Aerel, S.R.L. v. Pcc Airfoils, L.L.C.

• Decision Date: 23 May 2006
• Docket Number: No. 05-3864.,05-3864.
• Citation: 448 F.3d 899
• Parties: AEREL, S.R.L., Plaintiff-Appellant, v. PCC AIRFOILS, L.L.C., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

448 F.3d 899

AEREL, S.R.L., Plaintiff-Appellant, v. PCC AIRFOILS, L.L.C., Defendant-Appellee.

No. 05-3864.

United States Court of Appeals, Sixth Circuit.

Argued: April 25, 2006.

Decided and Filed: May 23, 2006.

ARGUED: Timothy John Fitzgerald, Gallagher Sharp, Cleveland, Ohio, for Appellant. M. Neal Rains, Frantz Ward LLP, Cleveland, Ohio, for Appellee. ON BRIEF: Timothy John Fitzgerald, George H. Carr, James F. Koehler, Gallagher Sharp, Cleveland, Ohio, for Appellant. M. Neal Rains, Lindsey A. Carr, Frantz Ward LLP, Cleveland, Ohio, for Appellee.

Before: SUHRHEINRICH, GILMAN, and ROGERS, Circuit Judges.

OPINION

RONALD LEE GILMAN, Circuit Judge.

Aerel, S.R.L., an Italian company that served as the exclusive sales agent for PCC Airfoils, L.L.C. in Italy, sued PCC for the breach of a contract that the parties executed in 2000. PCC is an Ohio-based company that provides castings for parts used in jet engines and power generating equipment. Aerel maintains that the contract required PCC to pay Aerel commissions for all orders that Aerel obtained for PCC in Italy during the term of the contract, even if those orders were not finalized until after the contract had expired. The district court concluded that the contract unambiguously permitted PCC to cease paying commissions upon the termination of the contract on December 31, 2002, and therefore granted summary judgment in favor of PCC. For the reasons set forth below, we AFFIRM the judgment of the district court.

I. BACKGROUND

A. Factual background

Aerel entered into its first contract with PCC in July of 1987. Under that contract, PCC agreed to pay Aerel commissions at a rate of 4% on the sale of certain PCC products in Italy, with the understanding that higher or lower commissions on other products or services could be established by mutual agreement. Commission payments were to extend for 18 months following the 1989 expiration date of the contract. Aerel would thus receive commissions during this extended period on orders placed, but not completed or paid for, during the contract term. Article V of the contract provided in relevant part as follows:

5-C Upon the termination of this AGREEMENT, PCC Airfoils, Inc.['s] obligation to pay commission on sales of PRODUCTS promoted by AEREL hereunder shall cease except AEREL shall be paid commission on purchase orders then in force for castings to be delivered up to 18 months after the termination of the contract where the PRODUCTS covered thereby have not been delivered or paid for.

After the initial contract expired in December of 1989, the parties renewed their arrangement with similar agreements—all of which contained ¶ 5-C—in 1990, 1993, and 1995. Aerel continued to serve as PCC's exclusive sales agent in Italy following the expiration of the 1995 agreement, but operated without a written contract.

In July of 2000, the parties signed a new sales agreement that modified their previous arrangement. Three provisions of the 2000 contract are at issue in the present case:

2-F PCC AIRFOILS, INC. agrees to pay AEREL in full under terms of net thirty (30) days from the date of receipt of payment to PCC AIRFOILS, INC. from the customer.

2-G On all sales originating from the Territory, PCC AIRFOILS, INC. shall pay AEREL as follows:

1. Tooling and fixtures 0%

2. Commission to be paid for CF6-8OC2 and GE90 airfoils sold to any Italian customer will not exceed 2%

3. Castings for any other program of PCC AIRFOILS, INC. 4%

4. It is understood that higher or lower commissions may be required with regard to certain products or services, by mutual agreement.

* * * * * *

5-B Upon the termination of this Agreement, PCC AIRFOILS, INC.['s] obligation to pay commission on sales of Products promoted by AEREL hereunder shall cease.

Just three months after signing the new contract, the parties further modified the terms of the agreement by amending subparagraph 2 of ¶ 2-G to include other PCC products at the 2% rate. Absent from the 2000 contract, however, was any language confirming Aerel's right to commission payments for timely placed orders delivered and paid for during the 18 months after the contract terminated. All of the prior contracts between the parties had included that language in ¶ 5-C.

Luciano Cosentini, Aerel's principal, testified in his deposition that he knew of the change in the language and was not pleased with it. But he acknowledged that he had signed the 2000 contract voluntarily. Notwithstanding this testimony, Cosentini filed an affidavit accompanying Aerel's motion for partial summary judgment in which he offered a detailed reason for the deletion of ¶ 5-C. Cosentini claimed that the language previously in Article V was eliminated because Aerel had requested a commission "tail" that would have permitted Aerel to collect commissions on orders that were negotiated directly by PCC, without Aerel's help, after the contract had expired. Aerel insisted that it was entitled to these extra commissions because it had developed a market in Italy for PCC products. But PCC rebuffed Aerel's efforts and, according to Cosentini, employed language in the new ¶ 5-B that expressly rejected the idea of commission tails. Cosentini maintained, however, that this did not alter his ongoing oral understanding with PCC's Sales Director Alan Peterson that Aerel would continue to receive commissions on all Aerel-obtained orders placed during the contract term, even if those orders were not completed and paid for until after the contract expired.

During the term of the 2000 contract, Aerel negotiated blanket purchase orders of PCC products with two Italian companies, FiatAvio and Nuovo Pignone. As the parties explained at oral argument, the blanket purchase orders in question, although submitted during the period of the agreement, did not become binding contracts until both the purchaser and PCC confirmed a specific draw-down against the blanket purchase order. These specific purchase orders led to continued sales in 2003, 2004, and 2005. In 2003, for example, sales under the specific purchase orders totaled $30,974,297. The FiatAvio purchase orders expired at the end of 2003, but the Nuovo Pignone orders still led to significant sales in 2004 and 2005. At the rates in the 2000 contract, Aerel estimated that it would have earned over $650,000 in commissions on the FiatAvio and Nuovo Pignone purchase orders between 2003 and 2005. But in October of 2002, two months before the contract was set to expire, PCC informed Aerel that the sales arrangement would not be renewed. PCC sent a check and an accompanying explanatory letter in March of 2003, purporting to pay Aerel for all of the commissions owed under the expired contract.

B. Procedural background

Aerel filed its complaint in the district court in April of 2004. The complaint sought recovery under the theories of breach of contract, quasi-contract, and unjust enrichment. After attempts at mediation failed, PCC filed a motion for summary judgment. Aerel responded with a cross-motion for partial summary judgment. The district court denied Aerel's cross-motion and granted PCC's motion. Aerel, S.R.L. v. PCC Airfoils, L.L.C., 371 F.Supp.2d 933, 943 (N.D.Ohio 2005). Aerel argued that the language of the contract clearly requires PCC to pay commissions on all orders initiated during the contract period or, in the alternative, that the contract was ambiguous. Rejecting both of these arguments, the district court held that, under ¶ 5-B of the contract, "Aerel is not entitled to commissions after the termination of the contract." Id. at 939.

The district court also rejected Aerel's contention that an alleged oral modification of the terms of ¶ 5-B after the contract was executed precluded summary judgment. This contention, the district court observed, was supported only by Cosentini's affidavit. Id. at 941. In paragraphs 7 and 11 of the affidavit, Cosentini averred that PCC Sales Director Peterson had told him during and after the negotiation of the 2000 contract that Aerel would receive the contested commissions, and that Peterson's representations "either confirmed [his] interpretation of the written contract, or modified the written contract to match [his] previous interpretation." But the district court determined that these statements should have been revealed in Cosentini's deposition testimony. It therefore struck the two paragraphs in the affidavit that related to the alleged oral modification. Id. at 942. Finally, the district court granted summary judgment to PCC on the quasi-contract and unjust-enrichment claims, neither of which Aerel has pursued on appeal. Id. at 943.

II. ANALYSIS

A. Standard of review

We review de novo a district court's grant of summary judgment. Int'l Union v. Cummins, Inc., 434 F.3d 478, 483 (6th Cir.2006). Summary judgment is proper where there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c). In considering a motion for summary judgment, the district court must construe the evidence and draw all reasonable inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The central issue 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." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

B. The district court did not err in determining that no commissions were due after the contract expired

Aerel first argues, as it did before the district court, that ¶ 2-G of the contract clearly entitles Aerel to all of the post-termination commissions that it seeks. This argument fails for two reasons. The first is that Aerel itself recognizes that the operative phrase in ¶ 2-G—"sales originating from the Territory"—"is...