Giant Food Stores v. MARKETPLACE COMMUNICATIONS

• Decision Date: 24 July 1989
• Docket Number: Civ. A. No. 88-1732.
• Citation: 717 F. Supp. 1071
• Parties: GIANT FOOD STORES, INC., Plaintiff, v. MARKETPLACE COMMUNICATIONS CORP., Shelfvision, Inc., MCC of Oregon, Inc., Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

717 F. Supp. 1071

GIANT FOOD STORES, INC., Plaintiff, v. MARKETPLACE COMMUNICATIONS CORP., Shelfvision, Inc., MCC of Oregon, Inc., Defendants.

Civ. A. No. 88-1732.

United States District Court, M.D. Pennsylvania.

July 24, 1989.

Wayne F. Shade, Carlisle, Pa., for plaintiff.

Myrna G. Baskin, Stanley J. Adelman, Michael L. Daugherty, Rudnick and Wolfe, Chicago, Ill., Thomas D. Caldwell, Jr., Richard B. Swartz, Harrisburg, Pa., for defendants.

MEMORANDUM

CALDWELL, District Judge.

Pursuant to Fed.R.Civ.P. 56, plaintiff, Giant Food Stores, Inc. (Giant), has moved for summary judgment against defendants, Marketplace Communications Corp. (Marketplace), Shelfvision, Inc. (Shelfvision), and MCC of Oregon, Inc. (MCC), in this diversity action controlled by Pennsylvania law, and removed here by the defendant, MCC.¹ Giant has sued for breach of contract, contending that defendants have failed to pay certain minimum guarantees owed to it under the terms of an agreement under which defendants were entitled to place advertising on the shelves of plaintiff's supermarkets. MCC opposes the motion. We will examine it under the well established standard, see Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), bearing in mind the parties respective burdens on the motion. See Sorba v. Pennsylvania Drilling Co., 821 F.2d 200 (3d Cir.1987), cert. denied, ___ U.S. ___, 108 S.Ct. 730, 98 L.Ed.2d 679 (1988).

From the pleadings, affidavits and admissions on file, the following is the undisputed background to this litigation. On June 16, 1986, plaintiff and Marketplace entered into a "Standard License Agreement," permitting Marketplace to position small advertising displays on the shelves of plaintiff's supermarkets. This agreement was negotiated on behalf of Marketplace by Robert J. Ferrante, within the course and scope of his duties. (Ferrante affidavit, ¶ 3). In part, the agreement provided that Giant would receive a license fee based upon its "proportional share of thirty (30%) of the monthly net income" from the sale of the advertising space as further defined in the agreement. (second amended complaint, Exhibit A, ¶ 4.1). It also contained a clause permitting assignment by either party but requiring the written consent of the other party, "which consent was not to be unreasonably withheld." (Id., ¶ 9) (brackets added). Finally, the agreement was integrated. Paragraph 13.2 provided as follows:

Modification. This Agreement contains the entire agreement between the parties, and unless otherwise provided in this Agreement, no modification or waiver of any of the provisions, or any future representation, promise, or addition shall be binding upon the parties unless made in writing and signed by both parties.

On November 13, 1987, Shelfvision, without first receiving the written consent of Giant, assigned the agreement to Actmedia, Inc. (Actmedia), a stranger to this litigation. Thereafter, defendants made payments under the agreement until May 9, 1988. Plaintiff has received no payments from Actmedia.² In this action it seeks as damages the difference between payments received from defendants and the amount of certain minimum guarantees made by Ferrante at the time the agreement was executed but admittedly not included in that document.

As proof of these guarantees, plaintiff has submitted a letter, dated June 2, 1986, from Ferrante to Allan Noddle of Giant who negotiated the deal on behalf of plaintiff. The letter stated, in pertinent part, as follows:

Dear Allan:

Please excuse the delay in getting back to you.

Using 39 stores with an average weekly customer count of 11,600, your guarantee for the first two years will be as follows:

                Year 1        $63,516.00
                Year 2         84,689.00
                

(second amended complaint, Exhibit B).

Noddle responded by letter, dated June 10, 1986, which read, in relevant part:

This is a confirmation of our recently concluded negotiations in regards to the placement of Shelf Vision in Giant Food Stores. Accordingly, the following has been decided upon:

1. The using of the GFS 39 store count with an average weekly customer count of 11,600 makes the following minimum guarantees payable to Giant as follows: At the conclusion of Year 1, $63,516; at the conclusion of Year 2, $84,689.

....

4. GFS will open a new store within the 60 day period in Ephrata, Pa. This store has not been included in any figures listed above, and you need to respond to us as to what the additional payment will be for the added store.

(second amended complaint, Exhibit E) (emphasis in original).

The June 10th letter also enclosed two copies of the Standard License Agreement which had been executed on behalf of Giant by Noddle. As noted, the agreement was dated June 16, 1986.

Plaintiff contends the parties subsequently entered into a verbal agreement concerning the new store not covered by the previous guarantees. This agreement, modifying the previous guarantees, was memorialized in a memorandum, dated July 16, 1986, authored by Noddle, and copied to Ferrante, among others. That memorandum read, in pertinent part, as follows:

As you are aware, my letter of June 10, 1986, set in motion the Shelfvision Program that is to be handled through Marketplace Communications, Corp. According to my letter, all agreements, contracts and fees have been agreed upon. In that letter I alluded to the fact that the arrangement was made for 39 stores, and the agreement did not include the new store that we have opened in Ephrata, Pa.

Accordingly, in a conversation held on July 14, 1986, with Mr. Bob Ferrante, Vice President of Marketplace Communications, the following change will be made to the agreement. (sic). In Year 1, the guarantee goes from $63,516 to $65,145 and in Year 2, the minimum guarantee goes from $84,689 to $86,861. There will be no change in the up front payment of $15,000 as a good-faith contribution, which will be deducted from the minimum guarantee of the first year.

In addition, you should know that during July 21, 22, and 23, all GFS will be installed with the program. Although there will be a few Shelfvision plaques put up initially, the program will build gradually towards the end of the year and into the Spring of next year. All fees listed above are minimum guarantees which will be due. If there are any questions or problems with reference to the above, please feel free to contact me.

(second amended complaint, Exhibit F) (emphasis added in part).

The affidavit of Robert Ferrante confirms all of the foregoing, and in the absence of contradictory evidence from the defendant, we accept that affidavit as proof of the existence of the oral agreements concerning the minimum guarantees.³ Specifically, Ferrante affirms that "one of the inducements offered by Marketplace ... for Plaintiff to enter into the written agreement was a written guarantee for minimum compensation ... under the terms of that agreement." (Ferrante affidavit, ¶ 5) (brackets added). This minimum compensation, set forth in his June 2nd letter to Noddle, (Id. ¶ 7), and confirmed in Noddle's letter to him of June 10th, constituted part of the agreement between the parties. (Id. ¶ 12). The minimum guarantees were not included in the formal written agreement because the guarantees "were not given to all licensors. Therefore, they were not included in the standard agreement, but the standard procedure was to memorialize them in separate letters as was done in the case of Giant Food Stores, Inc." (Id. ¶ 13).

Ferrante also affirmed the increase in the guarantees occasioned by the opening of the new store. As he put it:

Because the minimum compensation guarantees set forth in Exhibits "B" and "E" to the Second Amended Complaint did not include the new fortieth store of Giant Food Stores, Inc., at Ephrata, Pennsylvania, Allan S. Noddle and myself agreed in a telephone conversation on July 14, 1986, that the minimum compensation guarantees under the aforesaid Exhibit "A" would be increased from $63,516.00 to $65,145.00 for the first year of the agreement and from $84,689.00 to $86,861.00 for the second year.

This oral agreement was confirmed by a written memorandum dated July 16, 1986, from Allan S. Noddle to myself and others. The copy of said memorandum which is attached to the Second Amended Complaint as Exhibit "F" is an accurate copy of the original of that memorandum.

(Id. ¶¶ 15, 16).

Defendant's main defense is that the written agreement is integrated, thereby precluding any attempt to prove additional terms concerning guarantees of minimum compensation or other collateral agreements.⁴ The general rule in Pennsylvania is that:

Alleged prior or contemporaneous oral representations or agreements concerning subjects that are specifically dealt with in the written contract are merged in or superseded by that contract. Bardwell v. Willis Co., 375 Pa. 503, 507, 100 A.2d 102, 104 (1953). The effect of an integration clause is to make the parol evidence rule particularly applicable. National Cash Register Co. v. Modern Transfer Co., Inc., 224 Pa.Super. 138, 144, 302 A.2d 486, 489 (1973).

McGuire v. Schneider, Inc., 368 Pa.Super. 344, 349, 534 A.2d 115, 117 (1987), aff'd per curiam, 519 Pa. 439, 548 A.2d 1223 (1988) (table).

But there is an exception to the parol evidence rule when the party seeking to enforce the agreement as written has made admissions that the agreement does not, in fact, constitute the entire agreement between the parties even when it contains an integration clause. See Coal Operators Casualty Co. v. Charles T. Easterby and Co., Inc., 440 Pa. 218, 269 A.2d 671 (1970).

In Coal Operators, the appellant insurance company and the appellee insurance agency executed an agreement on January 6, 1961, authorizing the appellee, Charles T. Easterby and Co., to sell insurance policies on behalf of Coal Operators in certain areas of Pennsylvania. The agreement reserved the company's right to appoint other agents in the same...