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ARNOLD WEISS CORP. v. MANISHA SPORTSWEAR

May 24, 1991

ARNOLD WEISS CORPORATION, PLAINTIFF,
v.
MANISHA SPORTSWEAR, INC., DEFENDANT.



The opinion of the court was delivered by: Haight, District Judge:

MEMORANDUM OPINION AND ORDER

In this diversity action, plaintiff is a corporate sales representative which entered into a written contract with defendant, a manufacturer and importer of apparel. Defendant terminated the contract in a manner which plaintiff contends violated its terms. Plaintiff moves under Rule 56, Fed.R.Civ.P., for partial summary judgment on the issue of liability. Defendant cross-moves for summary judgment dismissing the complaint.

Background

Plaintiff Arnold Weiss Corporation and defendant Manisha Sportswear, Inc. entered into a written contract dated September 1, 1982 pursuant to which plaintiff acted as defendant's sales representative. The contract set forth a schedule of commissions payable by defendant to plaintiff whose details I need not consider on these motions.

The contractual provision central to the case appears in ¶ 3, which provides:

  The period of this agreement shall be one year
  effective September 1, 1982, and shall be
  automatically renewed from year to year unless
  revoked by either party with a 120 written notice of
  such cancellation.

Plaintiff and defendant maintained this relationship for a number of years. However, in a letter dated June 23, 1989, defendant's vice-president, Dilip S. Katara, advised Arnold Weiss of the plaintiff corporation that owing to adverse business conditions, "we feel that we have no choice but to terminate our contract with you dated September 1, 1982." Defendant's June 23, 1989 letter continues:

  As per clause three of the contract this is our
  notice for a hundred twenty (120) days for such
  termination. After October 21, 1989 the override on
  all sales will not be given. Only the regular agreed
  commission will be paid to all the salesman.

Plaintiff contends that under the unambiguous wording of ¶ 3 of the contract, the contract was automatically renewed for a year from September 1, 1989, so that it remained in effect through August 31, 1990. That is so, plaintiff contends, because defendant did not send the requisite 120 day written notice of cancellation, which to prevent automatic renewal under ¶ 3 had to be received by plaintiff not later than April 30, 1989. As noted, defendant's letter of termination was dated June 23, 1989.

Defendant contends that under the contract, "either side could give 120 days notice of termination which was equivalent to a selling season and then at the end of that time the contract was terminated." Affidavit of Sham Lund, defendant's vice-president, at p. 2.

In these circumstances, plaintiff moves for partial summary judgment on the issue of liability, with the amount of damages to be determined in subsequent proceedings. Defendant cross-moves for summary judgment dismissing the complaint.

Discussion

Plaintiff is entitled to partial summary judgment on the issue of liability.


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