United States District Court, D. Idaho
OFF-SPEC SOLUTIONS, LLC, an Idaho limited liability company, Plaintiff,
H.J. HEINZ COMPANY, L.P., a Delaware limited partnership, Defendant,
MEMORANDUM DECISION AND ORDER RE: PLAINTIFF'S
MOTION FOR PARTIAL SUMMARY JUDGMENT (Dkt. 27)
Honorable Ronald E. Bush, Chief U.S. Magistrate Judge
is Plaintiff's Motion for Partial Summary Judgment (Dkt.
27), in which Plaintiff Off-Spec Solutions, LLC
(“Off-Spec”) seeks the entry of an order making
three specific holdings related to its claims. Having
reviewed the briefing and supporting filings, participated in
oral argument on March 13, 2018, and otherwise being fully
advised, the Court enters the following Decision and Order:
is in the business of managing and distributing food waste
commodities. Am. Compl. ¶ 4 (Dkt. 21). Its core business
involves transporting food waste away from production
facilities and delivering it to animal producers that can use
it as animal feed. Id. Defendant H.J. Heinz Company,
L.P. (self-referred to as “Kraft-Heinz, ” but
referred to herein as “Heinz”), operates a potato
processing plant in Ontario, Oregon. Id. ¶ 5.
In September 2014, Heinz held an auction to sell the right to
purchase and haul away “press cake, ” one of
several kinds of potato processing by-products, from its
Ontario, Oregon potato processing plant. Plf.'s Statement
of Fact ISO Mot. for Partial Summ. J. ¶¶ 6-8 (Dkt.
27-1). Off-Spec bid in and won the auction. Id.
the auction, the parties worked on and entered into a final,
written, agreement. In that process were sown the seeds of
this dispute. Off-Spec alleges that on October 2, 2014, its
principals Chris Salvador and Daniel Salvador met with Bob
Pedracini, Heinz's plant manager, and Ashli Perdue,
Heinz's plant operational risk manager, to discuss the
contract terms. Am. Compl. ¶ 6 (Dkt. 21). During this
meeting, Off-Spec alleges, Mr. Pedracini and Ms. Perdue told
Messrs. Salvador that Heinz wanted Off-Spec to haul away
all potato by-products and not just press cake.
Id. ¶ 9. Because certain of the other
by-products are more valuable than press cake, Off-Spec was
eager to agree to this expansion of the rights they had won
at the auction. Id. Thus, Off-Spec alleges, it was
not surprised when the draft agreement Heinz presented to
Off-Spec on October 18, 2014 purported to apply to all potato
by-products and not just press cake. Id. ¶ 10.
The parties ultimately executed a written agreement on or
about November 22, 2014. Id. Ex. A (the
“Agreement”). The agreement references “all
solid potato by-product such as cull potatoes, fries, etc.,
Press Cake, dry peel, (hereinafter collectively referred to
as ‘Plant by-products') which results from
Heinz's operation of” its Ontario plant. Agreement
¶ 2 (Dkt. 21).
the agreement was executed, Heinz delivered press cake to
Off-Spec but no other by-products. Am. Compl. ¶ 17 (Dkt.
21). As a result, Off-Spec brings this lawsuit and alleges
that it is entitled to declaratory relief as well as damages
for breach of contract, breach of warranty, and unjust
enrichment. Id. ¶¶ 25-45. Heinz
counterclaimed, seeking reformation of the Agreement in
addition to damages for breach of contract and trespass.
Def.'s Ans. and Aff. Defenses to Plf.'s First Am.
Compl. and Def.'s Countercls. ¶¶ 58-77 (Dkt.
disputes many of Off-Spec's allegations. Most
significantly, Heinz says that no one told Messrs. Salvador
in October 2014 that Heinz wanted to sell to Off-Spec all
by-products rather than only press cake. Pedracini Decl.
¶¶ 3-7 (Dkt. 59-9); Perdue Decl. ¶ 29 (Dkt.
32). As set out in Ms. Perdue's declaration, Heinz
asserts it already had a contract to provide its cull
potatoes and “fries” (potatoes lost during the
production process) to another third party, so it would not
have even contemplated providing those by-products to
Off-Spec. Id. ¶¶ 12, 17. Heinz says that
Off-Spec was aware of this. Id. ¶¶ 12, 15.
Heinz maintains that it intended to sell Off-Spec only press
to Ms. Perdue, the first draft of the agreement she sent to
Off-Spec mentioned only press cake. Id. ¶ 37.
The redlined version of the draft agreement Daniel Salvador
returned to Ms. Perdue retained, unedited, the paragraph
indicating that Heinz would provide Off-Spec only press cake.
Id. ¶¶ 38-39. However, when Ms. Perdue
forwarded the redlined draft to an attorney in Heinz's
out-of-state in-house legal staff, a revised draft was
returned which included several changes. Id.
¶¶ 42-43. Among these were a redefinition of the
agreement's scope to state it applied to all by-products
rather than just press cake. Id. Ms. Perdue declared
she noticed and removed certain other incorrect changes, but
she did not notice the agreement scope had been redefined to
include all plant by-products rather than only press cake.
central issue in Off-Spec's motion is whether the
Agreement unambiguously requires Heinz to deliver to Off-Spec
all plant by-products. Off-Spec maintains that the Agreement
is unambiguous on its face and that even if there were a
mistake in the drafting the Agreement is nonetheless
enforceable against Heinz. Heinz counters that the Agreement
is ambiguous and that extrinsic evidence shows there was no
meeting of the minds as to by-products other than press cake.
Heinz argues the reference to plant by-products rather than
just press cake was a drafting error. Def.'s Opp. to
Plf.'s MPSJ 2 (Dkt. 30).
moves for partial summary judgment, seeking an order holding
that (1) the Agreement's language specifying it applied
to “all solid potato by-product such as cull potatoes,
fries, etc., Press Cake, dry peel” is unambiguous; (2)
this language plainly required Heinz to sell to Off-Spec all
solid potato by-product produced at Heinz's Ore-Ida
plant, including cull potatoes, fries, press cake, and dry
peel - and not just press cake; and (3) Heinz breached the
written agreement by delivering only press-cake to Off-Spec.
Mot. for Partial Summ. J. re: Breach of Contract 1-2 (Dkt.
27). Off-Spec's motion was filed concurrently with a
statement of fact in support (Dkt. 27-1), a memorandum in
support (Dkt. 27-2), and a declaration of Daniel Salvador
response, Heinz filed a memorandum in opposition (Dkt. 30), a
statement of disputed facts in opposition (Dkt. 31), and a
declaration of Ashli Perdue (Dkt. 32). Heinz also moved to
continue or deny the motion for partial summary judgment
under Fed.R.Civ.P. 56(d) (Dkt. 33). Off-Spec's response
to the motion to continue included a second declaration of
Daniel Salvador (Dkt. 36-1). Off-Spec also filed a reply
memorandum supporting its partial summary judgment motion
also moved to strike the second declaration of Daniel
Salvador, alternatively seeking leave to file a surreply
memorandum in opposition to the motion for partial summary
judgment. (Dkt. 38). Heinz then filed a reply supporting its
motion to continue (Dkt. 39). Off-Spec responded to the
motion to strike (Dkt. 43) and Heinz replied (Dkt. 46).
Court granted the motion to continue, to allow the parties to
conduct targeted discovery prior to deciding the partial
summary judgment motion (Dkt. 52). The Court's order set
a schedule for supplemental briefing after some discovery had
occurred. The Court also declined to strike the second
declaration of Daniel Salvador but granted Heinz leave to
file a surreply. (Dkt. 63.)
filed “Objections to Declaration of Ashli Perdue”
in which it argued that the Court may not consider those
statements of Ms. Perdue's that are “speculative,
conclusory, misleading, and not based on personal
knowledge.” (Dkt. 57.) Heinz then filed a supplemental
brief opposing Off-Spec's motion for partial summary
judgment, accompanied by several declarations (Dkts. 59, 59-1
through 59-9). Finally, Off-Spec filed a supplemental brief
supporting its partial summary judgment motion, accompanied
by a declaration of counsel and a declaration of John Hepton
(Dkts. 62, 62-1, 62-2).
hearing on Off-Spec's partial summary judgment motion was
held March 13, 2018.
Summary Judgment Standard
judgment is appropriate where a party can show that, as to
any claim or defense, “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). One of the
principal purposes of summary judgment “is to isolate
and dispose of factually unsupported claims . . . .”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
It is “not a disfavored procedural shortcut, ”
but is instead the “principal tool[ ] by which
factually insufficient claims or defenses [can] be isolated
and prevented from going to trial with the attendant
unwarranted consumption of public and private
resources.” Id. at 327. “[T]he mere
existence of some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for
summary judgment.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986). There must be a
genuine dispute as to any material fact - a fact
“that may affect the outcome of the case.”
Id. at 248.
evidence must be viewed in the light most favorable to the
non-moving party, and the court must not make credibility
findings. Id. at 255. Direct testimony of the
non-movant must be believed, however implausible. See
Leslie v. Grupo ICA, 198 F.3d 1152, 1159 (9th Cir.
1999). However, the Court is not required to adopt
unreasonable inferences from circumstantial evidence. See
McLaughlin v. Liu, 849 F.2d 1205, 1208 (9th Cir. 1988).
moving party bears the initial burden of demonstrating the
absence of a genuine dispute as to material fact. See
Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001).
To carry this burden, the moving party need not introduce any
affirmative evidence (such as affidavits or deposition
excerpts) but may simply point out the absence of evidence to
support the non-moving party's case. See Fairbank v.
Wunderman Cato Johnson, 212 F.3d 528, 532 (9th Cir.
2000). This shifts the burden to the non-moving party to
produce evidence sufficient to support a jury verdict in his
favor. See Devereaux, 263 F.3d at 1076. The
non-moving party must go beyond the pleadings and show
“by [his] own affidavits, or by the depositions,
answers to interrogatories, or admissions on file” that
a genuine dispute of material fact exists. Celotex,
477 U.S. at 324. Where reasonable minds could differ on the
material facts at issue, summary judgment should not be
granted. Anderson, 477 U.S. at 251.
Other Applicable Legal Standards
motion presents an issue of whether a contract is clear, or
whether it is ambiguous. Under Oregon law, 
“[u]nambiguous contracts must be enforced according to
their terms.” Pac. First Bank v. New Morgan Park
Corp., 876 P.2d 761, 764 (Or. 1994). “Extrinsic
evidence regarding the circumstances underlying the formation
of a contract may be considered to determine whether a
contractual provision is ambiguous.” State ex rel.
Dept. of Educ. v. Vantage Techs. Knowledge
Assessment, LLC, 261 P.3d 17, 22 (Or. App. 2011);
see also ORS 41.740, 42.220. “A provision is
ambiguous when it is reasonably susceptible to more than one
meaning.” Vantage Techs., 261 P.3d at 22.
“If a contract is ambiguous, the trier of fact will
ascertain the intent of the parties and construe the contract
consistent with the intent of the parties.” Pac.
First Bank, 876 P.2d at 764. “To interpret a
contractual provision, ” courts first “examine
the text of the disputed provision, in the context of the
document as a whole. If the provision is clear, the analysis
ends.” Yogman v. Parrott, 937 P.2d 1019, 1021
(Or. 1997). If “the contractual provision at issue is
ambiguous” the court proceeds “to examine
extrinsic evidence of the contracting parties'
intent.” Id. at 1022 (citing ORS 41.740 for
the proposition that “extrinsic evidence is admissible
to ‘explain an ambiguity' in a contract”).
simply, extrinsic evidence relating to the formation of an
agreement can be used to show an ambiguity. And where there
is an ambiguity, regardless of how it is shown, extrinsic
evidence may be used to ...