Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-00538/USCOURTS-casd-3_18-cv-00538-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

---

1

3:18-cv-0538-CAB-MDD

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

NORMERICA INTERNATIONAL 

CORPORATION, a Barbados 

corporation; and NORMERICA INC., an 

Ontario corporation,

Plaintiffs,

v.

LITTERPURRFECT, L.P., a California 

limited partnership; and IN BOCCA AL 

LUPO, INC., a California corporation ,

Defendants.

Case No.: 3:18-cv-0538-CAB-MDD

ORDER ON MOTION FOR 

SUMMARY JUDGMENT

[Doc. No. 31.]

This matter comes before the Court on Plaintiffs International Corporation and 

Normerica Inc.’s (collectively “Normerica”) Motion for Summary Judgment. [Doc. No. 

31.] The motion has been fully briefed and the Court finds it suitable for determination on 

the papers submitted and without oral argument in accordance with Civil Local Rule 

7.1(d)(1).

Case 3:18-cv-00538-CAB-MSB Document 58 Filed 09/19/18 PageID.<pageID> Page 1 of 9
2

3:18-cv-0538-CAB-MDD

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

I. Background

This following facts are taken from Plaintiffs’ First Amended Complaint, the answer 

to the operative complaint, the documents filed surrounding the application for temporary 

restraining order and writ of attachment, and the briefings and accompanying exhibits filed 

in connection with the motion for summary judgment.

For a number of years, Normerica supplied Costco with all the cat litter products that 

LitterPurrfect (“LP”) had sold to Costco. [Doc. No. 6 at 81; Doc. No. 11 at ¶ 16.] For 

approximately 15 years prior to the period involved in this dispute, the parties longstanding arrangement had been that Costco would send purchase orders to LP which LP

would then forward to Normerica. [Doc. No. 6 at ¶¶ 15-17; Doc. No. 8-1 at ¶ 3; Doc. No. 

16-5 at ¶¶ 5-6.] Upon receipt of the purchase order, Normerica would fulfill and deliver 

the goods to Costco and, within 30 to 60 days of receiving the goods, Costco would pay 

LP for the goods received. LP would then, in turn, pay Normerica. [Doc. No. 6 at ¶¶ 15-

17; Doc. No. 8-1 at ¶ 4; Doc. No. 16-5 at ¶¶ 5-6.]

During 2016 and 2017, Normerica began negotiations to purchase LP. [Doc. No. 6 

at ¶ 21.] As a result of Ms. Scarvaci’s refusal to consent to the sale to Normerica, Messrs. 

Katz & Wilson sued Ms. Scarvaci claiming that her refusal was unreasonably and, in the 

alternative, seeking the dissolution of LP.

2

 [Doc. No. 6 at ¶¶ 27-30.] The litigation 

amongst the partners proceeded before JAMS mediator, the Honorable Irma Gonzalez (ret). 

[Doc. No. 6 at ¶¶ 29-43; Doc. No. 13-3, pgs 6-116.]

While the litigation between the partners continued, Normerica withdrew its letter 

of intent to purchase on January 31, 2018. [Doc. No. 6 at ¶ 37; Doc. No. 16-2.] 

The January 31, 2018 letter from Normerica to LP also informed LP that, effective 

March 1, 2018, Normerica would be concluding its business relationship with LP under 

 

1 Document numbers and page references are to those assigned by CM/ECF for the docket entry.

2 LP is owned by three individuals: Keith Wilson (50 percent ownership), Larry Katz (25 percent 

ownership) and Angelyn Scarvaci nee Katz (25 percent ownership). 

Case 3:18-cv-00538-CAB-MSB Document 58 Filed 09/19/18 PageID.<pageID> Page 2 of 9
3

3:18-cv-0538-CAB-MDD

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the current conditions. [Doc. No. 6 at ¶ 46; Doc. No. 16-1 at 2, ¶ 6; Doc. No. 16-2.] The 

letter stated that effective March 1, 2018, Normerica would require from LP “immediate 

payment for all packaging on order and in [Normerica’s] warehouses” and that beginning 

on February 6, 2018, “all shipments by Normerica would be on a cash-on delivery (COD) 

basis and all LitterPurrfect pricing would be freight-on-board (FOB) plant.” [Doc. No. 16-

2.]

On February 5, 2018, Normerica again notified LP that, effective February 6, 2018, 

“all shipments would be COD [cash-on-delivery] and FOB [freight-on-board]” thereby 

making LP responsible for transportation costs up front. [Doc. No. 6 at ¶ 48; Doc. No. 13 

at 3; Doc. No. 13-3 at 39; Doc. No. 31-3.] It explained “[t]his means that all orders placed 

after February 6th, 2018, will require payment in full by LP prior to any orders being 

shipped by Normerica.” [Doc. No. 31-3 at 2.] The letter included an invoice in the amount 

of $416,440.13 for packaging and inventory currently on hand at the Normerica 

warehouses. [Id. at 3.]

On February 9, 2018, Ms. Scarvaci gave notice that she was appointing In Bocca Al 

Lupo, Inc, (“IBAL”), a company wholly owned by her, as the new general partner of LP. 

[Doc. No. 6 at ¶ 41; Doc. No. 13-3 at 39, 112.] On February 28, 2018, Judge Gonzales, 

confirmed IBAL as the sole general partner of LP, effective March 1, 2018.

3

 [Doc. No. 6 

at ¶ 43; Doc. No. 13-3 at 49; Doc. No 23 at ¶ 33.] 

Notwithstanding the internal struggles amongst the LP partners and the failed 

buyout, Mr. Keith Wilson, as General Partner of L.P, and Normerica Chief Executive 

Office, John Kimmel, executed a “Management Agreement” on February 13, 2018. [Doc. 

No. 6 at ¶ 49; Doc. No. 13-2 at 6-9; Doc. No. 16-4.] It allowed the two companies to 

continue to do business with each other, until at least March 15, 2018 and provided Costco:

will invoice Manager [Normerica] directly for all goods shipped to Costco. 

Manager will guarantee Company [LitterPurrfect] a net margin of nine 

 

3 Until March 1, 2018, Keith Wilson and Larry Katz were the general partners of LitterPurrfect.

Case 3:18-cv-00538-CAB-MSB Document 58 Filed 09/19/18 PageID.<pageID> Page 3 of 9
4

3:18-cv-0538-CAB-MDD

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

percent (9%) based off Manager’s current selling prices to Company and 

Company’s selling prices to Costco.... The nine percent (9%) will be 

inclusive of freight (but not of any allowances or commission). Manager will 

not charge a fee for this service as Manager already processes the invoices 

and receives orders directly from Costco.

[Doc. No. 16-4 at ¶ 6.] It also provided that “Company agrees to reimburse any preapproved out of pocket expenses incurred by the Manger in connection with the Services.” 

[Id. at ¶ 7.] According to a provision contained within the Management Agreement it was 

to be:

the final, complete and exclusive agreement of the parties with respect to the 

subject matter hereof and supersedes and merges all prior or contemporaneous 

representations, discussions, proposals, negotiations, conditions, 

communications and agreements, whether written or oral, between the parties 

relating to the subject matter hereof and all past courses of dealing or industry 

custom. No modification of or amendment to this Agreement shall be 

effective unless in writing and signed by each of the parties.

[Id. at ¶ 15.]

On March 6, 2018, Normerica sent a demand letter to LP for immediate payment of 

$520,431.17 and attached outstanding invoices for labels, packaging pails, jugs, sleeves 

and corrugate. [Doc. No. 6 at ¶ 50; Doc. No. 31-5.] The letter states “Normerica was 

explicitly clear that it required immediate payment for all packaging on orders and in our 

warehouse. As such, we demand payment for the two outstanding invoices totaling 

$520,431.17.” [Doc. No. 31-5 at 2.] The letter concludes by stating LP “was to arrange 

and pay for freight from Normerica’s facilities. This has also yet to transpire and as a 

result, Normerica demands further payment in the amount of $197,092.61 in freight 

charges.” [Id.]

On March 12, 2018, Normerica notified LP that it had stopped all shipments 

effective immediately. [Doc. No. 13-3 at 3, ¶ 8; Doc. No. 31 at 12.] 

On March 23, 2018, Normerica sent a letter terminating its relationship with LP for 

all products shipped to Costco Canada. [Doc. No. 31-7.]

Case 3:18-cv-00538-CAB-MSB Document 58 Filed 09/19/18 PageID.<pageID> Page 4 of 9
5

3:18-cv-0538-CAB-MDD

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

In March 2018, LP issued nine checks to Normerica as payment for invoices that 

have subsequently been returned by the bank. [Doc. No. 16-13.] Mr. Keith Wilson appears 

as the signatory on the checks. [Id.]

Normerica invoiced LP $1,095,673.98 for its fulfillment of the purchase orders –

exclusive of the disputed freight and packaging charges. [Doc. No. 16-5 at ¶¶ 5-9; Doc. 

No. 16-6; Doc. No. 16-7 – 16-12.] It is not clear to the Court if the exact dollar amount 

being sought by Plaintiffs’ for the goods delivered is still in dispute.4 

On April 9, 2018, Plaintiffs sought a writ of attachment which was granted by the 

Court on May 4, 2018. [Doc. Nos. 8, 21.] 

Plaintiffs now move for summary judgment and a finding of liability on its 

alternative claims for breach of contract, quantum meruit, and open book account, 

contending the undisputed facts prove it is entitled to recovery of $1,709,206.72 from 

Defendants.5 The amount Plaintiffs seek is inclusive of $197,092.61 freight charges, 

$416,440.13 worth of jugs, sleeves, and corrugate, and $1,095,673.95 in charges for 

fulfillment of purchase orders during the period in dispute. 

Defendants counter that the motion for summary judgment should be denied because 

Plaintiffs incorrectly assume that the Management Agreement does not apply. Defendants 

also contend that, notwithstanding the applicability of the Management Agreement, there 

are triable issues of fact concerning damages. Further, Defendants argue that the motion 

should be deferred or denied pursuant to Federal Rule of Civil Procedure 56(d) until after 

they complete discovery. Finally, Defendants request the Court stay this action until 

Normerica either stays or dismisses the duplicative Canadian action.

 

4

Initially Defendants disputed this calculation because it had not received payment from Costco for the 

delivered cat litter. See May 3, 2018 Declaration of Angelyn Scaraci calculating that Normerica supplied 

Costco with goods for invoices in amounts totaling $840,952.43. [Doc. No. 31-4.]

5

 Ms. Sue Sri, Executive Vice President of Normerica International Corporation and Normerica Inc., 

attests that as of April 25, 2018, LP owes $1,709,206.72. [Doc. No. 16-5 at ¶ 4]

Case 3:18-cv-00538-CAB-MSB Document 58 Filed 09/19/18 PageID.<pageID> Page 5 of 9
6

3:18-cv-0538-CAB-MDD

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

II. Legal Standard

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is 

proper when the “pleadings, depositions, answers to interrogatories, and admissions on file, 

together with the affidavits if any, show that there is no genuine issue as to any material 

fact and the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P 

56(c). Entry of summary judgment is proper “against a party who fails to make a showing 

sufficient to establish the existence of an element essential to that party’s case, and on 

which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 

317, 322 (1986). 

The moving party has the initial burden of “identifying those portions of the 

pleadings, depositions, answers to interrogatories, and admissions on file, together with the 

affidavits, if any, “which it believes demonstrate the absence of a genuine issues of material 

fact.” Id. at 323. If the moving party carries its burden of production, the nonmoving party 

must produce evidence to support its claim or defense. See Nissan Fire & Marine Ins. Co., 

Ltd. v. Fritz Cos., Inc. 210 F.3d 1099, 1103 (9th Cir. 2000); High Tech Gays v. Defense 

Indus. Sec. Clearance Office, 895 F.2d 563, 574 (9th Cir. 1990); Cline v. Indus. Maint. 

Eng’g. & Contracting Co., 200 F.3d 1223, 1229 (9th Cir. 1991) Rule 56(e) requires “the 

nonmoving party to go beyond the pleadings and by her own affidavits, or by the 

‘depositions, answers to interrogatories, and admissions on file,’ designate ‘specific facts 

showing that there is a genuine issue for trial.’” Celotex, 477 U.S at 324. The nonmoving 

party cannot “rest upon mere allegations or denials of his pleadings.” Anderson v. Liberty 

Lobby, Inc., 477 U.S. 242, 256 (1986).

The mere existence of some factual dispute between the parties will not defeat an 

otherwise properly supported motion for summary judgment; the requirement is that there 

be no genuine issue of material fact. Id. at 247-248. “Summary judgment will not lie if 

the dispute about a material fact is ‘genuine,’ that is if the evidence is such that a reasonable 

jury could return a verdict for the nonmoving party.” Id. at 248. The inquiry is whether

“the evidence presents a sufficient disagreement to require submission to a jury or whether 

Case 3:18-cv-00538-CAB-MSB Document 58 Filed 09/19/18 PageID.<pageID> Page 6 of 9
7

3:18-cv-0538-CAB-MDD

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

it is so one-sided that one party must prevail as a matter of law.” Id. at 251-252. The 

evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn 

in his favor. Adicks v. S.H. Kress & Co., 398 U.S. 144, 158-159 (1970).

III. Discussion

A. Breach of Contract Claim

To prevail on their breach-of-contract claim, plaintiffs must demonstrate (1) the 

existence of the contract, (2) plaintiffs’ performance or excuse for nonperformance, (3) 

defendant’s breach, and (4) resulting damages to plaintiffs. Armstrong Petroleum Corp. v. 

Tri-Valley Oil & Gas Co., 11 Cal. Rptr. 3d 412, 425 (2004).

Here, the parties do not dispute that Normerica delivered goods to Costco on LP’s 

behalf and that Normerica must be paid for these deliveries. They strongly disagree 

however as to what conduct or agreement controls the terms of their relationship - the 

individual purchase orders, the parties’ past conduct, or the Management Agreement. The 

parties have presented conflicting evidence as to which contract controls and disagree 

regarding the damages calculation. 

Plaintiffs contend that each purchase order could be “construed as a series of express 

contracts...or a broader implied-in-fact contract created by the parties’ conduct.” [Doc. 

No. 31-1 at 14-20.] According to Plaintiffs, it invoiced LP $1,095,673.98 based on the 

purchase orders Normerica has accepted and fulfilled, the invoices it has sent to LP, and 

the record of transactions between the companies. Additionally, Plaintiffs argue that the 

January 31, 2018, letter Normerica sent to LP effectively changed the terms of the 

relationship between the parties and obligated LP to pay $197,092.61 for freight for goods 

delivered to Costco. [Id.] As to damages, Plaintiffs claim they are entitled to incidental 

damages in the amount of $416,440.13 for costs associated with packaging it was required 

to order in advance. [Id. at 21-23.] Plaintiffs’ position is that since LP’s actions “imperiled 

its relationship with Normerica by nonpayment such that Normerica’s only realistic 

reasonable option was to terminate its relationship with LP....it is unreasonable to expect 

Normerica to bear the cost of LP’s custom packaging.” [Id. at 22.]

Case 3:18-cv-00538-CAB-MSB Document 58 Filed 09/19/18 PageID.<pageID> Page 7 of 9
8

3:18-cv-0538-CAB-MDD

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Defendants counter that they never agreed to the informal agreement and assert the 

relationship between the parties is governed by the Management Agreement that Messrs. 

Kimmel and Wilson executed on February 13, 2018. [Doc. No. 53 at 5-8.] Defendants 

assert that since the Management Agreement expired on March 15, 2018, any invoices

issued between February 13, 2018 and March 5, 2018 should be governed by its terms. 

Regarding damages, Defendants argue that if the Management Agreement is found to be 

enforceable then it is they who are entitled to damages under it as the relevant provision 

provides Normerica will pay LP “a net margin of 9%” and is “inclusive of freight.” [Id. at 

8.] Further, Defendants contend that the invoices for $416,440.13 packaging and 

$197,092.61 for freight lack a corresponding purchase order from LP and constitute double 

charging. [Id. at 9-11.] Relatedly, Defendants assert that the cost of freight was included 

in Normerica’s unit costs as evidenced by Normerica’s invoices. [Id. at 11-12.] Finally, 

Defendants submit that Plaintiffs are using the same jugs and corrugate it charged LP for 

in conjunction with its own new product – Simply Purrfect, thereby raising a triable issue 

as to whether the $416,440.13 invoice is valid. [Id. at 12-13.]

Without getting into the weeds of the parties conflicting arguments, it is clear from 

the background the Court has set forth above that there are many contested factual issues

regarding which contract governs the period in question and to what if any damages 

Plaintiffs are entitled. As a consequence summary judgment on the breach of contract 

claim is not appropriate. Accordingly, Plaintiffs’ motion on this claim is DENIED.

B. Quantum Meruit and Open Book Claims

If there are triable issues of fact as to the breach of contract claims it necessarily 

follows that there are triable issues of fact for the quantum meruit and open book claims. 

See e.g., Jogani v. Superior Court, 81 Cal. Rptr. 3d 503, 507 (2008) (a quantum meruit 

claim is a quasi-contract claim to recover the reasonable value of services rendered); Day 

v. Alta Bates Med. Ctr., 98 Cal. App. 4th 243, 248 (2002) (“[t]he theory or quasi-contractual 

recovery is that one party has accepted and retained a benefit with full appreciation of the 

facts, under circumstances making it inequitable for him to retain the benefit without 

Case 3:18-cv-00538-CAB-MSB Document 58 Filed 09/19/18 PageID.<pageID> Page 8 of 9
9

3:18-cv-0538-CAB-MDD

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

payment of its reasonable value.”) (internal citations omitted); HDR Envtl., Operations & 

Constr., Inc. v. Deason, Case No. 15CV1402 JAH (NLS), 2018 WL 1627229, at *9 (S.D. 

Cal. Mar. 29, 2018) (“to prevail on an open book account, a plaintiff must demonstrate 

show that plaintiff and defendant had financial transactions; that plaintiff kept an account 

of the debits and credits involved in the transactions; that defendant owes money on the 

account; and the amount of money defendant owes plaintiff. However, under California 

law, money due under an express contract cannot be recovered in an action claiming an 

open book account unless there is a contrary agreement by the parties.).

The amount Plaintiffs are entitled to be paid for the reasonable value of their services 

and whether or not an express contract exists between the parties is in dispute. 

Accordingly, Plaintiffs’ motion for summary judgment on these claims is DENIED.

IV. Conclusion

For the reasons set forth above Plaintiffs’ motion for summary judgment [Doc. No. 

31] is DENIED.

It is SO ORDERED.

Dated: September 19, 2018

Case 3:18-cv-00538-CAB-MSB Document 58 Filed 09/19/18 PageID.<pageID> Page 9 of 9