Meadors v. Cont'l Structural Plastics ( 2016 )

Not for Publication in West's Federal Reporter
United States Court of Appeals
For the First Circuit
No. 16-1007
ADA SOLUTIONS, INC.,
Plaintiff,
v.
CHUCK MEADORS; CHUCK MEADORS, INC.,
Defendants/Third-Party Plaintiffs, Appellants,
CMI, INC.,
Third-Party Plaintiff,
v.
CONTINENTAL STRUCTURAL PLASTICS, INC.,
Third-Party Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
[Hon. Marianne B. Bowler, U.S. Magistrate Judge]
Before
Lynch, Lipez, and Thompson,
Circuit Judges.
Timothy K. Cutler, with whom Cutler & Wilensky LLP was on
brief, for appellants.
Thomas H. Walters, with whom Howard & Howard Attorneys PLLC
was on brief, for appellee.
November 9, 2016
THOMPSON, Circuit Judge. This case arises from what the
district court characterized as "the worst-papered set of
arrangements [it had] ever seen." Chuck Meadors — along with his
company, Chuck Meadors, Inc. (collectively, Meadors) — appeals
from the entry of summary judgment in favor of Continental
Structural Plastics, Inc. (CSP) and from the denial of his motion
for summary judgment. We reverse in part and affirm in part.
Because we write primarily for the parties and the
district court judge — all of whom are familiar with the facts —
we offer only a brief summary of the relevant background before
cutting to the chase. In August 2005, Meadors entered into a
written agreement with ADA Solutions, Inc. (ADA), under which
Meadors acted as ADA's agent in negotiations with its
suppliers. This agreement specified the compensation Meadors
received from ADA for his services. Shortly after executing this
contract, Meadors entered into a written agreement with CSP, an
ADA supplier, in which CSP agreed to pay Meadors a 5% commission
on all sales by CSP to ADA. ADA says it was unaware Meadors had
made this deal until later. At first, everything went smoothly.
That all changed in June 2006, when CSP requested a
meeting with ADA. At this meeting, CSP indicated that its price
would be lower if it did not have to pay Meadors the 5%
commission. Upon learning this news, ADA decided that Meadors
should no longer accept the commission from CSP while acting as
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ADA's agent. From that point until ADA terminated Meadors in 2012,
CSP did not pay Meadors his commission under their contract.
Meadors filed suit against CSP, alleging breach of
contract (among other claims).1 The parties filed cross-motions
for summary judgment, and the district court entered summary
judgment in CSP's favor on the ground that Meadors had waived his
contractual right to the commission from CSP. Meadors timely
appealed.
Before addressing the district court's waiver analysis,
we first pause to explain why we need not concern ourselves with
third-party-beneficiary principles. Although CSP had not asserted
its status as a third-party beneficiary below and neither party
discussed it in the summary judgment papers, the district court
concluded in its decision that CSP was an intended third-party
beneficiary of an agreement between ADA and Meadors, which stated
that Meadors would no longer accept a commission from CSP.2 The
1 The procedural history of this case is more complex than
our summary lets on. We need not dwell on the details, and we
refer the interested reader to the district court's decision, ADA
Sols., Inc. v. Meadors, 98 F. Supp. 3d 240, 251-52 (D. Mass. 2015),
for a full recap.
2 Meadors characterizes CSP's third-party-beneficiary status
as an affirmative defense. By contrast, CSP asserts that the
district court merely applied "a 'third party beneficiary' legal
analysis." (Emphasis omitted.) But cf. First Nat'l State Bank of
N.J. v. Commw. Fed. Sav. & Loan Ass'n of Norristown, 610 F.2d 164,
170 (3d Cir. 1979) (concluding that a bank could not argue that it
was a third-party beneficiary on appeal because the bank "did not
set forth this affirmative defense in its pleadings as required by
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district court then stated that "CSP may enforce that agreement as
a third-party beneficiary, and may pursue its [defenses] of waiver
and novation," and it ultimately concluded that Meadors had waived
his right to the CSP commission.3
The district court assumed that it could only address
the issue of waiver after first determining that CSP was a third-
party beneficiary of an agreement between Meadors and ADA. The
primary focus of the parties' briefing on appeal is the propriety
of the district court's sua sponte determination that CSP was in
fact a third-party beneficiary of such an agreement. But the
third-party-beneficiary analysis is unnecessary under Ohio law.4
Meadors's right to the commission was based on the written contract
between CSP and Meadors. If Meadors waived that contractual right
expressly or by inconsistent conduct, CSP would be entitled to
enforce that waiver, regardless of whether it was a third-party
beneficiary of any agreement between Meadors and ADA. See Chubb
v. Ohio Bur. of Workers' Comp., 690 N.E.2d 1267, 1269 (Ohio 1998)
("A waiver may be enforced by the person who had a duty to perform
and who changed his or her position as a result of the waiver.");
Fed. R. Civ. P. 8(c)"). We need not enter this fray because our
disposition of this appeal focuses solely on CSP's waiver defense.
3 Because of its conclusion on the issue of waiver, the
district court did not address CSP's novation defense.
4 The district court found — and the parties agree — that Ohio
law applies to this dispute.
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CosmetiCredit, L.L.C. v. World Fin. Network Nat'l Bank, 24 N.E.3d
762, 772 (Ohio Ct. App. 2014) ("When a party to a contract offers,
by word or action, a waiver of certain duties under the contract,
other parties who change their position as a result of the waiver
may enforce the waiver."). Therefore, we proceed to analyze the
district court's conclusion that CSP is entitled to summary
judgment on the ground that Meadors waived his contractual right
to the CSP commission.5
In conducting our de novo review of the district court's
summary judgment ruling, see Matusevich v. Middlesex Mut. Assur.
Co., 782 F.3d 56, 59 (1st Cir. 2015), we conclude that genuine
disputes of material fact preclude summary judgment on the issue
of waiver. "A waiver is a voluntary relinquishment of a known
right." Chubb, 690 N.E.2d at 1269; see also CosmetiCredit, 24
N.E.3d at 772. Waiver of a contractual right can be accomplished
expressly or through a party's inconsistent conduct.
CosmetiCredit, 24 N.E.3d at 772. In either case, "[t]he party
asserting the existence of a waiver must prove the waiving party's
clear, unequivocal, and decisive act to waive." Id.
Typically, the question of whether a waiver has occurred
is for the factfinder to determine. See id. at 772-73 ("Whether
5 In doing so, we assume that CSP adequately developed in its
appellate brief the argument that it is entitled to summary
judgment on the basis of waiver alone.
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a party's inconsistent conduct amounts to a waiver involves a
factual determination to be resolved by the trier of fact."); Palek
Corp. v. A.P. O'Horo Co., No. 05 MA 141, 2007 WL 752159, at *4
(Ohio Ct. App. 2007) (unpublished decision) ("Whether or not there
has been waiver of all or certain terms of a prior written
agreement is a question of fact for the trier of fact." (quoting
Vocke v. Third Nat'l Bank & Trust Co., 267 N.E.2d 606, 617 (Ohio
Mun. Ct. 1971))); cf. Pottschmidt v. Klosterman, 865 N.E.2d 111,
117 (Ohio Ct. App. 2006) ("[I]t is for the trier of fact to
determine whether . . . a waiver [of a no-oral-modification
provision] occurred."). This case fits snugly within this general
rule.
In its discussion of the factual background of this case,
the district court stated that, either during or shortly after the
June 2006 meeting between ADA and CSP, John Flaherty, ADA's
president, issued Meadors an ultimatum: he could either receive
payment under his agreement with ADA or continue to receive his
commission from CSP; Meadors could not receive both. According to
the district court, "[f]aced with this choice, Meadors
relinquished [his] claim to the five percent commission on CSP's
sales, opting instead to receive a payment as the purchasing agent
of ADA." The district court concluded that "[t]his knowing and
voluntary choice [was] sufficient to effect a waiver of the right
to continue to receive commission payments from CSP." We cannot
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go along with this reasoning because its factual premise was
disputed.
It was not an undisputed fact that Meadors was presented
with an ultimatum and chose to forgo his contractual right to a
commission from CSP. At his deposition, Meadors testified that,
at some point after the June 2006 meeting between ADA and CSP, he
was told by Scott Ober, vice president and co-owner of ADA, that
he could no longer accept the commission from CSP. According to
Meadors, he protested to Ober, "You can't do that" because "I have
a legal and binding contract" with CSP. Ober was unmoved, telling
Meadors: "I did it. It's over." Similarly, while acknowledging
that he was aware that he was no longer receiving a commission,
Meadors also testified that he never volunteered, agreed, or
consented to the cessation of the CSP commission. Viewing the
facts in the light most favorable to Meadors — as we are required
to do when analyzing the grant of summary judgment in favor of
CSP, see Prescott v. Higgins, 538 F.3d 32, 39 (1st Cir. 2008) — a
jury could conclude that Meadors did not expressly waive
his contractual right to the CSP commission.
We reach the same conclusion with respect to a
waiver arising from inconsistent conduct. Although it is
undisputed that Meadors continued to work for ADA without
receiving his 5% commission from CSP for over five years,
he represents in his affidavit that he "repeatedly voiced [his]
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objections to the unilateral termination of [his right to the
CSP commission] to [David] Murtha[, the plant manager of one of
CSP's facilities,] as well as other managers at CSP."6 Along
similar lines, Meadors testified at his deposition that, although
he did not formally demand his commission from CSP, he raised the
issue of nonpayment of the commission with Murtha on more than one
occasion. Meadors also broached the issue with John Berwald,
another employee of CSP. The determination of whether a party has
waived a contractual right by inconsistent conduct is generally
left to the factfinder, CosmetiCredit, 24 N.E.3d at 772-73, and,
on these facts, a jury could reasonably conclude that CSP has not
carried its burden to show that Meadors's conduct represented the
requisite "clear, unequivocal, and decisive act to waive," id. at
772.7
6
CSP argued below that Meadors's affidavit was incompetent
summary judgment evidence under the sham-affidavit doctrine. See
generally Escribano-Reyes v. Prof'l HEPA Certificate Corp., 817
F.3d 380, 384-87 (1st Cir. 2016). The district court did not
address this argument in its decision (or anywhere else, as far as
we can tell), and CSP does not press it before this court.
Therefore, the argument is not properly before us. See United
States v. Hogan, 722 F.3d 55, 61-62 (1st Cir. 2013).
7
In staking out a contrary position, CSP relies upon the
following exchange from Meadors's deposition:
Q. Well, from July of 2006 forward, you continued to
perform a contract with ADA that did not include
the five percent that was part of the earlier
arrangement, correct?
A. Correct.
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For these reasons, the district court erred in granting
summary judgment in CSP's favor on the ground that Meadors waived
his contractual right to a commission from CSP.8 Meadors argues
that this conclusion entitles him to the entry of judgment in his
favor. We disagree.
The evidence in this record is not one sided.9 In their
respective depositions, Flaherty and Ober both testified that ADA
Q. And you did so knowingly and voluntarily? I mean,
you knew that you weren't getting the five percent
during all those years, 20 -- end of 2006, 2007,
'08, '09, '10, '11, you knew that, correct?
A. Correct.
According to CSP, this passage establishes that Meadors made a
"knowing and voluntary choice" to waive his right to receive the
commission from CSP. We think that is not necessarily so, and a
jury could find otherwise.
Although Meadors was asked whether he continued to perform
"knowingly and voluntarily," the examiner posed an additional
question before Meadors could respond. That question simply asked
whether Meadors knew he was not getting the commission while he
continued to perform. An affirmative answer to that question does
not establish beyond genuine dispute that Meadors voluntarily
relinquished — expressly or by inconsistent conduct — his right to
the commission, especially in light of the evidence that his
continued performance was punctuated by repeated objections to
CSP.
8 Although its motion for summary judgment offered several
defenses, CSP has pressed only the waiver defense before this
court. Any arguments relating to the other defenses, therefore,
are not properly before us. See Hogan, 722 F.3d at 61-62.
9 Where, as here, parties have cross-moved for summary
judgment, "we evaluate each motion independently and determine
'whether either of the parties deserves judgment as a matter of
law on facts that are not disputed.'" Matusevich, 782 F.3d at 59
(quoting Barnes v. Fleet Nat'l Bank, N.A., 370 F.3d 164, 170 (1st
Cir. 2004)).
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gave Meadors the ultimatum discussed by the district court and
that Meadors agreed to continue to work for ADA and to forgo
collection of the CSP commission. Additionally, there is evidence
that might cast doubt on Meadors's assertions that he raised the
issue of nonpayment of his commission with Murtha and Berwald; in
an interrogatory response, Meadors admitted that "no one on behalf
of [Meadors] ever contacted anyone at CSP during the years 2007,
2008, 2009, 2010, or 2011 relative to the CSP payment agreement."
Similarly, Flaherty and Ober testified that Meadors never
complained to them about CSP's nonpayment of the commission, and
Ober further testified that, to his knowledge, Meadors lodged no
such complaint with anyone at CSP. Moreover, even if Meadors did
voice his objections to Murtha and Berwald, that circumstance would
not, in itself, necessarily preclude a factfinder from concluding
that, based on his continued performance for over five years,
Meadors waived his right to the commission by his inconsistent
conduct.
Because of the existence of genuine issues of material
fact as to whether Meadors waived the commission expressly or by
inconsistent conduct, Meadors was not entitled to summary judgment
in his favor. The district court properly denied his summary
judgment motion.10
10Of course, the district court did not deny Meadors's motion
for summary judgment because a genuine issue of material fact
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In sum, the fact-intensive nature of the waiver
determination under Ohio law cuts both ways in this case; on this
conflicting evidentiary record, the factfinder must resolve the
question of whether Meadors waived his contractual right to receive
a commission from CSP.11 Accordingly, neither party was entitled
to summary judgment. Each side shall bear its own costs on this
appeal.
Reversed in part and affirmed in part.
existed on the question of waiver; instead, the judge reached the
opposite conclusion and entered summary judgment for CSP on the
basis of waiver. Nevertheless, we are free to affirm the district
court's summary judgment ruling on any grounds supported by the
record, see Cordero-Suárez v. Rodríguez, 689 F.3d 77, 81 n.4 (1st
Cir. 2012), and we do so here.
11 CSP's alternative affirmative defense of novation is
entirely dependent upon the same factual ambiguities entangled in
the waiver analysis and likewise can only be resolved by a
factfinder.
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