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William J. Tuma, Doing Business As, Tuma and Associates v. Eaton Corporation

May 23, 2011

WILLIAM J. TUMA, DOING BUSINESS AS, TUMA AND ASSOCIATES PLAINTIFF,
v.
EATON CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

SUMMARY JUDGMENT ORDER RE MOTION FOR

Defendant Eaton Corporation, formerly doing business as Cutler-Hammer, Inc., moves for summary judgment on Plaintiff's claims for breach of contract, breach of duty of good faith and fair dealing, and violation of the Independent Wholesale Sales Representative Contractual Relations Act (Civil Code § 1738.10 et seq.). In the alternative, Defendant moves for partial summary judgment on the issue of the maximum amount of damages recoverable by Plaintiff. For the reasons that follow, this motion is GRANTED in part and DENIED in part.

I. BACKGROUND

On June 2, 2003, Plaintiff entered into a written Manufacturer's Representative Agreement ("2003 Contract" or "contract") to act as an outside sales representative in the spa market for Defendant -- a manufacturer of electrical components, including spa circuit breakers and spa breaker panels. Plaintiff was granted the right to solicit orders for Defendant's products in a defined sales territory from customers that included Watkins Manufacturing ("Watkins") -- a major spa company. See Pl. Ex. 7 at 175, 188. The contract provides that Plaintiff would be paid commissions "on all sales of Products within the Territory." (Id. at 178). The contract also addresses payment of commissions following termination of the agreement, limiting such payment to orders placed "within thirty (30) days after the effective date of the termination." (Id. at 181)

Plaintiff alleges that he worked for four years before finally persuading Watkins to start purchasing Defendant's products. (FAC ¶ 4, 5) On July 20, 2007, Watkins placed an order with OneSource, a wholesale electrical distributor, for 500 Eaton breakers to be used in a field test ("field test order"). Defendant does not challenge Plaintiff's contention that Tuma played a major role in securing this order even though this order was placed through a third-party distributor. See generally mem. at 4. Although it is unclear from the complaint or Plaintiff's opposition, Plaintiff may be seeking recovery of a commission on this order.*fn1

On August 27, 2007, Defendant's employee, Brian Hulse, sent Plaintiff an email stating that Eaton and Tuma "have mutually agreed to separate our relationship." See Def. Ex. 4; see also Opp. at 7. On November 1, 2007, Defendant sent Plaintiff a letter stating that the 2003 Contract would terminate the following day. (Def. Ex. 5) Presumably because of the contract's 30-day notice requirement for terminations without cause, the parties agree that December 1, 2007 is the effective date of termination. See Mem. at 6; Def. Statement of Fact # 4; Opp. at 7; Pl. Statement Of Fact # 4. This letter also states that "even though One Source actually placed the order," Eaton would pay additional compensation of $10,000 to Plaintiff for the field test order "as an accommodation" in exchange for Plaintiff's release of all claims under the 2003 Contract. Def. Ex. 5.

On March 21, 2008, Defendant and Watkins signed a multi-year pricing agreement ("Watkins Agreement"). Plaintiff contends that he is owed commissions on this agreement, which he characterizes as a "multi-year contract for a three to five year minimum term at a fixed price for sales of circuit breakers." (Compl. ¶ 5) Although Plaintiff asserts that he worked with Defendant and Watkins to finalize this agreement prior to his termination, he does not dispute that this agreement was signed -- and, a fortiori, all orders using the fixed prices set forth in the agreement were placed -- later than one month after the effective date of termination. See Pl. Statement Of Fact # 8.

II. STANDARD

Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure if the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute is genuine if a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 248.

A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. The moving party can satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to establish an essential element of the nonmoving party's case on which the nonmoving party bears the burden of proving at trial. Id. at 322-23.

Once the moving party establishes the absence of genuine issues of material fact, the burden shifts to the nonmoving party to set forth facts showing that a genuine issue of disputed fact remains. Celotex, 477 U.S. at 314. The nonmoving party cannot oppose a properly supported summary judgment motion by "rest[ing] on mere allegations or denials of his pleadings." Anderson, 477 U.S. at 256. When ruling on a summary judgment motion, the court must view all inferences drawn from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

III. CHOICE OF LAW

The Court has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332. In a diversity action, it is well-settled that a federal court must apply the choice of law rules of the state in which the action was filed, and thus, the Court applies California choice-of-law rules. See Trans Meridian Trading, Inc. v. Empresa Nacional de Comercializacion de Insumos, 829 F.2d 949, 953-954 (9th Cir. 1987). Under California choice-of-law rules, California state law applies, unless the parties raise an objection. See Hurtado v. Superior Court, 11 Cal. 3d 574, 580 (1974); see also Plaspro GMBH v. Gens, No. C 09-04302 PSG, 2011 U.S. Dist. LEXIS 28808, at *8 (N.D. Cal. Mar. 21, 2011).

Here, none of the parties object to the application of California law, and in fact, both raise arguments based exclusively on California state law. California ...


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