Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 1 of 14
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF PENNSYLVANIA
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`AMY SILVIS, on behalf of
`herself and all others
`similarly situated
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`v.
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`AMBIT ENERGY L.P, et al.
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`M E M O R A N D U M
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`CIVIL ACTION
`NO. 14-5005
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`EDUARDO C. ROBRENO, J.
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`MARCH 18, 2016
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`Presently before the Court is the motion for summary
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`judgment filed by Defendant, Ambit Northeast, LLC (“Ambit”),
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`regarding Counts IX, XI, and XII of the amended complaint filed
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`by Plaintiff, Amy Silvis (“Silvis”). In these counts, Silvis
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`alleges breach of contract, unjust enrichment, and entitlement
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`to declaratory relief. For the reasons that follow, the Court
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`will grant Ambit’s motion.
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`I. FACTS AND PROCEDURAL HISTORY
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`Silvis contracted with Ambit to supply her with
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`electricity based on a variable rate plan under which she paid a
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`“teaser” rate for the first month and thereafter the rate
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`fluctuated. Silvis asserts that Ambit enticed her to switch her
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`electricity supplier from Penelec with its marketing materials
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`promising savings over other energy suppliers and competitive
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`variable rates. Silvis quickly became disappointed with her
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 2 of 14
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`decision when it became apparent that Ambit’s variable rate plan
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`was not saving her money, but was in fact causing her
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`electricity bill to swell, at times, to nearly double what she
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`would have paid under Penelec. Specifically, she alleges that:
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`(1) in April and May 2014, Ambit charged her $.1369 per kilowatt
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`hour (“kWh”) while Penelec charged $.0771/kWh; (2) in June 2014,
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`Ambit charged her $.1489/kWh while Penelec charged $.0823/kWh;
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`(3) in July and August 2014, Ambit charged her $.1489/kWh while
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`Penelec charged $.0925/kWh; (4) in September 2014, Ambit charged
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`her $.1489/kWh while Penelec charged $.0849/kWh; and (5) in
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`October 2014, Ambit charged her $.1489/kWh while Penelec charged
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`$.0703/kWh.
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`In response, Silvis filed a class action complaint on
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`August 27, 2014 alleging, inter alia, breach of contract. She
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`asserted that Ambit “breached its agreements with Plaintiff and
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`the Proposed Class Members by charging rates that did not meet
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`the contractual obligation to provide a competitive rate based
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`on market factors.” Am. Compl., ¶ 105 (ECF No. 16). On December
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`23, 2014, Ambit filed a motion to dismiss and, on January 6,
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`2015, filed a motion to transfer venue. (ECF Nos. 19 & 21). On
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`March 13, 2015, after a March 6, 2015 hearing on the motions,
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`see (ECF No. 38), the Court denied the motion to transfer venue,
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`(ECF Nos. 30 & 31), and granted in part and denied in part
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`Ambit’s motion to dismiss. (ECF No. 32). Specifically, the Court
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`2
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 3 of 14
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`dismissed all defendants except for Ambit and dismissed all
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`counts except for Count IX for breach of contract, Count XI for
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`unjust enrichment1, and Count XII seeking declaratory relief
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`regarding future services.
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`On May 6, 2015, the Court entered a scheduling order
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`setting a briefing schedule for Ambit’s motion for summary
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`judgment and for attendant discovery. (ECF No. 43).2 On May 13,
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`2015, Ambit filed the pending motion for summary judgment
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`regarding the remaining claims. (ECF No. 45). On October 9,
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`2015, Silvis responded to the motion after having conducted four
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`months of discovery on the issues relevant to the motion. (ECF
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`Nos. 51 & 52). Ambit filed its reply on October 26, 2015. (ECF
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`Nos. 54 & 55).3
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`1
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`Pennsylvania law precludes a plaintiff from claiming
`unjust enrichment if she also pleads the existence of a valid,
`express contract. Wilson Area Sch. Dist. v. Skepton, 895 A.2d
`1250, 1254 (Pa. 2006). When the Court entered its order on the
`motion to dismiss, the parties disputed which documents were
`included in the contract. Concluding that the contract’s
`validity was at issue, and recognizing that a plaintiff may
`plead unjust enrichment as an alternative to an invalid
`contract, the Court refused to dismiss this claim. (ECF No. 32,
`p.4 n.5). As discussed below, the parties now agree on which
`documents formed the valid contract. Thus, Silvis may no longer
`maintain her claim for unjust enrichment and the claim will be
`dismissed.
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` 2
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`At the parties’ request, the time for discovery related to
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`the motion was extended on August 24, 2015. (ECF No. 50).
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` 3
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`The response and reply were filed partially under seal to
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`protect allegedly confidential personal and business
`information. See August 11, 2015 Protective Order (ECF No. 49).
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`3
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 4 of 14
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`II. STANDARD
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`Summary judgment is appropriate if there is no genuine
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`dispute as to any material fact and the moving party is entitled
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`to judgment as a matter of law. Fed. R. Civ. P. 56(a). “A motion
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`for summary judgment will not be defeated by ‘the mere
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`existence’ of some disputed facts, but will be denied when there
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`is a genuine issue of material fact.” Am. Eagle Outfitters v.
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`Lyle & Scott Ltd., 584 F.3d 575, 581 (3d Cir. 2009) (quoting
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`Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986)). A
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`fact is “material” if proof of its existence or nonexistence
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`might affect the outcome of the litigation, and a dispute is
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`“genuine” if “the evidence is such that a reasonable jury could
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`return a verdict for the nonmoving party.” Liberty Lobby, 477
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`U.S. at 248.
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`The Court will view the facts in the light most
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`favorable to the nonmoving party. “After making all reasonable
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`inferences in the nonmoving party’s favor, there is a genuine
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`issue of material fact if a reasonable jury could find for the
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`nonmoving party.” Pignataro v. Port Auth., 593 F.3d 265, 268 (3d
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`Cir. 2010). While the moving party bears the initial burden of
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`showing the absence of a genuine issue of material fact, meeting
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`this obligation shifts the burden to the nonmoving party who
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`The Court finds that direct discussion of the sealed information
`is unnecessary to decide the motion and consequently, there will
`be no need to file this memorandum under seal.
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`4
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 5 of 14
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`must “set forth specific facts showing that there is a genuine
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`issue for trial.” Liberty Lobby, 477 U.S. at 250 (quoting First
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`Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288
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`(1968)) (internal quotation marks omitted).
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`III. DISCUSSION
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`A. Contractual Ambiguity
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`“The court can grant summary judgment on an issue of
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`contract interpretation if the contractual language being
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`interpreted ‘is subject to only one reasonable interpretation.’”
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`Atkinson v. LaFayette Coll., 460 F.3d 447, 452 (3d Cir. 2006)
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`(quoting Arnold M. Diamond, Inc. v. Gulf Coast Trailing Co., 180
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`F.3d 518, 521 (3d Cir. 1999)). “Where the language is clear and
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`unambiguous, the express terms of the contract will control” and
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`there is no need to consult extrinsic evidence to interpret the
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`contract. Id.; Bohler-Uddeholm Am., Inc. v. Ellwood Grp., Inc.,
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`247 F.3d 79, 92 (3d Cir. 2001). However, when the contractual
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`language at issue is ambiguous in that “it is reasonably or
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`fairly susceptible of different constructions and is capable of
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`being understood in more senses than one and is obscure in
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`meaning through indefiniteness of expression or has a double
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`meaning,” “a court may look to extrinsic evidence to resolve the
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`ambiguity and determine the intent of the parties.” In re Diet
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`Drugs(Phentermine/Fenfluramine/Dexfenfluramine) Prod. Liab.
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 6 of 14
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`Litig., 706 F.3d 217, 223 (3d Cir. 2013) (internal quotation
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`marks omitted).
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`Although the parties previously disagreed regarding
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`which documents made up the contract, they are now in agreement.
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`Both parties assert that the contract consists of two documents:
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`(1) the Ambit Northeast, LLC Pennsylvania Penelec Service Area
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`Residential Disclosure Statement (“Disclosure Statement”); and
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`(2) the Ambit Pennsylvania Northeast, LLC Service Area Sales
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`Agreement and Terms of Service (“Terms of Service”). Two
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`provisions, one in each document, form the heart of the dispute.
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`The Disclosure Statement provides that: “[y]our rate for the
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`Initial Term and subsequent Renewal Terms may vary dependent
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`upon price fluctuations in the energy and capacity markets, plus
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`all applicable taxes.” Am. Compl. Ex. C (ECF No. 16-3, p.2). The
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`Terms of Service provides that: “[i]f you selected a variable
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`rate plan, your initial rate will be shown at the time of your
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`enrollment and thereafter rates are subject to change at the
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`discretion of Ambit Energy.” Am. Compl. Ex. B (ECF No. 16-2,
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`p.3).
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`Silvis contends that these two provisions, when read
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`together, stand for the proposition that Ambit has discretion to
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`change the rate, but only if its decision is based upon price
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`fluctuations in the energy and capacity markets. Silvis asserts
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 7 of 14
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`that Ambit exercised its discretion to raise her rate as a
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`result of other unnamed factors.
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`Ambit argues that the two provisions are clear and do
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`not conflict with each other. It asserts that the provisions
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`provide that Ambit has complete discretion to change the rate,
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`and that one of the reasons it may change the rate is in
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`response to price fluctuations in the energy and capacity
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`markets. Silvis replies that, at a minimum, the provisions are
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`ambiguous and summary judgment is inappropriate.
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`The Court agrees with Ambit’s interpretation. The
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`provision in the Terms of Service reflects that Ambit has
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`discretion in setting the rate it charges for electricity,
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`limited only by the good faith requirement read into contracts.
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`See Bethlehem Steel Corp. v. Litton Indus., Inc., 488 A.2d 581,
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`600 (Pa. 1985)(providing that “[e]very contract imposes upon
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`each party a duty of good faith and fair dealing in its
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`performance and its enforcement”) (internal quotation marks
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`omitted). The provision in the Disclosure Statement merely
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`informs the customer that her rate may vary dependent upon price
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`fluctuations in the energy and capacity markets, but does not
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`otherwise limit Ambit’s discretion in setting the rate based on
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`other legitimate factors.
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`Silvis arrives at her interpretation by inserting the
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`word “only” after “may” in the contract so that the provision
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 8 of 14
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`reads that the rate “may [only] vary dependent upon price
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`fluctuations in the energy and capacity markets.” The word
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`“only” does not appear in the provision, and the Court may not
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`read it into the unambiguous language thereof. See e.g. Bohler-
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`Uddeholm Am., 247 F.3d at 92. If a baseball team posts a sign
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`reading that “the game may be cancelled dependent on rain,” that
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`sign is not a promise that it will not be cancelled for some
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`other legitimate reason, such as the other team not showing up
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`or the lights being out.
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` In that: (1) the parties now agree that the Terms of
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`Service and Disclosure Statement make up the whole of their
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`contract; (2) the contract includes an integration clause
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`indicating that the contract expresses “the entire agreement
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`between the parties,” (ECF No. 16-2, p. 4); and (3) the two
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`provisions in the contract are unambiguous and not internally
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`inconsistent, the Court will not look beyond the four corners of
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`the contract to extrinsic evidence, nor will it incorporate new
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`terms to change the contract’s plain meaning.4 See e.g. Atkinson,
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`4
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`In addition to attempting to read the word “only” into
`this provision, Silvis appears to rely on several items of
`extrinsic evidence such as: her understanding of the contract as
`contained in her declaration; Ambit’s marketing materials; and
`the impact of 52 Pa. Code § 54.5(c)(2), which requires energy
`providers to include in their variable pricing statements the
`“[c]onditions of variability (state on what basis prices will
`vary).” Whether Ambit’s variable pricing statement violated this
`provision is not at issue here, and whether Silvis relied on
`this provision when signing the contract is immaterial given the
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 9 of 14
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`460 F.3d at 452 (providing that the express contract terms
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`control where the language is unambiguous); Rearick v. Pa. State
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`Univ., 416 F. App’x 223, 225 (3d Cir. 2011) (providing that when
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`presented with an unambiguous contract the “court should neither
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`consider extrinsic evidence nor ‘read into the contract a term .
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`. . which clearly it does not contain’”) (alteration in
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`original) (quoting Seven Springs Farm, Inc. v. Croker, 748 A.2d
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`740, 744 (Pa. Super. 2000)(en banc)). Having established the
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`clear meaning of the relevant contractual provisions, the Court
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`concludes that unless Ambit breached those provisions, its
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`motion for summary judgment should be granted.
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`B. Breach of Contract and the Implied Covenant of Good
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`Faith and Fair Dealing
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`Under Pennsylvania law, a breach of contract claim
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`includes the following elements: “‘(1) the existence of a
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`contract, including its essential terms, (2) a breach of a duty
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`imposed by the contract[,] and (3) resultant damages.’” Ware v.
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`Rodale Press, Inc., 322 F.3d 218, 225 (3d Cir. 2003) (alteration
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`prohibition on extrinsic evidence. The Court also notes that
`there is no evidence that Silvis was aware of the Code provision
`when entering into the agreement. The effect of the Code
`provision is also not the type of extrinsic evidence that could
`establish latent ambiguity in the contract. See Bohler-Uddeholm
`Am., 247 F.3d at 94 n.3 (providing that “a party offers the
`right type of extrinsic evidence for establishing latent
`ambiguity if the evidence can be used to support a reasonable
`alternative semantic reference for specific terms contained in
`the contract,” for example, whether “dollars” referenced in the
`contract are Canadian or U.S.). (internal quotation marks
`omitted).
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 10 of 14
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`in original) (quoting CoreStates Bank, N.A. v. Cutillo, 723 A.2d
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`1053, 1058 (Pa. Super. 1999)). Silvis contends in her amended
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`complaint that Ambit “breached its agreements with Plaintiff and
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`the Proposed Class Members by charging rates that did not meet
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`the contractual obligation to provide a competitive rate based
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`on market factors.” Am. Compl., ¶ 105 (ECF No. 16).
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`There is no express provision in the contract
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`requiring Ambit to provide a competitive rate. Moreover, as
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`described above, the contract between Silvis and Ambit is an
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`unambiguous, fully integrated document made up of the Terms of
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`Service and the Disclosure Statement. See McGuire v. Schneider,
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`Inc., 534 A.2d 115, 118 (Pa. Super. 1987), aff’d, 548 A.2d 1223
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`(Pa. 1988) (holding that a contract was fully integrated where
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`it stated that it contained the parties’ entire understanding,
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`was not ambiguous, covered the disputed subject matter, and
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`“convey[ed] no suggestion that anything beyond the four corners
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`of the writing [was] necessary in order to ascertain the intent
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`of the parties”). Thus, the Court may not add into the contract
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`a term regarding competitive rates based on extrinsic evidence.
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`See Bohler-Uddeholm Am., 247 F.3d at 92; Atkinson, 460 F.3d at
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`452; Rearick, 416 F. App'x at 225. As a result, Silvis has not
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`alleged a breach of an express contractual provision.
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`Silvis also contends that Ambit breached the
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 11 of 14
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`implied covenant of good faith and fair dealing by exercising
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`its rate-adjusting discretion in bad faith. While every contract
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`under Pennsylvania law includes a duty of good faith in
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`performance, there is no separate cause of action for breach of
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`the implied covenant of good faith and fair dealing. Bethlehem
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`Steel Corp., 488 A.2d at 600; Burton v. Teleflex Inc., 707 F.3d
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`417, 432 (3d Cir. 2013). Instead, courts “utilize[ ] the good
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`faith duty as an interpretive tool to determine the parties’
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`justifiable expectations in the context of a breach of contract
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`action.” Northview Motors, Inc. v. Chrysler Motors Corp., 227
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`F.3d 78, 91 (3d Cir. 2000). That duty, however, “is not divorced
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`from the specific clauses of the contract and cannot be used to
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`override an express contractual term.” Id.
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`Ambit recognizes that if Silvis is to succeed, because
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`“the contract gives Ambit discretion to set rates, Plaintiff
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`must establish that Ambit exercised this discretion in bad faith
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`in order to prevail on her breach-of-contract claim.” Def.’s
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`Reply (ECF No. 54, p.15). Ambit asserts that Silvis has not
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`provided any evidence to establish bad faith and that, in fact,
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`the evidence shows that its rate adjustments were in good faith.
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`Ambit argues that its increased rates were due to a
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`polar vortex in early 2014 which produced record cold
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`temperatures. Ambit contends that Penelec, to which Silvis
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`compared Ambit’s rates, is a highly regulated entity which
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 12 of 14
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`cannot immediately change its prices in accordance with the
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`market, unlike Ambit. It also asserts that Penelec has multiple
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`sources of income that help it absorb negative fluctuations in
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`the energy market. Thus, Ambit contends, a side by side
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`comparison of its rates and those of Penelec do not evidence bad
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`faith pricing and Penelec does not represent the energy market
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`as a whole. It also notes that Penelec did eventually raise its
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`rate when it was authorized to do so, presumably in light of the
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`polar vortex.
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`Ambit further supports its assertion of good faith by
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`citing to the partially sealed testimony of Michael Chambless, a
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`co-founder of Ambit and its corporate representative. Chambless
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`provided multiple reasonable factors that he asserted Ambit
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`considered when setting its energy rates. He also divulged
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`Ambit’s profit margins to show the lack of price gouging. As
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`noted by Chambless, Ambit is a for-profit company, but would not
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`survive if it abused its discretion in setting rates, as Ambit’s
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`variable rate customers are under no contract and may switch
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`providers at the end of any given monthly period. See Am. Compl.
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`Ex. B (ECF No. 16-2, p.2).
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`Silvis does not proffer any legitimate evidence of bad
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`faith. She argues that summary judgment is inappropriate because
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`a jury must still decide whether Ambit violated the spirit of
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`the agreement by unreasonably exercising its discretion in
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 13 of 14
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`setting those higher rates. Silvis’ argument ignores the fact
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`that she has the burden at this stage to “set forth specific
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`facts showing that there is a genuine issue for trial.” Liberty
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`Lobby, 477 U.S. at 250 (internal quotation marks omitted).
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`In its motion for summary judgment, Ambit has shown
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`that there is no genuine dispute as to any material fact
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`regarding its lack of bad faith. After four months of discovery,
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`Silvis has provided no more than her bills from Ambit showing
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`higher rates than those offered by Penelec and her declaration
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`regarding her personal expectations.5 The bills showing a higher
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`5
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`As stated, Silvis has not provided any legitimate
`evidence of bad faith in response to the motion for summary
`judgment. However, in her brief, Silvis contends that
`“additional facts and discovery regarding the process by which
`Ambit determined the prices that it charged Ms. Silvis” are
`necessary, apparently indicating her belief that discovery of
`the issues relevant to the summary judgment motion was not
`completed. (ECF No. 51, pp.11-12). She contends that “[a]s this
`Court is aware, discovery has been limited just to the issue of
`whether Ambit had unfettered discretion under the contract.”
`(Id. n.6).
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`
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`To the contrary, while the parties set aside discovery
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`regarding class certification, the Court provided four months
`for discovery after Ambit filed its motion for summary judgment
`to investigate the claims raised in that motion. See (ECF Nos.
`43 & 50). Silvis’ counsel’s own assertion supports this
`conclusion. Before questioning Chambless at his deposition,
`Silvis’ counsel specifically stated, “before we get started,
`[defense counsel], it’s my understanding that the purpose of
`this deposition, or the scope, rather, is limited to the topics
`raised in the amended motion for summary judgment.” Pl. Resp.,
`Ex. B, p.5 (ECF No. 51-2 filed partially under seal). Certainly,
`whether Ambit engaged in bad faith in setting Silvis’ rate is an
`issue directly related to the summary judgment proceedings and
`should have been fully investigated during those four months.
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`Case 2:14-cv-05005-ER Document 56 Filed 03/21/16 Page 14 of 14
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`price for energy than one other provider do not evidence bad
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`faith and Silvis’ expectations are irrelevant when viewing the
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`contract within its four corners. Bohler-Uddeholm Am., 247 F.3d
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`at 92; Atkinson, 460 F.3d at 452; cf Hassler v. Sovereign Bank,
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`374 F. App’x 341, 345 (3d Cir. 2010) (providing that, under New
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`Jersey law, “[w]ithout bad motive or intention, discretionary
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`decisions that happen to result in economic disadvantage to the
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`other party are of no legal significance”) (internal quotation
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`marks omitted).6 As such, Silvis has failed to rebut Ambit’s
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`showing that there is no genuine dispute as to any material
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`fact. Therefore, summary judgment will be awarded in favor of
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`Ambit and against Silvis.
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`IV. CONCLUSION
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`For the reasons set forth above, the Court will grant
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`Ambit’s motion for summary judgment, entering judgment in its
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`favor, and against Silvis.
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`An appropriate order follows.
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`Silvis may not now legitimately claim that she was not afforded
`adequate time for discovery on this issue.
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` 6
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`It is of little consequence that Hassler was decided
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`under New Jersey law rather than Pennsylvania law, as “New
`Jersey provides a broader scope for breach of implied covenant
`of good faith and fair dealing claims than Pennsylvania.”
`Akshayraj, Inc. v. Getty Petroleum Mktg., Inc., No. 06-cv-2002,
`2009 WL 961442, at *1 n.1 (D.N.J. Apr. 8, 2009).
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`14