Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-01303/USCOURTS-azd-2_10-cv-01303-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

---

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

AL-MISEHAL COMMERCIAL GROUP, )

LTD., )

Plaintiff, ) 2:10-cv-01303 JWS

)

vs. ) ORDER AND OPINION

)

THE ARMORED GROUP, LLC, ) [Re: Motions at Dockets 62 and 75]

)

Defendant. )

)

I. MOTION PRESENTED

At docket 62, plaintiff Al-Misehal Commercial Group, Ltd. (“plaintiff” or “AlMisehal”) moves pursuant to Federal Rule of Civil Procedure 56 for summary judgment. 

Defendant The Armored Group, LLC (“defendant” or “TAG”) opposes the motion at

docket 70. Al-Misehal’s reply is at docket 73.

At docket 75, TAG moves to strike the statement of facts accompanying AlMisehal’s reply brief and portions of the reply brief itself. Al-Misehal responds to the

motion at docket 77. TAG’s reply is at docket 78.

Oral argument was not requested with respect to either motion and would not

assist the court. 

Case 2:10-cv-01303-JWS Document 81 Filed 09/30/11 Page 1 of 9
1

See doc. 63-1 at 1.

2

Doc. 71-2 at 2–3.

3

Doc. 65-1 at 1–2.

4

Doc. 63-5 at 2.

5

Doc. 1 ¶ 12.

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II. BACKGROUND

Al-Misehal is a Saudi Arabian company. It received an order from the Minister of

Defense and Aviation of Saudi Arabia for seven customized vehicles. TAG is an

Arizona corporation that does customization work. On March 20, 2006, Al-Misehal

contracted with TAG for the purchase of seven customized Ford Excursions. Three of

the vehicles were to be armored and equipped with remotely operated weapons

systems. Four of the vehicles were to be equipped with BombJammers (“jammers”) to

defend against improvised explosive devices. The vehicles were to be delivered by

September 22, 2006. The total contract price was $ 1,892,000. Al-Misehal provided

TAG with a $946,000 deposit.1

On April 10, 2006, TAG contracted with Homeland Security Strategies, Inc.

(“HSS”) for supply and installation of the jammers. TAG almost immediately

communicated to Al-Misehal concern as to HSS’s ability to perform.2

 By May 13, 2006,

TAG sought assurance from HSS that it would perform.3 TAG never received

assurance from HSS, but as late as June 10, 2006, conveyed to Al-Misehal that it

believed HSS would perform under the contract.4

 Al-Misehal cancelled its contract with

TAG on June 29, 2006, ostensibly because HSS’s failure to perform meant that TAG

could not meet the September 2006 deadline.5

Case 2:10-cv-01303-JWS Document 81 Filed 09/30/11 Page 2 of 9
6

Doc. 63-3.

7

Doc. 65-1 at 2–3.

8

Fed. R. Civ. P. 56(c)(2).

9

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

10Id.

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TAG ultimately sued HSS for breach of contract in the Southern District of New

York and won a $1,018,400 judgment plus interest.6 That court determined, among

other things, that Al-Misehal cancelled its contract with TAG because of HSS’s failure to

supply the jammers.7

Al-Misehal brought this lawsuit against TAG in June of 2010. Al-Misehal

asserted claims for breach of contract and, in the alternative, unjust enrichment. It

seeks damages for TAG’s alleged breach in an amount to be determined at trial, or

return of its $946,000 deposit.

III. STANDARD OF REVIEW

Summary judgment is appropriate where “there is no genuine issue as to any

material fact and . . . the movant is entitled to judgment as a matter of law.”8

 The

materiality requirement ensures that “only disputes over facts that might affect the

outcome of the suit under the governing law will properly preclude the entry of summary

judgment.”9

 Ultimately, “summary judgment will not lie if the . . . evidence is such that a

reasonable jury could return a verdict for the nonmoving party.”10 In resolving a motion

for summary judgment, a court must view the evidence in the light most favorable to the

Case 2:10-cv-01303-JWS Document 81 Filed 09/30/11 Page 3 of 9
11Lopez v. Smith, 203 F.3d 1122 (9th Cir. 2000). 

12Dominguez-Curry v. Nevada Transp. Dept., 424 F.3d 1027, 1036 (9th Cir. 2005).

13Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

14See LRCiv. 56.1(a), (d).

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non-moving party.11 The reviewing court may not weigh evidence or assess the

credibility of witnesses.12 The burden of persuasion is on the moving party.13

IV. DISCUSSION

A. Motion to Strike

TAG correctly argues that the Local Rules do not contemplate a separate

statement of facts accompanying a reply brief.14 Al-Misehal responds that it included

the additional statement of facts to respond to what it construed as TAG’s cross-motion

for summary judgment. Al-Misehal does not oppose the motion as it pertains to the

statement of facts because TAG clarified that its response was not intended to be a

cross-motion for summary judgment. Al-Misehal argues that the relevant portions of the

reply brief need not be stricken because those portions respond to TAG’s assertion of

two new affirmative defenses. TAG’s arguments that the statute of limitations on AlMisehal’s claim has run and that Al-Misehal breached the contract are not properly

raised in response to a motion for summary judgment, and the court will disregard them. 

The court will similarly disregard the portions of Al-Misehal’s reply brief that respond to

those arguments. Therefore, while the statement of facts will be stricken, it is not

necessary to strike any portion of the reply brief.

Case 2:10-cv-01303-JWS Document 81 Filed 09/30/11 Page 4 of 9
15Doc. 63-1 at 3.

16Doc. 1 ¶ 12.

17Doc. 1 ¶ 8.

18A.R.S. § 47-2609(A).

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B. Repudiation

Al-Misehal maintains that TAG breached the parties’ contract because HSS did

not manufacture the jammers in time. Here, there is no genuine dispute that Al-Misehal

cancelled the contract. The contract contained a force majeure clause that

contemplated cancellation “on account of . . . failure of source of supply,” but it only

gave TAG–not Al-Misehal–a right to cancel.15 The question is whether Al-Misehal’s

cancellation was in response to TAG’s repudiation of the contract.

Al-Misehal cancelled the contract on June 29, 2006.16 The deadline for delivery

of the armored trucks was September 22, 2006.17 Al-Misehal argues that TAG

breached the contract in June 2006, when HSS failed to give adequate assurance of

performance. TAG argues that Al-Misehal did not comply with the requirements of

A.R.S. § 47-2609. That statute is a codification of § 2-609 of the Uniform Commercial

Code and provides that “[w]hen reasonable grounds for insecurity arise with respect to

the performance of either party the other may in writing demand adequate assurance of

due performance and until he receives such assurance may if commercially reasonable

suspend any performance for which he has not already received the agreed return.”18 

TAG is mistaken that “under the UCC a failure by TAG to provide ‘adequate

assurance of due performance’ is the only possible theory” under which TAG could

Case 2:10-cv-01303-JWS Document 81 Filed 09/30/11 Page 5 of 9
19Doc. 70 at 5.

20A.R.S. § 47-2609(B).

21U.C.C. § 2-609 cmt. 1; see also id. § 2-609 cmt. 2 (“Repudiation can result from action

which reasonably indicates a rejection of the continuing obligation. And, a repudiation

automatically results under [§ 2-609] when a party fails to provide adequate assurance of due

future performance within thirty days after a justifiable demand . . . has been made.”).

22Id.

23Doc. 73 at 4; doc. 71-2.

24Doc. 71-2 at 5.

25Doc. 63-5 at 2.

26Doc. 63-5 at 1.

27Id.

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have repudiated the contract.19 Although a failure to provide such assurance “within a

reasonable time not exceeding thirty days” is a repudiation of the contract,20 the

commentary to § 2-610 of the Uniform Commercial Code (codified at A.R.S. § 47-2610)

makes clear that § 2-609 only deals “[w]ith the problem of insecurity.”21 Anticipatory

repudiation can occur under other circumstances–through “an overt communication of

intention or an action which renders performance impossible or demonstrates a clear

determination not to continue with performance.”22

Al-Misehal argues that an e-mail exchange indicated that performance would be

impossible.23 But that exchange ends with Al-Misehal approving substitute jammers.24

A later e-mail exchange indicates that TAG believed HSS would perform on time.25 It

also suggests that Al-Misehal was not willing to accept substitute jammers.26 The same

exchange does indicate that Al-Misehal became convinced that HSS would not

perform.27 However, it is unclear what caused Al-Misehal’s belief. Al-Misehal has not at

Case 2:10-cv-01303-JWS Document 81 Filed 09/30/11 Page 6 of 9
28U.C.C. § 2-609 cmt. 1.

29The Southern District of New York found that HSS failed to provide TAG reasonable

assurance that it would perform. Doc. 65-1 at 2. If that information had been communicated to

Al-Misehal, the communication could have been treated as a repudiation. However, to the

contrary, TAG conveyed a–presumably false–belief that HSS would deliver the jammers on

time. Doc. 63-5 at 2.

30New Hampshire v. Maine, 532 U.S. 742, 750 (2001).

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this juncture pointed to a definitive “overt communication of intention or an action which

renders performance impossible or demonstrates a clear determination not to continue

with performance.”28 There is, consequently, an issue of material fact as to precisely

what action, if any, rendered performance impossible and judgment is not appropriate

as a matter of law.29

C. Judicial Estoppel

Al-Misehal argues that judicial estoppel precludes TAG from arguing that it did

not breach the contract. There are three factors that “typically inform the decision

whether to apply the doctrine in a particular case.”30 First, the party’s later position must

be “clearly inconsistent” with an earlier position. Second, if a court has been persuaded

by the earlier position, application of the doctrine is more appropriate. Third, a court

should consider whether the party would gain an unfair advantage by asserting the

inconsistent position or whether the opposing party would suffer an unfair detriment.

Al-Misehal argues that TAG’s position that it did not breach its contract with AlMisehal is inconsistent with TAG’s position in the earlier proceeding that HSS breached

its contract with TAG. TAG argues that it has had one consistent position–“that HSS

breached its contract with TAG, causing damages because Al-Misehal consequently

Case 2:10-cv-01303-JWS Document 81 Filed 09/30/11 Page 7 of 9
31Doc. 70 at 11.

32Doc. 62 at 8.

33Doc. 62 at 8.

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breached its contract with TAG.”31 The court agrees that TAG’s characterization is not

internally inconsistent. In its reply brief, Al-Misehal clarifies its contention that TAG is

estopped from arguing that Al-Misehal cancelled its contract with TAG for any reason

other than that HSS did not perform its contract with TAG. The court agrees. TAG

adopted that position in litigation in the Southern District of New York, that court was

persuaded by TAG’s position, and allowing TAG to assert an inconsistent position in the

current proceedings–in which Al-Misehal seeks to recover its deposit–would cause AlMisehal to suffer an unfair detriment.

D. Issue Preclusion

Al-Misehal argues that TAG is precluded from re-litigating “the issue of what

caused TAG’s inability to perform.”32 Al-Misehal states that “HSS’s failure and refusal to

perform its contract with TAG necessarily meant that TAG was unable to perform the

[c]ontract with Al-Misehal.”33 Al-Misehal’s argument does not flow. The Southern

District of New York did not, and could not have determined that TAG breached its

contract with Al-Misehal. It only determined that Al-Misehal’s cancellation of the

contract was based on HSS’s failure to supply the jammers. The court has already

determined that TAG is judicially estopped from asserting otherwise. Application of

nonmutual, offensive collateral estoppel requires, inter alia, that “the issue was actually

Case 2:10-cv-01303-JWS Document 81 Filed 09/30/11 Page 8 of 9
34Syverson v. International Business Machines Corp., 472 F.3d 1072, 1078 (9th Cir.

2007).

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litigated in the prior action” and “decided in a final judgment.”34 Whether TAG breached

its contract with Al-Misehal was neither actually litigated nor decided.

V. CONCLUSION

For the reasons above, plaintiff’s motion at docket 62 is GRANTED in part and

DENIED in part as follows:

1) It is denied to the extent there are genuine issues of material fact concerning

repudiation of the agreement.

2) It is granted such that TAG may not argue that Al-Misehal cancelled the

agreement for a reason other than HSS’s failure to supply the jammers.

3) It is denied to the extent it seeks application of collateral estoppel to establish

that TAG breached the contract.

The motion at docket 75 is GRANTED in part. The Clerk will please strike the

statement of facts at docket 74.

Finally, it appears to the court that this case could be settled by the parties and

they are encouraged to do so.

DATED this 30th day of September 2011.

/s/ JOHN W. SEDWICK

UNITED STATES DISTRICT JUDGE

Case 2:10-cv-01303-JWS Document 81 Filed 09/30/11 Page 9 of 9