Cavcon, Inc. v. Endress + Hauser, Inc.
| Decision Date | 08 May 2008 |
| Docket Number | Civil Action No. 2:07-0044. |
| Parties | CAVCON INC., a West Virginia corporation, Plaintiff, v. ENDRESS + HAUSER, INC., an Indiana corporation, Todd Lucey, an individual, Fred Cappelli, an individual, L.H. Boleky Co., a Pennsylvania corporation, and John Planitzer, an individual, Defendants. |
| Court | U.S. District Court — Southern District of West Virginia |
David K. Hendrickson, Stephen Edward Hastings, Hendrickson & Long, Charleston, WV, for Plaintiff.
Andrew M. McNeil, Marisol Sanchez, Bose McKinney & Evans, Indianapolis, IN, M. David Griffith, Jr., W. Bradley Sorrells, Robinson & McElwee, Charleston, WV, for Defendants.
Pending in this eleven-count action for breach of contract, tortious interference and related claims are the joint motion of all the defendants for summary judgment and the motion of the plaintiff for summary judgment with respect to Count I only, each filed on December 19, 2007.1
On February 11, 1991, plaintiff Cavcon Inc. ("Cavcon"), a West Virginia corporation, entered into a sales representative agreement ("agreement") with defendant Endress + Hauser, Inc. ("Endress"), an Indiana corporation, to be its exclusive, independent sales representative in distributing Endress' industrial instrumentation products in a territory that included a portion of West Virginia that appears to cover all but the northern panhandle of the state ("West Virginia territory"). . The agreement authorized Cavcon to sell products made by Endress. . Endress paid Cavcon a commission upon all net sales of Endress' specified products within Cavcon's territory. (Id. ¶ 5).
The agreement contained the following relevant: paragraph:
13. Term of Agreement
(a) This agreement shall continue in force until terminated by either party, with or without cause, by the giving of thirty (30) days prior written notice of the intention to terminate this agreement.
(b) In the event of termination of this agreement in accordance with 13(a), Company [Endress] agrees to credit commission to Representative [Cavcon] for orders resulting from Representative's quotations, according to the following schedule:
For orders transmitted by Representative or customers in Representative's territory and accepted by Company within thirty (30) days after the effective termination date, the full commission shall be credited.
For orders similarly transmitted by Representative or customers in Representative's territory and accepted by Company between 31 and 60 days after the effective termination date,½ of the commission shall be credited.
No commission shall be paid on orders to be shipped more than one (1) year after termination.
For these provisions to apply, copies of all outstanding quotations up to the date of termination shall be deposited with Company at that time. Company's acceptance of such orders shall not be unreasonably withheld.
(Id. ¶ 13).
On October 30, 2006, Endress provided notice of its intent to terminate the agreement, effective November 1, 2006. (10-30-06 Cancellation Addendum, attached as Ex. 1 to Pl.'s M.S.J.). The cover letter and accompanying addendum to the contract cancelling the agreement ("cancellation addendum") cited paragraph 13 of the original agreement after providing as follows:
Afer much consideration, Endress + Hauser has elected to terminate CAVCON, Inc. as our representative in the territory defined:
* * *
[numerical descriptions omitted]
We appreciate your efforts on our behalf and wish you and your company success in the future. Your effective termination date is November 1, 2006. [boldfaced]
We will continue to honor orders resulting from your quotations and credit payment of sales commissions outlined in section 13 B of our representative agreement below.
* * *
(Id.). Following the boldface articulation of paragraph 13(b), the addendum contained signature blocks for Todd Lucey ("Lucey"), as general manager of Endress, and Jack Vaughan ("Vaughan"), as president of Cavcon; however, neither of their signatures were affixed to the document. (Id.). Vaughan did not sign and return the cancellation addendum to Endress at the advice of his lawyer. . It is undisputed, however, that Vaughan received the cancellation addendum via Federal Express on behalf of the plaintiff on October 31, 2006. (Id. at 87).
Frank Buchy ("Buchy"), as manager of the relevant West Virginia territory for Endress, testified that Endress decided to replace Cavcon because Vaughan did not provide any written plan to grow its West Virginia territory despite Endress' requests to provide one. .
On November 15, 2006, an e-mail was sent to potential Endress customers by Buchy announcing Endress' appointment of Pennsylvania corporation, L.H. Boleky Co. ("Boleky"), as industrial municipal representative for the West Virginia territory formerly occupied by Cavcon. . In the e-mail, the effective date of the appointment was listed as December 1, 2006. (Id.).
Boleky did not begin as the sales representative in the West Virginia territory, formerly occupied by Cavcon, until after December 1, 2006. . Cavcon "continued to place orders with [Endress] during the month of November 2006 and beyond that time." . Vaughan acknowledged that Cavcon received 100% commissions for all orders placed following his receipt of the termination notice. (Id.).
The obligation to pay these post-termination commissions was conditioned upon Cavcon meeting the requirement of the agreement that "copies of all outstanding quotations up to the date of termination shall be deposited with Company at that time." . Although Cavcon never sent Endress the outstanding quotations, , Endress nevertheless paid Cavcon full commissions for all orders placed. .
On January 1, 1996, John Planitzer ("Planitzer") purchased Boleky and has served as president and sole owner of Boleky during the relevant time period. . When he purchased Boleky, the company's sales territory for all of its suppliers included "Western Pennsylvania, West Virginia, the border counties of Ohio, and the counties of Allegheny and Garrett in Maryland." (Id.). Boleky did not, however, sell Endress products in those territories at that time. (Id.).
Boleky has had steady sales growth since Planitzer purchased it in 1996. . In 1996, the company had sales of $2.1 million, and in 2006, Boleky's annual sales reached $5.1 million. (Id. at 9-10),
Sometime in 2002, Joe Forrester ("Forrester"), then principal owner of Staples & Associates, Inc. ("Staples"), which was the Endress independent sales representative for Western Pennsylvania at the time, approached Planitzer about Boleky purchasing Staples' product lines. . Forrester and his son-in-law, Fred Cappelli ("Cappelli"), then employed by Staples, approached Endress to solicit its support for Staples' efforts to find a suitable merger partner and specifically mentioned Boleky, to which Endress agreed. .
Effective March 1, 2003, Boleky purchased Staples' product lines, including the Endress territory for Western Pennsylvania and the northern panhandle of West Virginia. . As part of the acquisition of Staples, Planitzer hired Forrester to be an employee of Boleky for three years. (Id. at 21). Around the time of the acquisition, Cappelli was hired as area vice president for Endress, which included supervision of all of West Virginia. .
During the discussions between Boleky and Staples in 2002, Michael Sherenian of Endress inquired of Planitzer's interest in Boleky serving as Endress' sales representative for the rest of West Virginia, if the territory were to become available. . In 2003, Planitzer again spoke with Sherenian, along with his new employee, Forrester, about working the rest of the West Virginia territory, if the possibility were to arise. . Planitzer did not, however, initiate these conversations with Sherenian regarding the takeover of the rest of Endress' West Virginia territory. (Id. at 52-53, 17-21).
Knowing he was about to work for Endress, Cappelli sold his shares of Staples to Forrester. (Cappelli Depo. at 12, attached as Ex. C to Pl.'s Resp. to M.S.J.). When asked whether he received any compensation for the sale of Endress' line by Boleky, Cappelli testified that he was supposed to receive ...
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