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Agv Sports Group, Inc. v. Lemans Corporation

United States District Court, Fourth Circuit

August 13, 2013

AGV SPORTS GROUP, INC. Plaintiff,
v.
LEMANS CORPORATION, Defendant.

MEMORANDUM OPINION

GEORGE L. RUSSELL, III, District Judge.

THIS MATTER is before the Court on Plaintiff AGV Sports Group, Inc.'s ("AGVSG") Motion for Partial Summary Judgment (ECF No. 49). AGVSG seeks damages against LeMans Corporation ("LeMans") for breach of contract, or, in the alternative, under a theory of promissory estoppel. In particular, AGVSG asks this Court to enter partial summary judgment on two issues, affirming that: (1) AGVSG and LeMans were engaged in an exclusive distribution agreement between December 14, 2006, and August 31, 2009; and (2) this agreement required LeMans to purchase a minimum quantity of, and use its best efforts to promote, AGVSG's product.

The issues have been fully briefed and no hearing is necessary. See Local Rule 105.6 (D.Md. 2011). AGVSG's Motion for Partial Summary Judgment will be denied because disputed material facts exist as to whether an exclusive distribution agreement formed.

I. BACKGROUND[1]

AGVSG is a Maryland corporation that designs, distributes, and licenses AGV Sport and AGVSPORT brand motorsports apparel, including boots, gloves, jackets, and accessories. LeMans is a Wisconsin corporation that distributes motorsports parts, accessories, and apparel from various vendors, including AGVSG. LeMans began distributing AGV products in 1989, at which time AGVSG did not yet exist. Rather, at that time, LeMans did business with AGV SpA, an Italian company, through its United States importer and designated resident agent, Michael Parrotte. In subsequent years, Mr. Parrotte formed AGVSG, a separate entity, which designs and markets an apparel line under the AGV name pursuant to a license from AGV SpA.

In 1994, AGVSG and LeMans entered into a written exclusive distribution agreement (the "Initial Agreement") for a term of three years, which, in the absence of sufficient notification, would automatically renew up to three times, each time for a three-year period. As neither party took steps to end the agreement, it continued through the fall of 2006. At that time, the parties were close to reaching an agreement (the "Licensing Agreement") that would grant LeMans an exclusive license and virtual ownership of the AGVSport trademark in the United States and Canada.[2] AGVSG contends that, during negotiations over the Licensing Agreement, the parties continued their relationship pursuant to the terms of the Initial Agreement, via an "Interim Agreement, " which continued the exclusive distributorship.

By fall of 2007, the parties had not yet signed the Licensing Agreement. Nonetheless, LeMans allegedly instructed AGVSG to begin operating under the terms of the Licensing Agreement, as its finalization was imminent. Thus, in reliance on the Licensing Agreement, and in anticipation of orders from LeMans, AGVSG prepared product designs for the next three riding seasons, but it ceased advertising, terminated its national sales manager, and laid off about half its office staff.

Conversely, LeMans contends that, while negotiations were ongoing, it discovered that AGVSG had neglected to disclose fully the extent of its rights to assign an exclusive license to LeMans. Accordingly, LeMans became uneasy over finalizing the Licensing Agreement. LeMans asserts that, by November 2007, it became clear that AGVSG would not be able to assign an exclusive license to LeMans and concluded that the Licensing Agreement would not be viable.

In any event, after December 13, 2006, LeMans alleges that the parties continued to conduct business on a purchase order-by-purchase order basis. To this end, AGVSG avers that, between November 2007 and February 2008, AGVSG and LeMans worked together to prepare LeMans's product order for the beginning of the 2008 season, supposedly agreeing that LeMans would place an order totaling $750, 000.00 in wholesale value. Upon reaching this agreement, LeMans representatives purportedly informed AGVSG that they would submit a formal purchase order for the agreed upon items within two weeks of their February 2008 meeting. AGVSG maintains LeMans never submitted a purchase order, and, in fact, contacted AGVSG about three weeks later, informing AGVSG that it would go forward with neither the Licensing Agreement nor the 2008 product order.

AGVSG filed its Complaint on January 4, 2011, seeking relief from LeMans for breach of contract, or, in the alternative, promissory estoppel. (ECF No. 1). Following initial discovery and an attempt at alternative dispute resolution before a U.S. Magistrate Judge, AGVSG filed its first Motion for Partial Summary Judgment. (ECF No. 18). LeMans filed its Response on August 29, 2011 (ECF No. 19), but AGVSG later withdrew its first Motion for Partial Summary Judgment (ECF No. 21). After agreeing to an extended deadline for dispositive motions, AGVSG filed its second Motion for Partial Summary Judgment on December 10, 2012. (ECF No. 49). LeMans filed its Response on January 16, 2013 (ECF No. 55), and AGVSG filed its Reply on February 4, 2013 (ECF No. 56).

II. DISCUSSION

A. Standard of Review

Under Federal Rule of Civil Procedure 56, the Court must grant summary judgment if the moving party demonstrates that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).

In reviewing a motion for summary judgment, the Court views the facts in a light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255 (1986) (citation omitted). Once a motion for summary judgment is properly made and supported, the opposing party has the burden of showing that a genuine dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586-87 (1986). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson , 477 U.S. at 247-48.

A "material fact" is a fact that might affect the outcome of a party's case. Id . at 248; JKC Holding Co. v. Wash. Sports Ventures, Inc. , 264 F.3d 459, 465 (4th Cir. 2001). Whether a fact is considered to be "material" is determined by the substantive law, and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson , 477 U.S. at 248; Hooven-Lewis v. Caldera , 249 F.3d 259, 265 (4th Cir. 2001).

A "genuine" issue concerning a "material" fact arises when the evidence is sufficient to allow a reasonable jury to return a verdict in the nonmoving party's favor. Anderson , 477 U.S. at 248. Rule 56(c) requires the nonmoving party to go beyond the pleadings and by its own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial. Celotex Corp. v. Catrett , 477 U.S. 317, 324 (1986). The nonmoving party "cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another." Beale v. Hardy , 769 F.2d 213, 214 (4th Cir. 1985).

B. Analysis

AGVSG's Motion for Summary Judgment regarding the existence of an Interim Agreement for an exclusive distributorship between the parties will be denied because disputed material facts exist as to whether the Interim Agreement was formed.

AGVSG seeks to enforce the alleged Interim Agreement as an "exclusive dealing" contract under Section 2-306 of the Uniform Commercial Code ("UCC"), Md. Code Ann., Com. Law ยง 2-306 (West 2013). Section 2-306 defines an exclusive dealing contract as "[a] lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods...." Id . Under such a contract, the principal is expected to refrain from supplying any other dealer or agent within the exclusive territory. See id., cmt. 5. An essential element of contract formation is "a manifestation of agreement or mutual assent by the parties to the terms thereof... [and] the minds of the parties must be in agreement as to its terms.'" Cnty. Comm'rs for Carroll Cnty. v. Forty W. Builders, Inc. , 941 A.2d 1181, 1209 (Md.Ct.Spec.App. 2008) (quoting Safeway Stores, Inc. v. Altman , 463 A.2d 829, 831 (Md. 1982)).

Because LeMans "is a body corporate [it] must act by its duly authorized executive or agent." N. Am. Accident Ins. Co. v. Plummer , 176 A. 466, 471 (Md. 1935). Absent a writing conferring such authority, it is a question of fact whether a purported agent had the authority to enter a particular contract on behalf of a corporation. Kennedy v. Mut. Life Ins. Co. , 159 A. 780, 782 (Md. 1932). The party seeking enforcement of such contract bears the burden of proving this fact. Id . Thus, to prevail on summary judgment, AGVSG must establish that there are no disputes of material fact that LeMans and AGVSG were bound to an Interim Agreement for an ...


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