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Premier Gaming Trailers LLC v. Luna Diversified Enterprises, Inc.

United States District Court, M.D. Florida, Tampa Division

January 18, 2018

PREMIER GAMING TRAILERS, LLC, Plaintiff,
v.
LUNA DIVERSIFIED ENTERPRISES, INC., Defendant.

          ORDER

          VIRGINIA M. HERNANDEZ COVINGTON UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court pursuant to Defendant Luna Diversified Enterprises, Inc.'s Motion for Summary Judgment (Doc. # 46), filed on October 31, 2017. Plaintiff Premier Gaming Trailers, LLC, responded on November 30, 2017. (Doc. # 52). Luna filed its reply on December 14, 2017. For the reasons that follow, the Motion is granted in part and denied in part as set forth herein.

         I. Background

         This lawsuit revolves around the submission of a bid for a contract with the federal government - specifically, a bid to build mobile gaming kiosks for the Army.

         Premier Gaming Trailers is a custom fabricator company that builds mobile gaming trailers in Tampa, Florida. (Doc. # 1 at ¶ 8). Although not registered with the Small Business Administration (SBA), Premier Gaming is a small company with fewer than five employees and less than $750, 000 in gross revenue. (Bekhor Aff. Doc. # 52-5 at ¶ 10; Bekhor Dep. Doc. # 46-2 at 9:10-20). Lidan Bekhor is the sole owner and manager of Premier Gaming. (Bekhor Dep. Doc. # 46-2 at 7:12-18).

         Bekhor had no experience with government contracts or the federal bidding process. (Id. at 7:6-11). Thus, he was unaware of when a federal bid becomes a binding contract and did not understand small business set-aside contracts or the Federal Acquisition Regulations (FARS), which govern the eligibility and requirements for contracting with the federal government. (Id. at 11:4-16). Premier Gaming never registered with the federal government's system for award management, SAM, and had never directly submitted a bid for a federal contract before. (Id. at 15:7-25). Instead, on the few occasions Premier Gaming sought to bid on a federal contract, Premier Gaming “looked to partner with somebody who is experienced to guide” it through the process. (Id. at 62:3-12, 58:6-19, 102:4-9).

         One such entity Premier Gaming trusted to understand federal contracts was Luna. Luna is a company that provides all types of merchandise and services to federal and state agencies exclusively, by submitting bids in response to various federal and state bid solicitations. (Gina Dep. Doc. # 46-3 at 6:6-7:13). Luna is a small business, registered with and certified by the SBA, and has between three and five employees at any given time. (Curry Dec. Doc. # 46-6 at ¶ 1; Curry Dep. Doc. # 46-4 at 6:7-9). Alma Gina, nee Hoffman, is the sole owner of Luna and maintains the sole authority to enter binding contracts. (Gina Dep. Doc. # 46-3 at 6:15, 9:15-19, 27:1-10; Curry Dep. Doc. # 46-4 at 10:11-17). Luna's “operations manager, ” Jason Curry, “manage[d] the day-to-day operations of the company in terms of [its] contract fulfillments, as well as internal staff issues, as well as [its] in-house IT.” (Curry Dep. Doc. # 46-4 at 5:24-6:4).

         The other Luna employee who figures prominently in this case is Marcos Morales. Morales works in “solutions development” for Luna, and his job entails “getting pricing [from suppliers] and building and submitting quotes to the customer, which included signing nonbinding solicitation paperwork.” (Morales Dep. Doc. # 46-5 at 5:19-23, 41:13-19; Curry Dep. Doc. # 46-4 at 10:18-11:4). According to Curry, Morales' job is “to find sources of product and get prices, ” and he can submit bids to contracts “for simplified acquisitions.” (Curry Dep. Doc. # 46-4 at 10:20-25). But Morales did not have the authority to make binding decisions on behalf of Luna, such as entering contracts with suppliers or customers. (Gina Dep. Doc. # 46-3 at 27:1-10; Morales Dep. Doc. # 46-5 at 42:19-20, 48:11-19; Curry Dep. Doc. # 46-4 at 14:23-25, 23:22-23).

         And, although he helped put bids together for government contracts, Morales had never been trained in the FARS and stated that he did not understand them. (Morales Dep. Doc. # 46-5 at 50:7-22; Curry Dep. Doc. # 46-4 at 13:24-14:6). Instead, Morales assumed that the suppliers he contacted about pricing on potential bids would be aware of their own eligibility under federal regulations for the bid opportunities Morales spoke about with them. (Morales Dep. Doc. # 46-5 at 50:12-22). Still, Morales' lack of familiarity with these regulations was not an issue because other Luna employees research the applicability of the FARS for each contract only after a tentative bid award is issued to Luna. (Gina Dep. Doc. # 46-3 at 19:11-19; Curry Dep. Doc. # 46-4 at 8:9-17). This is because a bid is not binding, and a bidder can decline to enter a contract even if it receives notice of its bid being selected. (Curry Dec. Doc. # 46-6 at ¶ 2).

         Beginning in August of 2016, Morales contacted Premier Gaming about other gaming trailer bids, and Luna submitted three bids for those gaming trailer contracts with Premier Gaming in mind as a vendor. (Doc. 1-1 at 2; Morales Dep. Doc. # 46-5 at 13:12-14:3; Bekhor Aff. Doc. # 52-5 at ¶ 7). Those three bids had been for contracts Curry described as “simplified acquisition” contracts, for which Morales had authority to submit non-binding bids. (Curry Dep. Doc. # 46-4 at 10:23-25, 12:15-13:8). Gina was not aware that Morales had worked with Premier Gaming on the quotes before submitting these bid proposals, (Gina Dep. Doc. # 46-3 at 27:11-15), perhaps because none of those previous bids had been awarded to Luna. (Bekhor Dep. Doc. # 46-2 at 25:25-26:5; Curry Dep. Doc. # 46-4 at 12:15-18).

         In September of 2016, Bekhor of Premier Gaming contacted Morales to notify him of the Army's bid solicitation for mobile gaming kiosks and to begin working on a bid together. (Bekhor Dep. Doc. # 46-2 at 18:2-12). The gaming kiosks would be used for marketing and recruitment purposes and were to include, among other things, a 42-inch television screen, X-Box gaming systems, and numerous speakers. (Doc. # 49-2 at 15-25). Although he had no records of any pricing or design research, Bekhor testified that he called various vendors and suppliers of metal and electrical parts for pricing around this time, so that he could come up with a price quote for the bid. (Bekhor Dep. Doc. # 46-2 at 33:7-35:15). As Bekhor understood his conversations with Morales, Premier Gaming would produce one hundred percent of the kiosks and handle delivery, with Premier Gaming to receive ninety-seven percent of the contract price and Luna to receive the remaining three percent. (Id. at 46:3-21, 98:8-11, 99:1-6).

         On September 26, 2016, Morales signed an “Amendment of Solicitation/Modification of Contract, ” which included modifications by the Army to its solicitation for bids for the gaming kiosks. (Doc. # 50-3 at 14). Gina stated in her deposition that Morales “would not have authority” to sign the document, but she was “not surprised” to see that he had signed because it was “just a solicitation” that did not “bind [Luna] to anything” and Gina had been “going through a lot in that period” of time. (Gina Dep. Doc. # 46-3 at 48:23-50:13).

         Then, Morales emailed a copy of the Army's specifications for the desired gaming kiosks to Bekhor on September 27, 2016, at 12:05 PM, including the Army's drawings of the proposed kiosks. (Doc. # 49-2 at 9; Bekhor Dep. Doc. # 46-2 at 30:2-21). About four and a half hours later, an employee of Premier Gaming sent its bid information to Morales, including the price Bekhor suggested for the kiosks and specifications for the kiosks. (Doc. # 50-1 at 1-5; Bekhor Dep. Doc. # 46-2 at 32:5-8, 39:1-7). Bekhor acknowledges that he expended no money in putting together the bid information. (Bekhor Dep. Doc. # 46-2 at 41:4-16). The specifications Premier Gaming sent included numerous deviations from the specifications in the Army's solicitation, such as including fewer X-Box consoles than requested, changing the USB connector, phone charger, and power cord specifications, and increasing the thickness of the kiosk. (Id. at 51:18-52:21, 72:17-22, 75:24-77:25; Doc. # 50-1 at 4-7).

         The bid proposal attached to the email sent from Premier Gaming to Morales states: “Thank you for taking the time to consider Premier Gaming [] as a potential partner in producing and manufacturing your proposed customized gaming units.” (Doc. # 50-1 at 3; Bekhor Dep. Doc. # 46-2 at 39:8-18). Bekhor testified that the “potential partner” language was standard and used in all such communications, but that he considered Luna as an actual partner at that time. (Bekhor Dep. Doc. # 46-2 at 39:11-40:18, 43:15-44:9). Bekhor also acknowledged there was never a signed contract between Premier Gaming and Luna. (Id. at 96:12-22). Rather, Bekhor stated that the alleged joint venture agreement between Premier Gaming and Luna was an oral contract, as evidenced by Bekhor's conversations and emails with Morales. (Id. at 96:23-97:1).

         During each bid for which Bekhor worked with Morales, Bekhor “underst[ood] that each company was working together” so that Premier Gaming “would supply its experience and know how on mobile kiosks and mobile computer units, and Luna would supply its expertise in government contract bidding and experience.” (Bekhor Aff. Doc. # 52-5 at ¶ 7). At no time did Morales “disclose[] to [Bekhor] any limitation on the scope of his authority to enter into binding agreements on Luna's behalf.” (Id. at ¶ 6). Morales was Bekhor's only point of contact and Bekhor believed Morales “also had the authority to engage with and enter into agreements with both [Premier Gaming] and the Army” on behalf of Luna. (Id.). Nevertheless, Bekhor admitted that he was unaware of what position Morales held with Luna and never asked Morales because “it didn't make a difference” to him. (Bekhor Dep. Doc. # 46-2 at 19:20-20:21, 95:18-21).

         On September 27, 2016, at 5:49 PM, Morales emailed Karyn Williams with the Army to ask whether the Army allowed partial invoicing - a question Premier Gaming had. (Doc. # 50-3 at 24). After learning that the Army would allow for partial invoicing, Morales then emailed Premier Gaming at 7:11 PM, writing “this email is to confirm both Luna and [Premier Gaming's] acceptance to DUAL CHECK terms for the project in case of Award.” (Doc. # 1-2 at 2; Doc. # 50-4 at 3). Morales testified that he had no authority to decide payment terms with a supplier, as payment terms have to be approved by Gina. (Morales Dep. Doc. # 46-5 at 16:15-17:15). Rather, he acknowledged that he was very busy with various bids in September, which is the end of the fiscal year, and “spoke out of place” regarding the dual check terms. (Id. at 16:18-17:5). And, indeed, payment via dual checks was unavailable under the contract because the federal government “doesn't allow for dual checks, ” and the solicitation instead provided for payment “by electronic fund transfer.” (Curry Dep. Doc. # 46-4 at 32:5-10, 33:1-3; Bekhor Dep. Doc. # 46-2 at 68:6-15).

         As Bekhor testified in his deposition, no other conversations between Bekhor and Morales took place about “profit, expenses, [or] loss.” (Bekhor Dep. Doc. # 46-2 at 21:12-24). Yet, in his affidavit, Bekhor asserts Premier Gaming and Luna “agreed that the parties would each share in the profit or loss from their collaborative effort to obtain and perform the contract.” (Bekhor Aff. Doc. # 52-5 at ¶ 7).

         Later that night, September 27, 2016, Morales went ahead and submitted the bid using the information provided by Premier Gaming. (Morales Dep. Doc. # 46-5 at 28:3-29:2; Doc. # 50-3 at 25; Doc. # 50-1 at 6-25). Morales' name and title are listed in the “Name and Title of Signer” box on the bid solicitation form, Standard Form 1449. (Doc. # 50-1 at 12). Gina stated that, at some unspecified time, she had given Morales permission to submit a bid for the Army's solicitation but was unaware that Premier Gaming was the vendor from which Morales had received the price quote. (Gina Dep. Doc. # 46-3 at 16:6-17:25).

         During his deposition, Bekhor could not clearly articulate any false statements made by Morales, or anyone else at Luna, before the bid was submitted to the Army. (Bekhor Dep. Doc. # 46-2 at 82:20-83:20). Nevertheless, Bekhor stated that he and Morales agreed the bid using Premier Gaming's bid information was “the only bid” and “[s]hould it be awarded, [Premier Gaming] was going to be the supplier.” (Id. at 89:4-6). And, in his affidavit, Bekhor states “[Premier Gaming] would not have expended the time and effort in creating the Bid Information and would not have provided the same to Luna had Luna not misrepresented to [Premier Gaming] that [Premier Gaming] would supply the Units in the event Luna was the successful bidder on the Solicitation.” (Bekhor Aff. Doc. # 52-5 at ¶ 12).

         The next day, September 28, 2016, Morales was contacted by Williams, who requested that Luna provide a “drawn concept with measurements and descriptions that represent the final product” with its bid. (Doc. # 50-4 at 6). Morales wrote back to Williams, stating “According to our supplier, he will have [the drawings] to me in the next 30 min[utes].” (Id.). During his deposition, Morales testified that “our supplier” was “a poor choice of words on [his] part.” (Morales Dep. Doc. # 46-5 at 35:13-19).

         So, Morales emailed Bekhor asking Premier Gaming to provide a drawing very quickly. (Doc. # 50-4 at 1-2). An employee of Premier Gaming emailed Morales back with a drawing of the proposed gaming kiosks about twenty minutes later. (Bekhor Dep. Doc. # 46-2 at 85:25-86:11; Doc. # 50-4 at 1-5). The drawing provided by Bekhor is “very similar” to the drawing provided by the Army in its solicitation, except that the kiosk is marked with Premier Gaming's logo in the corner of the image. (Morales Dep. Doc. # 46-5 at 54:16-56:6; Bekhor Dep. Doc. # 46-2 at 85:21-86:3; Doc. # 50-4 at 4-5). Morales then emailed the drawing provided by Premier Gaming to Williams. (Doc. # 50-4 at 8).

         While Morales was in contact with Premier Gaming and putting together the bid, he was unaware that Curry was already speaking to potential suppliers about the gaming kiosks in order to put together a different bid for the Army contract. (Morales Dep. Doc. # 46-5 at 37:3-12; Curry Dep. Doc. # 46-4 at 18:8-20:2). Although the previous gaming trailer bids had been “simplified acquisitions, ” Curry stated the Army solicitation was not a simplified acquisition because “it [was] a design-build service.” (Curry Dep. Doc. # 46-4 at 11:9-14). Morales' job did not entail submitting bids for more complex contracts, only simplified acquisitions. (Id. at 11:1-4).

         After speaking to various suppliers, Curry had done a cost calculation for what the Army kiosks would cost Luna to build and had drawn rough “sketch-ups” for the gaming kiosks according to the Army's specifications. (Curry Dep. Doc. # 46-4 at 18:8-20:2, 20:22-21:2). Curry passed that number along to Luna's sometimes-sales representative, Carlos Colon, who was supposed to factor in a mark-up to ensure Luna would profit if it was ultimately awarded the contract. (Id. at 6:14-21, 19:23-20:3, 29:23-30:4, 59:9-16). Curry was under the impression that Colon would add in the mark-up and then Morales would submit Curry's bid proposal to the Army. (Id. at 60:4-23). Indeed, at that time, Curry was under the impression that the bid proposal he drafted was submitted and was the one selected by the Army. (Id. at 25:9-12, 26:20-25, 33:11-13). Curry was unaware that Morales had been preparing a separate bid with Premier Gaming in mind as the supplier. (Id. at 50:12-17).

         On September 30, 2016, the Army notified Luna that its bid had been selected, thereby triggering the 72-hour period in which Luna could review the FARS and other related documents before signing a binding contract with the Army. (Doc. # 50-4 at 13; Curry Dec. Doc. # 46-6 at ¶ 2). Again, this 72-hour period exists because a bid is not binding - a bidder can decline to enter a contract even if it receives notice of its bid proposal being selected. (Curry Dec. Doc. # 46-6 at ¶ 2).

         Also on September 30, 2016, Gina, on behalf of Luna, signed a federal Standard Form 1449, accepting the Army's specifications, as a binding contract with a total award of $1, 233, 178.48. (Doc. # 51-1 at 2-3). “None of the contract deviations from [the Army's specifications] that were in [Premier Gaming's] proposal were in this contract.” (Curry Dec. Doc. # 46-6 at ¶ 2; Curry Dep. Doc. # 46-4 at 29:16-22). “The schematic diagrams [Luna] used to produce these kiosks were costly CAD drawings, not anything [Premier Gaming]” created for the bid proposal. (Curry Dec. Doc. # 46-6 at ¶ 4). But the price from the bid submitted to the Army did remain the same for the final contract. (Doc. # 51-1 at 2-3; Doc. # 50-1 at 7).

         Sometime after the Army selected Luna's bid, Morales informed Curry that he had spoken with Premier Gaming about being the supplier of all work on the gaming kiosks, which was the typical division of labor for simplified acquisition contracts. (Curry Dep. Doc. # 46-4 at 23:2-24:3, 50:18-51:2, 53:16-19, 58:1-7). But the Army's bid solicitation had a small business set-aside, which required that the contract be awarded to and at least fifty percent of the work be provided by a certified small business, like Luna. (Gina Dep. Doc. # 46-3 at 56:12-57:1; Curry Dep. Doc. # 46-4 at 44:6-12).

         Meanwhile, Bekhor was waiting to hear back from Luna about the Army bid. He grew impatient after numerous calls to Morales went unanswered over the weeks, so Bekhor called the Army sometime in October of 2016 and learned the contract had been awarded to Luna. (Bekhor Dep. Doc. # 46-2 at 23:8-24:9). Bekhor then called Luna and Curry answered the phone. During the tense conversation that ensued, Curry informed Bekhor that Luna had been awarded the Army contract but that Premier Gaming would not be the supplier of the gaming kiosks. (Id. at 23:8-24:25; Curry Dep. Doc. # 46-4 at 45:11-46:2).

         On October 28, 2016, counsel for Premier Gaming sent Gina a demand letter, demanding “a single payment of $300, 000 in full satisfaction of all claims against” Luna. (Doc. # 52-7 at 15-16). Curry testified that Gina approved him reaching out to an attorney to respond to Premier Gaming's demand letter. (Curry Dep. Doc. # 46-4 at 55:22-56:8). But Gina stated that she alone had authority to hire an attorney for Luna and did not remember authorizing Curry to do so. (Gina Dep. Doc. # 46-3 at 35:15-37:6).

         Premier Gaming initiated this action on December 9, 2016, asserting claims for breach of joint venture agreement (Count I), unjust enrichment (Count II), fraud in the inducement (Count III), and conversion (Count IV). (Doc. # 1). Luna filed its Answer on March 27, 2017. (Doc. # 20). At the Court's direction, the parties mediated on September 7, 2017, but met an impasse. (Doc. ## 39, 41).

         Now, Luna moves for summary judgment on all claims. (Doc. # 46). Premier Gaming filed a response, (Doc. # 52), and Luna ...


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