United States District Court, S.D. West Virginia, Charleston
KANAWHA INSTITUTE FOR SOCIAL RESEARCH & ACTION, INC. Plaintiff,
GREEN SPIRIT FARMS, LLC, Defendant.
MEMORANDUM OPINION AND ORDER
T. Copenhaver, Jr. Senior United States District Judge
is the plaintiff's motion for summary judgment, filed
October 8, 2018.
December 2014, the plaintiff, Kanawha Institute for Social
Research and Action (“KISRA”) and defendant,
Green Spirit Farms, LLC (“GSF”), entered into a
contract to develop a Vertical Farm using a Vertical Growing
System at a KISRA facility in Charleston, West Virginia.
Compl. ¶ 14. Plaintiff now brings an action for damages
resulting from an alleged breach of this contract and
conversion of KISRA's funds.
is a faith-based organization which works to strengthen
families through a community health center, health support
services, and a variety of programs in connection with
employment, financial counseling, and child education.
Pl.'s Mot. Summ. J. at Ex. 1 ¶ 3. In 2014,
KISRA's Chief Executive Officer was Michelle Foster
(“Foster”). Id. ¶ 2. GSF is a
for-profit limited liability company organized under the laws
of Illinois. Compl. ¶ 2; Def.'s Ans. and Aff.
Defenses. ¶ 2. GSF is a “manager-managed”
company under the Illinois Limited Liability Act, and from
January 1, 2014 until July 15, 2017, Milan Kluko
(“Kluko”) was the Manager of GSF. Ans. to
Pl.'s 1st Interrog. 3, 5.
2014, Foster became aware of GSF's Vertical Growing
System (“VGS”). Pl.'s Mot. Summ. J. at Ex. 1
¶ 6. The VGS is an indoor, hydroponic system where
produce is grown in vertical racks under lights. Id.
¶ 6. In early October 2014, Foster toured a GSF facility
in Michigan. Id. ¶ 7. After discussions between
Foster, Kluko, and other representatives of KISRA and GSF,
KISRA and GSF orally agreed to develop a vertical farm using
GSF's VGS in a building owned by KISRA in Charleston,
West Virginia. Id. ¶ 7.
around December 19, 2014, KISRA received a Purchase Order
from GSF (“P.O. No. 5504 Kisra”) requesting that
KISRA pay 50% of the total cost of lighting for the VGS -
$130, 680. Id. ¶ 9; Id. at Ex. A. On
December 19, 2014, KISRA paid GSF the $130, 680.00.
Id. ¶ 10; Id. at Ex. A.
December 22, 2014, Kluko emailed a “revised scope of
work agreement” to Foster regarding the development of
the VGS. Id. ¶¶ 11-12; Id. at Ex.
B. Foster acknowledged receipt of the “revised scope of
work agreement” by email and stated that she would sign
the agreement by the next day. Id. ¶¶
11-12; Id. at Ex. B. The “revised scope of
work agreement” was in the form of a Memorandum from
Kluko and another GSF representative to Foster, dated
December 22, 2014, titled: “Scope, Schedule and Budget
for 1039 Central Avenue Charleston, WV - the ‘Central
Avenue Vertical Farm' Project” (“VGS
Memorandum Agreement”). Id. ¶¶
11-12; Id. at Ex. B. Foster executed the VGS
Memorandum Agreement and returned the signed form to Kluko.
Id. ¶ 13.
Memorandum Agreement provided that “[b]ased on our most
recent discussions last week including our visit to KISRA as
well as inspection of the Central Avenue structure in
Charleston, WV, Green Spirit Farms (GSF) and KISRA have
agreed to develop an initial Vertical Farm using our Vertical
Growing Systems.” The VGS Memorandum Agreement noted
that “KISRA has provided an initial payment of $130,
680.00 representing 50% of the cost of the lighting for the
VGS units.” Finally, the VGS Memorandum Agreement
stated “[i]f you agree with this Scope of Services and
budget please sign where indicated and this will serve as our
agreement between KISA [sic] and GSF.” Id.
¶ 12; Id. at Ex. C.
2015, KISRA made efforts to prepare the Charleston building
for the installation of the VGS. Id. ¶ 14. As
of January 2016, no lighting for the VGS units had been
delivered to KISRA despite the payment by KISRA for lighting
in December 2014. Id. ¶ 14. On January 5, 2016,
Foster emailed Kluko and stated: “We would like to get
a check out to you for the balance of the lights. Since our
system is smaller than originally planned, I figure the
balance will be less than the original invoice. Please
provide an invoice for the balance.” Id.
¶¶ 15-16; Id. at Ex. D. Foster's
January 5th email to Kluko was followed by a series of emails
between Foster and Kluko regarding the cost of the remaining
lighting. Id. ¶¶ 15, 17; Id. at
Ex. D. Finally, on January 13, 2016, Kluko informed Foster
that the remaining cost of lighting was $92, 150.00.
Id. ¶ 17; Id. at Ex. D.
January 14, 2016, GSF issued a Purchase Order to KISRA in the
amount of $92, 150.00 for the remaining VGS lighting.
Id. ¶ 18; Id. at Ex. E. On January 21,
2016, KISRA furnished $92, 150.00 to GSF. Id. ¶
19; Id. at Ex. E. Despite having paid GSF a total of
$222, 830.00, KISRA has never received any VGS lighting from
GSF. Id. ¶ 19; Pl.'s Mot. Summ. J. at Ex. 5
resigned as the Chief Executive Officer of KISRA effective
February 5, 2016. Pl.'s Mot. Summ. J at Ex. 1 ¶ 20.
After the final payment of $92, 150.00 for the lighting on
January 14, 2016, KISRA asked GSF several times when KISRA
would receive the lighting, but KISRA never received an
explanation for GSF's failure to deliver it. See
Pl.'s Mot. Summ. J. at Ex. 6 ¶ 4.
February 19, 2016, KISRA's Chief Operating Officer, Carl
Chadband (“Chadband”), emailed Kluko informing
him that KISRA was cancelling the VGS project and that it
requested a return of the $222, 830.00. Pl.'s Mot. Summ.
J. at Ex. 6 ¶¶ 4-6; Pl.'s Mot. Summ. J., Ex. 1
at Ex. A. On February 22, 2016, Kluko responded to
Chadband's February 19th email by stating, inter alia,
that GSF “cancelled work orders for your lighting and
will refund the cost of the lighting, ” and that it
“[s]hould have this accomplished in approximately 2
weeks from today.” Id. at Ex. 6 ¶ 7;
Id. at Ex. A. However, GSF did not return the refund
on March 11, 2016, Chadband emailed Kluko and stated:
“Can you provide me with a status update for our
refund. It has been two weeks. Thanks!” Id. at
Ex. 6 ¶ 8; Id. at Ex. A. Kluko responded to
Chadband the same day and stated: “We hope to have this
wrapped next week the process has taken a little longer than
we had hoped and my apologies . . . we have all the items
together and RMA to get the funds[.] I will get back with you
COB Tuesday.” Id. at Ex. 6 ¶ 9;
Id. at Ex. A. ...