AGV Sports Group, Inc. v. LeMans Corporation
Filing
76
MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 8/12/13. (mps, Deputy Clerk)
AGV Sports Group, Inc. v. LeMans Corporation
Doc. 76
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
AGV SPORTS GROUP, INC.
:
Plaintiff,
:
v.
:
LEMANS CORPORATION,
:
Defendant.
Civil Action No. GLR-11-16
:
MEMORANDUM OPINION
THIS MATTER is before the Court on Plaintiff AGV Sports
Group, Inc.’s (“AGVSG”) Motion for Partial Summary Judgment (ECF
No.
49).
AGVSG
seeks
damages
against
LeMans
Corporation
(“LeMans”) for breach of contract, or, in the alternative, under
a theory of promissory estoppel.
In particular, AGVSG asks this
Court to enter partial summary judgment on two issues, affirming
that:
(1)
AGVSG
and
LeMans
were
engaged
in
an
exclusive
distribution agreement between December 14, 2006, and August 31,
2009;
and
minimum
(2)
this
quantity
agreement
of,
and
have
been
use
required
its
LeMans
best
to
efforts
purchase
to
a
promote,
AGVSG’s product.
The
issues
necessary.
fully
briefed
and
See Local Rule 105.6 (D.Md. 2011).
no
hearing
is
AGVSG’s Motion
for Partial Summary Judgment will be denied because disputed
material facts exist as to whether an exclusive distribution
agreement formed.
Dockets.Justia.com
I.
BACKGROUND1
AGVSG is a Maryland corporation that designs, distributes,
and licenses AGV Sport and AGVSPORT brand motorsports apparel,
including boots, gloves, jackets, and accessories.
Wisconsin
corporation
that
distributes
LeMans is a
motorsports
parts,
accessories, and apparel from various vendors, including AGVSG.
LeMans began distributing AGV products in 1989, at which time
AGVSG did not yet exist.
Rather, at that time, LeMans did
business with AGV SpA, an Italian company, through its United
States importer and designated resident agent, Michael Parrotte.
In
subsequent
years,
Mr.
Parrotte
formed
AGVSG,
a
separate
entity, which designs and markets an apparel line under the AGV
name pursuant to a license from AGV SpA.
In 1994, AGVSG and LeMans entered into a written exclusive
distribution agreement (the “Initial Agreement”) for a term of
three years, which, in the absence of sufficient notification,
would automatically renew up to three times, each time for a
three-year
period.
As
neither
party
took
steps
agreement, it continued through the fall of 2006.
to
end
the
At that time,
the parties were close to reaching an agreement (the “Licensing
Agreement”) that would grant LeMans an exclusive license and
virtual ownership of the AGVSport trademark in the United States
1
Unless otherwise noted, the facts contained herein are
taken from the Complaint, Motion for Summary Judgment, Response
in Opposition, and Reply.
2
and Canada.2
AGVSG contends that, during negotiations over the
Licensing Agreement, the parties continued their relationship
pursuant to the terms of the Initial Agreement, via an “Interim
Agreement,” which continued the exclusive distributorship.
By
fall
of
2007,
Licensing Agreement.
AGVSG
to
begin
the
parties
had
not
yet
signed
the
Nonetheless, LeMans allegedly instructed
operating
under
the
terms
Agreement, as its finalization was imminent.
of
the
Licensing
Thus, in reliance
on the Licensing Agreement, and in anticipation of orders from
LeMans, AGVSG prepared product designs for the next three riding
seasons,
but
it
ceased
advertising,
terminated
its
national
sales manager, and laid off about half its office staff.
Conversely, LeMans contends that, while negotiations were
ongoing,
it
discovered
that
AGVSG
had
neglected
to
disclose
fully the extent of its rights to assign an exclusive license to
LeMans.
Accordingly, LeMans became uneasy over finalizing the
Licensing Agreement.
LeMans asserts that, by November 2007, it
became clear that AGVSG would not be able to assign an exclusive
license to LeMans and concluded that the Licensing Agreement
would not be viable.
2
Under
this
agreement,
LeMans
would
assume
all
distribution, warehousing, advertising, marketing, and sublicensing duties from AGVSG, while AGVSG would concentrate on
product
design,
graphics
design,
brand
development,
and
marketing support.
(Compl. ¶ 12, ECF No. 1).
3
In any event, after December 13, 2006, LeMans alleges that
the parties continued to conduct business on a purchase orderby-purchase order basis.
November
2007
and
To this end, AGVSG avers that, between
February
2008,
AGVSG
and
LeMans
worked
together to prepare LeMans’s product order for the beginning of
the 2008 season, supposedly agreeing that LeMans would place an
order totaling $750,000.00 in wholesale value.
this
agreement,
LeMans
representatives
Upon reaching
purportedly
informed
AGVSG that they would submit a formal purchase order for the
agreed
upon
meeting.
items
AGVSG
within
two
maintains
weeks
LeMans
of
their
never
February
submitted
a
2008
purchase
order, and, in fact, contacted AGVSG about three weeks later,
informing
AGVSG
that
it
would
go
forward
with
neither
the
Licensing Agreement nor the 2008 product order.
AGVSG
relief
filed
from
alternative,
initial
its
LeMans
Complaint
for
promissory
discovery
and
on
breach
January
of
estoppel.
an
2011,
contract,
(ECF
attempt
4,
at
No.
or,
1).
alternative
seeking
in
the
Following
dispute
resolution before a U.S. Magistrate Judge, AGVSG filed its first
Motion for Partial Summary Judgment.
(ECF No. 18).
LeMans
filed its Response on August 29, 2011 (ECF No. 19), but AGVSG
later withdrew its first Motion for Partial Summary Judgment
(ECF
No.
21).
After
agreeing
to
an
extended
deadline
for
dispositive motions, AGVSG filed its second Motion for Partial
4
Summary Judgment on December 10, 2012.
(ECF
No. 49).
LeMans
filed its Response on January 16, 2013 (ECF No. 55), and AGVSG
filed its Reply on February 4, 2013 (ECF No. 56).
II. DISCUSSION
A.
Standard of Review
Under Federal Rule of Civil Procedure 56, the Court must
grant summary judgment if the moving party demonstrates that
there is no genuine issue as to any material fact, and that the
moving
party
is
entitled
to
judgment
as
a
matter
of
law.
Fed.R.Civ.P. 56(a).
In reviewing a motion for summary judgment, the Court views
the facts in a light most favorable to the non-moving party.
Anderson
(citation
v.
Liberty
omitted).
Lobby,
Once
Inc.,
a
477
motion
U.S.
for
242,
summary
255
(1986)
judgment
is
properly made and supported, the opposing party has the burden
of showing that a genuine dispute exists.
Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).
“[T]he mere existence of some alleged factual dispute between
the
parties
will
not
defeat
an
otherwise
properly
supported
motion for summary judgment; the requirement is that there be no
genuine issue of material fact.”
Anderson, 477 U.S. at 247-48.
A “material fact” is a fact that might affect the outcome
of a party’s case.
Id. at 248; JKC Holding Co. v. Wash. Sports
Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001).
5
Whether a
fact
is
considered
substantive
law,
and
to
be
“material”
“[o]nly
is
disputes
determined
over
facts
by
that
the
might
affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment.”
Anderson, 477
U.S. at 248; Hooven-Lewis v. Caldera, 249 F.3d 259, 265 (4th
Cir. 2001).
A “genuine” issue concerning a “material” fact arises when
the evidence is sufficient to allow a reasonable jury to return
a verdict in the nonmoving party’s favor.
248.
Anderson, 477 U.S. at
Rule 56(c) requires the nonmoving party to go beyond the
pleadings and by its own affidavits, or by the depositions,
answers to interrogatories, and admissions on file, designate
specific facts showing that there is a genuine issue for trial.
Celotex
Corp.
v.
Catrett,
477
U.S.
317,
324
(1986).
The
nonmoving party “cannot create a genuine issue of material fact
through mere speculation or the building of one inference upon
another.”
B.
Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985).
Analysis
AGVSG’s Motion for Summary Judgment regarding the existence
of an Interim Agreement for an exclusive distributorship between
the parties will be denied because disputed material facts exist
as to whether the Interim Agreement was formed.
AGVSG seeks to enforce the alleged Interim Agreement as an
“exclusive dealing” contract under Section 2-306 of the Uniform
6
Commercial Code (“UCC”), Md. Code Ann., Com. Law § 2-306 (West
2013).
Section 2-306 defines an exclusive dealing contract as
“[a] lawful agreement by either the seller or the buyer for
exclusive dealing in the kind of goods . . . .”
Id.
Under such
a contract, the principal is expected to refrain from supplying
any other dealer or agent within the exclusive territory.
id., cmt. 5.
See
An essential element of contract formation is “‘a
manifestation of agreement or mutual assent by the parties to
the terms thereof . . . [and] the minds of the parties must be
in agreement as to its terms.’”
Cnty. Comm’rs for Carroll Cnty.
v. Forty W. Builders, Inc., 941 A.2d 1181, 1209 (Md.Ct.Spec.App.
2008) (quoting Safeway Stores, Inc. v. Altman, 463 A.2d 829, 831
(Md. 1982)).
Because LeMans “is a body corporate [it] must act by its
duly authorized executive or agent.”
v.
Plummer,
176
A.
466,
471
(Md.
N. Am. Accident Ins. Co.
1935).
Absent
a
writing
conferring such authority, it is a question of fact whether a
purported agent had the authority to enter a particular contract
on behalf of a corporation.
A. 780, 782 (Md. 1932).
Kennedy v. Mut. Life Ins. Co., 159
The party seeking enforcement of such
contract bears the burden of proving this fact.
Id.
Thus, to
prevail on summary judgment, AGVSG must establish that there are
no disputes of material fact that LeMans and AGVSG were bound to
an
Interim
Agreement
for
an
exclusive
7
distributorship,
which
falls within the meaning of UCC § 2-306, and which AGVSG and
those
with
authority
to
bind
LeMans
established
through
a
meeting of the minds.
In
under
its
the
Motion,
Interim
AGVSG
asserts
Agreement
for
that
an
the
parties
exclusive
operated
distributorship
between December 14, 2006, and August 31, 2009.
(Pl.’s Mem.
Supp. Partial Summ. J. [“Pl.’s Mot.”] at 1, 4, ECF No. 49-1).
The record shows that the Initial Agreement terminated by its
own terms on December 13, 2006.
(Ex. A [“Initial Agreement”] ¶
13,
19
ECF
No.
18-2).
Paragraph
of
the
Initial
Agreement
further specifies that any amendment to the agreement, including
extension,
Michael
must
be
Parrotte,
distribution
in
writing.
AGVSG’s
agreement
(Id.
President,
between
the
¶
19).
admits
parties
no
was
Additionally,
new
exclusive
ever
(Parrotte Dep. 130:2-7, June 8, 2011, ECF No. 55-3).
signed.
Thus, the
exclusive distribution agreement AGVSG alleges existed between
the parties must have been a new, oral agreement.
the
new,
unwritten,
exclusive
distribution
In support of
agreement,
AGVSG
relies solely on the sworn testimony of five LeMans employees.3
(See Pl.’s Mot. at 4-10):
3
In the background section of its second Motion, AGVSG
points to pages 4-7 of LeMans’s Opposition to AGVSG’s first
Motion for Partial Summary Judgment, indicating that LeMans (i)
admitted to being the exclusive U.S. distributor of AGVSG
products,
(ii)
would
place
orders
directly
with
the
manufacturer, and (iii) would pay AGVSG an agreed upon
8
(1)
Jeff Hart, LeMans’s Purchasing Manager, stated
that “[a]fter December 13, 2006, LeMans simply
operated as an exclusive distributor of the AGV
Sport product line on a purchase order-by
purchase
order
arrangement.
(Ex.
H
[“Hart
Affidavit”] ¶ 6, ECF No. 19-8).
In his
subsequent deposition, Mr. Hart further testified
that
“there
was
never
any
discussion
or
statements made by Michael [Parrotte] that we
would not be the exclusive distributor.”
(Hart
Dep. 76:3-5, July 25, 2012, ECF No. 49-4);
(2)
Greg Blackwell, LeMans’s Vice President of Sales,
testified that “to [his] knowledge,” LeMans was
the exclusive distributor of AGV Sports product
until August 31, 2009.
(Blackwell Dep. 8:15-17,
July 24, 2012, ECF No. 49-5);
(3)
John
Holzhuter,
LeMans’s
General
Counsel,
testified
that
LeMans
was
the
exclusive
distributor as of May 5, 2009, in the United
States for AGV Sport products.
(Holzhuter Dep.
9:9-12, July 24, 2012, ECF No. 49-6);
(4)
Lou Lopez, LeMans’s National Sales Manager,
testified
that
LeMans
was
an
exclusive
distributor of AGV Sports products.
(Lopez Dep.
8:22-24, July 24, 2012, ECF No. 49-7); and
(5)
Mike
Collins,
Lemans’s
Vice
President
of
Purchasing,
testified
that
LeMans
was
the
exclusive distributor for AGV Sports products
through August 2009.
(Collins Dep. 29:20-23,
July 24, 2012, ECF No. 49-8).
commission.
(See Pl.’s Motion at 3).
In reviewing LeMans’s
Opposition, marked as Exhibit A to Plaintiff’s Motion, the only
statement it directly supports is that LeMans would place orders
directly with the manufacturer. Nowhere does the document state
that LeMans is the exclusive distributor, and it states that
after 2007, the parties never agreed upon a commission.
(See
Def.’s Opp’n to Pl.’s Mot. Summ. J. at 5, ECF No. 19).
AGVSG
did not include these assertions in the argument section of its
second Motion.
Accordingly because AGVSG’s reliance on the
document is unfounded, the Court will summarily dismiss this
argument.
9
Although the foregoing testimony may support the contention
that LeMans operated as an exclusive distributor of the AGV
Sport product line through August 31, 2009, AGVSG never alleges
on whose authority the Interim Agreement was created.
AGVSG
merely lists the testimony of LeMans employees, who may have
lacked the authority to bind LeMans to the purported Interim
Agreement.
Indeed,
LeMans
while
continued
several
to
be
an
LeMans
employees
exclusive
testified
distributor
of
that
AGVSG
products upon expiration of the Initial Agreement, a modicum of
scrutiny reveals that LeMans’s employees dispute whether there
was
an
Interim
Agreement
between the parties.
there
was
no
for
an
exclusive
distributorship
Mr. Holzhuter, for example, testified that
exclusive
distribution
agreement
between
the
parties and that their relationship was governed only by the
terms of individual purchase orders4 that LeMans issued directly
to product manufacturers after the Initial Agreement expired:
4
The terms of the purchase orders support LeMans’s
contention that genuine issues of material fact exist as to
whether the parties formed an Interim Agreement. Specifically,
LeMans reserved the right to rescind the purchase order and
place the order elsewhere. (See Def.’s Mem. Opp’n to Pl.’s Mot.
Partial Summ. J. [“Def.’s Resp.”] Ex. H [“Purchase Order”] ¶ 13,
ECF No. 55-9).
That an exclusive dealing contract existed
amidst this clause strains credulity.
Similarly, the purchase
order contained integration clauses and rejected all prior
courses of dealing, course of performance, and discussions
whether oral or written.
(Id. ¶ 10) (“This Order contains all
representations and agreements between LeMans and Seller with
10
Q:
What
were
agreement?
the
terms
of
that
distribution
A:
The terms were included in our purchase orders
that would have been sent out regarding the
purchases of product that we made.
Q:
Did the agreement terminate at some point?
A:
Our purchase orders?
Q:
The distribution agreement?
A:
I’m not sure what distribution agreement you’re
referring to.
Q:
Well, under what term was LeMans the distributor
as of May 5, 2009?
A:
We would issue purchase orders to purchase AGV
Sports products.
. . . .
Q:
What was the end of the 2009 selling season?
A:
Fall of 2009.
Q:
Was the end of the agreement August 31, 2009?
A:
I’m not sure what agreement you’re referring to.
Q:
The exclusive distribution agreement.
regard to the subject matter hereof and, as such, shall
supersede all prior courses of dealing, usage of trade, course
of performance, negotiations, discussions and understandings,
whether oral or written.”).
Maryland law generally recognizes
the validity and effect of integration clauses. See, e.g.,
Pumphrey v. Kehoe, 276 A.2d 194, 199 (Md. 1971) (noting that an
integration clause, “although not absolutely conclusive, is
indicative of the intention of the parties to finalize their
complete understanding in the written contract”); Kasten Constr.
Co. v. Rod Enters., Inc., 301 A.2d 12, 17-18 (Md. 1973)
(explaining that courts generally should not look beyond the
contract to evidence of prior statements or agreements,
especially when the contract contains an integration clause).
11
A:
The request from AGV Sports, as I understood it,
was that we would carry the product into the,
into the start of the 2010 selling season.
And
that is typically related to when new catalogs or
new products are released. And without reviewing
a number of documents, I don’t recall the exact
date that would have occurred in 2009.
(Holzhuter Dep. 8:20-10:4, ECF No. 55-10) (emphasis added).
Similarly, Mr. Collins testified that the parties did not
discuss exclusivity after the Initial Agreement expired or agree
to such an arrangement:
Q:
And what, what was it that determined that the
exclusive distributorship would last until August
of 2009?
A:
Well, I don’t know that we specifically said that
it was going to be an exclusive distributorship.
I don’t know if that ever came up.
That’s just
the way it had been.
But I think Michael
[Parrotte] had asked for us to continue selling
it until the 2010 season which in reality, for
apparel begins in the fall of 2009.
(Collins Dep. 30:18-31:2, ECF No 55-11) (emphasis added).
Mr.
Lopez also testified that he never saw such an agreement:
Q:
What was the agreement that LeMans had with AGV
Sport until the end of the relationship.
A:
I’ve never seen the agreement that AGV Sport and
LeMans had.
(Lopez Dep. 9:11-14, ECF No. 55-12) (emphasis added).
The existence of an Interim Agreement is further belied by
Mr. Parrotte’s testimony:
Q:
Was there ever a written agreement of any sort
between LeMans and AGV Sport that required LeMans
12
to help AGV Sport meet its minimums for other
customers?
A:
It’s not a written agreement. . . .
Q:
So is the answer no?
A:
I don’t believe so.
Q:
You don’t believe that the answer is no, or you
don’t believe there was a written agreement-
A:
I don’t believe the answer is no.
Q:
Okay. So what is the written agreement that
LeMans has with AGV Sport to help AGV Sport meet
its minimum for other customers?
A:
I think the 1994 contract is clear.
Q:
And that’s where the agreement arises from?
A:
I think that the general business dealings, the
company, the cooperation, the agreements and
relationship that I had with Jeff Fox, everything
from 1994 until May 2007 worked along those
lines.
(Parrotte Dep. 405:7-406:19).
A cursory review of the record reveals that the foregoing
contention flies in the face of the Initial Agreement, which
provided that “[a]cceptance of any order from LeMans or any sale
made to LeMans by AGV Sport after notice of termination or after
termination
of
this
Agreement
shall
not
be
construed
as
a
renewal or extension hereof nor as a waiver of such notice of
termination.”
testimony
(See Initial Agreement ¶ 13(c)).
regarding
the
lack
of
13
definiteness
Mr. Parrotte’s
surrounding
the
parties’ business relationship after termination of the Initial
Agreement is similarly debilitating to AGVSG’s claim:
[W]e were in this limbo where we were supposed to be
starting the licensing agreement but we were really
still doing the work under the distribution agreement.
We were sort of this in this [sic] quasi-hybrid, stuck
in two worlds between the two agreements waiting for
LeMans to figure out what they want to do.
(Parrotte Dep. 274:11-17).
In
the
Court’s
judgment,
the
testimony
of
LeMans’s
employees and that of Mr. Parrotte, coupled with the text of the
purchase-order agreements between the parties, create a genuine
dispute of material fact as to whether there was a meeting of
the
minds
as
to
the
Interim
Agreement.
Accordingly,
any
obligations related to exclusive dealings are also in dispute.
III. CONCLUSION
For the foregoing reasons, this Court will, by separate
order, DENY AGVSG’s Motion for Partial Summary Judgment (ECF No.
49).5
Entered this 12th day of August, 2013
/s/
_____________________________
George L. Russell, III
United States District Judge
5
Having determined that genuine issues of material fact
exists as to the formation of the Interim Agreement, the Court
will dispense with analysis of the parties’ arguments regarding
the enforceability of the Interim Agreement under the statute of
frauds.
14
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