King of Prussia Equipment Corp. v. Power Curbers, Inc. ( 2004 )

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
11-23-2004
King of Prussia v. Power Curbers Inc
Precedential or Non-Precedential: Non-Precedential
Docket No. 03-4639
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 03-4639
KING OF PRUSSIA EQUIPMENT CORPORATION,
Appellant
v.
POWER CURBERS, INC.
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
D.C. Civil Action No. 98-cv-04754
(Honorable Louis H. Pollak)
Argued October 28, 2004
Before: SCIRICA, Chief Judge, FISHER and GREENBERG, Circuit Judges
(Filed November 23, 2004)
ROBERT D. ARDIZZI, ESQUIRE (ARGUED)
PAUL A. BUCCO, ESQUIRE
Davis, Bucco & Ardizzi
10 East 6th Avenue, Suite 100
Conshohocken, Pennsylvania 19429
Attorneys for Appellant
JAMES M. PARKS, ESQUIRE (ARGUED)
JAMES H. STEIGERWALD, ESQUIRE
Duane Morris LLP
One Liberty Place, 37th Floor
1650 Market Street
Philadelphia, Pennsylvania 19103-7396
Attorneys for Appellee
OPINION OF THE COURT
SCIRICA, Chief Judge.
This appeal involves the termination of a seventeen-year implied distributorship
agreement. Plaintiff/appellant King of Prussia Equipment Corporation (“KPEC”)
contends that the District Court erred in finding the distributorship terminable at will
under Pennsylvania Law, and in granting summary judgment to defendant/appellee Power
Curbers, Inc. on its claim for breach of the implied covenant of good faith and fair
dealing. KPEC also appeals summary judgment on its quantum meruit claim. This is a
diversity case under 28 U.S.C. §1332, and we have appellate jurisdiction under 28 U.S.C.
§ 1291. We will affirm for the reasons set forth.
I.
The central facts of the case are not in dispute. KPEC started distributing
construction equipment manufactured by Power Curbers in Southeast Pennsylvania in the
early 1980s. The relationship was beneficial to both parties (during the last three years of
the agreement, sales of Power Curbers equipment accounted for about 15-20% of KPEC’s
revenues). The distribution agreement was never memorialized over the course of these
seventeen years, but no significant disputes between the parties arose. In December 1997,
Power Curbers terminated the implied agreement in order to establish its own direct
distributorship, giving rise to this lawsuit. The termination letter sent to KPEC provided
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that Power Curbers would repurchase parts from KPEC and pay a finder’s fee of 5% for
any sales by Power Curbers in the territory formerly serviced by KPEC in the first quarter
of 1998. In July 1998, KPEC cashed a check from Power Curbers, even though the
accompanying letter stated that the intent of the finder’s fee was “to terminate our
distributor agreement amicably and fairly.”
KPEC filed a complaint in the District Court in September 1998. On January 5,
2001, the District Court granted summary judgment to Power Curbers on KPEC’s claims
for breach of the implied covenant of good faith and fair dealing and quantum meruit
compensation, but denied summary judgment on the contract theory. King of Prussia
Equip. Corp. v. Power Curbers, Inc., 158 F. Supp. 2d 463, 466-67 (E.D. Pa. 2001)
(“KPEC I”). In May 2003, the District Court conducted a four-day bench trial on the
breach of contract claim. It found that there was no agreement between the parties
regarding the duration of their relationship and entered judgment for Power Curbers.
King of Prussia Equip. Corp. v. Power Curbers, Inc., 287 F. Supp. 2d 594, 597-98 (E.D.
Pa. 2003) (“KPEC II”). KPEC appeals from both orders.
II.
We review the District Court’s findings of fact for clear error. Fed. R. Civ. P.
52(a). The District Court’s conclusions of law are subject to plenary review. Scully v. US
WATS, Inc., 238 F.3d 497, 507 (3d Cir. 2001). We review grants of summary judgment
de novo. Dixon Ticonderoga Co. v. Estate of O’Connor, 248 F. 3d 151, 161 (3d Cir.
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2001). In determining whether there is a genuine issue to be tried, the court must accept
the evidence submitted by the nonmovant as true, resolving all ambiguities and drawing
all justifiable inferences in plaintiff’s favor. Anderson v. Liberty Lobby, 477 U.S. 242,
255 (1986).
We first address KPEC’s breach of implied contract claim. KPEC contends the
conduct and relationship of the parties shows that termination was allowable only for
cause. Power Curbers claims its distributorships are terminable at will. 1
The general rule in Pennsylvania as elsewhere is that “[w]here the contract
provides for successive performances but is indefinite in duration it is valid for a
reasonable time but unless otherwise agreed may be terminated at any time by either
party.” 13 Pa. C.S.A. § 2309(b); see also Slonaker v. P.G. Publ’g Co., 13 A.2d 48, 50 (Pa.
1940) (holding “language of far more precise and umistakable character” required to
create a perpetual commitment); Weilersbacher v. Pittsburgh Brewing Co., 218 A.2d 806(Pa. 1966) (rejecting plaintiff’s implied contract claim that it had right to distribute
defendant’s products as long as it continued to pay for them). In looking at implied
contracts under Pennsylvania law, “it is the intention of the parties which is the ultimate
guide, and, in order to ascertain that intention, the court may take into consideration the
1
Power Curbers also raised a Statute of Frauds (13 Pa. C.S.A. § 2201) defense in the
District Court. The District Court did not address this alternative ground supporting
judgment for defendants, and we do not consider it here.
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surrounding circumstances, the situation of the parties, the objects they apparently have in
view, and the nature of the subject-matter of the agreement.” Slonaker, 13 A.2d at 50-51.
In this case there was no written or oral agreement regarding termination. From
the record, the only point of reference on the issue appears to be Power Curbers’ 1994
termination of a distributorship in Central Pennsylvania, the Stewart-Amos Equipment
Company. KPEC later took over from Stewart-Amos, and had in its possession a copy of
the letter terminating Stewart Amos. The letter reads:
There is no written distributorship agreement between Power Curbers and
Stewart-Amos Equipment Company. However, the standard distributor
agreement that we use with other distributors contains the following: This
agreement shall continue until terminated at any time by either party upon
thirty (30) days’ written notice to the other party. . . .
(Emphasis added.)
Despite this letter, KPEC contends the distributorship was terminable only for
cause, as reflected by the dealings between the parties and especially by the conditions
Power Curbers allegedly imposed on KPEC’s distributorship. KPEC points to Power
Curbers’ requirements that KPEC maintain an inventory of Power Curbers’ parts, send
its employees to Power Curbers’ service school, and maintain a knowledgeable and well-
trained sales force. The District Court found, however, that “it is not clear that [Power
Curbers] actually did impose specific requirements upon KPEC,” and that while KPEC
may well have believed the distributorship was only terminable for cause, “that
understanding did not come from statements made by [Power Curbers].” KPEC II, 287 F.
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Supp. 2d at 598. There is more than enough support for this finding in the record,
including testimony by KPEC’s own vice president, Mr. Pietrini. We see no clear error.
KPEC then argues that, even assuming the agreement was terminable at will, this
case fits into the narrow situation where there is an implied contractual duty to terminate
in good faith and in a commercially reasonable manner under Pennsylvania law. See
Loos & Dilworth v. Quaker State Oil Refining Corp., 500 A.2d 1155, 1163 (Pa. Super. Ct.
1985) (requiring that termination of gas station franchise be undertaken in good faith and
in a commercially reasonable manner); Atlantic Richfield Co. v. Razumic, 390 A.2d 736(Pa. 1978). This argument is unavailing. The Power Curbers-KPEC relationship is easily
distinguishable from the service station franchisor-franchisee relationships in those cases.
KPEC was not nearly as dependent on Power Curbers: it did not pay Power Curbers for
its distributorship, distribute only Power Curbers products, nor license Power Curbers’
intellectual property rights. There is also nothing in the record to indicate that Power
Curbers had significant control over KPEC’s sales or prices. As such, the District Court
did not err in failing to conduct the analysis called for by Loos & Dilworth.
We move on to KPEC’s quantum meruit claim. KPEC claims compensation for
the intangibles (strong market share and goodwill in its distribution territory) that Power
Curbers effectively appropriated by ending KPEC’s distributorship. The District Court
found that KPEC could not recover under this theory because it was “in KPEC’s best
interests to market Power Curbers’ machines effectively and ‘unjust enrichment will not
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be found where Plaintiff rendered services to advance its own interests.’” KPEC I, 158 F.
Supp. 2d at 467 (quoting New Tech Voting Systems, Inc. v. Danaher Corp., 1996 U.S.
Dist. LEXIS 18376 at *10 (E.D. Pa. Dec. 6, 1996). Also, the existence of an agreement
fixing compensation generally precludes an action in quantum meruit. See EFCO
Importers v. Halsobrunn, 500 F. Supp. 152, 157-58 (E.D. Pa. 1980); Murphy v. Haws &
Burke, 344 A.2d 543, 546 (Pa. Super. Ct. 1975).
III. Conclusion
For the foregoing reasons, we will affirm the judgment of the District Court.
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