Power-Tek Solutions Services v. Techlink

• Citation: 403 F.3d 353
• Decision Date: 04 April 2005
• Docket Number: No. 03-4342.,03-4342.
• Parties: POWER-TEK SOLUTIONS SERVICES, LLC, Plaintiff-Appellant, v. TECHLINK, INC., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

403 F.3d 353

POWER-TEK SOLUTIONS SERVICES, LLC, Plaintiff-Appellant, v. TECHLINK, INC., Defendant-Appellee.

No. 03-4342.

United States Court of Appeals, Sixth Circuit.

Argued: March 10, 2005.

Decided and Filed: April 4, 2005.

ARGUED:

Debra J. Horn, Meyers, Roman, Friedberg & Lewis, Cleveland, Ohio, for Appellant. Philip Oliss, Squire, Sanders & Dempsey, Cleveland, Ohio, for Appellee.

ON BRIEF:

Debra J. Horn, Meyers, Roman, Friedberg & Lewis, Cleveland, Ohio, for Appellant. Philip Oliss, James D. Thomas, Squire, Sanders & Dempsey, Cleveland, Ohio, for Appellee.

Before: MARTIN and GILMAN, Circuit Judges; COHN, District Judge.^*

BOYCE F. MARTIN, JR., Circuit Judge.

In this diversity case, the sole issue presented on appeal concerns the propriety of the magistrate judge's entry of judgment as a matter of law on behalf of Techlink, Inc. on Power-Tek Solutions Services, LLC's breach-of-contract claim. For the following reasons, we AFFIRM.

I.

Before Eric Bischof started his own company in 1999, which he called Power-Tek Solutions Services, LLC, he worked for a demolition company called Complete Demolition Services. Consumers Energy Company hired Complete Demolition to perform demolition and scrapping work at its power plant facility in Midland, Michigan. The Midland facility was originally planned to be a nuclear power plant, but Consumers Energy halted construction of the nuclear portion of the plant because of soil remediation problems and other impediments. While the non-nuclear portion of the plant ultimately became an operational facility, Consumers Energy decided to scrap the equipment and materials from the nuclear portion of the plant and hired Complete Demolition to do the work. Bischof was the Complete Demolition employee who was primarily responsible for attempting to sell the nuclear equipment. Those duties required him to work closely with Clancy Pitsch, the Consumers Energy employee who was primarily responsible for investment recovery.

Techlink is a marketing, sales and engineering company that buys nuclear equipment from cancelled nuclear facilities, recertifies and rededicates the equipment for use, and then sells the equipment to end-user nuclear facilities. In March 1996, Techlink received an inquiry from a utility company seeking a component for a nuclear reactor. Allan Kemp, Techlink's president, inquired with Consumers Energy about the nuclear reactor at the Midland facility. Consumers Energy directed Kemp to Bischof. Bischof indicated that he was interested in working with Techlink to sell the reactor along with any other nuclear equipment from the facility. During 1996, Techlink purchased several pieces of equipment from the Midland facility for possible resale to its customers.

Complete Demolition's work for Consumers Energy at the Midland facility was set to end in 1997. Bischof alleges that in 1996 he, individually rather than on behalf of Complete Demolition, and Kemp, on behalf of Techlink, entered into an oral agreement concerning the future marketing of Midland nuclear equipment. According to Bischof, the two men agreed that upon the expiration of Complete Demolition's contract with Consumers Energy, Bischof and Techlink would work together to market and sell the Midland nuclear equipment and would evenly split the net proceeds derived from any sales. Bischof explains that Techlink was to conduct the negotiations and communications with potential buyers and that Bischof was to handle all contacts and dealings with Consumers Energy and Pitsch. This alleged agreement is referred to as the alleged 1996 agreement, and Techlink has consistently denied its existence.

No Midland nuclear equipment was sold in 1997 or 1998. In early 1999, Bischof left Complete Demolition and formed his own company, Power-Tek. According to Bischof, he then approached Consumers Energy, through Pitsch, about the prospect of Power-Tek — as opposed to Bischof individually — and Techlink continuing to market the nuclear equipment from the Midland facility. Bischof alleges that Pitsch offered Power-Tek an exclusive marketing agreement with Consumers Energy, but that he declined the offer "because he had already made an agreement [the alleged 1996 agreement] with Techlink." After receiving Consumers Energy's approval for Power-Tek and Techlink to market the nuclear equipment, Bischof informed Kemp about these developments. Bischof alleges that he and Kemp "discussed and agreed that Power-Tek, instead of Bischof individually, would continue with the same agreement initially entered into by Techlink and Bischof" in 1996, including the even-split provision. The alleged substitution of Power-Tek for Bischof is referred to as the alleged 1999 agreement or the alleged 1999 substitution.

During the summer of 2000, two sales of nuclear equipment from the Midland facility were effectuated. Power-Tek alleges that these sales were made pursuant to the alleged 1999 agreement between the parties and that, pursuant to that alleged agreement, Power-Tek and Techlink split the proceeds evenly from these sales. Techlink, on the other hand, denies the existence of any such agreement and insists that it merely hired Power-Tek "to provide support services" in connection with these sales and paid it a negotiated fee. Notably, none of the receipts, invoices or orders that documented these sales references an even split of the proceeds between Power-Tek and Techlink or any agreement to that effect.

In early 2002, a company called First Energy Corporation contacted Techlink about purchasing a nuclear reactor head, and Techlink suggested that First Energy purchase the reactor head from the Midland facility. First Energy officials visited the Midland facility on one or more occasions and Bischof assisted with these visits. Kemp testified that he offered to pay Bischof for his assistance but that Bischof declined the offer and instead asked to be offered future work.

As negotiations with First Energy and other prospective buyers of the reactor head continued, Consumers Energy and Techlink entered into a March 18, 2002, "Sales & Marketing Agreement," pursuant to which Techlink was to be paid a commission on the final sale price of the reactor head. Neither Power-Tek nor Bischof was a party to this agreement and neither participated in negotiations concerning it. On May 22, 2002, Consumers Energy, First Energy and a broker entered into a "Sales Agreement" providing for the sale of the reactor head for $10,428,000. The Sales Agreement acknowledged that Consumers Energy had "contracted for certain marketing services with Techlink, Inc., and [Consumers Energy] will pay to Techlink, Inc. any fees that [Consumers Energy] has agreed to pay Techlink, Inc., in connection with the sale of the Vessel Head hereunder." Based upon the commission schedule in the Sales & Marketing Agreement, Techlink received a commission of $3,128,000 on the reactor head sale.

Kemp testified that because First Energy used its own contractors to remove the reactor head from the Midland facility, Techlink was unable to hire Power-Tek to perform any support services in connection with that particular sale. Kemp asked Bischof to meet him in Tennessee for a meeting on June 7, 2002, which Bischof did. At that meeting, Kemp explained that Techlink could not offer Power-Tek any additional work on the sale of the nuclear reactor head, but offered to pay Power-Tek $300,000 for the work that it had already performed. Bischof rejected that offer and insisted that he deserved more in light of the alleged 1999 even-split agreement between Power-Tek and Techlink. Kemp denied the existence of any such agreement. According to Kemp, Bischof then asked for a million dollars and, after Kemp refused to pay that amount, threatened that Pitsch would cancel Techlink's Sales & Marketing Agreement with Consumers Energy. In late July 2002, Power-Tek sent Techlink an invoice for $1.56 million. Techlink responded by sending Power-Tek a purchase order for $300,000 for services rendered by Power-Tek. Power-Tek rejected Techlink's purchase order and Techlink eventually revoked it.

Power-Tek filed the instant lawsuit against Techlink on October 15, 2002, alleging claims for breach of contract, promissory estoppel, conversion and breach of the duty of good faith and fair dealing, as well as a third-party beneficiary claim. The crux of Power-Tek's breach-of-contract claim is that Techlink breached the alleged 1999 agreement by failing to pay Power-Tek one-half of the net proceeds that it earned from the sale of the nuclear reactor head to First Energy. Techlink filed an answer that, among other things denied the existence of any even-split agreement between Power-Tek and Techlink. All parties consented to the exercise of jurisdiction by a magistrate judge over all proceedings, including trial and entry of final judgment.

After discovery, Techlink filed a motion for summary judgment on all claims. The magistrate judge, applying Michigan law, denied Techlink's motion as to the breach-of-contract and promissory-estoppel claims, but granted it as to the remaining claims. A jury trial commenced on April 21, 2003, with respect to the breach-of-contract and promissory-estoppel claims. At the close of Power-Tek's case, Techlink moved for judgment as a matter of law on both claims. The district court granted the motion as to the breach-of-contract claim only. The jury trial on the promissory-estoppel claim continued, with the jury eventually deadlocking. The second trial on the promissory-estoppel claim resulted in a unanimous jury verdict in favor of Techlink.

In this timely appeal, Power-Tek challenges solely the magistrate judge's entry of judgment as a matter of law in favor of Techlink on the breach-of-contract claim.

II.

A. Choice of Law

As an initial matter, Power-Tek argues that the magistrate judge erred in holding that Michigan law, rather than Ohio or Tennessee law, governed its...