PAMELA K. CHEN, District Judge.
Plaintiff GLM Security & Sound, Inc. ("GLM") brings this action against Defendant LoJack Corp. ("LoJack") in a case arising out of a dispute over an agreement to distribute car security systems. Specifically, the parties dispute whether there was an oral modification
Because the Court resolves this question in the negative, it grants summary judgment in favor of LoJack on GLM's breach of contract claim. Further, because the remainder of GLM's claims are derivative of the alleged best price promise, they are likewise dismissed.
LoJack counterclaims that it is owed compensation for unpaid products and services it provided to GLM, and that GLM contrived the complaint in the instant litigation to gain leverage in negotiations over that debt. Having found no breach by LoJack, and it being undisputed that GLM failed to pay for a substantial portion of the products it received from LoJack, LoJack's motion for summary judgment on its breach of contract counterclaim is granted. The remainder of LoJack's motion for summary judgment on its counterclaims are denied.
LoJack's motion to strike is denied as moot. GLM's motion to amend is denied because the motion is unduly belated and would be futile in any event.
The Court includes only those facts necessary to resolve this motion. The following are either undisputed or presented in the light most favorable to GLM.
GLM is a New York corporation that sells wholesale automobile electronics, including car security systems, to automobile dealerships in New York City and Long Island. (Def. 56. 1 ¶¶ 1-2.) At all times relevant to this litigation, Gary Tabackman ("Tabackman") was GLM's president. (Id. ¶ 3.)
Defendant LoJack is a corporation that manufactures, distributes, and sells car security systems in the auto industry. (Id. ¶ 7.) LoJack's principal product, and the one at issue in the instant litigation, is the Stolen Vehicle Recovery Unit ("SVRU" or "Unit"). (Id. ¶ 8.)
George Wafer ("Wafer"), a non-party to this litigation, was the owner of a company named Vehicle Manufacturer Services ("VMS"). (Id. ¶ 10.) Wafer/VMS had a preexisting business relationship with LoJack. (Id.)
GLM and LoJack's relationship began in June 2002 when Wafer approached GLM to discuss the possibility of GLM becoming a distributor of LoJack products. (Id. ¶ 9.) Over the next few months, GLM had discussions with LoJack regarding a potential deal. (Id. ¶ 14.) Tabackman handled the negotiations on behalf of GLM (Id. ¶ 16); Joe Abely, then-President, and Anthony DelGuercio, a regional manager, among others, were involved on behalf of LoJack. (Id. ¶ 14; Dkt. 63-2 ("Pl. 56. 1") ¶¶ 18, 185.) During the negotiations, Abely told Tabackman that the initial $200 per unit price that GLM would pay for the Units was the best price currently offered by LoJack to any of its distributors. (Id. ¶¶ 16-18.) Wafer and VMS provided the draft agreement to GLM and LoJack, and acted as intermediary for the exchange of the parties' revisions to the draft. (Id. ¶ 15.) On September 15, 2012, LoJack and GLM entered into the LoJack Distributorship and Installation Agreement (the "Distribution Agreement"). (Id. ¶ 19.)
Relevant to this litigation, the Distribution Agreement provided as follows:
The Distribution Agreement also included the following critical provisions. Section 15 of the Agreement, entitled "Waiver," provided:
(Id. ¶ 15 (emphasis added).)
Section 17 of the Distribution Agreement set forth the integration clause:
(Id. ¶ 17 (emphasis added).)
With respect to any future changes to the Distribution Agreement, Section 18 provided:
Tabackman understood when he signed the Distribution Agreement, and throughout the length of the parties' contractual relationship, that Section 6.1 of the Distribution Agreement gave LoJack the right to change the price at any time. (Def. 56. 1 ¶ 29.)
At some point, GLM and LoJack had discussions about GLM being guaranteed LoJack's "best price" on the SVRUs. (Id. ¶ 32.) LoJack contends that any such discussions occurred prior to the execution of the Distribution Agreement and were therefore nullified by the integration clause contained therein. (Id. ¶¶ 30-33.) Indeed, LoJack provides persuasive evidence that its account of the events is accurate, especially in light of the equivocal testimony regarding the timeline presented by GLM. However, resolving factual disputes in the light most favorable to the Plaintiff, as the Court must on a motion for summary judgment, the Court assumes these discussions occurred after the Agreement was executed. (Pl. 56.1 ¶ 31.)
According to GLM, it was "in early October, after GLM had entered the Agreement with LoJack that Mr. Wafer approached Mr. Tabackman to ask that GLM help LoJack to sign up other distributors." (Id. ¶ 194.) As GLM put it in its complaint, "[i]n an effort to secure [GLM's] help in signing up other LoJack Distributors throughout the country, George Wafer, President of VMS, promised Gary Tabackman that [GLM] would receive the `best price' from LoJack. In addition, [sic] to the `best price,' VMS promised to pay $2.00 of its commission received from LoJack to GLM for each LoJack unit that was purchased by a [d]istributor which GLM helped to recruit." (Dkt. 30 ("FAC") ¶ 18; Def. 56.1 ¶ 30.) GLM now contends that though Wafer was the one who made the offer, LoJack confirmed to Wafer that this was acceptable. (Pl. 56.1 ¶ 30.) Drew Levy, GLM's vice-president, understood, however, that GLM had an arrangement with Wafer's company, VMS, under which GLM would receive a commission from VMS on any units sold by a distributor which GLM helped recruit. (Def. 56. 1 ¶¶ 5, 33.)
The parties agree that there is no document that memorializes any "best price" promise. (Def. 56.1 ¶ 34.)
On October 1, 2002, Wafer and VMS entered into a separate written agreement with LoJack that set forth the terms and conditions upon which VMS was required to recruit distributors of LoJack products in exchange for compensation from LoJack ("VMS/LoJack Agreement"). (Dkt. 60-3, Att. 6 ("VMS/LoJack Agr."); Def. 56.1 ¶¶ 37-42.) The VMS/LoJack Agreement does not refer to any promise by LoJack to compensate GLM in any way for assisting VMS in recruiting distributors. (Id.) The VMS/LoJack Agreement contains an integration clause and a provision requiring changes or modifications to be made in writing. (VMS/LoJack Agr. ¶ 9.) The VMS/LoJack Agreement was amended twice in writing, as required by its terms; neither amendment referred to any agreement by LoJack to compensate GLM in any way. (Def. 56.1 ¶ 41.)
In or around September 2005, Tabackman began corresponding by electronic mail with Abely about a proposed increase in the price LoJack charged GLM for the Units. (Id. ¶ 43.) Tabackman requested that LoJack not increase GLM's price. (Id. ¶ 44.) During approximately six months of correspondence relating to the price increase, Tabackman never mentioned or referred to any promise by LoJack to give GLM the "best price." (Id. ¶ 45.) LoJack granted Tabackman's request, and did not increase GLM's price. (Id. ¶ 46.)
Throughout the course of the GLM/LoJack relationship, there was a sales incentive program, which involved payments to automobile dealerships by LoJack to be used to reward dealership employees for selling LoJack Units to their customers. (Id. ¶ 68.) Prior to 2005, GLM paid these incentives to the dealerships for which it was responsible by writing a check directly to those dealerships. (Id. ¶ 69; Dkt. 60-3, Att. 1 ("Tabackman Tr.") at 214-215).) In 2005, LoJack instituted a debit card program for paying the sales incentives, the program description of which provided that all incentives not timely claimed by the dealerships ("unclaimed incentives") would be the property of LoJack. (Def. 56.1 ¶¶ 70-71.) There is a dispute as to whether Tabackman understood that this would be the case or was told otherwise,
Sometime prior to 2006, GLM requested that LoJack pay GLM for unclaimed incentives. (Def. 56. 1 ¶ 73.) LoJack refused this request as contrary to the Rewards Policy on or before March 9, 2006. (Id. ¶ 74.) Thereafter, Tabackman, without protest, signed several documents known as Price Change Notifications, or "PCNs," each of which stated at the bottom that all unclaimed incentives belonged to LoJack. (Id. ¶ 75.)
As previously discussed, pursuant to the Distribution Agreement, GLM was to pay one half of the amount for products received from LoJack within "thirty days of invoice, and the balance within sixty days of invoice." (Agr. ¶ 6.1.) The Distribution Agreement also provided that no waiver of any provision would be effective "unless made in writing and signed by the parties[,]" and that "[t]he failure of either party to require the performance of any term or obligation of [the] Agreement, or the waiver of either party of any breach of [the] Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach." (Id. ¶ 15.) LoJack never waived, in writing, GLM's obligation to make timely payments for the products and services it received, and LoJack requested on numerous occasions that GLM bring its delinquent account current. (Def. 56.1 ¶ 81.)
Tabackman believed, however, that the practice GLM and LoJack had established required that he pay outstanding invoices on 90 to 120 days terms. (Id. ¶ 82; Tabackman Tr. 96-98.) At his deposition, Tabackman admitted that GLM would be in breach of the Distribution Agreement if it fell more than 120 days behind in payments. (Tabackman Tr. 130.) Subsequently GLM admitted that it failed to pay numerous invoices that, as of October 2010, were more than 120 days past due, and that at the time GLM filed this action on October 13, 2010, it owed LoJack more than $1,000,000. (Def. 56.1 ¶ 84.)
On October 6, 2010, LoJack sent GLM a notice which showed that GLM had a balance due of over $1,000,000, of which hundreds of thousands of dollars were more than 120 days past due. (Id. ¶ 86.) The letter requested that GLM bring its account up to date. (Dkt. 60-3, Att. 27.) In response, on October 12, 2010, GLM sent a letter to LoJack stating that it was providing twoweeks' notice of termination under Section 12. 3 of the Distribution Agreement (no-cause termination), which would take effect as of October 26, 2010. (Def. 56.1 ¶ 88.) On October 22, 2010, LoJack replied with a letter to Tabackman terminating the Distribution Agreement pursuant to Section 12. 2 (for-cause) due to GLM's material breach, namely GLM's substantial overdue balance for products ordered and received by GLM. (Id. ¶ 89.)
Pursuant to Section 12. 5 of the Agreement, "[i]n the event that, after any termination of this Agreement,
The claims remaining in this case are GLM's claims for (1) breach of contract, (2) breach of the duty of good faith and fair dealing, (3) GLM's Massachusetts General Law 93A ("Chapter 93A") claim; and (4) LoJack's counterclaims, all of which are based on GLM's failure to pay for goods and services received.
Summary judgment is proper only where, construing the evidence in the light most favorable to the non-movant, "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); see also Redd v. N.Y. Div. of Parole, 678 F.3d 166, 173-74 (2d Cir. 2012). A dispute is "genuine" when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is material where it is legally relevant such that it "might affect the outcome of the suit under the governing law." Id. In determining whether there are genuine disputes of material fact, the court must "resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003) (citation and quotation omitted).
This standard imposes the initial burden on the moving party to demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met this burden, the party opposing summary judgment must identify specific facts and affirmative evidence that contradict those offered by the moving party to demonstrate that there is a genuine issue for trial. Id. at 324; see also Anderson, 477 U.S. at 256-57. The nonmoving party "may not rely on mere conclusory allegations nor speculation, but instead must offer some hard evidence showing that [their] version of the events is not wholly fanciful." D'Amico v. City of N.Y., 132 F.3d 145, 149 (2d Cir. 1998) (collecting cases). "Summary judgment is appropriate only `[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party.'" Donnelly v. Greenburgh Cent. Sch. Dist. No. 7, 691 F.3d 134, 141 (2d Cir. 2012) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
In this case, all of GLM's claims are based directly or derivatively on the contention that it was entitled to the "best price" at which LoJack offered its devices to dealers. There are a number of disputed facts and issues, including the substance of discussions regarding best price; whether such discussions took place before or after the execution of the Distribution Agreement; whether they took place before or after the VMS/LoJack Agreement; whether there was consideration for the alleged oral modification of the Distribution Agreement; and whether alternate pricing plans that LoJack offered to other distributors did, in fact, result in better prices than GLM received, among others. However, even were the Court to resolve the legal issues in GLM's favor, and in fact accepting GLM's version of the facts relating to the oral modification as true,
Under Massachusetts law, the elements of a breach of contract claim are (1) a written or oral agreement (2) for valid consideration, (3) performance by the plaintiff and breach by the defendant, and (4) damage to the plaintiff. Mass. Cash Register, Inc. v. Comtrex Systems Corp., 901 F.Supp. 404, 415 (D. Mass. 1995).
According to GLM, in October 2002, in exchange for GLM's assistance in recruiting distributors to sell LoJack products, Wafer offered—with LoJack's approval—that GLM would receive the "best price" on SVRUs and would also receive a $2.00 commission for each SVRU sold by a distributor recruited by GLM. (FAC ¶ 18; (Dkt. 63 ("Op. Br.") at 6).) The parties agree, however, that the plain language of the Distribution Agreement forbids amendment in any manner other than by "written instrument" duly executed by both GLM and LoJack. (Def. 56.1 ¶ 27.) The parties further agree that no discussions regarding "best price" between GLM and LoJack or Wafer were ever memorialized, formally or informally.
Under Massachusetts law, a provision that an agreement may only be amended by a written instrument, like the one in the Distribution Agreement, does not automatically bar oral modification of the contract. See Cambridgeport Sav. Bank v. Boersner, 413 Mass. 432, 439 (1992) (hereinafter "Cambridgeport"). "Mutual agreement on modification of the requirement of a writing may . . . `be inferred from the conduct of the parties and from the attendant circumstances' of the instant case.'" Id. (quoting First Pa. Mortg. Trust v. Dorchester Sav. Bank, 395 Mass. 614, 625 (1985). But the law "imposes stringent proof requirements for such oral modification." Wagner And Wagner Auto Sales, Inc. v. Land Rover N. Am., Inc., 547 F.3d 38, 46 (1st Cir. 2008). The evidence of a subsequent oral modification "must be of sufficient force to overcome the presumption that the integrated and complete agreement, which requires written consent to modification, expresses the intent of the parties." Cambridgeport, 413 Mass. at 439 n. 10; see also Wells Fargo Bus. Credit v. Environamics Corp., 77 Mass.App.Ct. 812, 817 (2010) ("[I]n order to support the existence of an oral modification . . . the parol evidence must be of sufficient strength to present an ambiguity between the actual conduct of the parties and the contract."); see also Beal Bank S.S.B. v. Krock, 97-CV-2241, 1998 WL 1085807, at *3 (1st Cir. 1998) ("Massachusetts . . . impose[s] a heavy burden on the party seeking to modify an integrated written contract by subsequent oral agreement."); Lydon v. Nationwide Mut. Ins. Co., 91-CV-11971 (NG), 1997 WL 260064, at *10 (D. Mass. May 9, 1997) ("[T]he evidence must be sufficiently clear and convincing to overcome the `presumption' that waiver was not intended.").
To defend against LoJack's motion for summary judgment, GLM offers the following evidence: (1) Tabackman's testimony that in exchange for GLM's assistance in recruiting distributors to sell LoJack products, Wafer offered that GLM would receive the "best price" on SVRUs and would also receive a $2.00 commission for each SVRU sold by a GLM-recruited distributor
Applying the standards set forth under Massachusetts law, GLM has failed to present—or put in genuine dispute—"evidence of sufficient force to overcome the presumption" that the parties did not intend to waive the written modification requirement in "the fully integrated and complete [Distribution Agreement]." See Cambridgeport, 413 Mass. at 439; Lydon, 1997 WL 260064, at *10. The evidence does not suggest that Wafer had the authority to bind LoJack to a best price promise, and there is a complete lack of evidence suggesting that LoJack (or GLM, as discussed infra) acted in accord with the alleged oral modification or believed that the Distribution Agreement had been orally modified.
That GLM attempted to recruit distributors and that VMS paid GLM a $2.00 per Unit commission fails to demonstrate anything beyond GLM's own (and perhaps VMS's) subjective belief as to the existence of an oral modification of the Distribution Agreement. See Wells Fargo Bus. Credit, 77 Mass. App. Ct. at 819 (citations omitted). Indeed, the fact the VMS—not LoJack—paid GLM the $2.00 commission from GLM-recruited distributors suggests that this oral modification, to the extent it existed, was between GLM and VMS.
The VMS/LoJack Agreement obligated VMS and Wafer to recruit distributors like GLM for LoJack. It stands to reason that, in an effort to satisfy its responsibilities under the VMS/LoJack Agreement, Wafer promised $2.00 of VMS's commission received from LoJack to GLM for GLM-recruited distributors.
The problems with Wafer's testimony that he promised GLM the best price "based on conversations" with LoJack are two-fold. First, this alone is not the kind of evidence sufficiently clear and convincing to overcome the deference to which the plain language of the Distribution Agreement is entitled. See Lydon, 1997 WL 260064, at *10. Second, the "attendant circumstances" do not factually support Wafer's testimony. For example, GLM was aware that any changes to the Distribution Agreement, especially with respect to price, had to be completed via a signed, written instrument. Indeed, any time there was a price change during the course of the Distribution Agreement, a written PCN document was prepared and signed by the parties. (Def. 56.1 ¶ 75.) Moreover, in or around September of 2005, Tabackman began corresponding by electronic mail with Abely about a proposed price increase for the SVRUs. (Id. ¶ 43.) Tabackman requested that LoJack not increase GLM's price. (Id. ¶ 44.) Not once during approximately six months of correspondence relating to the price increase did Tabackman mention or refer to any "best price" promise by LoJack. (Id. ¶ 45.) It strains credulity to believe that Tabackman would have failed to mention that LoJack was contractually bound to give his company the best price on SVRUs, if GLM was in fact so entitled, during a six-month negotiation over precisely that—the price LoJack was charging GLM for SVRUs.
LoJack's internal e-mails also do not support GLM's position. The Court has reviewed the e-mails in question (Dkt. 63-7, Att. Ex. J-L), and finds no mention of a best price guarantee. The text most supportive of GLM's argument is contained in an internal LoJack e-mail written by DelGuercio, the GLM relationship manager, wherein he attempts to persuade his colleagues that GLM should get a better deal due to their large sales volume. It reads, "[a]s we've discussed, I have concerns, given the tight geography, it's only a matter of time that GLM will gain exposure to some of our more aggressive pre-installation pricing guidelines and this would have them feeling like they are entitled to deeper pricing discounts given the current volume trends." (Id. at ECF pg. 115.) Whatever support this lends GLM's argument, it cuts more sharply against it. The absence of any `best price' reference is conspicuous; and the fact that GLM would feel "entitled" to a better deal (not even the best) based on its performance, rather than based on a contractual guarantee, is damning.
Tabackman's self-serving affidavit, which partly contradicts his deposition testimony, along with the equivocal assertions as to the issue of oral modification made by DelGuercio and Wafer in their affidavits, do not provide the specificity necessary to establish a genuine dispute of material fact where a fully integrated agreement is at issue. See Wells Fargo Bus. Credit, 77 Mass. App. Ct. at 817-18 (citing Community Natl. Bank v. Dawes, 369 Mass. 550, 554 (1976)). The alleged "best price" promise is not clearly or expressly manifested in any written document or the subsequent conduct of at least one of the parties to the alleged oral modification, LoJack. Even if Wafer had the authority to bind LoJack, the fact that LoJack did nothing to act in conformity with the alleged oral modification suggests that it never believed it was bound by the deal between Wafer and VMS. While GLM can demonstrate that it attempted to act on the alleged oral modification by recruiting distributors, it has no evidence of any such action taken by LoJack on the other side of the alleged modification. At most, the evidence shows that GLM had an agreement with VMS to recruit distributors for LoJack's products—a conclusion reinforced by the fact that the $2.00 commission was paid by VMS, not LoJack. Furthermore, the claim that GLM sought to recruit distributors because of a "best price" promise from LoJack is critically undercut by other evidence, such as Tabackman's failure to rely on, or even reference, a "best price" promise during the September 2005 to March 2006 price negotiations with Abely.
In light of the applicable standards pertaining to fully integrated agreements with written modification clauses, GLM needed to demonstrate that both parties believed an oral modification had been reached. Memorialization of the agreement, action in conformity with the agreement, written communications, such as an e-mail, recognizing the terms of the agreement, among other things, may have sufficed. None of that exists here.
In its complaint, in addition to the "best price" theory, GLM also alleged that LoJack breached the Distribution Agreement by failing to: (1) provide GLM with product unless it paid in advance; (2) after the Distribution Agreement was terminated, credit GLM's account for returned product, and pay GLM $50 per Unit sold to dealers in Plaintiff's territory for six months post-termination; and (3) credit GLM for unclaimed incentive payments. In its motion for summary judgment, LoJack argued that these theories were nonviable because (1) LoJack was not obligated to ship product to GLM when GLM was in material breach of the Distribution Agreement; (2) LoJack's termination of the Distribution Agreement in October 2010 extinguished its obligation to make any post-termination contract payments to GLM; and (3) there was no agreement binding LoJack to credit GLM for any monies in connection with the incentive program. The Court now turns to these disputes.
First, GLM alleges that LoJack breached the Distribution Agreement when, contrary to the terms of the Distribution Agreement, in September 2010—just prior to termination—LoJack required GLM to pre-pay for any Units it wanted to purchase. (FAC ¶ 124.) At the time LoJack requested pre-payment, GLM owed LoJack over $1,000,000 for product previously ordered and received by GLM. (Def. 56.1 ¶¶ 86, 89-91.) GLM's failure to pay for product it purchased and received constituted a material breach under the Distribution Agreement. See Teragram Corp. v. Marketwatch.com, Inc., 444 F.3d 1, 12 (1st Cir. 2006) (holding that failure to pay for goods constitutes a material breach) (citing Lease-It, Inc. v. Massachusetts Port Authority, 33 Mass.App.Ct. 391, 396 (1992)). According to Section 15.2 of the Agreement, "[t]he failure of either party to require the performance or obligation of this Agreement, or the waiver of either party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach." GLM's material breach, therefore, released LoJack from its obligation to supply to GLM without advance payment. See Teragram, 444 F.3d 1 at 11 ("[A] material breach by one party excuses the other party from further performance under the contract.") (quoting Ward v. Am. Mut. Liab. Ins. Co., 15 Mass.App.Ct. 98, 100 (1983)).
Next, GLM claims that it was entitled to certain post-termination payments, i.e., credit for returned product and payment for SVRUs sold by GLM to dealers, following termination of the Distribution Agreement in October 2010. (FAC ¶ 124.) On October 6, 2010, LoJack sent GLM a notice that showed that GLM had a balance due of over $1,000,000, of which hundreds of thousands of dollars were more than 120 days past due. (Id. ¶ 86.) The letter requested that GLM bring its account up to date. (Dkt. 60-3, Att. 27.) In response, on October 12, 2010, GLM sent a letter to LoJack stating that it was giving the required two-weeks' notice of termination under Section 12. 3 of the Distribution Agreement (no-cause termination), which would take effect as of October 26, 2010. (Def. 56.1 ¶ 88.) On October 22, 2010, LoJack replied with a letter to Tabackman terminating the Distribution Agreement, effective immediately pursuant to Section 12.2 due to GLM's material breach, namely GLM's substantial overdue balance for product ordered and received by GLM. (Id. ¶ 89.)
Because LoJack properly terminated the Distribution Agreement for cause, it was not obligated to make any post-termination payments to GLM. Pursuant to Section 12. 5 of the Agreement, "[i]n the event that, after any termination of this Agreement,
Finally, GLM alleges that LoJack improperly withheld credit for pre-paid incentive monies not claimed by dealership salespeople. (FAC ¶ 124.) The sales incentive program is not addressed in the Distribution Agreement.
Tabackman asserts that he was told otherwise, namely that GLM would receive any unclaimed incentive payments. However, Tabackman's conduct rebuts his self-serving claim that there was an oral modification to the written Rewards Policy. Sometime prior to 2006, GLM requested that LoJack pay it for unclaimed incentives. (Def. 56. 1 ¶ 73.) LoJack refused this request as contrary to the Rewards Policy on or before March 9, 2006. (Id. ¶ 74.) Thereafter, Tabackman, without protest, signed several documents known as PCNs, each of which stated at the bottom that all unclaimed incentives belonged to LoJack. (Id. ¶ 75.) Therefore, there is no evidence that the Rewards Policy provided for anything other than what was made clear by its written terms, and GLM was not entitled to any unclaimed incentives pursuant to those terms.
GLM's claim for breach of the common law doctrine of the duty of good faith and fair dealing alleges that, "LoJack's agreement to sell GLM its [SVRUs] at its `best price' required LoJack to be honest in fact and take no action that would undermine its promise to GLM or deny GLM the fruits of its bargain." (FAC ¶ 128.)
Under Massachusetts law, every contract is "subject, to some extent, to an implied covenant of good faith and fair dealing." Ayash v. Dana-Farber Cancer Inst., 443 Mass. 367, 385 (2005). "The concept of good faith `is shaped by the nature of the contractual relationship from which the implied covenant derives,' and the `scope of the covenant is only as broad as the contract that governs the particular relationship.'" Young v. Wells Fargo Bank, N.A., 717 F.3d 224, 238 (1st Cir. 2013) (quoting, Ayash, 443 Mass. at 385). The implied covenant may not be "invoked to create rights and duties not otherwise provided for in the existing contractual relationship." Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004).
The Court has already concluded that there is insufficient evidence to establish an oral modification to the Distribution Agreement regarding best price. Because LoJack's breach of good faith and fair dealing claim depends on proof of the asserted "best price" promise, the Court grants summary judgment in favor of LoJack on this claim.
To make out an unfair competition claim under Chapter 93A, a plaintiff "must establish that the alleged offending act was (1) within at least the penumbra of common law, statutory law or other established concepts of unfairness, (2) is immoral or otherwise unscrupulous, and (3) inflicted injury on another business." Rohm & Haas Elec. Materials, LLC v. Elec. Circuits Supplies, Inc., 759 F.Supp.2d 110, 123 (D. Mass. 2010) (quoting Franklin v. Ciroli, 865 F.Supp. 940, 947 n. 18 (D. Mass. 1994)). "A showing of bad faith requires dishonest purpose, conscious wrongdoing, or unfairness beyond bad judgment or failing to abide by the terms of a contract." Id. (citation omitted). Or, as the First Circuit has put it, "[t]he objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble world of commerce." Saint-Gobain Indus. Ceramics Inc. v. Wellons, Inc., 246 F.3d 64, 73 (1st Cir. 2001).
GLM's Chapter 93A claim is predicated on its allegations that LoJack induced GLM to continue the relationship by falsely stating that GLM was receiving LoJack's best price. G.L.M. Sec. & Sound, Inc. v. LoJack Corp., 10-CV-4701 (JS) (ARL), 2012 WL 4512499, at *6 (E.D.N.Y. Sept. 28, 2012).
The Court, therefore, grants summary judgment in favor of LoJack on GLM's Chapter 93A claim.
LoJack counterclaims that it is owed compensation for products and services GLM ordered and received from LoJack, from which GLM profited when it resold the products, and then failed to pay LoJack for more than $1,000,00 worth of products and services without any legal justification. (Dkt. 60-1 ("Mov. Br.") at 22.)
GLM essentially concedes that if LoJack did not breach the Distribution Agreement, then LoJack is entitled to payment for goods and services rendered. As discussed below, LoJack has demonstrated the existence (1) a written or oral agreement (2) for a valid consideration, (3) performance by LoJack, and breach by GLM, and that (4) LoJack suffered damages as result. See Mass. Cash Register, Inc., 901 F.Supp. 404 at 415.
The Agreement set forth the price and payment terms obligating both LoJack and GLM. (Agr. ¶ 6.1.) LoJack sent GLM invoices from March to October of 2010 relating to orders placed by GLM, and products and services shipped and billed to GLM. (Def. 56. 1 ¶¶ 90-181.) GLM admits receiving the products and services, and its failure to pay for either. (Id.) GLM sold the SVRUs to dealers for at least $300 per unit. (Id. at 67.) On October 6, 2010, LoJack sent GLM a notice which showed that GLM had a balance due of over $1,000,000, of which hundreds of thousands of dollars were more than 120 days past due. (Id. ¶ 86.) Thus, LoJack has made out a breach of contract claim, see Signarella v. Boston, 342 Mass. at 387, and summary judgment is granted to LoJack on this counterclaim.
LoJack also brings a counterclaim for breach of good faith and fair dealing based on two theories. The first boils down to the fact that GLM did not pay for goods and services received. This is denied as duplicative of its breach of contract claim. Second, LoJack "contends that GLM breached the implied covenant in making its phony complaint about the alleged `best price' issue in the summer of 2010 as a means to gain leverage to negotiate with LoJack about the million dollar debt it owed to LoJack." (Mov. Br. at 23-4.) In support of this contention LoJack argues that "[n]ot until GLM was significantly behind in its payments to LoJack did it put in writing its `best price' theory, which first appeared in its First Amended Complaint," and "GLM has not been able to produce a single document during the eight year term of the parties' relationship that speaks to, or mentions[,] `best price.'" (Id. ¶ 24.) However persuasive a theory, LoJack has not offered evidence as to GLM's motivation that would preclude a rational trier of fact from finding in favor of GLM on this claim. LoJack's motion for summary judgment on this counterclaim is, therefore, denied. See Donnelly, 691 F.3d at 141.
Following submission of the parties' briefs on summary judgment, LoJack moved to strike portions of the affidavits filed by GLM in support of its opposition to LoJack's motion for summary judgment, primarily on the ground that "they impermissibly contradict prior sworn testimony." (Dkt. 62 at 3.) Because LoJack's motion for summary judgment is granted, its motion to strike is denied as moot. The Court notes, however, that where statements in the subject affidavits failed to "set out facts that would be admissible in evidence," Fed. R. Civ. P. 56(c)(4), or contradicted clear prior deposition testimony, the Court declined to consider those statements. See Trans-Orient Marine Corp. v. Star Trading & Marine, Inc., 925 F.2d 566, 572 (2d Cir. 1991) ("The rule is well-settled in this circuit that a party may not, in order to defeat a summary judgment motion, create a material issue of fact by submitting an affidavit disputing his own prior sworn testimony.").
On December 19, 2013, more than one month after the summary judgment motion had been fully briefed, and more than seven months after the deadline for parties to do so, GLM moved to amend its operative complaint. (Dkt. 69; (See Dkt. 44 (setting the deadline for amendment of pleadings as 2/14/13))). The upshot of GLM's motion is that although its FAC "characterized LoJack's best-price promise as a modification to the parties' initial written [Distribution Agreement]," GLM now submits that the evidence adduced during discovery "supports the view that the [best price agreement] was in fact distinct" from the Distribution Agreement. (Dkt. 69-2 ("Amend Br.") at 3.)
Rule 15(a) of the Federal Rules of Civil Procedure ("FRCP") provides that a party may amend its complaint once as a matter of course before a responsive pleading has been served; thereafter, the party may do so "only with . . . the court's leave," which should "freely" be given "when justice so requires." Fed. R. Civ. P. 15(a)(2). But where, as here, a motion to amend is filed after the deadline the court has set for amending the pleadings, Rule 16(b)'s more stringent "good cause" standard applies. Parker v. Columbia Pictures Indus., 204 F.3d 326, 340 (2d Cir. 2000).
GLM's motion fails for two reasons. First, GLM's proposed amendment is futile. See McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007) ("A district court has discretion to deny leave for good reason, including futility . . .") Here, the "separate agreement" theory fails for the same reason as the "oral modification" theory: there is insufficient evidence to demonstrate that LoJack ever agreed to offer GLM the best price. The evidence GLM could offer in support of its proposed new claim would create no triable issue of fact, and LoJack would still be entitled to judgment as a matter of law under FRCP 56. See Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110-11 (2d Cir. 2001) (holding that when a motion to amend is filed in tandem with a fully briefed summary judgment motion, the summary judgment standard, rather than the motion to dismiss standard, applies in determining futility); see also Decter v. Second Nature Therapeutic Program, LLC, 13-CV-3519 (JFB), 2014 WL 4378805, at *12 (E.D.N.Y. Sept. 5, 2014) (denying leave to amend as futile because the amended complaint did "not contain facts that overcome the legal defects identified by the Court in [its] Memorandum and Order in connection with the claims that are being dismissed, nor could any such additional facts be alleged that could cure the legal defects.")
Second, even were GLM's claims viable, the motion would still be denied on the ground of undue delay. "Delay in seeking leave to amend a pleading is generally not, in and of itself, a reason to deny a motion to amend. However, the Court may deny a motion to amend when the movant knew or should have known of the facts upon which the amendment is based when the original pleading was filed, particularly when the movant offers no excuse for the delay." Smith v. Westchester Cnty. Dep't of Corr., 12-CV-3941 (SHS) (FM), 2014 WL 4384104, at *10 (S.D.N.Y. Sept. 3, 2014) (citations and quotations omitted). That is precisely the case here. All of the facts on which GLM relies in support of its motion to amend were within its ken at the time it filed its First Amended Complaint. GLM has not cited, nor can the Court find, anything produced by LoJack during discovery that supports the proposition that GLM's new theory was only recently discovered. Cf. Parker, 204 F.3d at 341 (refusing to find good cause where the information supporting the amendment to the complaint was available to support movant's claim, "and nothing he learned in discovery otherwise altered that fact."). Even if GLM's motion was based on new evidence, it should have noticed its motion for leave to amend shortly after the close of discovery, not after reading LoJack's summary judgment papers and deciding it had a better theory for its case.
For these reasons, GLM's motion to amend is denied.
In summary, LoJack's motion for summary judgment as to GLM's claims for breach of contract, breach of the duty of good faith and fair dealing, and violation of Massachusetts General Law 93A is GRANTED. LoJack's motion for summary judgment is GRANTED as to its breach of contract claim and DENIED as to the remainder of its counterclaims. LoJack's motion to strike is DENIED as moot. GLM's motion to amend is DENIED.
The parties shall submit by October 17, 2014, a letter to the Court advising (1) whether LoJack intends to go forward with its remaining counterclaims, and (2) a jointly agreed upon schedule regarding damages briefing regarding the breach of contract claim on which LoJack has prevailed.
