Opinion
Civil Action No. 98-2077-GTV Consolidated with No. 99-2055-GTV.
June 12, 2000.
Barry R. Grissom, Overland Park, KS; Gregory V. Blume, Overland Park, KS; Mary Jo Shaney, Douglas S. Laird and Christopher Swafford, Polsinelli, White, Vardeman Shalton, Kansas City, MO, for CUSTOM ENERGY LLC, plaintiff.
William H. Sanders, Sr. and James Borthwick, Blackwell Sanders Peper Martin LLP, Kansas City, MO; Frank R Osborne and M Neal Raines, Arter Hadden, Cleveland, OH, for LIEBERT CORPORATION, defendant.
MEMORANDUM AND ORDER
Plaintiff filed this diversity action alleging various causes of action stemming from defendant's alleged breach of contract. The case is before the court on defendant's motion for summary judgment (Doc. 55). For the reasons set forth below, the court grants defendant's motion.
I. SUMMARY JUDGMENT STANDARDS
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The requirement of a "genuine" issue of fact means that the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). Essentially, the inquiry 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." Id. at 251-52.
The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. This burden may be met by showing that there is a lack of evidence to support the nonmoving party's case. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmoving party to show that there is a genuine issue of material fact left for trial. See Anderson, 477 U.S. at 256. "A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Id. Therefore, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. See id. The court must consider the record in the light most favorable to the nonmoving party. See Bee v. Greaves, 744 F.2d 1387, 1396 (10th Cir. 1984).
II. FACTUAL BACKGROUND
The following facts are either uncontroverted or are based on the evidence submitted with summary judgment papers viewed in a light most favorable to the nonmoving party. Immaterial facts and facts not properly supported by the record are omitted.
In 1993, plaintiff's predecessor, Power System, entered into a written representative agreement with defendant, whereby Power System was an authorized representative of defendant with the right to purchase and resell defendant's products and services. Defendant manufactures and sells computer room precision air conditioning and power equipment and accessories. The parties' contract contained the following termination provision: "Either party hereto may terminate this agreement by giving to the other party thirty (30) days prior written notice by certified mail to that effect. Termination of the Agreement shall be effective thirty (30) days after the receipt of written notice of termination by either party."
In 1997, Power System was merged into plaintiff, Custom Energy. After the merger, the parties held at least three meetings discussing the possible effects of the merger. Plaintiff claims that during these meetings defendant orally modified the termination provision of the parties' agreement by promising to keep plaintiff as its representative as long as plaintiff continued to meet its quotas. Plaintiff's agents testified in deposition as to the following statements by defendant's representative, Jim Good, at these post-merger meetings: "Well, I don't know that [the merger is] good or I don't know that it's bad. We'll just have to wait and see." "As long as the business is doing well, we'll just watch." "Time will tell, and as long as you meet the numbers, we're happy." "If you meet the numbers, you know, we're going to be happy, and if you don't meet the numbers, you're going to hear from me." "We're concerned about the these [merger] issues, but in the end, if you make your numbers, ha-ha, that's what it's all about, and things are going to be fine." "We'll watch the numbers and see how this [merger] plays out." Plaintiff's agents testified that Ken Meyers, another representative of defendant, stated that he "wasn't sure how this [merger] was going to work out." On January 12, 1998, defendant provided plaintiff with thirty days notice of termination of the contract.
III. DISCUSSION
The court addresses plaintiff's two remaining claims — breach of contract and breach of implied covenant of good faith and fair dealing — in this decision. Plaintiff alleges that defendant modified the termination provision of the contract when it promised to keep plaintiff as its sales representative as long as plaintiff continued to meet its quota. Plaintiff claims that it in fact met the quotas and therefore defendant's termination breached the parties' contract. Defendant contends that plaintiff's alleged oral modifications are insufficient as a matter of law to modify the termination provision. The court agrees.
Plaintiff abandoned its other claims in its response to defendant's motion for summary judgment.
Kansas law allows modification of the terms of a written agreement on the basis of oral promises under certain circumstances. See Edo Corp. v. Beech Aircraft Corp., 911 F.2d 1447 (citing Lambertz v. Builders, Inc., 331 P.2d 559, 560 (Kan. 1958)). The burden rests with the plaintiff to prove by clear and convincing evidence an intent to modify the agreement. See id. (evidence must be clear and convincing, it need not be uncontroverted, but a preponderance of the evidence will suffice). "Evidence of vague, indefinite, or ambiguous statements will not suffice." Id. After thorough review of the record, the court concludes that the alleged statements of defendant's representatives, Mr. Good and Mr. Meyers, are vague, indefinite, and ambiguous and "certainly do not constitute clear and convincing evidence of an intent to modify" the termination provision of the parties' contract. Id.
The parties' contract provided that either party could terminate the contract upon thirty days prior written notice. Defendant exercised its right to terminate under the agreement. Finding no genuine issue of material fact with respect to plaintiff's breach of contract claim, the court grants summary judgment.
Plaintiff also claims that defendant breached the implied covenant of good faith and fair dealing inherent in all contracts in Kansas. The implied duty of good faith and fair dealing provides that a party to a contract shall not "intentionally and purposely do anything to prevent the other party from carrying out his part of the agreement, or do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract."Bonaza, Inc. v. McLean, 747 P.2d 792 (Kan. 1987).
"American courts have traditionally taken the view that competent parties may make contracts on their own terms provided such contracts are neither illegal nor contrary to public policy, and in the absence of fraud, mistake or duress a party who has entered into such a contract is bound thereby." Agusta Med. Complex, Inc. v. Blue Cross of Kansas, Inc., 608 P.2d 890, 895 (Kan. 1980). "This would include any provision for mutual termination of the contract." Id.
As stated above, the parties' contract provided that either party could terminate the contract upon prior written notice. Defendant exercised its right to do so. Finding no genuine issue of material fact, the court grants summary judgment on plaintiff's breach of implied covenant of good faith and fair dealing.
Finding no genuine issue of material fact exists and that defendant is entitled to judgment as a matter of law, the court grants summary judgment on plaintiff's claims.
IT IS THEREFORE BY THE COURT ORDERED that defendant's motion for summary judgment (Doc. 55) is granted.
The case is closed.
Copies of this order shall be mailed to counsel of record for the parties.
IT IS SO ORDERED.