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Weco Supply Company, Inc., A California Corporation v. the Sherwin-Williams Company

August 6, 2012

WECO SUPPLY COMPANY, INC., A CALIFORNIA CORPORATION
PLAINTIFF,
v.
THE SHERWIN-WILLIAMS COMPANY,
DEFENDANT.



ORDER ON SUPPLEMENTAL MOTION FOR SUMMARY JUDGMENT AND RELATED CROSS-ACTION (Docs. 47, 70)

INTRODUCTION

This is a business dispute between Plaintiff Weco Supply Company, Inc. ("Weco") and Defendant The Sherwin-Williams Company ("Sherwin-Williams"). On May 25, 2012, the Court granted in part and denied in part Sherwin-Williams' Motions for Summary Judgment, or, in the alternative, Summary Adjudication of Issues. See Court's Docket, Doc. No. 66. However, the Court gave the parties leave to file a supplemental dispositive motion on the issue of whether summary judgment on the alleged breach of a contract's express terms automatically requires dismissal of a breach of contract claim premised on the implied covenant of good faith and fair dealing.On June 29, 2012, Sherwin Williams fileda Supplemental Memorandum of Points and Authorities in Support of Motions for Summary Judgment. See id., Doc. No. 70.Weco filed a memorandum in opposition, and Sherwin-Williams filed a reply. See id., Doc. Nos. 71, 72. For the reasons set forth below, the Court will grant Sherwin-Williams' supplemental motion.

BACKGROUND

The background of this action has been described in a prior order. See id., Doc. No. 66. To sum up, Weco and Sherwin-Williams entered into a written agreement for the distribution of Sherwin-Williams paint products, referred to as a Direct Jobber Agreement(the "Jobber Agreement"). The First Amended Complaint ("FAC") alleges in part that Sherwin-Williams breached the Jobber Agreement by discontinuing a certain product line. The FAC further alleges Sherwin-Williams breached the implied covenant of good faith and fair dealing by selling directly to two end users who were Weco's customers. Sherwin-Williams filed a First Amended Cross-Complaint ("FACC") alleging, among other things, that Weco breached the Jobber Agreement by refusing to pay for an order of paint totaling $135,083.27.

With respect to Weco's breach of contract claims, the Court granted summary judgment on the FAC's Fifth Cause of Action for breach of contract, but denied summary judgment on the Sixth Cause of Action for breach of the implied covenant of good faith and fair dealing. Id. The Court also denied summary judgment on the FACC's First Cause of Action for breach of contract finding that there was a genuine factual dispute as to whether Sherwin-Williams breached the implied covenant of good faith and fair dealing. Id. The Court's findings were based upon an assumption that, under Ohio law, summary judgment on the claim for breach of the Jobber Agreement's express terms did not preclude Weco's claim for breach of the implied covenant of good faith and fair dealing. The instant supplemental motion challenges that assumption and seeks reconsideration of the Court's denial of summary judgment on the FAC's Sixth Cause of Action and the FACC's First Cause of Action.

LEGAL STANDARD

Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law.

Fed. R. Civ. P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Poller v. Columbia Broadcast System, 368 U.S. 464, 467 (1962); Southern California Gas Co. v. City of Santa Ana, 336 F.3d 885, 888 (9th Cir. 2003). A fact is material if it could affect the outcome of the suit under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Miller, 454 F.3d at 987.

If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968); Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies, Inc.,210 F.3d 1099, 1103 (9th Cir. 2000). In attempting to establish the existence of this factual dispute, the opposing party is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Rule 56(e); Matsushita, 475 U.S. at 586 n.11; First Nat'l Bank, 391 U.S. at 289; Miller, 454 F.3d at 987.

In the endeavor to establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." First Nat'l Bank, 391 U.S. at 290; Giles v. General Motors Acceptance Corp., 494 F.3d 865, 872 (9th Cir. 2007). Thus, the "purpose of summary judgment is to 'pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.'" Matsushita, 475 U.S. at 587 (quoting Fed. R. Civ. P. 56(e) advisory committee's note on 1963 amendments); International Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985).

In resolving the summary judgment motion, the Court examines the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any. Rule 56(c); Poller, 368 U.S. at 468; Price v. Sery, 513 F.3d 962, 965 n.1 (9th Cir. 2008); Lockett v. Catalina Channel Exp., Inc., 496 F.3d 1061, 1064 (9th Cir. 2007). "[I]n ruling on a motion for summary judgment, the nonmoving party's evidence 'is to be believed, and all justifiable inferences are to be drawn in that party's favor.'" Hunt v. Cromartie, 526 U.S. 541, 552 (1999) (quoting Anderson, 477 U.S. at 255); Miller, 454 F.3d at 987; Stegall v. Citadel Broad, Inc., 350 F.3d 1061, 1065 (9th Cir. 2003). Finally, to demonstrate a genuine issue, the opposing party "must do more than simply show that there is some metaphysical doubt as to the material facts. . . . 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.'" Matsushita, 475 U.S. at 587 (citation omitted).

DISCUSSION

A. Breach of Implied Covenant of Good Faith and Fair Dealing

Sherwin-Williams contends it is well-settled law in Ohio that a claim for breach of the implied covenant of good faith and fair dealing must be anchored to a breach of contract claim and cannot stand alone. In support of this, Sherwin-Williams cites Dawson v. Blockbuster, Inc., in which the Ohio Court of Appeals dismissed the plaintiff's claim for breach of the implied covenant of good faith and fair dealing because the complaint failed to allege a ...


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