Englert, Inc. v. Leafguard Usa, Inc., 4020.

• Decision Date: 08 September 2005
• Docket Number: No. 4020.,4020.
• Citation: Englert, Inc. v. Leafguard Usa, Inc., 619 S.E.2d 12, 365 S.C. 565 (S.C. 2005)
• Parties: ENGLERT, INC., Respondent, v. LEAFGUARD USA, INC., Appellant.
• Court: South Carolina Supreme Court

Page 12

619 S.E.2d 12

ENGLERT, INC., Respondent, v.LEAFGUARD USA, INC., Appellant.

No. 4020.

Court of Appeals of South Carolina.

Submitted June 1, 2005.

Decided August 8, 2005.

Rehearing Denied September 8, 2005.

Todd M. Musheff and Wendy J. Keefer, both of Charleston, for Appellant.

Michael Mark McAdams, of Myrtle Beach, for Respondent.

WILLIAMS, J.:

LeafGuard USA, Inc. appeals a partial grant of summary judgment in favor of Englert, Inc. concerning the possession of a gutter-fabricating machine.We affirm.¹

FACTS / PROCEDURAL HISTORY

In 1993, Jerry Dan Vickory entered into a sub-license contract with Englert, Inc. on behalf of his company, Seamless Gutters of Socastee, Inc.("Seamless Gutters").Seamless Gutters was in the business of manufacturing and installing roof gutters.The agreement granted Seamless Gutters the right to manufacture, sell, and install Englert's product, the LeafGuard Gutter System (a patented gutter system which protects against blockage caused by leaves and debris), in a pre-determined sales territory.The agreement also called for the purchase of a gutter-fabricating machine ("the Machine") to produce the Englert gutters.Seamless Gutters was required to pay a $5,000 deposit on the Machine and pay the remaining $21,000 balance upon its delivery.The contract also included the following buy-back provision:

Upon termination of this Agreement, Englert shall purchase, and Sub-Licensee shall sell, the Englert LeafGuard Gutter Machine, subject to normal wear and tear and pay Sub-Licensee at a price equal to the greater of:

(i) the depreciated value of the Englert LeafGuard Gutter Machine, based on a depreciated rate of 20% per year on the original price; or

(ii) $1.00

Upon the Machine's delivery, Seamless Gutters paid the full purchase price and began to manufacture, sell, and install the Englert Gutter System in its contractual sales territory.

In 1994, Vickory incorporated a second company, LeafGuard USA, Inc.,² which engaged in the same business as Seamless Gutters in the same sales territory.The incorporation of the new business essentially constituted the mere renaming of Seamless Gutters; however, Seamless Gutters remained an incorporated entity.Pursuant to Seamless Gutter's 1993 contract with Englert, Leafguard USA utilized the Machine for the manufacturing and sale of the Englert LeafGuard Gutter System.

In 1999, Vickory renewed the 1993 contract with Englert, this time acting on behalf of the more recently created LeafGuard USA, Inc.The 1999 contract is essentially identical to the 1993 contract, granting LeafGuard USA the right to sell Englert's product in the territory defined by the 1993 agreement.The 1999 contract also contains identical language regarding the purchase of an Englert gutter-fabricating machine.However, because LeafGuard USA already possessed the Machine purchased under the 1993 contract, no gutter-fabricating machine was actually purchased under the 1999 contract.

The 1999 contract, similar to that of 1993(as later amended), set a "sales target" of 15,000 lineal feet of product per year.LeafGuard USA agreed to pay Englert royalties on at least 15,000 feet per year, regardless of whether they met the quota.The contract contained the following language regarding termination:

The term of this Agreement shall initially be for a two-year period from January 1, 1999 through December 31, 2000 . . . and shall, if Licensee has materially complied with all of the provisions of this License, continue in full force and effect for additional one year periods thereafter, unless either party, upon 30 days written notice to the other party. . . elects to terminate this Agreement.

. . . .

Should Sub-Licensee be in default on its payment obligations to Englert for 60 days, Englert may, at its option, terminate this license immediately and/or seek any other options open to Englert, including taking over or repossessing Sub-Licensee's Englert LeafGuard Gutter Machine . . . .

According to Englert, the total footage of product ordered by LeafGuard USA in 2000 was 3,940 feet, which was 11,060 feet short of LeafGuard USA's contractual sales target and obligatory royalty payments.Englert claims no royalties were paid on the 2000 shortfall.On March 15, 2001, Englert faxed Vickory a letter notifying LeafGuard USA that Englert was terminating its sub-licensing agreement pursuant to the contractual language quoted above.Englert sought to exercise its contractual buy-back option regarding the Machine, which, after over six years of possession, was valued at $1.00 according to the depreciation schedule agreed upon in both the 1993 and 1999 contracts.³LeafGuard USA refused to return the Machine and, in July 2001, Englert commenced the present action seeking its immediate possession and monetary damages.

On June 17, 2002, the circuit court denied a preliminary motion by Englert for possession of the Machine, ruling that LeafGuard USA was entitled to its possession until a decision on the merits.In March 2003, Englert filed an amended complaint, which added an additional cause of action.LeafGuard USA answered the amended complaint, asserting several affirmative defenses as well as counterclaims for violations of South Carolina's Unfair Trade Practices Act, breach of contract, and fraud, inter alia.Englert then filed motions for 1) summary judgment on the issue of the Machine's possession, 2) dismissal of LeafGuard USA's counterclaims, and 3) temporary injunctive relief.After consideration of submitted materials from both parties, the circuit court refused to dismiss LeafGuard USA's counterclaims and denied Englert's requested injunctive relief.Englert's motion for partial summary judgment, however, was granted.The circuit court found no issue of fact as to the contract's termination and that the contract's unambiguous terms allowed Englert to repurchase the Machine upon termination of the parties' relationship.Accordingly, it ordered LeafGuard USA to sell the Machine to Englert for the agreed upon price of $1.00.LeafGuard USA's subsequent motion for reconsideration was denied.This appeal followed.

STANDARD OF REVIEW

"The purpose of summary judgment is to expedite disposition of cases which do not require the services of a fact finder."George v. Fabri,345 S.C. 440, 452, 548 S.E.2d 868, 874(2001).When reviewing the grant of a summary judgment motion, this court applies the same standard which governs the trial court under Rule 56(c), SCRCP: summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.Fleming v. Rose,350 S.C. 488, 493, 567 S.E.2d 857, 860(2002).

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