Saey v. Xerox Corp.

• Decision Date: 11 December 1998
• Docket Number: No. 4:98CV00030-SNL.,4:98CV00030-SNL.
• Citation: 31 F.Supp.2d 692
• Court: U.S. District Court — Eastern District of Missouri
• Parties: Thomas L. SAEY, et al., Plaintiffs, v. XEROX CORPORATION, Defendant.

31 F.Supp.2d 692

Thomas L. SAEY, et al., Plaintiffs, v. XEROX CORPORATION, Defendant.

No. 4:98CV00030-SNL.

United States District Court, E.D. Missouri, Eastern Division.

December 11, 1998.

COPYRIGHT MATERIAL OMITTED

Todd N. Hendrickson, Richard R. Lozano, Lozano and Hendrickson, Clayton, MO, for Thomas L. Saey, Denise Saey.

Louis F. Bonacorsi, Bryan Cave L.L.P., St. Louis, MO, for Xerox Corporation.

MEMORANDUM AND ORDER

LIMBAUGH, District Judge.

This matter is before the Court on Defendant Xerox Corporation's Motion for Summary Judgment (# 23). The partial summary judgment motion was originally filed as Xerox Corporation's Motion to Dismiss Plaintiffs' Second Amended Complaint (# 15) which sought dismissal of Counts III, IV, V, VIII, IX, X and XI of Plaintiffs' Second Amended Petition. Defendant also sought dismissal of plaintiffs' damage claims in Counts I, II, III, VI, VII and VIII. Because defendant submitted documents which went beyond the pleadings with its memorandum supporting that motion, the Court converted the motion to dismiss into this motion for summary judgment. The Court allowed the parties thirty days to file supplemental briefing and exhibits. Defendant responded with a supplemental brief, but plaintiffs never responded.

Background

This diversity action arose out of the termination of two agency agreements between plaintiffs and defendant. Plaintiffs are individuals residing in St. Louis County, Missouri. Defendant is a foreign corporation incorporated under the laws of the State of New York with its principal place of business in Rochester, New York, and registered to do business in the State of Missouri.

Defendant is in the business of providing office equipment through, in part, authorized agencies. Plaintiffs and defendant entered into two Agency Agreements wherein plaintiffs were to solicit orders on defendant's behalf in selected regions of Southeastern Missouri and St. Louis County. Plaintiffs allege that they were in fact resellers of defendant's products. However, the Agency Agreements, which were submitted by defendant and which plaintiff agreed were true copies of the agreements in issue, explicitly state otherwise. The Agreements each state that "Agent is not a reseller." Defense Exhibit E ¶ 1.5; Defense Exhibit F ¶ 1.5. The Agency Agreements also specifically forbade plaintiffs from referring to themselves as Xerox dealers or resellers. All orders plaintiffs obtained from defendant's customers were subject to acceptance by defendant. Plaintiffs had no authority to accept orders on defendant's behalf.

The Agency Agreements provided that defendant would set annual sales quotas for plaintiffs. Those sales quotas were to reflect defendant's reasonable estimate of the business potential of each of the Territories. The Agency Agreements further provided that defendant would monitor plaintiffs' performance quarterly. The first Agency Agreement stated that if plaintiffs' performance was deficient for the year to date as measured at the end of a quarter, plaintiffs would have until the end of the next quarter to correct the deficiency. If plaintiffs' performance were still deficient at the end of that quarter, defendant could terminate the agreement without further notice to plaintiffs. Defense Exhibit E ¶ 2.2.1. The second Agency Agreement also provided that if plaintiffs' year-to-date performance remained deficient for two consecutive quarters that defendant could terminate the agency without further notice to plaintiffs. Defense Exhibit F ¶ 2.2.1.

Plaintiffs allege that before they signed the Agency Agreements, defendant assured them that it would not terminate the agency under the sales quota provisions. Plaintiffs allege that in reliance on these assurances, they signed the agreements in spite of the sales quota termination clauses in the contracts. However, the express language of both agreements, subscribed by plaintiffs, states that the provisions in the written agreements "supersed[e] all previous agreements, proposals, representations, or understandings, whether oral or written." Defense Exhibit E ¶ 5.5; Defense Exhibit F ¶ 6.8. Those agreements also include limitation of liability clauses, whereby plaintiffs agreed that "neither party [would] have any liability to the other for lost profits or other incidental or consequential damages for any claim arising under or concerning [these] Agreement[s]...." Defense Exhibit E ¶ 5.2; Defense Exhibit F ¶ 6.3. Finally, the agreements both provided that the law of New York would govern any dispute arising out of or relating to the Agreements. Defense Exhibit E ¶ 5.7; Defense Exhibit F ¶ 6.11.

Plaintiff Denise Saey signed the Southeastern Missouri Agreement on October 24, 1989. Plaintiff Thomas Saey signed the St. Louis County Agreement on January 28, 1993. Defendant ultimately terminated both agreements under the sales quota provisions. Plaintiffs do not dispute that they failed to meet defendant's sales quotas. Rather, they argue that defendant failed to set reasonable quotas. Plaintiffs allege this failure constituted breach of contract, breach of fiduciary duty, and prima facie tort. Plaintiffs allege defendant's termination of the Agency Agreements constituted violation of the Missouri Franchise Termination Notification Act.

Plaintiffs also allege that the Agency Agreements required defendant to provide plaintiffs with certain information in order that they might more successfully market defendant's products to its customers. Plaintiffs allege that between September and November, 1996, defendant failed to provide that information, thereby breaching its contract with them. Plaintiffs allege that defendant's breach of the Agency Agreements caused the plaintiffs not to be able to sell defendant's products to Maritz Behavioral, Incorporated, during the period that defendant was in breach. Plaintiffs allege that defendant's breach constituted a tortious interference with their business relation with Maritz Behavioral, Incorporated.

Standard for Summary Judgment

Courts have repeatedly recognized that summary judgment is a harsh remedy which courts should only grant when the moving party has established his right to judgment with such clarity as not to give rise to controversy. New England Mutual Life Ins. Co. v. Null, 554 F.2d 896, 901 (8th Cir.1977). The standards for determining whether to grant summary judgment are well settled. Pursuant to Federal Rule of Civil Procedure 56(c), a district court may grant a motion for summary judgment if all the information before the court shows that "there is no genuine issue as to material fact and the moving party is entitled to judgment as a matter of law." Poller v. Columbia Broadcasting Sys., 368 U.S. 464, 467, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). The burden of proof is on the moving party. City of Mt. Pleasant, Iowa v. Assoc. Elec. Coop., Inc., 838 F.2d 268, 273-74 (8th Cir.1988). Once the moving party has discharged the burden, however, the non-moving party must do more than show that there is some doubt as to the facts. Matsushita Elec. Industrial Co. v. Zenith Radio, 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In fact, the non-moving party then bears the burden of setting forth specific facts to show that there is evidence in its favor for a jury to return a verdict for it. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In passing on a motion for summary judgment the court must review the facts in a light most favorable to the party opposing the motion and give that party the benefit of any inferences that can logically be drawn from those facts. Buller v. Buechler, 706 F.2d 844, 846 (8th Cir.1983). Moreover, in order to grant summary judgment, the court is required to resolve all conflicts of evidence in favor of the non-moving party. Robert Johnson Grain Co. v. Chemical Interchange Co., 541 F.2d 207, 210 (8th Cir.1976). The Court will now consider the merits of defendant's motion.

Discussion

I. CHOICE OF LAW

The question of choice of law is difficult in this case. "Federal district courts must apply the choice of law rules of the state in which they sit when jurisdiction is based on diversity of citizenship." Whirlpool Corp. v. Ritter, 929 F.2d 1318, 1320 (8th Cir.1991). Missouri courts follow the Restatement (Second) of Conflicts in contract actions. See Educational Employees Credit Union v. Mut. Guar. Corp., 50 F.3d 1432, 1437 (8th Cir.1995). This Court believes that Restatement (Second) of Conflicts § 187 applies in this case. The first step of any § 187 analysis is to determine whether the issue for determination is one which the parties "could have resolved by an explicit provision in their agreement directed to that issue." Restatement (Second) of Conflicts § 187(1). If so, then the Court should follow the law of the state chosen by the parties to determine the contractual rights and duties at issue.

The contract in this case provided a general forum selection clause choosing the law of New York. This Court should give that clause effect if the issues are of the kind to which the parties could have explicitly agreed to choice of law. In determining whether the issues involved in this case are of the kind to which the parties could have explicitly agreed, the Court will look to the Commentary to the Restatement (Second) of Conflicts. Comment (d) to Section 187 states that capacity, formalities and substantial validity are examples of issues which cannot be determined by explicit agreement. Comment (c) suggests that "whether the parties could have determined a particular issue by explicit agreement directed to that issue is a question to be determined by the local law of the state selected by application of the rule of § 188."

Section 188 is a "most significant relationship" test which looks at the place of contracting, the place of negotiation, the place of performance, the location of the subject matter of...