Opinion
Civil No. 99-2022 (MJD/JGL)
August 13, 2001
Kent B. Hanson and Lezlie Ott Marek, Hanson Marek Bolkcom Greene, LTD for and on behalf of Plaintiff.
Michael T. Nilan and Jennifer L. Kittelsen, Halleland Lewis Nilan Sipkins Johnson, P.A. for and on behalf of Defendant.
MEMORANDUM OPINION AND ORDER
FACTS
Plaintiff Hilleman House, Inc. ("Hilleman House") is a Minnesota corporation that performs marketing consultation and advertising. Since 1987, Hilleman House has served as the marketing consultant and the advertising agency of record for Oxford Veterinarian Laboratories ("Oxford"). The work performed by Hilleman House for Oxford included advertising, marketing communications, market research, public relations, strategy and regulatory compliance for biological products owned or controlled by Oxford. Hilleman Aff. ¶ 5. In 1989, Oxford was purchased by Defendant Pharmacia Upjohn ("Upjohn"), and Hilleman House continued its marketing and advertising duties for Upjohn.
In 1995, Upjohn transferred the marketing function of its Animal Health vaccine business from Worthington, MN to Kalamazoo, Michigan. At that time, Upjohn's Animal Health vaccine business was Hilleman House's primary client, constituting 70% of its business. After the transfer to Kalamazoo, Hilleman House worked with a different group of Upjohn managers. Approximately one year later, in September 1996, Upjohn notified Hilleman House that it was going to sell the Animal Health vaccine business, and that Hilleman House should stop work on selected projects, and to submit any outstanding invoices for projects, whether or not the project was completed. Hilleman Aff. ¶ 9. Hilleman House did submit invoices for all projects in progress, as well as completed projects. Hilleman House also sent Upjohn invoices in October, November and December 1996 for $20,000 per month, based on Hilleman House's position that it was guaranteed a minimum of $20,000 per month per agreement of the parties, and based on a ninety-day cancellation term.
Upjohn did not pay the invoices, but instead requested documentation to substantiate the invoices. It is Hilleman House's position that as it never had to provide documentation before for its invoices, and as a result, it spent a substantial amount of time collecting such data for Upjohn. Based on its understanding of the terms of payment, Hilleman House invoiced Upjohn for the time spent collecting the requested documentation. In addition, because Upjohn was not paying the invoices, Hilleman House began to charge Upjohn 18% (APR) interest on all unpaid invoices. Thereafter, Upjohn did pay for some of the invoices, but to date, certain invoices totaling approximately $39,000 remain unpaid.
Hilleman House filed the instant action, asserting claims for breach of contract, promissory estoppel, unjust enrichment, and intentional interference with prospective business advantage, negligent misrepresentation and fraud.
This claim has been dismissed.
Before the Court is Upjohn's motion for partial summary judgment. Upjohn seeks dismissal of all claims except the breach of contract claim. Upjohn argues that the promissory estoppel and unjust enrichment claims are duplicative of the breach of contract and should thus be dismissed. Upjohn also argues that such claims, as well as the interference with prospective business advantage and the negligent misrepresentation claims, fail on the merits. Upjohn also seeks to narrow the breach of contract claim to the disputed invoices for work allegedly done per the contract. Upjohn argues that it never agreed to pay interest payments or for the time expended in assembling documents.
Standard
Summary judgment, as a matter of law, is granted when no genuine issue of material fact exist. Fed.R.Civ.P. 56(c). Summary judgment is granted in favor of a defendant when the record clearly demonstrates an absence of evidence to support an essential element of the plaintiff's case. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). In addition, where the plaintiff has completely failed to offer probative material in support of an essential element of its claim, the court is required to enter summary judgment in favor of the defendant. Erickson v. Aetna Life Insurance Co., 777 F. Supp. 1463, 1466 (D. Minn. 1991).
Breach of Contract — 18% Interest Claim and Document Collection
Hilleman House asserts that it entered into an agreement with Oxford Labs in 1987, the terms of which are outlined in a December 1996 letter to Upjohn. Hilleman Aff. Ex. A. Although Upjohn was not involved at the beginning of Hilleman's working relationship with Oxford, it is Hilleman House's position that the terms of its compensation agreement, as outlined in the December 1996 letter, were affirmed by Upjohn throughout their business relationship. Hilleman House further asserts that as to the specific issue of interest on late payments, it has submitted the sworn affidavits of Duane Hilleman and Walter Babb, the former business manager for Oxford Labs, which show that Hilleman House and Oxford Labs understood and agreed that Hilleman House was entitled to 18% per annum interest on invoices not paid within thirty days. Hilleman Aff., ¶ 3, Babb Aff. ¶ 4.
In its responsive brief, Upjohn argues for the first time that Hilleman House's claim for interest on late payments is barred by the statute of frauds. Notably, this affirmative defense was not raised in Upjohn's Answer to Hilleman House's Complaint, nor was it raised in Upjohn's moving brief in support of partial summary judgment. Because it was raised in its responsive brief, Hilleman House did not present the Court with a response to such defense.
Generally, failure to plead an affirmative defense in a responsive pleading constitutes a waiver of such claim. See Federal Rules of Civil Procedure, 8(c). The Rules of Civil Procedure, however, also liberally permit amendments to pleadings. Fed.R.Civ.P. 15(a). Accordingly, the Court will address the issue of statute of frauds, even though it was not plead in Upjohn's Answer.
The statute of frauds, codified at Minn. Stat. § 513.01, provides that no agreement that by its terms cannot be performed within one year from the making is enforceable absent a writing signed by the party charged. The alleged agreement at issue in this case is for an indefinite period. To determine whether the statute of frauds applies to such agreements, the test is whether the agreement could be performed in one year, not whether it would likely be performed in one year. Braaten v. Midwest Farm Shows, 360 N.W.2d 455, 457 (Minn.Ct.App. 1985) (citing, Eklund v. Vincent Brass and Aluminum Co., 351 N.W.2d 371, 375 (Minn.Ct.App. 1984)). Because it was possible for the agreement at issue to be performed within one year, the statute of frauds does not apply in this case.
Upjohn also argues that the claim that Hilleman House could properly bill Upjohn for time spent on document collection is without merit, as there is no evidence that Upjohn agreed to pay for such services. Hilleman House responds that, as the most fundamental aspect of the contract between the parties provides that Hilleman House billed by the hour, it was appropriate to bill Upjohn for the time spent on collecting documents requested by Upjohn.
The Court finds that genuine issue of material fact preclude summary judgment as to the breach of contract claims based on interest, and for the billing of time spent collecting documentation.
Promissory Estoppel
Upjohn argues that Hilleman House's promissory estoppel and unjust enrichment claims are duplicative of the breach of contracts claim, and should therefore be dismissed. While it is true that a plaintiff cannot obtain double recovery for the same wrong, it is permissible to submit alternative pleadings. Judgment on this basis is therefore inappropriate.
Upjohn further asserts that the promissory estoppel claim must be dismissed, as Hilleman House cannot show a genuine issue of fact exists as to the elements of a promissory estoppel claim. To succeed on this claim, Hilleman House must show that Upjohn made a clear and definite promise, that it intended for Hilleman House to rely on such promise, and that Hilleman House did rely on such promise, and that the promise must be enforced to prevent injustice. Cohen v. Cowles Media Company, 479 N.W.2d 387, 391 (Minn. 1992).
Hilleman House asserts that in January 1996, Duane Hilleman and John Reimer, of Upjohn, met to specifically discuss Hilleman House's compensation arrangement. It is Hilleman House's position that Mr. Hilleman explained his understanding of the compensation arrangement to Mr. Reimer, and that in response, Mr. Reimer requested that Hilleman House continue what it had been doing in the past and requested that Hilleman House continue to help Upjohn's business growth. By reaffirming the longstanding contract between the parties, Hilleman House argues, Upjohn intended for Hilleman House to continue to performing services for Upjohn, and that Hilleman House did rely on such reaffirmation. Based on the above, the Court finds that genuine issues of fact preclude summary judgment on the promissory estoppel claim.
Interference with Prospective Business Advantage
Hilleman House's claim for interference with prospective business advantage is based on its assertion that Upjohn refused to release Hilleman House from its contract, thereby allowing Hilleman House to provide services to Bayer, A.G., which is the company that purchased the biological unit from Upjohn. Hilleman House argues that it had an ethical obligation not to provide services to a competitor of Upjohn while still under contract with Upjohn. Because Upjohn did not release Hilleman House, Hilleman House asserts that Bayer refused to enter into a contract with Hilleman House, causing it to lose a $30,000 per month retainer. To support this claim, Hilleman House has presented an affidavit from the marketing manager from Bayer. See Kennedy Affidavit.
To succeed on an intentional interference with business advantage claim, Hilleman House must show that Upjohn intentionally and improperly interfered with Hilleman House's ability to work with Bayer by "(a) inducing or otherwise causing [Bayer] not to enter into or continue the prospective relation; or (b) preventing the other from acquiring or continuing the prospective relation." United Wild Rice, Inc. v. Nelson, 313 N.W.2d 628, 633 (Minn. 1982). Hilleman House bears the burden of proving causation. Id.
Upjohn asserts it is entitled to judgment on this claim, as Hilleman admitted at his deposition that he could have terminated the working relationship with Upjohn, which would have allowed Hilleman House to ethically commence a working relationship with Bayer. The Court finds, however, that Hilleman House has submitted evidence that Upjohn took affirmative steps to prevent Hilleman House from speaking with Bayer. Hilleman Dep. at 132. Furthermore, it was Hilleman House's and Bayer's understanding that until Upjohn released Hilleman House from its contract; Bayer and Hilleman House could not ethically enter into a contract. Id., Kennedy Aff. ¶ 2. Accordingly, the Court finds that genuine issues of fact preclude summary judgment on this claim.
Negligent Misrepresentation
Hilleman House bases its negligent misrepresentation claim on the alleged assertions that Mr. Reimer falsely represented to Mr. Hilleman that Hilleman House would continue to serve as a marketing consultant for Upjohn, and that Upjohn's attorney, Peter Copeland, falsely represented to Mr. Hilleman that it was Upjohn's policy to deal fairly and reasonably with suppliers and that Upjohn would promptly pay all invoices.
A negligent misrepresentation claim may lie where "one who, in the course of his business, profession or employment, or in a transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information." Bonhiver v. Graff, 311 Minn. 111, 122, 248 N.W.2d 291, 298 (1976).
Hilleman House alleges that defendants failed to exercise reasonable care in making the above-noted representations, given their subsequent conduct toward Hilleman House — not paying invoices, and discontinuing its business relationship. As with the remaining claims, the Court finds that summary judgment is not warranted, based on genuine issues of fact.
IT IS HEREBY ORDERED that Pharmacia Upjohn's Motion for Partial Summary Judgment is DENIED.