Wagner Enterprises v. John Deere Shared Services
| Citation | 397 F.Supp.2d 1097 |
| Decision Date | 31 October 2005 |
| Docket Number | No. C-04-98-LRR.,C-04-98-LRR. |
| Parties | WAGNER ENTERPRISES, INC., d/b/a The Jym Bag Company, Plaintiff, v. JOHN DEERE SHARED SERVICES, INC., f/k/a Deere Marketing Services, Inc., Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
David A. Hacker, Jason M. Steffens, Stephen J. Holtman, Simmons Perrine Albright Ellwood, Cedar Rapids, IA, for Plaintiff.
John T. Clendenin, Richard J. Sapp, Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C., Des Moines, IA, for Defendant.
TABLE OF CONTENTS
I. INTRODUCTION .......................................................1099
II. PROCEDURAL BACKGROUND ..............................................1099
III. UNDISPUTED MATERIAL FACTS ..........................................1100
IV. STANDARD FOR SUMMARY JUDGMENT ......................................1103
V. LEGAL ANALYSIS .....................................................1104
A. CountI — Jym Bag's Breach of Contract Claim ....................1104
1. Indefinite terms ...........................................1105
2. Lack of consideration ......................................1107
3. Waiver .....................................................1108
B. Count II — Jym Bag's Promissory Estoppel Claim .................1109
VI. CONCLUSION .........................................................1111
The matter before the court is Defendant John Deere Shared Services, Inc.'s ("Deere") Motion for Summary Judgment (docket no. 16) [hereinafter "Motion"]. In this lawsuit, Plaintiff Wagner Enterprises, Inc., d/b/a The Jym Bag Company ("Jym Bag") claims breach of a 1999 licensing agreement [hereinafter "the Contract"] and promissory estoppel. For the reasons stated below, the court grants Deere's Motion.
On July 8, 2004, Jym Bag filed a Petition at Law and Jury Demand in the Iowa District Court In and For Linn County. On August 3, 2004, Deere removed the matter to this court. Deere invokes this court's diversity jurisdiction because complete diversity of citizenship exists between the parties and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332(a). Jym Bag is an Iowa corporation with its principal place of business in Iowa. Deere is a Delaware corporation with its principal place of business in Illinois.
Jym Bag's Petition at Law contains two claims: a breach of contract claim and a promissory estoppel claim. Deere filed its Answer on August 4, 2004.
On June 1, 2005, Deere filed the instant Motion. On June 24, 2005, Jym Bag filed a Resistance to Defendant's Motion for Summary Judgment [hereinafter "Resistance"]. Deere filed a reply brief on July 19, 2005, and Jym Bag filed a surreply brief on July 19, 2005.
On October 25, 2005, the court held a telephonic hearing on the Motion. Jym Bag was represented by attorneys Jason M. Steffens and Stephen J. Holtman. Deere was represented by attorneys Richard J. Sapp, Michael Mihm and Angel Anna West. Finding the Motion to be fully submitted and ready for decision, the court turns to consider it.
Deere is a subsidiary of Deere & Company that manages Deere & Company's trademark licensing programs and its licensees. Jym Bag is a former licensee and distributor of certain apparel items bearing the John Deere trademark and logo. Jym Bag is in the textile decorating and screen printing business. It creates wearable items such as sweatshirts, t-shirts, hats, jackets and other items bearing the logos of its licensors.
Deere and Jym Bag entered into the Contract on June 15, 1999. The Contract grants Jym Bag the non-exclusive right to use the Deere trademark in order to make, distribute and sell "t-shirts, sweatshirts, and caps." The Contract gave Jym Bag the right to sell such products to Wal-Mart, Target, and Bass Pro stores and catalogs. In exchange for such rights, Jym Bag agreed to pay Deere royalties totaling 10% of Jym Bag's net sales for Deere-licensed products, with a minimum advanced royalty payment of $15,000 each year. In the Contract, Jym Bag agreed to use the licensed products only in accordance with the terms of the Contract, and the Contract contains other restrictions consistent with Deere's right to control the use of its valuable trademark.
Section B of the Contract sets the term of the Contract and is at the heart of this dispute. In relevant part, the Contract provides:
B. Term of Agreement
6. This Agreement shall commence on 15 June 1999.
7. This Agreement will terminate two (2) years after the above commencement date. The Agreement will be automatically renewed for successive one (1) year periods unless either party gives notice to the other party of its intention not to renew the Agreement at least thirty (30) days prior to the scheduled termination date of the Agreement.
8. This Agreement may also be terminated by DEERE at any time upon the LICENSEE's failure to comply with any of the terms of this Agreement, provided that DEERE gives the LICENSEE written notice of the particular failure to comply with the terms of the Agreement thirty (30) days before the proposed termination date, and the LICENSEE does not cure the failure to comply with the Agreement in that thirty (30) day period.
9. Upon termination of this Agreement, LICENSEE shall discontinue manufacturing and selling products bearing LICENSED PROPERTIES, including products bearing images of DEERE manufactured equipment.
By its terms, the Contract contains no sell-off period which would permit Jym Bag to sell its inventory or fill confirmed orders if the Contract terminated earlier than Jym Bag anticipated.
In 2000, the parties signed two written amendments to the Contract. The first amendment allowed Jym Bag to sell Deere-licensed products at Pamida Stores and Place Department Stores. The second amendment made a new Deere trademarked logo part of the Contract.
In addition to these written amendments to the Contract, Deere and Jym Bag orally modified the Contract on various occasions. Some of those modifications allowed Jym Bag to sell to additional customers not contemplated by the Contract. Other oral modifications to the Contract allowed Jym Bag to produce and sell additional products not contemplated by the Contract. These agreements were not reduced to writing.
In addition to the Contract with Deere, Jym Bag was involved in licensing agreements with several other entities, including IH Case, GM-Chevrolet, The University of Iowa, Iowa State University, and the University of Northern Iowa. Such agreements contained year-to-year renewal provisions, like the provision in the Contract.
The Contract was established by Deere & Company employee Jim Doyle, who is now retired. Deere is currently represented by Jeff Gredvig, Deere & Company's Director of Brand Licensing, and Mike Porter, a Licensing Specialist. Since the spring of 2001, Gredvig has managed the outgoing licensing activities of dealers and non-dealers who sell the Deere brand of products. Porter has held his position since May of 2000 and is in charge of assisting in the management of Deere's non-dealer licenses. During all relevant times, Porter was the account manager for the Jym Bag account and was the primary Deere contact with Jym Bag.
Jim Wagner founded Jym Bag thirty years ago and, at all relevant times, was the President and majority stockholder, owning 51% of Jym Bag's stock. Jim Vancura is the Vice President who owns 49% of Jym Bag's stock. Vancura has been with Jym Bag for twenty-four years and, at all relevant times, was in charge of Jym Bag's internal business operations, including its sales and finances.
In September of 2002, Jym Bag representatives Wagner and Vancura met with Deere representatives Porter and Gredvig at Deere's facilities in Moline, Illinois, to discuss the Contract, including a possible change in the year-to-year renewal provision. During this meeting, Deere informed Jym Bag that it expected its licensees, including Jym Bag, to double revenues of Deere-licensed products every five years. Deere had not previously conveyed such an expectation to Jym Bag.
On January 31, 2003, Vancura sent a letter to Porter. Vancura discussed the renewal provision of the Contract in part of the letter:
The next item I would like to discuss is our licensing agreement. I also briefly mentioned this on our visit to Moline. My concern is the fact that this is only a yearly contract that automatically renews at the end of each year. I guess I kind of feel like a football coach who is on a year-to-year contract. In other words not real secure. Our company has put a great deal into this license agreement, and it would be nice to be on more stable ground. Do you do a year-to-year contract with most of your licensees or does it vary? Anyway could you review this situation and let me know what can be done. I would sincerely appreciate your efforts.
Deere did not initially respond to Vancura's concerns.
Jym Bag representatives called and emailed Porter after writing the January 31, 2003 letter to remind Porter of Jym Bag's concerns about the year-to-year renewal provision in the Contract. Porter informally responded to the letter by telephoning Jym Bag representatives in March or April of 2003. Although Porter addressed Jym Bag's concerns over the renewal provision of the Contract, the concerns were not resolved.
Sometime in early-2003 to mid-2003, the parties again met at Deere's facilities in Moline.1 Jym Bag was represented by Wagner and Vancura, and Deere was represented by Porter. The three first had a meeting in a conference room in Porter's office and then they went to lunch in the Deere cafeteria. During lunch, Wagner and Vancura raised the issue of the year-to-year renewal clause in the Contract. In response, Porter stated either "I will tell you that unless you just totally screw up...
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