Counter Wraps International, Inc. v. Diageo North America, Inc.
2:16-cv-02924
| D. Nev. | Mar 15, 2019Background
- Counter Wraps, a company that designs and installs advertising "wraps," entered negotiations with Diageo in 2010 for 5,000 custom Nuvo wraps at a discounted unit price, memorialized in a September 2010 written document (the "Nuvo Agreement").
- Counter Wraps manufactured and installed roughly 2,080 wraps between late 2010 and March 2011 and received about $3.3 million of the $7.5 million contract price through an intermediary; normal market value per wrap exceeds $2,500.
- Diageo, which had marketing control and budget responsibility for Nuvo, suspended additional installations on February 3, 2011 citing budget constraints and later purchased only an additional 333 wraps in May 2011.
- Counter Wraps filed suit in October 2016 alleging breach of contract and, after discovery revealed Diageo’s $12 million 2011 Nuvo advertising budget and other details, added claims for fraud in the inducement and negligent misrepresentation.
- Defendants moved for summary judgment arguing statute-of-limitations bars the fraud and breach claims; the court found Counter Wraps discovered the basis for both claims by February 3, 2011 and granted summary judgment for Diageo, closing the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fraud-in-the-inducement claim is timely | Fraud discovered only during later discovery (2016) when Diageo’s $12M budget was revealed; claim within statute | Fraud accrued in 2011 when Diageo halted installations; 3-year limitations expired before 2016 filing | Claim time-barred; summary judgment granted for Diageo |
| Whether breach-of-contract claim is barred by limitations | Contract breach not discovered until 2016 so accrual occurred then | Even if oral, breach accrued Feb 3, 2011 when performance was indefinitely suspended; 4-year limitations elapsed before filing | Oral-contract claim time-barred; summary judgment granted for Diageo |
| Whether written contract exists binding Diageo | The Nuvo Agreement memorialized terms; Diageo should be bound by its agents/communications | Agreement not signed by Diageo and does not name Diageo; no evidence Diageo accepted the written contract | No written contract with Diageo; acceptance required; court treated contract as oral for limitations analysis |
| Application of discovery rule to accrual | Discovery rule delays accrual until plaintiff actually learned of fraud/breach | Discovery rule accrues when plaintiff knew or should have known (by Feb 3, 2011) | Discovery rule applied; accrual occurred in 2011, barring later suit |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard and burdens on movant)
- Anderson v. Liberty Lobby, 477 U.S. 242 (1986) (court’s role at summary judgment and weighting evidence)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (nonmoving party must show genuine factual dispute)
- Lujan v. National Wildlife Federation, 497 U.S. 871 (1990) (disputed facts construed for nonmoving party at summary judgment)
- C.A.R. Transportation Brokerage Co. v. Darden Restaurants, Inc., 213 F.3d 474 (9th Cir. 2000) (movant’s initial burden when it would bear proof at trial)
- T.W. Electric Service, Inc. v. Pacific Electric Contractors Ass’n, 809 F.2d 626 (9th Cir. 1987) (what constitutes a genuine issue requiring trial)
- Taylor v. List, 880 F.2d 1040 (9th Cir. 1989) (conclusory allegations insufficient to avoid summary judgment)
- May v. Anderson, 119 P.3d 1254 (Nev. 2005) (basic contract acceptance principles)
- Bemis v. Estate of Bemis, 967 P.2d 437 (Nev. 1998) (Nevada discovery rule for accrual of claims)