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Filing # 32876490 E-Filed 10/06/2015 10:41:56 AM
IN AND FOR THE CIRCUIT COURT OF
THE SEVENTEENTH JUDICIAL CIRCUIT
IN AND FOR BROWARD COUNTY, FL
EVERGREEN SWEETENERS, INC., a Case No.: 14-CA-010427
Florida corporation,
Plaintiff,
v.
CUSTOM BEVERAGE CONCEPTS,
INC., a Georgia corporation,
Defendant.
SE EEE
PLAINTIFF’S RESPONSE TO MOTION TO COMPEL
AND MEMORANDUM OF LAW
Plaintiff, Evergreen Sweeteners, Inc. (“Evergreen”), files this Response to the Motion to
Compel (the “Motion”) filed by Defendant, Custom Beverage Concepts, Inc.(“CBC”), on September
30, 2015 and states:
I. INTRODUCTION
For the third time, CBC is seeking to discover information that is not relevant nor reasonably
calculated to lead to the discovery of admissible evidence. Not intent on this Court’s previous two
rulings denying discovery related to Evergreen’s purchase of sugar from non-party manufacturers!,
CBC served another round of discovery requesting much of the same information and documents for
its “third bite at the apple”. In its Motion, CBC has rehashed many of the same arguments in its
previously-denied Motion for Reconsideration and offers no new arguments save for its flawed
position that its Amended Affirmative Defense somehow invalidates the Court’s Orders on these
very same issues.
In essence, CBC is asking this Court to allow it to conduct unnecessary and costly discovery
| See Order Denying CBC’s Motion to Compel, dated June 22, 2015; and Order Denying
CBC’s Motion for Reconsideration, dated July 27, 2015. See Ex’s “A” and “B”.
4815-7303-1209.1
*** FILED: BROWARD COUNTY, FL HOWARD FORMAN, CLERK 10/6/2015 10:41:56 AM.****Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc.
Case Number 14-CA-010427
in an attempt to assess a measure of damages under an inapplicable provision of Florida’s UCC.
Though the Court recently extended the trial deadlines in this case, calendar call is only two months
away, and the parties have already exchanged expert disclosures/discovery. Allowing CBC to
engage in a meritless discovery exercise after the same issue has already been decided twice and with
trial fast approaching would open a rabbit hole of unnecessary written discovery, expert costs, and
additional depositions.
For the reasons set forth in Evergreen’s objections and more fully elaborated below,
Evergreen’s acquisition of sugar and calculation of “lost profits” is not relevant to this dispute or the
measure of damage. CBC’s Motion should be denied.
Il. |THE MEASURE OF DAMAGES IN DISPUTE
Evergreen’s Complaint asserts three causes of action for breach of contract against CBC.
Evergreen alleges that on three occasions, for years 2012, 2013 and 2014, it entered into written
contracts (“Contracts”) with CBC whereby Evergreen agreed to sell and CBC agreed to purchase the
commodity of white refined sugar. CBC breached all three of the Contracts by failing to purchase
the stated amounts of sugar for any of the contract periods, thereby damaging Evergreen.
As CBC stated in its Motion, the Contracts involve the sale of goods and specifically the
commodity of sugar. Thus, the dispute is governed under Florida’s Uniform Commercial Code, Fla.
Stat. § 672, ef seq. In accordance with the UCC, a seller’s damage for nonacceptance or repudiation
is the difference between the market price at the time and place of tender and the unpaid contract
price, together with any incidental damages. Section 672.708 states:
§ 672.708. Seller’s damages for nonacceptance or
repudiation.
(1) Subject to subsection (2) and to the provisions of this chapter with
respect to proof of market price (s._672.723), the measure of
damages for nonacceptance or repudiation by the buyer is the
difference between the market price at the time and place for
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Case Number 14-CA-010427
tender and the unpaid contract price together with any incidental
damages provided in this chapter (s._672.710), but less expenses
saved in consequence of the buyer’s breach.
(2) If the measure of damages provided in subsection (1) is
inadequate to put the seller in as good a position as performance
would have done then the measure of damages is the profit
(including reasonable overhead) which the seller would have made
from full performance by the buyer, together with any incidental
damages provided in this chapter (s_672.7/0), due allowance for
costs reasonably incurred and due credit for payments or proceeds
of resale.
As described in the Motion, CBC’s Requests are directed to what sugar Evergreen purchased
during the relevant period of time as well as records related to any profits or “lost profits” incurred
by Evergreen. Given the default measure of damages as outlined in Section 672.708(1), CBC’s
attempt to obtain evidence of Section (2) damages is inconsequential and is not relevant to this
dispute. How Evergreen acquired sugar, when it acquired sugar and for how much are not
components of the stated Section (1) damage analysis. Evergreen is entitled to the benefit of its
bargain represented by its Contracts.
Ill. CBC’S REQUESTS FOR DISCOVERY ALREADY DENIED TWICE
CBC first sought to obtain discovery regarding Evergreen’s purchase of sugar from non-
parties in its First Request for Production in June 2014. Evergreen objected to the discovery of the
records on the basis that the purchase data was not the proper measure of damages under Fla, Stat. §
672.708(1). See, supra. In accordance with § 672.708(1), Evergreen produced nearly 600 pages of
records evidencing its sale and delivery of white refined sugar to other customers in the marketplace
during the relevant timeframe (2012 — 2014) of the Contracts.
Pursuant to § 672.708(1), Evergreen produced sales data as well as discovery regarding the
unpaid contract price for purposes of demonstrating the market damages stemming from CBC’s
repudiation.Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc.
Case Number 14-CA-010427
Despite the relevant records produced by Evergreen regarding damages under section (1),
CBC filed a Motion to Compel on April 16, 2015, asking the Court to compel production of
Evergreen’s non-party sugar purchases. Evergreen filed its Response in opposition to the motion.
After a hearing on the motion, the Court denied CBC’s Motion to Compel on June 22, 2015. See
CBC’s Motion to Compel; Evergreen’s Response; Transcript of the Hearing on the Motion to
Compel; and the Court Order Denying the Motion to Compel, attached hereto as Composite Exhibit
“A”.
Not satisfied with the Court’s June 22 Order denying its Motion to Compel, CBC filed a
Motion for Reconsideration on July 14, 2015. Again, the Court denied CBC’s Motion to Compel.
See CBC’s Motion for Reconsideration and July 27, 2015 Order Denying the Motion, attached
hereto as Composite Exhibit “B”.
Notwithstanding the Court’s previous two orders ruling that this information was not
discoverable, CBC served its Fourth Request for Production and Third Set of Interrogatories
requesting many of the same documents and information relating to Evergreen’s purchase of sugar
from non-parties and “lost profit” information it previously requested in earlier rounds of discovery.
Evergreen objected to the requests to the extent that CBC sought information related to a calculation
of damages under § 672.708(2) but still provided over 150 pages of sales records representing a
compilation of all of Evergreen’s sales of sugar to non-parties for the Contract years: 2012 — 2014.
IV. CBC’S AMENDED AFFIRMATIVE DEFENSE DOES NOT MOOT THE
COURT’S ORDERS
Prior to the filing of CBC’s Motion for Reconsideration and the Court’s Order denying same,
CBC filed an Amended Motion for Leave to Amend Affirmative Defenses on July 9, 2015, attaching
to the motion several additional affirmative defenses including Aff. Def. 16. Affirmative Defense
16, which purports to avoid the proper measure of damages under § 672.708(1) in favor of a “lost
-4-Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc.
Case Number 14-CA-010427
profits” analysis under § 672.708(2), is a reiteration of CBC’s damage analysis argument in its
Motion to Compel and Motion for Reconsideration. The Court entered an Order granting CBC’s
Motion for Leave on August 3, 2015, and Evergreen filed its Reply to CBC’s Amended Affirmative
Defenses on August 10, 2015, asserting that Aff. Def. 16 was improper.
While a party may obtain discovery regarding any non-privileged matter at issue in a pending
action, the Court still retains broad discretion on limiting discovery. See Racetrac Petroleum, Inc. v.
Sewell, 150 So, 3d 1247, 1251 (Fla. 3d DCA 2014) (“Trial courts are accorded broad discretion in
the treatment of discovery problems”). Though CBC claims that its Amended Affirmative Defense
“moots” the Court’s Orders denying the Motion to Compel and Motion for Reconsideration by
making “the discovery sought relevant and permissible”, the Court still retains the same broad
discretion to deny the present Motion for the very same reasons as the earlier denials. Under the
Defendant’s logic, any party could moot a court order on discovery merely by asserting an
affirmative defense in contradiction to the Court’s ruling.
Vv. CBC MISCONSTRUES THE MEASURE OF DAMAGES UNDER
FLA. STAT. § 672.708
Under the UCC, the difference between the market price for goods and the outstanding
contract price is the “default measure of damages for a buyer’s non-acceptance or repudiation”.
M&G Polymers USA, LLC v. Carestream Health, Inc, 2010 Del. Super. LEXIS 151, *129-130 (Del.
Super. Ct. Apr. 21, 2010) (emphasis added). CBC’s description of § 672.708 as offering “two
alternate methods” of determining damages is misguided and departs from the UCC standard.
Specifically, in the Motion, CBC states:
If Evergreen believes it falls squarely within the damages calculation
provided by subsection (1) of Fla. Stat. § 672.708, it should produce
the documents Defendant has requested which, if Plaintiff is right,
would support such a contention.
CBC Mot. at 2.Evergreen Sweeteners, Inc. v, Custom Beverage Concepts, Inc.
Case Number 14-CA-010427
As the Plaintiff and movant on the breach of contract claims, Evergreen has the burden to
prove its damages. Evergreen has produced over 700 pages of documents of sales of refined white
sugar in order to demonstrate the actual market price during the relevant timeframe of the Contracts,
together with evidence of the unpaid contract price and incidental damages. Thus, Evergreen has
satisfied its burden under the default section (1). Evergreen has not asserted that Section (1)
damages are inadequate such that it would need to prove damages under section (2). CBC’s position
that Evergreen should produce documents regarding sugar purchases and lost profits — which relate
directly to section (2) — in order to support its contention that section (1) is the proper measure of
damages is circular logic not supported by the UCC or any of the case law cited by CBC in its
Motion.
According to the plain language of Fla. Stat. § 672.708, an election to seek damages under
Section 2 would apply if the damages under section (1) were inadequate to place the seller
(Evergreen) in as good a position as if the Contracts had been fully performed. See Razorback
Concrete Co. v. Dement Constr. Co., LLC, §88 F.3d 346, *352 (8th Cir. 2012); Purina Mills, L.L.C.
v. Less, 295 F. Supp. 2d 1017, *1042 (N.D. Iowa 2015) (citing TransWorld).
Furthermore, CBC has not cited to any legal precedent — nor does Evergreen believe any
legal precedent exists — which supports the position that Evergreen must prove its damages under
section (2) if it believes that damages under section (1) are adequate. Similarly, there is no
precedent that requires a Plaintiff/seller to engage in costly and unnecessary discovery of “lost
profits” damages under section (2) if section (1) damages are adequate.
A. EVERGREEN’S SALE OF SUGAR IS NOT AN EXCEPTION TO SECTION (1)
Courts have recognized three limited circumstances where the default measure of
contract/market damages under Section 672.708(1) is not appropriate in three situations: (1) where
the goods subject to the breach were specially-manufactured such that a readily accessible market
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Case Number 14-CA-010427
does not exist for the resale of said goods; (2) where the seller is a “lost volume seller”; or (3) where
the seller is a “jobber.” Under these limited circumstances, the Courts have required the plaintiff to
pursue damages for lost profits under 672.707(2) in order to avoid a windfall. There is nothing in the
record to suggest any of these limited circumstances apply.
CBC relies on cases in support of its Motion where the seller falls into one of the above
limited exceptions: Nobs Chemical, U.S.A., Inc. v. Koppers Co., Inc. 616 F.2d 212 (Sth Cir. 1980)
(finding the sellers to be “jobbers” that never acquired the contract goods in the course of the sale);
and Union Carbide Corp. v. Consumers Power Co., 636 F. Supp. 1498 (E.D. Mich. 1986) (holding
that for the period of time that the seller sought damages, it was acting as a “jobber”). Unlike the
sellers in Nobs Chemical and Union Carbide, Evergreen is not a “jobber”. As stated in Evergreen’s
Answers to CBC’s Third Set of Interrogatories 6(a)-(c), all “raw material sugar” purchased by
Evergreen for supplying to customers undergoes processing. As such, Evergreen does not fall into
any of the above categories.
Evergreen does not deny that CBC is entitled to inquire as to Evergreen’s business operations
to determine whether Evergreen may fall into an exception warranting the application of section (2).
However, until such evidence is present that an exception may apply, there are no grounds to pursue
or seek information on 672.708(2) damages.
B. EVERGREEN ASSUMED RISK WHILE ENTERING INTO THE CONTRACTS
TO SUPPLY WHITE REFINED SUGAR, A COMMODITY
Significantly, the “good” (i.e., white refined sugar) which is the subject of the Complaint, is a
commodity. Evergreen’s contractual obligation was to supply the commodity when called for under
the Contract. By its nature a commodity, has no unique specification. The sugar was readily
available on the market. There are essentially two methods of purchasing a commodity: 1) on the
“spot” market — meaning the goods are sold at the open market price, settled in cash and generally
-7-Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc.
Case Number 14-CA-010427
delivered within a short timeframe, usually within months; or 2) on a future contract — meaning the
parties negotiate a price for future delivery based on their present assessment of the market. In this
scenario, both sides are betting on “going long”. The Contracts that are at issue in this dispute were
for future delivery. By “going long” on the sale of commodity, both sides were betting on which
way sugar prices would move. CBC took the risk that the prices would fall and Evergreen took the
risk that the prices would rise.
The implication underlying CBC’s Requests is that Evergreen must show it purchased
specific sugar to be delivered to CBC under contract, in order to recover damages for loss of its
bargain. There is no support for this theory. Moreover, this theory ignores the stated measure of
damage set forth in Fla. Stat. § 672.708(1) and fails to contemplate the nature of the expectancy
created by the Parties’ Contracts. When Evergreen entered into the Contracts, it not only took a risk
on the future price of sugar, but in order to be able to meet its obligations under the Contracts,
Evergreen had numerous “sunk” costs, including investment in processing equipment, personnel,
facilities, packaging, trucking, rail and administrative costs associated with operating the business.
The UCC recognizes these associated costs are inherent in the parties’ expectancy and impliedly
considered as part of the parties’ bargain and thus not subject to independent proof or measure.
There is no reason to explore purchase data because the UCC damage model already provides the
rejecting buyer a mitigating sum in the form of the market price. See Fla. Stat. § 672.708(1). The
UCC damage model recognizes the nature of the expectation and the measure of risk contemplated
by allowing the market price to dictate the differential from the price at the time of the contract. The
UCC model also ensures the non-injured party is not overcompensated. If CBC wishes to attack the
damages, the attack must be directed to the market price, not the seller’s purchases.
In Diversified Energy, Inc. v. Tennessee Valley Auth. 339 F.3d 437 (6th Cir. 2003) a Sixth
Circuit case relied upon by CBC in its Motion, the Court opted to apply section (2) even in the
-8-Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc.
Case Number 14-CA-010427
absence of the three categories highlighted above due to the absence of any risk borne by the seller.
In Diversified, the seller entered into an exclusive contract with a coal producer that paid a fixed
commission to the seller for each ton of coal delivered to a third party, who ultimately breached the
contract. The court held that because the producer insulated the seller from any risk that the market
price would increase (by paying a fixed price commission), an analysis under section (1), which
contemplates market price, would be improper.
The facts of Diversified are inappropriate. Evergreen was expressly at risk of market price
changes when it entered into the Contracts with CBC.
In Trans World Metals, Inc. v. Southwire Co., 769 F.2d 902 (2d Cir. 1985), the Second
Circuit considered a claim for breach against the purchaser for repudiation of a long-term
commodity supply contract for aluminum. Similar to the circumstances here, where the price of
sugar dropped dramatically between the time of contract and the stated delivery times, the price of
aluminum had fallen significantly. The Second Circuit addressed the identical UCC measure of
damages under New York’s Code N. Y.U.C.C. Law §2-708. The buyer argued that lost profits should
be the measure of damage under §2-708(2) as §2-708(1) would overcompensate the Seller. The
Second Circuit stated:
«We disagree. We do not doubt that the contract/market price
differential “will seldom be the same as the seller’s actual economic
loss from breach.” White & Summers §7-7, at 269; see Peters,
Remedies for Breach of Contracts Relating to the Sale of Goods
Under the Uniform Commercial Code: A Roadmap for Article Two,
73 Yale L.J. 199, 259 (1963). However, nothing in the language or
history of section 2-708(2) suggests that it was intended to apply to
cases in which section 2-708(1) might overcompensate the seller. See
White & Summers §7-12, at 283. Nor has Southwire cited any New
York case that interprets section 2-708(2) as Southwire urges us to
interpret it. Asa federal court sitting in diversity, we will not extend
the application of this state law.
Nor are we convinced that Trans World has been overcompensated.
No measure other than the contract/market price differential will
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Case Number 14-CA-010427
award Trans World the “benefit of its bargain,” that is, the “amount
necessary to put {it] in as good a position as [it] would [**14] have
been if the defendant had abided by the contract.
The contract at issue in this case is an aluminum supply contract
entered into eight months prior to the initial deliveries called for by
its terms. The last of the anticipated deliveries of aluminum would
not have been completed until a full twenty months after the
negotiations took place. It simply could not have escaped these
parties that they were betting on which way aluminum prices would
move. Trans World took the risk that the price would rise; Southwire
took the risk that the price would fall. Under these circumstances,
Trans World should not be denied the benefit of its bargain, as
reflected by the contract/market price differential.”
(Internal citations omitted) (emphasis added).
Upon entering into the Contracts with CBC, Evergreen was entitled to rely upon CBC’s
promise to purchase sugar at a price certain in the future and needed only to be prepared to meet
those deliveries, which it did on each and every occasion at which CBC called for sugar. CBC’s
request for the quantities of sugar processed or purchased by Evergreen does not affect the measure
of damages sought by Evergreen and is an attempt to introduce wholly irrelevant material into the
case. ;
VI. © CONCLUSION
Based on the foregoing, Evergreen respectfully requests that this Court entering an order
denying CBC’s Motion to Compel in its entirety, together with such other and further relief as this
Court deems proper.
-10-Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc.
Case Number 14-CA-010427
CERTIFICATE OF SERVICE
IHEREBY CERTIFY that a true and correct copy of the foregoing document was furnished
via E-mail generated by the Florida Court E-Filing Portal this 6th day of October, 2015 to those on
the attached Service List.
Respectfully submitted,
LEWIS BRISBOIS BISGAARD & SMITH, LLP
Counsel for Plaintiff, Evergreen Sweeteners, Inc.
110 SE 6" Street, Suite 2600
Fort Lauderdale, FL 33301
Phone: (954) 728-1280; Facsimile (954) 728-1282
Ken. Joyce@lewisbrisbois.com
Michael. Platner@lewisbrisbois.com
Stacy.Schwartz@lewisbrisbois.com
Andrew.Zelman@lewisbrisbois.com
ftlemaildesig@Ibbslaw.com
By: _/s/ Kenneth J. Joyce
KENNETH J. JOYCE, ESQ.
FBN: 986488
MICHAEL G. PLATNER, ESQ.
FBN: 366331
STACY M. SCHWARTZ, ESQ.
FBN: 0520411
ANDREW B. ZELMAN, ESQ.
FBN: 74202
and
LAGOS & PRIOVOLOS PLLC
C0-Counsel for Plaintiff, Evergreen Sweeteners, Inc.
66 W. Flagler Street, Suite 1000
Miami, Florida 33130-1809
Telephone: 305-960-1990 * 866-747-9293
Facsimile: 305-891-2610 * 866-747-9299
Main e-mail: info@attainjustice.com
Service of court documents: file@attainjustice.com
CHRISTOS LAGO; Q.
FBN: 149690
-ll-Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc.
SERVICE LIST
Christos Lagos, Esq.
info@attainjustice.com
file@attainjustice.com
Lagos & Priovolos PLLC
66 W. Flagler Street, Suite 1000
Miami, Florida 33130-1809
Phone: 305-960-1990
Fax: 305-891-2610
Co-Counsel for Plaintiffs
Brian A. Leung, Esq.
BrianLeung@holcomblaw.com
Nicole@holcomblaw.com
michelle@holcomblaw.com
Holcomb & Leung, P.A.
3203 W. Cypress St.
Tampa, FL 33607
Telephone: (813) 258-5835
Facsimile: (813) 258-5124
Co-Counsel for Defendant, Custom Beverage Concepts, Inc.
Jesse H. Diner, Esq.
Jose R. Florez, Esq.
Jesse.diner@bipe.com
Jose florez@bipc.com
Jessie.steffes@bipc.com
Buchanan Ingersoll & Rooney PC
1200 East Las Olas Blvd., Suite 500
Fort Lauderdale, Florida 33301
Co-Counsel for Defendant, Custom Beverage Concepts, Inc.
James B. Manley, Jr., Esq.
Jim.manley@dentons.com
Dentons US LLP
303 Peachtree Street NE, Suite 5300
Atlanta, Georgia 30308
Co-Counsel for Defendant, Custom Beverage Concepts, Inc.
Jill C. Kuhn, Esq.
Jill. kuhn@dentons.com
Dentons US LLP
303 Peachtree Street NE, Suite 5300
Atlanta, Georgia 30308
Co-Counsel for Defendant, Custom Beverage Concepts, Inc.
-12-
Case Number 14-CA-010427Filing # 26169204 E-Filed 04/16/2015 12:22:56 PM
IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT
OF THE STATE OF FLORIDA, IN AND FOR BROWARD COUNTY
CIVIL DIVISION
EVERGREEN SWEETENERS
INC., a Florida corporation,
Plaintiff,
vs, CASENO.: 14-CA-010427
CUSTOM BEVERAGE CONCEPTS,
INC., a foreign corporation,
Defendant.
MOTION TO COMPEL PRODUCTION OF DOCUMENTS
Defendant, CUSTOM BEVERAGE CONCEPTS, by and through its undersigned
attorney, moves this Honorable Court for the entry of an Order compelling the Plaintiff,
EVERGREEN SWEETENERS, INC., to provide responsive documents to Defendant's First and
Second Request for Production of Documents, and as grounds therefore would show:
1. On or about November 5, 2014, the Defendant served its First Request for
Production of Documents directed to Plaintiff, EVERGREEN SWEETENERS, INC.; a true copy
of the Request for Production of Documents is attached hereto, incorporated by reference, and
made a part hereof as Exhibit “A”,
2. On or about January 19, 2015, EVERGREEN SWEETENERS, INC. served its
response to the First Request for Production, objecting to Requests 4, 5, 6, 11, 12, 13, and 14.
3. Requests 5, 6, 11, 12, 13 and 14 all request similar documents, related to the
purchase and sale of sugar by the Plaintiff during the specific contract years with Defendant.
Plaintiff has filed the same response to each request, “Plaintiff objects on the grounds that the
request is vague, ambiguous, indefinite and compound. Plaintiff further objects because the
request is not relevant or reasonably calculated to lead to the discovery of admissible evidence.
EXHIBIT _
i fact irePlaintiff's purchase/process of sugar not delivered to the Defendant or others is not the measure
of damage established by Florida Statute § 672.208. In a good faith effort to respond, Plaintiff is
producing documents bearing Bates Numbers EVERGREEN0000924-EVERGREEN001506
demonstrating its measure of damages through the re-sale of sugar at the market price to other
willing buyers during the relevant contract periods from 2012 through 2014.” Plaintiff's
responses are attached hereto as Exhibit B.
4, The documents produced fail to respond to the request and simply demonstrate
that some amount of sugar was sold to some customers during the contact years. The documents
fail to illustrate if the sugar sold was originally purchased to fulfill Defendant’s contracts, if any
sugar was ever purchased to fulfill Defendant’s contracts, the amount of sugar (if any) was
purchased by Plaintiff to fulfill Defendant’s contract, if any of the sugar purchased to fulfill
Defendant’s contracts was sold to others.
5. Defendant’s submitted a second request to produce to Plaintiffs on February 5,
2015. Requests 1-3 request, “All Confirmation of Purchase and Sale documents entered by you
for delivery of white refined sugar during calendar year 2012 (2013, 2014). Defendant’s Second
Request for Production is attached hereto as Exhibit C.
6. Plaintiff responded to request 1-3 by stating, “Plaintiff objects on the grounds that
the request is vague, ambiguous, indefinite, and seeks confidential, proprietary business
information that would reveal trade secrets of the Plaintiff such as price, margin and supply
terms. Plaintiff further objects because the request is not relevant or reasonably calculated to
lead to the discovery of admissible evidence. The request for all of Plaintiff's contracts to
deliver sugar to non-parties is not the measure of damage established by Florida Statute
§672.708. Plaintiff has previously produced documentation of its sale of sugar not purchased by
the Defendant during the relevant time frame.” Plaintiff's Response to Second Request to
Produce is attached hereto as Exhibit D.7. Without having evidence of what sugar was purchased and what sugar was sold
by Plaintiff during the contract years, Defendant cannot verify that Plaintiff suffered any
damages, that Plaintiff mitigated its damages, or that Plaintiff acted in furtherance of its contracts
with Defendant.
8. On or about March 24, 2015, the undersigned counsel had a telephone conference
with opposing counsel and a good faith effort was made to resolve these issues, which we were
unable to accomplish.
WHEREFORE, Defendant, CUSTOM BEVERAGE CONCEPTS, INC., prays this
Honorable Court for the entry of an Order compelling the Plaintiff, EVERGREEN
SWEETENERS, INC. to provide complete responses and responsive documents to the Requests
for Production, for the costs and fees incurred in the preparation and argument of this motion and
for such other and further relief that this Court deems just and proper.
HOLCOMB & LEUNG, P.A.
3203 W. Cypress St.
Tampa, Florida 33607
(813) 258-5835
(813) 258-5124 - Facsimile
By: /s/ Brian A. Leung
BRIAN A. LEUNG
Florida Bar #14510
BrianLeung@holcomblaw.com
Secondary email:
michelle@holcomblaw.com
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by
electronic mail to Kenneth J. Joyce at Ken. Joyce@lewisbrisbois.com,
Michael ,Platner@lewisbrisbois.com, Stacy.Schwartz@lewisbrisbois.com,
filemaildesig@!Ibslaw.com, whose address is 200 SW 1*' Avenue, Suite 910, Fort Lauderdale,
FL 33301 this_16 day of April, 2015.
/s/ Brian A. Leung
Brian A. LeungFiling # 28450632 E-Filed 06/12/2015 04:47:30 PM
IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT
OF THE STATE OF FLORIDA, IN AND FOR BROWARD COUNTY
CIVIL DIVISION
EVERGREEN SWEETENERS
INC., a Florida corporation,
Plaintiff,
vs. CASENO.: 14-CA-010427
CUSTOM BEVERAGE CONCEPTS,
INC., a foreign corporation,
Defendant.
CUSTOME BEVERAGE CONCEPTS MEMORANDUM OF LAW IN SUPPORT OF
MOTION TO COMPEL PRODUCTION OF DOCUMENTS
Defendant, CUSTOM BEVERAGE CONCEPTS, by and through its undersigned
attorney, files this its Memorandum of Law In Support of the Motion to Compel Production of
Documents which is currently set for hearing on Tuesday, June 16, 2015 and states:
CASE BACKGROUND.
Evergreen Sweeteners, Inc. (hereinafter, “Evergreen”) filed a lawsuit against Custom
Beverage Concepts, Inc. (hereinafter, “CBC”) for breach of contract on three separate contracts
for the purchase of white refined sugar from Evergreen. The complaint seeks damages under
Section 672.708, Florida Statutes, which provides two avenues of recovery. One avenue
provides for recovery of the difference between the contract price and the market price at time
and place of delivery, less expenses saved in consequence of the breach. The second avenue
provides for the recovery of the seller’s profit had full performance of the contract occurred,
along with incidental damages. While Evergreen would like to seek damages under the first
avenue, it is unclear to the Defendants if the first avenue is the appropriate avenue to place
Evergreen in the same position it would have been in had the contract been fully performed.
Accordingly, CBC has requested discovery that would shed light on the matter which has beenobjected to by Evergreen.
THE MOTION TO COMPEL
CBC has requested information in order to ascertain whether or not EVERGREEN
purchased any sugar in furtherance of its contracts with CBC, the amount of sugar purchased (if
any) in furtherance of the contracts with CBC, what expenses were incurred or avoided asa
consequence of the breach, and if Evergreen resold any of the sugar it acquired in furtherance of
the contracts with CBC. Additionally, CBC has requested the purchase price of any sugar
acquired in order to determine what Evergreen stood to profit ftom its contracts with CBC.
Evergreen has objected to any discovery regarding the acquisition of sugar purchased in
furtherance of the CBC contract and with regard to any sale of sugar acquired for that purpose.
CBC has provided some invoices for sugar sold during the contract years, but there is nothing to
indicate that the sugar sold was sugar purchased in furtherance of the contracts with CBC, or was
sugar subject to a different Evergreen supply agreement.
The discovery requests are all relevant to the defenses asserted by CBC in its answer.
Specifically the 5" (failure to mitigate), 7" (Plaintiffs have failed to incur damages. ..as no
products were purchased, processed or delivered by Plaintiff for the damages alleged), and 14%
(Should the Court ward the damages requested by Plaintiff, Plaintiff shall be unjustly enriched as
no products were purchased, processed, or delivered by Plaintiff for the damages alleges and any
award would be a windfall to Plaintiff) affirmative defenses directly relate to the discovery
requests. “A party may obtain discovery regarding any matter, not privileged, that is relevant to
the subject matter of the pending action, whether it relates to the claim or defense of the party
seeking discovery or the claim or defense of any other party.” Nucci v Target Corp. 2015 WL
71726 (4" DCA 2015) citing Fla. R. Civ, P. 1.280(b)(1).
Evergreen has argued in its Response to Motion to Compel and in conversation withcounsel that the requests regarding Evergreen’s acquisition of sugar, purchase price for sugar and
subsequent sale of sugar acquired in furtherance of the CBC contracts is inconsequential and
irrelevant to this dispute as a result of Evergreen’s selection of the most favorable remedy under
Section 672.708, Florida Statutes. Even the damages sought by Evergreen state that the award of
the difference between contract price and market price would be less expenses saved in
consequence of the buyer’s breach. All of the discovery requests made may uncover
admissible evidence with regard to these expenses which could significantly reduce the damages
in this matter. Additionally, CBC does not believe that Evergreen’s reliance on subsection (1) of
Section 672.708 is the proper method of damages and that Evergreen should be required to seek
damages under subsection (2), as subsection (1) damages would create a windfall for the
Plaintiffs. Evergreen is seeking damages under subsection (1), which calculates damages by
using the difference in contract price and the market price at time of delivery because the bottom
fell out of the sugar market during the time of the contracts at issue. In Nobs Chemical, USA,
Inc. v. Koppers Co., Inc., the court examined a similar claim involving the same language from
the UCC utilized in Section 672.708 with regard to the application of damages under subsection
(1) or (2). 616 F.2d 212 (5" Cir, 1980). In Koppers, the plaintiff sought the measure of damages
in subsection (1), because the price of the commodity (cumene) had dropped significantly at the
time of the breach and Defendants believed the proper measure of damages was subsection (2)
because subsection (1) would greatly overcompensate the seller. The Court states:
“Because there does not appear to be any law directly on point, we take the liberty
of looking to those more learned on the subject of the Uniform Commercial Code.
Professors White and Summers, recognizing that § 2.708(b) is not the most lucid
or best-drafted of the sales article section, decided that the drafters of the Uniform
Commercial Code intended subsection (b) to apply to certain sellers whose losses
would rarely be compensated by the subsection (a) market price-contract price
measure of damages, and for these sellers the lost profit formula was added in
subsection (b). One such type of seller is a “jobber,” who, according to the
treatise writers, must satisfy two conditions: “first, he is a seller who never
acquires the contract goods. Second, his decision not to acquire those goods after
learning of the breach was not commercially unreasonable...”(Internal citations omitted).
The Fifth Circuit upheld the district court’s application of subsection (b) (subsection (2) under
Florida law) damages over the objection of the Plaintiff. The court states, “Had the transaction
been completed, their ‘benefit of the bargain’” would not have been affected by the fall in
market price, and they would not have experienced the windfall they would otherwise receive if
the market price-contract price rule contained in § 2.708(a) is followed.” Id. at 215. Just as in the
current dispute, Evergreen is a “jobber” who does not refine the sugar it sells, but purchases the
sugar from another supplier or refinery. Whether or not Evergreen acquired the sugar to fulfill
its contracts with CBC and the price it paid for the sugar is directly at issue in this dispute, and is
clearly subject to discovery.
CONCLUSION
CBC’s discovery requests are directly related to the damages claimed by Evergreen in
this case and the determination of the proper application of the damages statute, Further the
discovery requests are related to the expenses saved by Evergreen in consequence of the alleged
breach under the subsection (1) damages claimed by Evergreen. Finally, the discovery requests
are directly related to the affirmative defenses plead by CBC. Evergreen has failed to provide
any reasons other than a failed relevancy argument for not producing the requested documents
and should be compelled to do so, based on the broad scope of discovery under Florida’s Rules
of Civil Procedure, along with an award of attorney’s fees and costs for the time incurred by
counsel in the preparing and arguing the motion and this memorandum in accordance with Fl. R.
Civ. P. 1.380,
HOLCOMB & LEUNG, P.A.
, 3203 W. Cypress St.
Tampa, Florida 33607
(813) 258-5835
(813) 258-5124 - FacsimileBy: /s/ Brian A. Leung
BRIAN A. LEUNG
Florida Bar #14510
BrianLeung@holcomblaw.com
Secondary email:
michelle@holcomblaw.com
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by
electronic mail to Kenneth J. Joyce at Ken. Joyce@lewisbrisbois.com,
Michael. Platner@lewisbrisbois.com, Stacy.Schwartz@lewisbrisbois.com,
ftlemaildesig@llbslaw.com, whose address is 200 SW 1* Avenue, Suite 910, Fort Lauderdale,
FL 33301 and Christos Lagos, Esq., at info@attainjustice.com and file@attainjustice.com whose
address is Lagos & Priovolos PLLC, 66 W. Flagler St., Suite 1000, Miami, FL 33130 this
_12. day of June, 2015.
/s/ Brian A. Leung
Brian A. LeungFiling # 28297281 E-Filed 06/10/2015 09:17:20 AM
IN AND FOR THE CIRCUIT COURT OF
THE SEVENTEENTH JUDICIAL CIRCUIT
IN AND FOR BROWARD COUNTY, FL
EVERGREEN SWEETENERS, INC., a Case No.: 14-CA-010427
Florida corporation,
Plaintiff,
v.
CUSTOM BEVERAGE CONCEPTS,
INC., a Georgia corporation,
Defendant.
/
PLAINTIFF’S RESPONSE TO MOTION TO COMPEL
AND MEMORANDUM OF LAW
Plaintiff, Evergreen Sweeteners, Inc., a Florida corporation (“Evergreen”), files this
Response to the Motion to Compel (the “Motion”) filed by Defendant, Custom Beverage
Concepts, Inc., a Georgia corporation (“CBC”), on April 16, 2014 and states:
L INTRODUCTION
CBC has filed a Motion to Compel Evergreen to respond to several requests in two
separately propounded Requests for Production. Evergreen objected to requests 5, 6, 11, 12, 13
and 14 of the First Request for Production and requests 1, 2 and 3 of the Second Request for
Production (collectively referred to hereinafter as the “Requests”). All of the Requests
essentially seek information concerning Evergreen’s purchase of sugar or delivery of sugar to
non-parties. For the reasons set forth in Evergreen’s objections and more fully elaborated below,
Evergreen’s acquisition of sugar is not relevant to this dispute or the measure of damage.
I. NATURE OF THE DISPUTE
Evergreen’s Complaint asserts three causes of action for breach of contract against CBC.
Evergreen alleges that on three occasions, for years 2012, 2013 and 2014, it entered into written
48:44-B285-8020.1Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc.
Case Number 14-CA-010427
contracts with CBC whereby Evergreen agreed to sell and CBC agreed to purchase the
commodity of white refined sugar.
. Pursuant to Contract 1, CBC agreed to purchase 10 million pounds of sugar
(100,000 cwt) in the calendar year 2012.
. Pursuant to Contract 2, CBC agreed to purchase 10 million pounds of sugar
(100,000 cwt) in the calendar year 2013.
. Pursuant to Contract 3, CBC agreed to purchase 15 million pounds of sugar
(150,000 cwt) between January 1, 2013 and December 31, 2014 (collectively the “Contracts”).
CBC failed to purchase the stated amounts of sugar for any of the contract periods. As a
result, Evergreen has been damaged and seeks the appropriate measure of its damages. The
Defendants’ Requests purport to seek to discover information related to a damage theory that is
not recognized under the law. Therefore, it is necessary for the Court to examine the appropriate
measure of damages to determine this discovery dispute.
Ill. CBC’s REQUESTS FOR PRODUCTION
Since all of the Requests similarly seek to gather information related to damages, for
illustration, set forth below is Request No. 5, and Plaintiff's Response which is representative of
the Requests.
5. Documentation of all sugar purchased and/or processed in
reliance upon the terms of any Confirmation documents with
CUSTOM, that was not delivered and paid for by CUSTOM or
sold to other customers! of EVERGREEN.
RESPONSE: Plaintiff objects on the grounds that the request is
vague, ambiguous, indefinite, and compound, Plaintiff further
objects because the request is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Plaintiff's
purchase/process of sugar not delivered to the Defendant or others
is not the measure of damage established by Florida Statute
* Unless otherwise indicated, all emphasis is added.
~2-Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc.
Case Number 14-CA-010427
§672.708. In a good faith effort to respond, Plaintiff is producing
documents bearing Bates Numbers EVERGREEN 000924-001506
demonstrating its measure of damage through the re-sale of sugar
at the market price to other willing buyers during the relevant
contract periods from 2012 through 2014.
As described in the response, Evergreen did provide evidence of its sale and
delivery of sugar in order to demonstrate its actual market price during the relevant timeframe of
the Contracts. Evergreen’s objections are premised on the law of the Florida Uniform
Commercial Code and measure of damages under the Uniform Commercial Code.
IV. THE MEASURE OF DAMAGES UNDER THE UCC
The Contracts involve the sale of goods, specifically the commodity of sugar. See Fla.
Stat. §672.105(1)(2014). This dispute is therefore governed under the law of Florida’s Uniform
Commercial Code, Chapter 672, Florida Statutes (the “UCC”). The purpose of a damage award
in a breach of contract case is to restore the injured party to the condition it would have been in
had the contract been performed and the breach not occurred. Mnemonics, Inc. v. Max Davis
Assoes., Inc., 808 So.2d 1278 (Fla. 5" DCA 2002). See also, Restatement (Second of Contracts)
§347 (1981) (“Contract damages are ordinarily based on the injured party’s expectation interest
and are intended to give him the benefit of the bargain by awarding him a sum of money that
will...put him in as good a position as he would have been in had the contract been performed”).
Fla. Stat. §672.106 provides that damages are to be liberally administered “to the end that the
aggrieved party may be put in as good a position as if the other party had fully performed...”
In accordance with the UCC, a seller’s damage for nonacceptance or repudiation is the
difference between the market price at the time and place of tender and the unpaid contract price,
together with any incidental damages. Section 672.708 states:
§ 672.708. Seller's damages for nonacceptance or
repudiation.
a3Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc.
Case Number 14-CA-010427
(1) Subject to subsection (2) and to the provisions of this chapter
with respect to proof of market price (s.__672.723), the measure
of damages for nonacceptance or repudiation by the buyer is the
difference between the market price at the time and place for
tender and the unpaid contract price together with any incidental
damages provided in this chapter (s_ 672.710), but less expenses
saved in consequence of the buyer’s breach.
(2) If the measure of damages provided in subsection (1) is
inadequate to put the seller in as good a position as performance
would have done then the measure of damages is the profit
(including reasonable overhead) which the seller would have
made from full performance by the buyer, together with any
incidental damages provided in this chapter (s_ 672.710), due
allowance for costs reasonably incurred and due credit for
payments or proceeds of resale.
As described in the Motion, Defendant’s Requests are directed to what sugar Evergreen
purchased during the relevant period of time. Given the measure of damages outlined by the
UCC, this inquiry is inconsequential and is not relevant to this dispute. How Evergreen acquired
sugar, when it acquired sugar and for how much are not components of the stated damage
analysis. Evergreen is entitled to the benefit of its bargain represented by its Contracts.
The Requests also ignore the fact that the “good” (i.e., white refined sugar) which is the
subject of the Complaint, is a commodity. Evergreen’s contractual obligation was to supply the
commodity when called for under the Contract. By its nature a commodity, has no unique
specification. The sugar was readily available on the market. There are essentially two methods
of purchasing a commodity: 1) on the “spot” market - meaning the goods are sold at the open
market price, settled in cash and generally delivered within a short timeframe, usually within
months; or 2) on a future contract — meaning the parties negotiate a price for future delivery
based on their present assessment of the market. In this scenario, both sides are betting on
“going long”. The Contracts that are at issue in this dispute were for future delivery. By “going
long” on the sale of commodity, both sides were betting on which way sugar prices would move.
-4-Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc,
Case Number 14-CA-010427
CBC took the risk that the prices would fall and Evergreen took the risk that the prices would
rise.
The implication underlying CBC’s Requests is that Evergreen must show it purchased
specific sugar to be delivered to CBC under contract, or otherwise demonstrate lost profits.
There is no support for this theory. Moreover, this theory ignores the stated measure of damage
set forth in Fla. Stat. §672.708 and fails to contemplate the nature of the expectancy created by
the Parties’ Contracts. When Evergreen entered into the Contracts, it not only took a risk on the
future price of sugar, but in order to be able to meet its obligations under the Contracts,
Evergreen had numerous “sunk” costs, including investment in processing equipment, personnel,
facilities, packaging, trucking, rail and administrative costs associated with operating the
business. The UCC recognizes these associated costs are inherent in the parties’ expectancy and
impliedly considered as part of the parties’ bargain and thus not subject to independent proof or
measure, There is no reason to explore purchase data because the UCC damage model already
provides the rejecting buyer a mitigating:sum in the form of the market price. See Fla. Stat.
§672.708(1). The UCC damage model recognizes the nature of the expectation and the measure
of risk contemplated by allowing the market price to dictate the differential from the price at the
time of the contract. The UCC model also ensures the non-injured party is not overcompensated,
If Defendant wishes to attack the damages, the attack must be directed to the market price, not
the seller’s purchases.
In an analogous case involving a commodity, the United States Court of Appeal for the
Second Circuit concisely summed up the law. In Trans World Metals, Inc. v. Southwire Co., 769
F.2d 902 an Cir. 1985), the Second Circuit considered a claim for breach against the purchaser
for repudiation of a long-term commodity supply contract for aluminum. Similar to the
circumstances here, where the price of sugar dropped dramatically between the time of contract
-5-Evergreen Sweeteners, Inc. v. Custom Beverage Concepts, Inc.
Case Number 14-CA-010427
and the stated delivery times, the price of aluminum had fallen significantly. The Second Circuit
addressed the identical UCC measure of damages under New York’s Code N.Y.U.C.C. Law §2-
708. The buyer argued that lost profits should be the measure of damage under §2-708(2) as §2-
708(1) would overcompensate the Seller. The Second Circuit stated:
“.,,.We disagree. We do not doubt that the contract/market price
differential “will seldom be the same as the seller’s actual
economic loss from breach.” White & Summers §7-7, at 269; see
Peters, Remedies for Breach of Contracts Relating to the Sale of
Goods Under the Uniform Commercial Code: A Roadmap for
Article Two, 73 Yale L.J. 199, 259 (1963). However, nothing in
the language or history of section 20708(2) suggests that it was
intended to apply to cases in which section 2-708(1) might
overcompensate the seller. See White & Summers §7-12, at 283.
Nor has Southwire cited any New York case that interprets section
2-708(2) as Southwire urges us to interpret it. As a federal court
sitting in diversity, we will not extend the application of this state
law.
Nor are we convinced that Trans World has been
overcompensated. No measure other than the contract/market
price differential will award Trans World the “benefit of its
bargain,” that is, the “amount necessary to put [it] in as good a
position as [it] would [**14] have been if the defendant had abided
by the contract.
The contract at issue in this case is an aluminum supply contract
entered into eight months prior to the initial deliveries called for by
its terms. The last of the anticipated deliveries of aluminum would
not have been completed until a full twenty months after the
negotiations took place. It simply could not have escaped these
parties that they were betting on which way aluminum prices
would move. Trans World took the risk that the price would rise;
Southwire took the risk that the price would fall. Under these
circumstances, Trans World should not be denied the benefit of its
bargain, as reflected by the contract/market price differential.”
(Internal citations omitted).
Upon entering into the Contracts with CBC, Evergreen was entitled to rely upon CBC’s
promise to purchase sugar at a price certain in the fu