Rgj Associates, Inc v. Stainsafe, Inc.

Decision Date21 January 2004
Docket NumberNo. CIV.A.01-10936-DPW.,CIV.A.01-10936-DPW.
PartiesRGJ ASSOCIATES, INC. d/b/a Williamsville Products, Plaintiff, v. STAINSAFE, INC., Defendant.
CourtU.S. District Court — District of Massachusetts

David A. Rich, Lawson & Weitzen, LLP, Boston, MA, J. Mark Dickison, Lawson & Weitzen, LLP, Boston, MA, for RGJ Associates, Inc. dba Williamsville Products, Plaintiff.

Henry C. Dinger, Dana A. Zakarian, Goodwin Procter, LLP, Boston, MA, Steven Ellison, Broad and Cassel, West Palm, FL, for Stainsafe, Inc., Defendant.

PROCEDURAL ORDER RE: DAMAGES MEASUREMENT

BOWLER, Chief United States Magistrate Judge.

A review of the filings (Docket Entry 152, 155, 163 & 164) submitted in connection with the motion in limine by plaintiff RGJ Associates, Inc. ("RGJ"), d/b/a Williamsville Products ("Williamsville"), to preclude the testimony of Christopher Barry and the second motion in limine by defendant Stainsafe, Inc. ("Stainsafe") to preclude the testimony of Howard J. Gordon ("Gordon") evidences that the parties dispute the proper method to measure contract damages for breach of the unwritten requirements contract1 and for breach of the letter agreement. Clarification is therefore appropriate.

As explained in the June 2002 opinion, section 2-708 of the UCC, Mass. Gen. L. ch. 106, § 2-708 ("section 2-708"), governs the measure of contract damages. Where, as here, the difference between the market price and the unpaid contract price under section 2-708(1) would not place Williamsville "in as good a position as performance would have done,"2 section 2-708(2) allows RGJ to recover lost profits which Williamsville would have made from full performance, together with incidental damages and due allowance for reasonably incurred costs minus proceeds from any resale. (Docket Entry # 83, pp. 39-40; citing cases).

Damages for breach of contract are also governed by section 2-309 of the UCC, Mass. Gen. L. ch. 106, § 2-309 ("section 2-309"). See Maytronics, Ltd. v. Aqua Vac Systems, Inc., 277 F.3d 1317, 1320-1321 (11th Cir.2002) (discussing UCC section identical to section 2-309 in the course of explaining the proper measure of damages in distributorship agreement); Pharo Distributing Co. v. Stahl, 782 S.W.2d 635, 638-639 (Ky.App.1989) (same); Teitelbaum v. Hallmark Cards, Inc., 25 Mass.App.Ct. 555, 520 N.E.2d 1333, 1336-1337 (1988) (performance of supply contract governed by section 2-309). Section 2-309 states that an agreement providing for successive performances3 that is indefinite in duration is valid for a reasonable period of time. Mass. Gen. L. ch. 106, § 2-309(2). The parties did not place a time limit on the contract which is therefore valid only for a reasonable period of time. Mass. Gen. L. ch. 106, § 2-309(2); Teitelbaum v. Hallmark Cards, Inc., 520 N.E.2d at 1336 (quoting section 2-309(2)); accord Shearon v. Boise Cascade Corp., 478 F.2d 1111, 1117 (8th Cir.1973) (applying Iowa law to similar agreement and recognizing that "`contract continues for a reasonable time'"); see also Anglo Fabrics, Inc. v. Town of Webster, 2002 WL 31187829 at * 10 (Mass.Super. July 1, 2002) ("contract which does not have a duration of term clause is not presumed to last in perpetuity or for an extended number of years unless there is an express term to that effect").

Because the parties did not expressly agree to a durational term or to prevent termination, Massachusetts law construes the contract as terminable at will. Serpa Corporation v. McWane, Inc., 199 F.3d 6, 14 (1st Cir.1999) ("[u]nder Massachusetts law, a contract without a durational term is terminable at will by either party upon reasonable notice"); Labrecque v. Niconchuk, 442 F.2d 1094, 1098 (1st Cir.1971) ("It is well settled that, without a term specifying duration, a distribution contract is a contract at will"); Teitelbaum v. Hallmark Cards, Inc., 520 N.E.2d at 1336 (absent "express agreement preventing termination, the arrangement that existed was terminable at the will of either party"). Any termination, however, requires reasonable notice to the non-terminating party. Mass. Gen. L. ch. 106, § 2-309(3); Teitelbaum v. Hallmark Cards, Inc., 520 N.E.2d at 1336; accord Maytronics, Ltd. v. Aqua Vac Systems, Inc., 277 F.3d at 1321 (because "Florida UCC requires reasonable notification prior to the termination of a terminable-at-will contract, it follows that the parties have an expectation that the contract will not end without such notification"); Shearon v. Boise Cascade Corp., 478 F.2d at 1117 (applying Iowa law and noting that contract granting distributorship for indefinite time period "`may be terminated without cause only upon reasonable notice'"); Swierczynski v. Arnold Foods Co., Inc., 265 F.Supp.2d 802, 810 (E.D.Mich.2003) (applying New Jersey law and noting that, "where an exclusive distribution agreement lasts for an indefinite period, the exclusive distributor is entitled to reasonable notice that the exclusive distributorship would be terminated"). In such circumstances, the breach is the failure to give reasonable notice of the termination rather than the termination itself. California Wine Association v. Wisconsin Liquor Co. of Oshkosh, 20 Wis.2d 110, 121 N.W.2d 308, 318 (1963) (inasmuch as "the exclusive distributorship contract could be terminated at will, ... the breach was the failure to give reasonable notice"); Conneaut Metalcasters, Inc. v. Emco Wheaton, Inc., 1997 WL 560054 at * 3 (6th Cir. Sept.5, 1997) (Emco breached the volume purchase commitment when it stopped its purchases "only to the extent that it failed to give reasonable notice when it did so") (unpublished opinion).4 The reasoning is best expressed as follows by the court in Pharo:

It is not the termination of an at-will contract that constitutes the breach; the right to terminate is inherent in the nature of the contract. Nor is it relevant that a party losing an at-will contract suffers losses. Again, this is an inherent probability. Rather, it is the failure to give reasonable notice before termination that constitutes breach.

Pharo Distributing Co. v. Stahl, 782 S.W.2d at 638.

Further, as uniformly held by the majority of courts, the amount of damages following the termination date is limited to the time period of what constitutes reasonable notice. Maytronics, Ltd. v. Aqua Vac Systems, Inc., 277 F.3d at 1321 (party should be placed in same position it would have been in but for "the failure to give proper notice;" nonbreaching party therefore entitled to lost profits "it would have made from the contract during the notice period") (emphasis added); King v. Exxon Co., U.S.A., 618 F.2d 1111, 1119 (5th Cir.1980) (proper measure of damages for "contract of indefinite duration terminable at will upon reasonable written notice ... is the net profit that would have been earned by the plaintiff during that period of time constituting reasonable notice of termination"); Swierczynski v. Arnold Foods Co., Inc., 265 F.Supp.2d at 810-811 (since distributorship agreement "is of indefinite duration, Plaintiff's damages are limited to a reasonable time after termination of the Agreement"); California Wine Association v. Wisconsin Liquor Co. of Oshkosh, 121 N.W.2d at 318 (after notice of termination of distributorship agreement, "the breach continued to run only for the period of reasonable notice"). Massachusetts law applying section 2-309 adheres to these principles. Teitelbaum v. Hallmark Cards, Inc., 520 N.E.2d at 1336 ("the adequacy of the notice is generally coextensive with the amount of harm that can be proved by the party who has incurred the loss of a supplier"); Serpa Corporation v. McWane, Inc., 199 F.3d 6, 14 (1st Cir.1999) (quoting Teitelbaum). Furthermore, any such damages must result from the inadequate notice of termination as opposed to the loss of the business due to the termination itself, Serpa Corporation v. McWane, Inc., 199 F.3d at 14 ("there is no evidence in the record that Serpa's injuries resulted from inadequate notice of termination"); accord Pharo Distributing Co. v. Stahl, 782 S.W.2d at 638 (because "it is the failure to give reasonable notice of termination rather than the termination of the contract itself which constituted the breach, ... [t]he damages may not reflect loss of a contract or discontinuance of the business relationship"), and RGJ has the burden of proving the amount of the loss. Teitelbaum v. Hallmark Cards, Inc., 520 N.E.2d at 1336 (noting that it is "the amount of harm that can be proved by the party who has incurred the loss of a supplier"); accord Anglo Fabrics, Inc. v. Town of Webster, 2002 WL 31187829 at * 10 (Mass.Super. July 1, 2002) ("Anglo Fabrics has the burden of showing that its `injuries resulted from the inadequate notice of termination'").5

Determining what constitutes a reasonable notification of termination time as well as the date of termination is a question for the finder of fact. Swierczynski v. Arnold Foods Co., Inc., 265 F.Supp.2d at 811 ("[d]etermining exactly what is a reasonable time ... is a question of fact for the jury"); Conneaut Metalcasters, Inc. v. Emco Wheaton, Inc., 124 F.3d 197, 1997 WL 560054 at * 4 (6th Cir. Sept.5, 1997) (remanding case for more specific factual finding of the date of termination in nonjury trial). Under section 2-309, the reasonableness of the notice of termination is measured in terms of the amount of time "as will give the other party reasonable time to seek a substitute arrangement." Mass. Gen. L. ch. 106, § 2-309, Comment 8 (emphasis added); see Teitelbaum v. Hallmark Cards, Inc., 520 N.E.2d at 1336 ("reasonableness of notice of termination in agreements falling within § 2-309 is measured in terms of the ability of the party affected by the termination to obtain a substitute arrangement"); accord Pharo Distributing Co. v. Stahl, 782 S.W.2d at 638 ("[r]easonable notice is that period of time which, under the circumstances of the case, would allow one to make alternate arrangements...

To continue reading

Request your trial
6 cases
  • Primarque Prods. Co. v. Williams W. & Witts Prods. Co.
    • United States
    • U.S. Court of Appeals — First Circuit
    • February 12, 2021
    ...of the amount of time ‘as will give the other party reasonable time to seek a substitute arrangement.’ " RGJ Assocs., Inc. v. Stainsafe, Inc., 300 F. Supp. 2d 250, 254 (D. Mass. 2004) (emphasis omitted) (quoting Mass. UCC § 2–309, Comment 8). But, even so, a reasonable juror could have dete......
  • SANTA FE CUSTOM SHUTTERS v. Home Depot
    • United States
    • Court of Appeals of New Mexico
    • March 4, 2005
    ...its business relations with SFCS and SFCS suffered damages due to the lack of reasonable notification. RGJ Assoc., Inc. v. Stainsafe, Inc., 300 F.Supp.2d 250 (D.Mass.2004) (discussing measure of seller's damages for buyer's breach of the duty of reasonable notification in the context of an ......
  • Nat'l Ass'n of Gov't Emps., Inc. v. Nat'l Emergency Med. Servs. Ass'n, Inc.
    • United States
    • U.S. District Court — District of Massachusetts
    • August 23, 2013
    ...the failure to give reasonable notice before termination would constitute a breach of the Agreements. See RGJ Assocs., Inc. v. Stainsafe, Inc., 300 F.Supp.2d 250, 252–53 (D.Mass.2004), and cases cited. See also Int'l Union of Operating Eng'rs, Local 542 v. Allied Erecting & Dismantling Co.,......
  • Primarque Prods. Co. v. Williams W. & Witts Prods. Co.
    • United States
    • U.S. District Court — District of Massachusetts
    • March 29, 2018
    ...1333 ). Damages in such cases are limited to the "the time period of what constitutes reasonable notice. " RGJ Assocs., Inc. v. Stainsafe, Inc. , 300 F.Supp.2d 250 (D.Mass. 2004) (emphasis added). In this case, there is no dispute that the parties did not have a written agreement and while ......
  • Request a trial to view additional results
1 firm's commentaries

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT