T. and B. Equipment Company, Inc. v. RI, Inc.
Filing
46
MEMORANDUM OPINION. Signed by District Judge Henry E. Hudson on 07/22/2016. (tjoh, )
JU. 2 2 20I6
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division
CLERK, U.S. DISTRICT COURT
RICHMOND. VA
T. AND B. EQUIPMENT
COMPANY, INC.
Plaintiff/
Counter Defendant
Civil Action No. 3:15-CV-337-HEH
V.
RI, INC. d/b/a SEATING SOLUTIONS
Defendant/
Counter Claimant.
MEMORANDUM OPINION
(Cross-Motions for Summary Judgment)
This matter arises from the alleged violation of a mutual Non-Disclosure
Agreement (the "NDA") between T. and B. Equipment Company, Inc. ("T&B" or
"Plaintiff) and RI, Inc. d/b/a Seating Solutions ("Seating Solutions" or "Defendant").
Plaintiff seeks a declaratory judgment from this Court, affirming that its purchase of a
seating system from the manufacturer ("The Product People") did not constitute a
violation of the NDA. Conversely, Defendant's Counterclaim alleges that Plaintiffs
actions did constitute a violation of the NDA, as well as an illegal interference with a
business relationship between Seating Solutions and The Product People, governed by a
separate agreement (the "Distribution Agreement"). Defendant's counterclaim consists
of five Counts, including Breach of Contract, Misappropriation of Trade Secrets, Tortious
Interference with Contract, Civil Conspiracy, and Misrepresentation.
The case is presently before the Court on the parties' cross-motions for summary
judgment. Both sides filed supporting memoranda with pertinent attached documents.
Oral argument followed on June 29, 2016. While each party notes some factual
disagreement, the Court finds no genuine issue of material fact precluding resolution of
the competing motions for summary judgment.
I.
BACKGROUND
In reviewing cross motions for summary judgment, a district court must examine
each motion separately on its own merits "to determine whether either of the parties
deserves judgment as a matter of law." Philip Morris Inc. v. Harshbarger, 122 F.3d 58,
62 n.4 (4th Cir. 1997) (internal citations omitted). Furthermore, when considering each
individual motion, the court must take care to "resolve all factual disputes and any
competing, rational inferences in the light most favorable" to the party opposing the
motion. Wightman v. SpringfieldTerminal Ry. Co., 100 F.3d 228, 230 (1st. Cir. 1996);
see also Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003). "Summary judgment
is appropriate only if the record shows 'there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of law.'" Norfolk S. Ry. Co. v.
City ofAlexandria, 608 F.3d 150, 156 (4th Cir. 2010) (citing Fed. R. Civ. P. 56(c)).
The Court has reviewed each party's statement of undisputed facts, including the
extensive supporting documentation filed in support of the respective positions. The
Court has concluded that the following narrative represents the dispositive facts for the
purpose of resolving the motions at hand.
T&B is a Virginia corporation that specializes in indoor and outdoor event seating.
(Compl.
2, 7.) Seating Solutions is a business that sells and rents spectator seating.
(Def. Mem. Supp. Mot. Summ. J. at 2.) T&B desired to purchase an upgrade for a
seating system, which it rents to clients for the purpose of temporary large-scale spectator
seating. (Countercl. H13.) T&B engaged Seating Solutions in order to explore seating
systems available for purchase. (Countercl. H13.)
Specifically, T&B became interested in one particular seating system sold by
Seating Solutions, the 901 Box Seat. (Countercl. 115.) Seating Solutions provided T&B
with two separate written quotes for the 901 Box Seat on March 14, 2012 and April 19,
2012, at least one of which included a sample model of the 901 Box Seat. (Compl. 19;
Countercl. T| 16.)
During the course of early discussions regarding the 901 Box Seat, Seating
Solutions also expressed interest in selling its own seating rental business. (Compl. ^ 10;
Countercl. t 10.) T&B reciprocated by acknowledging possible interest in the business
acquisition. (Compl. H10; Countercl. H10; Def Mem. Supp. Mot. Summ. J. at 12-13.)
Accordingly, the companies entered into a Non-Disclosure Agreement on April 24, 2012.
(Compl. ^ 11, Ex. C ("NDA"); Countercl. H11.) The NDA contained an express
provision stating that the purpose of the agreement was to govern the exchange of
information and materials related to the "potential acquisition of all or a part of
Company." (NDA HA (emphasis added).) Further, the NDA expressly covered
confidential information provided before and after the initiation of the agreement. (NDA
Kio.)
Following the signing of the NDA, T&B sent a due diligence checklist to Seating
Solutions in order to obtain more detailed information pertaining to its seat rental
business. (Compl. ^ 14.) Seating Solutions provided no information in return. (Compl. |
14.)
Negotiations stalled. After significant time passed, Seating Solutions learned that
T&B had purchased 901 Box Seats directly from the manufacturer of the system, The
Product People. (Compl. ^ 16.) Seating Solutions sent a letter to T&B in December
2012, stating that it had provided information related to the 901 Box Seats in reliance on
the NDA and maintained an interest in reaching a deal. (Compl. ^ 17, Ex. D.)
Over two years later, in February 2015, Seating Solutions sent another letter to
T&B, but this time via legal counsel. (Compl. T| 19, Ex. E.) This letter claimed that
T&B's purchase of 901 Box Seats from The Product People constituted a violation of the
NDA and demanded that T&B pay Seating Solutions $30.00 for every seat purchased.
(Compl. K19, Ex. E.) The demand totaled $320,700. (Compl. H19, Ex. E.) T&B
rejected the demand in a March 2015 letter, claiming that it did not disclose any
confidential information in the process of purchasing the box seats from The Product
People and that the NDA did not require T&B to purchase the seats exclusively from
Seating Solutions. (Compl. H20, Ex. F.) Seating Solutions sent another letter in April
2015, in which it maintained its position that T&B violated the NDA. (Compl. ^21, Ex.
G.)
T&B filed suit in June 2015, seeking a declaratory judgment that its actions did
not constitute a violation of the NDA. (Compl.) Seating Solutions counterclaimed.
alleging Breach of Contract, Misappropriation of Trade Secrets, Tortious Interference
with Contract, Civil Conspiracy, and Misrepresentation. (Countercl.) These claims are
rooted in alleged violations of either the terms of the NDA between T&B and Seating
Solutions, or the separate Distribution Agreement between Seating Solutions and The
Product People. Both parties seek Summary Judgment in their favor. (PI. Mem. Supp.
Mot. Summ. J.; Def. Mem. Supp. Mot. Summ. J.)
II.
STANDARDS OF REVIEW
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary judgment is
appropriate "if the movant shows thatthere 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. The
relevant inquiry in a summary judgment analysis is "whether the evidence presents a
sufficient disagreement to require submission to a jury or whether it is so one-sided that
one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., All U.S.
242, 251-52 (1986). In reviewing a motion for summary judgment, the Court must view
the facts in the light most favorable to the non-moving party. Id. at 255.
Once a motion for summary 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, All U.S. at 247^8 (emphasis in original). Indeed,
summary judgment must be granted if the nonmoving party "fails to make a showing
sufficient to establish the existence of an element essential to that party's case, and on
which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986). To defeat an otherwise properly supported motion for summary
judgment, the nonmoving party must rely on more than conclusory allegations, "mere
speculation," the "building of one inference upon another," the "mere existence of a
scintilla of evidence," or the appearance of some "metaphysical doubt" concerning a
material fact. Lewis v. City ofVa. Beach Sheriffs Office, 409 F. Supp. 2d 696, 704 (E.D.
Va. 2006) (citations omitted). Of course, the Court cannot weigh the evidence or make
credibility determinations in its summary judgment analysis. Williams v. Staples, Inc.,
372 F.3d 662, 667 (4th Cir. 2004).
Furthermore, a "material fact" is one that might affect the outcome of a party's
case. Anderson, All U.S. at 248; JKC Holding Co. LLC v. Wash. Sports Ventures, Inc.,
264 F.3d 459, 465 (4th Cir. 2001). Whether a fact is considered to be "material" is
determined by the substantive law, and "[o]nly disputes over facts that might affect the
outcome of the suit under the governing law will properly preclude the entry of summary
judgment." Anderson, All U.S. at 248; see also Hooven-Lewis v. Caldera, 249 F.3d 259,
265 (4th Cir. 2001). A "genuine" issue concerning a "material" fact only arises when the
evidence, viewed in the light most favorable to the non-moving party, is sufficient to
allow a reasonable jury to return a verdict in that party's favor. Anderson, All U.S. at
248.
III.
DISCUSSION
The determinative issue governing summary judgment is whether the Non-
Disclosure Agreement between T&B and Seating Solutions governed both the possible
purchase of 901 Box Seats (the "Seat Sale") and the potential acquisition of Seating
Solutions' seat rental business by T&B (the "Business Acquisition"), or alternatively,
only the Business Acquisition. If negotiations relating to the Seat Sale are found to have
been envisioned by the NDA and related correspondence, it must then be determined
whether T&B's actions constituted a violation of its ternis. The viability of Seating
Solutions' counterclaims of Breach of Contract, Misappropriation of Trade Secrets, and
Misrepresentation depend upon whether the NDA encompasses the Seat Sale
negotiations.
Further, Seating Solutions alleges that it maintained a special business relationship
with The Product People, which allows for exclusive rights to distribute the product in
North America. (Def. Mem. Supp. Mot. Summ. J. at 21.) This relationship is
purportedly detailed in a Distribution Agreement between the two companies. (Id. at 8,
Ex. 19 ("Distribution Agreement").) The claims of Tortious Interference with Contract
and Civil Conspiracy depend upon the validity and terms of the Distribution Agreement.
A. NDA Coverage & Application of its Terms
It must first be noted that neither party contests the validity of the NDA as a
contract. (PI. Mem. Supp. Mot. Summ. J. at 4; Countercl. H34.) Additionally, both
parties agree, as the contract states, that it is to be "governed by and construed in
accordance with the laws of the State of New York." (NDA H 17; PI. Mem. Supp. Mot.
Summ. J. at 5; Countercl. H27.)
T&B asserts that the NDA was only intended to apply to the negotiation of the
Business Acquisition, not to the Seat Sale. (PI. Mem. Supp. Mot. Summ. J. at 6.)
Conversely, Seating Solutions contends that there was one comprehensive negotiation
contemplated by the NDA, including both the Business Acquisition and the Seat Sale.
(Def Mem. Supp. Mot. Summ. J. at 15.)
New York law states that "[w]here the terms of a contract are clear and
unambiguous, the intent of the parties must be found within the four corners of the
contract, giving a practical interpretation to the language employed and reading the
contract as a whole." Ellington v. EMI Music, Inc., 21 N.E.3d 1000, 1003 (N.Y. 2014)
(internal citations omitted). "The best evidence of what parties to a written agreement
intend is what they say in their writing." Slamow v. Del Col, 594 N.E.2d 918, 919 (N.Y.
1992). The terms of the contract, therefore, must be interpreted according to their plain
meaning. See Ellington, 21 N.E.Sd at 1003; Greenfield v. Philles Records, 780 N.E.2d
166, 170 (N.Y. 2002).
Evidence beyond the written agreement may only be considered if the terms of the
agreement are ambiguous, and whether or not an agreement is ambiguous is a question of
law to be decided by the court. Greenfield, 780 N.E.2d at 170. "A contract is
unambiguous if the language it uses has 'a definite and precise meaning, unattended by
danger of misconception in the purport of the [agreement] itself, and concerning which
there is no reasonable basis for a difference of opinion.'" Id. at 170-71 (quoting Breed v.
8
Insurance Co. ofN. Am., 46 N.Y.2d 351, 355 (N.Y. 1978)). Conversely, "[a]mbiguity in
a contract arises when the contract, read as a whole, fails to disclose its purpose and the
parties' intent, or when specific language is susceptible of two reasonable
interpretations." Ellington, 21 N.E.3d at 1003 (citation and internal quotation marks
omitted).
The purpose of the NDA is stated clearly at the outset of the agreement:
A. The Parties desire to exchange certain information and materials
necessary or related to the potential acquisition of all or a part of the
Company [Seating Solutions] and all information contained therein (the
"Purpose").
(NDA HA (emphasis added).) The provision expressly states that the agreement is to
govern information shared between the parties as a part of the "potential acquisition" of
Seating Solutions, thus referring to the Business Acquisition. At no point does the
NDA's purpose discuss the sale or rental of 901 Box Seats or any seating system
generally.
Further, such language concerning seats specifically does not appear anywhere
else in the NDA. The only language which may remotely lend credence to the NDA's
contemplation of the sale of 901 Box Seats is the inclusion of "products" in the broad
definition of "Information" in Paragraph One. (NDA ^1.) However, this language fails
to provide any helpful context. Simply noting that confidential information is protected
by an agreement (which is explicitly designated as governing a possible acquisition of all
or one portion of a business), does not convey that the contract's purpose is also to
govern a transaction involving the sale or rental of a product. Additionally, there was no
clear indication by Seating Solutions that the seats in question or any related information
should be considered confidential.
A simple reading leads this Court to conclude, based on the unambiguous
language of the contract, that the intent of the parties was for the NDA to govern the
possible Business Acquisition of Seating Solutions' seat rental business. Therefore the
NDA did not contemplate the Seat Sale or related information. The Court realizes that
each party argues a different interpretation of the text and surrounding circumstances, but
the Court must rely on the plain language of the contract, not on extrapolation of
extraneous parole evidence. Although the Court's construction of the NDA precludes
relief on the related counterclaims, the Court will further explain why the counterclaims
fail as a matter of law.
New York law controls the Breach of Contract claim, since the NDA includes a
New York choice of law provision. The remaining tort claims are controlled by Virginia
law, as tort claims in Virginia are to be "governed by the law of the place of the wrong."
McMillan v. McMillan, 253 S.E.2d 662, 663 (Va. 1979) (internal citation omitted),
a. Breach of Contract
Seating Solutions contends that T&B violated the NDA, not by disclosing any
information, but rather by using information that Seating Solutions provided in reliance
on the NDA to compete with Seating Solutions. (Def. Mem. Supp. Mot. Summ. J. at 16-
17.) While not completely clear. Seating Solutions seems to argue that the alleged "use"
of information was T&B utilizing its knowledge of the 901 Box Seat to purchase the
seats from The Product People. (Def. Mem. Supp. Mot. Summ. J. at 17.) Specifically,
10
Seating Solutions points to its exclusive knowledge of the existence of the 901 Box Seat,
as well as unique mounting techniques. (Def. Mem. Supp. Mot. Summ. J. at 15.)
To prevail on this claim, Seating Solutions must demonstrate "[1] the existence of
a contract, [2] the plaintiffs performance under the contract, [3] the defendant's breach
of that contract, and [4] resulting damages." JP Morgan Chase v. J.H. Elec. ofNew York,
Inc., 893 N.Y.S.2d 237, 239 (2010).
Defendant's breach of contract claim founders on the second element, given the
Court's finding that the Seat Sale, along with information exchanged pertaining to that
potential sale, was beyond the scope of the NDA. T&B's purchase of 901 Box Seats
from The Product People cannot be considered a breach of the NDA if the information
allegedly "used" to "compete" with Seating Solutions was not covered by the NDA.
Even if the Seat Sale was encompassed by the NDA, or sending the sample seat
was intended to demonstrate the value of Seating Solutions' company, T&B's actions
still did not violate the NDA's terms. Seating Solutions claims that it provided T&B with
non-public "Information" under Paragraph One of the NDA. (Def. Mem. Supp. Mot.
Summ. J. at 14-16.) It is telling, however, that none of the 901 Box Seat information
sent by Seating Solutions prior to the execution of the NDA was marked as being
confidential. The Court is also unaware of any case in which information pertaining to
products sold by a distributor with an exclusivity agreement with the product's
manufacturer has been found to carry implied confidentiality. Moreover, there is no
evidence that other distributors were restricted in placing the seats in question into the
stream of commerce, making them available for public inspection.
11
T&B did send Seating Solutions a "due diligence checklist" in order to obtain
information specific to its rental business, but no information was provided in return.
(CompL 11 14.) Based on the record evidence, none of the information shared regarding
the 901 Box Seats would have been covered by Paragraph One of the NDA.
Seating Solutions also contends that T&B violated Paragraph Nineteen of the
NDA, which states as follows:
19.
Non-Solicitation. Receiving Party [T&B], for itself and on
behalf of its Representatives, stipulates, covenants and agrees that from the
date hereof and until the date that is two (2) years following the
Termination Date, it shall not, directly or indirectly, employ or attempt to
employ or retain the service of any director, officer, employee or agent then
employed or retained by Company [Seating Solutions] or induce, encourage
or solicit any director, officer, employee or agent to leave the employment
or service of Company [.] Receiving Party explicitly agrees that it will not
use any information received pursuant to this Agreement to compete with
or against the Company, nor will it use any information received pursuant
to this Agreement to solicit any of Company's customers as identified in
the Information.
(NDA H19 (emphasis added).) Specifically, Seating Solutions alleges that T&B used
information related to the 901 Box Seat to "compete with or against" them by purchasing
seats from The Product People. (Def. Mem. Supp. Mot. Summ. J. at 16-17.)
The Court does not agree with Defendant that the term "compete" in Paragraph
Nineteen can be interpreted to apply to T&B's purchase of 901 Box Seats from another
vendor. T&B was under no contractual obligation to deal exclusively with Seating
Solutions. (NDA H8.) In fact, the NDA even contemplates other agreements which
could potentially be competitive. (NDA H11.) Further, the NDA expressly
acknowledges that parties "may currently or in the future be ... exploring opportunities
12
with other persons similar, related or identical to the Purpose or similar business with the
products, concepts, systems or techniques contemplated by or embodied in this
Information." (NDA^ 11.)
Further, there is no allegation that T&B used the information to create their own
product, to sell this same product, or to inform a competitor of Seating Solutions of the
901 Box Seat. T&B simply responded to another company's offer to sell the product. It
is hard to imagine how this could constitute a "use" or "disclosure" of information to
"compete" with Seating Solutions.
In sum, the Seat Sale was not contemplated by the NDA. And even if it was,
T&B's purchase of 901 Box Seats from The Product People would not constitute a
breach.
b. Misappropriation of Trade Secrets
Seating Solutions also asserts a claim for Misappropriation of Trade Secrets.
(Countercl.
39^3.) This claim is a result of T&B's alleged "use" of mounting
techniques shared by Seating Solutions when T&B purchased 901 Box Seats from The
Product People. Seating Solutions contends that these mounting techniques constitute a
trade secret and that T&B misappropriated the trade secret by using it to its advantage.
(Def. Mem. Supp. Mot. Summ. J. at 18-20.)
According to the Virginia Uniform Trade Secrets Act (VUTSA),
misappropriation of trade secrets consists of two elements: "(1) the information in
question must constitute a trade secret, and (2) that trade secret must have been
misappropriated." MicroStrategy Inc. v. Bus. Objects, S.A., 331 F. Supp. 2d 396, 416
13
(E.D. Va. 2004). VUTSA's relevant definition of misappropriation means unauthorized
disclosure or use of a trade secret that was"[a]cquired under circumstances giving rise to
a duty to maintain its secrecy or limit its use" or "[djerived from .. .a person who owed a
duty to the person seeking relief to maintain its secrecy or limit its use." Va. Code Ann.
ยง 59.1-336(2).
The Court need not decide whether Seating Solutions' mounting techniques
constitute a trade secret. Rather, the claim fails because the information provided to T&B
regarding the Seat Sale was not covered by the NDA. Misappropriation requires that a
trade secret be provided under circumstances that impose a duty on a party to refrain
from using the information. No facts suggest that such a duty existed, beyond the argued
application of the NDA. It is again noteworthy that none of the 901 Box Seat
information sent by Seating Solutions prior to the execution of the NDA was marked as
being confidential. The record fails to support a viable claim.
c. Misrepresentation
Seating Solutions claims that T&B fraudulently misrepresented its intentions, by
representing that all communications regarding the Business Acquisition and Seat Sale
would be made with the NDA in mind and subsequently using Seating Solutions'
expertise to its advantage when it purchased the seating system from The Product People.
(Countercl.
54-59.)
In Virginia, "fraudulent misrepresentation requires that a plaintiff show a '[1] false
representation of a material fact; [2] made intentionally, in the case of actual fraud, or
negligently, in the case of constructive fraud; [3] reliance on that false representation to
14
their detriment; and [4] resulting damage.'" Caperton v. A.T. Massey Coal Co., 740
S.E.2d 1, 9 (Va, 2013) (internal citations omitted).
This claim appears to be a restatement of the breach of contract claim. Consistent
with the Court's finding that the NDA did not apply to the Seat Sale, the record evidence
does not support the contention that T&B made a false representation to Seating
Solutions. T&B inquired about Seating Solutions' seating products, considered its price
quotations, and ultimately decided to purchase the product from a different vendor. None
of these actions were governed by the NDA. Seating Solutions' claim for
misrepresentation lacks both factual and legal moorings.
B. Distribution Agreement Validity & Application of its Terms
Seating Solutions next contends that it maintained exclusive rights to sell 901 Box
Seats in North America via the Distribution Agreement, and that T&B's purchase of seats
from The Product People constituted civil conspiracy and a tortious interference with that
contract. (Countercl. fl 44-53; Def Mem. Supp. Mot. Summ. J. at 20-27.) These
claims are tort actions, therefore governed by Virginia law, and controlled in part by the
validity, terms, and limitations of the Distribution Agreement.
There is no disagreement that at one point in time. Seating Solutions had a valid
Distribution Agreement with The Product People. {See PI. Mem. Supp. Mot. Summ. J.
at 15.) The present dispute focuses on the duration of the agreement and whether it had
lapsed prior to T&B's purchase of 901 Box Seats from The Product People. (PI. Mem.
Supp. Mot. Summ. J. at 15-16.) The duration of the agreement is explicitly defined as
continuing "until the earlier of 01 June 2011 or termination of this agreement in
15
accordance with its terms." (Distribution Agreement ^ 5(a).) Seating Solutions argues
that the provision pertaining to the agreement's duration is ambiguous. (Def. Mem.
Supp. Mot. Summ. J. at 21.) The Court finds its purport beyond peradventure. The
provision unequivocally states that the agreement was to expire on June 1, 2011 or by
termination by the parties in accordance with the contract's termination requirements,
whichever occurs first. That expiration undisputedly occurred prior to the negotiations
between Seating Solutions and T&B. (Countercl. ^ 13.) Additionally, even if the
agreement had still been in effect, it required a writing to activate exclusivity.
(Distribution Agreement ^ 4.3(b).) There is no indication that such a writing exists.
Seating Solutions contends, however, that despite any finding that the duration
provision was unambiguous, the agreement was in fact extended by its course of dealing
with The Product People. (Def Mem. Supp. Mot. Summ. J. at 22.) While the Court
agrees that the terms of a contract may be modified under Virginia law through a course
of dealing (see Reid v. Boyle, 527 S.E.2d 137, 145 (Va. 2000)), such modification must
be demonstrated by '"clear, unequivocal and convincing evidence, direct or implied,"'
that it was the intent of the parties to do so. Stanley's Cafeteria, Inc. v. Abramson, 306
S.E.2d 870, 873 (Va. 1983) (quoting Warren v. Goodrich, 112 S.E. 687, 694 (Va.
1922)).
Seating Solutions has provided several documents that it argues demonstrate a
clear and unequivocal intent to extend the duration of the Distribution Agreement. (Def
Mem. Supp. Mot. Summ. J., Exs. 20-22.) These documents include marketing materials
16
for the 901 Box Seat that display the Seating Solutions logo, as well as e-mail
communications between Seating Solutions and The Product People.
The Court finds Seating Solutions' proffered evidence unavailing. The
communications exchanged between Seating Solutions and The Product People seem to
indicate an interest in maintaining some sort of distribution relationship, but do not
clearly and unequivocally show that the parties wished to extend the Distribution
Agreement or any exclusive relationship.' Therefore, based on the Distribution
Agreement's own terms, and the lack of any evidence supporting a clear course of
dealing or expectancy, it appears that the agreement expired prior to T&B's purchase of
the seating at issue. Defendants' claim therefore falls short of the mark.
a. Tortious Interference with Contract
Seating Solutions asserts that T&B, by buying 901 Box Seats from The Product
People, tortiously interfered with a business relationship that Seating Solutions
maintained with The Product People. (Countercl.
44-48.) As noted above. Seating
Solutions claims it had a valid contract, or at least a valid business expectancy, and that
T&B damaged its business interests by purchasing 901 Box Seats from The Product
People. (Countercl. fl 21-29.)
The elements of tortious interference with a contract or business expectancy are as
follows: "(1) the existence of a valid contractual relationship or business expectancy; (2)
knowledge of the relationship or expectancy on the part of the interferor; (3) intentional
' Notably, The Product People explicitly state, after the Distribution Agreement's expiration date, that
they do not have a contractual relationship with Seating Solutions, but rather a "gentlemen's agreement.'
(Def Mem. Supp. Mot. Summ. J., Ex. 23.)
17
interference inducing or causing a breach or termination of the relationship or
expectancy; and (4) resultant damage to the party whose relationship or expectancy has
been disrupted." Chaves v. Johnson, 335 S,E.2d 97, 102 (Va. 1985). This Court's
finding that Seating Solutions had no valid contract or expectancy with The Product
People at the relevant time precludes the tortious interference claim.
Even if the Court found the Distribution Agreement to be binding, its requirements
for exclusivity were not met. The terms of the agreement provide explicit procedures by
which Seating Solutions may obtain exclusive rights. Seating Solutions failed to comply
with those terms. Exclusivity is addressed in the Distribution Agreement as follows:
(a) The appointment of the Distributor under this Agreement is non
exclusive to the Distributor for the Term in the Territory solely in respect of
the Markets.
(b) Notwithstanding clause 4.3(a), the Company agrees to appoint the
Distributor exclusively only for such projects in the Territory in respect of
the Markets which the Distributor has submitted a proposal for the Products
to the end-client. The Distributor has to obtain the Companies written
approval for such projects in order to activate the exclusivity on a project
and such written approval is not unreasonably withheld by the Company.
Distribution Agreement 114.3.
Seating Solutions argues that in the event no valid contract is found, the
evidence supports a business expectancy with The Product People. (Def. Mem.
Supp. Mot. Summ. J. at 23.) Business expectancy is a valid component of the first
element of tortious interference with contract under Virginia law. See Chaves, 335
S.E.2d at 102.
In order for Seating Solutions to have obtained exclusivity to sell to T&B, The
Product People must have provided written approval of such exclusivity. Although
18
Seating Solutions asserts that it "registered" T&B with The Product People, it also
admits that no written approval was provided by Seating Solutions granting exclusivity.
(Def. Mem. Supp. Mot. Summ. J., Ex. 45, Suprina Dep. at 96-97.) Without such a
writing. Seating Solutions' claim of exclusivity is illusory at best. Based on the analysis
above, however, it is this Court's opinion that Seating Solutions did not have a valid
business expectancy with The Product People.
b. Civil Conspiracy
Finally, Seating Solutions contends that T&B conspired with The Product People
to deprive Seating Solutions of its valid contractual rights or expectancy, which resulted
in damage to Seating Solutions. (Countercl. fl 49-53.) UnderVirginia law, "civil
conspiracy is a combination of two or more persons to accomplish an unlawful purpose
or to accomplish a lawful purpose by unlawful means, resulting in damage to the
plaintiff." Glass v. Glass, 321 S.E.2d 69, 74 (Va. 1984).
The unlawful purpose identified by Seating Solutions is the decision by T&B and
The Product People to disregard the Distribution Agreement and the NDA, and to
proceed with the sale of 901 Box Seats to Seating Solutions' detriment. This Court has
already found thatthe NDA did not apply to the Seat Sale, and even if it did, T&B did
not breach the NDA's terms. The Court has also found that the Distribution Agreement
was invalid at the time of the relevant transaction, and there was no legitimate business
expectancy. Consistent with these findings, this claim fails.
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IV.
CONCLUSION
In sum, even when viewing the facts in the light most favorable to the Defendant,
the Court finds that Plaintiffs purchase of 901 Box Seats did not violate the NDA.
Further, Defendant's five counterclaims, which include Breach of Contract,
Misappropriation of Trade Secrets, Misrepresentation, Tortious Interference with
Contract, and Civil Conspiracy, each fail as a matter of law. Accordingly, Plaintiffs
Motion for Summary Judgment (ECF No. 30) will be granted and Defendant's Motion
for Summary Judgment (ECF No. 37) will be denied.
An appropriate Order will accompany this Memorandum Opinion.
/s/
Henry E. Hudson
Date: 'Jviu
United States District Judge
Richmond, 'Virginia
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