Tandberg, Inc. v. Advanced Media Design, Inc.

Filing 44

ORDER following hearing re plaintiff's 30 Motion for Summary Judgment. It is Ordered that plaintiff's motion for partial summary judgment is Granted as to Count I. It is further that defendant submit a supplemental memorandum confirming or disputing the approximately $249,000 late fee owed pursuant to the agreed-upon 60-day payment period by 5:00 p.m., Friday, November 6, 2009. Signed by District Judge T. S. Ellis, III on 11/03/2009. (nmcc)

I
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division

I

E

NOV -3 2009
CLERK, U.S. DISTRICT COURT '<

TANDBERG, INC., Plaintiff,
v.

) )

ALEXANDRA, V''-·' "

:

)
)

Civil Action No. l:09cv863

ADVANCED MEDIA DESIGN, INC.,
Defendant.

)
)

ORDER

The matter came before the Court on plaintiffs motion for partial summary judgment

with respect to Count I of the Complaint alleging breach of contract. More specifically, plaintiff contends that the undisputed material facts establish that plaintiff shipped to defendant over $3
million of videoconferencing equipment pursuant to the parties' valid contract, and that defendant has failed to pay for this equipment in breach of the contract. In response, defendant argues that the motion is not ripe because it has not had an adequate opportunity to conduct

discovery pursuant to Rule 56(f), Fed. R. Civ. P. Defendant moreover contends that its defenses of anticipatory breach and waiver preclude summary judgment for plaintiff on its breach of
contract claim.

The parties, by counsel, fully briefed and argued the matter on October 30,2009, at which

time the motion was resolved by a ruling from the Bench. This Order memorializes the bench
ruling granting plaintiffs motion.

-1-

I.

The following record facts are material and undisputed:1

1. Plaintiff, a Delaware corporation with its principal1 place ofW»ta-Virginia,
manufactures videoconferencing equipment. See Compl. fl 1, 5, Answer 1 l,

2 Defendant, a California corporation, specializes in providing companie^Uh industryfeadingToilaborative audio-visual and teleconferencing solutions. See Compl. fl 2,6,
Answer ffll 2,6.

3 On July 1 2002, the parties entered into an Authorized Channel ^TM^ff*TMT
r Aereement") under which defendant was named a nonexclusive reseller o
Territories. See Compl. 17; Answer H 7.

prodTcLfor theregions defined in Schedule A to be the Southwest and Western

customer. See PL's Statement of Undisputed Material Facts 1i 6, Def. s Br. at 2.

5 Each time plaintiff shipped equipment in response to defendant's purchase orders

defend^ would draw down on a credit line and plaintiff would issue an invoice. Under

2S?3 «d schedule B of the Agreement, defendant was required to pay the invoice wSthirty days of the invoice date. For purposes of this motion the parties, by Tolse Seed in the course of the October 30,2009 hearing that defendant was afforded
were subject to a late fee calculated at 1.5% of the invoiced amount per month.

ixTdtsTnwhich to make payment.' Schedule B further provided that late payments

6. Between January 29,2009 and June 22,2009, plaintiff states that it P $3 187 975 52 worth of videoconferencing equipment to defendant or defendant s

equipment. See Def.'s Ex. 18. In its reply brief, plaintiff accepted this figure for

Cornersdefendant concedes that it has not paid for $3,180,71472 worth of

These undisputed facts are derived from the pleadings, memoranda and decJaraU°ns
to those counterclaims are addressed here.

2 Plaintiff initially contended that defendant was required to pay an invoice within fortyfive days. In response, defendant argued that sixty days was given as a matter of course.
-2-

purposes of this motion.3 Moreover, the parties, by counsel agreed in the course.of the October 30,2009 hearing to apply the 60-day payment period with respect to late fees.
7 On May 8,2009, plaintiff sent defendant a formal notice of termination PTMTM** section 7 1 of the Agreement. The notice stated that termination was to be effective on
June 30,2009. See Compl. H 8; Answer 18.

8 Defendant contends that plaintiff anticipatorily breached the Agreement on o,-about May
20 2009 by refusing to ship certain products and demonstration equipment that
certain orders were cancelled.

defendant ordered, llaintiff conceded in the course of the October 30,2009 hearing that

9 In the course of the October 30,2009 hearing, plaintiff asserted-and defendant conceded-that plaintiff filled at least forty-two of defendant's purchase orders between
May 8,2009 and June 22,2009.

10 Plaintiff disputes or does not admit the following allegations of fact.pertinent_to the

defense of anticipatory breach: (i) placing a hold on defendant's credit line; (u) cancelling
a pre-paid $231,000 order and refusing to refund this sum; (in) diverting sales from defendant; (iv) failing to provide training, sales samples and aids, promotional materials,

and" other published technical information; and (v) excluding defendant from the annual
true for purposes of resolving plaintiffs motion for partial summary judgment.
II.

America's Summit and InfoComm Convention. These contested facts are assumed to be

The Supreme Court of Virginia in Sunrise Continuing Care, LLC v. Wright, 671 S.E.2d

132,135 (Va. 2009) (citation omitted), recently had occasion to reiterate the settled rule that a
party claiming breach of contract must prove (i) the existence of an enforceable contract, (ii) a

3 It should be noted that defendant also asserts that it is owed additional rebates and credits which would lower the balance due to plaintiff. Yet, these assertions are essentially a claim that plaintiff breached the Agreement, and are more appropriately adjudicated in the context of defendant's pending counterclaims. Accordingly, no ruling is made as to defendant s
claims to additional rebates and credits.

4 Plaintiff by counsel, represented that it calculated the late fees on the $3,180,714.72 figure to be approximately $249,000, In response, defendant's counsel requested additional time in which to confirm the figure's accuracy. Accordingly, defendant was ordered to submit a supplemental memorandum confirming or disputing the late fee calculation.

material violation or breach of that contract, and (iii) a consequently injury or damage to the
pontiff. In this case, there is no dispute that the parties entered into a va.id contract, i.e., the Agreement, pursuant to which defendant ordered, received, bu, did not pay for $3,. 80,714.72
worth of videoconferencing equipment. Yet, defendant contends that the Agreement is

unenforceable because plaintiff anticipator!* breached the Agreement on or about May 20,2009.
,,, addition, defendant argues that plaintiff waived its right to bring an action to collect the
outstanding balance on defendant's account.' Each argument is considered in turn.
A. Anticipatory Breach

ptiSs mot1 for partial summary judgment. This Order does not m any way hm t motion
defendantCbility' to conduct discovery for purposes of establishing Us counterclaims. to conduct discovery for pui
-4-

Under Virginia law, it is well-settled that "if one party to a contract declares in advance

that he will not perform at the time set for his performance, the other party may bring an
immediate action for total breach of contract." City of Fairfax v. Wash. Metro. Area Transit

Auth., 582 F.2d 1321,1325 (4th Cir. 1978). Importantly, the anticipatory breach doctrine is only
applied where exacting requirements are met. As the U.S. Supreme Court has stated, a party

arguing anticipatory breach must demonstrate that the other party bound under the contract has made "a positive, unconditional, and unequivocal declaration of fixed purpose not to perform the
contract in any event or at any time." Dingleyv. Oler, 117 U.S. 490, 502 (m6), cited with

approval in City of Fairfax, 582 F.2d at 1326.6 The strictness of this requirement is
demonstrated by the facts of Dinghy. In that case, the Supreme Court found no anticipatory

breach where a defendant refused to deliver ice for an entire year under the terms of a valid
contract because the refusal to perform was conditioned on the market price not increasing during
the course of the year. See id.

When these principles are applied to the instant dispute, it becomes pellucidly clear that

plaintiff did not anticipatorily breach the Agreement. Because defendant concedes that plaintiff
continued to ship videoconferencing equipment upon receiving certain purchase orders well into

June 2009,7 plaintiff cannot be said to have unconditionally refused to perform the contract in all
< See also Lake Ridge Apartments, LLC v. BIR Lakeridge, LLC, 2009 U.S^ App^ LEXIS 14263 at *7-*ll (4th Cir. July 1,2009); Cordon v. Urban Telecomms. Corp., 1991 U.S. App. LEXIS 19696 at *5-*6 (4th Cir. Aug. 23,1991); Elite Entertainment v. Khela Bros.

Entertainment, 369F. Supp.2d680, 693 (E.D. Va. 2005); Vahabzadeh-v. Mooney3%> S ILM
803, 805 (Va. 1991) (citations omitted); Supervisors v. Ecology One, 245 S.E.2d 425,42 i-jx

(Va! 1978).

7 Although it is undisputed that some orders were shipped, it is also undisputed that certain purchase orders were not filled or were cancelled by plaintiff in May and June of 2009.
-5-

circumstances. See id. Even assuming plaintiff breached the contract in other respects, as

defendant alleges in its counterclaims, plaintiffs continued performance under the contract

precludes a finding of anticipatory breach as a matter of law. Accordingly, the Agreement is
enforceable and defendant's attempt to avoid the Agreement by claiming anticipatory breach
fails.
B. Wavier

Defendant raises a defense of waiver, which is defined as "an intentional relinquishment

of a known right." See Stanley's Cafeteria, Inc. v. Abramson, 305 S.E.2d 870, 873 (Va. 1983).8
Accordingly, such a defense requires proof that plaintiff had (i) knowledge of the facts basic to

the exercise of the right, and (ii) the intent to relinquish that right. See Employers Commercial
Union Ins. Co. ofAm. v. Great Am. Ins. Co., 200 S.E.2d 560,562 (Va. 1973). Importantly,

defendant bears the burden of establishing waiver by "clear, precise and unequivocal evidence."
UticaMut. Ins. Co. v. Nat'l Indem. Co., 173 S.E.2d 855, 858 (Va. 1970).

These principles, applied here, clearly compel the conclusion that defendant's waiver

argument is facially unavailing. To support its position, defendant points to the May 8,2009 notice of termination and argues that plaintiff effected a waiver by failing to specifically identify
defendant's failure to pay for equipment as a basis for termination. Yet, this fact cannot support

an inference of implied waiver because such evidence falls well short of the "clear, precise and

As noted supra, however, these unfilled orders are the subject of defendant's pending
counterclaims, and no judgment is rendered as to those claims here.

8 A defense of waiver assumes the existence of a contract. See Autumn Ridge, LP v Acordia ofVa. Ins. Agency, Inc., 613 S.E.2d 435,441 (Va. 2005) (citing Jones v. N. Y Life Ins.
Co., 253 P. 200,203 (Utah 1926)).
-6-

unequivocal" standard required by the Supreme Court of Virginia. Utica Mut. Ins. Co., 173

S.E.2d at 858. In addition, section 14.2 of the Agreement explicitly states that no inference of
waiver may be drawn from Tandberg's "failure, refusal, neglect, delay, waiver, forbearance or

omission by Tandberg to exercise any right(s) under this Agreement or to insist upon full
compliance by [AMD] with [AMD]'s duties, obligations or restrictions."

In sum, because it is clear that plaintiffs notice of termination did not constitute a waiver
of its right to recover the amount due under the contract, defendant cannot defeat plaintiffs
motion for partial summary judgment for breach of contract on this ground.
III.

For the reasons stated herein and from the Bench, which reasons may be elucidated in a
forthcoming Memorandum Opinion, and for good cause,

It is hereby ORDERED that plaintiffs motion for partial summary judgment is
GRANTED as to Count I.

It is further ORDERED that defendant submit a supplemental memorandum confirming

or disputing the approximately $249,000 late fee owed pursuant to the agreed-upon 60-day
payment period by 5:00 p.m., Friday, November 6,2009.

Given the rulings recorded in this Order, it remains now (i) to determine the total
damages award on Count I following submission of defendant's supplemental memorandum on the issue of late fees, (ii) to adjudicate defendant's counterclaims and determine what, if any, damages may be due as a result of the counterclaims, and (iii) to resolve the issue of attorney's
fees under section 8.3 of the Agreement pending resolution of defendant's counterclaims.
The Clerk is directed to send a copy of this Order to all counsel of record.
-7-

Alexandria, VA November 3,2009

United States Efiitrict Judga

-8-