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TERSCO, INC. v. E.I. DUPONE DE NEMOURS & CO.

November 5, 1992

TERSCO, INC.
v.
E.I. DUPONE DE NEMOURS AND COMPANY



The opinion of the court was delivered by: LOUIS C. BECHTLE

 BECHTLE, CH. J.

 Presently before the court is defendant E.I. DuPont de Nemours and Company's ("DuPont") motion to dismiss the complaint of plaintiff Tersco, Inc. ("Tersco"). For the reasons set forth below, the court will dismiss with prejudice count one of the complaint only insofar as it asserts a claim for breach of an implied covenant of good faith and fair dealing and seeks punitive damages. All other aspects of count one shall proceed as stated in the complaint. In addition, the court will dismiss without prejudice count two of the complaint and count three of the complaint insofar as count three asserts a claim for breach of an express warranty. Finally, the court will dismiss with prejudice count three of the complaint insofar as it asserts a claim for breach of an implied covenant of good faith and fair dealing.

 BACKGROUND

 In this diversity action, DuPont, a Delaware corporation with its principal place of business in Wilmington, Delaware, moves to dismiss, pursuant to Fed.R.Civ.P. 12(b)(6), the claims of Tersco, a Texas corporation whose corporate headquarters are located in Philadelphia, Pennsylvania, for breach of contract, tortious interference with business and contractual obligations, and breach of express and implied warranties.

 Pursuant to section 12 of the Agreement, the Appointment and Agreement became effective on January 1, 1991, continued in full force and effect until December 31, 1991, and then remained effective "from year to year thereafter, unless and until terminated with at least ninety (90) days' prior written notice given by either party to the other." See Complaint, Exhibit A, at P 12.

 Tersco alleges that, on or about April 10, 1992, DuPont breached the Agreement by way of a letter, dated April 10, 1992, from Daniel J. Lauritis, a sales manager for DuPont. DuPont informed Tersco that, effective July 9, 1992, DuPont would terminate the Agreement. Tersco alleges that DuPont wrongfully terminated the Agreement on or about July 9, 1992, and refused to comply in any way with the terms of the Agreement, thus causing Tersco to suffer damages.

 MOTION TO DISMISS STANDARD

 When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court must accept as true all well-pleaded allegations contained in the complaint, and must construe them in a light most favorable to the plaintiff. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1410 (3d Cir.), cert. denied, 111 S. Ct. 2839 (1991). The claim will be dismissed only where it appears that the plaintiff has alleged no set of facts in support of the claim which would entitle him to relief. Id.

 DISCUSSION

 a. Choice of Law

 As this is a diversity case, a court sitting in the Eastern District of Pennsylvania must look to the choice of law rules of Pennsylvania to decide what law is to be applied to the Agreement. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941). In Melville v. American Home Assur. Co., 584 F.2d 1306 (3d Cir. 1978), the Third Circuit concluded that Pennsylvania had replaced the "vested rights" approach to choice-of-law analysis in contract actions with a more flexible hybrid approach combining governmental interest analysis with the grouping-of-contracts approach adopted in the Restatement (Second) of Conflict of Laws. Id. at 1311-12. Therefore, the state that has the most interest in settling the dispute and which is the most concerned with its outcome is the state whose law should be applied. Id.

 In this case, Tersco's complaint concerns the interpretation of an Agreement which authorized Tersco to sell DuPont's products at "authorized locations." Importantly, pursuant to the Agreement, each authorized location to which Tersco, a corporation organized under the laws of Texas, was entitled to sell, was located in Texas. This is significant in determining which law to apply because the "state where performance is to occur under a contract has an obvious interest in the nature of the performance and in the party who is to perform." See Restatement (Second) of Conflict of Laws, § 188, Comment on Subsection (2). Moreover, it is significant that Tersco and DuPont ...


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