DONNA F. MARTINEZ, Magistrate Judge.
Plaintiff, Innovative Sales and Machine Services, LLC ("ISMS"), brought this breach of contract action against defendant, Maier USA, LLC ("Maier"). After a two-day bench trial on December 16 and 17, 2015, I make the following findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure.
This case involves a dispute between a manufacturer of Swiss-style screw machines and one of its distributors. The individuals involved came to know one another through many years in the industry working for different manufacturers and distributors. Two of them entered into an oral agreement on behalf of the parties. For nearly two years, they carried on without incident, but the relationship eventually fell apart, leading to the instant lawsuit.
Plaintiff ISMS, a distributor of Swiss-style screw machines, is a limited liability company in which John Schuld is the only member. (Tr. 12/17/15 AM, pp. 4, 7.)
Defendant Maier USA is a limited liability company owned by Michael Maier, who lives in Germany and also owns Maier Germany. (Tr. 12/17/15 PM, pp. 71-72, 80.) Maier USA was founded in 2008 to import and distribute Maier Germany products in the United States. (Tr. 12/17/15, pp. 71-72.) Before 2008, Maier imported and distributed its machines through Methods Machine Tools ("Methods"), the "largest importer of machine tools privately owned" in the United States. (Tr. 12/16/15 AM, p. 18.) James Kucharski was the product manager of the Maier line at Methods. (Tr. 12/16/15 AM, p. 19.) He later became the national sales manager at defendant Maier.
Schuld and Kucharski met in or around 1999. (Tr. 12/16/15 AM, p. 20; Tr. 12/17/15 AM, p. 6.) At the time, Schuld worked for Rudel Machinery Company ("Rudel"), which distributed screw machines manufactured by another company called Tornos, where Kucharski was the regional sales manager. (Tr. 12/16/15 AM, p. 20; Tr. 12/17/15 AM, p. 6.) Schuld and Kucharski became friends and socialized. (Tr. 12/16/15 AM, p. 22; Tr. 12/17/15 AM, p. 6.)
In 2001, Schuld left Rudel to work for his father's company rebuilding, manufacturing, and selling screw machine tooling and replacement parts. (Tr. 12/17/15 AM, pp. 6-7.) Schuld remained in contact with Kucharski. (Tr. 12/17/15 AM, pp. 7-8.) After four years at his father's company, Schuld left to start ISMS. (Tr. 12/17/15 AM, pp. 4, 7.) Schuld hired two independent contractors, Jeff Judd and Barry Ertel. (Tr. 12/17/15 AM, pp. 9, 10, 22, 58, 68-9, 71, 98.)
After forming ISMS, Schuld contacted Kucharski, who at the time was working as the regional sales manager of Tornos, to ask if Kucharski was satisfied with Tornos's New England distributor, Rudel. (Tr. 12/17/15 AM, p. 8.) He was not. (Tr. 12/17/15 AM, p. 8.) In or around 2005, Rudel "fell apart," and Kucharski asked ISMS to become the regional distributor of Tornos products. (Tr. 12/16/15 AM, pp. 22-23; Tr. 12/17/15 AM, pp. 8-9.)
By 2008, Kucharski was working for defendant Maier as its national sales manager. (Tr. 12/16/15 AM, pp. 17-19; Tr. 12/17/15 PM, p. 72.) ISMS still was distributing Tornos products. (Tr. 12/16/15 AM, pp. 24-27; Tr. 12/17/15 AM, pp. 11, 13.) Kucharski approached Schuld to discuss ISMS becoming a distributor of Maier products. (Tr. 12/16/15 AM, pp. 24-27; Tr. 12/17/15 AM, pp. 11, 13.)
In or around April 2008, Schuld and Kucharski, on behalf of the parties, entered into an oral distribution agreement. The material terms included (i) services; (ii) territory; (iii) exclusivity; (iv) commission; and (v) duration and termination.
Under the contract, ISMS was to serve as Maier's distributor. ISMS would market, promote, and sell Maier machines and ancillary equipment. (Tr. 12/16/15 AM, pp. 25-26, 73, 106-07; 12/17/15 AM, pp. 12, 26-27, 90.) ISMS was to pay its own marketing expenses. (Tr. 12/16/15 AM, pp. 97-98; Tr. 12/17/15 PM, pp. 54-56.)
Schuld and Kucharski agreed that ISMS would distribute Maier machines in the six New England states.
ISMS was the exclusive distributor of Maier machines in the New England territory, with the exception of Maier's "house account"
The parties agreed that ISMS would receive commissions for selling Maier machines and ancillary items.
Between August 2008 and October 2010, Maier paid ISMS a total of $140,308.56 in commissions.
There was no term to the agreement and either party could terminate it at any time. (Tr. 12/16/15 AM, pp. 36, 112-13; Tr. 12/17/15 AM, p. 54.) In the event of termination, ISMS would have between 30 days (the industry standard) and 60 days to close any outstanding deals. (Tr. 12/16/15 AM, p. 113; Ertel Depo.,
On February 19, 2010, Schuld and Kucharski had a "heated discussion," after which Kucharski opened ISMS's exclusive territory to other distributors.
ISMS makes five claims against Maier (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) violation of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. §§ 42-110a
"The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages."
(Pl.'s Proposed Stmt. Facts, Doc. #75, ¶ 12.)
ISMS has failed to meet its burden of showing that the parties agreed to terms as ISMS describes them.
Considering the evidence presented at trial, I find that the parties entered into an oral agreement whereby ISMS would market, promote, and sell Maier machines and ancillary equipment in the six New England states. ISMS would be the exclusive distributor in this territory, with the exception of Maier's house account with Alpha Grainger.
"[E]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement."
ISMS argues that Maier acted in bad faith by making direct sales to customers in ISMS's exclusive territory, which deprived ISMS of the commissions it expected to receive under the agreement. Specifically, ISMS contends that it is owed commission payments for Maier's two direct sales to Alpha Grainger, as well as three other direct sales Maier made to New England companies after Kucharski opened ISMS's exclusive territory. ISMS has failed to prove its claim. Maier's direct sales to Alpha Grainger were excluded from ISMS's exclusive sales territory and thus, Maier was not required to pay ISMS commissions for the sales Maier made there. As for the three direct sales Maier made after February 2010, ISMS has offered no persuasive evidence that it is entitled to commissions.
ISMS additionally argues that Maier breached the implied covenant by terminating ISMS's exclusive territory without notice or cause. The evidence shows, however, that either party could terminate the agreement at any time.
"[A] violation of CUTPA may be established by showing either an actual deceptive practice or a practice amounting to a violation of public policy."
ISMS argues that Maier violated CUTPA by (1) failing to disclose to ISMS that it made direct sales of its machines to customers in ISMS's exclusive territory; (2) intentionally withholding from ISMS copies of purchase orders, price quotes, order confirmations, and invoices for the sales ISMS made; and
(3) opening ISMS's exclusive territory to other distributors based on Kucharski's personal sentiments toward Schuld.
ISMS has failed to prove that Maier engaged in any conduct violative of CUTPA. First, the parties agreed that ISMS would not receive commission on Maier's direct sales to Alpha Grainger. As to sales after Kucharski terminated ISMS's exclusive territory, ISMS could register leads and add customers to a protected list, preventing any other distributors from soliciting sales there. ISMS did not do so. ISMS also has failed to show that Maier intentionally withheld purchase orders, price quotes, order confirmations, and invoices in order to prevent ISMS from calculating commissions. Lastly, because either party could terminate the agreement at any time, ISMS has not established that Maier violated CUTPA by opening ISMS's exclusive territory based on Kucharski's personal feelings toward Schuld.
"Under the doctrine of promissory estoppel, [a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. A fundamental element of promissory estoppel . . . is the existence of a clear and definite promise which a promisor could reasonably have expected to induce reliance."
ISMS asserts that it relied to its detriment on Maier's promises that ISMS would be the exclusive distributor of Maier machines in the New England territory; that it would receive a straight 10% commission on the sale of every Maier machine and ancillary part sold in the territory; that it would be reimbursed for marketing expenses; and that it would not be terminated as an exclusive distributor except upon reasonable notice and for just cause. ISMS has not offered sufficient evidence to support a finding that Maier made any such clear and definite promises.
"Unjust enrichment applies whenever justice requires compensation to be given for property or services rendered under a contract, and no remedy is available by an action on the contract."
ISMS argues that Maier has been unjustly enriched by not paying ISMS a straight 10% commission on sales made to customers in ISMS's exclusive territory. The evidence reflects that the parties had an enforceable contract pursuant to which Maier paid ISMS for the benefits Maier received. As such, ISMS's unjust enrichment claim fails.
Judgment shall enter in favor of defendant Maier on all counts. This is not a recommended ruling. The parties have consented to trial before a magistrate judge pursuant to 28 U.S.C. § 636(c) and Fed.R.Civ.P. 73. (Doc. #55.)
SO ORDERED.
