REBECCA BEACH SMITH, Chief Judge.
This matter comes before the court on a Motion for Summary Judgment filed by Innovative Legal Marketing, LLC ("ILM") on April 27, 2012. The motion was referred to United States Magistrate Judge Douglas E. Miller by Order on May 18, 2012, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Federal Rule of Civil Procedure 72(b).
The magistrate judge heard oral argument on June 5, 2012, and filed his Report and Recommendation ("R & R") on June 20, 2012, 2012 WL 3525612. The magistrate judge recommended denying in part and granting in part ILM's motion. Specifically, the magistrate judge recommended that the court find as a matter of law that ILM had not waived its rights under a spokesperson agreement ("Agreement") with Corbin Bernsen ("Bernsen"), and that while the language of the Agreement included a morality clause, the court should deny ILM's motion as to Bernsen's alleged breach of that clause. R & R 23-24. The magistrate judge further recommended that the court grant ILM's motion on Bernsen's claim for unjust enrichment and dismiss that claim. Id. By copy of the R & R, the parties were advised of their right to file written objections thereto. On July 5, 2012, the court received Plaintiff's Objection to Magistrate Judge Miller's June 20, 2012 Report & Recommendation ("Bernsen's Objection"). ILM filed its Response on July 19, 2012.
Pursuant to Rule 72(b) of the Federal Rules of Civil Procedure, the court, having reviewed the record in its entirety, shall make a de novo determination of those portions of the R & R to which Bernsen has specifically objected. Fed.R.Civ.P. 72(b). The court may accept, reject, or modify, in whole or in part, the recommendation of the magistrate judge, or recommit the matter to him with instructions. 28 U.S.C. § 636(b)(1).
The court, having examined Bernsen's Objection and having made de novo findings with respect thereto, sustains Bernsen's Objection. Accordingly, the findings and recommendations set forth in the R & R are adopted in part and modified in part, and ILM's Motion for Summary Judgment is
Summary judgment under Rule 56 is appropriate when the court, viewing the record as a whole and in the light most favorable to the nonmoving party, finds there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A court should grant summary judgment if the nonmoving party, after adequate time for discovery, has failed to establish the existence of an essential element of that party's case, on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
To defeat a motion for summary judgment, the nonmoving party must go beyond the facts alleged in the pleadings, instead relying upon affidavits, depositions,
Bernsen raises one objection to the R & R, contesting the magistrate judge's finding as a matter of law that ILM has not waived its rights to terminate the Agreement based on any alleged violation of the morality clause. For the reasons set forth below, the court sustains Bernsen's Objection.
Bernsen objects to the finding in the R & R that, as a matter of law, "ILM has not waived its rights under the contract." Bernsen's Obj. 1. Bernsen argues that a party may waive an anti-waiver provision by its conduct, and thus whether ILM waived its right to terminate the agreement for the alleged violations of the morality clause of the Agreement raises a jury question. Id. at 2-3. ILM contends in its Response that, "[w]hile Bernsen is correct that a non-waiver clause can theoretically be waived, he has failed to put forth any evidence to support the waiver of the non-waiver clause." ILM's Resp. 1.
Section C(1) of the R & R addressed Bernsen's allegation "that ILM waived its right to terminate the Agreement for violations of the morality clause as the company knew about his conduct for some time prior to terminating him." R & R 9. As both parties agree, the Agreement contains an unambiguous anti-waiver provision. See Bernsen's Obj. 1; ILM's Resp. 1. Examining Virginia Elec. & Power Co. v. Norfolk S. Ry. Co., 278 Va. 444, 683 S.E.2d 517 (2009), the magistrate judge stated that, under Virginia law, an anti-waiver provision "did not preclude the defendant from enforcing the terms of the agreement even though it had not done so previously." R & R 10.
Waiver "is the voluntary, intentional abandonment of a known legal right. It has two essential elements: (1) knowledge of the facts basic to the exercise of
Here, there appears to be no dispute that ILM knew of some of the alleged incidents at issue "for months, and even years," prior to the decision to terminate the Agreement. Bernsen's Obj. 3. The question of waiver thus turns on whether there is a material dispute as to ILM's intent to relinquish its contractual right. Bernsen points to three pieces of evidence as creating a jury question as to ILM's intent to waive: "(1) ILM continued to use Bernsen for almost two years [after the potentially violative conduct]; (2) ILM continued to pay Bernsen under the Agreement; and (3) ILM continued to reap the benefit of the use of Bernsen in its advertisements by collecting payments from its customers." Id. at 4. ILM does not contest this evidence, but characterizes it as insufficient, stating that the "conduct by ILM is entirely consistent with its bargained-for contractual right of non-waiver.... The conduct is entirely consistent with a party who knows its rights are protected by a non-waiver provision." ILM's Resp. 3.
The court finds both parties' characterizations plausible. ILM's continued use of Bernsen, continued payment under the Agreement, and continued enjoyment of the benefits of Bernsen's endorsement may be consistent with a party exercising its bargained-for contractual right of non-waiver. However, continuation of use, payment, and enjoyment under a contract after five separate incidents potentially violative of the contract's morality clause, see R & R 4-6, is also a course of conduct entirely consistent with an affirmative intent by ILM to waive its right to subsequently enforce the morality clause. Other courts have similarly found that repeated declination to enforce a clause in a contract can evidence intent to waive the provision, notwithstanding an anti-waiver provision. See Perry Eng'g Co., 1993 WL 264461, at *5, 1993 U.S.App. LEXIS 17432, at *14 ("One could infer from AT & T's consistent practice of approving price adjustments submitted after ten days had elapsed that it intended to waive the ten-day deadline in all cases."). See generally Woodmen of World, 38 S.E.2d at 454 (holding that a party's intent to waive can be evidenced "by conduct, acts, or a course of dealing"). Even the case cited by ILM in support of its position in its Response makes this point. See Olga's Kitchen v. Papo, No. 85-1591, 1987 WL 36385, at *4, 1987 U.S.App. LEXIS 2205, at *12 (6th Cir. Feb. 16, 1987) (unpublished) ("A lessor may waive a `non-waiver' clause in a lease agreement
At this stage in the litigation, the court must draw "all reasonable inferences in favor of the non-moving party." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). Viewing the evidence in that light, the court concludes that a jury could find that the evidence of ILM's continued payment and use of Bernsen's endorsement after repeated incidents potentially violative of the morality clause in the Agreement demonstrate ILM's intent to waive its anti-waiver provision with respect to that clause.
Given the court's recognition of two potentially valid and contradictory interpretations of the submitted evidence as it relates to ILM's intent, and thus waiver, the court declines to find that ILM is entitled to judgment as a matter of law. As such, the court
The court, having examined Bernsen's Objection to the R & R, and having reviewed the record and made de novo findings with respect to the portion objected to, does hereby adopt and approve the findings and recommendations set forth in Sections A and C(2)-(5) of the R & R, concerning the morality clause in the Agreement and dismissal of Bernsen's unjust enrichment claim. The court does hereby modify the findings and recommendations set forth in Section C(1) of the R & R, concerning a conclusion of law on ILM's potential waiver of its rights under the Agreement, as discussed above.
Accordingly, ILM's Motion for Summary Judgment is