Wright-Moore Corp. v. Ricoh Corp.
| Citation | 908 F.2d 128 |
| Decision Date | 28 August 1990 |
| Docket Number | Nos. 89-2784,89-2854,WRIGHT-MOORE,s. 89-2784 |
| Parties | CORPORATION, Plaintiff-Appellant, Cross-Appellee, v. RICOH CORPORATION, Defendant-Appellee, Cross-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Philip A. Whistler, Cory Brundage, Fred R. Biesecker, Ice, Miller, Donadio & Ryan, Indianapolis, Ind., Vincent J. Backs, Beers, Mallers, Backs, Salin & Larmore, Fort Wayne, Ind., for plaintiff-appellant, cross-appellee.
James P. Fenton, Robert S. Walters, Barrett & McNagny, Fort Wayne, Ind., for defendant-appellee, cross-appellant.
Before BAUER, Chief Judge, and FLAUM and RIPPLE, Circuit Judges.
This case arises out of defendant Ricoh Corporation's ("Ricoh") refusal to renew its national distributorship agreement with plaintiff Wright-Moore Corporation ("Wright-Moore") after the expiration of its one year term. On a motion for summary judgment, the district court, applying Indiana law, held that Ricoh had good cause not to renew Wright-Moore's franchise agreement and did so without bad faith or discrimination, in compliance with the Indiana franchise statutes. See IND.CODE Secs. 23-2-2.5-1, et seq., 23-2-2.7-1, et seq. The court further held that Ricoh did not breach its contract with Wright-Moore and did not engage in fraud or misrepresentation with respect to the contract. Finally, the court refused to estop Ricoh from not renewing Wright-Moore based on oral representations made prior to the formation of the contract. Wright-Moore appeals the grant of summary judgment and Ricoh cross-appeals claiming that, in the event we hold for Wright-Moore, venue was improper. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.
Wright-Moore is an Indiana corporation having its principal place of business in Fort Wayne, Indiana. It is an independent distributor of copiers, related parts, and supplies. Wright-Moore has developed a network of independent, authorized dealers to purchase and resell its products which it supports by providing service training for the products they handle and offering the independent dealers favorable credit terms and minimal inventory requirements. Ricoh is a New York corporation with its principal place of business in West Caldwell New Jersey. It manufactures copiers, related parts and supplies, and distributes them both through independent distributors (such as Wright-Moore) and its own network of retail dealers.
In early 1984, the parties entered into a one year agreement whereby Wright-Moore agreed to distribute Ricoh 3000 Series copiers. In July, 1984, the parties entered into a second (and superceding) one year agreement under which Wright-Moore was appointed a national distributor of both the Series 3000 and the Series 4000 Ricoh copiers. Under the agreement, Wright-Moore was required to purchase 2,850 copiers during the one year contract term and to bear the costs of providing Ricoh-prescribed training courses for the service personnel of each dealer to whom Wright-Moore sold a Series 4000 machine. To meet this requirement, Wright-Moore, at its own cost, sent employees to Ricoh's headquarters for training and these employees, in turn, trained the service personnel of each dealer. The agreement also required Wright-Moore to maintain an extensive inventory of copier parts.
According to the agreement, the sole relationship between the parties was that of supplier and distributor. Wright-Moore's territory was defined as the continental United States, and Wright-Moore was permitted to sell as a wholesaler to retailers not affiliated with Ricoh. Wright-Moore was forbidden from using any Ricoh trademark in connection with Wright-Moore's name but was permitted to state that it was authorized to distribute certain Ricoh products. The agreement provided that the courts of Manhattan would have exclusive jurisdiction over any controversy arising out of the agreement and that New York law would govern any disputes. The agreement also contained an integration clause nullifying all prior agreements and understandings.
A second, related agreement, styled a "letter agreement," was completed simultaneously with the distributorship agreement. Wright-Moore agreed in the letter agreement to purchase immediately 1,200 machines towards the 2,850 requirement. The letter agreement also provided Wright-Moore with "price protection" in the event of a price change and allowed Wright-Moore to purchase more copiers on the same credit terms as the 1,200 machines provided for in the letter agreement.
Wright-Moore performed up to Ricoh's expectations during the contract term. At the end of the term, however, Ricoh refused to renew the distributorship and Wright-Moore filed this suit against Ricoh in the Northern District of Indiana. It claimed violations of the Sherman Act and the Indiana franchise statutes, breach of contract, fraud, misrepresentation and estoppel and sought compensatory and punitive damages. Wright-Moore claimed that it had been assured by Ricoh that its relationship with Ricoh would be long term and that under Ricoh policy, Wright-Moore's national distributorship would be renewed as long as it satisfied its financial obligations to Ricoh and met its minimum purchase agreements. Wright-Moore contended that the continued success of its dealers caused dealers in Ricoh's own network to complain that its aggressive pricing policy cut into their profits. As a result, Ricoh and its authorized dealers conspired against it, culminating in Ricoh's refusal to perform its obligations under the letter agreement (, Ricoh changed the credit terms and did not give it price protection) and refusal to renew the distributorship agreement as contemplated by the parties.
As a defense, Ricoh offered evidence that the refusal to renew was based on a change in marketing strategy. In early 1985, James Ivy, Ricoh's new vice-president for sales and marketing, undertook a review of Ricoh's distribution system to determine whether the existing distribution network was appropriate for the effective marketing of Ricoh's copiers. At that time, Wright-Moore, together with three other independent dealers, served as national distributors of the Ricoh 3000 and 4000 Series copier. These machines were also marketed through regional distributors and through Ricoh's own dealer network. The overlap of responsibility between the national and regional distributorships along with the resulting competition prevented the development of strong regional distributors which Ivy believed could best market the products. Ivy, therefore, decided that Wright-Moore and the other national distributorship agreements should not be renewed. In January of 1985, a meeting was held between Ricoh and Wright-Moore at which Wright-Moore was informed that Ricoh was considering removing the 3000 and 4000 Series copiers from national distribution. Ricoh discussed with Wright-Moore several alternatives, including regional distributorships of the 3000 and 4000 Series copiers or a national distributorship for two other copier models, but no agreement was reached.
Based on this evidence, Ricoh moved for summary judgment. The district court determined that there was no evidence of a conspiracy in violation of the Sherman Act. With respect to the Indiana franchise statutes, the court held that the choice of law clause in the contract was contrary to Indiana public policy as stated in the franchise statutes and, therefore, it would apply Indiana law rather than New York law. It further held that there was a material issue of fact with respect to Wright-Moore's qualification as an Indiana franchise. It found, however, that the evidence established that Ricoh was motivated by its economic self-interest and did not act in bad faith or with discriminatory purpose. Economic self-interest, the court held, was sufficient to satisfy the good cause requirement of the Indiana franchise statutes.
With respect to the breach of contract claims, the court determined that, on its face, the letter agreement's credit terms for future orders of copiers might have been breached but that properly interpreted in conjunction with the distributorship agreement, it was, in fact, not breached because the distributorship agreement allowed Ricoh to unilaterally change terms of credit. The court further determined that the price protection clause of the letter agreement had not been breached because it only provided price protection if Ricoh were to offer a lower price to another distributor, a condition precedent which had not occurred.
The court also found no fraud or misrepresentation because Ricoh had made statements only with respect to its future actions and Indiana law expressly prohibits fraud or misrepresentation claims based on representations of future actions. The court held that the same was true for the Indiana franchise statute's fraud provision. Finally, the court held that Ricoh is not estopped from not renewing the contract because Wright-Moore could not reasonably rely on Ricoh's oral representations made prior to formation of the contract. The court, therefore, granted Ricoh summary judgment. The court expressly refrained from reaching the forum selection clause of the distributorship agreement.
Wright-Moore appeals claiming that there were material issues of fact with respect to the franchise, contract, fraud and misrepresentation claims. In addition, Wright-Moore maintains that the district court made errors of law. Specifically, Wright-Moore claims that: (1) under Indiana franchise law, economic self-interest is not good cause for nonrenewal of a contract; (2) the court misinterpreted the letter agreement by reading it in conjunction with the distributorship agreement; and (3) the court's reading of the agreement was...
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