Entm't United States, Inc. v. Moorehead Commc'ns, Inc., CAUSE NO. 1:12-cv-116 RLM
| Decision Date | 09 August 2017 |
| Docket Number | CAUSE NO. 1:12-cv-116 RLM |
| Parties | ENTERTAINMENT USA, INC., Plaintiff, v. MOOREHEAD COMMUNICATIONS, INC., Defendant. |
| Court | U.S. District Court — Northern District of Indiana |
This is a breach of contract action. Entertainment USA, Inc., which (along with related companies) used the trade name One Wireless World, seeks unpaid commissions it says One Wireless World earned by finding cell phone dealers for Moorehead Communications, Inc. The case went to trial without a jury in August 2016, and the parties should have gotten a decision long before today. The assigned judge underwent two major surgeries since the trial, which might help explain, but doesn't justify, the delay in ruling.
There is a lot to this case. It involves an agreement drafted without the benefit of legal advice. It involves plaintiff One Wireless World, which was, when the agreement was adopted in January 2006, the largest cellular dealer in central Pennsylvania, but could no longer carry the Verizon product line. It involves defendant Moorehead Communications, Inc., which agreed to pay One Wireless World for referrals of stores that didn't want to go exclusively with the Sprint product line. The case requires resolution of whether that referral agreement was for a term of years or required payments as long as any referred store was producing sales; how the agreement applied to later referrals; what transactions at the referred stores produced an obligation to pay One Wireless World a fee; how the fees to One Wireless World were to be calculated; whether One Wireless World abandoned the agreement; and whether, as an equitable matter, One Wireless World is entitled to an accounting.
This memorandum is meant to comply with the court's obligations under Fed. R. Civ. P. 52(a)(1).
Entertainment USA is in incorporated in, and has its principal place of business in, Pennsylvania. Moorehead Communications is incorporated in, and has its principal place of business in, Indiana. Well over $75,000 is in controversy. The court has jurisdiction under 28 U.S.C. § 1332(a)(1).
The parties agree that Indiana law applies in this case. When addressing claims under a contract, a court applying Indiana law looks to the contract itself to discern the parties' intent, Citimortage, Inc. v. Barabas, 975 N.E.2d 805, 813 (Ind. 2012); Zukerman v. Montgomery, 945 N.E.2d 813, 819 (Ind. Ct. App. 2011), giving the contract's terms their clear and ordinary meaning. State Farm Mut. Auto Ins. Co. v. Cox, 873 N.E.2d 124, 127 (Ind. Ct. App. 2007).
One Wireless World is a fictitious name registered to Entertainment USA, Inc., the plaintiff in this case. One Wireless World was once the largest cellular telephone seller in central Pennsylvania. Chau Nguyen and his brother Chinh Nguyen were equal co-owners; Chinh Nguyen served as chief operating officer. One Wireless World had several dealers in several locations, selling contracts with a variety of cellular carriers: AT&T, Singular, T-Mobile, Verizon, NextelPartners, and Nextel Communication. Things changed dramatically in 2006, when Sprint demanded exclusivity with all of its dealers, meaning that to sell for Sprint, a dealer could sell nothing but Sprint. Verizon soon followed suit.
One Wireless World itself chose to go with Sprint, which meant it had to sever its relationships with One Wireless World dealers who chose to go with Verizon or to go in a different direction altogether. This left One Wireless World with several associations with business entities that were valueless to One Wireless World because those entities decided not to become exclusive Sprint dealers. At the same time this was happening, Moorehead Communications was trying to expand its cellular business into central Pennsylvania. One Wireless World and Moorehead Communications addressed their problems by entering into the January 2006 agreement that underlies the parties' dispute. The agreement recited its purpose this way: "The proposed referral fee is designed to compensate [One Wireless World] for locations handoffs and offset loss incurred from adding another carrier to their Branded Store's existing lineup." One Wireless World's Chau Nguyen and Moorehead's Larry Myers negotiated the referral agreement.
The agreement described Moorehead's offer as follows: "For all handoffs/referrals from OWW, dating back to Jan. 1, 2006 and any locations that are approved following that date as a direct result of an OWW referral, we will pay a referral bonus in the amount described below." Those "locations" referred to locations with non-Sprint One Wireless World dealers that couldn't continue as One Wireless World stores after One Wireless World went exclusively with Sprint. One Wireless World would be paid if it referred alocation to Moorehead, Verizon approved the location, and Moorehead signed up the location.
Chau Nguyen gave Eric Schlesselman of Moorehead a list of One Wireless World dealers that didn't want to become exclusive Sprint dealers. That list — which One Wireless World calls the "term letter" and which Mr. Schlesselman denies receiving — consisted of these locations, which were named in the referral agreement:
The referral agreement required Moorehead to pay a fee to One Wireless World for every activation. The parties no longer agree on how those fees were to be calculated. The referral agreement says this:
20$ per activation (New Activations Only) to assist with ramp up period which will remain in affect 6 months from the date this agreement is signed by both parties. After which, referral bonus will be adjusted to the appropriate tier. (See below).
The agreement then set forth various bonus fees for 50-150 activations per month, for 151-250 activations per month, for 251-350, for 351-450, for 451-500, and for more than 500. Below those bonus fees is this: "there will be a flat fee of 10$ per 2 year upgrade in addition to items listed above."
Effective January 1, 2007, Chau Nguyen and Chinh Nguyen divided the remaining One Wireless World stores between them. Chau Nguyen bought outChinh Nguyen's 50 percent interest in One Wireless World, and formed a new company called One Wireless World Consulting, Inc. Chinh Nguyen formed a new company called ChinhCo Inc. The brothers created two more new companies in 2007: Chinh Nguyen formed Wireless Advisors in May, and Chau Nguyen formed United Consulting in June. Neither of these new companies was associated with One Wireless World. Sprint terminated its relationship with One Wireless World in 2007, leaving One Wireless World with no agreements with any cell phone service provider. One Wireless World locations that had been selling Sprint products and service could continue to sell those products through someone approved by Sprint, but Sprint had disapproved One Wireless World. By January 15, 2008, One Wireless World wasn't operating any stores selling Sprint. No One Wireless World-branded stores remained.
Chinh Nguyen emailed Moorehead in January 2008 to ask that future payments under the agreement be divided between his new company (Wireless Advisers) and Chau Nguyen's new company (United Consulting). Before providing that email in discovery, Chau Nguyen altered it to remove the names of the companies. In any event, under the terms of the email, Moorehead would send no more referral fees to One Wireless World. The trial record leaves unclear when Moorehead learned that One Wireless World had ceased to exist.
Chinh Nguyen's role after the split is, at best, murky. He was to serve as an agent of One Wireless World and he testified that he worked as a consultant for One Wireless World. Chinh Nguyen's consulting agreement was between his company (ChinhCo) and Chau Nguyen's company (OWW Consulting). It calledfor payments of $50,000 on June 1, $50,000 on June 15, $25,000 on July 1, $25,000 on August 1, $35,000 each of the first days of September, October, November, December and January, $75,000 on February 1, then $45,000 on each of the first days of March, April, May and June - a total of more than $800,000. Whether One Wireless World ever actually paid Chinh Nguyen anything for work as an agent isn't clear from the trial record.
Notwithstanding his role as a One Wireless World agent, Chinh Nguyen also tried in June 2007 to become (or for his wife to become) a Moorehead sub-dealer through a company called Wireless Advisors. Verizon demanded that Chinh Nguyen cut all ties with One Wireless World, and eventually refused to allow him to sell Verizon products. Chinh Nguyen also formed a business with Mike Kapp called "Mobile Pros," and tried to get a license to sell T-Mobile products.
At some point after the brothers split, Chau Nguyen sold T-Mobile products through another company. In February, 2008, Chau Nguyen contacted Moorehead and proposed that Moorehead enter into a new referral agreement with his new company, United Consulting. Moorehead declined that proposal.
Moorehead paid One Wireless World a total of $70,979.50 in referral fees under the agreement. One Wireless World claims entitlement to another $2,211,752.50, plus upgrades for the claimed locations through May 2013, the last month for which it has information. Moorehead sent One Wireless World two payments after suit was filed. In May 2012, Moorehead sent $45,770 (which included interest at 8 percent per annum) on the Elizabethtown store(which did business as "Etown") for April 2008 through July 2011, when the store relocated. In September 2012, after another One Wireless World demand, Moorehead sent another $6,503.24 for referral fees...
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