RMD, LLC v. Nitto Americas, Inc.

• Decision Date: 27 March 2012
• Docket Number: No. 09-2056-JAR,09-2056-JAR
• Parties: RMD, LLC, Plaintiff, v. NITTO AMERICAS, INC., et al., Defendants.
• Court: U.S. District Court — District of Kansas

RMD, LLC, Plaintiff,

v.NITTO AMERICAS, INC., et al., Defendants.

No. 09-2056-JAR

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

Dated: March 27, 2012

MEMORANDUM AND ORDER

This case involves the rights and obligations of each of the parties relating to a Distributorship Agreement entered into between the parties on June 9, 2003. Plaintiff RMD, LLC ("RMD") brings this lawsuit against Defendants Nitto Americas, Inc. and Permacel, Inc. alleging breach of contract, fraudulent inducement, fraudulent/negligent misrepresentation and fraudulent concealment.¹ Defendants have filed a counterclaim alleging breach of contract for non-payment of goods delivered, and have asserted eighteen affirmative defenses. This matter is now before the Court on Defendants' Motion for Summary Judgment (Doc. 236) on all of Plaintiff's claims as well as thirteen of Defendants' affirmative defenses, and Plaintiff's Motion for Partial Summary Judgment (Doc. 237) on its breach of contract claim. For the reasons explained in detail below, the Court grants Defendants' motion with respect to expiration of the Agreement and denies the motion with respect to the remaining claims and affirmative defenses, and denies Plaintiff's motion, as there is a genuine dispute as to material facts precluding judgment as a matter of law.

I. Summary Judgment Standard

Summary judgment is appropriate if the moving party demonstrates that there is "no genuine dispute as to any material fact" and that it is "entitled to a judgment as a matter of law."² In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party.³ A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim."⁴ An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way."⁵

The moving party initially must show the absence of a genuine issue of material fact and entitlement to judgment as a matter of law.⁶ In attempting to meet this standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim.⁷

Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial."⁸ The nonmoving partymay not simply rest upon its pleadings to satisfy its burden.⁹ Rather, the nonmoving party must "set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant."¹⁰ To accomplish this, the facts "must be identified by reference to an affidavit, a deposition transcript, or a specific exhibit incorporated therein."¹¹ Rule 56(c)(4) provides that opposing affidavits must be made on personal knowledge and shall set forth such facts as would be admissible in evidence.¹² The non-moving party cannot avoid summary judgment by repeating conclusory opinions, allegations unsupported by specific facts, or speculation.¹³ " "Where, as here, the parties file cross-motions for summary judgment, we are entitled to assume that no evidence needs to be considered other than that filed by the parties, but summary judgment is nevertheless inappropriate if disputes remain as to material facts."¹⁴

Finally, summary judgment is not a "disfavored procedural shortcut"; on the contrary, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action."¹⁵ In responding to a motion for summary judgment, "a party cannot rest on ignorance of facts, on speculation, or on suspicion and may not escape summary judgment in themere hope that something will turn up at trial."¹⁶

II. Motion to Strike

Before determining the uncontroverted facts in this matter, the Court must address Defendants' request to strike the affidavit of Tim McCarthy, RMD's owner, as raised in their Reply to RMD's Response to Defendants' Motion for Summary Judgment.¹⁷ The standards for ruling on a motion to strike are well established. Rule 12(f) of the Federal Rules of Civil Procedure provides that the court may order stricken from any pleading "any redundant, immaterial, impertinent or scandalous matter."¹⁸ Because striking an entire pleading, or a portion thereof, is a drastic remedy, and because a motion to strike may often be brought as a dilatory tactic, motions to strike under Rule 12(f) are generally disfavored.¹⁹ The decision to grant a motion to strike lies within the court's sound discretion.²⁰ This Court typically declines to strike a response to a motion for summary judgment or a supporting affidavit that does not comply with D. Kan. Rule 56.1 or Rule 56(c), and instead simply disregards those portions of the response or affidavit that do not comply.²¹

Defendants ask the Court to strike and disregard all of McCarthy's Affidavit, arguing thatit constitutes a "sham" affidavit or alternatively, is conclusory, inadmissible and self-serving. "[A]n affidavit may not be disregarded [solely] because it conflicts with the affiant's prior sworn statements. In assessing a conflict under these circumstances, however, courts will disregard a contrary affidavit when they conclude that it constitutes an attempt to create a sham fact issue."²² In determining whether an affidavit creates a sham issue, the Tenth Circuit has directed district courts to consider whether "(1) the affiant was cross-examined during his earlier testimony; (2) the affiant had access to the pertinent evidence at the time of his earlier testimony or whether the affidavit was based on newly discovered evidence; and (3) the earlier testimony reflects confusion which the affidavit attempts to explain."²³ The Circuit "explicitly require[s] that a district court first 'determine whether the conflicting affidavit is simply an attempt to create a "sham fact issue" before excluding it from summary judgment consideration.'"²⁴ In addition, Fed. R. Civ. P. 56(c)(4) provides that "[a]n affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." "Though an affidavit which fails to meet any of the three requirements is subject to a motion to strike, the [c]ourt may also enforce the rule by disregarding portions of the affidavit it finds insufficient."²⁵

"Conclusory and self-serving affidavits are not sufficient."²⁶

In its response to Defendants' motion, RMD submitted an affidavit of McCarthy avering to the parties' intent regarding the Agreement and Defendants' purported fraudulent inducements. McCarthy states that he interpreted the Agreement as automatically renewing on an annual basis and that, based on his "review of the records," it appears that Defendants have directly sold Exclusive Product to Dynamic Control, JBC/Thermalsound and Novicon, all of whom sell in the automotive aftermarket. McCarthy does not substantiate or identify which records he bases his conclusions on. While Defendants assert that McCarthy's affidavit is a sham, they do not identify which portions of McCarthy's affidavit are inconsistent with his deposition testimony except to argue that his deposition testimony was vague, ambiguous, non-responsive and generally evasive, while his affidavit makes bold and unsupported allegations. The Court declines to search McCarthy's deposition testimony for contradictory statements and will not strike the affidavit on these grounds. The Court agrees with Defendants, however, that much of McCarthy's affidavit is conclusory and self-serving and will disregard those portions that do not comply with Rule 56(c)(4).

III. Uncontroverted Facts

The following material facts are either uncontroverted or deemed admitted.²⁷

RMD is a distributor of, among other things, adhesive sound absorption and vibration dampening material and tape material marketed for the automotive aftermarket. Defendants Nitto Americas, Inc. ("Nitto") and Permacel, Inc. ("Permacel") (collectively "Defendants"), design, manufacture and sell certain specialty materials, including but not limited to, adhesive tape products, structural material and sound dampening butyl-based materials. Defendants sell non-exclusive product to original equipment manufacturers ("OEM"), such as GM, Chrysler and Ford. On June 9, 2003, the parties entered into a Distributorship Agreement ("the Agreement") in which Defendants appointed RMD the exclusive distributor of certain products ("the Exclusive Products"), in a certain market (the "Exclusive Market") within a certain territory (the "Territory").

The following are key provisions of the Agreement:

Section 1(a) of the Agreement states that RMD will act as "exclusive distributor of the Exclusive Products in the Exclusive Market" and that Defendants "shall not directly or indirectly sell the Exclusive Products in the Territory in the Exclusive Market and shall refer to RMD all inquiries received from customers or potential customers in the Territory regarding the same." Paragraph 1(b) of the Agreement states that Permacel will not "sell or distribute, directly or indirectly, the Exclusive Products to any entity or person (other than RMD) under circumstances where Permacel knows or has reason to believe that such sale will result in a breach of RMD's exclusive rights under this Agreement." The Exclusive Products are listed in Exhibit A of the Agreement and include Product Code 1432—Butyl Constrained Layer. The Agreement defines the Exclusive Market to include the "automotive aftermarket, including but not limited to the retail (NAPA, Auto Zone, O'Reilly Auto Parts, Pep Boys,etc.), wholesale,...