United States District Court, M.D. Florida, Tampa Division
VIRGINIA M. HERNANDEZ COVINGTON UNITED STATES DISTRICT JUDGE
matter comes before the Court upon consideration of
Counterclaim-Defendant The Independent Savings Plan
Company's Motion to Dismiss Claims (Doc. # 32), filed on
November 26, 2019. Counterclaim-Plaintiff Crystal Clear
Concepts, LLC responded in opposition on December 20, 2019.
(Doc. # 43). With the Court's permission, Independent
Savings filed a reply on January 8, 2020. (Doc. # 48). For
the reasons that follow, the Motion is denied.
City initiated this action against Crystal Clear and
Defendant Austin Ford in state court on September 15, 2019,
asserting claims for breach of contract, breach of guaranty,
account stated, and quantum meruit. (Doc. # 1-1). The case
was removed to this Court on the basis of diversity
jurisdiction on October 14, 2019. (Doc. # 1). Crystal Clear
filed its answer and counterclaim against Solar City and
Independent Savings on October 30, 2019. (Doc. # 15).
to the counterclaim, Solar City “produces
Westinghouse® brand water treatment systems referred to
as the ‘Dynamic' and/or ‘Reliance' models
and distributes a full line of water treatment equipment for
treating water quality challenges experienced by homeowners
and sells its products throughout the United States through a
network of authorized dealers.” (Id. at 7).
Independent Savings “provides consumer financing to
homeowners for a variety of home improvement products and
equipment, including but not limited to home water treatment
Savings and Solar City “are affiliated entities that
share common ownership and management.” (Id.
at 8). For example, “Robert W. Schabes is a director
and officer of both entities.” (Id.). Solar
City “offers consumer financing in connection with the
sales of its products and systems exclusively through”
Independent Savings and Independent Savings “provides
consumer financing exclusively to customers of [Solar City]
authorized dealers.” (Id.).
Clear sells “water purification and filtration systems
to homeowners in the Dallas-Fort Worth, Texas metro
area.” (Id.). “On March 24, 2015,
Crystal Clear completed and submitted a ‘Dealer
Application' in an effort to become an authorized [Solar
City] dealer” and eventually became an authorized Solar
City dealer in August 2015. (Id. at 8-9).
connection with and further to the dealer relationship
between Crystal Clear and [Solar City], Crystal Clear as of
August 13, 2015, entered into a Merchant Agreement
with” Independent Savings. (Id. at 10).
“Under the Merchant Agreement, [Independent Savings]
would provide consumer financing mechanisms only to
purchasers of [Solar City] products sold by Crystal Clear
under the Dealer Agreement.” (Id. at 11).
“As of December 19, 2017, Crystal Clear and
[Independent Savings] entered into a Turn-Down Program
Addendum to Merchant Agreement (the ‘TD Addendum'),
” which is a supplement to and is subordinate to the
Merchant Agreement. (Id.). “The TD Addendum
was intended to provide financing ‘to qualifying high
credit risk applicants who otherwise may not qualify for
financing under [Independent Savings'] usual and
customary underwriting and credit acceptance criteria . . .
.'” (Id. at 12).
Addendum provided that, in the event that a customer
defaulted, Independent Savings could delegate to Crystal
Clear the authority to repossess the equipment.
(Id.). Crystal Clear would have to accept this
delegation, repossess the equipment from the customer, and
inform Independent Savings of the repossession.
(Id.). Independent Savings would then accept the
equipment in full satisfaction of the debt. (Id.).
“The TD Addendum also gave [Independent Savings] the
option to sell the repossessed equipment to Crystal Clear for
re-sale to another customer.” (Id.).
Alternatively, if Crystal Clear did not perform its
repossession responsibilities properly, Independent Savings
held a “charge-back” right under the TD Addendum
against Crystal Clear. (Id.).
Clear, Solar City, and Independent Savings worked together
smoothly under these agreement for years. (Id. at
early 2018, the current owner of Crystal Clear, Michael
Bodnar, owned another company called Galt Strategies, LLC.
(Id. at 13). Galt proposed a sales and marketing
platform for home water purification systems, called
“Growth Potential Program” or “GPP, ”
to Solar City and Independent Savings. (Id.).
“Galt and [Solar City] entered into the GPP Acquisition
Agreement dated May 31, 2018” under which Solar City
“agreed to pay Galt a total purchase price of $2, 000,
000.” (Id.). Solar City paid Galt $1, 000, 000
and eventually entered into an Amended and Restated GPP
Acquisition Agreement in September 2018. (Id.).
weeks, the relationship between Galt and Solar City
deteriorated, with Solar City accusing Galt of fraud and
other improper conduct in connection with the GPP
transaction. (Id. at 14). “On or about March
18, 2019, [Solar City] and Galt executed a Termination and
Release Agreement effective as of January 23, 2019 
releasing each other and [Solar City]'s dealers from
their respective obligations in connection with the GPP
Agreement [and] the Amended GPP Agreement.”
(Id.). Galt kept the $1, 000, 000 it was paid under
the GPP Agreement. (Id.). But the termination of the
GPP Agreement with Galt did not affect the various agreements
between Crystal Clear, Solar City, and Independent Savings.
Clear alleges that Solar City and Independent Savings
“engaged in a conspiracy to damage and destroy Crystal
Clear's business” in retaliation for the failed GPP
transaction. (Id. at 22). Soon after the GPP
transaction was terminated, “Crystal Clear began to
experience an unusually high rate of customer complaints
concerning the [Solar City] products being sold and installed
by Crystal Clear.” (Id. at 14). “This
was further evidenced by a dramatic and otherwise
inexplicable increase in the number of service calls received
by Crystal Clear.” (Id.). As a result of these
quality issues and negative reviews, Crystal Clear's
business suffered dramatically. (Id. at 15).
Crystal Clear determined that the equipment shipped by [Solar
City] in April and May  was either defectively
manufactured or intentionally and maliciously altered to
cause harm to Crystal Clear in its business, it refused to
pay the invoices for said equipment.” (Id. at
16). According to Crystal Clear, Solar City knowingly
supplied Crystal Clear with defective or maliciously altered
products so that ...