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Display Pack Corp. v. Grimm Industries

December 12, 2005

DISPLAY PACK CORPORATION, PLAINTIFF,
v.
GRIMM INDUSTRIES, INC., DEFENDANT.



The opinion of the court was delivered by: H. Kenneth Schroeder, Jr. United States Magistrate Judge

DECISION AND ORDER

In accordance with 28 U.S.C. § 636(c), the parties have consented to have the undersigned conduct all further proceedings in this case, including entry of final judgment. Dkt. #37.

Currently before the Court is plaintiff Display Pack Corporation's ("Display Pack's"), motion to file a second amended complaint to add a cause of action pursuant to New York Labor Law § 191-c (Dkt. #55); defendant Grimm Industries, Inc.'s ("Grimm Industries'"), motion to amend its answer to assert the Statute of Frauds as an affirmative defense and for summary judgment on that defense (Dkt. #68); Display Pack's motion for sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure (Dkt. #74); and Display Pack's motion for summary judgment on its breach of contract, quantum meruit, and unjust enrichment causes of action. Dkt. #85.

For the following reasons, Display Pack's motion to amend its complaint is denied; Grimm Industries' motion to amend its answer and for summary judgment is denied; Display Pack's motion for sanctions is denied; and Display Pack's motion for summary judgment on its breach of contract claim is granted.

BACKGROUND

Grimm Industries is a manufacturer of plastic point-of-purchase retail displays and merchandisers. Dkt. #45, p.2. Since its inception in 1992, Display Pack has acted as Grimm Industries' sales representative. Dkt. #45, p.2. The parties agree that the terms of their business relationship were never formalized in writing. Dkt. #69, ¶ 4; Dkt. #84, ¶ 4.

Plaintiff's amended complaint sets forth the following agreement between Display Pack and Grimm Industries:

The plaintiff's services include contacting potential customers, introducing them to products manufactured by the defendant and soliciting the customers to purchase the defendant's products. As part of this agreement, the defendant agreed to pay the plaintiff commissions based on the purchase of defendant's products.

Dkt. #56, p.6, ¶ 4. Although Display Pack was free to represent or broker orders with other manufacturers with respect to non-plastic products, the President of Grimm Industries, Beatus Grimm, testified that it was agreed that Display Pack would represent Grimm Industries exclusively on the items Grimm Industries could produce. Dkt. #45, p.3; Dkt. #69, p.16. Display Pack agreed that "if the item is a product that can be produced by Grimm Industries, then we want to represent Grimm Industries exclusively." Dkt. #110, p.70.

The President of Display Pack, Thomas Dobmeier, avers that its commissions were based solely upon those purchase orders it obtained on behalf of Grimm Industries. Dkt. #80, ¶ 8. Grimm Industries states that "Display-Pack's compensation was a commission based on the amount of sales Grimm Industries derived from sales to customers that Display-Pack was servicing." Dkt. #69, ¶ 6. Mr. Grimm testified that he had removed Display Pack from an inactive account and had accepted from a broker an order destined for a customer Display Pack serviced. Dkt. #98, pp.14-16.

Beginning in September, 2000, Mr. Grimm testified that he "slowed down and/or stopped payments of commissions" to Display Pack as a result of his concerns about Display Pack's loyalty to Grimm Industries. Dkt. #80, p.14; see Dkt. #110, ¶ 9. In March, 2001, Grimm Industries terminated its business relationship with Display Pack via letter accusing Display Pack of attempting to strengthen its brokerage business by selling products in competition with items produced by Grimm Industries. Dkt. #45, p.4; Dkt. #80, p.12. Grimm Industries also notified customers "of the change in sales representation." Dkt. #98, p.21. Grimm Industries states that "[a]fter discovering this conduct and terminating Display-Pack, Grimm Industries refused to pay any further commissions to Display-Pack." Dkt. #69, ¶ 9.

Display Pack commenced suit against Grimm Industries seeking payment of outstanding commissions. Dkt. #41, Exh. A. Grimm Industries counterclaimed for breach of Display Pack's duty of loyalty, stating, inter alia, that Display Pack was "not entitled to recover commissions that it claims are due and owing" as a result of this breach. Dkt. #41, Exh. B, ¶ 8. In a prior Decision and Order addressing the parties' motions for declaratory judgment, this Court determined that in the event that plaintiff is found to have breached its duty of loyalty to defendant, the appropriate measure of damages would be limited to the commission(s) attributable to the disloyal transaction(s). Dkt. #52.

The parties each maintained and regularly exchanged reports documenting the commissions earned by Display Pack. Dkt. #80, p.3, ¶ 7. Mr. Dobmeier avers that "[t]hese commission reports were regularly exchanged between Display Pack and Grimm [Industries] in the ordinary course of business so that each could verify the amount of the commissions due and owing to Display Pack so there would be no confusion between the parties . . . ." Dkt. #80, p.3, ¶ 4. The commission reports generated by Grimm Industries set forth, inter alia, the manufacturer's representative, customer, purchase order number, product description, invoice number, invoice date, quantity, unit price, total price, commission rate and commission total. Dkt. #80, Exh. D. Display Pack's commission reports set forth, inter alia, the vendor, purchase order date, purchase order number, purchase order value, commission rate, commission due, commission paid, last date paid, last check number, total commission paid and outstanding commission. Dkt. #80, Exh. E. Display Pack also presents these commission reports broken down for each customer by year. Dkt. #82, Exh. A, B & C. A summary of Display Pack's commission reports demonstrates that Grimm Industries owes Display Pack $345,651.03. Dkt. #80, Exh. F.

DISCUSSION AND ANALYSIS

Leave to Amend the Complaint & Answer - Fed.R.Civ.P 15(a) Fed. R. Civ. P. 15(a) provides that a party may amend a pleading by leave of court or by written consent of the adverse party. Leave to amend is to be "freely granted" unless the party seeking leave has acted in bad faith, there has been an undue delay in seeking leave, there will be unfair prejudice to the opposing party if leave is granted, or the proposed amendment would be futile. Foman v. Davis, 371 U.S. 178, 182 (1962); State Teachers Retirement Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981); Fed. R. Civ. ...


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