WALL RECYCLING, LLC v. 3TEK GLOBAL, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

WALL RECYCLING, LLC, )

)

Plaintiff, )

)

v. ) 1:20cv371

)

3TEK GLOBAL, LLC, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

This is an action alleging breach of contract for the sale of

an industrial metal recycling shredder. Before the court is the

motion of Defendant 3TEK Global, LLC (“3TEK”) for summary judgment

pursuant to Federal Rule of Civil Procedure 56. (Doc. 40.)

Plaintiff Wall Recycling, LLC (“Wall”) has filed a response in

opposition. (Doc. 50.) 3TEK has also filed a motion to strike

and objections to the declaration of Daniel Wall. (Doc. 56.) Wall

opposes this motion. (Doc. 58.) For the reasons set forth below,

3TEK’s motion to strike will be denied and its for summary judgment

will be granted.

I. BACKGROUND

The facts, either not in dispute or viewed in the light most

favorable to Wall as the non-moving party, establish the following:

Wall is a recycling company based in central North Carolina.

(Doc. 2 ¶ 8.) 3TEK manufactures scrap metal processing equipment,

including a large industrial NEXT 6280 shredder (the “NEXT

shredder”), which is the subject of this dispute. (Id. ¶¶ 2, 9.)

In April 2018, at an industry convention in Las Vegas, Nevada, Dan

Wall, owner of Wall, met Bill Padula, 3TEK’s Vice President of

Sales, and discussed the NEXT shredder. (Doc. 41-1 at 1 ¶ 3.) At

that time, 3TEK had not completed the fabrication of a NEXT

shredder, nor had it installed a shredding system with any

customer. (Id. at 1-2 ¶ 4.)

In December 2018, following several months of discussions

between Dan Wall and Padula, Dan Wall signed an agreement with

3TEK on behalf of Elite Waste Services, Wall’s predecessor, that

“provided options to purchase” two mobile shredders, and Wall paid

a $100,000 deposit. (Doc. 51-1 at 3 ¶ 5.) In February, Wall

decided to purchase a downstream system for the 3TEK shredder,

which sorts the material after it is processed; so, on February

28, 2019, 3TEK sent Wall an 11-page letter captioned, “RE: NEXT

6280 with Mobile Downstream Quotation” (“the February Agreement”),

which Wall countersigned. (Id. at 15-25.) Wall’s prior $100,000

deposit was applied to the February Agreement. (Id. at 16.) While

Wall contends, and 3TEK denies, that the February Agreement

constitutes a valid contract for the sale of a NEXT shredder, the

February Agreement does set forth Wall’s intent to purchase a NEXT

shredder and downstream system for $2,299,500, and states that

“[c]urrently” the available NEXT shredder would “be ready for

shipment in July, of 2019.” (Doc. 41-1 at 8, 17.) The February

Agreement contains a significant amount of specific information

about 1) price; 2) quantity; 3) detailed product specifications;

4) shipping and assembly; 5) payment terms; 6) warranty

information; and 7) a validity period for the right of first

refusal at the price offered through December 2019. (Id. at 7-

17.)

The NEXT shredder was a newly-developed product at the time,

which Wall understood. (Doc. 41-2 at 145:14-21.) 3TEK maintains

that it completes each NEXT shredder to the same specifications

and then distributes the machine on a first-come, first-served

basis while it is being manufactured. (Doc. 41-1 at 1-2 ¶ 4.)

However, the February Agreement offered Wall a right of first

refusal for the second and sixth NEXT shredder production slots

under the following conditions:

If 3TEK receives a signed Sales Contract with deposit

from another customer, we will extend to Elite Waste

Services seventy-two (72) hours to determine your course

of action. If for example you elect to take the second

slot, then 1.) Signing of the 3TEK Sales Contract will

be required; 2.) Payment of the balance of the initial

20% will be due and payable; and 3.) A finalized ready

to ship date from 3TEK will be pledged. If you elect to

pass, then your name will be attached to the next

machine.

(Doc. 41-1 at 8.)

On April 18, 2019, Padula emailed Wall that the customer

holding the third production slot had come forward with its full

deposit, meaning Wall could exercise its right of first refusal

for the second production slot. (Doc. 53-2 at 2.) Padula emailed

Dan Wall and informed him that to exercise Wall’s right of first

refusal, Wall would need to wire the balance of its 20% deposit

and sign a 3TEK Sales Contract (“the Sales Contract”), which was

attached to the email.1 (Id.) Padula advised Dan Wall that the

machine would not be ready by July (as earlier referenced in the

February Agreement) and wrote that “[i]f you choose this path then

3TEK will pledge a firm shipment date in September of 2019.” (Doc.

51-1 at 4 ¶ 12; Doc. 53-2 at 2.) Dan Wall expressed his discontent

with this delivery timeframe, noting he was losing substantial

profits not being able to sell shredded metal at a higher value,

which the machine would enable him to do. (Doc. 51-1 at 4 ¶ 12.)

According to Dan Wall, Padula responded that the shredder would be

ready for shipment “by the end of September 2019, and that this

was a conservative, safe date for [Wall] to plan around.” (Id.)

Dan Wall says that “Padula offered that 3TEK could include a 10%

reduction in the sales price for the shredder if 3TEK could not

delivery [sic] it by the end of the year.” (Id. at 4-5 ¶ 13

1 The Sales Contract differs substantially from the February Agreement.

For example, it sets forth additional terms, including choice of law

provisions, limitations of liability, and allocations of the obligations

of both parties, and it notes that the delivery schedule is

“approximate[]” and subject to revision. (Doc. 53-2 at 14-19.)

(emphasis added).)2 Wall chose to exercise its right of first

refusal. (Id. at 5 ¶ 14.)

Wall wired the remaining balance of the 20% deposit to 3TEK

-- $359,900. (Id.) However, Wall did not sign and return the

Sales Contract. Instead, on April 19, 2019, Wall’s Chief Financial

Officer, RJ Smith, sent 3TEK a redlined version of the Sales

Contract with Wall’s “proposed revisions,” which included several

proposed revisions including a 10% penalty if 3TEK failed to

deliver the NEXT shredder by the end of 2019. (Doc. 53-3.)

Padula emailed Smith on April 23, 2019, to schedule a phone

call to discuss the proposed revisions to the Sales Contract.

(Doc. 53-1 at 103:1-25.) Specifically, Padula advised “I’m

following up on this lose [sic] end. Wanting to get this document

signed as we move closer.” (Id.) Yet for over a month, neither

Smith nor Wall responded, and no progress was made on finalizing

the Sales Contract.

2 Though Dan Wall was deposed, this statement is contained in a

declaration he later filed and, as noted infra, is based on the written

correspondence between 3TEK and Wall’s RJ Smith in May 2019, whose

authenticity is not disputed and which contradicts it in so far as 3TEK’s

willingness to assent to the request was conditioned on further agreement

by Wall, which was never received. The court therefore need not accept

Wall’s testimony on this point to the extent it contradicts the written

record. See Scott v. Harris, 550 U.S. 372, 380 (2007) (“When opposing

parties tell two different stories, one of which is blatantly

contradicted by the record, so that no reasonable jury could believe it,

a court should not adopt that version of the facts for purposes of ruling

on a motion for summary judgment.”); Bouchat v. Balt. Ravens Football

Club, Inc., 346 F.3d 514, 526 (4th Cir. 2003) (noting it is the

“affirmative obligation of the trial judge to prevent factually

unsupported claims and defenses from proceeding to trial” (citation and

internal quotation marks omitted)).

Padula, after having Matthew Morrison, President of 3TEK,

review Wall’s proposed revisions, and not having heard back from

Wall or Smith for over a month, responded to Wall’s proposed 10%

reduction penalty with a May 30 email as follows:

I am following up on this loose end to get this document

signed as we move closer. As you may recall, our

intentions are not that far apart. We are happy to

comply with a delivery penalty as long as you take equal

responsibility for timely completion on your

responsibilities to insure a timely installation.

No huge rush here, but let’s see if we can dust this off

and bring acceptable closure.

(Doc. 52-1 at 2 (emphasis added).)3 Smith responded about an hour

later, “Yes, I think we were very close to agreement – I’ve been

buried in other projects so I apologize for the delay. Let me

chat with Dan about this and I’ll get a response to you.” (Doc.

40 at 8 (emphasis added).)4 Unfortunately, Smith never responded,

and Wall terminated Smith’s employment thereafter, although not

until November 2019. (Doc. 41-2 at 132:12-16.) Neither Dan Wall

nor anyone at Wall ever sent a response to Padula.5

3 Such responsibilities of Wall would include ensuring it timely obtained

proper environmental and other permits and that the site is ready. (Doc.

51-8 at 5-6.)

4 3TEK includes Smith’s email in its motion for summary judgment

memorandum and cites to Wall deposition exhibit 13. There is one

reference to Wall deposition exhibit 13 on ECF, but that exhibit does

not include the email 3TEK cites. (see Doc. 52-2.) Nevertheless, the

parties do not dispute or contest the email’s contents or authenticity.

5 Dan Wall states in his declaration that he spoke to Smith and has an

“understanding” that Padula told Smith that “3TEK was willing to include

Between May and early October 2019, Padula informed Dan Wall

of numerous delays in the production of the NEXT shredder. (Doc.

51-1 at 6 ¶ 19.) Despite these delays, Padula insisted that the

Shredder was “almost done” and that it would be “ready shortly.”

(Id.) On October 3, Wall confronted Jonathan Maly, a sales

representative for Granutech-Saturn Systems, an owner of 3TEK, at

a trade show and complained about his dealings with 3TEK, Padula,

and Morrison. (Doc. 51-1 at 7 ¶ 24.)

On October 9, 2019, citing 3TEK’s failure to meet the June

date noted in the February Agreement and the shipment date in

September stated in Padula’s April 18 email, Wall emailed Padula,

“I am requesting my deposit back in full.” (Doc. 52-3 at 4.) Dan

Wall explained, “[a]ll in all, I think you are making a great

machine and I will definitely keep you and 3Tek [sic] in mind for

the future, but at this point I cannot afford to wait any longer.”

(Id.) He added: “Please get me in touch with the appropriate

person and I will provide my wiring instructions. Thank you very

much and I wish you guys the best of luck.” (Id.)

the 10% reduction to the sales price if the Shredder was not delivered

to Wall Recycling by the end of the year.” (Doc. 51-1 at 5 ¶ 16.)

However, Wall’s proposed testimony on his “understanding” based on what

he says Smith told him that Padula said is inadmissible hearsay not

within an exception. Fed. R. Evid. 801; Evans v. Techs. Applications &

Serv. Co., 80 F.3d 954, 962 (4th Cir. 1996). In his deposition, Dan

Wall testified that the 10% penalty “was the part that Bill [Padula]

said he had no problem with.” (Doc. 41-2 at 193:21-194:9.) As the

negotiations on this issue were between Smith and Padula, this testimony

is obviously contrary to the record.

After not receiving an acknowledgement of his cancellation

from 3TEK, Dan Wall emailed Padula on October 16, stating, “I have

not heard back from you [sic] please answer me so I can get you my

wiring info for the deposit to be sent back to [sic]. Thank you.”

(Id. at 2.) 3TEK’s president, Morrison, responded with an email

to Dan Wall the next day, stating:

Please find attached the acknowledgement of your order

cancellation with 3TEK for the 6280 Shredding System.

Please send your wiring instructions to me so we can

begin reimbursing your deposit per the attached letter.

(Id. at 2 (emphasis added).) An attached letter from Morrison

provided:

3TEK regretfully accepts your request to cancel the

Sales Order from Wall Recycling dated February 21, 2019

regarding the purchase of a 6280 Shredding System per

your email to Bill Padula on Wednesday October 9, 2019.

3TEK will reimburse the deposits made toward this

purchase totaling $459,900.00 . . .

(Id. at 5.) The letter went on to explain that 3TEK had invested

over $1,000,000 in work-in-process toward the manufacture of

Wall’s shredding system and was thus unable to return Wall’s full

deposit at that time. (Id.) However, the letter stated 3TEK would

wire $100,000 of Wall’s $459,900 deposit to Wall immediately “once

wiring instructions are confirmed,” with the remaining to be sent

when “3TEK secures a confirmed order from another customer on its

waiting list.” (Id.) The letter closed by stating, “We wish you

the best of luck in your future endeavors and hope you will keep

us in mind if you are in the market for a shredding system.” (Id.)

Thereafter, Wall never provided wiring instructions to

Morrison or anyone at 3TEK or made any attempt to receive its

deposit. (Doc. 41-2 at 156:7-20.)

In his declaration, Dan Wall states that in mid-October,

sometime after Morrison’s letter accepting Wall’s request to

cancel its sales order, he spoke with Maly, who advised that “3TEK

wanted to keep [his] business,” and that he “personally would work

with me on behalf of 3TEK to ensure that the deal was completed.”

(Doc. 51-1 at 7 ¶¶ 25-26.) Dan Wall’s earlier deposition testimony

provides a slightly different context. He puts the conversation

in November. (Doc. 41-2 at 161:25-163:5.) According to Mr. Wall,

he initiated the conversation with Maly, who he did not know

before, and “went up to them and pretty much called them crooks.”

(Id. at 165:4-16.) Wall says he was “not very polite” and was

“quite irate” because he was “losing a lot of money and missed

opportunity” and “they couldn’t return my deposit.” (Id. at

165:17-23.) Dan Wall “expressed [to Maly:] that I would – I wanted

to buy the machine, I just did not want to deal with Bill Padula

anymore, because I didn’t like being misled constantly.” (Id. at

161:25-162:12.) Maly assured him that the NEXT shredder would be

complete before the end of 2019. (Doc. 51-1 at 7 ¶ 26.) Based on

this, Dan Wall agreed to continue to move forward with the purchase

of the shredder and withdrew his demand for refund of his deposit.

(Id. at 8 ¶ 27.) Though Wall does not provide a date for this

exchange, on November 13, 2019, Maly followed up with an email to

Dan Wall:

Dan,

Could you do me a favor just so I have a bit of a record

and I can make sure everyone up at corporate are on the

same page. Can you send me an email stating that you

are still intent on moving forward with the purchase of

a 6280 that is being manufactured by the end of the year.

The last communication that we have record of was that

of the refund for the deposit. I just like to have t’s

crossed and I’s dotted.

(Doc. 52-4 at 2.) Dan Wall, reflecting on his response, believes

Maly’s email “prompted a phone call that was probably not the

nicest phone call either.” (Doc. 41-2 at 167:18-23.) Dan Wall

added that he told Maly, “You guys have my money. Build my

machine.” (Id. at 167:24-168:2.) However, Dan Wall did not

provide an email confirming his company’s interest, as requested

by 3TEK.

On December 6, Maly and Dan Wall communicated by text

messaging. Maly assured that “All the pieces [of the shredder]

are done. It is definitely not months from being completed. I

can promise you that.” (Doc. 52-5 at 3.) Dan Wall responded,

“Ok. Sounds good keep me posted. Really looking forward to seeing

it shred next month.” (Id.) Maly responded that he would advise

of any changes, but he could “guarantee we are not months away

from shredding.” (Id.) Maly added, “To protect you why don’t I

come down the week of December 16th and we sign a commitment that

we have to pay a penalty if we don’t deliver in January!” (Id.)

On December 10, Maly texted a photograph of the NEXT shredder

with the note, “Tracks are being mounted.” (Id. at 2.) Dan Wall

responded, “Great,” to which Maly responded, “Dan can we get a

contract signed? More for your protection than [3TEK]. As I

mentioned we put in a build clause so you are protected.” (Id.)

Dan Wall did not respond to this request.

The NEXT shredder was not completed by December 31, 2019, but

3TEK advised Wall that it would be ready to ship in January. (Doc.

51-1 at 10 ¶ 34.) 3TEK offered to assemble the shredder at no

cost in Raleigh and give Wall a “$15,000 parts credit” for the

delay. (Id.) No further action was taken by either party until

February 6, 2020.

On February 6, 3TEK conducted a site visit at Wall’s facility

to discuss shipping arrangements, crane requirements, the site set

aside for the NEXT shredder, and the assembly logistics. (Doc.

53-5 at 158:2-159:7.) During this visit, 3TEK representatives,

including Padula and Maly, did not raise the need for a completed

Sales Contract. (Doc. 51-1 at 10 ¶ 35.)

On February 18, Dan Wall emailed Maly and Padula for an update

on the machine. (Doc. 52-6 at 3 (“Where does the machine stand?).)

The next day, February 19, Maly responded with an update that the

machine was receiving “final electrical upgrades” and “being

prepped for shipment.” (Id. at 2.) Maly also noted he was

attaching an “updated version of the contract” for the NEXT

shredder. (Id.; Doc. 51-1 at 10-11 ¶ 36.) This document resembles

the February Agreement, however it is titled “RE: Bravo 6280 with

Mobile Downstream” and does not include the right of first refusal

language, but it does include 3TEK’s concessions for $30,000 for

assembly labor and a “full set of hammers,” shipping details, and

equipment specifications. (Doc. 53-11.) Maly requested that Wall

review and email back a signed copy “at some point this week.”

(Id.) According to Dan Wall, he did not sign this agreement

“because it didn’t have the concessions in there that [3TEK] agreed

upon in writing.” (Doc. 41-2 at 175:25-176:24.) The only alleged

concession not included in the letter was a 10% price reduction

Wall contends 3TEK previously agreed to.

On February 19, 2020, the same day Maly emailed the updated

contract to Dan Wall, Wall learned that 3TEK had sold the NEXT

shredder in production slot 2 to another customer on 3TEK’s waiting

list and that Wall would be purchasing production unit three.6

(Id. at 250:19-251:1; Doc. 53-13.) This prompted Dan Wall to

contact 3TEK’s customer and complain that the customer had

purchased what Dan Wall contended should have been his machine.

(Doc. 41-2 at 250:19-251:1.) As Dan Wall notes, he was “extremely”

heated and “did show not a better side of me” when he called Maly

6 3TEK maintains that NEXT shredder production units two and three were

produced in tandem with each another. (Doc. 53-12 at 2.)

to discuss what Wall perceived as 3TEK’s dishonesty. (Id. at

199:7-9; 209:2-3.)

Maly responded to Dan Wall in a February 20 email, explaining

that when Wall cancelled its sales order in October, it

“effectively lost your spot in line.” (Doc. 52-7.) Maly also

noted that when Dan Wall changed his mind and withdrew his request

of the deposit, he was given the next spot, production unit 3,

which was available “only a few weeks” after unit 2. (Id.) Maly

reiterated that “[going] forward” he would need a “signed sales

contract” and an “[i]nvoice paid which will be issued on Monday

for 75%.” (Id.) Referencing Wall’s cancellation letter, which

Maly attached, Maly closed by stating, “Honestly we want to make

this relationship work but we need to get everything signed and in

line.” (Id.)

The next day, February 21, 2020, Nancy Wall, Wall’s legal

counsel, emailed Maly, Padula, and Morrison, among others, “in the

interest of trying to complete this purchase that we’ve been

working on for over a year.” (Doc. 52-8 at 2.) Nancy Wall noted

three concessions that Wall Recycling was “asking for,” which she

stated “have been previously agreed upon and/or offered by 3TEK.”

(Id. at 2-3) Specifically, she noted: a 10% reduction in the sales

price for failing to deliver the NEXT shredder by December 31,

2019, citing a “5-30-2019” email (presumably Padula’s email with

his statement “we will agree if you also agree to complete your

duties in a timely fashion”); 3TEK’s commitment it would assemble

the machine at no cost to Wall; and a $15,000 parts credit, again

referencing emails.7 (Id. at 3.)

Morrison replied by informing her that his “team will be

reviewing your requests.” (Doc. 53-15 at 3.) He also advised

that the NEXT shredder was complete and ready for shipment and

“3TEK and Wall Recycling do not have a fully executed Sales

Contract for this transaction.” (Id.) Nancy responded, noting

Wall had not known the NEXT shredder was ready for shipment but

agreeing with Morrison that “[t]here is no ‘Sales Agreement’

signed; there is a ‘Sales Quote’ signed.” (Id.)

On February 25, the relationship between Wall and 3TEK eroded

significantly when Dan Wall threatened to sue 3TEK with “an army

of lawyers.” (Id. at 2.) Three days later, 3TEK sent Nancy Wall

a letter that outlined its view that Wall had failed to finalize

the Sales Contract but instead had “significantly revised” it

without signature; cancelled the February Agreement in October

2019, which cancellation 3TEK accepted on October 17; and failed

to send wiring instructions as requested by 3TEK. (Doc. 52-17 at

2.) 3TEK further indicated that it was rejecting Wall’s offer

conveyed through Nancy Wall, and because 3TEK and Wall “never

7 The referenced attachments to Nancy Wall’s email do not appear in the

record, as far as the court can discern. It is unclear why Nancy Wall

referenced the assembly and parts credits when they were already

contained in 3TEK’s February 6, 2020 contract. (Doc. 52-6 at 4.)

reached an agreement for the purchase” of the NEXT shredder, 3TEK

was returning Wall’s deposit and would not be delivering a NEXT

shredder system. (Id.) 3TEK included a check for $479,687.72,

representing Wall’s $459,900 deposit with an additional $19,787.72

as interest. (Id.) Wall then filed the present action for breach

of contract in the General Court of Justice, Superior Court

Division, Durham County, on April 24, 2020. (Doc. 2.)

3TEK removed the action to this court based on diversity

jurisdiction and moved to dismiss the complaint pursuant to Federal

Rules of Civil Procedure 12(b)(2) and 12(b)(6) or, in the

alternative, to transfer the action to the United States District

Court for the Northern District of Texas. (Docs. 1, 6.) On

October 28, 2020, this court denied both motions. (Doc. 15.) 3TEK

now moves for summary judgment. (Doc. 40.)

II. ANALYSIS

A. Applicable Law

At the motion to dismiss stage, the parties originally

contested whether North Carolina or Texas law applied. (Doc. 7 at

19; Doc. 12 at 14-16.) The court deferred decision on which law

was applicable, noting that the material requirements for contract

formation were the same in both states.8

8 Compare USAA Tx. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 501 n.21 (Tex.

2018) (elements of a valid contract under Texas law are offer,

acceptance, a meeting of the minds on the essential terms of the contract

(mutual assent), each party’s consent to the terms, and execution and

In determining which state’s substantive law applies, a

federal court sitting in diversity applies the forum state’s

choice-of-law rule. Klaxon Co. v. Stentor Elec. Mfg. Co., 313

U.S. 487, 496 (1941). In North Carolina, for claims for breach of

contract, in the absence of an agreement between the parties, North

Carolina law applies to “transactions bearing an appropriate

relation to this State.” N.C. Gen. Stat. § 25–1–301(b). North

Carolina courts have interpreted this provision to mean the

applicable law is that of the state with the “most significant

relationship” to the contract. See Dassault Falcon Jet Corp. v.

Oberflex, Inc., 909 F. Supp. 345, 352 (M.D.N.C. 1995) (citing

Boudreau v. Baughman, 368 S.E.2d 849, 855 (N.C. 1988)).

The NEXT Shredder was to be placed in Raleigh, North Carolina,

representatives from 3TEK visited the Raleigh site to plan

logistics for moving the NEXT shredder to North Carolina, and

contractual obligations were to be performed in North Carolina.

Additionally, both parties now cite exclusively to North Carolina

law. As such, this court will analyze Wall’s breach of contract

claim under North Carolina law.

B. Motion to Strike Dan Wall’s Declaration

3TEK seeks to strike portions of Dan Wall’s declaration

delivery of the contract with the intent that it be mutual and binding),

with Se. Caissons, LLC v. Choate Constr. Co., 784 S.E.2d 650, 654 (N.C.

Ct. App. 2016) (North Carolina law requires offer, acceptance,

consideration, and mutuality of assent to the contract’s essential terms

to form a valid contract).

because it: 1) contradicts Wall’s prior deposition testimony; 2)

otherwise contains “objectionable” statements; and 3) contains

“untimely expert testimony.” (Doc. 56.) Wall argues that these

arguments are meritless and urges the court to deny 3TEK’s motion.

(Doc. 58.)9

3TEK argues that Dan Wall’s declaration contradicts his prior

deposition testimony. (Doc. 56 at 3.) Wall responds by arguing

that the declaration should not be struck as a sham declaration,

because 3TEK “deliberately cherry picks” Wall’s statements, which

were intended to provide additional context. (Doc. 58 at 5.)

In order to disregard a declaration,10 there must be a bona

fide inconsistency between the declaration and the prior

deposition testimony. Spriggs v. Diamond Auto Glass, 242 F.3d

179, 185 n.7 (4th Cir. 2001). “No such inconsistency exists when

the affidavit ‘merely detail[s] and lend[s] context’ to the prior

testimony.” Riggins v. SSC Yanceyville Operating Co., 800 F. App’x

151, 160 (4th Cir. 2020) (quoting Libertarian Party of Va. v. Judd,

9 As to the third argument, 3TEK contends that Dan Wall’s declaration

contains untimely expert opinions on damages because Wall designated

only one damages expert, Robert Brewer, and not Dan Wall. (Doc. 56 at

2.) Because this issue is moot in light of the court’s grant of summary

judgment, the court need not reach it.

10 Technically, the court does not strike declarations, as motions to

strike are directed to pleadings. See Fed. R. Civ. P. 12(f). Rather,

the court would elect not to consider any portion that is inconsistent

with prior deposition testimony.

718 F.3d 308, 314 n.6 (4th Cir. 2013)).11

3TEK first points out that Dan Wall acknowledged during his

deposition that the February Agreement required a separate Sales

Contract between the parties. (Doc. 56 at 4.) It then points to

his declaration, which stated:

After I threated to sue 3TEK, 3TEK terminated

the February Agreement purportedly on the grounds

that Wall Recycling had not signed a Sales Contract,

and returned Wall Recycling’s deposit. 3TEK’s

position was a huge surprise to me. I had signed

the February Agreement on behalf of Wall Recycling

and I was not aware that any further contractual

document needed to be signed.

(Doc. 51-1 at 11 ¶ 38.) Wall is correct that Dan Wall’s two

statements are not necessarily inconsistent.

Specifically, in Dan Wall’s deposition, 3TEK’s attorneys

presented the February Agreement to him and read portions of it.

(Doc. 41-2 at 122:2-20.) They then asked Mr. Wall whether there

was “[a]nything unclear about that?” to which he replied “[n]o.”

(Id. at 19-20.) All this inquiry questioned was Mr. Wall’s reading

comprehension and whether he understood what was just read to him.

However, the context of his declaration statement is different.

There, Mr. Wall stated he “was not aware that any further

contractual document needed to be signed” as of February 2020 when

11 While the Fourth Circuit does not accord precedential value to its

unpublished opinions, it has noted that they “are entitled only to the

weight they generate by the persuasiveness of their reasoning.” See

Collins v. Pond Creek Mining Co., 468 F.3d 213, 219 (4th Cir. 2006)

(citation omitted).

3TEK canceled Wall’s NEXT shredder because no signed Sales Contract

existed. (Doc. 51-1 at 11 ¶ 38.) It is not inconsistent for Mr.

Wall to state his understanding as of February 2020 as compared to

that immediately after reading the February Agreement. This is

especially true where Wall contends that at some point after

February 2019 3TEK waived the Sales Contract requirement.

Believing that 3TEK waived the requirement, Dan Wall could express

his view that as of February 2020 no further agreement was

required, despite the February Agreement expressly requiring one.

As such, Dan Wall’s declaration and deposition are not fatally

inconsistent.

3TEK further argues that Dan Wall’s declaration and

deposition statements concerning two text messages from Maly are

inconsistent. (Doc. 56 at 5.) Maly’s first text message, sent

December 6, 2019, stated that he would visit Wall’s facility in

North Carolina and “sign a commitment that [3TEK has] to pay a

penalty if [3TEK does not] deliver in January!” (Doc. 51-1 at

29.) Maly then asked Dan Wall in his second text message, sent

December 11, “Dan, can we get a contract signed?” which Maly stated

was “[m]ore for [Wall’s] protection than for Granutech,” noting

that 3TEK had “put in a build clause so [Wall is] protected.” (Id.

at 32.)

In his deposition, when asked what he thought Maly meant when

Maly asked “can we get a contract signed?” Dan Wall responded that

Maly was talking about “[s]igning a new agreement.” (Doc. 41-2 at

172:1-173:2.) However, in his declaration, Dan Wall states:

Again, [Maly] did not tell me that 3TEK

required that I sign a further contract. I

understood this was something that 3TEK was offering

to encourage me to not back out of the contract to

purchase the Shredder given the on-going delays, but

did not understand that a further contract was

required to be signed.

(Doc. 51-1 at 9 ¶ 32 (emphasis added).) Dan Wall’s declaration

seems to provide explanation for the “new agreement” he referenced

in his deposition. While his declaration testimony is different

from that in his deposition, it is not necessarily inconsistent.

Therefore, 3TEK has not shown that the court should disregard Dan

Wall’s declaration.

3TEK’s final argument against Wall’s declaration is that many

of the statements “do not satisfy the standards for summary

judgment evidence.” (Doc. 56 at 7.) Specifically, 3TEK contests

Wall’s declared statements concerning Padula’s various

representations as to when the NEXT shredder would be available to

ship, because they do not satisfy the statute of frauds. (Id. at

7-8.) Wall responds by noting that “[m]ost of the statements

identified by 3TEK do not relate to the contract terms upon which

Wall Recycling bases its breach of contract claim,” therefore the

statute of frauds is not implicated. (Doc. 58 at 11.) As to the

other statements to which the statute of frauds might apply, Wall

replies, there is proper written evidence of these statements in

the record. (Id. at 12.)

North Carolina’s statute of frauds under the Uniform

Commercial Code (“UCC”) provides that “a contract for the sale of

goods for the price of five hundred dollars . . . or more is not

enforceable . . . unless there is some writing sufficient to

indicate that a contract for sale has been made between the

parties.” N.C. Gen. Stat. § 25-2-201(1). “The statute of frauds

requires that all essential elements of the contract be reduced to

writing.” Powell v. City of Newton, 684 S.E.2d 55, 58 (N.C. Ct.

App. 2009) (internal quotations and citations omitted). Such a

writing “may not be contradicted by evidence of any prior agreement

or of a contemporaneous oral agreement . . . .” N.C. Gen. Stat.

§ 25-2-202.

Wall’s breach of contract claim is based upon 3TEK failing to

have the NEXT shredder ready for delivery by the end of September

2019 and failing to deliver the NEXT shredder at subsequently

promised times, 3TEK shipping the second production slot NEXT

shredder to another buyer, and 3TEK’s alleged repudiation of the

February Agreement in February 2020. (Doc. 58 at 11.) Therefore,

Padula’s representations of delivery dates prior to September

2019, and Dan Wall’s declaration on those representations, are not

relevant to the breach of contract claim. (Doc. 51-1 at 3 ¶ 6, 4

¶ 10.) As to his remaining representations (id. at 3-4 ¶¶ 13, 16,

10 ¶ 36), Dan Wall does not indicate whether he claims they were

oral or written statements, although the context suggests he is

repeating his understanding of the contents of a writing. To the

extent he intends them to be based on verbal statements, however,

any testimony about a 10% reduction in the purchase price of the

NEXT shredder for delivery delay would violate the statute of

frauds if not based on a writing (e.g., Wall’s proposed redline

version of the Sales Contract, or an email or text message) and

will be disregarded to that extent. N.C. Gen. Stat. § 25-2-201(1);

see Jackson v. Cape Fear Turf Farm, Inc., 749 S.E.2d 110, at *2

(N.C. Ct. App. 2013) (noting that “under ordinary circumstances”

an oral agreement between parties for the sale of goods is not

enforceable unless the agreement is “in writing and signed by the

parties”).

The only dispute concerns two paragraphs of Dan Wall’s

declaration. First, Dan Wall states that Padula told him “that

the Shredder would be ready for shipment by the end of September

2019, and that this was a conservative, safe date for [Dan Wall]

to plan around.” (Id. at ¶ 12.) 3TEK argues that, because the

February Agreement is in writing and the only agreement between

the parties, Dan Wall’s declaration of an unwritten statement

violates the statute of frauds. (Doc. 56 at 7.) However, there

is written evidence in the record that Padula made this promise.

For instance, Padula authored an email to Dan Wall on April 18,

2019, informing him that if Wall chose to exercise its right of

first refusal, “then 3TEK will pledge a firm shipment date in

September of 2019.” (Doc. 41-1 at 18.) To the extent Dan Wall is

referring to and not contradicting these writings, therefore,

there is no statute of frauds problem.

The second paragraph to which 3TEK objects is Dan Wall’s

statement that Maly “also assured [Dan Wall] that the manufacturing

of the Shredder would be complete before the end of 2019.” (Doc.

51-1 at 7 ¶ 26.) However, there is also written evidence in the

record from 3TEK representatives conveying a manufacturing date by

December 31, 2019. Maly emailed Dan Wall on November 13, 2019,

asking Mr. Wall to send him an email with his intent to purchase

a NEXT shredder which “is being manufactured by the end of the

year.” (Doc. 52-4 at 2.) Additionally, Maly represented in text

messages to Dan Wall that Maly could “guarantee we are not months

away from shredding” and the NEXT shredder would be manufactured

in December and delivered in January 2020. (Doc. 52-5 at 3.)

Again, to the extent Dan Wall is referring to and not contradicting

these documents, these two paragraphs from his declaration do not

violate the statute of frauds.12

Having resolved these evidentiary questions, the court turns

to 3TEK’s motion for summary judgment.

12 Moreover, because the court finds that the February Agreement was

mutually rescinded in October 2019, any alleged oral statement thereafter

would not relate to Wall’s claim, which only alleges breach of the

February Agreement.

C. Motion for Summary Judgment

1. Standard of Review

A court must grant a motion for summary judgment if the

pleadings, depositions, and affidavits submitted show that there

is no genuine dispute as to any material fact and the moving party

is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).

A fact is considered “material” if it “might affect the outcome of

the suit under the governing law.” Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248 (1986). Under this standard, a genuine

dispute of material fact exists “if the evidence is such that a

reasonable jury could return a verdict for the nonmoving party.”

Id. As a result, the court will only enter summary judgment in

favor of the moving party when the record “shows a right to

judgment with such clarity as to leave no room for controversy”

and clearly demonstrates that the non-moving party “cannot prevail

under any circumstances.” Campbell v. Hewitt, Coleman & Assocs.,

Inc., 21 F.3d 52, 55 (4th Cir. 1994) (internal quotation marks

omitted). “Credibility determinations, the weighing of the

evidence, and the drawing of legitimate inferences from the facts

are [fact-finder] functions . . . .” Anderson, 477 U.S. at 255.

On summary judgment, “[t]he evidence of the non-movant is to be

believed, and all justifiable inferences are to be drawn in his

favor.” Id.

While the movant bears the initial burden of demonstrating

the absence of any genuine dispute of material fact, once that

burden has been met, the non-moving party must demonstrate that a

genuine dispute of material fact actually exists. Matsushita Elec.

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986);

Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514, 521

(4th Cir. 2003). A mere scintilla of evidence is insufficient.

Anderson, 477 U.S. at 252. Instead, the nonmoving party must

convince the court that, upon the record taken as a whole, a

rational trier of fact could find for the nonmoving party. Id.

at 248–49. Trial is unnecessary if “the facts are undisputed, or

if disputed, the dispute is of no consequence to the dispositive

question.” Mitchell v. Data Gen. Corp., 12 F.3d 1310, 1315–16

(4th Cir. 1993).

2. Parties’ Arguments

The parties present contrasting interpretations of the facts

and their legal significance. Therefore, it is helpful to set

forth the opposing views for clarity.

3TEK argues that Wall’s claim fails at multiple points.

First, 3TEK contends the February Agreement is not a contract to

sell a NEXT shredder, but rather a sales quote. (Doc. 40 at 4.)

Second, even if it is a contract, 3TEK argues, Wall terminated it

on October 9, 2019, when Dan Wall emailed Padula and demanded

return of his full deposit, which 3TEK confirmed on October 17.

(Id. at 10.) Third, if Wall’s actions did not constitute

termination of the contract, 3TEK further argues, Wall failed to

sign the separate Sales Contract required by the February Agreement

to purchase a NEXT shredder. (Id. at 6.) Fourth, although Wall

contends that 3TEK waived this requirement by its course of

dealing, 3TEK argues it did not and that even if it did, it

reasonably retracted the waiver in February 2020. (Id. at 31.)

Therefore, 3TEK contends, there was no operative contract after

Wall’s October termination of the February Agreement and Wall never

signed a Sales Contract; rather, as of February 21, 2020, Wall was

still attempting to negotiate a deal and 3TEK permissibly rejected

Wall’s offer to purchase a NEXT shredder on February 28.

Wall bases its contract claim on the February Agreement, which

it contends “contains the essential terms to form a contract.”

(Doc. 50 at 3.) In fact, Wall contends it is the only binding

contract between the parties. While Wall contends there were

certain oral modifications to the February Agreement, the

complaint refers to no other contract, oral or written, and Wall’s

response brief to 3TEK’s motion for summary judgment contends

“[t]here is no question that 3TEK breached the February Agreement.”

(Id. at 20.) Wall argues that at all times in the parties’ business

relationship, 3TEK was bound to sell Wall a NEXT shredder and

breached the February Agreement by “unilaterally disavow[ing]” it

in February 2020, as well as by selling the production slot two

shredder to another customer and by missing delivery dates in June,

September, and December 2019. (Id.) Wall argues 3TEK’s actions

over the course of dealing constitute waiver of the Sales Contract

requirement and that any retraction of that waiver was untimely.

(Id. at 18-19.) Therefore, Wall contends, it was never required

to enter into any other agreement apart from the February

Agreement. Wall finally argues that, because 3TEK did not

immediately refund all of Wall’s deposit and Dan Wall withdrew his

demand for a refund, the February Agreement was either never

cancelled or was revived. (Id. at 7.)

With these contentions in mind, the court starts with the

February Agreement.

3. February Agreement

The February Agreement is governed by Article 2 of North

Carolina’s UCC as it concerns the sale of goods. See N.C. Gen.

Stat. § 25–2–102. “The Uniform Commercial Code applies more

liberal rules governing the formation of contracts than the rules

applied under traditional common law.” Neugent v. Beroth Oil Co.,

560 S.E.2d 829, 834 (N.C. App. 2002) (quoting Fordham v. Eason,

521 S.E.2d 701, 705 (N.C. 1999)). Under the UCC, “[a] contract

for sale of goods may be made in any manner sufficient to show

agreement, including conduct by both parties which recognizes the

existence of such a contract.” N.C. Gen. Stat. § 25-2-204(1); id.

§ 25–2–207(3) (“Conduct by both parties which recognizes the

existence of a contract is sufficient to establish a contract for

sale although the writings of the parties do not otherwise

establish a contract.”). “Even though one or more terms are left

open a contract for sale does not fail for indefiniteness if the

parties have intended to make a contract and there is a reasonably

certain basis for giving an appropriate remedy.” Id. § 25–2–

204(3).

Under North Carolina law, interpretation of a written and

unambiguous contract is a question of law for the court. Briggs

v. Am. & Efird Mills, Inc., 111 S.E.2d 841, 843 (N.C. 1960).

“Whenever a court is called upon to interpret a contract its

primary purpose is to ascertain the intention of the parties at

the moment of its execution.” Lane v. Scarborough, 200 S.E.2d

622, 624 (N.C. 1973). When construing contractual terms, a

contract’s plain language controls. See DeLoach v. Lorillard

Tobacco Co., 391 F.3d 551, 558 (4th Cir. 2004) (noting that “as

under general principles of contract law, our task is to ‘give

ordinary words their ordinary meanings.’” (quoting Internet East,

Inc. v. Duro Commc’ns., Inc., 553 S.E.2d 84, 87 (N.C. Ct. App.

2001)); Walton v. City of Raleigh, 467 S.E.2d 410, 411 (N.C. 1996)

(“If the plain language of a contract is clear, the intention of

the parties is inferred from the words of the contract.”). “If

the contract is ambiguous, however, interpretation is a question

of fact . . . and resort to extrinsic evidence is necessary . . .

.” Crider v. Jones Island Club, Inc., 554 S.E.2d 863, 866 (N.C.

Ct. App. 2001) (internal citations omitted). An ambiguity may

exist if the language is “fairly and reasonably susceptible to

either of the constructions asserted by the parties.” Glover v.

First Union Nat’l Bank of N.C., 428 S.E.2d 206, 209 (N.C. Ct. App.

1993); see also Crawford v. Potter, No. 1:04CV303, 2005 WL 2452092,

at *4 (M.D.N.C. Oct. 4, 2005) (“Ambiguity is not created merely by

a difference of opinion between the parties on the issue of what

certain terms mean.”) (citing Wachovia Bank & Tr. Co. v.

Westchester Fire Ins. Co., 172 S.E.2d 518, 522 (N.C. 1970)). In

determining whether language is ambiguous, “words are to be given

their usual and ordinary meaning and all the terms of the agreement

are to be reconciled if possible.” Anderson v. Anderson, 550

S.E.2d 266, 269-70 (N.C. Ct. App. 2001) (citation omitted).

The parties dispute whether the February Agreement

constitutes a valid contract for sale or a price quotation. In

general, price quotations are not offers. See Audio Visual

Assocs., Inc. v. Sharp Elecs. Corp., 210 F.3d 254, 259 (4th Cir.

2000) (applying the UCC as adopted in Maryland and concluding

“[w]ithout more, [price quotations] amount to an invitation to

enter into negotiations, but generally they are not offers that

can be accepted to form binding contracts”); Kraft Foods N.A.,

Inc. v. Banner Eng’g Sales, Inc., 446 F. Supp. 2d 551, 568 (E.D.

Va. 2006); J.D. Fields & Co., Inc. v. U.S. Steel Int’l, Inc., 426

F. App’x 271, 276 (5th Cir. 2011).13 However, if a price quotation

is sufficiently detailed, it can constitute an offer capable of

acceptance. See U.S. Steel, 426 F. App’x at 276; 77A C.J.S. Sales

§ 43 (2019) (“[P]rice quotations may be ‘offers,’ if they are

sufficiently definite, in that they include a description of the

goods and the quantity, price, delivery terms, and the time the

price would be held, and only the buyer’s assent is necessary to

form a binding contract.”).

In order for a price quotation to be sufficiently detailed,

“it must reasonably appear from the price quote that assent to the

quote is all that is needed to ripen the offer into a contract.”

U.S. Steel, 426 F. App’x at 277 (citation omitted). If the price

quote contains language that “would condition the formation of a

contract on some further step,” id. at 279, or “is expressly

qualified by statements that . . . look[] toward some future

contract,” 77A C.J.S. Sales § 43 (2019), then it is unlikely to

constitute an offer.

Here, the February Agreement is significantly detailed. The

13 While U.S. Steel is an unpublished out-of-circuit case, the court

relies on it for the persuasiveness of its reasoning, as it is consistent

with North Carolina law on price quotations and North Carolina and Texas

law on contracts appears similar, if not identical, in pertinent

respects. The case is also cited by Wall. (Doc. 12 at 19.) To be

sure, where there is no state law on point, it is the court’s obligation,

sitting in diversity, to apply the law it predicts the forum state’s

highest court would adopt, if presented with the issue. Private Mortg.

Inv. Servs., Inc. v. Hotel & Club Assocs., Inc., 296 F.3d 308, 312 (4th

Cir. 2002).

11-page document is the result of nearly a year of discussions

between Wall and 3TEK and includes: 1) price; 2) quantity; 3)

detailed product specifications; 4) shipping and assembly

information; 5) payment terms; 6) warranty information; and 7) a

validity period through 2019. Under the UCC, this level of detail

and specificity sufficiently transforms this quotation into a

valid offer. See U.S. Steel, 426 F. App’x at 278 n.6 (collecting

cases where similarly detailed price quotations were valid offers

and noting the “UCC tolerates a great deal of incompleteness and

even contradiction in offer and acceptance”).

Under the February Agreement, Wall’s payment of a $100,000

deposit entitled it to a right of first refusal for a specific

NEXT shredder (production slot 2 or 6). However, the February

Agreement conditioned receipt of a guaranteed production slot of

a NEXT shredder (after Wall exercised its right of first refusal)

on the occurrence of two events: the execution of a separate “Sales

Contract,” and Wall’s payment of the remaining 20% of its deposit.

Upon receipt of both a signed Sales Contract and payment of the

20% deposit, Wall would receive a guaranteed production slot and

3TEK would pledge a “finalized ready to ship date.” (Doc. 41-1 at

8). In the event Wall did not pay the remainder of its deposit

and timely sign the separate Sales Contract, its right of first

refusal would expire. (Doc. 41-1 at 8.) Thus, assent to the quote

in the February Agreement is not all that was needed to ripen the

offer into a contract for the sale of a shredder because of these

additional requirements. See U.S. Steel, 426 F. App’x at 277.

Rather, the February Agreement was “expressly qualified by

statements that . . . look[] toward some future contract.” See

77A C.J.S. Sales § 43 (2019); (Doc. 41-1 at 8 (“1.) Signing of the

3TEK Sales Contract will be required”)).

Wall argues that 3TEK waived the requirement for an executed

Sales Contract for the sale of the shredder, rendering the February

Agreement a sales contract. But this claim is based on an

unreasonable reading of the February Agreement. And even in the

light most favorable to Wall, the evidence fails to support a claim

that 3TEK, by its conduct, waived the Sales Contract requirement

for the sale of the NEXT shredder.

As a legal matter, all terms of the February Agreement must

be given their ordinary meaning, and the agreement must be read as

a whole in order to discern the intention of the parties. DeLoach,

391 F.3d at 558 (applying North Carolina law). The document

clearly contemplates the execution of a Sales Contract. The

requirement is noted in the section addressing the buyer’s

obligation for obtaining a right of first refusal for a specific

production slot, reflecting the seller’s intent not to commit a

production slot without a signed Sales Contract. Wall would have

the court conclude that any waiver of this requirement for a

production slot extends the waiver to the requirement of a Sales

Contract to complete a sale. But there is simply no indication in

the February Agreement that 3TEK ever intended to sell a

multimillion-dollar machine without a Sales Contract. To the

contrary, the February Agreement expressly provides that if Wall

elects to “take the second slot,” “the signing of a Sales Contract

will be required.” (Doc. 41-1 at 8.) Even if this were ambiguous,

which it is not, it is not susceptible to the interpretation Wall

offers – that the Sales Agreement is merely a predicate for a

production slot, which was waived by 3TEK’s provision of one, and

not a requirement for the ultimate sale of the machine.14 Anderson,

550 S.E.2d at 269-70 (“words are to be given their usual and

ordinary meaning and all the terms of the agreement are to be

reconciled if possible”) (internal quotations and citations

omitted); Lee v. Cooper, 801 S.E.2d 371, 373 (N.C. Ct. App. 2017)

(noting an option contract is “a continuing offer to sell,” not

itself an agreement to sell).

As for Wall’s argument that 3TEK waived the requirement of a

Sales Contract through its conduct,15 Wall cites 3TEK’s conduct

14 This is demonstrated, for example, by the fact that had Wall only put

down $100,000 to hold a right of first refusal but never exercised it

for a specific production slot, instead waiting for 3TEK to advise that

a machine was completed, it could not contend there is no requirement

to execute a Sales Contract.

15 At one point in his deposition, Wall confessed that he had thought the

Sales Agreement had been executed. (Doc. 41-2 at 171:15-172:1 (“I didn’t

realize we didn’t have – we didn’t even sign the actual contract.”).)

If he had thought so, there is no record evidence to support that belief,

from May 30, 2019, to February 2020 without insisting on a signed

Sales Contract until February 24, 2020. (Doc. 50 at 15-18.)

Waiver is “an intentional relinquishment or abandonment of a

known right or privilege.” Ernst v. N. Am. Co. for Life & Health

Ins., 245 F. Supp. 3d 680, 687 (M.D.N.C. 2017) (quoting Bombardier

Cap., Inc. v. Lake Hickory Watercraft, Inc., 632 S.E.2d 192, 196

(N.C. Ct. App. 2006)). Waiver may be express or “may arise from

the acts and conduct of the party which would naturally and

properly give rise to an inference that the party intended to waive

the agreement.” Guerry v. Am. Tr. Co., 68 S.E.2d 272, 275 (N.C.

1951). However, waiver requires conduct that the right was

intentionally surrendered, and any waiver is not permanent but can

be withdrawn. Klein v. Avemco Ins. Co., 220 S.E.2d 595, 599 (N.C.

1975) (“The intention to waive may be expressed or implied from

acts or conduct that naturally lead the other party to believe

that the right has been intentionally given up.” (emphasis added));

N.C. Gen. Stat. § 25-2-209(5); cf. Briston Metals, LLC v. Messer,

LLC, 498 F. Supp. 3d 840, 855 (E.D. Va. 2020) (under Pennsylvania’s

UCC identical to North Carolina’s, waiver can be implied “through

unequivocal conduct demonstrating an intent to relinquish a known

right”). “Waiver is a mixed question of law and fact. When the

and it is contradicted by Wall’s own attorney’s February 24, 2020 email,

which confirmed that Wall understood that it was operating only under a

sales quote and that there was no Sales Contract. (Doc. 53-15 at 3.)

facts are determined, it becomes a question of law.” Hicks v.

Home Sec. Life Ins. Co., 39 S.E.2d 914, 918 (N.C. 1946).

Wall does not claim, nor is there evidence, that anyone at

3TEK ever advised that a Sales Contract would not be required,

thus there is no evidence of an express waiver. (Doc. 41-2 at

203:7-15 (Dan Wall conceding 3TEK never told Wall a Sales Contract

would not be required).) Wall relies principally on 3TEK’s failure

to send a copy of the Sales Contract to Wall after Wall’s CFO,

Smith, proposed modifications in a redlined version on April 19,

2019. (Doc. 51-1 at 6 ¶ 21.) But Wall overlooks the fact that

Padula had contacted Smith at least twice thereafter and that Smith

responded that he was busy and promised to provide a response to

3TEK’s concerns about the proposed revisions. But then Dan Wall

terminated Smith’s employment, and no one at Wall ever followed

through by responding to 3TEK. In other words, not only was Wall

aware that 3TEK required a signed Sales Contract, the Sales

Contract was last in Wall’s hands and it is Wall who failed to

respond to 3TEK about Wall’s requested revisions. Wall responds

by faulting 3TEK for not following up with it after that point in

time, noting that 3TEK was also aware that Smith had left Wall’s

employ. But Smith was not terminated until November 2019, and

such failure to act, especially when any sale was at least months

away, is not sufficient evidence upon which a jury could reasonably

find waiver. Moreover, to permit this silence to constitute waiver

of a Sales Contract, especially when Padula noted there was “no

huge rush” (Doc. 52-1 at 2), would reward Wall for its failure (or

refusal) to comply with the terms of the deal.

Moreover, Padula’s May 30, 2019 email response to Smith

stating, “[w]e are happy to comply with a delivery penalty clause,”

was conditional, noting “as long as you take equal responsibility

for your responsibilities to insure timely installation”.16 (Id.)

Padula also stated that further discussions over the proposed

revisions were necessary (“I am following up on this loose end

wanting to get this document signed as we move closer” and “see if

we can dust this off and bring acceptable closure”). (Id.)

Smith’s response acknowledged the conditional nature of 3TEK’s

response and lack of agreement, stating in an email, “Yes, I think

we were very close to agreement – I’ve been buried in other

projects so I apologize for the delay. Let me chat with Dan about

this and I’ll get a response to you.” (Doc. 40 at 8 (emphasis

added).) But Dan Wall did not know whether Smith ever responded

to Padula. (Doc. 41-2 at 144:16-22 (Q: So what became of that? A:

I have no clue.”).) Though Wall relies on its own failure to

respond to 3TEK about Wall’s proposed revisions to the Sales

Contract to support its claim of waiver, at no time did 3TEK do

anything that could reasonably be construed to have waived the

16 It is also notable that Padula referred only to “a” delivery penalty

clause and not to any more specific penalty.

requirement of a separate Sales Contract to complete the sale.

Wall further relies on what he describes as his discussions

with 3TEK between May 30 and September 30, 2019. However, these

related to questions and reports on the status of the manufacture

of the shredder. (Id. at 167-169.) For example, in July of 2019,

Padula sent Wall photos of the processing scrap from a 6280

shredder and stated that 3TEK “looked to formalize those

[production results] in terms of tons/hrs over two more weeks of

testing.” (Id. at 168-169.) On July 25, 3TEK invited Dan Wall to

Texas to see a shredder and talk with Morrison, but the trip was

cancelled. (Id. at 167.) Otherwise, apart from general statements

about the status of the manufacturing process, Wall offers little

by way of specifics about the conversations taking place between

May and September. (See id. at 145.) At no time did anyone at

3TEK even suggest that it would sell the machine without a Sales

Contract.17

17 Even if Wall’s inference that 3TEK waived the Sales Contract

requirement by moving forward without it were reasonable, at best Wall

could contend that 3TEK waived the requirement of an executed Sales

Contract in order for Wall to receive a guarantee for production slot 2

if 3TEK had “pledged” a “finalized ready to ship date” (upon payment of

the 20% deposit) under the February Agreement. But even that is

unsupported by the record, because of all the alleged promises for

delivery cited by Wall, which the court accepts at this stage, none was

a “pledged” “finalized ready to ship date” required by the February

Agreement until February 24, 2020. (See Doc. 41-1 at 18 (“If you choose

this path then 3TEK will pledge a firm shipment date in September of

2019.”); id. at 38 (seeking written verification by Wall in a shredder

“that is being manufactured by the end of the year”); Doc. 41-1 at 38

(Maly acknowledging he told Wall, “I had said previously MANUFACTURED

The lack of basis for Wall’s claim of waiver is underscored

by its contention of an agreement of a 10% penalty for delivery

delay. Wall contends that 3TEK agreed to a 10% delivery delay

penalty, which Wall proposed as a revised term of the Sales

Contract, while simultaneously contending that 3TEK waived any

requirement that the very same Sales Contract be executed. In

other words, Wall seeks both to enforce the proposed delivery terms

from the redlined-Sales Contract (including the proposed September

30 deadline) while simultaneously arguing that the Sales Contract

requirement from the February Agreement was waived. In the end,

Dan Wall appears to rely on his belief that he had a sales agreement

with 3TEK because, as he testified, “I mean, we shook hands. We

shook hands. We exchanged funds and we signed sales quotes and

talked about the progress of my machine.” (Id. at 160:5-10.)

Because Wall’s contention that 3TEK waived the Sales Contract

by the end of December, deliver will be mid to late January.”); Doc. 52-

5 at 3 (Maly texting Wall seeking a signed commitment that 3TEK pay a

penalty “if we don’t deliver in January”); Doc. 52-6 (2/6/2020 contract,

sent 2/24/2019, stating “ready to ship from the factory in Grand Prairie

no later than February 28, 2020”); Doc. 52-8 (Morrison 2/24/2020 email

noting the machine is “complete and available for shipment from the

manufacturing locations”).) Even the draft Sales Contract exchanged

between the parties in spring 2019 noted that delivery would be “by

approximately September 30, 2019” and that “[s]uch delivery schedule is

subject to revision upon completion of final specifications by [3TEK]

and subject to reasonable or excusable delays.” (Doc. 51-8 at 6.)

Further, Dan Wall concedes there is nothing in the February Agreement

that provides a date. (Doc. 41-2 at 164:21-165:3.) Rather, he

acknowledges that the dates given were “roundabout dates” that were

“times of year that were given.” (Id. at 233:18-24.) It is also notable

that shipment, and thus the timing of delivery, was the responsibility

of the buyer under the February Agreement; for these reasons, 3TEK could

only promise a date the machine would be ready for shipment.

requirement to purchase a NEXT shredder is not supported by the

law or the facts, Wall’s claim for breach of contract fails.

However, even if Wall were correct in assuming that the February

Agreement constituted a valid sales contract, the question becomes

what became of it when Wall demanded return of its full deposit in

October 2019.

4. Mutual Rescission of the February Agreement

3TEK contends that Wall rescinded the February Agreement and

that 3TEK accepted it, thus terminating any responsibility under

that document.

Rescission of a contract may be made by mutual agreement.

Top Line Const. Co. v. J.W. Cook & Sons, Inc., 455 S.E.2d 463, 466

(N.C. Ct. App. 1995). The “mutuality essential to rescission may

be found to exist if, after breach of contract or abandonment by

one party, the other by word or act declares the contract

rescinded.” Brannock v. Fletcher, 155 S.E.2d 532, 542 (N.C. 1967)

(internal quotations and citations omitted). To constitute

rescission by mutual consent, there must be an abandonment or

repudiation of the contract by one of the parties that is assented

to or acquiesced in by the other. Id. at 542 (quoting 91 C.J.S.

Vendor & Purchaser § 124 (1955)). A rescission “implies the entire

abrogation and undoing of the contract from the beginning.”

Lumsden v. Lawing, 421 S.E.2d 594, 599 (N.C. Ct. App. 1992). In

the case of rescission, “ordinarily a party may not seek damages

arising out of the breach of contract such as benefit of the

bargain and special damages.” Id. (citing Kee v. Dillingham, 49

S.E.2d 510, 512 (N.C. 1948)).

On October 9, 2019, Dan Wall emailed Padula with the subject

line “6280 deposit.” (Doc. 52-3 at 4.) Wall wrote that “since

3TEK wasn’t able to meet the June date or September date and it

sounds like you probably won’t make the end of the year date, I am

requesting my deposit back in full.” (Id.) Although he thought

the NEXT shredder was “a great machine,” Wall informed 3TEK he

“cannot afford to wait any longer” and that he would “keep you and

3tek [sic] in mind for the future.” (Id.) Wall ended his email

by stating “[p]lease get me in touch with the appropriate person

and I will provide my wiring instructions.” (Id.) When asked at

his deposition, “on October 9th, 2019, you’re saying ‘I’m done.

We’re done’; right?” Dan Wall replied “Yes, sir.” (Doc. 41-2 at

154:12-15.) Dan Wall further confirmed his intent that the October

9 email serve as cancellation of the February Agreement:

Q: Is it your testimony that there would be no

contract between the parties after October 2019, if

3TEK had given Wall all of its money back?

A: On that day, I was very mad about the missed dates

and being misled, and if I would have gotten my money

back, yes, we would have both gone our separate ways.

(Id. at 160:20-161:1.)

One week later, on October 16, Dan Wall confirmed his intent

to cancel by requesting contact information for sending wiring

instructions for return of his full deposit. (Doc. 52-3 at 2.)

3TEK immediately acknowledged Wall’s cancellation, “regretfully

accept[ing]” Wall’s “request to cancel the Sales Order.” (Id. at

5.) 3TEK’s Morrison confirmed that “3TEK will reimburse the

deposits made toward this purchase totaling $459,900.00.” (Id.)

At the time, both parties reflected their intent to rescind the

February Agreement and confirmed that intent in writing when Wall

submitted his refund request and 3TEK accepted it. (Doc. 41-2 at

155:9-11 (demonstrating Wall understood that 3TEK considered the

February Agreement terminated).) By demanding his refund in full

(and not just the amount in excess of the $100,000 initial

deposit), Wall sought to situate the parties in their positions

before they entered into the February Agreement. Johnson v. Smith,

Scott & Associates, Inc., 335 S.E.2d 205, 207 (N.C. Ct. App. 1985)

(noting that rescission “abrogates the contract from its beginning

and restores the parties to the position they would have been in

had the contract not been made”).

Wall now contends that the February Agreement had “never been

fully cancelled” because “[y]ou guys never sent the money back.”

(Doc. 41-2 at 157:23-25.) Wall also argues that Dan Wall rescinded

his request for return of the deposit, thus effectively reinstating

the February Agreement. But, as 3TEK argues, these contentions

fail both legally and on the factual record.

Where a contract is silent on timing, an action is taken

“seasonably” under a contract controlled by the UCC as adopted by

North Carolina if it is done “within a reasonable time.” N.C.

Gen. Stat. § 25-1-205(b). What constitutes “reasonable time”

depends on the “nature, purpose, and circumstances of the action.”

Id. at § 25-1-205(a). While reasonableness is generally a question

of fact, “the issue can become a question of law only when the

facts are undisputed and only when an inference can be drawn as to

reasonableness of notice.” GATX Logistics, Inc. v. Lowe’s Cos.,

Inc., 548 S.E.2d 193, 196 (N.C. Ct. App. 2001) (internal quotations

and citations omitted).

Here, the facts are undisputed. Wall sent a full cancellation

request on October 9 (Doc. 52-3 at 4), and 3TEK accepted that

cancellation request on October 16 (id. at 5). 3TEK committed to

returning Wall’s full deposit, was immediately prepared to send

Wall $100,000, and asked for wiring instructions in order to do

so. (Id.) But as Wall concedes, it never responded to provide

any wiring information. (Id.; Doc. 41-2 at 156:18-20.) Rescission

of the February Agreement was therefore effective when 3TEK

accepted Wall’s request to cancel the contract on October 16,

reflecting the mutuality essential to rescission. As reflected by

3TEK’s acceptance of Wall’s cancellation one week later, the

contract had been mutually rescinded by the parties. See Brannock,

155 S.E.2d at 542 (holding that rescission of a contract “may be

by mutual agreement” and “a rescission of the contract entitles

each party to be placed in Statu quo ante fuit”).

Wall contends that 3TEK’s acceptance of Wall’s request to

terminate the February Agreement was ineffective because 3TEK did

not refund Wall’s deposit. Such a belief is legally and factually

unfounded. There is no evidence that 3TEK ever refused to return

Wall’s deposit. Rather, 3TEK expressly agreed to do so and stated

it would have to do it over time because Wall’s deposit was

invested in the machine Wall ordered but had now reneged on. (Doc.

52-3 at 5.) Because Wall never sent 3TEK wiring instructions for

the return of the funds, as 3TEK requested, and because Wall

maintains that sometime between October 16 and November 13 Dan

Wall “withdrew his demand for a refund” upon renewing his interest

in a NEXT shredder, Wall cannot claim that 3TEK refused to return

its deposit, much less that it did not do so seasonably so as to

negate the rescission of the February Agreement.18

18 Had Wall been dissatisfied with this payment schedule or desired its

deposit sooner, it could have considered suing 3TEK for failure to timely

return it. Under that assumption, Wall could have maintained that 3TEK

was liable for any damages allegedly incurred before the cancellation

as a result of any alleged breach of the contract. Brannock, 155 S.E.2d

at 541. Here, Wall makes two allegations of breach prior to rescinding

the February Agreement in October. The first is that 3TEK missed a

delivery date in June of 2019. (Doc. 41-2 at 152:18-20.) This contention

is based on a prior, 2018 quotation 3TEK provided to Wall that estimated

that the NEXT shredder would be ready to ship by June 2019. However,

that agreement was superseded by the February Agreement which, as Wall

recognizes, contains no promise to deliver a NEXT shredder in June. (Id.

at 153:1-6.) Wall’s second allegation of breach is that 3TEK missed a

delivery date in September 2019 promised by Padula. (Doc. 50 at 7, 20.)

However, as noted, there is no evidence in the record that 3TEK ever

gave Wall a “finalized ready to ship date” as required by the February

Agreement. (Doc. 41-1 at 8.)

Finally, while Dan Wall changed his mind after 3TEK accepted

his cancellation and expressed interest in buying a shredder,

withdrawing his request for a refund, and while Maly said he would

work “to ensure that the deal was completed,” Wall refused to

respond to Maly’s email to confirm in writing that Wall was “intent

on moving forward with the purchase of a 6280 that is being

manufactured by the end of the year.” (Doc. 52-4 at 2.) Dan

Wall’s assumption that after October 16 the parties were operating

under the mutually-cancelled February Agreement was just that, an

assumption. (Doc. 41-2 at 171:15-172:7 (“we’d already had an

agreement in place. . . . Look at the signed quote. . . . I didn’t

even realize we didn’t have – we didn’t even sign the actual

contract. . . . we had an agreement that the money was sent. The

machine was being built. I was getting updates. . .”); (id. at

157:20-25 (“I guess this had never been fully canceled. You guys

– had never been canceled. You guys never sent the money back.”

(emphasis added)).) Wall cites no authority for the proposition

that mutual cancellations are ineffective unless deposits are

refunded immediately. There is no evidence of any writing,

statement, or conduct to mutually put the February Agreement back

in place. Nor was there any indication that Wall would be returned

to his abandoned place for production unit 2. Even Dan Wall

understood that Maly’s text requests in December were to sign a

new contract. (Id. at 172:18-173:2.) In light of this record,

Wall has not provided sufficient evidence that a jury could

reasonably find that 3TEK somehow revived the February Agreement

through its efforts to sell Wall a shredder after Wall rescinded

the February Agreement but then later withdrew his request to have

his prior deposit refunded.

Even if the parties could be said to have mutually revived

the February Agreement, however, for the reasons already stated,

it was not without the requirement that a Sales Agreement

eventually be executed.

5. Period After Mutual Rescission

Wall’s complaint alleges breach of the February Agreement –

with the modifications it claims for 10% delivery delay penalty,

$30,000 in set up costs, and free hammers. It does not allege

that any other agreement, oral or written, was ever entered into

by the parties.19

Given the court’s determination that 3TEK accepted Wall’s

rescission of the February Agreement, there was no binding

agreement thereafter. By the time the parties got close to closing

the sale in February 2020, Nancy Wall, Wall’s attorney,

acknowledged the absence of a sales contract and sought concessions

that she represented were “agreed upon and/or offered by 3TEK.”

19 Even had Wall entered into a new oral agreement with 3TEK after the

parties mutually rescinded the February Agreement, that agreement would

appear to be barred by the statute of frauds, raised by 3TEK in its

amended answer, as it was for the sale of goods for more than $500. N.C.

Gen. Stat. § 25-2-201. (See Doc. 85 ¶ 58.)

(Doc. 53-15 at 4.) The largest of them, a 10 percent reduction in

price for not delivering the machine by December 31, 2019, would

have totaled approximately $229,950. However, as noted previously

and evidenced by Smith’s failure to respond to Padula in April and

May 2019, 3TEK never assented to this proposed revision of the

Sales Contract. (Doc. 52-1 at 2.)

After review of Wall’s requests, Morrison properly regarded

Nancy Wall’s letter as terms of an offer to purchase a NEXT

shredder. (Doc. 41-1 at 43.) By then, Wall had made threats of

legal action against 3TEK, and 3TEK determined that the

relationship had soured. (Doc. 53-15 at 2; Doc. 53-14 at 2.) 3TEK

was within its rights to reject the offer, and Morrison enclosed

a check to Wall in the amount of $479,687.72, which represented

Wall’s full deposit with interest. (Doc. 41-1 at 45.)

Even if the February Agreement were deemed to still be in

place in some form, it did not contain the 10% delay penalty, for

the reasons noted, and there was as of yet no signed Sales

Contract. Wall’s complaint alleges that “Wall has been, and

remains, ready and able to perform the Contract.” (Doc. 2 at

¶ 49.) However, according to Wall, the “Contract” includes the

ten percent reduction in the cost of the NEXT shredder (roughly

$229,950). While there was no meeting of the minds as to the terms

of a delay penalty, 3TEK eventually rejected this request in

February. Wall does not allege that it was ready, willing, and

able to purchase the machine without the nearly quarter of a

million dollar discount it erroneously contends was part of the

February Agreement, and by signing the Sales Agreement.

3TEK’s motion for summary judgment will therefore be granted.

III. CONCLUSION

For the reasons stated,

IT IS THEREFORE ORDERED that 3TEK’s motion to strike Dan

Wall’s declaration (Doc. 56.) is DENIED but that the court will

consider the testimony to the extent noted herein, its motion for

summary judgment pursuant to Rule 56 (Doc. 40) is GRANTED, and

this action is DISMISSED WITH PREJUDICE.

A judgment in accordance with this Order shall issue

contemporaneously.

/s/ Thomas D. Schroeder

United States District Judge

March 1, 2022