Canderm Pharmacal, Ltd. v. Elder Pharmaceuticals, Inc.

Decision Date01 December 1988
Docket NumberNos. 87-3352,87-3368,s. 87-3352
PartiesCANDERM PHARMACAL, LTD., Plaintiff-Appellee, Cross-Appellant, Sylvia Vogel, Plaintiff, Cross-Appellant, v. ELDER PHARMACEUTICALS, INC., Defendant-Appellant, Cross-Appellee, ICN Pharmaceuticals, Inc.; SPI Pharmaceuticals, Inc., Defendants, Cross-Appellees.
CourtU.S. Court of Appeals — Sixth Circuit

Eric M. Oakley, argued, Miriam R. Arfin, Squire, Sanders & Dempsey, Cleveland, Ohio, for appellant, cross-appellee.

Ralph W. Gallagher, Gallagher, Milliken & Stelzer, Bryan, Ohio, John C. Milliken, argued, for appellee, cross-appellant.

Before WELLFORD and BOGGS, Circuit Judges, and PECK, Senior Circuit Judge.

BOGGS, Circuit Judge.

Elder Pharmaceuticals, Inc. (Elder) appeals from the trial judge's ruling refusing to submit to the jury its defense that it had timely revoked its anticipatory repudiation. Canderm Pharmacal, Ltd. (Canderm) crossappeals, as does Canderm's President, Sylvia Vogel. Canderm filed its complaint on December 17, 1984 against Elder, Elder's parent corporation (SPI), and another SPI subsidiary (ICN) for breach of contract, tortious interference with contractual relations, and personal damages on behalf of Sylvia Vogel (Vogel), Canderm's President and sole shareholder. Elder counterclaimed for injury to its reputation and loss of sales. This court has diversity jurisdiction under 28 U.S.C. Sec. 1332.

The trial court made a number of pretrial rulings and findings. First, it granted ICN's motion to dismiss for lack of personal jurisdiction, thereby eliminating ICN as a party. Later, it granted defendants' motion for summary judgment, dismissing SPI from the case and limiting the issues for trial between Elder and Canderm to the breach of contract claims. In its memorandum and order of summary judgment, the court made a number of findings: (1) Ohio law precludes an action for breach of an implied covenant of good faith and fair dealing; (2) SPI was privileged to interfere with the contract, so Canderm's claim of tortious interference must fail; (3) Vogel lacked standing although she was President and sole shareholder of Canderm; (4) Vogel had alleged no personal injuries; (5) the defendants had not acted with malice; and (6) the acts of SPI were the acts of Elder so that there could be no tortious interference with the contract between Canderm and Elder. The court further ruled that Elder had anticipatorily repudiated the contract, and would not let the jury consider Elder's contentions that it had timely revoked any repudiation. The jury trial was thus limited to the issue of fixing the amount of damages. The jury awarded Canderm $706,938.00 in Canadian dollars. Based on the then-existing exchange rate, the judge entered judgment for Canderm in the amount of $537,767.73 in American dollars. Elder, Canderm, and Vogel filed notices of appeal.

We affirm on all issues except on the issue of Elder's alleged revocation of its anticipatory repudiation.

I

The facts underlying this action are as follows. Canderm is a Canadian pharmaceutical distributor with its principal place of business in Montreal, Quebec. Elder is an Ohio corporation that manufactures pharmaceuticals. On July 1, 1973, Canderm and Elder entered into a contract granting Canderm the exclusive right to distribute Elder products in Canada. The contract contained two relevant provisions: first, for the agreement to continue, Canderm's sales must be equal to or greater than 9.8% of Elder's domestic sales in the United States; and, second, Vogel must continue to be the majority shareholder in Canderm. In addition, the contract was renewable at Canderm's sole option. The first contract term was one year, the second was four years, and the third was five years. Canderm notified Elder that it wanted to renew the contract in 1974, 1978, and 1983. In 1983, the president of Elder acknowledged Canderm's right to renew in 1988. Canderm's sales of Elder products grew from $25,000 to $470,000 from 1973 to 1983.

In March, 1984, SPI notified Canderm that it had bought Elder and that, effective June 30, 1984, the contract would be cancelled. SPI was the parent company of ICN Canada Ltd., and the undisputed motivation for SPI's cancellation of the contract between Elder and Canderm was to transfer the distribution rights of Elder products to ICN. There is some dispute over whether SPI's goal was to consolidate its operations, or whether its ultimate purpose was to eliminate Canderm, which allegedly was in direct competition with ICN.

Upon receipt of SPI's letter of cancellation, Canderm immediately notified SPI that it considered that it had a valid contract with Elder and would not allow SPI to cancel. On that same day, April 13, 1984, Canderm submitted an order, and confirmed the order on June 8, 1984. On June 14, 1984, Canderm sent an announcement to other participants in the pharmaceutical industry stating that, though SPI had purchased Elder, Canderm remained the sole Canadian distributor of Elder products. However, on July 3, 1984, ICN sent a letter to Canadian wholesalers saying that future orders of Elder products should be arranged through ICN, and, that month, a shipment of Elder products was sent to ICN.

On August 16, 1984, Canderm secured an interlocutory injunction against Elder and ICN which contained three orders: first, Elder must continue to deal with Canderm pursuant to the contract; second, Elder could not sell to any company in Canada other than Canderm; and, third, ICN could not sell Elder products in Canada.

On August 21, 1984, Canderm wrote to Elder, saying that it assumed that Elder would comply with the injunction, and confirmed its earlier order with Elder, adding an order for another product. Canderm stated in this letter that if there was no confirmation of the delivery date of this order within ten days, Canderm would tell its customers that Elder products were no longer available in Canada.

Elder initially resisted compliance with the injunction, and voiced its reluctance in a September 19, 1984 letter. At that time, the above-mentioned orders still were outstanding. Canderm placed no further orders with Elder.

On October 15, 1984, the Vice President of SPI proposed a monetary settlement. On October 16, 1984, Canderm announced to the Canadian market that Elder products had been discontinued. Shortly thereafter, on October 29, 1984, Canderm rejected SPI's settlement offer.

On November 12, 1984, SPI wrote Canderm, informing it that SPI had directed Elder to fill Canderm's outstanding orders and asking Canderm to place more orders so that Elder could fulfill the first term of the injunction. Canderm then rejected the shipment of the outstanding order and placed no further orders. Thus, alleging that Canderm was preventing it from complying with the injunction, Elder moved that the court lift the injunction just after Canderm filed the present suit.

On December 1 to 6, 1984, ICN attended a dermatology convention, where it listed itself as the Canadian distributor of Elder products, and a 1985 trade publication also listed ICN as the Canadian distributor of Elder products.

On February 14 and 15, 1985, a hearing on Elder's motion to lift the injunction was held. Vogel, Canderm's president, testified that Canderm still wanted to purchase and distribute Elder products. The court denied Elder's motion based on this testimony.

On February 27, 1985, Elder's Treasurer, Paul Maier, wrote Canderm saying that Elder was ready to comply with the injunction by resuming performance of the contract, and again asking Canderm to place an order so that Elder could demonstrate its willingness to comply. Canderm did not place such an order, and it let the contract lapse 1 after its inventory of Elder products was depleted. Then, finally, Canderm allowed the injunction to be dissolved.

As noted above, the trial court granted summary judgment in favor of Canderm, made findings on a number of issues, and allowed only the issue of damages to be decided by the jury. The jury awarded Canderm a sizeable sum, and both parties appeal.

II

On appeal, Canderm argues that the question of SPI's privilege to interfere with the contract is one of fact that should have been submitted to the jury. In addition, Canderm claims that there was a question of fact regarding malice and, so, the issue of malice, as a prerequisite for both a finding of tortious interference and an award of punitive damages, should have gone to the jury. Finally, Vogel claims that the fact that she was a main reason for the contract's existence, as shown by a term conditioning renewal on her continued financial involvement, gave her standing to sue; and, in any case, standing is a question of fact that should have been submitted to the jury.

In its cross-appeal, Elder claims that, although it breached the contract initially, it had timely revoked its anticipatory repudiation, and that the trial judge erred in refusing to submit this issue to the jury, even as it related to fixing the amount of damages. In addition, Elder claims that the jury's award of damages, which included damages for lost profits, is not substantiated by the evidence.

A

The standard of review of a summary judgment is that a summary judgment should be sustained if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A district court "should be extremely hesitant to grant summary judgment on important and complex issues." Felix v. Young, 536 F.2d 1126, 1135 (6th Cir.1976) (citations omitted). In addition, summary judgment is "likely to be inappropriate in cases where the issues involve intent." Int'l Mining Co., Inc. v. Allen & Co., Inc., 567 F.Supp. 777 (S.D.N.Y.1983) (citations omitted). Ac...

To continue reading

Request your trial
666 cases
  • White Mule Co. v. Atc Leasing Co. LLC, Case No. 3:07CV00057.
    • United States
    • U.S. District Court — Northern District of Ohio
    • March 25, 2008
    ...to redress injuries to a corporation ... cannot be maintained by a stockholder in his own name." Canderm Pharmacal, Ltd. v. Elder Pharmaceuticals, Inc., 862 F.2d 597, 602-03 (6th Cir.1988) (quoting Schaffer v. Universal Rundle Corp., 397 F.2d 893, 896 (5th Cir.1968)). As a result, the defen......
  • GenCorp, Inc. v. American Intern. Underwriters
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • June 2, 1999
    ...fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see Canderm Pharmacal, Ltd. v. Elder Pharm., Inc., 862 F.2d 597, 603 (6th Cir.1988). The party moving for summary judgment bears the initial responsibility of informing the court that there is ......
  • Maltz v. Union Carbide Chemicals & Plastics Co.
    • United States
    • U.S. District Court — Southern District of New York
    • January 20, 1998
    ...corporations have the privilege to interfere with the contractual relations of one another); Canderm Pharmacal, Ltd. v. Elder Pharmaceuticals, Inc., 862 F.2d 597, 601 (6th Cir.1988) (parent company privileged to interfere with contracts of its subsidiary in order to further its legitimate b......
  • Parker v. Metropolitan Life Ins. Co.
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • August 1, 1997
    ...and that the moving party is entitled to a judgment as a matter of law.'" See Fed.R.Civ.P. 56(c); Canderm Pharmacal, Ltd. v. Elder Pharmaceuticals, Inc., 862 F.2d 597, 601 (6th Cir.1988)(quoting Fed.R.Civ.P. III. A. Title III: Places of Public Accommodation To determine whether a benefit pl......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT