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Doynow Sales Associates, Inc. v. Rocheux International of New Jersey

August 24, 2009

DOYNOW SALES ASSOCIATES, INC., PLAINTIFF,
v.
ROCHEUX INTERNATIONAL OF NEW JERSEY, INC. A/K/A ROCHEUX INTERNATIONAL, INC., DEFENDANT.



The opinion of the court was delivered by: Andrew J. Peck, United States Magistrate Judge

OPINION AND ORDER

Plaintiff Doynow Sales Associates, Inc. ("DSA") brings this action alleging that Rocheux International of New Jersey, Inc., a wholesale commercial distributor of swimming pool liners and other plastic products, breached its contract with DSA when it reduced DSA's sales commissions in part or entirety on at least two accounts with large pool distributors. (See generally Dkt. No. 18: Am. Compl.)

Presently before the Court is DSA's summary judgment motion (Dkt. No. 32: DSA Notice of Motion; see also Dkt. No. 34: Lucas Aff.; Dkt. No. 35: Steven Doynow Aff.; Dkt. No. 36: Larry Doynow Aff.; Dkt. No. 37: DSA Rule 56.1 Stmt.; Dkt. No. 42: DSA Br.), and Rocheux's summary judgment motion (Dkt. No. 38: Rocheux Notice of Motion; see also Dkt. No. 39: Stephanoff Aff.; Dkt. No. 40: Schwartz Aff.; Dkt. No. 41: Rocheux Br.; Dkt. No. 43: Rocheux Rule 56.1 Stmt.). The parties have consented to decision of this case by a Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Dkt. No. 9.)

For the reasons set forth below, DSA's and Rocheux's summary judgment motions both are DENIED.

FACTS

Rocheux distributes and sells industrial plastics, including "vinyl for swimming pool liners" manufactured by "NanYa Plastics Corp. of Ta[i]wan." (Dkt. No. 37: DSA Rule 56.1 Stmt. ¶ 9; Dkt. No. 35: Steven Doynow Aff. ¶ 9; Dkt. No. 43: Rocheux Rule 56.1 Stmt. ¶ 1.) DSA, which employs Steven Doynow as a sales representative, entered into a "Sales Representative Agreement" with Rocheux in May 1992 to sell Rocheux "products in a specified territory" as a "non-exclusive sales representative" "in exchange for commissions on sales." (DSA Rule 56.1 Stmt. ¶¶ 7, 17; Steven Doynow Aff. ¶¶ 7, 17; Rocheux 56.1 Stmt. ¶¶ 2-3; see Dkt. No. 40: Schwartz Aff. Ex. A: 5/5/1992 Sales Representative Agreement.) "The focus of DSA's sales to Rocheux customers has been the sale of vinyl to swimming pool manufacturers and distributors." (DSA Rule 56.1 Stmt. ¶ 31; Steven Doynow Aff. ¶ 22.)

The Sales Representative Agreement

The Sales Representative Agreement (the "Agreement") was drafted by Rocheux based on a Rocheux form agreement. (Dkt. No. 37: DSA Rule 56.1 Stmt. ¶¶ 15-16, 136-41.) The Agreement "appoints [DSA] as an authorized nonexclusive [sales] agent for the Rocheux Products specified in Schedule A . . . [to] market and promote the sale of, to solicit orders for, and to service orders for the Products, in the geographic area specified in Schedule B . . . ." (Dkt. No. 40: Schwartz Aff. Ex. A: Agreement ¶ 1.)*fn1 DSA's geographic area includes the entire "[c]ontinental U.S." (Schwartz Aff. Ex. A: Agreement at p. 11, Schedule B.) Schedule A to the Agreement establishes the following compensation structure:

[DSA]'s total compensation under this Agreement shall consist of the following percentages of the Rocheux sales price paid to and reviewed by Rocheux for Products shipped based on orders, released and options exercised and accepted by Rocheux during the term of this Agreement through the efforts of [DSA].

Sales commission shall be 3-5% except in cases, which in order to entertain large volume accounts, it may be necessary upon mutual agreement to reduce [DSA's] commission. (Schwartz Aff. Ex. A: Agreement at p. 12, Schedule A(3), emphasis added.)

The Agreement also contains a "merger clause" and provides a specific procedure to modify the Agreement:

This Agreement supersedes any previous Agreement or negotiations between the parties, either expressed or implied, and constitutes the entire Agreement between the parties. It shall not be amended or modified except by a subsequent written agreement signed by the party to be bound thereby. Modifications to Schedules A and B shall be accomplished by both parties signing and dating the schedule modified as desired and appending the modified schedule to the contract. . . . The failure or delay of either party to exercise any right hereunder shall not be deemed to be a waiver of such right, and the delay or failure to terminate this Agreement for noncompliance or breach shall not be deemed a waiver of the right to do so for that or any . . . other such default, of the persistence in such default of a continuing nature. (Schwartz Aff. Ex. A: Agreement ¶ 11.)

The Agreement commenced on May 1, 1992, and "was automatically renewed for successive five-year terms beginning on May 1, 1997, May 1, 2002 and May 1, 2007," and "remains in force and is not scheduled to expire until May 1, 2012." (DSA Rule 56.1 Stmt. ¶¶ 25, 26, 29, 54; Dkt. No. 35: Steven Doynow Aff. ¶¶ 18-20, 41; see Schwartz Aff. Ex. A: Agreement ¶ 5.) Either party can prevent the Agreement's automatic renewal by providing the other party "a written notice of non-renewal at least six months before the Agreement's expiration." (DSA Rule 56.1 Stmt. ¶ 25; Schwartz Aff. Ex. A: Agreement ¶ 5.)*fn2

The Agreement contains a non-compete clause binding DSA for the term of the agreement and twelve months after termination (i.e., through May 1, 2013). (DSA Rule 56.1 Stmt. ¶ 30; see Schwartz Aff. Ex. A: Agreement ¶ 8.) Rocheux, however, claims the non-compete "applies only to competition with NanYa products, not to Rocheux." (Dkt. No. 48: Rocheux Opp. Rule 56.1 Stmt. ¶ 8.) DSA maintains that it "remains bound by the Agreement's non-compete clause . . . until May 1, 2013," even though "Rocheux has eliminated or virtually eliminated 100% of DSA's compensation by unilaterally converting DSA's accounts into 'house accounts.'" (DSA Rule 56.1 Stmt. ¶ 30.)

"Any dispute arising under th[e] Agreement not resolved by agreement of the parties shall be . . . governed and construed by the laws of New Jersey and the USA, excluding New Jersey choice of law rules." (Schwartz Aff. Ex. A: Agreement ¶ 12; see DSA Rule 56.1 Stmt. ¶ 24.)

The Parties' Construction of the Agreement's Commissions Provision

DSA maintains that the "Agreement does not contain any clause permitting Rocheux to convert DSA's accounts into house accounts or to otherwise cease paying DSA commissions, and expressly requires Rocheux to pay [DSA] commissions on 'all orders' accepted by Rocheux prior to the Agreement's termination date." (Dkt. No. 37: DSA Rule 56.1 Stmt. ¶ 20; see Dkt. No. 40: Schwartz Aff. Ex. A: Agreement ¶¶ 4D, 6D.) DSA claims that "[u]pon bringing in the account, the [sales] 'rep[resentative] [is] deemed to be the sales rep on the account as long as the orders continued from that customer,'" and "having generated the account . . . would thereafter receive the commissions from sales to that account." (DSA Rule 56.1 Stmt. ¶¶ 34, 35, 40-47.) Only when the Agreement ends would Rocheux "have no obligation to pay DSA any commissions" on "orders from customers generated through DSA's efforts." (DSA Rule 56.1 Stmt. ¶ 55.)

In contrast, Rocheux maintains that the "Agreement does not prohibit Rocheux from re-assigning accounts" because ¶ 2B of the Agreement provides Rocheux "the sole right . . . to establish the terms and conditions of any sale it makes; . . . to establish policies regarding sales solicitation . . . ; and to establish such other policies or procedures as it may deem necessary for the effective marketing of its products." (Dkt. No. 48: Rocheux Opp. Rule 56.1 Stmt. ¶ 4; Schwartz Aff. Ex. A: Agreement ¶ 2B.) Further, Rocheux argues that its "[c]ommission rates under the Agreement are based on the profitability of each account and are established customer by customer," that it "establish[ed] commission rates on a customer by customer basis" with DSA during their "course of dealing" for over eighteen years, and that Rocheux only determined DSA's "available commission" once it reached a "final price . . . with a customer," establishing "the account's potential gross profit." (Rocheux Opp. Rule 56.1 Stmt. ¶¶ 9, 10; see also DSA Rule 56.1 Stmt. ¶¶ 131, 134-35.)

In addition, Rocheux argues that the Agreement provides for compensation only for "ongoing" services, "including the soliciting of orders, servicing of accepted orders, maintaining relationships with actual and prospective customers, maintaining records, and as otherwise detailed in paragraphs 3A, B, and F and 4A and B of the Agreement." (Rocheux Opp. Rule 56.1 Stmt. ¶ 5; see Schwartz Aff. Ex. A: Agreement ¶¶ 3 & 4.) Those paragraphs of the Agreement provide the following:

3. Responsibilities of the Representative [DSA]

A. [DSA] agrees to maintain at its own expense adequate facilities, for the effective sale of the Products in the Territory, and for the adequate and competent servicing of accepted orders.

B. [DSA] shall take all reasonable steps to make Rocheux's Products known in the Territory, shall cooperate with and assist with and assist Rocheux in promotional and advertising campaigns, and shall use its best efforts to maintain good relationships with all of Rocheux's actual or prospective customers and to work constantly and diligently in the best interests of Rocheux. . . . .

F. [DSA] shall maintain records, accounts, copies of purchase orders and correspondence pertaining to its activities on behalf of Rocheux, all of which shall be available for review if requested by Rocheux. [DSA] shall keep Rocheux well informed regarding sales efforts on Rocheux's behalf, and upon request shall update Rocheux regarding [DSA]'s current staff of sales personnel, principles represented and changes in coverage within the territory. . . . .

4. Compensation

A. In full payment for services rendered by [DSA] under this Agreement, Rocheux agrees to pay [DSA], and [DSA] agrees to accept as its sole and entire compensation, a commission . . . on the sales price of products sold by Rocheux through the efforts of [DSA] hereunder and for which Rocheux has received payment from the customer . . . . The amount of such contained in [sic; perhaps, "commissions"] shall be set in accordance with the schedule contained in Schedule A hereto, on the sales price of Products sold hereunder and shipped to any customer. When multi-year agreements, options to purchase, letters of intent to purchase, or agreements for sales orders to be placed upon periodic releases are involved, commission shall be paid only upon orders, ...


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