Fisherman Surgical Instruments v. Tri-Anim Health

• Decision Date: 20 August 2007
• Docket Number: Civil Action No. 06-2082-KHV.
• Citation: 502 F.Supp.2d 1170
• Court: U.S. District Court — District of Kansas
• Parties: FISHERMAN SURGICAL INSTRUMENTS, LLC, Plaintiff, v. TRI-ANIM HEALTH SERVICES, INC., Defendant.

502 F.Supp.2d 1170

FISHERMAN SURGICAL INSTRUMENTS, LLC, Plaintiff, v. TRI-ANIM HEALTH SERVICES, INC., Defendant.

Civil Action No. 06-2082-KHV.

United States District Court, D. Kansas.

August 20, 2007.

COPYRIGHT MATERIAL OMITTED

Randall E. Hendricks, William D. Beil, Rouse Hendricks German May PC, Kansas City, MO, for Plaintiff.

Angela M. Higgins, Gregory J. Pals, James S. Kreamer, Baker, Sterchi, Cowden & Rice, L.L.C., Kansas City, MO, Bryan E. Mouber, Baker, Sterchi, Cowden & Rice, L.L.C., Overland Park, KS, for Defendant.

MEMORANDUM AND ORDER

VRATIL, District Judge.

Fisherman Surgical Instruments, LLC ("Fisherman") brings suit against Tri-anim Health Services, Inc. (4`Tri-anim"), alleging that Tri-anim breached the terms of its agreement to distribute Fisherman's general surgical instruments. This matter is before the Court on Defendant's Motion For Summary Judgment (Doc. # 249), plaintiffs Motion For Summary Judgment Ruling That Parties' Agreement Is An Enforceable Contract With Five Year Term And With Exclusivity (Doc. # 253) and Defendant Tri-anim Health Services' Motion To Exclude Plaintiff Fisherman Surgical Instruments' Proposed Expert Witness John Meara (Doc. # 255), all filed May 7, 2007. For reasons stated below, the Court sustains the cross-motions for summary judgment in part and sustains defendant's motion to exclude Meara.

Summary Judgment Standards

Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. See Fed.R.Civ.P. 56(c); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Vitkus v. Beatrice Co., 11 F.3d 1535, 1538-39 (10th Cir.1993). A factual dispute is "material" only if it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. A "genuine" factual dispute requires more than a mere scintilla of evidence. Id. at 252, 106 S.Ct. 2505.

The moving party bears the initial burden of showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Hicks v. City of Watonga, 942 F.2d 737, 743 (10th Cir.1991). Once the moving party meets its burden, the burden shifts to the nonmoving party to demonstrate that genuine issues remain for trial "as to those dispositive matters for which it carries the burden of proof." Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir.1991). The nonmoving party may not rest on his pleadings but must set forth specific facts. Applied Genetics, 912 F.2d at 1241.

"[W]e must view the record in a light most favorable to the parties opposing the motion for summary judgment." Deepwater Invs., Ltd. v. Jackson Hole Ski Corp., 938 F.2d 1105, 1110 (10th Cir.1991). Summary judgment may be granted if the nonmoving party's evidence is merely colorable or is not significantly probative. Anderson, 477 U.S. at 250-51, 106 S.Ct. 2505. "In a response to a motion for summary judgment, a party cannot rely on ignorance of facts, on speculation, or on suspicion, and may not escape summary judgment in the mere hope that something will turn up at trial." Conaway v. Smith, 853 F.2d 789, 794 (10th Cir.1988). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505.

Factual Background

The following material facts are uncontroverted or deemed admitted.¹

Brandon Johnston and Ken Hare own Fisherman Surgical Instruments, LLC. In June of 2003, Fisherman began doing business as a specifications developer, i.e. a packager and labeler, of surgical instruments. In December of 2004, Fisherman began negotiations for Tri-anim Health Services, Inc. to distribute its surgical instruments. In January of 2005, Tri-anim sold medical products in all 50 states and so advised Fisherman. On February 24, 2005, Fisherman and Tri-anim executed a Distribution Agreement in which Fisherman agreed to supply and Tri-anim agreed to exclusively sell general surgical instruments from Fisherman. The Distribution Agreement specified a five-year term, as follows:

The term of this Agreement shall be for a period of five (5) years with an effective date of February 15, 2005 and shall automatically renew in one-year increments unless terminated by either party without cause with a 90 day written notice to the other party.

Id. at 1. The Distribution Agreement did not contain sales goals or objectives. In the agreement, however, Tri-anim committed to the following:

1. So long as this Agreement is in effect, meet sales goals and objectives mutually agreed upon by Tri-anim and Manufacturer. Sales goals and objectives for calendar year 2005 shall be established by June 1, 2005 and included in Exhibit A. Sales goals and objectives for subsequent years of this Agreement will be established by January 1, 2006 and will be included as a revision to Exhibit A. * * *

10. Provide professionally trained sales staff to sell the value of Products over competitive products. * * *

12. Not sell the Products outside of the United States of America (USA) or knowingly to, any company who intends to sell the Products outside of the USA.

13. Solely represent and distribute the Products as the only comparable surgical instrument line available from Tri-anim (excluding Geister or a manufacturer of comparable Geister products).

Distribution Agreement at 1-2. The Distribution Agreement did not contain Exhibit A, which was supposed to establish agreed sales goals, and neither party ever proposed an Exhibit A.

In the Distribution Agreement, Fisherman agreed as follows:

1. So long as this Agreement is in effect, provide support for the Products indicated in Exhibit B, at pricing in effect at the time of order. from Tri-anim. Products may be added, deleted or modified at [Fisherman's] option. [Fisherman] will keep Tri-anim notified of product related changes. * * *

10. Allow the option to return all new, unused and demo Products for full credit if Manufacturer terminates Tri-anim or adds any other distribution within Tri-anim's designated area. Termination without cause, including sale or merger of Manufacturer, requires 90 days notice and no additional distribution may be added in Tri-anim's area prior to the final termination, so long as Tri-anim continues to maintain sufficient inventory and continues to fill orders. Termination for cause requires 30 days notice. Termination of the Agreement shall not release Manufacturer or Tri-anim from any liability or obligation which has accrued or remains to be performed.

11. Forward all price inquiries from customers in Tri-anim's sales area to Tri-anim. * * *

14. Provide access to all Products nationwide through Tri-anim's e-commerce strategy, online or paper catalog and corporate Agreements.

Id. at 3-4.

At some point in 2005, after it began to sell Fisherman instruments, Tri-anim and/or its customers began to complain about quality problems with the instruments. On June 6, 2005, Tri-anim acquired the assets of Adler, a surgical instrument distribution company. Fisherman asserts that through former sales representatives for Adler, Tri-anim began selling Jarit surgical instruments which competed with Fisherman products.

On October 21, 2005, Fisherman's attorney sent a letter to Robert Byers, president of Tri-anim. The letter stated that Tri-anim had not fully performed under the Distribution Agreement because (among other things) it had not established sales goals and objectives for 2004 or exclusively sold Fisherman instruments. See Depo. Exhibit 54.

On October 26, 2005, Byers replied to Fisherman's attorney by terminating the Distribution Agreement, effective immediately. More specifically, Byers stated as follows:

We are in receipt of your letter of October 21, 2005 with reference to our agreement dated February 15, 2005.... Please be advised that Tri-anim ... hereby terminates the Agreement immediately because of material defaults by Fisherman. Specifically there have been numerous e-mails documenting the poor quality of the allegedly high-end Fisherman products.

Alternatively, Tri-anim hereby deems the Agreement null and void as merely an agreement to agree. Specifically, Exhibits A (Sales Goals) and Exhibit B (Products Price List) were never agreed to or appended to the Agreement. Your suggestion that Sales Goal was Tri-anim's obligation is at odds with the Agreement, which specifically states that they shall be mutually agreed to. Additionally, the Agreement refers to "Tri-anim's designated area," but never defines what that is.

Depo. Exhibit 56.

On March 8, 2006, Fisherman filed suit against Tri-anim, asserting claims for breach of contract and promissory estoppel. Tri-anim asserted affirmative defenses, including mutual mistake, unilateral mistake and fraud. It also asserted counterclaims for breach of express and implied warranties, rescission, breach of contract, fraud and negligent misrepresentation. Fisherman's only computation of damages is contained in the report of its expert, John Meara.

Tri-anim seeks summary judgment that as a matter of law, (1) the Distribution Agreement is not enforceable because it does not contain a quantity term; (2) to the extent that the Distribution Agreement is enforceable, either party could terminate it without cause upon 90 days written notice during the initial five year term; (3) the Distribution Agreement (and, accordingly,...