Entertainment USA Inc v. Moorehead Communications Inc
Filing
106
OPINION AND ORDER: DENYING 86 MOTION for Summary Judgment by Plaintiff Entertainment USA Inc; GRANTING IN PART AND DENYING IN PART 90 MOTION for Summary Judgment/Moorehead Communications, Inc.s Motion for Partial Summary Judgment by Defendant Mo orehead Communications Inc; GRANTING 97 SEALED MOTION/Motion to File Exhibits in Opposition to Summary Judgment Under Seal by Defendant Moorehead Communications Inc; DENYING AS MOOT 99 RULE 56 MOTION to Strike 94 Response to Motion, by Defendant Moorehead Communications Inc. Signed by Judge Rudy Lozano on 3/20/2015. (lhc)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
ENTERTAINMENT USA, INC.
)
)
)
)
)
)
)
)
)
Plaintiff,
vs.
MOOREHEAD COMMUNICATIONS, INC.
Defendant.
NO. 1:12–CV-116
OPINION AND ORDER
This matter is before the Court on the: (1) Motion for
Summary Judgment filed by Plaintiff Entertainment USA, Inc., on
August
18,
2014
(DE#
86);
(2)
Motion
for
Partial
Summary
Judgment filed by Defendant Moorehead Communications, Inc., on
August
18,
2014
(DE#
90);
(3)
Motion
to
File
Exhibits
in
Opposition to Summary Judgment Under Seal filed by Defendant on
September 15, 2014 (DE# 97); and (4) Motion to Strike filed by
Defendant on September 29, 2014 (DE# 99).
For the reasons set
forth below, Plaintiff’s Motion for Summary Judgment (DE# 86) is
DENIED, Defendant’s Motion for Partial Summary Judgment (DE# 90)
is GRANTED IN PART AND DENIED IN PART, Defendant’s Motion to
File Exhibits in Opposition to Summary Judgment Under Seal (DE#
97) is GRANTED, and Defendant’s Motion to Strike (DE# 99) is
DENIED AS MOOT.
‐1‐
FACTS
For
the
purposes
of
the
parties’
motions
for
summary
judgment, the facts below are material and undisputed:
Plaintiff
Entertainment
USA,
Inc.
is
one
of
several
companies doing business as One Wireless World (“OWW”).
OWW was
a multi-carrier for wireless services including AT&T, Nextel,
Sprint, and T-Mobile, until the spring of 2006, when OWW began
working
exclusively
with
Sprint.
OWW
served
the
central
Pennsylvania area, and had a significant presence in that area
at that time.
Chau Nguyen (“Chau”) was CEO of each of the
companies doing business as OWW.
Chau and his brother, Chinh
Nguyen (“Chinh”), co-owned these companies until Chinh sold his
interest to Chau in January 2007.
Defendant Moorehead Communications, Inc., (“Moorehead”) is
a master agent for Verizon Wireless (“Verizon”), which signs up
individuals and entities to sell Verizon cellular phone services
as a sub-agent or sub-dealer of Moorehead.
Originally located
in Indiana, Moorehead has expanded to numerous states throughout
the
country.
Moorehead
began
expanding
Pennsylvania area in the early 2000s.
into
the
central
By 2005, Moorehead had
signed up two sub-dealers by the names of “Kimmel’s 1-Stop” and
“Quick Cell Phone.”
In
an
effort
to
expand
Moorehead’s
presence
in
central
Pennsylvania, Moorehead entered into an agreement with OWW for
‐2‐
referral fees (“Referral Agreement”) in January 2006.
The two-
page Referral Agreement states in large part:
OWW Referral Fee
The proposed referral fee is designed to compensate
OWW for location handoffs and offset loss incurred
from adding another carrier to their Branded Store’s
existing
lineup.
This
will
also
include
any
locations, other than the current list of Branded
stores that are approved through Verizon and signed up
under Moorehead Communications in the future that are
referred directly to us by the OWW group. 1
Moorehead is proposing the following:
For all handoffs/referrals from OWW, dating
back to Jan. 1, 2006 and any locations that
are approved following that date as a direct
result of an OWW referral, we will pay a
referral bonus in the amount described
below.
Monthly Activations for the referred group
*** 20$ per activation (New Activations Only) to
assist with ramp up period which will remain in effect
6 months from the date this agreement is signed by
both parties.
After which, referral bonus will be
adjusted to the appropriate tier. (See Below)
50-150 per month – 10$ referral bonus per activation2
151-250 per month – 15$ referral bonus per activation
251-350 per month – 20$ referral bonus per activation
351-450 per month – 25$ referral bonus per activation
451-500 per month – 30$ referral bonus per activation
1
The parties do not dispute that the term “Branded” stores refers to OWW
dealer locations that are contractually bound to sell only products or
services approved by OWW, and are identified as OWW locations by signage and
store name. (See DE## 92-4 at 13-14, 92-5 at 5.) These store locations may
also be subject to a lease in favor of OWW. (See DE## 92-4 at 13, 92-5 at 4.)
2
The Referral Agreement contains a single handwritten revision, changing the
lowest tier of activations from “100-150 per month” to “50-150 per month.”
(DE# 95-1 at 2.) The parties do not dispute this revision.
‐3‐
501 per month and higher – 35$ referral bonus per
activation
*There will be a flat fee of 10$ per 2 year upgrade in
addition to the items listed above.
*There is a 180 day chargeback period in which
commissions can be revoked.
If we chargeback any of
the referred locations for a deactivation by one of
their customers, OWW will also be charged back the
referral bonus for that activation.
Any representation required for Verizon in these
locations, will be conducted entirely by Moorehead
Communications and will not be affiliated with the OWW
group in any way. These locations will be approved on
a case by case basis by Verizon and will be designated
a sub agent of Moorehead Communications Inc.
All support, training, merchandising, collateral and
commission payout to these approved locations, will be
supplied by Moorehead Communications, and will not be
filtered through OWW in any way.
List of Referred
(Pending Approval)
locations
as
of
Jan.
9th,
2006
[Table of ten rows, each row identifying a
store name, an individual’s name, and a
street address, among other information.
For example, “John Forsyth-Etown Branded . .
.
John Forsyth . . . 32 N Market Street.”
The table also includes street addresses for
“Quick Cellular” and “Kimmel’s 1 Stop.”]
Street Kicks – Tony Baaklini – Harrisburg, PA
Signage Change –
Moorehead will help with Signage build-out in select
locations, and will help to finance 50% of the buildout. This will however, be approved on a case by case
basis and will require a minimum of activations per
month, per location. This is will be coordinated with
the independent owner/operator and will not be
filtered in any way through OWW corporate.
‐4‐
(DE# 95-1 at 2-3.)
President
of
the
Larry Myers (“Myers”), Moorehead’s Vice
Dealer
Referral Agreement.
Division
at
the
time,
drafted
the
Chau negotiated the Referral Agreement on
behalf of OWW.
In
December
2006,
Moorehead
employee
Erik
Schlesselman
(“Schlesselman”) communicated with OWW employee Jason Annibali
via email regarding a list of specific OWW locations referred to
Moorehead by OWW (“Annibali Email”).
(DE# 88-2 at 26-42.)
At
some point, OWW also provided Schlesselman with a list of dealer
locations that OWW was terminating because those dealers did not
want to sell exclusively for Sprint and OWW (“Term List”).
89-3
at
20-22,
DE#
87
at
48-49.)
Chau
testified
(DE#
that
he
referred individuals to Moorehead during several meetings with
Schlesselman
by
displaying
lists
of
individuals’
names
on
projection screens and computer monitors. (DE# 89-3 at 30.)
He
also testified that he shared OWW’s dealers and their credit
terms with Schlesselman.
(Id.)
Chinh testified that OWW gave
Moorehead access to its vice-presidents, the names of all of its
people, and its business model.
In
2007,
Chau
(DE# 89-4 at 20.)
purchased
Chinh’s
interests
in
the
OWW
companies, and formed a new company named “OWW Consulting, Inc.”
In
mid-2007,
OWW
Consulting
“ChinhCo
Incorporated,”
According
to
the
hired
to
Consulting
perform
Services
‐5‐
one
of
Chinh’s
companies,
consulting
services.
Agreement,
ChinhCo’s
services
were
(1)
personnel
management,
(2)
management
certain sub-agent relationships, and (3) leasing.
11.)
of
(DE# 95-7 at
OWW claims that it paid ChinhCo for consulting services in
2007, but provides no proof of payment.
By
January
terminated.
2008,
OWW’s
relationship
with
Sprint
had
Chau created a new entity, “United Consulting,” and
Chinh operated his own company named “Wireless Advisors, Inc.”
Neither
United
Consulting
nor
Wireless
Advisors
is
an
OWW
company.
In January 2008, the OWW Consulting’s Vice President of
Operations emailed a location to Moorehead, and Chinh provided
Moorehead with a spreadsheet of OWW locations.
In February
2008, Chau proposed a new referral agreement with Moorehead and
United Consulting, which included, among other things, referring
“quality
exclusive
agents”
to
Moorehead.
No
agreement
was
reached.
OWW asserts that it referred locations, individuals, and
entities to Moorehead in the Referral Agreement, the Annibali
email,
the
Moorehead.
Term
List,
and/or
in
communications
with
Some of these individuals include:
1. John Forsyth (“Forsyth”).
and
verbal
his
“Etown”
location
Forsyth was subagent for OWW,
at
32
N.
identified in the Referral Agreement.
Market
Street
is
(DE# 95-1 at 3.)
Forsyth eventually closed his Etown store and moved to a
‐6‐
larger location at 1575 South Market.
than
ten
locations
that
were
Forsyth had more
approved
by
Verizon
and
signed up under Moorehead.
2. Mike Kapp (“Kapp”).
Kapp joined OWW in 2006 or early
2007, after working for T-Mobile for several years.
Kapp
managed OWW-owned stores in western central Pennsylvania
for approximately one year.
Kapp left OWW and pursued a
venture called Mobile Pros with Chinh, which involved
selling for T-Mobile.
Moorehead
during
a
(DE# 89-7 at 9.)
Chinh suggested that Kapp join
meeting
with
Moorehead
employees.
Kapp left Mobile Pros in July 2007 to
begin working with Moorehead as an account manager.
was
promoted
twice,
and
is
now
Vice
President
Kapp
of
Moorehead’s Northeast and South regions of its Dealer
Division.
Multiple regional managers report to Kapp in
this role.
3. Mike Trimble (“Trimble”).
Chau testified that, during a
couple of meetings in 2006 and 2007, he told Schlesselman
that
Moorehead
working
for
Trimble
worked
might
OWW
at
for
want
the
OWW
to
hire
time.
until
Trimble,
(DE#
January
89-3
at
2008.
who
was
24-26.)
He
then
worked for Mobile Pros for over a year before joining
Moorehead.
locations
In
in
H.H.
2010,
Gregg
‐7‐
Moorehead
stores.
began
Trimble
establishing
became
Vice
President of Moorehead’s H.H. Gregg Division, and, as of
2013, oversaw more than 220 locations in the H.H. Gregg
Division in almost 20 states.
4. Jordan Golob (“Golob”).
were
approved
Moorehead.
by
Golob had four locations that
Verizon
and
were
signed
up
under
Because both Forsyth and Chinh claimed to
have referred Golob to Moorehead, Moorehead entered into
an agreement with Forsyth and Chinh in 2008 to split a
referral fee for a one-year period.
Between 2006 and mid-2008, Moorehead paid OWW referral fees
totaling approximately $25,000, and provided monthly accountings
of the referral fees due to OWW under the Referral Agreement.
Moorehead paid OWW referral fees for activations of two-year
service plans at one Golob location in December 2007 and January
2008.
Moorehead never paid OWW for any activations of one-year
cellular service plans, data services, or DISH Network services.
During that time, OWW never complained to Moorehead regarding
the referral payments or accountings.
process
to
monitor
monthly accountings.
or
review
the
OWW maintained no formal
referral
fee
payments
or
Chau testified that OWW representatives
periodically asked agents how they were “doing with Verizon” in
order to verify that Moorehead’s “numbers . . . made sense.”
(DE# 96-5 at 3.)
Moorehead ceased making referral payments to
OWW
because
in
mid-2008
Moorehead’s
‐8‐
Chief
Strategy
Officer
believed that the Referral Agreement had expired and that the
locations qualifying for referral fees no longer existed.
On April 9, 2012, OWW filed a complaint in federal court
alleging that the Referral Agreement entitles OWW to a fee for
every activation and upgrade resulting from every referral it
made to Moorehead, regardless of whether the referral was a
location, entity, or individual.
counts
against
The complaint includes three
Moorehead:
breach
of
contract,
accounting/injunctive relief, and unjust enrichment.
(Comp.,
DE# 1.)
OWW seeks more than $23 million for past referral fees
and
injunction
an
requiring
Moorehead
to
continue
to
pay
referral fees in the future.3
On
August
18,
2014,
OWW
filed
a
motion
judgment, which the parties have fully briefed.
for
summary
(DE# 86.)
On
August 18, 2014, Moorehead filed a motion for partial summary
judgment, which the parties have fully briefed.
(DE# 90.)
On
September 15, 2014, Moorehead filed a motion to file certain
exhibits in opposition to summary judgment under seal.
97.)
OWW filed no response to this motion.
(DE#
On September 29,
2014, Moorehead filed a motion to strike certain testimony from
OWW’s response to Moorehead’s summary judgment motion.
99.)
(DE#
The parties have fully briefed the motion to strike.
3
The $23 million damages sought by OWW includes approximately $12 million in
referral fees for the locations in the Moorehead division managed by Kapp,
and approximately $5 million in referral fees for Moorehead’s H.H. Gregg
locations under Trimble’s management.
‐9‐
SUMMARY JUDGMENT STANDARD
Summary judgment must be granted when “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).
A genuine
issue of material fact exists when “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct.
2505, 91 L. Ed. 2d 202 (1986).
Not every dispute between the
parties makes summary judgment inappropriate; “[o]nly disputes
over facts that might affect the outcome of the suit under the
governing
law
judgment.”
will
Id.
properly
preclude
the
entry
of
summary
In determining whether a genuine dispute of
material fact exists, the Court must construe all facts in the
light
most
reasonable
favorable
to
the
non-moving
inferences
in
that
party’s
party
favor.
Atterholt, 606 F.3d 355, 358 (7th Cir. 2010).
and
draw
See
Ogden
all
v.
A party opposing
a properly supported summary judgment motion may not rely on
allegations in his own pleading, but rather must “marshal and
present the court with the evidence [he] contends will prove
[his] case.”
Goodman v. Nat'l Sec. Agency, Inc., 621 F.3d 651,
654 (7th Cir. 2010).
“[I]nferences relying on mere speculation
or conjecture will not suffice.”
Stephens v. Erickson, 569 F.3d
779, 786 (7th Cir. 2009) (citation omitted).
‐10‐
If the non-moving
party fails to establish the existence of an essential element
on which he bears the burden of proof at trial, summary judgment
is proper.
See Massey v. Johnson, 457 F.3d 711, 716 (7th Cir.
2006).
Where the parties file cross-motions for summary judgment,
the Court must consider each motion, but despite the parties’
agreement that no genuine issue of material fact exists, the
Court can deny all motions if the parties do not establish their
rights to judgment as a matter of law.
See Garbach v. Evans,
196 F. Supp. 2d 746, 747 (N.D. Ind. 2002).
DISCUSSION
Motions for Summary Judgment
The parties move for summary judgment on multiple issues
relating to OWW’s breach of contract claim, as well as OWW’s
unjust
enrichment
claim.
Moorehead
judgment in OWW’s accounting claim.
also
moves
for
summary
Where “neither party raises
a conflict of law issue in a diversity case, the federal court
simply applies the law of the state in which the federal court
sits.”
Citadel Group Ltd. v. Washington Reg’l Med. Ctr., 692
F.3d 580, 587 n.1 (7th Cir. 2012) (quotation omitted).
the parties agree that Indiana law applies.
94 at 5.)
(See DE## 91 at 5,
Thus, the Court will apply Indiana law in deciding
each of these issues.
‐11‐
Here,
Count I:
Breach of Contract
The parties’ arguments regarding OWW’s breach of contract
claim
raise
issues
of
contract
interpretation.
“Summary
judgment is especially appropriate in the context of contract
interpretation because the construction of a written contract is
a question of law.”
TW Gen. Contracting Servs., Inc. v. First
Farmers Bank & Trust, 904 N.E.2d 1285, 1287–88 (Ind. Ct. App.
2009) (citation omitted).
The goal of contract interpretation
is to determine the parties’ intent at the time that they made
the agreement.
Citimortgage, Inc. v. Barabas, 975 N.E.2d 805,
813 (Ind. 2012) (citation omitted).
To do so, the Court begins
with “the plain language of the contract, reading it in context
and, whenever possible, construing it so as to render each word,
phrase, and term meaningful, unambiguous, and harmonious with
the whole.”
Id.
(citation omitted).
Where terms of a contract are clear and unambiguous,
we will apply the plain and ordinary meaning of the
terms and enforce the contract according to its terms.
If necessary, the text of a disputed provision may be
understood by referring to other provisions within the
four corners of the document.
The four corners rule
states that where the language of a contract is
unambiguous, the parties’ intent is to be determined
by reviewing the language contained within the “four
corners” of the contract, and parol or extrinsic
evidence is inadmissible to expand, vary, or explain
the instrument unless there has been a showing of
fraud, mistake, ambiguity, illegality, duress or undue
influence.
Extrinsic evidence cannot be used to
create an ambiguity.
‐12‐
John M. Abbott, LLC v. Lake City Bank, 14 N.E.3d 53, 56 (Ind.
Ct. App. 2014) (citations and quotations omitted).
A document
is not ambiguous merely because parties disagree about a term’s
meaning.
Kelly v. Estate of Johnson, 788 N.E.2d 933, 935 (Ind.
Ct. App. 2003); see also East v. Estate of East, 785 N.E.2d 597,
601 (Ind. Ct. App. 2003) (“The lack of clarity upon a casual
reading of an instrument is not sufficient grounds to determine
whether
the
ambiguous
instrument
merely
is
because
ambiguous.
it
may
is
an
instrument
difficult
be
Nor
to
construe.”
(citations omitted)).
Language is ambiguous only if reasonable people could come
to different conclusions as to its meaning.
Univ. of S. Ind.
Found. v. Baker, 843 N.E.2d 528, 532 (Ind. 2006).
instrument
is
ambiguous,
all
relevant
“[W]here an
extrinsic
evidence
properly be considered in resolving the ambiguity.”
may
Id. at 535.
“If a contract is ambiguous or uncertain and its meaning must be
determined by extrinsic evidence, its construction is a matter
for the fact finder.”
Town of Plainfield v. Paden Eng’g Co.,
Inc., 943 N.E.2d 904, 909 (Ind. Ct. App. 2011).
Regarding
judgment
Referral
OWW’s
motion
breach
asserts
Agreement
of
that
applies
individuals referred by OWW.
contract
the
to
OWW’s
“referrals”
locations,
summary
in
entities
the
and
Moorehead opposes this motion and
‐13‐
term
claim,
moves for partial summary judgment, maintaining that the term
“referrals” in the Referral Agreement is limited to locations
referred directly by OWW, signed up by Moorehead, and approved
by Verizon.
meaning
of
arguing
OWW also moves for summary judgment as to the
the
it
term
means
“activation”
all
in
the
activations,
Referral
regardless
Agreement,
of
provider, type of service, or length of service plan.
takes
a
more
restrictive
view
of
this
term,
service
Moorehead
arguing
that
“activation” includes only cellular phone activations for two
year service contracts with Verizon.
the
duration
of
the
Referral
The parties also differ on
Agreement.
Finally,
Moorehead
moves for summary judgment on the breach of contract claim,
asserting that OWW abandoned the Referral Agreement.
The Court
will address each of these issues in turn.
“Referrals”
OWW
Agreement
anything
contends
that
“includes
that
helps
the
term
locations,
[Moorehead]
“referrals”
in
individuals,
grow
results in activations and upgrades.”
its
the
and
business
Referral
entities,
and
(DE# 87 at 27.)
which
OWW
claims that if a referred individual or entity results in store
locations approved by Verizon, OWW is entitled to referral fees
for all activations and upgrades sold at those stores.
OWW
Agreement
relies
upon
to
insist
the
following
that
“referrals”
‐14‐
sentence
in
means
the
Referral
locations,
individuals or entities:
“For all handoffs/referrals from OWW,
dating back to Jan. 1, 2006 and any locations that are approved
following that date as a direct result of an OWW referral, we
will pay a referral bonus in the amount described below.”
95-1 at 2.)
categories
(DE#
OWW interprets this sentence as having two separate
warranting
payment
of
a
referral
fee:
(1)
all
handoffs/referrals from OWW dating back to January 1, 2006, and
(2) any locations that are approved following that date as a
direct
result
of
an
OWW
referral.
OWW
argues
that
“handoffs/referrals” is not limited, and that, in the second
phrase, “referral” means more than a referred location because
multiple
“locations”
referral.”
would
not
result
from
a
single
“OWW
OWW also cites a definition of “referral” to support
its expansive interpretation of the term: “1: the act, action,
or an instance of referring . . . . ; 2:
Merriam–Webster
Dictionary
one that is referred.”
Online,
available
at
http://www.merriam-webster.com/dictionary/referral (last visited
March 13, 2015).
in
the
Finally, OWW points to one referral identified
Referral
Agreement
that
does
not
include
a
street
address, i.e., “Street Kicks - Tony Baaklini – Harrisburg, PA,”
as
evidence
locations,
that
but
referrals
rather,
are
include
not
limited
referred
to
specific
entities
and
individuals.4
4
OWW also cites to extrinsic evidence, including deposition testimony and
‐15‐
Moorehead concedes that the eleven locations (ten locations
with street addresses, plus “Street Kicks – Tony Baaklini Harrisburg, PA”) identified in the Referral Agreement qualify as
referrals,
and,
to
the
extent
generated
activations
and
payment.
(DE# 93 at 4-5.)
that
upgrades,
they
would
were
and
eligible
be
opened
for
Moorehead also concedes that it
would be obligated to pay referral fees for additional locations
not included in the Referral Agreement if OWW referred those
locations during the term of the Referral Agreement.
5.)
But the concessions stop there.
(Id. at
Moorehead maintains that
OWW’s interpretation of “referrals” is overbroad to the extent
it includes individuals and entities.
when
considered
requires
payment
Moorehead
that
Moorehead.
as
a
only
is
whole,
the
if
directly
OWW
approved
by
Moorehead insists that
Referral
Verizon
Agreement
refers
and
a
clearly
location
signed
up
to
under
The Court agrees with Moorehead.
The Referral Agreement explains its purpose in the first
paragraph:
The proposed referral fee is designed to compensate
OWW for location handoffs and offset loss incurred
from adding another carrier to their Branded Store’s
existing
lineup.
This
will
also
include
any
locations, other than the current list of Branded
Stores that are approved through Verizon and signed up
affidavits, to support its interpretation of the Referral Agreement.
As
explained below, because the Referral Agreement is clear and unambiguous on
this issue, the Court will not consider this extrinsic evidence.
‐16‐
under Moorehead Communications in the future that are
referred directly to us by the OWW group.
(DE# 95-1 at 2 (emphasis added).)
The parties’ intent could not
be clearer - the agreement is “designed” to compensate OWW for
referring
locations,
and
to
offset
OWW’s
loss
incurred
from
adding another carrier to OWW’s Branded Store locations.
The
Referral Agreement goes on to refer to “locations” repeatedly:
“For all handoffs / referrals from OWW, dating
back to Jan. 1, 2006 and any locations that are
approved following that date as a direct result
of an OWW referral, we will pay a referral
bonus;”
“If we chargeback any of the referred locations
for a deactivation by one of their customers, OWW
will also be charged back;”
“Any representation required for Verizon at these
locations will be conducted entirely by Moorehead
Communications and will not be affiliated with
the OWW group;”
“These locations will be approved on a case by
case basis by Verizon;”
“All
support,
training,
merchandising,
collateral,
and
commission
payout
to
these
approved
locations,
will
be
supplied
by
Moorehead;”
.“List of
2006;” and
“Moorehead will help
select locations. .
approved on a case by
a minimum number of
location.”
Referred
locations
of
Jan.
9th,
with Signage build-out in
.
This will however, be
case basis and will require
activations per month, per
‐17‐
as
(Id.
at
2-3
(emphasis
added).)
In
contrast,
the
Referral
Agreement makes no reference to compensating OWW for referring
“individuals” or “entities,” or, as OWW claims in its opening
brief, “anything that helps [Moorehead] grow its business.”
OWW’s
broad
interpretation
of
“referrals”
ignores
the
stated purpose of the Referral Agreement, and takes a single
sentence out of context to support its entitlement to fees for
referrals of individuals and entities.
do.
This the Court cannot
See Citimortgage, 975 N.E.2d at 813 (court must construe
contract so as to render each word, phrase, and term “harmonious
with
the
whole.”).
Reading
“referrals”
as
applying
to
any
individuals or entities referred by OWW does not make sense,
especially in the broader context of the Referral Agreement.
See Pittman v. Max H. Smith Farms, Inc., 506 N.E.2d 1139, 1141
n.3 (Ind. Ct. App. 1987) (“This court will use common sense
justice and the probable intention of the parties to construe a
contract.” (citation omitted)).
While OWW claims that “handoffs
/ referrals” in the phrase, “all handoffs / referrals from OWW
dating
back
to
Jan.
1,
2006,”
is
not
limited,
the
first
paragraph of the Referral Agreement clarifies that the referral
fee is designed to compensate OWW for “location handoffs.”
See
Kelly, 788 N.E.2d at 935 (“the text of a disputed provision may
be understood by referring to other provisions within the four
corners of the document”).
In arguing that “referrals” must
‐18‐
include
cannot
individuals
provide
substance.
and
multiple
entities
because
“locations,”
a
OWW
single
elevates
“referral”
form
over
“[T]he Court is not at liberty to ignore clear and
unambiguous language evincing the intent of the parties.
Thus,
where language is clear and unambiguous, the Court will not
indulge in a hyper-technical, unduly-critical construction of
[a] clause.”
BMD Contractors, Inc. v. Fid. & Deposit Co. of
Md., 828 F. Supp. 2d 978, 986-87 (S.D. Ind. 2011), aff'd, 679
F.3d 643 (7th Cir. 2012).
The
Court
also
disagrees
with
OWW’s
claim
that
the
identification of “Street Kicks – Tony Baaklini – Harrisburg,
PA” supports its interpretation of “referral” as an individual
or entity.
the
title
As Moorehead notes, this referral is listed under
“List
of
Referred
9th,
2006
(DE# 95-1 at 3 (emphasis added).)
(Pending Approval).”
Locations
as
of
Jan.
The
lack of a street address for this referral does not undermine
the
parties’
intent
referred locations.
OWW
would
refer
demonstrating
Moorehead
the
Referral
Agreement
apply
to
The Referral Agreement contemplates that
locations
the
with
that
parties’
additional
to
Moorehead
intent
that
information
“in
the
OWW
would
after
the
future,”
provide
Referral
Agreement was executed.
The Court finds the Referral Agreement to be unambiguous as
to the meaning of the term “referrals,” despite the parties’
‐19‐
dispute over it.
See Kelly, 788 N.E.2d at 935 (a document is
not ambiguous merely because parties disagree about a term’s
meaning).
clear
Looking at the Referral Agreement as whole, it is
that
the
parties
intended
“referrals”
to
mean
only
referred locations, and not referred individuals or entities.
Because the Court is able to determine the parties’ intent by
reviewing the language contained within the four corners of the
Referral
Agreement,
it
will
not
consider
extrinsic
evidence.
See John M. Abbott, 14 N.E.3d at 56 (where contract language is
unambiguous, extrinsic evidence is inadmissible to expand, vary,
or explain the contract).
To the extent OWW seeks referral fees based solely on the
referral of the individuals and entities, rather than locations,
those claims are rejected.
to,
the
Because
claims
based
'referrals'
on
are
These include, but are not limited
the
referral
referred
of
locations,
Kapp
and
and
not
Trimble.5
referred
individuals or entities, OWW is not entitled to referral fees
from
additional
locations
or
relocated
stores
opened
by
an
individual or entity, unless OWW referred those additional or
new locations.
5
OWW also seeks fees for certain referrals as both referred individuals and
referred locations, including Forsyth and former OWW employee Mike Perago
(“Perago”).
(See DE# 94 at 15.)
While OWW is not entitled to fees for
referring Forsyth or Perago as individuals, it may be entitled to fees based
on referrals of their locations.
‐20‐
The
Referral
Agreement
states
that
OWW
will
be
paid
a
referral fee for any locations that are approved by Verizon
after January 1, 2006, as a “direct result” of an OWW referral.
(DE#
95-1
at
2.)
OWW
contends
that
it
made
referrals
to
Moorehead in the Referral Agreement, the Annibali Email, the
Term List, and in verbal communications.
(DE# 87 at 14-21.)
OWW insists that it is entitled to fees for referring specific
OWW
locations
to
Moorehead
in
the
Annibali
Email
because
Moorehead acknowledges that if a location listed in the Annibali
Email was signed up under Moorehead and approved by Verizon,
then OWW would be entitled to referral fees.
96-6
at
evidence
7.)
Moorehead
showing:
(1)
argues
that
the
that
(DE## 94 at 18-19,
OWW
alleged
has
not
proffered
“referred”
locations
identified in the Annibali Email, the Term List, or in verbal
communications were actually operating; (2) for those locations
that
match
Moorehead
dealer
locations,
when
the
Moorehead
locations were opened; or (3) a causal connection between a
referral and the actual opening of a location.
(DE# 95-3 at 5.)
The parties also dispute Chinh’s role in his interactions
with
Moorehead
companies
to
after
Chau.
Chinh
OWW
sold
asserts
his
that
interests
it
hired
in
the
Chinh
OWW
as
a
consultant after he sold his interests in the OWW companies, and
that Chinh’s main focus as a consultant was growing the Referral
Agreement.
As OWW’s consultant, Chinh was allegedly instructed
‐21‐
to make referrals to Moorehead and build the Verizon referral
network.
OWW cites Chau’s deposition testimony, affidavits from
Chinh, and email correspondence between Chinh and Moorehead in
2007-2008, to support these allegations.
89-2 at 13, 89-3 at 12-13, 96-9.)
assertions,
and
claims
that
Chinh
(See, e.g., DE## 89-1,
Moorehead disputes these
pursued
after he sold his interest in OWW to Chau.
his
own
interests
Among other things,
Moorehead points to 2007 email correspondence between Chinh and
Moorehead in which Moorehead advises Chinh that he must distance
himself from OWW.
show
that
you
(See, e.g., DE## 95-9 at 3 (“you will have to
have
no
stake
in
OWW”),
95-10
at
2
(Chinh’s
corporate offices “can’t be at the same location as OWW”).)
A
genuine issue of material fact exists as to whether Chinh was
acting on OWW’s behalf in his interactions with Moorehead after
he sold his interests in the OWW companies.
The Court finds that, aside from the locations conceded by
Moorehead, genuine issues of material fact exist regarding which
locations
entitle
OWW
to
referral
fees
under
the
Referral
Agreement.6
Finally, OWW argues that it is entitled to a referral fee
if it referred a location to Moorehead, and Moorehead “plugged”
6
Moorehead concedes that five of the eleven referred locations identified in
the Referral Agreement were signed up by Moorehead or had sufficient
activations or upgrades to warrant payment. (DE# 93 at 4-5.) Moorehead also
admits its obligation to pay referral fees for one OWW location not listed in
the Referral Agreement, specifically, 1910 Fruitville Pike in Lancaster,
operated from April through October 2006. (Id. at 5.)
‐22‐
a new agent into that location.
As Moorehead points out, OWW
has identified no locations that satisfy this scenario.
claims
that
noting
it
that
circumstances
is
entitled
Moorehead
in
the
to
has
a
declaration
compensated
past.
(See
DE#
of
at
this
right,
under
OWW
103
OWW
these
6
(asserting
Moorehead paid OWW referral fees after a new agent “took over
the Furnace Hill Road location”).)
Neither party cites any case
law on this issue.
Indiana courts “allow the pursuit of declaratory judgment
if the judgment would effectively solve the problem involved and
no traditional remedy would be as effective or efficient in
resolving the dispute.”
No.
Dometic Corp. v. Liberty Mut. Ins. Co.,
1:06-CV-1260-DFH-TAB,
2008
WL
4443234,
at
*2
(S.D.
Ind.
Sept. 26, 2008) (citing Ferrell v. Dunescape Beach Club Condo.
Phase I, Inc., 751 N.E.2d 702, 707-08 (Ind. Ct. App. 2001)).
The
determinative
judgment
will
economical
factor
result
in
determination
is
whether
a
just
of
the
and
issuing
more
entire
a
declaratory
expeditious
controversy.
and
Id.
Revisiting the issue of referral fees when a new agent takes
over
a
referred
resources.
location
would
waste
everyone’s
time
and
Therefore, the Court finds that OWW is entitled to
referral fees for activations and upgrades at locations directly
referred by OWW that are approved through Verizon and signed up
‐23‐
under Moorehead, even if a new agent takes over that location,
for the duration of the Referral Agreement.7
“Activation”
Having
determined
that,
for
purposes
of
the
Referral
Agreement, “referrals” mean only referred locations, the Court
turns to the issue of what constitutes an “activation” for which
a referral fee is due.
issue,
arguing
contain
that
language
OWW moves for summary judgment on this
because
limiting
the
Referral
the
term
Agreement
does
not
OWW
is
“activation,”
“entitled to a fee on all activations resulting from a referral
without
limitation
including,
but
activations,
2-year
activations,
activations,
voice
activations,
activations, and reactivations.”
not
no
limited
term
data
to
[or
1-year
“prepaid”]
activations,
DISH
(DE# 87 at 26.)
Activations with Different Service Providers
The
entitled
Court
to
will
referral
first
fees
address
for
OWW’s
activations
claim
with
that
DISH
it
is
Network
because the term “activation” is not limited in the Referral
Agreement.
Moorehead responds that the Referral Agreement has
nothing to do with DISH Network.
centers
around
approval
by
Rather, the Referral Agreement
Verizon,
and
thus,
the
parties
intended “activation” to include only activations with Verizon,
7
As explained in more detail below, the meaning of the term “activation” and
the duration of the Referral Agreement are genuine issues of material fact
precluding summary judgment.
‐24‐
not DISH Network.
Looking at the four corners of the Referral
Agreement, the Court agrees with Moorehead.
The
Referral
Agreement
requires
Verizon’s
approval
of
referred locations in order for OWW to be eligible to receive a
referral fee:
The proposed referral fee is designated to compensate
OWW for location handoffs and offset loss incurred
from adding another carrier to their Branded Store’s
existing
lineup.
This
will
also
include
any
locations, other than the current list of Branded
stores that are approved through Verizon and signed up
under Moorehead Communications in the future that are
referred directly to us by the OWW group.
(DE#
95-1
at
2
(emphasis
added).)
The
section
entitled,
“Monthly Activations for the referred group,” provides tiers of
referral fees “per activation.”
(Id.)
The Referral Agreement
goes on to state that “[a]ny representation required for Verizon
in these locations, will be conducted entirely by Moorehead. . .
.
These locations will be approved on a case by case basis by
Verizon. . . .”
does
not
Verizon.
the
(Id. (emphasis added).)
mention
DISH
Network,
or
The Referral Agreement
any
carrier
other
than
Reading the contract as a whole, the Court finds that
parties
intended
the
Referral
Agreement
activations with Verizon, and only Verizon.
to
address
See Citimortgage,
Inc., 975 N.E.2d at 813 (goal of contract interpretation is to
determine parties’ intent when they made agreement).
‐25‐
The Court
therefore
rejects
OWW’s
claim
that
“activations”
includes
activations with DISH Network.
Types of Activations
The
“referral
Referral
bonus
Agreement
per
states
activation,”
that
depending
activations per month.
(DE# 95-1 at 2.)
term
qualify
“activation,”
length
of
service
“activation”
is
or
plan.
not
it
OWW
limited
by
the
will
on
receive
the
number
a
of
It does not define the
any
asserts
in
OWW
type
that
of
service
because
Referral
the
or
term
Agreement,
it
encompasses all activations, regardless of the type of service
(i.e., cellular and data), or length of service plan (i.e., oneyear service plans, two-year service plans, and prepaid).
Under
OWW’s interpretation, a single phone with cellular service and
data services would entitle OWW to referral fees for multiple
activations.
Moorehead argues that “activation” means only a two-year
post-paid cellular phone activation, and does not include data
activations,
phone plans.
or
activations
for
prepaid
or
one-year
cellular
Moorehead asserts that any ambiguity regarding the
term “activation” should be resolved by reference to wireless
industry practice.
Indiana courts have held that,
a contract made with reference to a particular
business is presumed to have been made with reference
to the known usage or general course of such business.
Thus, in the absence of an agreement to the contrary,
usage may reasonably be supposed to have entered into
‐26‐
and formed part of their contracts . . . in relation
to such business, and the parties’ contracts are to be
interpreted consistent with such usage.
Clark Adver. Agency, Inc. v. Avco Broad. Corp., 383 N.E.2d 353,
356
(Ind.
Howell,
Ct.
95
App.
N.E.
1978)
279,
280
(citations
(Ind.
omitted);
Ct.
App.
see
1911)
Todd
v.
(“Peculiar
expressions or terms are to be given the meaning which they have
acquired
in
such
business
by
common
usage,
unless,
by
the
express terms of the contract, such usage is excluded, or is
inconsistent
contract
has
with
“a
the
contract.”).
peculiar
trade
Where
a
meaning,
admissible to explain such trade meaning.”
word
parol
used
in
evidence
a
is
Southwestern Milling
Co. v. Niemeier, 131 N.E. 831, 831 (Ind. Ct. App. 1921); see
generally Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831,
837 (2015) (noting that sometimes, “when a written instrument
uses technical words or phrases not commonly understood, those
words may give rise to a factual dispute.
If so, extrinsic
evidence may help to establish a usage of trade or locality.”)
(quotations
omitted).
“[I]f
language
of
the
contract
is
ambiguous, or if technical words, local phrases or terms of art
are used and evidence is properly admitted showing meaning, the
question becomes one of fact.”
Ecorp, Inc. v. Rooksby, 746
N.E.2d 128, 131 (Ind. Ct. App. 2001) (quotation omitted); see
Walker v. Trailer Transit Inc., 1 F. Supp. 3d 879, 884 (S.D.
Ind.
2014)
(finding
question
‐27‐
of
material
fact
requiring
extrinsic
evidence
services”
and
as
to
“special
what
charges
administrative
constitute
costs”
“special
in
trucking
industry).
Here, Moorehead proffers evidence in the form of deposition
testimony of its Rule 30(b)(6) witness and another Moorehead
employee that “activation” means a two-year post-paid activation
in the wireless industry; that nobody in the wireless industry
considers data service or data add-ons to be “activations;” that
neither Verizon nor Moorehead considers prepaid service to be an
“activation;”
Verizon’s
and
Key
“activation”
that
prepaid
Performance
includes
data
service
Indicators.
service,
is
not
included
Regarding
Moorehead
in
whether
points
to
the
testimony of Forsyth and Golob indicating that activations and
upgrades were based on “total phones,” rather than the type of
service activated.
OWW responds by discounting the deposition testimony cited
by Moorehead as taken out of context.
deposition
testimony
of
Moorehead’s
OWW also relies on other
Rule
30(b)(6)
witness
to
assert that the Referral Agreement doesn’t distinguish between
one-year and two-year activations, that OWW is entitled to be
paid
on
one-year
activations
and
reactivations,
and
that
Moorehead does not have other referral agreements and is unaware
of other referral agreements in the industry.
OWW also cites
evidence that sub-dealers were paid commissions for prepaids and
‐28‐
one-year
service
activation fees.
contracts
and
were
allowed
to
collect
OWW does not claim that “activation” has no
particular meaning in the wireless industry, but rather, asserts
that
“[v]ague
industry
practice
that
does
not
exist
relevant to what the parties in this case intended.”
is
not
(DE# 103
at 9.)8
Construed in the light most favorable to Moorehead as the
non-moving party, the Court finds that there is a genuine issue
of material fact as to the meaning of the term “activation” in
the Referral Agreement.
See Ecorp, Inc., 746 N.E.2d at 132
(reversing summary judgment where, “[g]iven the technical nature
of the term used, reasonable people could arrive at different
conclusions about the meaning of ‘recapitalization’ in Rooksby's
employment contract”).
The Court therefore DENIES OWW’s motion
for summary judgment on this issue.
8
OWW also asserts that any ambiguity regarding the term “activation” should be
construed against Moorehead as the drafter of the Agreement. In Indiana, any
ambiguities in a contract are to be construed against the drafter.
See
Heartland Crossing Found., Inc. v. Dotlich, 976 N.E.2d 760, 763 (Ind. Ct.
App. 2012).
However, the Court questions OWW’s premise that the rule of
construing ambiguities against the drafter gives it a license to bypass
relevant, extrinsic evidence in favor of declaring judgment for the nondrafter. As the case cited by OWW for this proposition states, “the language
creates an ambiguity, construed against the drafter, for a fact-finder to
resolve.” Warrick Cnty. ex rel. Conner v. Hill, 973 N.E.2d 1138, 1144 (Ind.
Ct. App. 2012) (citation omitted, emphasis added).
Similarly, here, the
Court finds the meaning of “activation” to be an issue for the fact-finder.
‐29‐
Duration of Referral Agreement
The parties agree that the Referral Agreement contains no
express termination date, and no statement that it will remain
in force indefinitely.
begs
the
Agreement?
Agreement
future
question,
OWW
what
asks
remains
payments
(See DE# 87 at 24, DE# 93 at 10.)
a
is
the
Court
due
duration
to
find
agreement
going
valid
are
the
for
referrals
by
This
of
the
Referral
that
the
Referral
forward,
OWW
and
that
indefinitely.
Moorehead argues that, because the Referral Agreement has no
termination date, it is terminable at will by either party.
Indiana courts have held that “a contract containing no
specific termination date is terminable at will and that where
the parties fix no time for the performance or discharge of
obligations created by the contract they are assumed to have had
in mind a reasonable time.”
City of E. Chicago, Ind. v. E.
Chicago Second Century, Inc., 908 N.E.2d 611, 623 (Ind. 2009).
“What constitutes a reasonable time depends upon the subject
matter of the contract, the circumstances attending performance
of
the
contract,
contract.”
Int'l
and
the
Union,
situation
United
of
Auto.,
the
parties
Aerospace
to
&
the
Agr.
Implement Workers of Am., U.A.W. v. Randall Div. of Textron,
Inc., 5 F.3d 224, 230 (7th Cir. 1993) (quoting Fraternal Order
of Police Lodge No. 52 v. City of Elkhart, 551 N.E.2d 469, 472
(Ind. Ct. App. 1990)).
Determining the point at which a party’s
‐30‐
contractual obligation terminated is a triable issue of fact
that precludes summary judgment.
Citing
no
Indiana
law,
See id.
OWW
asserts
that
the
Referral
Agreement remains in effect so long as a store location is open
and selling activations and upgrades.
(See DE# 103 at 6.)
In
support of its position, OWW cites Warner-Lambert Pharmaceutical
Co. v. John J. Reynolds, Inc., 178 F. Supp. 655 (S.D.N.Y. 1959),
and Lura v. Multaplex, Inc., 129 Cal. App. 3d 410 (Cal. App. Ct.
1982).
(Id. at 7-8.)
In Warner-Lambert, the agreements at
issue provided that the plaintiff would pay the defendants a
monthly royalty fee for every gross of Listerine sold.
Supp. at 658.
The agreements did not provide for a length of
time during which they would continue in effect.
The
plaintiff
178 F.
claimed
that
because
the
Id. at 660.
agreements
were
indefinite as to duration, its obligation to make payments to
the defendants under the contract was terminated by the public
disclosure
of
the
Listerine
formula.
The
New
York
federal
district court found that the agreements were not infinite in
duration.
The court also found that, pursuant to the language
of the agreements, the plaintiff’s obligation to pay continued
so long as it manufactured and sold Listerine; “the plaintiff
has the right to terminate its obligation to pay whenever in
good
faith
Listerine.”
it
desires
to
cease
Id. at 662-63.
‐31‐
the
manufacture
and
sale
of
In
Lura,
Multaplex
agreed
to
pay
Lura
commissions
for
assisting Multaplex in obtaining various business accounts, and
the terms of the agreement were set out in a memorandum.
Cal. App. 3d at 412.
an
understanding
as
129
The parties neither discussed nor reached
to
the
duration
of
the
agreement.
Id.
Several years later, Multaplex notified Lura of its intent to
terminate
his
commission
payments,
indicating
that
reasonable compensation had been paid for his services.
that
time,
Multaplex
continued
accounts solicited by Lura.
rejected
Multaplex’s
to
Id.
argument
conduct
business
full
Id.
with
and
At
the
The California appellate court
that
because
the
contract
was
silent as to duration, it extended only for a reasonable time.
Id. at 413-14 (citing Warner-Lambert, 178 F. Supp. 665).
court
explained
that
“[s]ince
appellant
is
contingent
upon
secured,
the
agreement
is
respondent’s
its
of
a
sales
to
limited
respondent stops selling to those accounts.”
The
obligation
the
accounts
duration
–
to
he
until
Id.
Neither Warner-Lambert nor Lura was decided under Indiana
law, and no Indiana court has cited either opinion.
While not
directly on point, at least one case indicates that Indiana
courts would not be inclined to follow Warner-Lambert or Lura.
In Marksill Specialties, Inc. v. Barger, 428 N.E.2d 65 (Ind. Ct.
App. 1981), the parties disputed the duration of an agreement to
pay commissions.
The agreement did not include a termination
‐32‐
date, but stated that “[t]his agreement is valid and payment
shall
continue
company
as
listed.”
long
Id.
as
at
______
67.
sells
any
Marksill
product
any
that
contended
to
the
agreement was terminable at will because it contains no specific
termination date.
The Indiana Court of Appeals found that the
agreement did not fall within the category of contracts having
no
termination
date
because,
“[a]lthough
a
date
is
not
specified, the representative agreement does contain a provision
that
sets
out
obligations.”
a
condition
which
would
terminate
Id. at 69 (emphasis added).
Marksill’s
The condition was
the discontinuance of the sale of certain products to certain
companies.
“The
representative
agreement,
containing
a
provision for termination, is terminable in accordance with its
terms and not at the will of either party.”
added).
Id. (emphasis
The Indiana court relied on the fact that the contract
contained a provision setting a condition for termination to
find that it was not terminable at will.
See id.; see also
Made2Manage Sys., Inc. v. ADS Info. Sys., Inc., No. 1:02–cv–
1405–LJM–WTL, 2003 WL 21508235, at *4 (S.D. Ind. June 24, 2003)
(“when a contract contains specific provisions that provide for
termination, the contract is terminable only in accordance with
those provisions and not at the will of either party, even if
there is no specific termination date”) (citing Marksill, 428
N.E.2d at 69).
‐33‐
Here, the Referral Agreement does not contain a specific
termination date, or any provision setting out a condition that
would
terminate
Moorehead’s
obligations.
Therefore,
in
accordance with Indiana law, the Court finds that the Referral
Agreement is terminable at will.
N.E.2d at 623.
See City of E. Chicago, 908
While Moorehead and OWW have proffered evidence
of the circumstances attending the performance of the Referral
Agreement,
determining
the
point
at
which
their
contractual
obligations terminated is a triable issue of fact.
Therefore,
OWW’s motion for summary judgment as to the duration of the
Referral Agreement is DENIED.
See Randall Div. of Textron, 5
F.3d at 230.
Abandonment of the Referral Agreement
Moorehead
breach
of
moves
contract
for
partial
claim,
summary
arguing
that
judgment
OWW
on
OWW’s
abandoned
the
Referral Agreement.
The abandonment of a contract is a matter of intention
to be ascertained from the facts and circumstances
surrounding the transaction from which the abandonment
is claimed to have resulted.
Abandonment may be
inferred from the conduct of the parties, and a
contract will be treated as abandoned when one party
acts
inconsistently
with
the
existence
of
the
contract, and the other party acquiesces.
Estate of Kappel v. Kappel, 979 N.E.2d 642, 643 (Ind. Ct. App.
2012) (citations and quotations omitted).
Moorehead relies upon
three facts to show that OWW intended to abandon the Referral
‐34‐
Agreement.
First, OWW never reviewed or objected to the monthly
accountings provided by Moorehead.
Second, Chau attempted to
negotiate a new referral agreement with Moorehead in 2008 on
behalf of Chau’s new company, United Consulting.
Third, during
discovery, Chau altered a 2008 email to Moorehead by deleting
references to United Consulting and Wireless Advisors (companies
operated by Chau and Chinh, respectively).
Moorehead asserts
that this alteration during discovery concealed that OWW had
abandoned the Referral Agreement.
OWW responds that it never intended to abandon the Referral
Agreement,
summary
and
argues
judgment.
that
multiple
Regarding
issues
Moorehead’s
of
fact
preclude
accountings,
Chau
testified that OWW representatives would verify that Moorehead’s
“numbers . . . made sense” by periodically asking agents how
they were “doing with Verizon.”
that
it
continued
Referral
Agreement,
referred
locations
to
make
citing
in
(DE# 96-5 at 3.)
referrals
emails
January
2008.
and
with
OWW asserts
perform
Moorehead
OWW
under
the
regarding
acknowledges
that
altering the email between OWW and Moorehead was improper, but
insists it did not reflect OWW’s intent to abandon the Referral
Agreement.
Chau testified that this email communicated where
Moorehead was to send payments due to OWW.
5.)
(See DE# 96-11 at 4-
OWW argues that there was nothing improper about OWW asking
Moorehead to direct payments due to OWW to other parties.
‐35‐
“Abandonment of a contract is a mixed question of law and
fact; that is, what constitutes abandonment is a question of law
and whether there has been abandonment is a question of fact.”
Kappel, 979 N.E.2d at 652 (citation omitted).
Taken in the
light most favorable to OWW as the nonmoving party, the Court
finds that there are genuine issues of material fact regarding
whether OWW abandoned the Referral Agreement.
Therefore, the
Court DENIES Moorehead’s motion for partial summary judgment on
the issue of abandonment.9
Damages
OWW asks the Court to award it damages in the amount of
more than $23 million.
For the reasons set forth above, the
Court denies OWW’s motion for summary judgment on its breach of
contract claim, and finds that genuine issues of material fact
preclude
types
of
summary
service
judgment
and
on
certain
service
plans
issues,
including
constitute
which
“activations”
under the Referral Agreement, and the duration of the Referral
9
OWW also argues that Moorehead waived its abandonment defense by failing to
plead it as an affirmative defense in its Answer. See Am. Family Ins. Grp.
v. Ford, 293 N.E.2d 524, 525 (Ind. Ct. App. 1973) (“cancellation . . .
defense is one of confession and avoidance, an affirmative defense which must
be specially pleaded”). OWW maintains that it is too late for Moorehead to
argue a defense on summary judgment that was never raised in a pleading.
Because the Court finds that genuine issues of material fact preclude summary
judgment on the abandonment issue, it need not address this waiver argument
directly.
However, the Court notes that “[t]he failure to plead an
affirmative defense in the answer works a forfeiture only if the plaintiff is
harmed by the defendant’s delay in asserting it.” Garofalo v. Vill. of Hazel
Crest, 754 F.3d 428, 436 (7th Cir. 2014) (citation omitted).
Courts have
found no waiver of an affirmative defense and no abuse of discretion in
allowing the argument to be raised at the summary judgment stage where
plaintiffs had the opportunity to challenge the argument in their summary
judgment briefs. See, e.g., id. at 436-37.
‐36‐
Agreement.
The amount of damages to which OWW is entitled (if
any) cannot be determined until these issues are resolved by a
trier of fact.
Therefore, OWW’s motion for summary judgment on
the issue of damages is DENIED.
Count II:
Accounting Claim
Count II of OWW’s Verified Complaint seeks an “accounting
of
all
activations
handoff/referral
upgrades
for
from
any
and
upgrades
OWW,”
locations
in
including
subsequently
connection
“all
with
any
activations
and
opened
in
connection
with the handoffs/referrals from OWW” from January 2006 to the
present.
(Comp.
¶¶
27-29.)
“Generally,
an
action
for
an
accounting is a proceeding in equity and is addressed to the
sound discretion of the trial court.”
Lily, Inc. v. Silco, LLC,
997 N.E.2d 1055, 1076 (Ind. Ct. App. 2013) (citations omitted).
An action for an accounting has the purpose of adjusting the
account of the litigants and of rendering complete justice in a
single action.
Id.
“A court may refuse to award an equitable
accounting to a party who has an adequate remedy at law.”
Grant
v. Van Natta, No. 1:10–cv–01220–MJD–LJM, 2013 WL 466212, at *10
(S.D. Ind. Feb. 7, 2013) (quoting First Commodity Traders, Inc.
v. Heinold Commodities, Inc., 766 F.2d 1007, 1011 (7th Cir.
1985)).
‐37‐
Moorehead
seeks
dismissal
of
OWW’s
accounting
arguing that OWW has an equitable remedy at law:
any alleged breach of the Referral Agreement.
claim,
damages for
Moorehead also
asserts that the accounting claim should be dismissed because
Moorehead
has
already
produced
voluminous
documents
showing
phone activation and upgrade data for various locations.
OWW
contends that Moorehead’s argument fails if the sums due to OWW
exceed
the
scope
of
the
contract,
and
maintains
that
it
is
entitled to an accounting “depicting all activations/upgrades,
etc. . . . to support past, present, and future payments due to
OWW.”
(DE# 94 at 25.)
Presumably,
the
documents
produced
by
Moorehead
do
not
account for activations and upgrades sold since those documents
were produced.
As explained above, a genuine issue of material
fact exists regarding the duration of the Referral Agreement.
Until the finder of fact has determined the Referral Agreement’s
duration, it is premature to decide the accounting claim.
Under
these
is
circumstances,
the
Court
concludes
that
there
question of fact with respect to the account claim.
Inc., 997 N.E.2d at 1076.
See Lily,
Thus, Moorehead’s motion for partial
summary judgment on Count II is DENIED.
‐38‐
a
Count III:
Unjust Enrichment Claim
OWW and Moorehead submit cross-motions for summary judgment
on OWW’s unjust enrichment claim.
extent
it
obtains
complete
OWW acknowledges that, to the
relief
on
Count
I,
its
unjust
enrichment claim is moot, but argues that if OWW is granted
“something less than full relief on Count I, then OWW seeks the
balance of its damages under its unjust enrichment claim.”
87 at 34.)
(DE#
OWW’s requested “full relief” is judgment in the
amount of over $23 million, and a declaration that Moorehead
remains obligated to pay OWW for all ongoing activations and
upgrades following the dates of the documents produced and into
the future, for all of the referrals that still operate and
generate activations of any kind, and upgrades.
(See id. at
36.)
Moorehead
maintains
that
OWW’s
unjust
enrichment
claim
should be dismissed because recovery for unjust enrichment is
unavailable
“where
there
is
an
express
contract
between
the
parties governing the same subject matter raised in the claim.”
Kusper v. Poll Farms, Inc., 649 F. Supp. 2d 917, 922 (N.D. Ind.
2009) (citation omitted).
Unjust enrichment requires a party who has been unjustly
enriched
at
another’s
aggrieved party.
expense
to
make
restitution
the
Zoeller v. E. Chicago Second Century, Inc.,
904 N.E.2d 213, 220 (Ind. 2009) (citation omitted).
‐39‐
to
“When the
rights
of
parties
are
controlled
by
an
express
contract,
recovery cannot be based on a theory implied in law.”
221 (quotation omitted).
no
contract
unenforceable.
with
Id. at
Here, OWW does not assert that it had
Moorehead
or
that
the
contract
was
Rather, the parties concede to the existence and
enforceability of the Referral Agreement, but differ on their
interpretations of the contract.
The existence of an express contract precludes an unjust
enrichment claim because: (1) the contract provides a remedy at
law; and (2) a plaintiff cannot pursue an equitable remedy when
there is a remedy at law.
See Coppolillo v. Cort, 947 N.E.2d
994, 998 (Ind. Ct. App. 2011).
Courts “do not sit to improve
the bargains that parties freely negotiate.
express
terms
in
a
valid
contract
The existence of
thus
precludes
the
substitution of implied terms regarding matters covered by the
contract’s
express
terms.
In
short,
there
can
be
no
constructive contract where there is an express contract between
the parties in reference to the same subject matter.”
Brown v.
Mid-Am. Waste Sys., Inc., 924 F. Supp. 92, 94 (S.D. Ind. 1996)
(internal quotations and citations omitted).
In Coppolillo v. Cort, the Indiana Court of Appeals held
that “when an express contract does not fully address a subject,
a court of equity may impose a remedy to further the ends of
justice.”
947 N.E.2d at 998; see also Kohl's Ind. L.P. v.
‐40‐
Owens, 979 N.E.2d 159, 168 (Ind. Ct. App. 2012).
relies
heavily
on
Coppolillo
to
argue
that
it
While OWW
may
recover
damages for both breach of contract and unjust enrichment, the
case
is
distinguishable.
In
Coppolillo,
the
parties
had
a
written contract to pay a lump sum payment, as well as an oral
agreement for additional monthly payments.
947 N.E.2d at 998.
The court determined that because the parties did not have an
agreement covering all payment arrangements, the plaintiff could
pursue an unjust enrichment claim for amounts not covered by the
written contract.
Here,
OWW
Id. at 998-99.
fails
to
show
that
a
subject matter at issue does not exist.
contract
covering
the
OWW maintains that if
“OWW obtains complete relief on Count I [its breach of contract
claim], the unjust enrichment claim is moot,” but if “this Court
grants something less than full relief on Count I, then OWW
seeks the balance of its damages under its unjust enrichment
claim.”
(DE# 87 at 34.)
Referral
Agreement
In doing so, OWW admits that the
addresses
unjust enrichment claim.
the
same
subject
matter
as
its
OWW “may not seek unjust enrichment
just in case the contract does not afford it the relief it
seeks; a valid contract still governs the parties’ rights with
respect to the subject matter at issue.”
CoMentis, Inc. v.
Purdue Research Found., 765 F. Supp. 2d 1092, 1103 (N.D. Ind.
2011)
(dismissing
unjust
enrichment
‐41‐
claim
under
Indiana
law)
(emphasis in original).
Because the Referral Agreement controls
the parties’ dispute over referral fees, OWW’s unjust enrichment
claim
does
not
Coppolillo.
Coppolillo
fall
See
within
Walker,
exception
did
1
the
F.
not
exception
Supp.
apply
3d
where
at
set
forth
885
agreement
in
(finding
addressed
calculation of plaintiffs’ compensation, thereby providing an
adequate remedy at law); Pain Ctr. of SE Ind., LLC v. Origin
Healthcare
6750042,
at
Solutions
*6
(S.D.
LLC,
No.
Ind.
Dec.
1:13-CV-00133-RLY,
1,
2014)
2014
(dismissing
WL
unjust
enrichment claim where alleged conduct fell within the scope of
the parties’ agreements).
For these reasons, the Court DENIES
OWW’s motion for summary judgment and GRANTS Moorehead’s motion
for
partial
claim.
summary
judgment
as
to
OWW’s
unjust
enrichment
Count III of OWW’s complaint is hereby DISMISSED.10
Moorehead’s Motion to File Exhibits in Opposition to Summary
Judgment under Seal
Moorehead
seeks
approval
to
file
certain
pages
of
its
response brief to OWW’s summary judgment motion, as well as
unredacted designations to its response brief, under seal.
OWW
does not oppose this motion.
10
Because the Court rules in Moorehead’s favor, it need not address
Moorehead’s alternative argument that OWW provides no evidence of any benefit
actually conferred to Moorehead. See Reed v. Reid, 980 N.E.2d 277, 296 (Ind.
2012) (to prevail on an unjust enrichment claim, a plaintiff must show it
rendered a measurable benefit to the defendant at the defendant’s express or
implied request) (citation omitted).
‐42‐
Northern District of Indiana Local Rule 5–3 provides that
“[t]he
clerk
may
not
maintain
a
filing
under
seal
unless
authorized to do so by statute, court rule, or court order.”
N.D. Ind. L.R. 5–3(a) (2014).
There is no statute, rule, or
order providing for sealed filings in this case.
The Seventh
Circuit has held that, although there is a general presumption
that
judicial
overridden”
by
litigants
.
.
records
“the
.
if
are
public,
property
the
and
latter
that
presumption
“can
be
interests
of
the
predominate
in
the
privacy
interests
particular case” such that “there is good cause for sealing a
part or the whole of the record.”
Citizens First Nat'l Bank of
Princeton v. Cincinnati Ins. Co., 178 F.3d 943, 945 (7th Cir.
1999).
Notwithstanding
an
agreement
of
parties
to
seal
documents, the decision of whether good cause exists to file a
document under seal rests with the Court.
See id.
Good cause
may exist if the documents are sealed in order to maintain the
confidentiality of trade secrets, privileged information (such
as information covered by the attorney-client privilege), and
non-public
financial
and
business
information.
See
Baxter
Int'l, Inc. v. Abbott Lab., 297 F.3d 544, 546 (7th Cir. 2002);
Metavante Corp. v. Emigrant Sav. Bank, No. 05–CV01221, 2008 WL
4722336,
at
*9
(E.D.
Wis.
Oct.
24,
2008).
In
this
case,
Moorehead has good cause for filing under seal a settlement
agreement between OWW and Sprint Solutions, Inc., stock purchase
‐43‐
agreements containing sale prices for OWW and related companies,
and OWW Consulting’s 2007 tax return, as these documents contain
non-public financial and business information.
v.
Alkar-Rapidpak-MP
Equip.,
Inc.,
No.
See Formax Inc.
11-C-0298,
2013
WL
2452703, at *1 (E.D. Wis. June 5, 2013) (“documents containing
sensitive
pricing
information,
sales
figures,
sales
dollar
amounts, profit and loss data, and other financial records not
normally made known to the public may be properly filed under
seal”)
(citation
omitted);
Reassure
Am.
Life
Ins.
Co.
v.
Isermann, No. 07-CV-829, 2008 WL 168666, at *1-*2 (E.D. Wis.
Jan. 17, 2008) (granting motion to file under seal materials
containing confidential information including financial and tax
return information); Kay Beer Distrib., Inc. v. Energy Brands,
Inc., No. 07-C-1068, 2009 WL 3790202, at *1 (E.D. Wis. Nov. 12,
2009)
(granting
agreements).
request
to
seal
confidential
settlement
Therefore, Moorehead’s Motion to File Exhibits in
Opposition to Summary Judgment Under Seal is GRANTED.11
11
The Court notes that OWW filed documents under seal without moving for
approval to do so. (See DE## 87, 88, 96.) This is improper. See Citizens
First, 178 F.3d at 945 (“The determination of good cause cannot be eluded by
allowing the parties to seal whatever they want.”); (DE# 23-1, Protective
Order, ¶ 11 (“Entire pleadings must not be filed under seal. . . . Except as
noted above, no Party shall file under seal . . . without previously-obtained
court approval.”).
The documents OWW filed at Docket Entry Numbers 87, 88
and 96 shall remain under seal for thirty (30) days. Thereafter, the Court
will direct the Clerk of the Court to place these documents in the public
record, unless OWW makes a showing in accordance with Seventh Circuit law
that the documents should remain sealed.
‐44‐
Moorehead’s Motion to Strike
Moorehead
moves
to
strike
any
testimony
that
OWW
is
currently “in the wireless industry,” asserting that OWW is no
longer in this industry.
(DE# 99.)
OWW responds by arguing,
among other things, that “[w]hether OWW is actively engaged in
the wireless industry is irrelevant.”
(DE# 104 at 1.)
The
Court agrees, and did not consider statements regarding whether
OWW
is
currently
in
the
wireless
parties’ summary judgment motions.
industry
in
deciding
the
Thus, Moorehead’s motion to
strike is DENIED AS MOOT.
CONCLUSION
For the reasons set forth above, OWW’s Motion for Summary
Judgment
(DE#
86)
is
DENIED,
Moorehead’s
Motion
for
Partial
Summary Judgment (DE# 90) is GRANTED IN PART AND DENIED IN PART,
Moorehead’s Motion to File Exhibits in Opposition to Summary
Judgment Under Seal (DE# 97) is GRANTED, and Moorehead’s Motion
to Strike (DE# 99) is DENIED AS MOOT.
DATED:
March 20, 2015
/s/ RUDY LOZANO, Judge
United States District Court
‐45‐
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