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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

Senior Judge Wiley Y. Daniel

Civil Action No. 11-cv-02444-WYD-KMT 

AMERICAN WEB, INC., 

 Plaintiff, 

v. 

FLOM CORPORATION; 

LLOYD S. STIRMER; 

PETER O. ABELES; and, 

JOHN DOE TRUSTEE(S) of the STIRMER TRUST, 

 Defendants. 

ORDER

 THIS MATTER is before the Court on American Web, Inc.’s, Motion For Partial 

Summary Judgment [ECF No. 75]. For the reasons stated below, the motion is 

GRANTED IN PART and DENIED IN PART. 

BACKGROUND

 On April 27, 2013, American Web, Inc. (“Am Web”) filed a Third Amended 

Complaint [ECF No. 53] against Flom Corporation (“Flom”), Lloyd S. Stirmer, Peter O. 

Abeles, and the John Doe Trustees of the Stirmer Trust (collectively “the Defendants”), 

seeking a declaratory judgment and constructive trust, and alleging the following claims: 

(1) breach of contract for underpayment and nonpayment; (2) breach of duty of good 

faith and fair dealing; (3) conversion; (4) fraud by deceit; and, (5) negligent 

misrepresentation. 

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Am Web is a commercial printing company which, in connection with its business 

operations, produces wastepaper. Flom provides consulting services to wastepaper 

producers with regard to their recycling options. Defendant, Peter O. Abeles, is a 50% 

owner and Chairman of Flom’s Board of Directors. Defendant, Lloyd S. Stirmer, is 

Flom’s President. The John Doe Trustees of the Stirmer Trust own 46% of Flom. 

 In 1986, Abeles visited Colorado to discuss the possibility of entering into a 

contract with Am Web regarding wastepaper recycling. In September 2006, Am Web 

and Flom entered the Wastepaper Supply and Equipment Access Agreement (“the 

Wastepaper Agreement”) [ECF No. 65-3] in which Flom agreed to purchase all of Am 

Web’s marketable wastepaper and pay Am Web “in accordance with the prevailing 

market conditions.” ECF No. 65-3, p.1, ¶ 3. For five years, Flom purchased wastepaper 

from Am Web on a monthly basis. 

 After selling wastepaper to Flom for five years, Am Web obtained a commercially 

available schedule of rates considered to be the prevailing market prices for wastepaper 

that are paid by consuming paper mills. Am Web alleges that according to these rates, 

Flom grossly under-compensated Am Web for its wastepaper purchases dating back to 

the beginning of the parties’ business relationship. Following this discovery, Am Web 

ceased its wastepaper shipping operation to Flom in August 2011. At that time, Flom 

allegedly owed Am Web for twelve shipments made since July 1, 2011. According to 

Am Web, Flom should have paid Am Web for these shipments by November 5, 2011. 

Am Web alleges that Flom has not paid for these final twelve shipments. 

 On September 16, 2011, Am Web filed this lawsuit against Flom, Stirmer, 

Abeles, and the John Doe Trustees of the Stirmer Trust. Am Web seeks a declaratory 

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judgment regarding its rights and obligations under the Wastepaper Agreement and 

requests this Court to impose a constructive trust on the funds Flom allegedly withheld 

from Am Web by not paying Am Web for wastepaper in accordance with prevailing 

market conditions. Am Web also alleges the following claims: (1) breach of contract for 

underpayments; (2) breach of contract for nonpayment; (3) breach of duty of good faith 

and fair dealing; (4) conversion; (5) fraud; and, (6) negligent misrepresentation. 

 On May 30, 2012, Flom filed an Amended Partial Motion To Dismiss Third 

Amended Complaint [ECF No. 62], arguing that: (1) Colorado’s Economic Loss Rule 

(“ELR”) bars Am Web’s tort claims; and, (2) this Court lacks personal jurisdiction over 

Abeles. On March 25, 2013, I issued an Order [ECF No. 95] dismissing all claims 

against Abeles for lack of personal jurisdiction and Am Web’s tort claims against the 

defendants pursuant to Colorado’s Economic Loss Rule (“ELR”). On April 2, 2013, Am 

Web filed Motion For Clarification Of Order [ECF No. 97], requesting that I clarify the 

effect of Colorado’s ELR as it relates to Am Web’s tort claims against Stirmer. 

 On August 31, 2012, Am Web filed a Motion For Partial Summary Judgment 

[ECF No. 75], arguing that it is entitled to judgment as a matter of law on its breach of 

contract claims because Flom breached the Wastepaper Agreement by: (1) improperly 

retaining commission in connection with payments from wastepaper mills who 

purchased Am Web’s wastepaper through Flom; and, (2) not paying Am Web for 12 

shipments of wastepaper. On Wednesday, September 11, 2013, I held a Motions 

Hearing and heard arguments regarding Am Web’s motion [ECF No. 75] and took the 

matter under advisement. 

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ANALYSIS

A. Legal Standard for a Motion for Summary Judgment 

 Summary judgment is proper when “the movant shows that there is no genuine 

dispute as to any material fact and the movant is entitled to judgment as a matter of 

law.” FED. R. CIV. P. 56(a); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 

(1986); Equal Employment Opportunity Comm. v. Horizon/CMS Healthcare Corp., 220 

F.3d 1184, 1190 (10th Cir. 2000). “When applying this standard, [the court must] ‘view 

the evidence and draw all reasonable inferences therefrom in the light most favorable to 

the party opposing summary judgment.’” Atl. Richfield Co. v. Farm Credit Bank of 

Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000) (citation omitted). “A fact is ‘material’ if, 

under the governing law, it could have an effect on the outcome of the lawsuit.” 

Horizon/CMS Healthcare, 220 F.3d at 1190. “A dispute over a material fact is ‘genuine’ 

if a rational jury could find in favor of the nonmoving party on the evidence presented.” 

Id.

 “The burden of showing that no genuine issue of material fact exists is borne by 

the moving party.” Horizon/CMS Healthcare, 220 F.3d at 1190. “‘Only disputes over 

facts that might affect the outcome of the suit under the governing law will properly 

preclude the entry of summary judgment.’” Atl. Richfield Co., 226 F.3d at 1148 

(quotation omitted). All doubts must be resolved in favor of the existence of triable 

issues of fact. Boren v. Sw. Bell Tel. Co., 933 F.2d 891, 892 (10th Cir. 1991). 

B. Am Web’s Motion For Partial Summary Judgment [ECF No. 75] 

 Am Web requests: (1) a declaratory judgment regarding the parties’ rights and 

obligations under the Wastepaper Agreement; and, (2) entry of summary judgment in its 

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favor regarding its breach of contract claims. 

As an initial matter, I note that the Wastepaper Agreement contains a choice of 

law provision. The provision states that “[t]his Agreement shall be construed in 

conformity with the laws of the state of Maryland.” ECF No. 65-3, p. 5, ¶ 16. Regarding 

the issues raised by Am Web in its Motion For Partial Summary Judgment [ECF No. 

75], all parties agree that Maryland law applies. Thus, I will analyze Am Web’s 

arguments under Maryland law. 

1. Declaratory Judgment / Breach of Contract for Underpayment 

 Am Web requests that I declare the parties’ rights and obligations under the 

Wastepaper Agreement as it relates to payment for wastepaper. Pursuant to the 

Declaratory Judgment Act, 28 U.S.C. § 2201, I have the authority to “declare the rights 

and other legal relations” of the parties under the Wastepaper Agreement.1

 The 

Wastepaper Agreement states, in pertinent part: 

2. AM Web agrees to sell and FLOM agrees to buy all of AM 

Web’s output of marketable Wastepaper . . . 

3. The price to be paid by Buyer [Flom] for the various 

grades of Wastepaper generated by AM Web will be in 

accordance with the prevailing market conditions. These 

 

1 Pursuant to 28 U.S.C. § 2201: 

In a case of actual controversy within its jurisdiction, except with respect 

to Federal taxes other than actions brought under section 7428 of the 

Internal Revenue Code of 1986 [26 USCS § 7428], a proceeding under 

section 505 or 1146 of title 11, or in any civil action involving an 

antidumping or countervailing duty proceeding regarding a class or kind 

of merchandise of a free trade area country (as defined in section 

516A(f)(10) of the Tariff Act of 1930 [19 USCS § 1516a(f)(10)]), as 

determined by the administering authority, any court of the United States, 

upon the filing of an appropriate pleading, may declare the rights and 

other legal relations of any interested party seeking such declaration, 

whether or not further relief is or could be sought. Any such declaration 

shall have the force and effect of a final judgment or decree and shall be 

reviewable as such. 

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prices will be evidenced by FLOM’s monthly purchase order. 

4. It is understood and agreed that Wastepaper which is the 

subject of this Agreement is purchased by FLOM for resale 

to a consuming paper mill or mills (hereinafter the “Mill”) on a 

direct Mill shipment and consumption basis. In the event of 

any Mill rejections of Wastepaper purchased from AM Web, 

FLOM shall, in addition to any other payments or credits or 

debits due AM Web, have the right to debit its payments or 

credits to AM Web for any such Mill rejections, including 

freight. Such debit shall be shown in the following month’s 

invoice. FLOM shall furnish AM Web with a monthly 

accounting of all credits and debits due the Parties no later 

than sixty (60) days subsequent to the date of the close of 

business for the subject month, which statement shall be 

certified by FLOM as being complete, correct, and accurate 

as of the date it bears. 

5. Flom shall use reasonable efforts to obtain for AM Web 

the best possible price from the Mill, however, Buyer [Flom] 

makes no representations as to the price other than those 

expressly set forth herein. Wastepaper failing to conform 

with the agreed Specifications shall be subject to price 

adjustment, downgrading or rejection at the sole discretion of 

the Mill. All monetary adjustments assessed by the Mill shall 

be explained in detail to AM Web and may, if requested, be 

accompanied by sample of the objectionable materials taken 

from the Wastepaper examined. In the event of Wastepaper 

being rejected by the Mil, FLOM Shall have no obligation to 

pay AM Web but shall use reasonable efforts to advise AM 

Web of the rejection. Prices may increase or decrease 

monthly depending on market conditions beyond the control 

of the Parties. Nothing in this Agreement shall constitute a 

price guarantee from Buyer [Flom] to AM Web. 

 FLOM shall not be required to pay AM Web until FLOM has 

been paid by the Mill, or until 90 days after shipment, 

whichever occurs first. 

ECF No. 65-3, p. 3, ¶ 3 & p. 4, ¶¶ 4-5. 

 Because the Wastepaper Agreement is a contract for the sale of goods, disputes 

regarding the agreement are governed by the Uniform Commercial Code (“UCC”) as 

adopted by Maryland. See Sagent Tech., Inc. v. Micros Sys., 276 F. Supp. 2d 464, 467 

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n.1 (D. Md. Aug. 5, 2003) (internal citations omitted) (“The U.C.C. applies to 

‘transactions in goods.’ Something is a ‘good’ if it is ‘movable at the time of 

identification to the contract for sale’”). Pursuant to § 1-103 of Maryland’s UCC, 

“[u]nless displaced by the particular provisions of the Maryland Uniform Commercial 

Code, the principles of law and equity . . . shall supplement [the UCC’s] provisions . . . ” 

Maryland’s UCC does not contain a provision specifically dictating how a contract shall 

be interpreted. Thus, I look to Maryland’s common law. When interpreting a contract, 

Maryland courts apply “an objective approach to contract interpretation, according to 

which, unless a contract’s language is ambiguous, [courts] give effect to that language 

as written without concern for the subjective intent of the parties at the time of 

formation.” Ocean Petroleum, Co. v. Yanek, 5 A.3d 683, 691 (Md. 2010) (citing Cochran 

v. Norkunas, 919 A.2d 700, 709 (Md. 2007)). This inquiry restricts courts to “the four 

corners of the agreement” and requires them to “ascribe to the contract’s language its 

‘customary, ordinary, and accepted meaning.’” Id. (citations omitted). Thus, “the true 

test of what is meant is not what the parties to the contract intended it to mean, but what 

a reasonable person in the position of the parties would have thought it meant.” Id. 

(quoting Cochran, 919 A.2d at 710). 

 Am Web’s chief complaint is that Flom retained significant amounts of money as 

service charges or commission, $609,929 to be exact, in derogation of the Wastepaper 

Agreement. The Wastepaper Agreement’s plain language does not provide for any 

service charge or commission. In fact, during the September 11, 2013, Motions 

Hearing, Flom admitted on record that the words “service charge” and “commission” do 

not appear in the Wastepaper Agreement. Using Maryland’s objective approach to 

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contract interpretation as a supplement to its UCC, I am confined to the four corners of 

the Wastepaper Agreement because the Wastepaper Agreement is unambiguous. The 

Wastepaper Agreement does not contemplate a commission for Flom upon the sale of 

Am Web’s wastepaper. Thus, under the Wastepaper Agreement’s terms, Flom is not 

entitled to receive commission upon the sale of Am Web’s wastepaper. 

 Though it admitted that the words “service charge” and “commission” do not 

appear in the Wastepaper Agreement, Flom argues that the UCC’s course of 

performance and course of dealing provision permits it to receive commission upon the 

sale of Am Web’s wastepaper. Pursuant to Md. COMMERCIAL LAW Code Ann. § 1-

303(d), “[a] course of performance or course of dealing between the parties . . . may 

give particular meaning to specific terms of the agreement, and may supplement or 

qualify the terms of the agreement.” First, as this provision relates to course of 

performance or course of dealing giving meaning to “specific terms of the agreement,” 

there is no “service charge” or “commission” term in the Wastepaper Agreement. Thus, 

there is term or terms to give “particular meaning to.” Second, while parties’ course of 

performance and course of dealing may supplement and qualify terms of an agreement, 

a party must at the very least have knowledge of the action and behavior that serves as 

the basis for the alleged course of performance or dealing.2

 In other words, a party 

 

2

 Pursuant to Md. COMMERCIAL LAW Code Ann. §§ 1-303(a) and (b): 

(a) “Course of performance” defined. -- A “course of performance” is a 

sequence of conduct between the parties to a particular transaction that 

exists if: 

 (1) The agreement of the parties with respect to the transaction 

 involves repeated occasions for performance by a party; and 

 (2) The other party, with knowledge of the nature of the 

 performance and opportunity for objection to it, accepts the 

 performance or acquiesces in it without objection. 

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cannot claim that certain behavior constitutes course of performance or dealing when 

the other party had no knowledge of such behavior. Am Web was not aware that Flom 

was improperly retaining commission on wastepaper sales. Thus, Flom cannot properly 

assert that such behavior was a course of performance or dealing with Am Web. 

 While the UCC governs the Wastepaper Agreement, it cannot be used as a 

vehicle to rewrite the Wastepaper Agreement and create rights and obligations that did 

not previously exist and that the parties did not intend to exist. Therefore, I find that 

under the Wastepaper Agreement’s terms: (1) Flom cannot rightfully retain commission 

from wastepaper sales; and, (2) Am Web is entitled to the money Flom illegally withheld 

as commission on wastepaper sales: $609,929. 

2. Am Web’s Breach of Contract Claim for Non-Payment 

 Am Web terminated the Wastepaper Agreement in August 2011. Am Web 

alleges that between July 1, 2011, and August 5, 2011, Flom received at least 12 

wastepaper shiploads and has not paid Am Web for the shiploads. ECF No. 53, p. 4, ¶ 

27. Flom states Am Web breached the Wastepaper Agreement in July 2011 by selling 

wastepaper to a company named Curbside. Flom states that to offset its damages for 

such breach, it withheld payment on eight wastepaper shipments from July 14, 2011, to 

August 5, 2011. ECF No. 77, p. 10, ¶ 16. 

 Am Web denies that it breached the Wastepaper Agreement. Am Web states 

that it only sent “test” shipments to Curbside so Curbside could determine the 

wastepaper’s grade and determine its price. ECF No. 76, p. 6, ¶ 30. However, Flom 

 

(b) “Course of dealing” defined. -- A “course of dealing” is a sequence of 

conduct concerning previous transactions between the parties to a 

particular transaction that is fairly to be regarded as establishing a 

common basis of understanding for interpreting their expressions and 

other conduct. 

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produced numerous receipts from Curbside which allegedly show that Am Web sold 

some of its wastepaper to Curbside. ECF No. 72-12, pp. 4-20. These receipts total over 

$64,000. If Am Web breached the Wastepaper Agreement, then Flom may have been 

justified in withholding payment for certain wastepaper shipments. 

 There are genuine issues of material fact as to whether: (1) Am Web breached 

the Wastepaper Agreement by selling wastepaper to a company other than Flom i.e., 

Curbside; and, (2) Flom was justified in withholding payment for certain wastepaper 

shipments because of Am Web’s alleged breach. Thus, Am Web is not entitled to 

judgment as a matter of law on its breach of contract claim for nonpayment. 

Accordingly, Am Web’s Motion For Partial Summary Judgment [ECF No. 75] is DENIED 

to the extent Am Web seeks partial summary judgment on its breach of contract claim 

for nonpayment. 

CONCLUSION

 After careful consideration of the matters before this Court, it is 

 ORDERED that Am Web’s Motion For Partial Summary Judgment [ECF No. 75] 

is GRANTED IN PART and DENIED IN PART. The motion is GRANTED to the extent 

that Am Web seeks partial summary judgment on its breach of contract for 

underpayment claim. As such, Am Web is entitled to, and Flom shall pay Am Web, 

the entire amount of money withheld as commission: $609,929. The motion is 

DENIED to the extent that Am Web seeks partial summary judgment on its breach of 

contract claim for nonpayment. It is 

 FURTHER ORDERED that my in-court rulings during the September 11, 2013, 

Motions Hearing are incorporated in this Order. Accordingly, it is 

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 FURTHER ORDERED that Am Web’s Motion To Clarify [ECF No. 97] is 

GRANTED to the extent that Am Web seeks clarification of my March 25, 2013, Order 

[ECF No. 95]. To clarify, Colorado’s Economic Loss Rule bars Am Web’s tort claims, 

including those asserted against Lloyd S. Stirmer. It is 

 FURTHER ORDERED that Flom’s Motion For Partial Summary Judgment [ECF 

No. 74] is DENIED. 

 Dated: September 12, 2013. 

 BY THE COURT: 

 /s/ Wiley Y. Daniel 

 Wiley Y. Daniel 

 Senior U.S. District Judge 

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