Metropolis Holdings, LLC v. SP Plus Corporation

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

METROPOLIS HOLDINGS, LLC, Case No. 3:20-cv-00612-SB

Plaintiff, OPINION AND ORDER

v.

SP PLUS CORPORATION,

Defendant.

BECKERMAN, U.S. Magistrate Judge.

Plaintiff Metropolis Holdings, LLC (“Metropolis”), filed this action against SP Plus

Corporation (“SP Plus”), on April 14, 2020, initially alleging claims for breach of contract and

fraud. (ECF No. 1.) Now before the Court is SP Plus’s motion for summary judgment or, in the

alternative, for case-dispositive discovery sanctions. (ECF No. 54.)

The Court has jurisdiction over Metropolis’s claims pursuant to 28 U.S.C § 1332, and all

parties have consented to the jurisdiction of a U.S. Magistrate Judge pursuant to 28 U.S.C. § 636.

For the reasons discussed below, the Court grants SP Plus’s motion for summary judgment.

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BACKGROUND1

Independent Development Enterprise Alliance (“IDEA”), an Oregon nonprofit

corporation, and Central Parking System of Washington (“CPS”) entered into a ten-year General

Partnership Agreement to form Portland Parking Associates (“PPA”) on October 3, 2011. (Am.

Compl. Ex. 1 (“PPA”) at 1, ECF No. 51-1.) IDEA and CPS formed the PPA for the purpose of

“operating, managing, and acquiring public parking management and revenue contracts, within a

sixty (60) mile radius of Portland, Oregon.” (PPA at 2.) Pursuant to the terms of the partnership

agreement (also referred to herein as the “PPA”), IDEA would receive 30% of the net profits

with CPS retaining the other 70%, IDEA would receive 80% of monthly cashflow, IDEA could

request and inspect PPA’s books, receipts, and records, and IDEA “may assign, without consent,

its interest in the [PPA] to another legal entity provided that a majority of such entity’s stock or

other ownership interest is owned by Roy Jay.” (PPA at 6-10.) One of the purposes of the PPA’s

payment arrangement was to share the PPA’s profits with IDEA to advance IDEA’s nonprofit

mission, including to support Project Clean Slate. (Aff. of Roderick W. Woodruff (“Woodruff

Aff.”) ¶ 3, ECF No. 61.)

CPS and IDEA modified the PPA on April 24, 2013, in a Memorandum of Understanding

(“MOU”). (Am. Compl. Ex. 2 (“MOU”) at 1, ECF No. 51-2.) The MOU modified the PPA to

require CPS to pay IDEA $10,000 a month as a fixed monthly partnership fee. (MOU at 1.) In

2012, Standard Parking Corporation acquired Central Parking Corporation, the parent company

of CPS. (Decl. of Ritu Vig (“Vig Decl.”) ¶ 3, ECF No. 56.) In 2013, Standard Parking

Corporation changed its name to SP Plus. (Id.) Metropolis alleges that “sometime in the 2012-

1 Unless otherwise noted, the following facts are either undisputed or viewed in the light

most favorable to Metropolis.

2014 timeframe, IDEA’s Board of Directors approved the transfer of [its interest in the PPA] to

Metropolis[.]” (Woodruff Aff. ¶ 2.)

Metropolis’s original complaint asserted breach of contract and fraud claims, alleging

that SP Plus breached the PPA and MOU and committed fraud by failing to make the required

payments. (ECF No. 1.) On June 1, 2020, Metropolis moved for partial summary judgment on its

breach of contract claim. (ECF No. 14.) On June 5, 2020, SP Plus moved to dismiss Metropolis’s

fraud claim. (ECF No. 16.) On August 5, 2020, the Court denied Metropolis’s motion for partial

summary judgment and granted SP Plus’s motion to dismiss the fraud claim. (ECF No. 39.)

On May 18, 2021, Metropolis filed an amended complaint, alleging breach of contract

and seeking $7 million in damages and declaratory relief regarding several PPA and MOU terms.

(ECF No. 51.) On June 1, 2021, SP Plus answered Metropolis’s amended complaint and asserted

a counterclaim for unjust enrichment, alleging that Metropolis and its sole member, Roy Jay,

intentionally and improperly diverted PPA payments intended for IDEA, a nonprofit corporation,

to Roy Jay’s wholly-owned for-profit entity, Metropolis. (ECF No. 52.)

ANALYSIS

I. STANDARD OF REVIEW

Summary judgment is proper if “there is no genuine dispute as to any material fact and

the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). At the summary

judgment stage, the court views the facts in the light most favorable to the non-moving party, and

draws all reasonable inferences in favor of that party. Porter v. Cal. Dep’t of Corr., 419 F.3d

885, 891 (9th Cir. 2005). The court does not assess the credibility of witnesses, weigh evidence,

or determine the truth of matters in dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255

(1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the

non-moving party, there is no ‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 587 (1986) (quoting First Nat’l Bank of Ariz. v. Cities Serv. Co., 391

U.S. 253, 289 (1968)).

II. DISCUSSION

SP Plus moves for summary judgment on Metropolis’s breach of contract claim on

several grounds, including that Metropolis has no valid interest in the PPA because IDEA never

assigned its interest in the PPA to Metropolis and never provided notice of the assignment to SP

Plus as required by the PPA’s terms. (Def.’s Mot. for Summ. J. (“Def.’s Mot.”) at 3, ECF No.

54.) Metropolis argues, among other things, that disputed facts preclude summary judgment on

the issues of assignment and notice of assignment. (Pl.’s Am. Resp. at 2, 8, ECF No. 65.) The

Court finds that even if disputed facts remain regarding whether IDEA assigned its interest in the

PPA to Metropolis,2 no reasonable trier of fact could find that IDEA provided written notice to

SP Plus of any such assignment, as required by the PPA.

A. Governing Law

Section 11.5 of the PPA contains a choice-of-law provision: “This agreement and the

rights of the Partners shall be governed by and construed and enforced in accordance with the

laws of the state of Tennessee.” (PPA at 16.) Accordingly, the Court applies Tennessee law to

2 Metropolis has not presented any documentary evidence of an assignment nor board

minutes demonstrating that IDEA’s board of directors approved an assignment. Instead,

Metropolis relies on the affidavit of Roderick Woodruff who asserts that IDEA’s board of

directors approved the transfer of IDEA’s interest in the PPA to Metropolis “sometime in the

2012-2014 timeframe.” (Woodruff Aff. ¶ 2.) SP Plus argues that “the disparity between

Woodruff’s affidavit and his prior deposition testimony is so extreme that the affidavit amounts

to a sham affidavit” and is therefore inadmissible. (Def.’s Reply at 5, ECF No. 67.) “The general

rule in the Ninth Circuit is that a party cannot create an issue of fact by an affidavit contradicting

his prior deposition testimony.” Yeager v. Bowlin, 693 F.3d 1076, 1080 (9th Cir. 2012) (quoting

Van Asdale v. Int’l Game Tech., 577 F.3d 989, 998 (9th Cir. 2009)). The Court need not reach

the question of whether the sham affidavit rule applies here, but recognizes that Mr. Woodruff’s

affidavit materially contradicts—without explanation—his prior testimony regarding his

knowledge of whether IDEA assigned its interest in the PPA to Metropolis.

interpret the terms of the PPA. See, e.g., Welles v. Turner Ent. Co., 503 F.3d 728, 734 (9th Cir.

2007) (“Because the Production Agreement contains a New York choice of law provision, we

apply New York’s principles of contract interpretation in deciding this issue.”).

Under Tennessee law, the Court is required to “initially determine the parties’ intent by

examining the plain and ordinary meaning of the written words that are contained within the four

corners of the contract[, and t]he literal meaning of the contract language controls if the language

is clear and unambiguous.” Dick Broad. Co. of Tenn. v. Oak Ridge FM, Inc., 395 S.W.3d 653,

659 (Tenn. 2013) (simplified).

B. The PPA’s Assignment Clause Requiring Written Notice of Transfer

Article IX, Section 9.2 of the PPA, titled “Transfers of Interest,” provides that IDEA may

assign its interest in the PPA without consent, but requires that IDEA first deliver written notice

to CPS and the Partnership:

Except as hereinafter provided, no transfer of a Partnership Interest shall be made

except on the following conditions . . . (c) [IDEA] may assign, without consent,

its interest in the Partnership to another legal entity provided that a majority of

such entity’s stock or other ownership interest is owned by Roy Jay. . . . (d) [w]ith

respect to any proposed voluntary transfer to a third party[, (1) t]he transferring

Partner shall deliver written notice to the other Partner and to the Partnership,

which notice shall state the name of the prospective purchaser and the price and

terms offered by such prospective purchase . . . .

(PPA at 10.) The PPA further provides that “[a]ny . . . transfer . . . of any Partnership Interest

shall be null and void unless made strictly in accordance with the provisions of this Article [IX].”

(PPA at 13.) Section 11.2 of the PPA instructs that any required notice “shall be in writing,

signed by the Party giving the same, and shall be deemed properly given when actually received

or when mailed, if sent by registered or certified United States mail, postage prepaid, addressed:

[to specific addresses provide for each entity].” (PPA at 15.)

Despite this language, Metropolis suggests that the PPA did not require written notice of

an assignment, citing Section 9.2(c) of the PPA allowing an assignment without consent. (Pl.’s.

Am. Resp. at 9.) Metropolis overlooks the clear and unambiguous language of Section 9.2(d),

which expressly requires that “with respect to any proposed voluntary transfer [of an interest in

the PPA] to a third party,” the transferring party “shall deliver written notice to the other Partner

and to the Partnership[.]”3 (PPA at 10.) IDEA’s purported assignment of its interest in the PPA to

Metropolis was a voluntary transfer to a third party, which triggered Section 9.2(d)’s written

notice requirement.

The Court finds that under the clear and unambiguous language of the PPA, IDEA was

required to notify SP Plus in writing of any voluntary transfer of IDEA’s interest in the PPA to

Metropolis.

C. Metropolis’s Evidence Regarding Written Notice of Assignment

Metropolis asserts that SP Plus’s “Exhibits 3 through 5 show written notice of the

transfer” of interest in the PPA to Roy Jay’s “contact” at SP Plus, Malisa McCreedy. (Pl.’s. Am.

Resp. at 11.) Metropolis appears to be referring to the exhibits attached to the declaration of Ritu

Vig. (See Vig Decl., Exs. 3-5.) There is no evidence of written notice of the assignment in those

records.

Exhibit Three is an October 21, 2014 email on IDEA letterhead from

“roy@smartparkgarages.com” to two SP Plus email addresses (but not to Malisa McCreedy),

stating “Authorization to Make Monthly Direct Deposit to our Vendor Account,” and a follow-

up message from Roy Jay, “Thank you for making the change immediately.” (Vig Decl., Ex. 3.)

3 Similarly, Under Tennessee law, “[a] partnership need not give effect to a transferee’s

rights under this section until it has notice of the transfer.” TENN. CODE ANN. § 61-1-503.

This exhibit contains no “written notice of transfer” to “Malisa McCreedy,” or anyone else, as

Metropolis alleges. (See Pl.’s Am. Resp. at 11.)

Exhibit Four is an eight-page email string from “Roy@royjay.com” to

“mmcreedy@spplus.com”:

• On September 5, 2014, Roy Jay states, “I need to have the monthly allocation sent

to a new bank account. Who do I send the routing and account number to[?]” (Vig

Decl., Ex. 4.)

• On September 8, 2014, Malisa McCreedy responds in an email with the subject

line “Change Bank Account,” with “Hi Roy, Please send the information to

Kristie Stone and I. She will handle ensuring the information is provided to the

right people.” (Id.)

• On September 24, 2014, Roy Jay responds, “Kristie.. I am out of town until

october 6 but can forward you the new routine [sic] number and bank account

within a few hours. I need for this to go into effect immediately so the next

deposit will be posted about the 2nd or 3rd of the month,” responding shortly

thereafter with, “Kristie… here is the new account information. The account is

with Bank of America.” (Id.)

• Also on September 24, 2014, Marc Lenihan, identified in his email signature as

Director of Treasury Operations for SP Plus, informs Kristie Stone that “to

finalize set-up we will need a document on either the client’s or financial

institution they bank with letterhead indicating the account the funds need to go

to.” (Id.)

• On September 25, 2014, Kristie Stone passes along the information to Roy Jay,

asking for his request to be “on your company’s letterhead or the bank[’]s

letterhead.” (Id.)

• Nearly one month later, on October 21, 2014, Roy Jay responds from a different

email account, “royjay@gmail.com,” “Kristi.. [sic] sorry to do this again.. but we

-- established a new vendor account.. Can you send our payments for direct

deposit to: (effective immediately) [routing and account number].” (Id.)

• Kristie Stone forwards Roy Jay’s request to SP Plus accountant San Chan. (Id.)

• San Chan informs Roy Jay again that, “our Treasury department . . . cannot

process your request unless the request is in the form of your letterhead . . . .” (Id.)

• On November 2, 2014, Roy Jay sends—on IDEA letterhead—a “NOTICE OF

CHANGE OF FEDERAL TAX ID” stating, “[p]lease update your records to

include our vendors new tax identification number as listed below . . . [p]lease

continue to mail all statements and communications to 9159 SE Anton Court

Happy Valley, OR 97086-3015,” and signed by “Roy Jay, Director/Manager.”

(Id.)

Exhibit Five is substantially the same email string as Exhibit Four, with the addition of

San Chan requesting that Roy Jay provide an “updated W9.” (Vig Decl., Ex. 5.) Roy Jay

provides a W9, signed on November 3, 2014, with the company name listed as “Metropolis

Holdings, LLC” but the business name, “if different from [company name],” listed as “[IDEA].”

(Id.)

The Court finds that no reasonable trier of fact could conclude that these exhibits include

written notice to SP Plus of a transfer of IDEA’s interest in the PPA to Metropolis. The emails

include no mention of an assignment or transfer of interest, let alone in conformance with the

PPA’s notice requirements. On the contrary, Roy Jay continues to communicate with SP Plus

using IDEA letterhead, vaguely references sending the payments to IDEA’s new “vendor,”

incorrectly represents on the W9 that Metropolis is doing business as IDEA, a nonprofit entity,

and fails to disclose that he is asking SP Plus to redirect payments from the nonprofit IDEA to

his own LLC. No reasonable juror could view this evidence as written notice to SP Plus of an

assignment of IDEA’s interest in the PPA to Metropolis.

The Court finds that Metropolis has presented no evidence that IDEA provided SP Plus

with written notice of an assignment of IDEA’s interest in the PPA to Metropolis, as required by

the clear and unambiguous language of PPA Section 9.2. The bargained-for PPA requires that

any transfer of interest “shall be null and void unless made strictly in accordance with the

provisions of this Article [IX].” (PPA at 13.) Under the plain language of the contract, the

transfer of interest in the PPA from IDEA to Metropolis, if any, is void and unenforceable.

Accordingly, Metropolis has no contractual relationship with SP Plus and its breach of contract

claim necessarily fails in the absence of a valid contract.4

CONCLUSION

For the reasons stated, the Court GRANTS SP Plus’s motion for summary judgment.

(ECF No. 54.) Counsel shall confer regarding the status of SP Plus’s counterclaim and file a joint

status report by January 19, 2022.

DATED this 29th day of December, 2021.

HON. STACIE F. BECKERMAN

United States Magistrate Judge

4 In light of the Court’s holding, it need not address SP Plus’s other summary judgment

arguments. However, had the Court not resolved Metropolis’s claim on the merits, the Court

would have imposed sanctions for Metropolis’s failure to comply with the Court’s discovery

order. (See ECF No. 50.)