CFG Private Equity, LLC et al v. Ultraseal International, Inc. et al

Filing 72

ORDER denying 53 Defendant Ultraseal's Motion for Partial Summary Judgment, signed by Judge Ronald B. Leighton.(DN)

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HONORABLE RONALD B. LEIGHTON

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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CFG PRIVATE EQUITY, LLC,
ULTRASEAL DISTRIBUTORS, LLC,

CASE NO. C12-5651 RBL
ORDER DENYING MOTION FOR
PARTIAL SUMMARY JUDGMENT
[DKT. 53]

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Plaintiff,
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v.

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ULTRASEAL INTERNATIONAL, INC.,
KEITH W. CLANCY,

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Defendant.
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This matter involves a contract dispute between CFG1 and Ultraseal. In February of
2011, the parties entered into an agreement that gave CFG the right to sell Ultraseal’s products.

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The initial term of the agreement was one year. According to the terms of the contract, if CFG
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increased Ultraseal’s net volume of sales 100 percent above “the baseline” during that first year,
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the contract would automatically renew for two successive five-year terms. CFG filed this

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lawsuit after its relationship with Ultraseal ended in 2012. Currently before the Court is

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UltraSeal’s motion for partial summary judgment that asks the Court to establish as a matter of

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law that the contract did not automatically renew after the initial one-year term. Because

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Ultraseal Distributors, LLC is also a plaintiff in this case, but to avoid confusion, this
Order will collectively refer to Plaintiffs as “CFG.”

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ORDER - 1

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material questions of fact remain in dispute, including the meaning of the term “baseline,” how

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to calculate the baseline figure, and ultimately whether CFG increased Ultraseal’s sales 100%

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above that amount, Ultraseal’s motion is DENIED.
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I.

BACKGROUND

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The parties entered into the agreement on February 1, 2011. The agreement gave CFG an

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almost exclusive right to sell Ultraseal’s products throughout the world on a commission basis.

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The section of the contract that established the term of the agreement provides:

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10. Term of Agreement: The term of this Agreement shall be for one (1) year
and automatically renewed for two successive five year terms if at the time of
expiration of the initial one-year term Global Sales and Marketing Team has
increased Ultraseal’s net volume of sales one-hundred percent (100%) above the
baseline.

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According to CFG, it sold Ultraseal’s products under the terms of the agreement until it
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received a letter from Elizabeth Aguirre, Ultraseal’s President and owner, in May of 2012. In

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her letter, Aguirre claimed that the agreement did not automatically renew and that CFG and

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Ultraseal’s business relationship had expired on February 1st. Her letter instructed CFG to stop

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selling Ultraseal’s products and using its name. CFG subsequently filed this lawsuit.

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This Court has previously denied CFG’s motion for a preliminary injunction and has

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denied Ultraseal’s motion for summary judgment on all of CFG’s claims. Ultraseal now asks the
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Court to establish as a matter of law that the contract did not automatically renew according to
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the terms of the agreement. Ultraseal argues that the parties agreed when they entered into the

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contract that “baseline” refers to its previous year’s sales. Ultraseal also contends that it has

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submitted uncontroverted evidence that establishes its previous year’s sales and CFG’s sales

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figures during the term of the agreement. According to Ultraseal, that evidence shows that CFG

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did not increase its sales 100% above the baseline. CFG has argued that the parties agreed that

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“baseline” refers to some arbitrary number that they were supposed to establish after CFG had
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sold Ultraseal’s profits for a couple of months. CFG also argues that even if the parties intended

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“baseline” to mean the previous year’s sales, Ultraseal improperly calculated the baseline figure

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and CFG’s sales.
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II.

DISCUSSION

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Summary judgment is appropriate when, viewing the facts in the light most favorable to

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the nonmoving party, there is no genuine issue of material fact which would preclude summary

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judgment as a matter of law. Once the moving party has satisfied its burden, it is entitled to

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summary judgment if the non-moving party fails to present, by affidavits, depositions, answers to

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interrogatories, or admissions on file, “specific facts showing that there is a genuine issue for

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trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 91 L.Ed.2d 265 (1986).
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“The mere existence of a scintilla of evidence in support of the non-moving party's position is
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not sufficient.” Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir.1995).

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Factual disputes whose resolution would not affect the outcome of the suit are irrelevant to the

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consideration of a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S.

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242, 248, 106 S. Ct. 2505, 91 L.Ed.2d 202 (1986). In other words, “summary judgment should

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be granted where the nonmoving party fails to offer evidence from which a reasonable [fact

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finder] could return a [decision] in its favor.” Triton Energy, 68 F.3d at 1220.
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Contracts are to be interpreted to give effect to the parties’ intentions. Berg v. Hudesman,

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115 Wash.2d 657, 663, 801 P.2d 222, 226 (Wash. 1990). Contract interpretation is a question of

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law if it is unnecessary to rely on extrinsic evidence or if only one reasonable inference can be

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drawn from the extrinsic evidence. Tanner Elec. Corp. v. Puget Sound Power & Light Co., 128

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Wash.2d 656, 674, 911 P.2d 1301, 1310 (Wash. 1996). When the parties’ intentions must be

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determined from extrinsic evidence, however, it is the trier of fact’s role to evaluate the
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credibility of the evidence and to choose among varying reasonable inferences that can be drawn

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from the evidence. Berg, 115 Wash.2d at 668, 801 P.2d at 229 (citing Restatement (Second) of

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Contracts §§ 212, 214(c) (1981)).
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There is no question that the term “baseline” as used in the contract is ambiguous and
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requires interpretation. The contract does not define “baseline.” The context in which the term

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is used establishes that the “baseline” is some amount of sales, but what that amount is or how it

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is supposed to be calculated is unclear from the contract. The parties have submitted conflicting

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declarations regarding what they believed “baseline” to mean when they entered into the contract

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and how the baseline figure would be calculated. Because both parties’ interpretations are

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reasonable, and because it is solely within the province of a trier of fact to evaluate the credibility
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of the evidence, Ultraseal’s motion for partial summary judgment must be DENIED.
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III.

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CONCLUSION

As the Court noted in a prior order, the claims and defenses in this case are replete with

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questions of fact. Among the questions of fact that remains for trial is what the parties intended

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“baseline” to mean and how to calculate the baseline figure. Ultraseal’s motion for partial

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summary judgment is DENIED.
Dated this 30th day of October, 2013.

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A
RONALD B. LEIGHTON
UNITED STATES DISTRICT JUDGE

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ORDER - 4