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JayKal LED Solutions Inc. v. G-W Management Services, LLC

United States District Court, D. Maryland, Southern Division

October 20, 2017



          Paul W. Grimm United States District Judge.

         In May 2016, G-W Management Services, LLC (“G-W Management” or “GWMS”) received a proposal from a potential subcontractor, JayKal LED Solutions Inc. (“JayKal”), as it was preparing a bid for a lighting project (“Lighting Project”) at the Walter Reed National Military Medical Center. G-W Management included the pricing information it received from JayKal in its final bid submission, was subsequently awarded the Lighting Project contract, but did not use JayKal as a subcontractor. JayKal viewed G-W Management's actions as fraudulent and a breach of contract, and filed this litigation. Compl., ECF No. 1. G-W Management has moved to dismiss the case. ECF No. 14.[1] G-W Management's Motion to Dismiss is granted in part, as JayKal has failed to state a claim for fraud, and is denied in part, as JayKal has stated a claim for breach of contract. G-W Management must file its Answer no later than November 7, 2017.


         On May 10, 2016, a request for proposal was issued for a Lighting Project at the Walter Reed National Military Medical Center (“WRNMMC” or “Walter Reed”). Compl. ¶ 10. JayKal, a manufacturer, supplier, and installer of LED lighting products, initially sent its pricing to G-W Management, a bidder on the Walter Reed contract, on June 3, 2016. Id. ¶ 14. On June 8, 2016, JayKal sent its initial proposal to G-W Management for the Lighting Project. Id. ¶ 15. G-W Management was informed on June 9, 2016 that the Potomac Electric Power Company (“Pepco”) would be accepting applications for incentives coinciding with the bid proposal. Id. ¶ 16. The Pepco incentive announcement provided an extension to the deadline to submit bid proposals, and during that extension, JayKal updated its turn-key proposal (“Proposal”), which then provided for $1, 153, 788 in LED lighting material. Id. ¶¶ 17-18; Proposal, ECF No. 14-1. G-W Management included JayKal's Proposal pricing in its June 27, 2016 bid response for the Lighting Project. Compl. ¶ 22. On July 12, 2016, G-W Management was informed it was awarded the Lighting Project contract. Id. ¶ 24.

         On July 14, 2016, G-W Management Project Executive Michael Heaton met with JayKal's President, Sanjay Kapuria, at G-W Management's offices. Id. ¶ 27. During the meeting, the parties agreed to additional terms beyond the Proposal, which included:

a. JayKal would complete the paperwork, certification, pre and post-evaluation, and inspection needed to secure a Pepco rebate that would be split evenly between GWMS and JayKal;
b. JayKal would complete all formalities and paperwork required to receive federal tax credits, which would be split evenly between GWMS and JayKal;
c. The terms of JayKal's agreement with GWMS were limited to JayKal supplying the LED lighting material for the WRNMMC Project; and
d. GWMS would send the work order for the Agreement to JayKal after the bond released in 10 days.

Id. Following the meeting, on July 15, 2016, JayKal sent G-W Management an email confirming the “prior day agreement about the Pepco rebate and federal tax credit terms.” Id. ¶ 28. According to JayKal, its June 24, 2016 updated Proposal and the parties' discussion of terms during their July 14, 2016 meeting resulted in a binding and enforceable contract. Id. ¶ 29. In its view, the agreement that was reached was for JayKal to receive $1, 153, 788 for its LED lighting material for the Lighting Project and for the Pepco rebates and federal tax credits to be split equally between JayKal and G-W Management. Id.

         On or about August 3, 2016, G-W Management informed JayKal that it was going to work with a different vendor instead of JayKal. Id. ¶ 33. As a result, JayKal did not receive $1, 153, 788 for supplying the LED lighting materials or its portion of the Pepco rebates or federal tax credits. Id. ¶ 34. JayKal alleges that it had relied on G-W Management's false representations “that JayKal would serve as GWMS's Lighting Project subcontractor and enjoy the agreed-upon benefits, ” which “entic[ed] JayKal to provide its specifications, pricing, experience at WRNMMC, and excellent reputation in the industry to win the Lighting Project bid.” Id. ¶¶ 37-38.

         In an email dated August 4, 2016, G-W Management stated that it decided not work with JayKal because of concerns about JayKal's ability to complete its work within the time required by Walter Reed and concerns over its products complying with the Buy American Act. Id. ¶ 40. Kapuria responded that JayKal's products were compliant with the Buy American Act and that JayKal could begin delivery within two weeks, although it advised against doing so ahead of Pepco approval. Id. ¶ 41. “Kapuria also told Heaton that GWMS used JayKal's proprietary pricing and specification data under the false pretense that if GWMS won the Lighting Project bid it would use JayKal as the Project's LED subcontractor and the parties would split the Pepco rebates and federal tax credits.” Id. ¶ 42. Heaton responded to Kapuria's email and appeared to acknowledge that a contract existed. Id. ¶ 43. He stated that G-W Management used JayKal's pricing in its bid and that G-W Management “would hold JayKal responsible for breaching the Contract by purportedly forcing GWMS to retain a new higher-priced subcontractor for the Lighting Project instead of JayKal.” Id.

         On May 18, 2017, JayKal filed suit against G-W Management alleging breach of contract and fraud. Id. ¶¶ 58-68. JayKal seeks minimum damages of $1, 100, 000 for breach of contract and $75, 000 in compensatory damages and $500, 000 in punitive damages for fraud. Id.

         STANDARD ...

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