438 F.Supp.3d 847
M.D. Tenn.2018Background
- EPAC and Thomas Nelson entered a five-year Master Services Agreement (with a New York choice-of-law clause) making EPAC the exclusive printer for Thomas Nelson.
- Thomas Nelson terminated the Agreement and moved printing to a lower-cost vendor, alleging EPAC produced poor-quality books and missed production requirements.
- EPAC contends Thomas Nelson secretly arranged a lower price beforehand and breached to save money; EPAC asserts breach of contract and two fraud claims (promissory fraud and fraudulent concealment).
- Cross-motions for summary judgment were filed by both parties; the court granted partial relief to Thomas Nelson and denied other portions due to factual disputes.
- The court dismissed EPAC’s promissory fraud claim under New York law (per the contract clause) but preserved EPAC’s fraudulent concealment claim and multiple breach-of-contract issues for jury trial scheduled Sept. 25, 2018.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether breaches of contract occurred | EPAC: Thomas Nelson breached by terminating without valid cause and by disclosing confidential pricing | Thomas Nelson: EPAC failed to produce quality books/volumes required | Denied summary judgment to both — material facts disputed; jury to decide |
| Promissory fraud claim | EPAC: Thomas Nelson promised exclusive business but never intended to perform | Thomas Nelson: NY law (per contract) bars fraud claim duplicative of breach absent separate duty, collateral misrep., or special damages | Promissory fraud dismissed: governed by NY law and fails under NY rule prohibiting parallel fraud claim absent exceptions |
| Fraudulent concealment claim (pre-contract) | EPAC: Thomas Nelson concealed that it had obtained a lower price from another vendor before contracting | Thomas Nelson: Choice-of-law clause should govern torts or bar claim | Claim preserved: Concealment alleged as pre-contract tort; choice-of-law for this tort left for trial due to insufficient facts |
| Damages (punitive, lost profits, casebound books, post-closure losses) | EPAC: Seeks lost profits and other damages; asserts fraud may allow punitive | Thomas Nelson: Contract limits consequential/punitive damages; many damages barred | Court: Lost profits may be recovered as general damages if breach prevented EPAC’s performance; punitive and other limitations reserved pending choice-of-law; casebound book pricing and partial-performance disputed — denied summary judgment |
| Counterclaims for misrepresentation (capacity of Fairfield facility) | Thomas Nelson: EPAC misrepresented facility capacity and quality | EPAC: Some admissions conceded re: book standards; disputes remain on capacity and knowledge | Summary judgment denied on counterclaims due to factual disputes under either NY or TN law |
Key Cases Cited
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (summary judgment standard and drawing inferences for nonmovant)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment/genuine dispute standard)
- Rodgers v. Banks, 344 F.3d 587 (movant’s initial burden on summary judgment)
- Town of Smyrna v. Mun. Gas Auth. of Ga., 723 F.3d 640 (choice-of-law clause interpretation re: torts)
- Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13 (New York rule limiting fraud claims duplicative of breach)
- Biotronik A.G. v. Conor Medsystems Ireland, Ltd., 11 N.E.3d 676 (NY distinction between general vs. consequential lost-profit damages)
- Hataway v. McKinley, 830 S.W.2d 53 (Tenn. choice-of-law: Restatement significant-relationship test for torts)
- Moses v. Business Card Express, Inc., 929 F.2d 1131 (fraud seeking to invalidate contract may fall within contractual choice-of-law)