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TL of Florida Inc v. Terex Corp, 16-4153 (2017)

Court: Court of Appeals for the Third Circuit Number: 16-4153 Visitors: 9
Filed: Aug. 29, 2017
Latest Update: Mar. 03, 2020
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT No. 16-4153 TL OF FLORIDA, INC., Appellant v. TEREX CORP, d/b/a Terex Constructions America On Appeal from the United States District Court for the District of Delaware (District Court No.: 1-13-cv-02009) District Judge: Honorable Leonard P. Stark Submitted under Third Circuit L.A.R. 34.1(a) on July 13, 2017 Before: GREENAWAY, JR., SHWARTZ, and RENDELL, Circuit Judges (Opinion filed: August 29, 2017) O P I N I O N* RENDELL,
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                                                    NOT PRECEDENTIAL

           UNITED STATES COURT OF APPEALS
                FOR THE THIRD CIRCUIT


                           No. 16-4153



                     TL OF FLORIDA, INC.,
                                      Appellant
                              v.

         TEREX CORP, d/b/a Terex Constructions America


          On Appeal from the United States District Court
                    for the District of Delaware
               (District Court No.: 1-13-cv-02009)
           District Judge: Honorable Leonard P. Stark


           Submitted under Third Circuit L.A.R. 34.1(a)
                        on July 13, 2017


Before: GREENAWAY, JR., SHWARTZ, and RENDELL, Circuit Judges


                 (Opinion filed: August 29, 2017)
                                      O P I N I O N*


RENDELL, Circuit Judge:

       In this appeal, Appellant TL of Florida, Inc. (“TL”) challenges the District Court’s

grant of summary judgment in favor of the Appellee Terex Corporation (“Terex”) in a

dispute arising from its non-exclusive distributorship agreement. For the following

reasons, we will affirm.

                                             I.

       Terex, a Delaware corporation that sells heavy equipment such as articulated

dump trucks as well as parts, and TL agreed in 2008 that TL would become a non-

exclusive distributor of Terex parts in south Florida.1 As part of the deal, TL was required

to maintain a costly inventory of Terex heavy equipment. In 2013, however, TL brought

this suit claiming that it was fraudulently induced into entering the agreement.

       Specifically, it claims fraudulent non-disclosure, negligent misrepresentation,

violation of the Florida Deceptive and Unfair Trade Practices Act, and violation of an

implied covenant of good faith and fair dealing. TL alleges that: (1) Terex misrepresented

there was a market for Terex heavy equipment in Southern Florida (the “Equipment

Market Representation”); (2) Terex misrepresented there was a market for Terex parts in


       *
         This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
       1
         The agreement was amended in 2011 (the “2011 Distributorship Agreement;”
collectively, the “Distributorship Agreements”). TL claims that the same
misrepresentations, discussed infra, induced it to sign this amended agreement.
                                             2
Southern Florida (the “Parts Market Representation”); (3) Terex failed to disclose that it

“did not select distributors on the basis of demand in the marketplace or quality of the

distributor,” but entered distribution agreements with “any person who asked for it and

had the financial ability to purchase [heavy equipment]” (the “Dealership Selection

Representations”), JA59; and (4) Terex failed to disclose that TL was surrounded by

other authorized sellers of Terex parts (called “CPEX Accounts”) who, unlike TL, were

not required to maintain an inventory of heavy equipment and supporting infrastructure

and therefore could undersell TL (the “Dealer Representation and Omissions”). Had it

known all of these facts, TL says it would not have entered into a distributorship

relationship with Terex.

       Earlier in the case, the District Court dismissed TL’s claim of violation of the

covenant of good faith and fair dealing for failure to state a claim, as well as all claims

based on the Equipment Market Representation because they were barred under the

applicable statute of limitations.2 The District Court then granted summary judgment in

favor of Terex on TL’s remaining claims, holding that no reasonable juror could find for

TL on its proffered theory of lost profit damages.3 The District Court also rejected what


       2
         TL does not appeal these rulings.
       3
         This Order appears to have resolved all claims with respect to the Dealership
Selection Representations and Dealer Representation and Omissions. Shortly after this
ruling, the parties stipulated to dismissal with prejudice of “any and all . . . remaining
claim(s) related to the Parts Market Representations.” JA4. As a result, the District
Court’s Order granting summary judgment to Terex on the issue of damages is a final
order we may review.
        Moreover, because we will affirm that holding, as well as the District Court’s
denial of leave to amend with respect to damages, we do not reach the District Court’s
alternative holding that Terex was entitled to judgment on the pleadings with respect to
                                              3
it interpreted to be a materially different damages theory advanced by the Plaintiff at

summary judgment as untimely. On appeal, TL primarily challenges these holdings as

well as others. Because we agree with the District Court that TL has failed to provide

sufficient evidence from which a jury could reasonably find for it on its damages

theories, we will affirm.

                                             II.4

       We exercise plenary review over a district court’s grant of summary judgment,

applying the same standard that the district court should have applied. Abramson v.

William Paterson Coll. of N.J., 
260 F.3d 265
, 276 (3d Cir. 2001). A court grants

summary judgment when “there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In assessing

whether there are any material issues of fact, we must draw “all justifiable inferences . . .

in [the nonmovant’s] favor.” Giles v. Kearney, 
571 F.3d 318
, 322 (3d Cir. 2009) (quoting

Anderson v. Liberty Lobby, Inc., 
477 U.S. 242
, 255 (1986)). The “mere existence of some

evidence in support of the nonmovant is insufficient to deny a motion for summary

judgment; enough evidence must exist to enable a jury to reasonably find for the

nonmovant on the issue.” 
Id. Although TL
asserts a number of independent claims, its theories of damages were

common to each. It advanced two. First, TL argued that it was entitled to lost profits from

all claims arising out of the Dealer Representation and Omissions and the Dealership
Selection Representations.
        4
          The District Court had jurisdiction pursuant to 28 U.S.C. § 1332. The District
Court’s summary judgment Order as well as the parties’ stipulation rendered the matter
final. We therefore have appellate jurisdiction pursuant to 28 U.S.C. § 1291.
                                              4
sales that it could have made to the customers of CPEX Accounts. The District Court

concluded that, because the record contained no evidence that CPEX Accounts sold

Terex parts within TL’s territory, TL could not prevail on this theory. Second, TL argued

that it suffered losses from sales that Terex made directly to CPEX Accounts who

operated in south Florida. The District Court rejected this second theory as “untimely”

because it was a “new” theory of damages that had not been advanced until after

discovery closed and shortly before trial was scheduled to begin. JA16. TL argues that

both of these holdings were error. We address each in turn.

       A. Lost Profits from Sales Made by CPEX Accounts to CPEX Account Customers

       The District Court properly granted summary judgment regarding TL’s claim for

damages for lost profits from sales made by CPEX Accounts. The thrust of TL’s

Complaint was that it suffered damages from undisclosed CPEX Accounts who were

selling Terex parts to TL’s customers in TL’s territory. As the District Court rightly

noted, however, there is no dispute in the record that “CPEX [A]ccounts in Southern

Florida were set up in order to export parts to end users outside the United States” where

no Terex distributorships existed. JA 161. Nor was there any significant evidence that

CPEX Accounts sold parts within TL’s territory. TL, on the other hand, was expressly

limited under the Distributorship Agreements to selling parts within its southern Florida

territory only. On appeal, TL points out that the 2011 Distributorship Agreement

prohibited only “active[] solicit[ation]” of sales outside of its territory, and the earlier

2008 Agreement contained no such limitation. As such, TL contends there is a genuine

dispute of fact as to whether these foreign end users, in the absence of CPEX Accounts,

                                               5
would have purchased their Terex parts in TL’s territory, and whether TL would have

had to actively solicit them to do so. We disagree.

       Even if foreign end users could purchase parts from TL under the Distribution

Agreements, TL cannot sustain its burden to survive summary judgment. There was

nothing in the record to suggest that Terex’s foreign end users, in the absence of

competition from CPEX Accounts, would purchase Terex parts in south Florida, let alone

from TL. TL points to its expert witness who generally opined that parts buyers like to

purchase locally. But we see no evidence in the record from which a juror could

reasonably infer that TL itself would be considered a “local” dealer to Terex’s foreign

end users, some of whom operate in Latin America, South America, and Africa. Indeed,

TL could not produce a single record of a sale to a foreign user (and admitted as much at

oral argument before the District Court). Rather, the record appears uncontested that TL

did not even have a practice of soliciting such users outside its territory. We will

therefore affirm this portion of the District Court’s ruling.

       B. Lost Profits from Sales Terex Made Directly to CPEX Accounts in South

Florida

       The District Court did not address this theory on the merits, but found that it was

not advanced in a timely manner. TL attacks this ruling primarily on two fronts.

       First, TL rejects the District Court’s finding that this theory represented a “new”

theory of damages. TL argues that “[b]ecause Terex sold to CPEX Accounts in South

Florida, they displaced sales that otherwise would have gone to TL, as the natural,

authorized source of Terex parts in South Florida.” Appellant’s Br. 11. As such, TL

                                              6
contends that its damages theory that it lost sales it could have made to CPEX Accounts

is “no different” from its original damages theory that it lost sales made by CPEX

Accounts to TL’s potential customers. 
Id. But TL
does not address the substance of the

District Court’s ruling that this theory was fundamentally different from the one it had

explicitly alleged and upon which it premised its discovery requests. TL’s Complaint

assumes that it was harmed by Terex’s failure to disclose the existence of parts-only

“dealers” who “surrounded” TL in south Florida, i.e., CPEX Accounts. JA59. The

Complaint makes no mention of competing with Terex. TL’s subpoenas to CPEX

Accounts, moreover, sought only documents related to “sales of Terex Parts by [CPEX

Accounts] to customers in Southern Florida as opposed to customers elsewhere.” E.g.,

JA388; 395. Finally, TL’s opening expert report explicitly relied upon TL’s original,

narrower theory. See JA522 (stating that analysis in report “constitutes calculation . . . of

lost profits sustained by TL of Florida as a result of sales of Terex parts by other Terex

dealers in South Florida.” (emphasis added)).5 TL’s allegation that it was unfairly forced

to compete with Terex in supplying parts to CPEX Accounts—which it did not articulate

       5
         We note that the subpoenas we refer to and the expert report were filed in an
appendix that contained documents that had been filed under seal in the District Court.
Notwithstanding Local Appellate Rule 106.1(c)(2), the parties filed an untimely motion
to permit sealing in this Court that set forth no basis for sealing the documents. Upon
request by the Court for the basis for sealing, the parties cited the District Court's sealing
order and their agreement to keep all the documents in that appendix confidential. This is
insufficient under our rule and runs afoul of our case law. See Pansy v. Borough of
Stroudsburg, 
23 F.3d 772
, 787-88 (3d Cir. 1994) (requiring that party requesting sealing
show “[g]ood cause” as to how disclosure “will work a clearly defined and serious
injury”). Because we are mystified as to how there could be “good cause” for keeping the
items we reference from public view, we refer to them herein as public information.
Further, we will deny Appellant TL’s pending motion seeking to file the appendix under
seal.
                                              7
until its second expert report—is an entirely separate concern. It was not error to

conclude that this theory of harm was materially different.

         Second, TL argues that even if this theory of damages did amount to a new theory,

the District Court still erred by finding that such a theory was untimely and by denying

leave to amend.6 Although the District Court did not do so explicitly, we analyze this

claim under the rubric of Federal Rule of Civil Procedure 15, and review the District

Court’s denial of leave to amend for abuse of discretion. See Rolo v. City Inv. Co.

Liquidating Tr., 
155 F.3d 644
, 654 (3d Cir. 1998).

         Under Rule 15, “[t]he court should freely give leave when justice so requires.”

Fed. R. Civ. P. 15(a)(2). However, the District Court may deny leave on account of

undue delay, bad faith, prejudice to the opposing party, or futility. See Alvin v. Suzuki,

227 F.3d 107
, 121 (3d Cir. 2000); Lorenz v. CSX Corp., 
1 F.3d 1406
, 1413 (3d Cir.

1993).

         Here, the District Court did not abuse its discretion in denying leave to amend.

TL’s new theory was not presented until three months before the scheduled trial and after

discovery had closed. TL now blames Terex for “conceal[ing]” the existence of CPEX

Accounts, Appellant Br. 16, but it forgets that it was aware before the close of discovery

that CPEX Accounts sold only to end users outside of TL’s territory. Yet, despite this

knowledge, TL limited its discovery to (and predicated its expert report on) its first,

flawed damages theory, all the while insisting that the case proceed to trial. The delay


       TL requested leave to amend at oral argument on Terex’s motion for summary
         6

judgment.
                                               8
thus appears to be wholly of TL’s doing. The District Court also found that allowing this

amendment now at this late stage would require Terex to engage in significant, additional

discovery related to the nature and identity of CPEX Accounts, the volume of parts sold

to CPEX Accounts, and realistic capture rates associated with sales to CPEX Accounts.

TL concedes this new discovery might be relevant to the issue. It was not improper to

deny leave to amend so close to trial given these facts. See Adams v. Gould Inc., 
739 F.2d 858
, 869 (3d Cir. 1984) (citing Serrano Medina v. United States, 
709 F.2d 104
(1st Cir.

1983) and DeBry v. Transamerica Corp., 
601 F.2d 480
(10th Cir. 1979) for the

proposition that “eleventh-hour amendment” or amendment introducing “new concepts

and theories that would require extensive additional discovery and create [a] risk that [a]

trial scheduled for three months hence will have to be delayed” constitutes prejudice

sufficient to deny leave to amend).7

                                             III.

       For the foregoing reasons, we will affirm.




       7
           We therefore decline TL’s request to reach the merits of its second damages
theory.
                                              9

Source:  CourtListener

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