`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
`
`Case No. 4:15-CV-677
`
`§
`
`§§
`
`§§
`
`§
`§
`
`§§
`
`§
`
`3W POWER USA, INC. f/k/a
`AEG POWER SOLUTIONS USA, INC.,
`
`Plaintiff,
`
`v.
`
`POWER MAX CO., LTD.,
`
`Defendant.
`
`CORRECTED MEMORANDUM OPINION AND ORDER
`GRANTING IN PART PLAINTIFF’S MOTION FOR
`SUMMARY JUDGMENT AND DENYING DEFENDANT’S
`MOTION FOR PARTIAL SUMMARY JUDGMENT
`
`The following are pending before the court:
`
`1.
`
`2.
`
`3.
`
`Plaintiff’s motion for summary judgment and brief in support (docket entry #16);
`
`Power Max’s opposition to motion for summary judgment (docket entry #21); and
`
`Plaintiff’s reply in support of motion for summary judgment (docket entry #23).
`
`___________________________
`
`1.
`
`2.
`
`3.
`
`4.
`
`5.
`
`Power Max’s motion for partial summary judgment (docket entry #17);
`
`Notice of errata to Power Max’s motion for partial summary judgment (docket entry
`#18);
`
`Plaintiff’s corrected response to Defendant’s motion for partial summary judgment
`and brief in support (docket entry #22);
`
`Power Max’s reply in support of motion for partial summary judgment (docket entry
`#24); and
`
`Plaintiff’s sur-reply to Defendant’s motion for partial summary judgment and brief
`in support (docket entry #25).
`
`-1-
`
`
`
`Case 4:15-cv-00677-RAS Document 41 Filed 11/07/16 Page 2 of 12 PageID #: 921
`
`Having considered the pending motions and the responsive briefing thereto, the court finds that the
`
`Plaintiff’s motion for summary judgment should be granted in part and the Defendant’s motion for
`
`partial summary judgment should be denied.
`
`FACTUAL BACKGROUND and PROCEDURAL HISTORY
`
`The stipulated facts, as set forth in the parties’ Joint Final Pretrial Order (docket entry #31)
`
`beginning at page 17, are as follows:
`
`1.
`
`2.
`
`3.
`
`4.
`
`5.
`
`6.
`
`7.
`
`8.
`
`9.
`
`Simon Britter (“Britter”) is an employee of AEG Power Solutions Sdn Bhd, a
`subsidiary of the Singapore division of AEG Power Solutions BV;
`
`Sean Huang (“Huang”) was the Chief Commercial Officer for ZNShine and,
`subsequently, for Power Max1;
`
`Power Max Co., Ltd. (“Power Max”) is in the business of, among things, developing
`and selling to investors solar electric power plants in Japan;
`
`Power Max is an affiliate of ZNShine Solar aka ZNShine PV-Tech Co. Ltd.
`(“ZNShine”), a Chinese manufacturer of photovoltaic panels, which convert sunlight
`into electricity;
`
`During 2012, Britter began interfacing with representatives of ZNShine in Japan
`regarding the possibility that AEG might provide inverters for ZNShine’s solar
`projects in Japan;
`
`In early 2013, AEG proposed the use of the 45 kW MPV inverter systems for projects
`generating up to 50 kW of electricity;
`
`Britter made several trips to Fukuoka, Japan during 2013 and 2014 to meet with
`representatives from ZN Shine and Power Max;
`
`The 45 kW MPV inverter referenced above is a modular unit consisting of a 75 kW
`inverter cabinet and three 15 kW modules;
`
`The cabinet is referred to as a 75 kW cabinet because it is capable of housing up to
`five (5) 15 kW modules [for] a total capacity of 75 kW;
`
`1Although this fact was not included in the parties’ stipulated facts, it appears to be undisputed.
`
`-2-
`
`
`
`Case 4:15-cv-00677-RAS Document 41 Filed 11/07/16 Page 3 of 12 PageID #: 922
`
`10.
`
`11.
`
`12.
`
`13.
`
`14.
`
`15.
`
`16.
`
`17.
`
`18.
`
`19.
`
`20.
`
`21.
`
`22.
`
`23.
`
`The inverter units being discussed only included three (3) 15 kW modules for a total
`capacity of 45 kW. These modular units, consisting of a 75 kW Cabinet and three (3)
`15 kW modules, will be referred to hereinafter as the 45 kW MPV Inverters;
`
`Britter traveled to Fukuoka, Japan between June 3 and June 14, 2013, to meet with
`representatives from ZNShine;
`
`On June 27, 2013, Britter sent Huang an email attaching the specifications for a
`transformer that he represented could be used with the 45 kW MPV Inverters along
`with a quote from one potential supplier;
`
`On July 13, 2013, Huang, as “Director” of Power Max, issued a purchase order (the
`“Purchase Order”) to “AEG Power Solutions”;
`
`The first page of the Purchase Order specifies a quantity of 500 “sets” of one (1) 75
`kW MPV cabinet and three (3) 15 kW MPV inverters, at a price per set of $12,000,
`for a total price of $6,000,000;
`
`The second page of the Purchase Order identifies a delivery schedule that adds up to
`only 200 Inverters;
`
`On July 29, 2013, Britter sent Power Max’s CEO an email requesting him to make
`the initial 20% payment on the first 80 45 kW MPV Inverters;
`
`The unit price for each 45 kW MPV Inverter was $12,000;
`
`The total cost for the first 80 units was, therefore, $960,000, 20% of which is
`$192,000;
`
`Britter also requested that Power Max make arrangements for the letter of credit for
`the 80% balance of $768,000;
`
`Power Max did not make the initial 20% deposit on the first eighty (80) units;
`
`Sixteen (16) units at $12,000 per unit totals $192,000, 20% of which is $38,400;
`
`On or about October 28, 2013, Power Max paid AEG Power Solutions USA, Inc.
`(“AEG USA”) $38,400;
`
`AEG USA shipped sixteen (16) 45 kW MPV Inverters to Power Max in November,
`2013 which arrived in Japan in December, 2013;
`
`24.
`
`Power Max made a 60% payment to AEG USA, in the amount of $115,200, in
`
`-3-
`
`
`
`Case 4:15-cv-00677-RAS Document 41 Filed 11/07/16 Page 4 of 12 PageID #: 923
`
`connection with the shipment;
`
`25.
`
`26.
`
`27.
`
`28.
`
`29.
`
`30.
`
`31.
`
`On January 14 and February 17, 2014, Michael Julian, general counsel for AEG
`Power Solutions BV, sent Huang “Notice Letters” on behalf of AEG USA
`demanding that Power Max complete the purchase of the remaining 484 45kW MPV
`Inverters;
`
`On March 26, 2014, Britter sent Huang an email reminding him that the 20% balance
`on the delivery of the first sixteen (16) 45 kW MPV Inverters was due;
`
`The 45 kW MPV Inverters were manufactured for AEG USA by Creation
`Technologies, Inc.;
`
`Sixteen (16) 45 kW MPV Inverters were delivered to Power Max in Japan, together
`with 6 spare 15 kW modules for which Power Max was not charged;
`
`The total purchase price for these sixteen (16) units was $192,000, of which Power
`Max paid $153,600;
`
`AEG USA contracted to sell the 45 kW MPV Inverters to Power Max at a loss of
`approximately $1,450 per unit; and
`
`Had AEG USA delivered five hundred (500) 45 kW MPV Inverters to Power Max
`and had Power Max paid $6,000,000 for all 500 inverters, AEG USA would have lost
`approximately $725,000.
`
`On June 16, 2015, the Plaintiff filed its original petition in the 296th Judicial District Court
`
`of Collin County, Texas. In its petition, the Plaintiff alleged that the July 13, 2013 purchase order
`
`constituted an enforceable contract between the parties and the Defendant breached the contract. The
`
`Plaintiff sued for damages for the alleged breach of contract. The Plaintiff also seeks to recover its
`
`reasonable and necessary attorneys’ fees. On September 29, 2015, the Defendant filed its original
`
`answer in state court, asserting the following affirmative defenses: statute of frauds; the contract was
`
`illusory, invalid, or unenforceable; the Plaintiff failed to satisfy all conditions precedent; waiver;
`
`ratification; estoppel; the economic loss rule; unclean hands; in pari delicto; statute of limitations;
`
`and comparative responsibility. Also on September 29, 2015, the Defendant filed counterclaims in
`
`-4-
`
`
`
`Case 4:15-cv-00677-RAS Document 41 Filed 11/07/16 Page 5 of 12 PageID #: 924
`
`state court, alleging breach of the implied warranty of fitness for a particular purpose and breach of
`
`contract, seeking damages as well as its reasonable and necessary attorneys’ fees. Thereafter, the
`
`Defendant removed this case to this court on October 2, 2015. On October 19, 2015, the Plaintiff
`
`filed its answer to the Defendant’s counterclaims, asserting that the Defendant’s claims are barred
`
`by the following affirmative defenses: prior breach; statute of frauds; the damage limitation
`
`contained in the agreement between the parties; statute of limitations; and the doctrines of waiver
`
`and/or estoppel.
`
`On August 24, 2016, the Plaintiff moved for summary judgment, arguing that it is entitled
`
`to judgment as a matter of law on its own breach of contract claim as well as on both of the
`
`Defendant’s counterclaims. Also on August 24, 2016, the Defendant moved for partial summary
`
`judgment, arguing that it is entitled to judgment as a matter of law on the issue of damages with
`
`respect to the remaining 484 45kW MPV Inverters. The court will address each motion in turn.
`
`SUMMARY JUDGMENT STANDARD
`
`The purpose of summary judgment is to isolate and dispose of factually unsupported claims
`
`or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment is proper
`
`“if the movant shows that there is no genuine dispute as to any material fact and the movant is
`
`entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). A dispute about a material fact is
`
`genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving
`
`party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The trial court must resolve all
`
`reasonable doubts in favor of the party opposing the motion for summary judgment. Casey
`
`Enterprises, Inc. v. American Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981) (citations
`
`omitted). The substantive law identifies which facts are material. See id. at 248.
`
`-5-
`
`
`
`Case 4:15-cv-00677-RAS Document 41 Filed 11/07/16 Page 6 of 12 PageID #: 925
`
`Both parties have a responsibility in the summary judgment process. Celotex, 477 U.S. at
`
`323–24. First, the party seeking summary judgment must show that the admissible evidentiary
`
`material of record and any affidavits submitted by the nonmoving party are insufficient to permit the
`
`nonmoving party to carry its burden of proof. The nonmoving party must then set forth “specific
`
`facts showing that there is a genuine issue for trial” and “may not rest upon the mere allegations or
`
`denials of his pleadings.” Anderson, 477 U.S. at 248. “Conclusional allegations and denials,
`
`speculation, improbable inferences, unsubstantiated assertions, and legalistic argumentation do not
`
`adequately substitute for specific facts showing a genuine issue for trial.” Roach v. Allstate
`
`Indemnity Co., 2012 WL 1478745 (5th Cir. 2012), citing SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir.
`
`1993).
`
`DISCUSSION AND ANALYSIS
`
`I.
`
`BREACH OF CONTRACT CLAIMS BY THE PLAINTIFF AND THE DEFENDANT
`
`Both the Plaintiff and the Defendant have asserted a cause of action for breach of contract.
`
`The Plaintiff has moved for summary judgment on its own breach of contract claim as well as the
`
`Defendant’s breach of contract counterclaim. In its motion for summary judgment, the Plaintiff
`
`contends, and the Defendant does not contest, that this case is governed by Article II of the Uniform
`
`Commercial Code, TEX. BUS. & COMM. CODE TITLE I, CHAPTER 2 (“UCC”).
`
`Pertinent to both parties’ breach of contract claims is whether the July 13, 2013 purchase
`
`order resulted in an enforceable contract. In response to the Plaintiff’s motion for summary
`
`judgment, the Defendant argues that the purchase order did not result in an enforceable contract
`
`-6-
`
`
`
`Case 4:15-cv-00677-RAS Document 41 Filed 11/07/16 Page 7 of 12 PageID #: 926
`
`because (1) the purchase order was not accepted in the manner specified in the purchase order2, and
`
`(2) the inverters were not delivered in accordance with the schedule set forth in the purchase order.
`
`As noted by the Plaintiff, however, § 2.209(a) of the UCC permits the modification of an
`
`agreement for the sale of goods. Further, § 2.204(a) provides that “[a] contract for [the] sale of
`
`goods may be made in any manner sufficient to show agreement, including conduct by both parties
`
`which recognizes the existence of such a contract.” TEX. BUS. & COM. CODE ANN. § 2.204(a).
`
`Additionally, “[e]ven though one or more terms are left open[,] a contract for sale does not fail for
`
`indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis
`
`for giving an appropriate remedy.” TEX. BUS. & COM. CODE ANN.§ 2.204(c).
`
`While the Defendant has cited the court to considerable case law indicating that the contract
`
`is not enforceable because the Plaintiff failed to accept the purchase order pursuant to its terms, the
`
`case law does not pertain to the UCC. “Where the U.C.C. applies, it displaces all common law rules
`
`of law regarding breach of contract and substitutes instead those rules of law and procedure set forth
`
`in the U.C.C.” Glenn Thurman, Inc. v. Moore Const., Inc., 942 S.W.2d 768, 771 (Tex. App. – Tyler
`
`1997, no writ). Even though the Defendant failed to provide the court with applicable case law and
`
`failed to respond to the Plaintiff’s argument that the Defendant’s case law is indeed inapposite, the
`
`court finds that there is a fact issue as to whether the purchase order resulted in an enforceable
`
`contract under the UCC. See supra. (the court finds that a genuine dispute as to a material fact exists
`
`regarding whether the Plaintiff failed to provide the on-site technical support required under the
`
`2The purchase order provided that “[i]t is valid only with the advanced payment mentioned above
`and must be formally acknowledged by AEGPS within 1 week of receipt of the advanced payment and
`this purchase order. The Purchase order in total becomes valid only after design confirmation by AEG
`PS, hence signed layout as per Addendum 1.”
`
`-7-
`
`
`
`Case 4:15-cv-00677-RAS Document 41 Filed 11/07/16 Page 8 of 12 PageID #: 927
`
`purchase order and whether the Plaintiff failed to ensure the technical functionality of the inverters).
`
`The Defendant urges the court to deny the Plaintiff’s motion for summary judgment with
`
`respect to (presumably) both parties’ respective breach of contract claims on the affirmative defenses
`
`of ambiguity and abandonment.3 The Defendant argues that the contract was ambiguous because
`
`the quantity of inverters noted on the front page of the purchase order was 500. However, the second
`
`page of the purchase order only enumerates 200 inverters. As such, the Defendant contends that this
`
`ambiguity prevents the court from granting the Plaintiff’s motion for summary judgment.
`
`In response, the Plaintiff first contends that ambiguity is an affirmative defense that must be
`
`pled; however, the Defendant failed to plead the same.
`
`FED. R. CIV. P. 8(c) requires that a party specifically plead an affirmative
`defense. Rule 8(c) contains a nonexclusive list of affirmative defenses that does not
`include ambiguity. Under Texas law, however, ambiguity is an affirmative defense
`that must be pleaded. See Old Republic Sur. Co. v. Palmer, 5 S.W.3d 357, 360 (Tex.
`App. 1999, no pet.). Even in a diversity case, however, interpretation of a contract
`is a matter of law, and the court can conclude that a contract is ambiguous even when
`no party pleads ambiguity.
`
`Vought Aircraft Indus., Inc. v. Falvey Cargo Underwriting, LTD., 729 F. Supp. 2d 814, 847 (N.D.
`
`Tex. 2010) (citations omitted). Here, however, the court finds that the contract is not ambiguous.
`
`Although the Defendant, in its response to the Plaintiff’s motion for summary judgment, makes
`
`much of the numerical inconsistencies regarding the number of units ordered, the Defendant took
`
`a different position in its own motion for partial summary judgment. In the section of the
`
`Defendant’s motion for partial summary judgment entitled “Statement of Undisputed Facts,” the
`
`Defendant states, “On July 13, 2013, Power Max issued the Purchase Order to AEG to purchase 500
`
`3This corrected Memorandum Opinion and Order is being issued by the court because the court
`has deleted the following wording from the original version of this Memorandum Opinion and Order:
`“Having found that a contract was formed under the UCC, the court notes that”.
`
`-8-
`
`
`
`Case 4:15-cv-00677-RAS Document 41 Filed 11/07/16 Page 9 of 12 PageID #: 928
`
`Inverters at a cost of $12,000 per Inverter.” POWER MAX’S MTN. FOR PARTIAL SUMM. JUDG., p. 2,
`
`§ III. Since the court does not consider motions in a vacuum, the court finds that ambiguity is a non-
`
`issue since the parties agree that the contract was for 500 inverters.
`
`Next, the court considers the affirmative defense of abandonment. The Defendant argues that
`
`the parties abandoned the terms of the contract because the parties discussed a delivery schedule for
`
`the inverters that differed from that stated in the purchase order. The Plaintiff contends that because
`
`the Defendant failed to plead the affirmative defense of abandonment, the Defendant waived its
`
`argument. Unlike the affirmative defense of ambiguity, which requires the court to interpret a
`
`contract as a matter of law, the affirmative defense of abandonment does not require any such
`
`interpretation. “Abandonment is an affirmative defense which must be pled . . ., and failure to plead
`
`it results in its waiver.” Cargal v. Cargal, 750 S.W.2d 382, 384 (Tex. App. – Fort Worth 1988, no
`
`writ). Since the Defendant did not plead the affirmative defense of abandonment, the Defendant
`
`waived the same.
`
` Next, the Defendant argues that the Plaintiff failed to perform its obligations under the
`
`purchase order. In its breach of contract counterclaim, the Defendant alleges the following:
`
`AEG promised “to provide Power Max Co Ltd with on-site technical
`19.
`support within Japan during the installation and commissioning for the first 50
`systems at no extra cost. This is to help Power Max Co Ltd become familiar with the
`systems and to ensure AEGPS systems are installed and working correctly.”
`
`AEG breached its contract with Power Max because the systems could
`20.
`not be made to work on the Japanese power grid.
`
`Power Max has been injured by AEG’s breach of contract in the
`21.
`amount of $153,600 because that is the amount that it paid AEG for the systems that
`did not work.
`
`The Defendant argues that the Plaintiff failed to provide the support required under the purchase
`
`-9-
`
`
`
`Case 4:15-cv-00677-RAS Document 41 Filed 11/07/16 Page 10 of 12 PageID #: 929
`
`order and further failed to ensure the technical functionality of the inverters. In response, the
`
`Plaintiff contends that Britter was prepared to provide on-site technical support to the Defendant
`
`once he was advised by the Defendant that the Defendant was ready to proceed with installation.
`
`However, the Plaintiff argues that the Defendant failed to provide the Plaintiff with an installation
`
`schedule. The Plaintiff further responds that the inverters were designed and manufactured to be
`
`fully capable of use in connection with the power grid in Japan, if installed properly and with a
`
`proper transformer.
`
`The court finds that as a matter of law, a genuine issue of material fact exists regarding
`
`whether the Plaintiff failed to provide the support required under the purchase order and whether the
`
`Plaintiff failed to ensure the technical functionality of the inverters. The Plaintiff contends that in
`
`order for the Defendant to establish that the inverters or the related transformers were not functional,
`
`the Defendant would be required to offer competent expert testimony. Since the Defendant failed
`
`to designate any expert witnesses, the Plaintiff argues that the Defendant will not be able to meet its
`
`burden. While this might be ultimately true, that is a matter of proof to be determined at trial.
`
`Finally, the Plaintiff argues that it is entitled to judgment on its breach of contract claim. In
`
`its breach of contract claim, the Plaintiff alleges the following:
`
`. . . Power Max issued the PO to AEG, which AEG accepted. The
`13.
`accepted PO constitutes an enforceable contract between Power Max and AEG for
`the delivery of 500 inverters. Of the 500 Inverters ordered by Power Max, it
`purchased only 16. Furthermore, not only did Power Max fail to purchase the
`additional 484 Inverters it ordered, it failed even to pay the full purchase price for the
`16 Inverters which were delivered.
`
`As a result of the foregoing, Power Max is in breach of the agreement
`14.
`between the parties. As a result of such breach, AEG has been damaged in the
`amount of Five Million Eight Hundred Forty-Six Thousand Four Hundred and
`00/100 Dollars ($5,846,400).
`
`-10-
`
`
`
`Case 4:15-cv-00677-RAS Document 41 Filed 11/07/16 Page 11 of 12 PageID #: 930
`
`The Plaintiff contends that since the Defendant breached the terms of the contract, it is entitled to
`
`recover its damages. However, since a genuine dispute as to a material fact exists regarding whether
`
`the Plaintiff failed to provide the support required under the purchase order and whether the Plaintiff
`
`failed to ensure the technical functionality of the inverters, the court need not reach the issue of
`
`damages.4
`
`II.
`
`BREACH OF THE IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
`
`Although the Plaintiff moved for summary judgment on the Defendant’s counterclaim for
`
`breach of the implied warranty of fitness for a particular purpose, the Defendant did not file a
`
`response. Given the Defendant’s failure to brief this issue, the court finds that the Defendant has
`
`abandoned this counterclaim. See Denson v. BeavEx, Inc., 612 F. App'x 754, 759 (5th Cir. 2015).
`
`Accordingly, the Plaintiff’s motion for summary judgment on the Defendant’s counterclaim for
`
`breach of the implied warranty of fitness for a particular purpose is GRANTED.
`
`CONCLUSION
`
`Based on the foregoing, it is hereby ORDERED that the Plaintiff’s motion for summary
`
`judgment (docket entry #16) is GRANTED IN PART and Power Max’s motion for partial summary
`
`judgment (docket entry #17) is DENIED.
`
`4The Defendant’s motion for partial summary judgment concerns whether the Plaintiff is entitled
`to recover damages for the 484 Inverters. Since the issue presented concerns dam ages, the court need not
`reach this issue. However, to the extent the Defendant complains that it did not receive timely discovery
`related to purchase order 1341 between Creation Technologies and the Plaintiff for the component parts
`necessary to fill the July 13, 2013 purchase order between the Plaintiff and the Defendant, the court finds
`the Defendant’s arguments unpersuasive. The court is not inclined to consider objections to discovery
`matters that are buried in a motion for summary judgment. Further, the court presumes the Defendant
`was aware of the Plaintiff’s pretrial disclosures filed on August 19, 2016 (docket entry #15) which noted
`that the Plaintiff expects to offer “[i]nvoices from Creation Technologies, Inc. to Plaintiff Dated
`September 23, 2013 through October 8, 2014” and “Summary of Creation Technology, Inc. Invoices.”
`The Defendant did not move to strike these exhibits. While the court does not condone gamesmanship,
`the court does not have sufficient information to determine wrongdoing, if any.
`
`-11-
`
`
`
`Case 4:15-cv-00677-RAS Document 41 Filed 11/07/16 Page 12 of 12 PageID #: 931
`Case 4:15—cv—OO677—RAS Document 41 Filed 11/07/16 Page 12 of 12 Page|D #: 931
`
`IT IS SO ORDERED.
`IT IS SO ORDERED.
`
`SIGNED this the 7th day of November, 2016.
`
`
`
`UNITED STATES DISTRICT JUDGE
`
`-12-
`-12-
`
`