged that the email from iDrive President was a
request for improvements on UPS pricing for IntegraCore and
specifically asked for a proposal in response to that request,
essentially saying that the request was the functional equivalent
of an RFP.10 This testimony is conflicting and it cannot be said
that “reasonable jurors, properly instructed, would be able to
come to only one conclusion” regarding whether an RFP was
issued. See Heslop v. Bear River Mutual Ins. Co., 2017 UT 5, ¶ 20,
390 P.3d 314 (citation and internal quotation marks omitted).
Therefore, whether iDrive performed this obligation is a
disputed material fact, which should have precluded summary
judgment.
¶50 Similarly, the district court erred under the summary
judgment standard when it concluded that the undisputed facts
showed that iDrive performed its obligation to ensure iDrive
President, in his capacity as IntegraCore’s vice president of
logistics, conducted the required visits. The Agreement required
iDrive President to initially visit for two days to learn
IntegraCore’s operations and to make two additional visits to
IntegraCore over the following two quarters from the date the
Agreement was executed. It is undisputed that iDrive President
spent two days at IntegraCore. It is also undisputed that iDrive
President did not visit IntegraCore again. However, iDrive
argues that it “acquiesced” to IntegraCore’s request that iDrive
CEO be the primary contact between IntegraCore and iDrive.
And it is undisputed that iDrive, through iDrive CEO, had
“several in-person meetings with [Director of Logistics],
including some that took place at IntegraCore’s facility.”
¶51 Viewing these facts and reasonable inferences in a light
favorable to IntegraCore, we conclude that a reasonable juror
10. Also, the FedEx representative testified that an RFP can be
very simple and “can come in the form of any mode of
communication.”
20150857-CA 24 2018 UT App 40iDrive Logistics v. IntegraCore
could consider the facts here and determine that because iDrive
President did not make the visits, iDrive failed to perform this
term of the contract. The district court’s finding that someone
from iDrive “made visits” and that “the purposes of the
additional visits were fulfilled” does not comport with long-
established standards on summary judgment. All of the factual
disputes related to this question should have been construed
against iDrive and in favor of IntegraCore. In reality, the district
court made factual findings on materiality and substantial
performance that it should not have made. At a minimum, the
district court failed to construe the factual disputes against
iDrive.
¶52 Next, it is unclear whether iDrive’s direct contact with
carriers fulfilled its obligation to “negotiat[e] pricing, terms and
conditions” with them. While there is undisputed evidence
showing communications between iDrive President, on behalf of
IntegraCore, and both UPS and FedEx discussing pricing on
carrier contracts, IntegraCore has presented evidence from the
UPS representative that she never negotiated with anyone.
IntegraCore further contends that iDrive’s last attempt to
communicate with carriers was in May 2011, which arguably
shows a lack of effort. And while iDrive’s lack of effort may have
been completely justified, based on carrier responses or working
through IntegraCore’s own employees who contacted carriers,
concluding that iDrive fulfilled its obligation to negotiate with
carriers as a matter of law involved weighing facts to come to a
firm conclusion.11 These facts show a dispute as to whether
11. The parties disagree whether the Agreement permitted
Director of Logistics to “run point” on and be the main contact
for negotiations with carriers, and whether IntegraCore properly
asserts admissions made by iDrive as part of a dismissed fraud
claim. We need not decide the merits of these arguments to settle
the questions on appeal but reference them only to demonstrate
that Director of Logistics’s request to take the lead in
(continued…)
20150857-CA 25 2018 UT App 40iDrive Logistics v. IntegraCore
iDrive negotiated with carriers pursuant to the Agreement, and
we cannot say that “reasonable jurors, properly instructed,
would be able to come to only one conclusion.” See Heslop, 2017
UT 5, ¶ 20 (citation and internal quotation marks omitted).
Therefore, whether iDrive negotiated pricing, terms, and
conditions with carriers is a disputed material fact.
¶53 Thus, the rulings of the district court based on the
determinations above were in error because material issues of
fact precluded the entry of partial summary judgment.
2. The District Court’s Determination That IntegraCore
Cannot Raise a Timeliness Defense
¶54 The district court also ruled that, because there is no
specific time mentioned in the Agreement by which iDrive was
required to perform, iDrive could not have breached the
Agreement unless IntegraCore demanded performance. This
analysis fails for two reasons. First, the Agreement does contain
a time requirement as it pertains to one obligation. The
Agreement states that, in addition to spending two days learning
current logistics practices and operations at IntegraCore, iDrive
President (or a mutually agreed upon person) was required to
conduct two additional visits “over the next 2 quarters.”
(Emphasis added.) The Agreement was signed by iDrive
President on January 13, 2011. As a result, the two additional
visits should have occurred sometime in 2011. If anything, the
evidence appears to be undisputed that the two additional visits
(…continued)
negotiations, that iDrive’s communications to Director of
Logistics on the progress with carriers, and that IntegraCore’s
testimony that Director of Logistics was not qualified to
negotiate with carriers, are other examples of disputed facts
about whether iDrive performed under the Agreement, which
should have precluded summary judgment.
20150857-CA 26 2018 UT App 40iDrive Logistics v. IntegraCore
did not happen within the required timeframe. At a minimum,
performance on this issue is disputed.
¶55 Second, the fact that there is no time specified when
performance was to be completed does not itself mean that the
conflict at hand can be summarily dismissed. “[T]he settled rule
is that if a contract fails to specify a time of performance the law
implies that it shall be done within a reasonable time under the
circumstances.” New York Avenue LLC v. Harrison, 2016 UT App
240, ¶ 32, 391 P.3d 268 (citation and internal quotation marks
omitted). Even assuming IntegraCore was required to make a
demand for performance, the court still would have needed to
determine that iDrive could perform within a reasonable time.
“And because what constitutes a reasonable time is necessarily a
fact-intensive question,” we conclude that “the district court
erred in granting summary judgment.” See id. ¶ 35 (brackets,
citation, and internal quotation marks omitted).
3. The District Court’s Determination That No Breach May
Occur Where No Demand for Performance Was Made
¶56 The district court further concluded that, because there
was no provision in the Agreement stating a date by which
iDrive must perform, IntegraCore was “obligated to provide
notice to [iDrive]” of its belief that the time for performance had
passed to “allow a reasonable time for performance before
unilaterally deciding to consider [the Agreement] void.” In
support of its conclusion, the district court cited principles
articulated in Gammon v. Bunnell, 64 P. 958 (Utah 1900).
However, the language relied on by the district court is dicta and
the case is distinguishable and does not apply to iDrive’s burden
on its own claims.
¶57 Gammon involved a contract for the sale of real property.
Id. at 958. The plaintiff/purchaser paid the title holder $1 and
took possession of the land. Id. The deed was placed in escrow
with an escrow instruction that upon the grantor’s death $300
20150857-CA 27 2018 UT App 40iDrive Logistics v. IntegraCore
would be paid to grantor’s designee. Id. The escrow instructions
then provided that the designee would deliver a receipt and
when that receipt was presented to the escrow agent, the deed
would be released by the escrow agent to the purchaser. Id. A
fine plan indeed, except that when the $300 was tendered to the
designee, she rejected the tender and refused to give a receipt.
See id. at 959. The purchaser sued for quiet title in addition to
other relief not identified by the Gammon court. Id. at 958–59.
¶58 The question presented was whether the purchaser’s
complaint stated a claim upon which relief could be granted. Id.
at 959. The Gammon court held that the purchaser’s complaint
did state a claim, that the purpose of the escrow was to ensure
the designee was paid, and that, when the tender was made, the
purchaser had a right to the deed. Id. When discussing the
general duties of an escrow agent, in dicta the Gammon court
stated, “If no date is fixed for the delivery or performance of the
contract, a reasonable time is intended, and no default can attach
until after a demand and failure or refusal to perform.” Id. There
is, however, no reference to any assertion that the purchaser did
not act with all diligence. Therefore, this statement made in
passing does not constitute the holding in Gammon and the
decision is not applicable here. Further, Gammon is
distinguishable as it pertained to an escrow arrangement and
concerned a real property transaction, not a general contract
such as in this case.12
12. iDrive points us to sister state authorities for similar
propositions. Yet these cases actually undermine iDrive’s
position. These cases are distinguishable for the same reason as
Gammon—they explicitly state their holdings apply to real estate
transactions. For example, in ADC Orange, Inc. v. Coyote Acres,
Inc., 857 N.E.2d 513 (N.Y. Ct. App. 2006), the court applied its
analysis to “contracts of this type” and “contracts of this kind,”
meaning contracts for the sale of real property. Id. at 514, 516.
(continued…)
20150857-CA 28 2018 UT App 40iDrive Logistics v. IntegraCore
¶59 Moreover, and most importantly, on its own claims,
iDrive bears the burden of showing it performed under the
Agreement to succeed on its breach of contract claim. See Bair v.
Axiom Design, LLC, 2001 UT 20, ¶ 14, 20 P.3d 388. iDrive cannot
hide behind the dicta of Gammon and claim that iDrive is
relieved of proving an element of its claim because IntegraCore
did not demand performance. As a result, Gammon does not
control, and consequently, we are left with the fact question of
whether a reasonable period had passed wherein iDrive should
have performed. This is an issue that should be left to a
factfinder and partial summary judgment should not have been
based thereon. See New York Avenue, 2016 UT App 240, ¶ 35.
(…continued)
The court held, consistent with New York Avenue LLC v. Harrison,
2016 UT App 240, ¶ 32, 391 P.3d 268, that performance must
occur within a reasonable time (a fact question) or if a party
wishes to impose a certain date by which performance must
occur, then demand must be made—not that no breach occurs if
no demand for performance has been made. See ADC Orange,
857 N.E.2d at 516. Similarly, in Command Security Corp. v. Moffa,
84 So. 3d 1097 (Fla. Dist. Ct. App. 2012), also involving the
limited circumstances of a real estate escrow transaction, the
court held, again consistent with New York Avenue, that where a
contract does not make time of the essence the parties would
have a reasonable time to perform. See id. at 1099. The Moffa
court explained that time can be of the essence when it is
expressly called for in the contract, or in a number of other
circumstances, including where express notice is given to the
alleged defaulting party. But again, that is not the question
which is presented in this case. Instead, a fact question remains
about whether iDrive’s efforts, whatever they may or may not
have been, were undertaken within a reasonable time.
20150857-CA 29 2018 UT App 40iDrive Logistics v. IntegraCore
4. The District Court’s Determination That IntegraCore Is
Barred from Asserting a Defense of Nonperformance
¶60 IntegraCore challenges the district court’s ruling that
IntegraCore was barred from asserting that it was excused from
performance under the Agreement. The district court ruled, “The
fact that [IntegraCore] continued to accept [iDrive’s]
performance under [the Agreement], long after [IntegraCore]
now asserts it had a known excuse for nonperformance, bars
[IntegraCore] from asserting a breach of contract by [iDrive.]”
The district court relied on H.B. Zachry Co. v. Travelers Indemnity
Co., 391 F.2d 43 (5th Cir. 1968), which states, “When the
promisor on a contract not already fully performed on either
side continues his performance in spite of a known excuse for
nonperformance, he loses his defense of nonperformance.” Id. at
48.
¶61 IntegraCore argues that the district court erred because
(1) waiver is a fact-based question and generally inappropriate
on summary judgment, and (2) the Agreement is divisible and
the shipping and auditing services that continued long after
IntegraCore asserted the Agreement was breached are “not at
issue.”
¶62 First, it is true that “[w]aiver is an intensely fact
dependent question.” McCleve Props., LLC v. D. Ray Hult Family
Ltd. P’ship, 2013 UT App 185, ¶ 9, 307 P.3d 650 (citation and
internal quotation marks omitted). However, summary
judgment is appropriate “if the moving party shows that there is
no genuine dispute as to any material fact and the moving party
is entitled to judgment as a matter of law.” Utah R. Civ. P. 56(a).
IntegraCore does not dispute that it continued to accept auditing
services from iDrive under the Agreement. Therefore, this fact,
which the district court relied on to determine that IntegraCore
continued to accept the benefit of the Agreement after it now
claims the Agreement was breached, is not disputed. Because the
facts surrounding IntegraCore’s continued acceptance of iDrive’s
20150857-CA 30 2018 UT App 40iDrive Logistics v. IntegraCore
services are undisputed, the general contention that summary
judgment is usually inappropriate for fact intensive questions is
not enough to demonstrate that the district court erred.
¶63 Instead of challenging the facts showing IntegraCore’s
continued acceptance of performance under the Agreement,
IntegraCore argues that the facts relied upon by the district court
should not have been considered because the Agreement is
divisible. Although IntegraCore argued to the district court that
“the audit services are separate from the pricing optimization
services,” the district court did not rule on whether the
Agreement is divisible. “Whether a contract is divisible depends
on the intent of the parties at the time they entered the contract.”
Estate Landscape & Snow Removal Specialists, Inc. v. Mountain
States Tel. & Tel. Co., 844 P.2d 322, 328 (Utah 1992). “A divisible
contract is in legal effect, independent agreements about
different subjects though made at the same time.” In re Payless
Cashways, 203 F.3d 1081, 1085 (8th Cir. 2000) (citation and
internal quotation marks omitted). If the Agreement is divisible,
as IntegraCore argues, IntegraCore could maintain that its
acceptance of auditing and shipping services do not show that it
treated iDrive as though no breach had occurred under the
pricing optimization services provision, as the district court
concluded. See Prospero Assocs. v. Burroughs Corp., 714 F.2d 1022,
1026 (10th Cir. 1983) (examining divisibility to determine
whether the breach of different provisions in a contract gave rise
to distinct claims). Because the district court did not address
whether the Agreement is divisible, we remand the issue to the
district court.
¶64 Additionally, “[o]nly a material breach will excuse further
performance by the non-breaching party.” Cross v. Olsen, 2013
UT App 135, ¶ 26, 303 P.3d 1030. “Whether a breach of a contract
constitutes a material breach is a question of fact . . . . Therefore,
the issue will ordinarily be resolved by the factfinder, and
summary judgment should be granted with great caution.” Id.
¶ 29 (brackets, citations, and internal quotation marks omitted).
20150857-CA 31 2018 UT App 40iDrive Logistics v. IntegraCore
¶65 By concluding that IntegraCore may not assert a defense
of nonperformance, the district court essentially concluded that,
even if iDrive breached under the optimization services
provision, that breach was “not so substantial and fundamental
as to defeat the object of the parties in making the agreement.”
See id. ¶ 28 (citation and internal quotation marks omitted). But
to reach such a conclusion the district court impermissibly
construed the facts against IntegraCore and made a factual
finding on materiality. Because the district court “appears not to
have examined the issue through the lens of the foregoing
standards,” the district court “erred in granting summary
judgment on the factual question of material breach.” See id.
¶ 30. Consequently, we also remand this issue to the district
court.
5. IntegraCore’s Additional Arguments
¶66 We next discuss two remaining contentions:
(1) IntegraCore’s additional claims of breach by iDrive that the
district court did not address and (2) the district court’s ruling
that, despite IntegraCore’s argument otherwise, iDrive owed
fiduciary duties to IntegraCore in fulfilling its contractual
obligations.
¶67 First, IntegraCore claims additional breaches by iDrive
that the district court did not address. IntegraCore claims that
besides UPS and FedEx, iDrive never contacted any other
carriers, including USPS and DHL, both of which were explicitly
identified in the Agreement. Additionally, IntegraCore asserts
that iDrive ceased contacting both UPS and FedEx in the spring
of 2011. Thus, at a minimum there appears to be a disputed fact
whether iDrive performed, or was in the process of performing,
under the Agreement. As to each and every claim of breach by
either iDrive or IntegraCore, assuming the breach exists, there
remains a fact question as to whether each breach was
material—an intensely fact-based question typically submitted to
a factfinder. See Cross, 2013 UT App 135, ¶ 29.
20150857-CA 32 2018 UT App 40iDrive Logistics v. IntegraCore
¶68 Second, IntegraCore argued to the district court that
iDrive, whose designee served as vice president of logistics for
IntegraCore and as an “agent” as stated in the Agreement, owed
IntegraCore fiduciary duties in fulfilling its obligations under
the Agreement. The district court did not include any ruling on
this point in its original orders, but did state in its ruling and
clarification on IntegraCore’s objection to the orders that “[t]he
Court noted at oral argument . . . that iDrive did not owe
IntegraCore fiduciary duties. . . . While an officer or director of a
corporation may owe fiduciary duties to that corporation,
iDrive’s obligations to IntegraCore are limited to those
enumerated in the Agreement.” We are directed to no further
analysis of this issue in the district court’s written rulings or in
the transcript at oral argument.
¶69 As noted, the original orders granting summary judgment
were silent on the issue of potential fiduciary duties.
Nevertheless, in its clarifying ruling, the district court did state
that no fiduciary duty exists. The district court in no way
indicated how the existence or nonexistence of fiduciary duties
would have altered its analysis on the ultimate issues before it
on partial summary judgment. And because we perceive that
this issue may arise on remand at trial or in further motion
practice, we choose to address the issue here. See State v. Low,
2008 UT 58, ¶ 61, 192 P.3d 867.
¶70 Although the analysis is meager, the district court appears
to have concluded that the mere existence of a contract between
the parties precluded the possibility that fiduciary duties existed.
However, as acknowledged in Orlando Millenia, LC v. United Title
Services of Utah, Inc., 2015 UT 55, 355 P.3d 965, contractual duties
might be supplemented by fiduciary duties. See id. ¶ 40 n.5.
Officers of a company may owe fiduciary duties to the entity
they serve. See Stevensen 3rd East, LC v. Watts, 2009 UT App 137,
¶ 32, 210 P.3d 977. Likewise, agents may owe a fiduciary duty to
their principals. See Eagar v. Burrows, 2008 UT 42, ¶ 25, 191
P.3d 9. Given our supreme court’s recognition in Orlando that
20150857-CA 33 2018 UT App 40iDrive Logistics v. IntegraCore
contractual duties might coexist with fiduciary duties, the bare
analysis of the district court here was insufficient. To the extent
that the district court’s analysis relies upon this faulty premise,
the district court is reversed, and the issue of the existence of a
fiduciary duty and its application in this case is remanded for a
more thorough consideration by the district court.
B. IntegraCore’s Motion for Partial Summary Judgment on
iDrive’s Breach of Contract Claim
¶71 We similarly conclude that IntegraCore was not entitled
to summary judgment on iDrive’s breach of contract claim.
IntegraCore’s motion involves the same facts analyzed above,
but on IntegraCore’s motion we instead view all facts and
inferences in a light most favorable to iDrive—the nonmoving
party. See Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600.
¶72 We cannot say that a reasonable juror could not conclude
that iDrive submitted an RFP to UPS. As explained above, even
though the UPS representative said she never received an RFP,
so denominated, from iDrive, the UPS representative also said
that she received a request from iDrive President asking that
IntegraCore’s contracts be evaluated and requesting that she
respond with a proposal. Supra ¶ 15. A reasonable juror could
conclude that, despite its apparent informality, iDrive President
sent UPS an RFP. Therefore, this fact is disputed and precludes
summary judgment on IntegraCore’s motion. See Heslop, 2017
UT 5, ¶ 20.
¶73 Likewise, a reasonable juror could conclude that iDrive
fulfilled its contractual obligation to spend two additional days
at IntegraCore. Although iDrive President made no additional
visits himself, iDrive CEO visited multiple times in iDrive
President’s place, apparently at IntegraCore’s insistence. Because
“reasonable jurors, properly instructed,” could not “come to
only one conclusion” here, see id. (citation and internal quotation
20150857-CA 34 2018 UT App 40iDrive Logistics v. IntegraCore
marks omitted), IntegraCore was not entitled to summary
judgment on this issue.
¶74 Next, whether iDrive negotiated pricing, terms, and
conditions with carriers is a disputed material fact that precludes
summary judgment on IntegraCore’s motion. There is
undisputed evidence showing communications between iDrive
President, on behalf of IntegraCore, and both UPS and FedEx
that discuss pricing on carrier contracts. Even recognizing
IntegraCore’s arguments and evidence to the contrary, while
viewing the facts in the most favorable light to iDrive, we
conclude that “reasonable jurors, properly instructed, . . . might
come to different conclusions, thereby making summary
judgment inappropriate.” See id. (citation and internal quotation
marks omitted).
¶75 Finally, we conclude here, as we did above, that the
absence of a specified time for performance in the Agreement
makes the question of performance unsuitable for summary
judgment. Supra ¶ 59. Even if iDrive had not performed any of
its obligations, the lack of a contracted time for performance
must be “reasonable . . . under the circumstances.” New York Ave.
LLC v. Harrison, 2016 UT App 240, ¶ 32, 391 P.3d 268. “[B]ecause
what constitutes a reasonable time is necessarily a fact-intensive
question,” id. ¶ 35 (brackets, citation, and internal quotation
marks omitted), and because “reasonable jurors . . . might come
to different conclusions,” see Heslop, 2017 UT 5, ¶ 20 (citation and
internal quotation marks omitted), we conclude that the district
court properly denied IntegraCore’s motion.
C. IntegraCore’s Motion for Partial Summary Judgment on
the USPS Account
¶76 As part of its motion for partial summary judgment,
IntegraCore argued that iDrive’s contract claims with respect to
IntegraCore’s use of Move Method’s USPS account failed as a
matter of law. The USPS contract claims were not included in the
20150857-CA 35 2018 UT App 40iDrive Logistics v. IntegraCore
district court’s original orders. In its ruling on IntegraCore’s
objection to the orders the district court said, “IntegraCore’s
motion for summary judgment was denied, effectively
preserving the [USPS contract] issue for future litigation and
trial.” On appeal, iDrive asserts, as the district court observed,
that “iDrive did not move for summary judgment regarding its
USPS-related claims.” That is not the point. While it is true
iDrive did not move for summary judgment regarding its USPS
claims, IntegraCore did. IntegraCore’s initial motion identified a
number of ways that IntegraCore claimed iDrive’s breach of
contract claim failed as a matter of law. Among those reasons,
clearly identified, was that “iDrive’s claim that IntegraCore
breached the contract at issue by switching its [USPS] account
from iDrive to a new broker fails as a matter of law because the
contract at issue does not require IntegraCore to use iDrive’s
USPS account.” Accordingly, the issue of the USPS account was
squarely before the district court. Although the district court’s
lack of analysis on this issue is troubling, we nevertheless affirm
the denial of summary judgment. “When reviewing a decision
made on one ground, we have the discretion to affirm the
judgment on an alternative ground if it is apparent in the
record.” Madsen v. Washington Mutual Bank FSB, 2008 UT 69,
¶ 26, 199 P.3d 898 (emphasis omitted).
¶77 IntegraCore argues that it is entitled to summary
judgment on this issue because iDrive’s USPS claim “is not
supported by the terms of the Agreement.”13 While it is true
there is no provision that says IntegraCore must use the USPS
13. IntegraCore goes on to argue several other theories to
challenge the district court’s denial of summary judgment on
iDrive’s USPS contract claims. Those theories are based on the
premise that iDrive would need to prove an oral modification of
the contract for the claim to survive. Because we affirm the
district court’s denial without presuming an oral modification to
the contract, we do not reach those arguments.
20150857-CA 36 2018 UT App 40iDrive Logistics v. IntegraCore
service, the Agreement also states that “[a]ll significant logistics
decisions will flow through iDRIVE for review.” iDrive alleges,
and IntegraCore does not dispute, that IntegraCore
incrementally diminished its use of iDrive’s USPS account in
favor of another broker’s USPS account during the term of the
Agreement and without notifying iDrive. At the very least, it is
an open question whether IntegraCore’s switch to another
broker account for its USPS shipments constitutes a “significant
logistical decision[]”; there is no provision requiring IntegraCore
to use iDrive’s USPS account and Move Method is not a “carrier”
as defined in the Agreement, but choosing which broker account
to use is a logistical decision that, as iDrive argues, potentially
affects savings. Because reasonable jurors, properly instructed,
could conclude that such a change is a significant logistical
decision requiring iDrive’s involvement, summary judgment
was inappropriate. See Heslop v. Bear River Mutual Ins. Co., 2017
UT 5, ¶ 20, 390 P.3d 314. Therefore, we affirm the district court’s
denial of this motion.
D. Summary Judgment on IntegraCore’s Breach of Contract
Claim14
¶78 The district court granted summary judgment in favor of
iDrive on IntegraCore’s counterclaim for breach of contract.
First, the court ruled that based upon its reasoning in its ruling
in favor of iDrive on its principal claims, the same reasoning
would apply to entitle iDrive to partial summary judgment on
IntegraCore’s counterclaims. The district court’s analysis did not
end there. The district court also ruled for an “independent
reason” that, under the first to breach rule, iDrive was relieved
14. Again, in the second order, the district court made no
distinction and provided no separate analysis between the
breach of contract and breach of the covenant of good faith and
fair dealing. We therefore treat them as combined or redundant
in this decision. See supra ¶ 22 note 5.
20150857-CA 37 2018 UT App 40iDrive Logistics v. IntegraCore
of the obligation to perform. As a third basis upon which to
grant partial summary judgment, the district court stated:
Finally, [the Agreement] . . . expressly and
unambiguously precludes [IntegraCore] from
asserting contract-based claims for damages
against [iDrive]:
Notwithstanding anything else in this
Agreement or otherwise, iDRIVE will not be
liable with respect to any subject matter of
this Agreement under any contract,
negligence, strict liability or other legal or
equitable theory (1) for any amounts . . . .
The Court finds that the language in the liability
limitation is unambiguous and bars [IntegraCore’s]
counterclaims for breach of contract and breach of
the covenant of good faith and fair dealing in this
case.
¶79 IntegraCore completely ignores this exculpatory clause of
the Agreement, which was expressly the basis of the district
court’s conclusion. Surprisingly, iDrive also does not mention
the exculpatory provision or the court’s reliance thereon in its
brief. Where an appellant fails to address the basis of the district
court’s ruling, we reject the challenge. Golden Meadows Props., LC
v. Strand, 2010 UT App 257, ¶ 17, 241 P.3d 375. Therefore, we
affirm the district court’s grant of partial summary judgment on
IntegraCore’s counterclaim for breach of contract in favor of
iDrive.
CONCLUSION
¶80 For the foregoing reasons, we affirm in part and reverse in
part and remand for further proceedings consistent with this
opinion. We see no error in the district court’s interpretation of
20150857-CA 38 2018 UT App 40iDrive Logistics v. IntegraCore
the Agreement and affirm the district court’s ruling in that
regard. However, the district court erred in granting partial
summary judgment in favor of iDrive on its claim that
IntegraCore breached the Agreement because disputed material
facts exist regarding the question of performance. Likewise, we
conclude that IntegraCore was not entitled to summary
judgment on iDrive’s breach of contract claim. Further, we
affirm the district court’s denial of IntegraCore’s motion for
partial summary judgment on iDrive’s claims in regard to the
USPS shipping account because reasonable jurors could
conclude that IntegraCore’s actions amounted to a significant
logistical decision that required iDrive’s input. Finally, because
IntegraCore failed to address the district court’s ruling based on
the exculpatory clause of the Agreement, we affirm the court’s
grant of partial summary judgment in favor of iDrive on
IntegraCore’s counterclaim. We remand to the district court for
further proceedings consistent with this opinion.
20150857-CA 39 2018 UT App 40