Coleman v. Sears, Roebuck & Co.

• Decision Date: 29 December 2003
• Docket Number: No. Civ.A. 01-87J.,Civ.A. 01-87J.
• Parties: James COLEMAN, Plaintiff, v. SEARS, ROEBUCK & CO., and Sears Carpet and Upholstery Care, Inc. Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

319 F.Supp.2d 544

James COLEMAN, Plaintiff, v. SEARS, ROEBUCK & CO., and Sears Carpet and Upholstery Care, Inc. Defendants.

No. Civ.A. 01-87J.

United States District Court, W.D. Pennsylvania.

December 29, 2003.

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Alexander H. Lindsay, Jr., Lindsay, Jackson & Martin, Butler, PA, Angelo A. Papa, New Castle, PA, for Plaintiff.

Mike Adams, William J. Moorhead, Jr., Cipriani & Werner, Pittsburgh, PA, Fredric A. Cohen, John Chen, Frederic A. Cohen, Catherine M. Burkhardt, Piper Rudnick, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

GIBSON, District Judge.

This case comes before the Court for consideration of Defendants' Motion for Summary Judgment (Document No. 50) and Plaintiff's Reply in Opposition to Defendants' Motion for Summary Judgment (Document No. 56). For the following reasons, Defendants' Motion for Summary Judgment is granted.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff alleges the following: Plaintiff, James Coleman, went into the carpet cleaning business in 1973, doing business as Magic Mist. (Document No. 1, ¶ 8). In the early 1980's, Plaintiff contacted Defendants, Sears, Roebuck & Company and Sears Carpet and Upholstery Care, Incorporated (collectively "Sears") about securing a license to use the Sears name in connection with his business. Id. ¶ 22. Plaintiff first entered into a license agreement with Sears in October 1981. Id. ¶ 30. Between 1981 and 1995, the parties entered into a series of written agreements, the terms of which did not vary. Id. ¶ 89. There were not separate agreements between the parties for the years 1996 and 1997, but during those years the parties operated under the terms of the 1995 agreement. Id. ¶ 92. Finally, in 1998 the parties signed an agreement that was "identical" to their 1995 agreement. Id. ¶ 93. They operated under the terms of this contract until July 20, 2000. Id. ¶ 95.

Under the 1998 agreement, the Plaintiff was given a non-exclusive license to use certain Sears trademarks solely in connection with his carpet and upholstery cleaning business. Id. Exhibit A, ¶ 1. In exchange for this license, Plaintiff was required to pay Defendants a percentage of all revenue that he earned from any customers who originated from Sears. Id. ¶¶ 29 G & 43. This agreement was for "a period of 1 year beginning on May 1, 1998, and ending at the close of business on April 30, 1999, unless sooner terminated in accordance with the provisions of this License Agreement." Id. Exhibit A, ¶ 10(a). The agreement expressly stated that "[t]his Agreement contains no renewal rights." Id. The agreement further provided for termination by either party without cause by giving the other party sixty (60) days written notice. Id. Exhibit A, ¶ 20.

In 1997, Plaintiff heard that Defendants were considering a change in the nature of the relationship that they had with individuals like Plaintiff. Plaintiff heard that rather than sign license agreements with such individuals, Defendants were contemplating selling franchises. Id. ¶ 52. This rumor concerned Plaintiff because, if true, it would place Plaintiff in a bind. Either Plaintiff would have to buy a franchise from Sears, something he felt was unfair because he had already expended tremendous sums in promoting the Sears name, or Plaintiff would have to forego such a deal, thereby losing use of the Sears name, a large number of customers, and all the money that he had expended in the past. Id. ¶ 53. When Plaintiff approached Defendants about this rumor, a representative of Defendants told him that such a thing would "never" happen. Id. ¶ 55. In fact, Defendants' representative urged Plaintiff to put such fears to rest. Id. ¶ 56. In no uncertain terms, Plaintiff was told that he "would always be a part of the Sears group, without any change in the relation[ship], and without having to purchase or pay for anything of that sort again." Id. ¶ 58; see also id. ¶ 76.

These representations turned out to be untrue. In May 1998, Defendants established a franchise program. Id. ¶ 98. In February of 1999, Defendants informed Plaintiff that he was required either to buy a Sears' franchise for $7,500.00 or else Sears would offer his territory to the public. Id. Under the terms of this offer, Plaintiff could continue to use the Sears name in his business, but he would lose his independence. Any non-Sears customers that Plaintiff had would become Defendants' customers. Id. ¶ 99 C. Additionally, Plaintiff would be forced to close his Magic Mist business completely, a business he had been operating since 1973. Id. ¶ B. The offer also required Plaintiff to hand over his entire customer list to Sears, id. ¶ 99 F, and to meet Sears' market penetration quotas. Id. ¶ 99 H.

Plaintiff did not accept the offer. In July 2000, Defendants notified Plaintiff that his agreement with the company had expired on April 30, 1999. Id. ¶ 111; Document No. 5, Exhibit 1. In this same notice, Defendants notified Plaintiff that he must wind up his dealings with Sears by September 30, 2000. (Document No. 5, Exhibit 1). Finally, Defendants told Plaintiff that they expected him to cease all use of the Sears name, its products, or its customers. Id.

As a result of the aforementioned actions, Plaintiff brought legal action against Defendants. Initially, Plaintiff filed a six (6) count Complaint in the Court of Common Pleas of Cambria County. Complaint ¶¶ 122-202. On August 21, 2001, the court dismissed most of the counts in Plaintiff's original complaint against Sears. (Document No. 9).¹ The only remaining claim asserted by Plaintiff was Plaintiff's claim that Defendants fraudulently misrepresented to Plaintiff that they would never establish a franchise program. (Document No. 9).

Plaintiff claims that he relied, to his detriment, on the oral misrepresentations made by Defendants' representative, Mr. Witcher. (Document No. 10, ¶ 189). Plaintiff argues that Mr. Witcher personally guaranteed in no uncertain terms that Plaintiff would never be asked or required to enter into a franchise agreement with Defendants. Id. at ¶¶ 184, 180. Plaintiff claims that in reliance on these misrepresentations, Plaintiff invested his "time, money, and energy into the preservation and maintenance of a business relationship with the Defendant[s] to the eventual detriment of Magic Mist Carpet Cleaning, his own business." Id. at ¶ 189. Plaintiff's argument, at its core, is that Defendants' representations to him about a lifetime commitment and the absence of a franchise requirement were false.

Defendants refute this argument by pointing out that any statements made by Defendants concerning the nature of any continuing relationship is contradicted by the unambiguous language of the contract, and therefore, Plaintiff could not, as a matter of law, have reasonably relied on any such statements. (Document 51). Additionally, Defendants argue that Plaintiff cannot establish a prima facie case of fraud pursuant to Pennsylvania law.² Defendants have filed a Motion for Summary Judgment stating that Plaintiff's remaining fraud claim must be dismissed for the following reasons:

(a) because [Plaintiff] could not as a matter of law have reasonably relied on any statement made by Sears concerning the nature of any continuing relationship due to the unambiguous language of the parties' contract, (b) [Plaintiff's] fraud claim is barred by the `gist of the action doctrine', and (c) Plaintiff has no evidence of fraud and cannot establish a prima facie claim of fraud.

(Document No. 50, ¶ 8).

II. DISCUSSION

Fed.R.Civ.P. 56(c) provides that summary judgment may be granted if, drawing all inferences in favor of the non-moving party, "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 a judgment as a matter of law."

The mere existence of some factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. A dispute over those facts that might affect the outcome of the suit under the governing substantive law, i.e., the material facts, however, will preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Similarly, summary judgment is improper so long as the dispute over the material facts is genuine. Id. In determining whether the dispute is genuine, the court's function is not to weigh the evidence or to determine the truth of the matter, but only to determine whether the evidence of record is such that a reasonable jury could return a verdict for the nonmoving party. Id. at 248-49, 106 S.Ct. 2505. In summary, the inquiry under a Rule 56 motion is whether the evidence of record presents a genuine dispute over material facts so as to require submission of the matter to a jury for resolution of that factual dispute, or whether the evidence is so one-sided that the movant must prevail as a matter of law.

To demonstrate entitlement to summary judgment, defendants, as the moving parties, are not required to refute the essential elements of the plaintiff's cause of action. Defendants need only point out the absence or insufficiency of plaintiff's evidence offered in support of those essential elements. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Once that burden has been met, plaintiff must identify affirmative evidence of record that supports each essential element of his cause of action.

A non-moving party may not successfully oppose a summary judgment motion by resting upon mere allegations or denials contained in the pleadings, or by simply reiterating those allegations or denials in an affidavit. Lujan v. National...