Southwest Refrigerated Warehousing Services Joint Venture v. M.A. & Sons, Inc.
3:16-cv-00421
W.D. Tex.Sep 21, 2017Background
- M.A. & Sons, a New Mexico chile processor, contracted in Sept. 2015 to store chile at Southwest Refrigerated’s El Paso facility under Southwest’s Standard Contract Terms (the Storage Agreement).
- Beginning Oct. 2015 M.A. accrued storage charges; unpaid balance alleged by Southwest of $122,219.02 through Sept. 2016.
- In Jan. 2016 M.A. discovered extensive packaging damage to stored chile that caused spoilage; M.A. alleges up to 355,810 pounds were damaged and seeks about $355,810 in damages.
- From Jan.–June/July 2016 M.A. removed product for testing and returned product to Southwest intermittently; there is dispute whether a Southwest agent caused the damage and whether that person was acting within the scope of employment.
- M.A. alleges Southwest’s actions constituted a prior material breach that excuses M.A.’s further payment; Southwest insists no breach is shown and seeks summary judgment on its breach-of-contract claim to collect unpaid storage charges.
- The court denied Southwest’s motion for summary judgment, finding genuine disputes of material fact about whether Southwest caused a breach and whether any breach was material, and noting unresolved factual questions about whether M.A. treated the contract as continuing after the alleged breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Southwest is entitled to summary judgment on its breach-of-contract claim for unpaid storage charges | Southwest: no genuine dispute of material fact; valid contract, plaintiff performed, defendant breached by nonpayment | M.A.: Southwest materially breached first (damaged chile), excusing M.A.'s performance; factual dispute over who caused damage | Denied — genuine disputes of material fact preclude summary judgment |
| Whether Southwest’s conduct (damaging chile) constitutes a breach of the Storage Agreement | Southwest: no evidence an agent acted on Southwest’s behalf; no contractual breach established | M.A.: Section 11 imposes a duty to exercise reasonable care; alleged damage by Southwest’s agent supports breach claim | Court: Section 11 can support a breach claim; factual dispute as to agent’s status and causation remains |
| Whether any breach was material enough to excuse M.A.’s obligations | Southwest: even if damage occurred, M.A. continued to use storage and accrue charges; no excuse | M.A.: loss of large quantity of product (allegedly 355,810 lbs) would be a material deprivation | Court: materiality is a fact-sensitive inquiry under Restatement factors; genuine issues of fact exist |
| Whether M.A. treated the contract as continuing (which could bar treating contract as terminated) | Southwest: M.A. stored product during the period and accrued charges before damage; M.A. continued dealings | M.A.: moved product for testing and mitigation, which could reflect mitigation rather than continued acceptance | Court: Neither party briefed the issue; facts permit both inferences—issue unresolved, affecting excuse for nonpayment |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (moving party’s burden and summary judgment framework)
- Anderson v. Liberty Lobby, 477 U.S. 242 (1986) (standard for genuine dispute of material fact)
- Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195 (Tex. 2004) (adopting Restatement factors for material breach)
- Matter of Dallas Roadster, Ltd., 846 F.3d 112 (5th Cir. 2017) (distinguishing legal question of breach from factual questions about occurrence and materiality)