ROBERT W. PRATT, Chief Judge.
Before the Court is Nationwide Wash Systems, Inc.'s ("Nationwide") Motion for Partial Summary Judgment, filed June 10, 2010. Clerk's No. 12. Ryko Manufacturing Co. ("Ryko") filed a Resistance to Nationwide's Motion on July 13, 2010. Clerk's No. 15. Nationwide filed a Reply on August 2, 2010. Clerk's No. 18. Though Nationwide has requested a hearing, the Court does not believe oral argument would substantially aid it in resolving the present motion. Accordingly, the matter is fully submitted.
On May 5, 2009, Ryko filed a two-count Complaint against Nationwide. Clerk's No. 1. In the first count of the Complaint, Ryko alleges that Nationwide failed to pay for goods and merchandise purchased from Ryko on account. See id. In the second count of the Complaint, Ryko seeks declaratory judgment on the question of whether Ryko owes Nationwide "rebates" (also referred to as "commissions") under the terms of a written, non-exclusive Distributorship Agreement, which the parties entered into on January 1, 2008 (the "2008 Agreement"). Id. Nationwide filed an Answer to Ryko's Complaint on June 12, 2009. Clerk's No. 4. On June 26, 2009, Nationwide filed a six-count Counterclaim against Ryko, asserting that Ryko is liable for: 1) breach of contract; 2) breach of the duty of good faith; 3) breach of oral contract; 4) open account; 5) account stated; and 6) unjust enrichment. Clerk's No. 5.
In the present Motion for Partial Summary Judgment, Nationwide contends that there "are two contractual payments that Ryko owes to Nationwide as a matter of law under the terms of the [2008 Agreement]." Def.'s Mot. at 2. First, Nationwide contends that Ryko has failed to pay it certain "rebates" owed under the terms of the 2008 Agreement. Id. Second, Nationwide contends that Ryko has failed to credit it with a $25,000.00 payment, pursuant to paragraph 21 of the 2008 Agreement. Id. Ryko strongly opposes Nationwide's claims of entitlement to partial summary judgment, for reasons to be discussed in detail, infra.
Ryko is an Iowa corporation engaged in the business of manufacturing and selling motor vehicle washing equipment. Nationwide's Statement of Material Facts (hereinafter "Def.'s Facts") ¶¶ 2-3. Nationwide is a Minnesota corporation engaged in the installation and service of motor vehicle car wash systems. Id. ¶¶ 1, 4. Ryko and Nationwide have had a business relationship dating back to 1979, whereby Nationwide operated as a Ryko Distributor, i.e., Nationwide would purchase equipment from Ryko at distributor prices, and then resell that equipment for customers to use in automatic car washes.
According to Nationwide, in 1990, after seven years of meetings and social contacts, Valerie Adams Kreager ("Kreager") successfully solicited the corporate account of Holiday Companies, Inc. ("Holiday").
From April 2006 to December 31, 2007, the parties' relationship was governed by a Distributorship Agreement (the "2006 Agreement"). Id. ¶¶ 13. At the time the parties entered into the 2006 Agreement, there existed a dispute between Ryko and Nationwide related to Nationwide's account with Ryko for car wash equipment parts, and related to Nationwide's claims for payments alleged to be due from Ryko for performing warranty services. Id. ¶ 14. The dispute was resolved by including in the 2006 Agreement a $25,000.00 credit to Nationwide's parts account, in full settlement of all outstanding disputes between Nationwide and Ryko.
On January 1, 2008, Nationwide and Ryko entered into the 2008 Agreement, whereby Nationwide again agreed to be a distributor of Ryko car wash equipment. Id. ¶¶ 5-6. The 2008 Agreement was substantially identical to the 2006 Agreement, and though the parties did not discuss or negotiate the matter, the 2008 Agreement contained the same provision providing for a $25,000.00 credit to Nationwide in settlement of all disputes then existing between the parties. Pl.'s Facts ¶¶ 18-19. Ryko contends that there were no disputes between the parties at the time they entered into the 2008 Agreement, and that the $25,000.00 credit provision was included by mistake. Id. ¶ 19. Nationwide counters that the inclusion of the provision in the 2008 Agreement demonstrates the intent of the parties to include it, though Nationwide admits that, prior to the filing of its counterclaim in this case, it had never
In May 2008, while the 2008 Agreement was in effect, Holiday again entered into an Equipment Supply Agreement with Ryko for the purchase of Ryko car wash systems. Id. ¶ 18. Ryko provided Nationwide with a copy of that agreement, under which Holiday pre-paid Ryko for ten car wash systems in December 2008. Id. ¶¶ 18-19. Holiday entered into a separate agreement with Nationwide to install the ten car wash systems at Holiday locations in Minnesota, North Dakota, and Michigan, and to provide warranty service on them. Id. ¶¶ 20-22, 24; Pl.'s Resp. to Def.'s Facts ¶ 20. Nationwide completed installation on nine out of ten of the car wash systems by December 2009. Def.'s Facts ¶¶ 23-24. Despite the fact that the parties' contract had expired several months previously, after installing the car wash systems, Nationwide sent Ryko invoices for "rebates" it claimed Ryko owed it in relation to Holiday's purchase of the car wash systems. Id. ¶ 25. Ryko has refused to pay the rebates, taking the position that no rebates are owed to Nationwide since the 2008 Agreement expired prior to Nationwide's installation of the car wash systems. Id. ¶ 25 (second).
The term "summary judgment" is something of a misnomer.
Federal Rule of Civil Procedure 56(b) provides that "[a] party against whom relief is sought may move at any time ... for summary judgment on all or part of the claim." "[S]ummary judgment is an extreme remedy, and one which is not to be granted unless the movant has established his right to a judgment with such clarity as to leave no room for controversy and that the other party is not entitled to recover under any discernible circumstances." Robert Johnson Grain Co. v. Chem. Interchange Co., 541 F.2d 207, 209 (8th Cir.1976) (citing Windsor v. Bethesda Gen. Hosp., 523 F.2d 891, 893 n. 5 (8th Cir.1975)). The purpose of summary judgment is not "to cut litigants off from their right of trial by jury if they really have issues to try." Poller v. Columbia Broad. Sys., Inc., 368 U.S. 464, 467, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962) (quoting Sartor v. Ark. Natural Gas Corp., 321 U.S. 620, 627, 64 S.Ct. 724, 88 L.Ed. 967 (1944)). Rather, it is designed to avoid "useless, expensive and time-consuming trials where there is actually no genuine, factual issue remaining to be tried." Anderson v. Viking Pump Div., Houdaille Indus., Inc., 545 F.2d 1127, 1129 (8th Cir. 1976) (citing Lyons v. Bd. of Educ., 523 F.2d 340, 347 (8th Cir.1975)).
Federal Rule of Civil Procedure 56(c) mandates the entry of summary judgment upon motion after there has been adequate time for discovery. Summary judgment can be entered against a party if that party fails to make a showing sufficient to establish the existence of an element essential to its case, and on which that party will bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is appropriately granted when the record, viewed in the light most favorable to the nonmoving party and giving that party the benefit of all reasonable inferences, shows that there is no genuine issue of material fact, and that the moving party is therefore entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Harlston v. McDonnell Douglas Corp., 37 F.3d 379, 382 (8th Cir.1994). The Court does not weigh the evidence, nor does it make credibility determinations. The Court only determines whether there are any disputed issues and, if so, whether those issues are both genuine and material. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Wilson v. Myers, 823 F.2d 253, 256 (8th Cir.1987) ("Summary judgment is not designed to weed out dubious claims, but to eliminate those claims with no basis in material fact.") (citing Weight Watchers of Quebec, Ltd. v. Weight Watchers Int'l, Inc., 398 F.Supp. 1047, 1055 (E.D.N.Y.1975)).
In a summary judgment motion, the moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact based on the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any. See Celotex, 477 U.S. at 323, 106 S.Ct. 2548; Anderson, 477 U.S. at 248, 106 S.Ct. 2505. If the moving party has carried its burden, the nonmoving party must then go beyond its original pleadings and designate specific facts showing that there remains a genuine issue of material fact that needs to be resolved by a trial. See Fed.R.Civ.P. 56(e)(2). This additional showing can be by affidavits, depositions, answers to interrogatories, or the admissions on file. Id.; Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548; Anderson, 477 U.S. at 257, 106 S.Ct. 2505. "[T]he mere existence of some alleged factual dispute between the parties will not defeat a motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at
Courts do not treat summary judgment as if it were a paper trial. Therefore, a "district court's role in deciding the motion is not to sift through the evidence, pondering the nuances and inconsistencies, and decide whom to believe." Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir.1994). In a motion for summary judgment, the job of a court is only to decide, based on the evidentiary record that accompanies the moving and resistance filings of the parties, whether there really is any material dispute of fact that still requires a trial. See id. (citing Anderson, 477 U.S. at 249, 106 S.Ct. 2505 and 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2712 (3d ed. 1998)). It is the responsibility of the parties to provide the evidence necessary for this assessment. Id. at 921.
In its Motion for Partial Summary Judgment, Nationwide asserts that it is entitled to judgment as a matter of law on two issues. First, Nationwide argues that it clearly entitled to "rebates" on Holiday's purchase of ten car wash systems from Ryko in December 2008. Second, Nationwide contends that there is no genuine issue of material fact as to whether Ryko owes it a $25,000.00 credit, pursuant to the terms of the 2008 Agreement. The Court will evaluate each claim in turn.
The first dispute between the parties is Nationwide's claimed entitlement to rebates under the 2008 Agreement. Exhibit A-3 of the 2008 Agreement provides:
Def.'s App. at 16.
With respect to the timing of rebate payments, the 2008 Agreement, Exhibit
Def.'s App. at 25. Nationwide contends that this contract language contains a conflict within a conflict, i.e., either Ryko is supposed to pay the distributor the applicable commission within a reasonable period of time after receiving payment in full from a national customer, or Ryko is to pay the distributor the applicable commission within a reasonable time after receiving payment from the national customer and after receiving an Installation Completion Form. Def.'s Br. at 5-6. According to Nationwide, Ryko owes it rebates under either clause because Holiday has paid in full for the car wash systems it purchased in December 2008, and because Nationwide has completed installation of the car wash systems and has provided Ryko with Installation Completion Forms.
Ryko counters that, since the "equipment was installed after the Agreement terminated ... no rebates were due." Pl.'s Br. at 4. Specifically, Ryko points to the language of Exhibit A-3 which provides that Nationwide was only entitled to "receive commission or rebates on sales [to Holiday] for the term of the agreement," and only so long as Holiday remained satisfied. Id. at 3-4 (citing the 2008 Agreement, Ex. A-3, Def.'s App. at 16, emphasis added). Ryko further points out that the course of conduct between the parties during the term of the 2008 Agreement, and during the term of the substantially identical 2006 Agreement, demonstrates that the parties understood that Ryko was only to be paid rebates for national account customers after installation of equipment was completed and after Nationwide provided Ryko with an Installation Completion Form. Id. at 5. Ryko additionally points out that Nationwide has ignored a more specific provision of the 2008 Agreement, which governs situations where equipment cannot be immediately installed:
Pl.'s Br. at 4; Def.'s App. at 26.
The question of when, and under what conditions, Ryko was required to pay rebates to Nationwide is a matter of contract interpretation. Contract interpretation is the process of ascertaining "the
When interpreting a contract, the Court must engage in a two-step process. Walsh v. Nelson, 622 N.W.2d 499, 503 (Iowa 2001). "First, from the words chosen, a court must determine `what meanings are reasonably possible.'" Id. (quoting Restatement (Second) of Contracts § 202 cmt. a, at 87 (1981)). "In so doing, the court determines whether a disputed term is ambiguous." Id. The question of whether a term is ambiguous will not be determined by the mere fact that the parties disagree about its meaning. Id. (citing Hartig Drug Co. v. Hartig, 602 N.W.2d 794, 797 (Iowa 1999)). Rather, a term is ambiguous if, "`after all pertinent rules of interpretation have been considered,' `a genuine uncertainty exists concerning which of two reasonable interpretations is proper.'" Id. (quoting Hartig Drug Co., 602 N.W.2d at 797). Second, if the Court identifies an ambiguity in the relevant contact terms, it must choose which meaning the parties intended. Id. "In ascertaining the meaning of contractual terms extrinsic evidence is admissible as an aid to interpretation when it sheds light on the situation of the parties, antecedent negotiations, the attendant circumstances, and the objects they were striving to attain." Dickson v. Hubbell Realty Co., 567 N.W.2d 427, 430 (Iowa 1997) (internal quotation omitted). When, however, "extrinsic evidence is necessary to resolve the meaning of ambiguous language, `a question of interpretation arises which is reserved for the trier of fact.'" Rick v. Sprague, 706 N.W.2d 717, 723 (Iowa 2005) (quoting Walsh, 622 N.W.2d at 503).
Applying the principles of contract interpretation to the 2008 Agreement's rebate provisions, the Court finds that Nationwide's entitlement to rebates from Ryko under the 2008 Agreement cannot be determined as a matter of law. Had the parties continued in their contractual arrangement, it appears clear that, under any reading of the various rebate timing provisions, Nationwide would have been entitled to receive rebates, at the latest, within a reasonable time after Holiday had paid for the units and after Nationwide provided Ryko with Installation Completion Forms for the units. See Def.'s App. at 25-26 (Contract, Ex. D-1). Nationwide and Ryko did not, however, continue their long-standing contractual arrangement after March 31, 2009, and nothing in the
At best, the Court has three relevant considerations from which to discern the parties' intent in such a situation: 1) the conflicting timing provisions which provide that payment of rebates must be made either after payment in full is received or after Installation Completion Forms are submitted; 2) the provision in Exhibit A-3 of the contract providing that "Distributor would receive commissions or rebates on sales to [national accounts] for the term of the agreement so long as each customer remains satisfied with the Distributor provided sales and service for that customer"; and 3) the fact that rebates were previously paid by Ryko to Nationwide only after the submission of Installation Completion Forms.
Nationwide next contends that it is entitled to a $25,000.00 credit to its account, in accordance with the following provision in the 2008 Agreement:
Def.'s App. at 8. Nationwide contends that the plain language of the contractual provision evidences the parties' intent that Ryko pay Nationwide $25,000.00 under the terms of the 2008 Agreement. Ryko counters that the provision was developed for use in the 2006 Agreement, and that it was never intended by either party to be included in the 2008 Agreement. In support of this assertion, Ryko contends that there "was no current dispute" between the parties at the time they entered into the 2008 Agreement. Pl.'s Facts ¶ 17. Nationwide denies Ryko's assertion that there was no "current dispute" between the parties at the time of negotiating the 2008 Agreement, pointing to its own assertion that
The Court finds Nationwide's argument unconvincing. The dispute over the credit is not, in the Court's opinion, an issue of "unilateral mistake." Rather, the dispute raises an issue of equitable reformation, which was discussed by the Iowa Supreme Court in State of Iowa, Department of Human Services ex rel. Palmer v. Unisys Corp.:
637 N.W.2d 142, 151 (Iowa 2001) (some internal citations omitted). Obviously, the inverse of the situation in Palmer is at issue in this case, i.e., if the $25,000.00 credit clause was not intended by the parties to be included in the 2008 Agreement, enforcement of the clause would allow Nationwide to be unjustly enriched by receiving a benefit that the written contract was not meant to express.
As discussed above, the purpose of contract interpretation is to ascertain the intent of the parties at the time of entering into the contract. Pillsbury Co., Inc., 752 N.W.2d at 436. In this case, the intent of the parties with regard to the inclusion of the $25,000.00 credit provision is clearly in dispute. Extrinsic evidence of the parties' intent, including evidence tending to show that the parties had "current disputes" that would warrant the inclusion of the provision in the 2008 Agreement, will certainly be required to determine the matter, given Ryko's assertion that the provision was mistakenly included, and given Nationwide's assertion that it was not. Accordingly, summary judgment in favor of Nationwide on the credit issue is not warranted on the current record.
For the reasons stated herein, the Court finds that Nationwide has failed to carry its burden to demonstrate the absence of genuine issues of material fact, both as to the rebate issue and the credit issue. Accordingly, Nationwide's Motion for Partial Summary Judgment (Clerk's No. 12) is hereby DENIED.
IT IS SO ORDERED.
