Mass Cash Register, Inc. v. Comtrex Systems Corp.
| Decision Date | 15 August 1995 |
| Docket Number | Civ. A. No. 93-10853-PBS. |
| Parties | MASS CASH REGISTER, INC., Plaintiff, v. COMTREX SYSTEMS CORP., Defendant. |
| Court | U.S. District Court — District of Massachusetts |
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Thomas J. Walsh, Robert Ciociola, Casner & Edwards, Boston, MA, for Plaintiff Mass Cash Register, Inc.
Laurence H. Reece, III, Heidlage & Reece, Boston, MA, Steven J. Fram, Archer & Greiner, Haddonfield, NJ, for Defendant Comtrex Systems Corporation.
This dispute arises out of an alleged agreement between plaintiff Mass Cash Register, Inc. (Mass Cash) and defendant Comtrex Systems Corporation (Comtrex). In its complaint, Mass Cash alleges breach of contract (Count I), tortious interference with advantageous contractual relationships (Count II), unjust enrichment (Count III), fraud (Count IV), and violation of Mass.Gen.L. ch. 93A (Count V).1 On May 24, 1995, the Court heard oral argument on defendant Comtrex's motion for summary judgment on all counts pursuant to Fed.R.Civ.P. 56(b). For the reasons illustrated below, after hearing, the motion for summary judgment is ALLOWED on all Counts except for the claim for unjust enrichment and quantum meruit.
For the purposes of this motion, the undisputed facts are as follows.
Plaintiff Mass Cash is a Massachusetts corporation which sells, installs, and services electronic cash registers. In 1990, Mass Cash was a dealer for various companies which produced point-of-sale (POS) equipment and cash registers, including Omron, Sharp Electronics, and TEC.2
Since its incorporation in 1978, Thomas Speropoulos has served as the president of Mass Cash. From January 1985 until January 1991, William Mitchell was employed by Mass Cash as its sales manager and major account manager.
Defendant Comtrex is a New Jersey corporation with its principal place of business located in Moorestown, New Jersey. Formed in 1981, Comtrex originally serviced electronic cash registers but extended its business to include the manufacturing, marketing, and distribution of electronic cash registers used in the food service industry, including fast-food establishments. In 1993, Comtrex sold approximately 3500 electronic cash registers. Since February of 1989, Jeffrey Rice has been the president, chief executive officer, and a director of Comtrex.
Although not named in the lawsuit, Dunkin' Donuts is at the vortex of this controversy. In 1990, Dunkin' Donuts had approximately 2000 to 2500 stores, including both franchised and company-owned stores. Under Dunkin' Donuts franchise agreements, the ultimate decision of whether to purchase a new POS terminal was for the franchisee to make, but franchisees could purchase only those POS terminals which Dunkin' Donuts had approved.
Davie Bent, a Dunkin' Donuts' employee since 1984 and the manager of field service systems in 1989, was in charge of personally evaluating and testing various POS terminals. Comtrex, Tranti, TEC, Fastfax, Panasonic, Sharp, and Omron were among the brands evaluated by Bent during the period pertinent to this controversy.
Beginning in 1978, Mass Cash sold cash registers and POS equipment to Dunkin' Donuts, and serviced them. For the past eleven years, Mass Cash has been the principal supplier of cash register terminals to Dunkin' Donuts, most of which are manufactured by Omron Systems Corporation (Omron), a competitor of Comtrex. Indeed, from 1985 to 1990 Omron provided about 2500 registers to Dunkin' Donuts and its franchisees. Mass Cash would buy the registers from Omron at 40-48 percent off list price and then resell them to Dunkin' Donuts at ten percent off list plus charge an installation fee.
Dunkin' Donuts was Mass Cash's largest major account in 1990. William Mitchell was the salesman for Mass Cash handling the Dunkin' Donuts account.
Beginning in 1988, Dunkin' Donuts informed Mass Cash of its need for a new POS terminal. Accordingly, Mitchell talked to various manufacturers, including Citizen, Tranti, Sanyo, Sharp, FDS, and others. Mass Cash also notified Omron of Dunkin' Donuts' request for more sophisticated POS terminals in May, 1989. Mitchell's search proceeded for two years until he found a manufacturer that offered a solution for Dunkin' Donuts. That manufacturer was Comtrex.
Dunkin' Donuts' introduction to Comtrex originated in 1987, when Bent attended a food service show in New York City. Thereafter, Comtrex sent Bent a proposal regarding its POS terminal for Dunkin' Donuts to review, and shipped a POS terminal which Bent spent more than one week evaluating and testing. Subsequently, Bent visited Comtrex's offices in New Jersey for two days for a demonstration of the Comtrex POS terminal.
After his visit, Bent concluded that Comtrex could not fulfill Dunkin' Donuts' need without changes on Comtrex's part. Dunkin' Donuts decided not to pursue the Comtrex POS terminals in 1988 for three reasons: (1) the price point of the basic terminal was too high; (2) the software operated under a UNIX system instead of MS-DOS, and; (3) the hardware was limited in its memory capacity.
Although Bent does not recall any further conversations with Comtrex until the meeting set up by Mass Cash in October 1990, Rice testified that he spoke with Bent in May of 1990 and provided a detailed update on the Comtrex Sprint product line. Rice also testified that he had numerous follow-up conversations with Bent from May to September 1990.
In 1988, Speropoulos met with a Comtrex salesperson at Mass Cash's office to view Comtrex's product. As a result of the meeting, Speropoulos attended a Comtrex meeting at their New Jersey office that same year. Between 1988 and 1990, Speropoulos had three or four telephone conversations with Comtrex personnel regarding the possibility of selling the Comtrex product. In these discussions, no dealership agreement was reached.
Sometime in the spring of 1990, Andy Fusco, a consultant for Comtrex, contacted Speropoulos to inform him that Comtrex had a new president, Jeff Rice, and that a new product was being enhanced. Comtrex had hired Fusco to review Comtrex sprint systems, and introduce it to some of the dealers. During this conversation between Fusco and Mass Cash, there was a "very light discussion" on a dealer agreement including negotiations over a geographic region. At no time during the conversation did the issue of compensation arise. Despite a discussion on the pricing of Comtrex products, no agreement was reached. Indeed, these preliminary negotiations were undertaken with an eye toward executing a written dealer agreement. Speropoulos told Fusco he would require three things to be a dealer for Comtrex: (1) exclusivity with respect to a specific geographic area encompassing Eastern Massachusetts, Eastern Connecticut, Rhode Island, and Southern New Hampshire; (2) training for Mass Cash personnel; and (3) that Comtrex upgrade its software. Fusco said that the selling price to Mass Cash would be consistent with the standard in the industry, which was approximately forty percent off price, plus or minus ten percent. Fusco also told Speropoulos that with the exception of Fall River, the desired territory would not be a problem. Despite the lack of a formalized written dealer agreement, in May, 1990, Mass Cash ordered some point of sale terminals from Comtrex, and Comtrex forwarded pricing information. Mass Cash did not reveal the opportunities presented by the Dunkin' Donuts account at this time.
Soon thereafter, in June, 1990, Fusco conducted a product demonstration at Mass Cash's office before Speropoulos, Mitchell, and other Mass Cash employees. Further discussions ensued regarding the proposed dealer agreement. Fusco also brought a written dealer agreement and dealer application with him to the meeting, and Speropoulos agreed to review it at a later date. The parties also agreed that Mass Cash would have to look at the Comtrex products further before they would formalize the agreement.
Discussions between Comtrex and Mass Cash continued through the summer of 1990. Mass Cash pursued Comtrex because Omron did not have the solution for which Dunkin' Donuts was looking, and Comtrex might satisfy Dunkin' Donuts' needs. However, Mass Cash did not yet reveal the Dunkin' Donuts' account to Comtrex.
In August 1990, Mass Cash attended another meeting at Comtrex's office in New Jersey. There was a twofold purpose for the meeting: to find out whether Mass Cash wanted to become a dealer for Comtrex and to determine whether the Comtrex product met Dunkin' Donuts' needs. When Mass Cash realized that the Comtrex system could fulfill the needs of Dunkin' Donuts, it inquired as to Comtrex's position with respect to national accounts and dealer arrangements. Comtrex revealed that it dealt directly with Wang Laboratories, but that its focus was on dealers, not direct accounts. When Mitchell asked Rice and Fusco whether Comtrex had a major account policy, Rice said: (Emphasis added). Donuts. Mitchell then faxed Dunkin' Donuts' electronic cash register requirements to Comtrex. This information allowed Comtrex to program its product to meet Dunkin' Donuts' needs and to develop a prototype which could be...
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