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Choquette v. Motor Information Systems, Inc.

United States District Court, S.D. New York

August 2, 2017



          VALERIE CAPRONI, United States District Judge

         Plaintiffs Anthony Choquette and Stephanie Pedroza are independent distributors for Motor Information Systems (“Motor”), which is an operating division of Defendant Hearst Business Publishing, Inc. that publishes manuals regarding vehicle service and repairs.[1]Historically, Motor's products were physical manuals; more recently it has transitioned many of its products to online manuals. When Motor discontinued one of the online manuals that Plaintiffs had been authorized to distribute, Plaintiffs sued, alleging breach of contract, “Deceit/Misrepresentation, ” and “Intentional Interference with Advantageous Business Relations.”[2] Defendant has now moved for summary judgment (“the Motion”).[3] Plaintiffs have failed to raise a genuine question of material fact as to any of their claims. Accordingly, Defendant's Motion is GRANTED.


         Motor sells vehicle service and repair manuals. It does so both through direct sales and through independent distributors. Def. 56.1 Stmt. ¶¶ 1-4. Anthony Choquette and Stephanie Pedroza are independent distributors, each in the business of selling such manuals in or around Massachusetts and Utah, respectively. Id. ¶¶ 5-8. Choquette's and Pedroza's “Independent Sales Distribution Agreements” (“Agreements”)[5] authorize them to sell Repair Manuals (“Manuals”), Crash Manuals (“Crash”), Motor/Alldata Systems (“MAS”), and Shop Management Systems (“MSM”), collectively “Products, ” to certain customers. Id. ¶ 19; Agreements §1.

         Several provisions in the Agreements are relevant to Plaintiffs' claims. Each Plaintiff is authorized to sell Products to certain types of customers, designated as “Qualified Customers, ” within a limited geographic territory that is defined in each of the Agreements.[6] Agreements §§2, 3; Def. 56.1 Stmt. ¶¶ 23, 25. Motor may change the authorized territory provided that any change is “not [] arbitrary and [is] predicated on the level of sales of the Products compared to sales of the Products in other territories in the same geographical area.” Agreements § 3; Def. 56.1 Stmt. ¶ 24. Each Plaintiff's appointment as a distributor is “exclusive with respect to sales of Manuals for direct personal sales calls on Qualified Customers in the Territory.” Agreements § 1. This is the only exclusivity provided for in the Agreements. Def. 56.1 Stmt. ¶ 28. Motor retains full rights to market and distribute all Products in Pedroza's territory, Pedroza Agreement § 2, and may market and distribute Crash and MAS in Choquette's territory, Choquette Agreement § 2, “directly, or indirectly, to Qualified Customers and other prospects.” Agreements § 2; Def. 56.1 Stmt. ¶¶ 29-30. Each Agreement allows for partial termination “by Motor . . . as to any Product if Motor discontinues [the] Product . . . .” Agreements § 8; Def. 56.1 Stmt. ¶ 39. Finally, commissions are mentioned only with respect to sales of MAS: “Distributor shall be entitled to the then current renewal commission for renewals of MAS sold by the Distributor while this Agreement is in effect.” Agreements §6(e). The Agreements also contain an integration clause, Agreements §11(c), a requirement that all modifications be made in writing signed by both parties, Agreements §11(b), and a New York choice of law clause, Agreements §11(a).[7] Beyond the 2000 amendment to Choquette's contract, no written changes were made to either Agreement, and the terms in the Agreements are the only contractual terms between the parties. Def. 56.1 Stmt. ¶¶ 12-13, 17-18.

         At the time Pedroza signed her Agreement in 2007, Motor and Alldata, which developed and sold the MAS product to Motor, were parties to a contract that allowed Motor to sell MAS through 2016. Id. ¶¶ 85-86. In December 2013, Motor and Alldata mutually agreed to end their relationship. Id. ¶ 87. On December 18, 2013, Motor notified Plaintiffs, as well as other independent distributors, that they must stop selling MAS. Id. ¶ 88. Since then, Plaintiffs have not sold MAS. Id. ¶ 93. In an attempt to encourage distributors to continue working with Motor, Motor offered to pay its independent distributors, including Plaintiffs, a lump sum to offset the loss of MAS. Id. ¶ 89. Plaintiffs rejected the offer and attempted to renegotiate their Agreements. Id. ¶¶ 90-91. When those negotiations were unsuccessful, Plaintiffs filed this Complaint in the United States District Court for the District of Massachusetts. Dkt. 1. Upon Defendant's motion to transfer for improper venue, the case was transferred to the Southern District of New York on November 24, 2015. Dkt. 21.


         I. Defendants' Motion for Summary Judgment

         Summary judgment is appropriate when “the movant shows that 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 Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Scott v. Harris, 550 U.S. 372, 380 (2007) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)) (internal quotation marks omitted). Courts “construe the facts in the light most favorable to the non-moving party and resolve all ambiguities and draw all reasonable inferences against the movant.” Delaney v. Bank of Am. Corp., 766 F.3d 163, 167 (2d Cir. 2014) (per curiam) (quoting Aulicino v. N.Y.C. Dep't of Homeless Servs., 580 F.3d 73, 79-80 (2d Cir. 2009)) (alteration omitted).

         The nonmoving party, however, “must do more than simply show that there is some metaphysical doubt as to the material facts, ” and “may not rely on conclusory allegations or unsubstantiated speculation.” Jeffreys v. City of New York, 426 F.3d 549, 554 (2d Cir. 2005) (citations and internal quotation marks omitted). Rather, the nonmoving party must come forward with “specific facts showing that there is a genuine issue for trial.” Sista v. CDC Ixis North America, Inc., 445 F .3d 161, 169 (2d Cir. 2006) (citation omitted). “The plain language of Rule 56(c) mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

         A. Plaintiffs' Breach of Contract Claim

         To prove breach of contract under New York law, a plaintiff must prove “(1) a contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages.” Terwilliger v. Terwilliger, 206 F.3d 240, 245-46 (2d Cir. 2000). Plaintiffs bear the burden of proof as to all elements of a breach of contract claim. See Barton Grp., Inc. v. NCR Corp., 796 F.Supp.2d 473, 498 (S.D.N.Y. 2011), aff'd, 476 F. App'x 275 (2d Cir. 2012) (“Under the applicable New York law, a ‘party asserting a breach of contract claim has the burden of proving the material allegations in the complaint by a fair preponderance of the evidence.'” (quoting Raymond v. Marks, 116 F.3d 466, 466 (2d Cir. 1997))). New York law requires that unambiguous contractual terms be given their plain meaning. See, e.g., LaSalle Bank Nat'l Ass'n v. Nomura Asset Capital Corp., 424 F.3d 195, 206 (2d Cir. 2005); see also CIBC World Markets Corp. v. TechTrader, Inc., 183 F.Supp.2d 605, 610-11 (S.D.N.Y. 2001) (“[W]hen parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms.” (quoting W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d 157 (1990))). Plaintiffs appear to allege that Motor has breached their Agreements in three ways. First, Plaintiffs allege that Motor “arbitrarily erod[ed] [Plaintiffs'] sales territories and accounts by interfering with their customers in an attempt to lure them as a company account . . . .” Compl. ¶ 13. The Agreements, however, allow Motor to “change the Territory from time to time . . . .” provided that such “[c]hanges . . . will not be arbitrary . . . .” Agreements § 3. “Territory, ” given its plain meaning and viewed in light of each Agreement as a whole, refers exclusively to the geographical area in which each Plaintiff can distribute Products (rather than to whom or the quantity of Products Plaintiffs can sell).[8] Plaintiffs have presented no evidence to show that their geographic territories have been changed, let alone that the Defendant acted arbitrarily.[9]Plaintiffs “do not contend that the [Agreements] prohibit[] the Defendant from marketing, selling, or distributing its products within the territory” but rather take issue with the effect that Defendant's practices have had on Plaintiffs' businesses. Specifically, Plaintiffs believe that Motor's marketing and sales activities within their geographic territories have hurt Plaintiffs' businesses. Choquette Interrog. ¶ 19 (Dkt. 69-5); Pedroza Interrog. ¶ 19 (Dkt. 69-6). Plaintiffs have presented no evidence that Motor is marketing or selling Products within Plaintiffs' geographic territories, but even if they had presented such evidence, the Agreements expressly allow Motor to market and distribute all Products in Pedroza's territory, Pedroza Agreement § 2, and to market and distribute Crash and MAS in Choquette's territory, Choquette Agreement § 2. Accordingly, the only sale Motor could make that would amount to a breach would be a sale of a Manual to a “Qualified Customer” in Choquette's territory. Choquette has not presented any evidence that raises a genuine issue of material fact that such a sale has occurred.[10]

         Second, Plaintiffs allege that Motor refused to “pay [Plaintiffs] direct or residual commissions” for their sales of Motor products. Compl. ¶ 14. The Agreements provide for commissions only with reference to MAS. Agreements §6(e) (“Distributor shall be entitled to the then current renewal commission for renewals of MAS sold by the Distributor while this Agreement is in effect.”). Plaintiffs have nowhere alleged that they are owed commissions for sales that were made before Alldata discontinued Motor's right to sell MAS. Rather, it appears that Plaintiffs are suing for the prospective commissions that they would have earned if Alldata had not terminated its agreement with Motor as to MAS.[11] But the plain language of the Agreements allows for “partial termination as to any Product if Motor discontinues any Product . . . .” Agreements § 8. Once Motor discontinued MAS, Plaintiffs did not make any sales (renewals or otherwise), and they are thus not owed any commissions.

         Finally, Plaintiffs allege that “Motor has wrongfully debited money from certain accounts developed and funded by each of their independent sales performance under the Distributor Agreement.” Compl. ¶ 15. Because the Complaint does not identify what provision of the Agreements Motor has allegedly breached by wrongfully debiting money ...

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