Topp, Inc. v. Uniden American Corp.

• Decision Date: 30 March 2007
• Docket Number: No. 05-21698CIV.,05-21698CIV.
• Citation: 483 F.Supp.2d 1187
• Parties: TOPP, INC., a Florida corporation, Plaintiff, v. UNIDEN AMERICA CORPORATION, a Delaware corporation, Defendant.
• Court: U.S. District Court — Southern District of Florida

483 F.Supp.2d 1187

TOPP, INC., a Florida corporation, Plaintiff, v. UNIDEN AMERICA CORPORATION, a Delaware corporation, Defendant.

No. 05-21698CIV.

United States District Court, S.D. Florida. Miami Division.

March 30, 2007.

Stanley H. Wakshlag, Amanda M. McGovern, and Ismael Diaz of the firm of Kenny Nachwalter, P.A., Miami, FL, Frank G. Smith, III and Jay D. Bennett of the firm of Alston & Bird, Atlanta, GA, Counsel to Defendant Uniden America.

Andres Rivero of Rivero Palmer & Mestre, P.A. Coral Gables, FL, in connection with the Magistrate's Report and Recommendation, and Jeffrey B. Crockett and Paul Schwiep of the firm of Coffee and Burlington, Miami, FL, in connection with the Order Adopting, In Part, Magistrate's Report and Recommendation, Counsel to the Plaintiff, Topp, Inc.

ORDER ADOPTING, IN PART, MAGISTRATE'S REPORT AND RECOMMENDATION, GRANTING, IN PART, DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND GRANTING, IN PART, DEFENDANT'S MOTION TO DISMISS

MORENO, District Judge.

THE MATTER was referred to the Honorable Andrea M. Simonton, United States Magistrate Judge for a Report and Recommendation on Defendant's Motion to Dismiss (D.E. No. 58, 59) and Defendant's Motion for Summary Judgment (D.E. No. 101). The Magistrate Judge filed a Report and Recommendation (D.E. No. 228) on January 22, 2007. The Court has reviewed the entire file and record. The Court has made a de novo review of the issues that the objections to the Magistrate Judge's Report and Recommendation present.

I. Background

A. The Amended Complaint

To summarize briefly, Plaintiff Topp, Inc., ("Topp") is proceeding under a three-count Amended Complaint (DE # 41). In Count I of the Amended Complaint, Topp contends that Uniden America breached exclusive distribution agreements for the sales of new products in Latin America and used products in the United States, Canada and Latin America.

In Count II, Topp alleges that Uniden America tortiously interfered with Topp's advantageous business relationships with Lectron Radio Sales, Ltd. (Lectron), and Costco Wholesale Corporation in Mexico (Costco Mexico). The tortious interference claim as it relates to Lectron is not at issue in either the Motion to Dismiss or the Motion for Summary Judgment.

In Count III, Topp contends that over the course of Uniden America's business relationship since 1996, Uniden America continuously falsely represented to Topp that it was supplying Topp with all of the B-products it obtained in that time period, and that at the time Uniden America made those statements, Uniden America knew that the statements were false because it was skimming the best B-products off for its own benefit on resale, leaving to Topp the B-products of lesser value.

B. Magistrate Judge Simonton's Recommendations

Magistrate Judge Simonton, in a thoughtful and well-reasoned Report and Recommendation ("R & R"), applying Florida law, recommended that the Court grant Defendant's Motion for Summary Judgment as to all three Counts. She recommended that summary judgment be granted as to Count I because the alleged oral exclusive distributorship agreements are unenforceable under the Statute of Frauds. She also found that a breach of the September 12, 2003 written B-stock agreement was not pled in the Amended Complaint.

As to Count II, Magistrate Judge Simonton recommended that summary judgment be granted as to the Costco Mexico claims because the economic loss rule bars raising breach of contract issues as torts.

Magistrate Judge Simonton also recommended that summary judgment be granted as to Count III for two reasons. First, she found that the economic loss rule bars the tort claims. Second, pursuant to the finding in Count I that the alleged oral agreements which form the basis of the fraud claims are unenforceable, Plaintiff cannot avoid the Statute of Frauds by restating its breach of contract claim as a tort.

Finally, Magistrate Judge Simonton recommended that the Motion to Dismiss be denied as moot in light of her recommendations as to the Motion for Summary Judgment.

Defendant has no objections to the R & R. Plaintiff, however, has filed numerous objections, which the Court now addresses.

II. Analysis

A. Objection as to Choice of Law

In an objection that applies to the entire analysis of the R & R, Plaintiff contends that Texas rather than Florida law should apply to all claims. After a hearing was held on the objections to the R & R, the Court allowed the parties to brief the issue of which states' law should apply to the claims.

The Court initially indicated at the hearing that it agreed with Magistrate Simonton's application of Florida law to both the breach of contract and tort claims. After reviewing the briefs submitted by both parties on the choice-of-law issue, the Court still finds that Florida law applies to all claims.

1. Contract Law Claims

At the outset, the Court notes that to the extent a breach of the written 2003 B-stock agreement is alleged, the parties appear to be in agreement that Texas law governs because of the choice of law provision in the contract. Accordingly, the Court's discussion of which states' law governs is limited to the oral contract claims at issue.

Defendant Uniden vigorously asserts that because Topp has for the very first time, in its objections to the R & R argued that the Texas Statute of Frauds applies to its oral contract claims in Count I, it has waived the right to argue Texas law applies. Topp counters that in relying on Florida law it was only responding to Uniden's Florida-based arguments and during oral argument in front of the Magistrate, it merely admitted that no one had thought about whether Florida law applied without conceding the point.

After thoroughly reviewing the record presented to the Magistrate, the transcript of the oral argument during which the Magistrate questioned Topp closely on its reliance upon Florida law, and the briefs submitted by the parties, the Court agrees with Defendant that Plaintiffs time to argue that Texas law applies to the oral contract claims has passed.

First, unlike with respect to the tort law claims discussed infra, Plaintiff never once cited to a Texas case or stated to the Magistrate Judge that it was asking the Court to consider the application of Texas law to its contract claims. In fact, Plaintiff stated during oral argument that, "unless one side or the other is asking the court to apply the law of another forum, it is the law of forum (sic) where the court sits in diversity matters." Plaintiff now argues that it was Uniden's burden to bring the choice of law "issue" to the Court's attention.

The Court finds, as Plaintiff itself stated at oral argument, that with respect to the contract issue, "because the parties failed to consider the choice of law in this diversity case, we must presume that the substantive law of the forum (Florida) controls." International Ins. Co. v. Johns, 874 F.2d 1447, 1458 n. 19 (11th Cir.1989). In American Home Assur. Co. v. Glenn Estess & Associates, Inc., 763 F.2d 1237 (11th Cir.1985), a party did not raise a choice of law issue on summary judgment and the district court applied the law of its own forum. Id. at 1238. After the party lost on summary judgment, it raised the choice of law issue in a motion to amend the judgment, arguing that the court had erred in applying the law of its forum. Id.

On appeal, the Eleventh Circuit held that the district court was well within its discretion in denying the motion where the choice of law issue was raised for the first time after the entry of summary judgment. Id. at 1239. It noted that plaintiff attempted to raise the argument only after failing to prevail in its interpretation of the forum's law, and allowing the litigant to now do so would essentially afford "two bites at the apple.'" Id. (citation omitted).

It is within this Court's discretion as to whether it will receive evidence not presented to the Magistrate. See Papapanos v. Lufthansa German Airlines, 1996 WL 33155438 *11 (S.D.Fla.1996)(discussing why court should be reluctant to consider matters not addressed before the Magistrate). Although summary judgment has not yet been entered and the Court recognizes that the district court's relationship with magistrates differs from its relationship with the appellate court, the same principles apply. Allowing Plaintiff to now present an entirely new argument even though the Magistrate expressly inquired as to Topp's stance on choice of law would defeat the purpose of referring this matter to the Magistrate.

Here, where Plaintiff has not cited to a single Texas case in its summary judgment pleadings or at oral argument and so much time has already been expended on this case, the Court exercises its discretion to decide that it is inequitable to now entertain a choice-of-law argument. Thus, Florida law will continue to apply to Plaintiff's oral contract claims.¹

2. Tort Law Claims

Plaintiff's argument that Texas law should apply to its tort claims is a slightly easier pill for the Court to swallow. Although neither party raised the issue to the Magistrate by fully briefing the choice of law issue, Plaintiff had at least some citations to Texas case law and made at least some representations during oral argument that Texas law should apply. It is also correct in now arguing that it was not improper to also cite to Florida law as an argument in the alternative. Therefore, the Court will engage in a choice-of-law analysis.

A federal district court sitting in Florida and deciding a tort claim is required by Florida choice-of-law rules to apply the "most significant relationship test." Trumpet Vine Inv. v. Union Capital, 92 F.3d 1110, 1115-1116 (11th Cir.1996). Under this test, the court will apply the law of the jurisdiction that has the most significant relationship to the occurrence and the parties under the principles as stated in the Restatement (Second) of Conflict of Laws § 6 (1971). Id....