869 F.2d 934 (6th Cir. 1989), 87-2195, Cloverdale Equipment Co. v. Simon Aerials, Inc.

Docket Nº:87-2195.
Citation:869 F.2d 934
Party Name:CLOVERDALE EQUIPMENT COMPANY, Plaintiff-Appellant, v. SIMON AERIALS, INC., Defendant-Appellee.
Case Date:March 10, 1989
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

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869 F.2d 934 (6th Cir. 1989)

CLOVERDALE EQUIPMENT COMPANY, Plaintiff-Appellant,

v.

SIMON AERIALS, INC., Defendant-Appellee.

No. 87-2195.

United States Court of Appeals, Sixth Circuit.

March 10, 1989

Argued Oct. 12, 1988.

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Michael H. Whiting (argued), Thomas H. Finnerty, Troy, Mich., for plaintiff-appellant.

Gregory G. Wille (argued), Milwaukee, Wis., I. Mark Steckloff, Detroit, Mich., for defendant-appellee.

Before MERRITT and RYAN, Circuit Judges; and POTTER, District Judge. [*]

RYAN, Circuit Judge.

Cloverdale Equipment Company, a Michigan corporation, sued Simon Aerials, Inc., a Wisconsin corporation, in diversity, presenting contract and fraud claims that sought damages resulting from the termination of a sales distributorship agreement. The district court granted summary judgment in favor of the defendant on all counts; plaintiff appealed. Because a careful review of the evidence presented to the district court indicates that the motion was properly granted, we affirm.

I.

Cloverdale Equipment Company ("Cloverdale") sells and leases construction and other heavy equipment. Simon Aerials, Inc., ("SAI") manufactures aerial lift equipment used in the construction industry. In a series of meetings commencing in December of 1985, SAI's president, Mr. Terry Smith, and Cloverdale's president, Mr. Tom Moilanen, discussed the possibility of Cloverdale replacing SAI's present Michigan distributor of aerial lift equipment. Cloverdale was not, however, SAI's first choice. SAI had discussed with another Michigan company, Caledonia Tractor and Equipment Company ("Caledonia") the possibility of entering into a master distributorship agreement whereby Caledonia would control distribution for an entire region of the United States. But Caledonia was committed to its aerial lift supplier through 1986. Thus, Caledonia was unable to make any commitments and its discussions with SAI terminated in late 1985.

In January 1986, Smith and Moilanen agreed in principle to a distributorship arrangement by which Cloverdale would become an SAI distributor and purchase approximately

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one million dollars of SAI equipment for sale or lease in Michigan. On February 15, 1986, SAI signed its standard distribution agreement contract and forwarded it to Cloverdale for approval. The standard contract designated Cloverdale as a distributor and permitted Cloverdale to purchase SAI products at discount for subsequent sale, lease, or service anywhere in the United States but with primary responsibility in lower Michigan. Thus, paragraph 1(b) of the standard contract provided:

It is expressly understood that this is not an exclusive agreement and SAI reserves the right to appoint other Distributors who may sell, lease and service SAI Products in the Territory. The Distributor is in no way restricted from selling SAI Products outside the Territory, and SAI does not restrict itself or other Distributors from selling SAI Products inside the territory.

Recognizing the advantage of reduced competition from other SAI distributors, Cloverdale requested a modification of the standard contract's paragraph on exclusivity. Cloverdale signed the form contract subject to SAI's acceptance of the following letter:

Attn: Mr. Terry Smith, President

Gentlemen:

This letter will serve as an addendum to the Simon Aerials, Inc. Distributorship Agreement. The following items shall be revised:

Page 1, "Witnesseth" Paragraph II, strike out the word "Non-Exclusive" and insert "Exclusive."

Page 1, Paragraph 1b, Delete and replace with the wording "During the term of this agreement and so long as Distributor is in compliance with its obligations hereunder, SAI will not appoint another distributor, dealer, agent or consignee in, or for, the territory, nor will SAI sell on a direct basis in the territory except replacement parts to Cyril J. Burke, Inc. for a period not to exceed twelve months from the distributorship agreement with Cloverdale Equipment Co."

Page 2, Paragraph 2C, Delete the words in the last sentence "and file, at its own expense and".

Page 4, Paragraph # 9, Delete the last sentence in its entirety.

Exhibit A--Add the words "-All" after the words Eagle Series.

Please sign and return one executed copy for our files.

Very truly yours,

CLOVERDALE EQUIPMENT COMPANY

SAI agreed to the proposed changes which effectively replaced SAI's standard paragraph 1(b) referring to nonexclusivity.

Significantly, Cloverdale did not request any change in the termination rights provision of the contract. Those rights are set out clearly in paragraph 11 on the fourth page of the six-page contract. Paragraph 11(a) states:

11. Termination. (a) This agreement may be terminated at any time by either party hereto upon sixty (60) days' written notice of such termination to the other party.

In addition, paragraph 11(b) provides that certain "occurrence[s]" would automatically terminate the relationship without the sixty-day notification unless SAI subsequently consented, in writing, to the occurrences. Those occurrences include Cloverdale's filing for bankruptcy, failing to pay or otherwise breaching the contract, failing to act in good faith in dealing with SAI, or Cloverdale's attempting to assign its distributorship rights.

In August 1986, Caledonia resumed discussions with SAI over the previously discussed possibility of a master distributorship and by mid-October the parties agreed to such an arrangement. Because the agreement, scheduled to take effect in 1987, included distribution rights in lower Michigan, SAI sent Cloverdale a written notice of termination pursuant to paragraph 11(a) of their contract on November 3, 1986. Cloverdale received the notice on November 5, 1986, and its distributorship was terminated sixty days later.

Cloverdale filed a complaint seeking recovery on four theories, one of which it

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abandoned prior to this appeal. On appeal Cloverdale challenges the propriety of the district court's summary judgment dismissal of its contract, estoppel, and fraud claims.

II.

Federal Rule of Civil Procedure 56(e) requires that the non-moving party confronted with a properly supported Motion for Summary Judgment "set forth specific facts showing that there is a genuine issue for trial." Otherwise, a district court may properly enter judgment before trial. Recent Supreme Court decisions have clarified the standards a court must apply when confronted with a Motion for Summary Judgment. In Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), the Court stated that summary judgment should not be disfavored and may be an appropriate avenue for the "just, speedy and inexpensive determination" of a matter. Id. at 327, 106 S.Ct. at 2555. In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), the Court stated:

If the defendant in a run-of-the-mill civil case moves for summary judgment or for a directed verdict based on the lack of proof of a material fact, the judge must ask himself not whether he thinks the evidence unmistakably favors one side or the other but whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. The mere existence of a scintilla of evidence in support of the plaintiff's positions will be insufficient; there must be evidence of which the jury could reasonably find for the plaintiff.

Id., at 252, 106 S.Ct. at 2512.

Clearly, mere allegations of a cause of action may no longer suffice to get a plaintiff's case to the jury. When confronted with a properly supported Motion for Summary Judgment, the party with the burden of proof at trial is obligated to provide concrete evidence supporting its claims and establishing the existence of a genuine issue of fact. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552; Anderson, 477 U.S. at 256, 106 S.Ct. at 2514; Adcock v. Firestone Tire and Rubber Co., 822 F.2d 623, 626 (6th Cir.1987). On this appeal we must determine whether the district court was correct in concluding that Cloverdale presented insufficient evidence to rebut SAI's showing that it had properly terminated Cloverdale's distributorship pursuant to paragraph 11(a) of the parties' written contract.

III.

In the first count of its amended complaint, Cloverdale alleged that when SAI terminated the distributorship it breached a contract for "an indefinite term [providing] for termination upon good cause only ..." On appeal Cloverdale advances four arguments for its proposition that despite paragraph 11(a)'s express language indicating that the parties had assented to a contract terminable at will, they were actually bound by a contract terminable only for cause.

First, Cloverdale argues that the letter addendum it drafted, referring to "Page 1, Paragraph 1b," expressly changed the contract's termination provisions or at least made the issue ambiguous because the addendum applied "so long as Distributor is in compliance with its obligations hereunder." But the addendum specifically referred to paragraph 1b of the agreement and made no reference to paragraph 11's termination provisions. The addendum expressly limits SAI from dealing with others in Cloverdale's market during the term of its contract with Cloverdale, but does not prevent SAI from exercising its paragraph 11(a) right to terminate its agreement with Cloverdale upon proper notice in order to engage another distributor.

Second, Cloverdale asserts that even if the addendum does not explicitly modify the paragraph 11 termination provisions of the contract, or at least render them ambiguous, the provisions themselves are so ambiguously drafted as to warrant the admission of parol evidence to prove that the parties intended that the contract could only be terminated for just cause.

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Cloverdale's argument in this respect is that paragraph 11 is ambiguous because subparagraph (a) provides for...

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