In re Adi Liquidation, Inc.

555 B.R. 423, 90 U.C.C. Rep. Serv. 2d (West) 233, 2016 Bankr. LEXIS 2841, 2016 WL 4056202
CourtUnited States Bankruptcy Court, D. Delaware
DecidedJuly 26, 2016
DocketCase No. 14-12092(KJC) (Jointly Administered)
StatusPublished
Cited by1 cases

This text of 555 B.R. 423 (In re Adi Liquidation, Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Adi Liquidation, Inc., 555 B.R. 423, 90 U.C.C. Rep. Serv. 2d (West) 233, 2016 Bankr. LEXIS 2841, 2016 WL 4056202 (Del. 2016).

Opinion

OPINION2

BY: KEVIN J. CAREY, UNITED STATES BANKRUPTCY JUDGE

BACKGROUND

Currently before the Court is the Debtors’ Motion for Partial Summary Judgment Pursuant to Fed.R.Civ.P. 56 (Made Applicable by Fed. R. Bankr.P. 7056 and 9014) with Respect to Their Objection to Claim Number 1868 Filed by Fairway Group Central Services LLC (the “SJ Motion,” D.I. 2626) to determine whether that portion of proof of claim 18683 seeking recovery for alleged “Additional Freight & Upcharges Stemming From Emergency Purchases,” “Lost Profits Due to Service Level Breach,” and “Los[t] Deals Due to Termination of the Buy and Hold Program,” must be disallowed due to the waiver of any claims for consequential and/or incidental damages in the parties’ Vendor Supply Agreement (the “Supply Agreement,” D.I. 2627 Ex. B). (Supply Agreement § 33.) For the reasons that follow, the SJ Motion will be granted, in part, and denied, in part.

Procedural Background

On September 9, 2014, the Debtors commenced a voluntary chapter 11 bankruptcy proceeding in this Court. On February 6, 2015, Fairway Group Central Services LLC (“Fairway”) timely filed a proof of claim, indexed as number 1868 by the Debtors’ claims agent, asserting a claim against one of the Debtors, WR Liquidation, Inc. f/k/a White Rose, Inc. (“White Rose”) in the total amount of $1,290,779.66, of which $919,514.75 was designated as an administrative priority claim under § 507(a)(2) of the Bankruptcy Code (“POC 1868”). (D.I. 2627 Ex. A.)

On August 17, 2015, the Debtors filed their Objection to Claim Number 1868 (the “Debtors’ 1868 Objection”). (D.I.2435.) On October 20, 2015, along with Fairway’s response to the objection (“Fairway’s 1868 Response,” D.I. 2435), Fairway filed the Declaration of Pat Sheils in Support of its response (the “First Sheils Decl.,” D.I, 2435-1). On November 30, 2015, the Debtors amended their objection (the “Amended 1868 Objection”). (D.I.2547.)

On December 11, 2015, a scheduling hearing was held, during which I granted the Debtors’ request to provide for filing of the present motion (12/14/15 Tr. 17:13-18:16, D.I. 2589), and on December 22, 2015, I entered the scheduling order. (D.I.2604.) On January 4, 2016, the Debtors filed the SJ Motion, along with the Debtors’ Opening Brief in Support of its Motion for Partial Summary Judgment (the “Debtors’ Opening Brief’). (D.I. 2627.) On January 25, 2016, Fairway filed its Answering Brief in Opposition to Debtors’ Motion for Partial Summary Judgment (“Fairway’s Answering Br.,” D.I. 2671), along with a Declaration of Pat Sheils in Support of [its] Answering Brief that was nearly identical to the previous Sheils Decl. but significantly altered in certain paragraphs and footnotes (the “Revised Sheils Decl.”). (D.I. 2671-1.), On February 8, 2016, the Debtors filed the Debtors’ Reply in Support of its Motion for Partial Summary Judgment (the “Debtors’ Reply”). (D.I.2965.) On June [427]*4276, 2016, oral argument was held regarding the SJ Motion. (6/6/16 Tr., D.I.2009.)

The Debtors argue that there is no genuine dispute as to material facts, and that they are entitled to summary judgment as a matter of law with respect to categorizing the damages in question without first proceeding to discovery.4

FACTS

Fairway, a Delaware limited liability company, and debtor White Rose were parties to a Supply Agreement dated March 28, 2014. The Supply Agreement provided that Fairway would “purchase from White Rose substantially all ‘Primary Products’ (defined in Schedule A)5 required by Fairway to stock the current Fairway Stores.” (Supply Agreement § 1.1.) The contract also provided that, “Notwithstanding anything to the contrary herein, the parties acknowledge and agree that Fairway may engage a third party supplier, without restriction or penalty, for its requirement of any Primary Products that are not, at the time of purchase, available from White Rose.” (Id.) By order dated December 16, 2014, the Supply Agreement was rejected by the Debtor effective November 26, 2014 (the “Rejection Date”). (D.I.1198.)

A “Statement of Damages Incurred by Fairway Due to White Rose’s Breach of the Parties’ Supply Agreement” (the “Statement of Damages”) was attached to POC 1868. The statement consisted of a spreadsheet with six separate headings describing different types or categories of damages incurred both, (1) pre-petition, and (2) post-petition through October 29, 2014. (Id.) Each heading in the Statement of Damages had an accompanying footnote that further explained Fairway’s theory behind each category of damages. (Id.) Each column of the Statement of Damages specified either that the Debtor was liable for the damages or from whom the emergency purchases were made (including “Supervalu,” “J & J,” “UNFI,” and “KeHE,”). (Id.) The different categories of damages alleged in POC 1868 were as follows: (1) “Additional Freight & Up-charges Stemming from Emergency Purchases” (the “Freight & Upcharges”); (2) “Increased Product Cost Stemming from Emergency Purchases”; (3) “Lost Profits due to Service Level Breach” (the “Lost Profits”); (4) “Los[t] Deals due to the Termination of the Buy and Hold Pro[428]*428gram” (the “Lost Deals”); (5) “Reclamation Amounts Owed”; and (6) “Volume Rebates Owed.” (Id.) No receipts or shipping manifests were attached to POC 1868.

STANDARDS

A. Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure, made applicable by Federal Rule of Bankruptcy Procedure 7056 and 9014(c), provides that “[t]he court shall grant summary judgment if the movant shows that there is ho genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”6 At the summary judgment stage, the court’s function is not to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial.7

The moving party bears the burden of establishing the absence of a genuine dispute as to a material fact.8 When the nonmoving party bears the burden of persuasion at trial, the moving party “may meet its burden ... by showing that the nonmoving party’s evidence is insufficient to carry that burden.”9

Once the moving party has carried its initial burden, the opposing party “must do more than simply show that there is some metaphysical doubt as to the material facts.”10 Summary judgment cannot be avoided by introducing only “a mere scintilla of evidence,”11 or by relying on “con-clusory allegations, improbable inferences and unsupported speculation.”12 “Brash conjecture coupled with earnest hope that something concrete will materialize, is insufficient to block summary judgment.”13

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555 B.R. 423, 90 U.C.C. Rep. Serv. 2d (West) 233, 2016 Bankr. LEXIS 2841, 2016 WL 4056202, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-adi-liquidation-inc-deb-2016.