Summary
stating with respect to civil conspiracy allegations against John Doe defendants: "This Court is not in the position of channeling or divining potential co-conspirators who are presently as tangible as Santa Claus, the Easter [B]unny or the Tooth Fairy"
Summary of this case from Allied Capital v. GC-Sun Holdings, L.P.Opinion
Civ. No. 3:98-CV-2367-X.
November 2, 2000.
MEMORANDUM OPINION AND ORDER
Defendant Nissan Motor Co. Ltd. ("Defendant NML") and Defendant Nissan Forklift Corp., N.A. ("Defendant NFC")(collectively, "Defendants") have filed their Motions for Summary Judgment. After review of the motions, responses and replies, for the reasons set forth below, it is this Court's opinion that the motions should be, and they hereby are GRANTED. Plaintiff's Cross-Motion to Re-Open Discovery and Motion to Submit Newly Received Evidence in Opposition to Motion for Summary Judgment are DENIED.
I. FACTUAL BACKGROUND
While this lawsuit involves numerous causes of action, the core events all relate to an alleged breach of contract. Defendant NFC and the Plaintiff entered into a Dealer Agreement (the "Agreement") on January 1, 1994. Under the Agreement, Plaintiff became an Authorized Dealer, with nonexclusive rights to market and resell Defendant NFC's products and nonexclusive privileges to identify itself as an Authorized Dealer. Plaintiff also assumed responsibilities for marketing, repairing and otherwise servicing Defendant NFC's products.
Under the Agreement, Plaintiff was assigned an Area of Primary Responsibility ("APR"), within which it was to actively market and promote Defendant's products. The Agreement required dealers who sold products in another dealer's APR to comply with Defendant NFC's policies, as modified from time to time, governing cross-compensation between the parties. On or about July 14, 1998, Defendant NFC notified Plaintiff that it was establishing a second dealership in Plaintiff's APR with Shannon, a local, non-party dealer. Plaintiff alleges that this decision constituted a termination of the franchise, which along Defendant NFC's subsequent failure to pay cross-compensation breached the Agreement. These two complaints give rise to the flood of causes of action presented to this Court.
Plaintiff filed its Complaint and Demand for Jury Trial on October 8. On October 16, 1998, Defendants each filed a Motion to Dismiss. On July 23, 1999, this Court granted the Motions to Dismiss in part, dismissing all antitrust causes of action (Counts 5, 11, 12, 13, 14 and 17). The Court referred this case to mediation on March 30, 1999, which ultimately failed on December 15, 1999, leading to Defendant's respective Motions for Summary Judgment, each filed on January 19, 2000.
Defendants challenge all of Plaintiff's remaining Counts, arguing principally that the underlying Agreement unambiguously provides Plaintiff only with nonexclusive rights and privileges. Given these limited rights and privileges, Defendants argue that no breach of contract has occurred. Against the other counts, Defendants argue that Plaintiff's claims are either not cognizable, not supported by summary judgment evidence, or simply not available under Texas or Illinois law.
Defendant NML, the corporate parent of Defendant NFC, has filed its own motion for summary judgment. Its foundational argument is that no privity of contract exists between itself and the Plaintiff, and thus, it cannot be held directly or indirectly liable for any claims founded upon a breach of contract. Without addressing the merits of this reasoning, this Court concludes that when the unambiguous Agreement forecloses a breach of contract claim against Defendant NFC, it also forecloses parallel claims against the more remote corporate parent. In addition to its response, Plaintiff has filed a Cross-Motion for the Reopening of Discovery and a Motion to Submit Newly Received Evidence in Opposition to Motion for Summary Judgment.
II. SUMMARY JUDGMENT STANDARDS
Summary judgment is appropriate when, viewing the evidence in the light most favorable to the nonmoving party, the summary judgment record demonstrates that no genuine issue of material fact exists, and therefore, the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986). Once the movant has met its burden, the burden shifts to the nonmovant to establish with significant probative evidence that a material issue of fact exists. Kansa Reinsurance Co., Ltd v. Congressional Mortgage Corp. of Tex., 20 F.3d 1362, 1371 (5th Cir. 1994). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The nonmovant may not rest upon the pleadings but must identify specific facts that establish a genuine issue exists for trial. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). The nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
III. ANALYSIS
Plaintiff has pled, all told, thirty-one separate counts against Defendants. These counts are thrown against the wall, in the apparent hope that some will stick. None do. The Court has made its best efforts to interpret some of the more abstract counts; all claims, except the previously dismissed antitrust ones, are discussed below. Many of the claims simply shrivel on the vine, with insufficient factual allegation or legal basis to survive Defendants' motions. A few truly push the Rule 11 envelope. The length of this opinion is the necessary, but wasteful consequence of such drive-by pleading.
A. Breach of Contract and Related Claims i. Counts 3, 15, 16 and 30: Breach of Contract
Defendants argue that none of Plaintiff's breach of contract claims are legally sufficient to survive summary judgment. Specifically, they contend that the Agreement unambiguously creates a nonexclusive relationship between Plaintiff and Defendant NFC. As a result, although some actions may have affected Plaintiff's bottom line, none independently breach that Agreement. The clear language of the Agreement precludes Count 3; the appointment of another dealer within Plaintiff's APR cannot breach an Agreement that recognized no territorial exclusivity.
In Count 15, Plaintiff complains that Defendant NFC converted one of its accounts into a national account. Defendant NFC replies that it never represented to Plaintiff that it would not effect that conversion outside a one year grace period. Plaintiff provides no summary judgment to modifies the Agreement's unambiguous disclaimer of any agreements other than those incorporated within itself. In the absence of this specific contrary evidence, Defendants are entitled to summary judgment on Count 15.
This Court construes Count 30 as a general breach of contract claim, where Plaintiff complains of Defendant NFC's failure of its duty to support Plaintiff's marketing efforts. Plaintiff has failed, thus far, to adduce any summary judgment evidence which would confirm or even suggest the existence of this broad, implied duty. Absent any genuine issue over the existence of the duty, this Court will respect the plain meaning of the Agreement. Defendants are entitled to summary judgment on Count 30.
The last explicit contractual claim is found in Count 16, Plaintiff's claim that it was entitled to cross-compensation, which Defendant NFC subsequently failed to pay, for Shannon's sales within its APR. In support of this claim, Plaintiff submits evidence on Defendant NFC's cross-compensation policy, as it existed on July 22, 2000.
Without rendering a finding on the admissibility of this evidence, this Court nonetheless finds that it creates no genuine issue of material fact. Plaintiff has not provided any summary judgment evidence showing Defendant's cross-compensation policy as it existed during the Agreement, from which this Court could construe a strict, contemporaneous policy of paying cross-compensation. Without this showing, Plaintiff cannot overcome Defendant NFC's argument that at best, a third-party would have to pay cross-compensation, and that Defendant NFC was never itself contractually obligated to pay. The existing evidence provides the Court with no basis for reinterpreting the unambiguous meaning of the Agreement. Accordingly, on Count 16, Defendants are entitled to summary judgment.
ii. Counts 6, 7, 10, 20, 21 and 22: Good Faith and Fair Dealing Claims
With respect to Plaintiff's six counts alleging a breach of the duty of good faith and fair dealing, Defendants respond that Texas and Illinois only recognize the duty in the execution of a contract, not in its surrounding negotiations. Furthermore, they argue that Plaintiff's failure to bargain for an exclusive APR does not, by necessity, transform the events into a breach of good faith and fair dealing. Defendant NFC asserts that it acted within its contractual rights, and thus, such acts could not be construed as bad faith. Plaintiff rebuts none of these arguments.
Texas courts recognize an independent cause of action for the breach of the duty of good faith and fair dealing only where a "special relationship" exists between the parties, one where there is substantially unequal bargaining power. "The `special relationship' cause of action in tort for breach of the duty of good faith and fair dealing, however, does not extend to ordinary commercial contractual relationships such as the supplier-distributor relationship." See McClendon v. Ingersoll-Rand Co., 757 S.W.2d 816, 819-20 (Tex.App.-Houston [14th Dist.] 1988), rev'd on other grounds, 779 S.W.2d 69 (Tex. 1989). Absent some inequality, such as exists in the insurer's control over the claims process, Texas courts default to the general contractual duty of good faith in a commercial setting prescribed by the Uniform Commercial Code, § Tex.Bus. Com. Code Ann. 1.203 (Vernon 1968), which provides that "[e]very contract or duty within this title imposes an obligation of good faith in its performance or enforcement." See La Sara Grain Co. v. First National Bank of Mercedes, 673 S.W.2d 558, 563 (Tex. 1984) (emphasis added). Likewise, under Illinois law, the covenant of good faith and fair dealing does not create independent duties for contracting parties. Beraha v. Baxter Health Care Corp., 956 F.2d 1436, 1443 (7th Cir. 1992). The covenant only serves to "guide the construction of the explicit terms in the agreement." Id.
Plaintiff has alleged many facts which give the Court a basis to understand its disappointment, which reveal perhaps lost opportunities, but none of these facts provide any basis for finding that Defendant NFC either did not' perform its contractual duties in good faith or acted outside of its contractual rights. More importantly, none of the allegations alters the existing judicial precedents so as to create a duty of good faith and fair dealing during the contractual negotiations. Defendants are entitled to summary judgment on these six counts.
iii. Counts 18 and 19: Texas DTPA Claims
Defendants argue, against Counts 18 and 19, that Defendant NFC's contractually permitted behavior cannot violate the DTPA. It is well-settled law in Texas, and in the Fifth Circuit, that a mere "allegation of breach of contract — without more-does not constitute a false, misleading, or deceptive action as would violate section 17.46 of the DTPA." Dura-Wood Treating Co. v Century 7 Forest Indus., Inc. 675 F.2d 745, 755 (5th Cir. 1982). This Court has already found no breach of contract, and Plaintiffs provides no summary judgment evidence illustrative of deception by the Defendants. Accordingly, Defendants are entitled to summary judgment with respect to Counts 18 and 19.
iv. Counts 8, 9, 27 and 29: Residual Contractual Claims
Plaintiff, in Count 8 claims that Defendant NFC's acts lead to its unfair detriment. A basic Westlaw search reveals that while this phrase exists in legal parlance, it is neither a cause of action nor a measure of damages, and this Court cannot sustain it as either. Count 9, too, claims unfair detriment, but it adds a claim of unjust enrichment to Defendant NFC. Defendants reply that unjust enrichment is an equitable cause of action, unavailable when the terms of the contract expressly permit the objectionable acts.
Under Texas law, "the fact that a party to a contract has made a profit is an insufficient ground on which to order restitution on a theory of unjust enrichment." Burlington Northern R.R. v. Southwestern Elec. Power Co., 925 S.W.2d 92, 97 (Tex.App.-Texarkana, 1996, reh. overr.) "The enrichment of one party at the expense of the other is not unjust where it is permissible under the terms of an express contract." Id. Defendant NFC has produced summary judgment evidence showing that its behavior was contractually permissible. In the absence of countervailing evidence from the Plaintiff, Defendants are entitled to summary judgment on this count. Nonetheless, even assuming the acts were not contractually permissible, Plaintiff provides no summary judgment evidence showing that profits rightfully due it transferred instead to Defendant NFC, or for that matter, any other party.
The Court has distilled the virtual hornbook presented in Count 27 into a claim for intentional infliction of emotional distress. Assuming, arguendo, that Defendants committed a breach of contract, this claim must still fall, as Plaintiff has failed to substantiate, intimate, or even to allege any actual and severe emotional distress suffered by the parties. Under Texas law, intentional infliction of emotional distress consists of the following elements: (1) intentional or reckless acts by the defendant, (2) which are extreme and outrageous; (3) causing the plaintiff's emotional distress; (4) which distress is of a severe nature. Brewerton v. Dalrymple, 997 S.W.2d 212, 215 (Tex. 1999) (citing Twyman v. Twyman, 855 S.W.2d 619, 621 (Tex. 1993)). Extreme and outrageous conduct is the exception, rather than the rule; it must be "`so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.'" Mattix-Hill v. Reck, 923 S.W.2d 596, 597 (Tex. 1996) (quoting Twyman, 855 S.W.2d at 621).
First, Plaintiff's reconstructed claim fails to allege any facts which would establish these elements. This Court finds that none of the events in question meet the threshold of "extreme and outrageous," so as to trigger tort liability. At worst, Defendant NFC behaved in a way permitted under the Agreement, and Plaintiff shows this Court no basis for finding such permissible behavior both extreme and outrageous as a matter of law. Defendants are entitled to summary judgment on Count 27.
Finally, in Count 29, Plaintiff states a nebulous claim for Defendants' unreasonable refusal to approve potential buyers of Plaintiff's business. Absent from the summary judgment evidence, however, are any facts showing that 1) Plaintiff intended to sell its business; 2) Plaintiff found sellers; 3) this sale required Defendant NFC's approval; 4) Defendant unreasonably denied this approval; and 5) Plaintiff has yet to sell its business. Such a factual gap would very likely justify a dismissal under Rule 12(b)(6), and this Court finds that Plaintiffs have done nothing more than make a bare legal assertion. Defendants are entitled to summary judgment on Count 29.
B. Counts 1, 2 and 4: Violations of the Illinois Franchise Disclosure Act
Defendants argue that the relationship between Plaintiff and Defendant NFC is statutorily exempt from the application of the Illinois Franchise Disclosure Act (IFDA). The IFDA protects parties that satisfy, certain criteria, among them, 1) location in Illinois, and 2) payment of a fee which meets the statutory definition of a "franchise fee." Ill. Admin. Code § 200.108. Defendants specifically argue that Plaintiff satisfies neither condition, having never (by its own pleading) been located in Illinois, nor paid a fee (monetary or in kind) which falls into the regulated categories. Defendants add that Plaintiff's initial inventory investment was not "excessive," as would be needed for the IFDA to apply. Plaintiff rebuts neither argument, and the existing summary judgment evidence leaves no genuine issue over Defendant's claim. As this relationship does not qualify as an Illinois franchise, Plaintiff lacks standing to bring an action under the IFDA. Thus, this Court cannot recognize these claims, and Defendants are entitled to summary judgment on Counts 1, 2 and 4.
C. Count 24: Texas Business Opportunity Act Claims
Defendant, by way of deposition testimony from Plaintiff's CEO, provides summary judgment evidence that Plaintiff has sold and leased, and has been free to sell and lease, equipment, products, and supplies from other manufacturers and competitors. Plaintiff provides no contrary evidence or argument. The statutory language of the Texas Business Opportunity Act exempts certain transactions from its application, including "a sale or lease to a business enterprise that also sells or leases equipment, products, and supplies or performed services . . . that are not supplied by the seller . . ." Tex. Bus. Com. Code § 41.004(b)(5). This Court is not free to ignore the explicit statutory boundaries set by the Texas Legislature. As the Act does not apply to the Agreement, Defendants are entitled to summary judgment on Count 24.
D. Count 26: Spoliation of Evidence
Defendants argue that spoliation of evidence does not exist as an independent cause of action under Texas law. In Garcia v. Columbia Medical Center of Sherman, 996 F. Supp. 617 (E.D. Tex. 1998), the district court considered recognizing spoliation as a cause of action. The court concluded that since the Texas Supreme Court had not yet declared spoliation of evidence to be an independent cause of action, it would similarly decline. Without rendering a finding on the admissibility of the evidence submitted with and after Plaintiff's reply, this Court finds that Defendants are entitled to summary judgment with respect to Count 26, as no facts, presented or imaginable, would justify this federal court's creation of a cause of action yet unauthorized by Texas law.
E. Count 4: Federal Trade Commission Act Claims
Defendants argue that the Federal Trade Commission Act (FTCA) claims are not legally cognizable, since the Act does not provide a private cause of action. In Morrison v. Back Yard Burgers, Inc., 91 F.3d 1184, 1187 (8th Cir. 1996), the appeals court, in reviewing a grant of summary judgment against the Plaintiff, held not only that the FTCA did not recognize a private cause of action, but further, that lack of a private cause of action precluded Plaintiff from pleading a violation of the FTCA as an element in its state common law fraud claim. This Court agrees with the Morrison court; Plaintiff's claim of an FTCA violation by Defendant NFC is not legally cognizable, and thus, Defendants are entitled to summary judgment on Count 4.
F. Counts 23, 25, 28 and 31: Miscellaneous
To the best of its ability, this Court has reviewed the remaining counts to discern if any viable causes of action exist. In Count 23, Plaintiff speaks of how the appointment of the second dealer would enable that dealer to "enjoy a free ride on [its] marketing efforts without compensating for same." Defendant has argued, and this Court agrees, that Plaintiff has failed to state a cognizable claim. Neither Texas law nor Illinois law recognize `free riding' as a cause of action. With respect to possibly construing these counts as either breach of contract or cross-compensation claims, this Court has already resolved such issues.
Likewise, Count 25 alleges "willful disregard" by the Defendants. While this legal term of art describes a state of mind, it has no independent legal significance as a self-sufficient cause of action. This Court cannot find a viable claim in Count 25. Count 28 catalogues the damages for which relief is sought, but the list which contains no independent cause of action. Defendants are therefore entitled to summary judgment on both of these non-claims.
Finally, this Court gets to meet and greet John Doe, the alleged joint participant in a civil conspiracy to breach the Agreement. (Count 31). Under Texas law, the elements of a civil conspiracy are: (1) two or more persons; (2) an object to be accomplished; (3) a meeting of minds on the object or course of action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result. Massey, 652 S.W.2d at 934; Futerfas, 707 S.W.2d at 156. Here, once again, Plaintiff has failed to elaborate the elements of its nebulous claim, or to provide summary judgment evidence showing any genuine issues of material fact. Having had more than a year to produce the other character(s) in the alleged conspiracy, Plaintiff has simply failed to do so. This Court is not in the position of channeling or divining potential co-conspirators who are presently as tangible as Santa Claus, the Easter bunny or the Tooth Fairy. Plaintiff also offers no summary judgment evidence which provide the third and fourth elements. With only two out of five necessary legs developed so far, this claim cannot stand, and Defendants are entitled to summary judgment on Count 30.
IV. CONCLUSION
It may well be that the Plaintiff negotiated a deal that turned out to be, for it, a bad deal. But it is not the function of the Court to tear up valid contracts and through the litigation process, rewrite, for the disappointed party, the contract that it wished it would have executed. A deal is a deal.