United States District Court, M.D. Pennsylvania
MARTIN C. CARLSON, Magistrate Judge.
I. INTRODUCTION AND STATEMENT OF THE CASE
This litigation stems from a broken and embittered commercial relationship between two independent salesman, an equine-products company, and its founder.
The plaintiffs, Joe Pete Wells and Les Krutoff, have sued JPC Equestrian, Inc. ("JPC") and its President, Varun Sharma, alleging that the defendants breached the terms of sales representation contracts by failing to pay the Wells and Krutoff sales commissions for products they sold on behalf of JPC. Additionally, the plaintiffs allege that Sharma tortiously interfered with their contractual relations by causing another corporate entity that Sharma controlled to engage in sales activity in the plaintiffs' assigned territories, thereby undercutting the commissions that they would have received from JPC.
After the preliminary disposition of a number of claims, the parties engaged in fact discovery, which has now concluded. Following that discovery, the parties have filed cross motions for summary judgment, which are now ripe for disposition. For the reasons that follow, we conclude that the plaintiffs' contract claims are replete with disputed issues of fact, and that the resolution of these disputes must await trial. The defendants insist that the record fails to support the plaintiffs' claims that there was mutual assent to support the contracts, or otherwise that the record should compel the conclusion that the plaintiffs waived their contract claims long ago by failing to pursue contractual remedies for years. We disagree that the record compels such a conclusion, and instead find that the contract claims in this case turn on the resolution of numerous disputed issues in the record, making summary judgment unwarranted.
In contrast, we agree with the defendants that there is insufficient evidence to support the plaintiffs' tortious interference claims, and will enter summary judgment in Sharma's favor on these claims alone.
II. FACTUAL BACKGROUND
The background facts relevant to this dispute begin nearly thirteen years ago, and many do not seem to be seriously disputed.
A. JPC's Business and Operations
Varun Sharma is a native of India and, since 1992, has operated two businesses in that country. These businesses manufacture and sell equestrian-related supplies, clothing, and equipment. Sales from these businesses extend worldwide, and are primarily directed at wholesalers, who then sell the products to retailers.
One of the businesses that Sharma has operated in India is a company called JPC ("JPC-India"). JPC-India is a partnership, in which Sharma owns 90% and his son owns the remaining 10%. JPC-India primarily sells its products to wholesalers but sometimes sells to retailers as well. (Doc. 36, Affidavit of Varun Sharma ("Sharma Aff.") ¶¶ 1-5.)
In early 2002, Sharma came to the United States to establish a new business known as JPC Equestrian, Inc ("JPC"). On February 4, 2002, JPC was incorporated under the laws of Pennsylvania. JPC is a wholly owned subsidiary of Cotton Naturals India Ltd. Sharma owns 90% of Cotton Naturals, and his son owns the remaining 10%. Sharma is the President of JPC, which has its principal place of business in Drums, Pennsylvania. (Sharma Aff. ¶¶ 6-8.)
JPC sells equestrian-related supplies, clothing, and equipment to retailers in the United States. Its purchases inventory from JPC-India and then sells the product to retail-store customers. (Sharma Aff. ¶ 9.) Since it was established in the United States in 2002, JPC has used independent sales representatives to make many, but not all, of its sales. These sales representatives are assigned territories in which they are responsible for marketing and selling JPC product. (Sharma Aff. ¶ 10.) In order to market JPC products, sales representatives purchase product samples from JPC and then show those samples to customers. (Sharma Aff. ¶ 12.) The sales representatives are all independent contractors, and are paid solely through commissions on sales made to customers. (Id. ¶ 15.)
Although many of JPC's sales are made through sales representatives, some sales are made through the company's customer service department. Customers who purchase products through JPC's customer service department are known as "house accounts." (Id. ¶ 13.) JPC has used house accounts since 2003. House accounts are generally internet-based accounts or customers who have asked to deal directly with JPC's customer service department. (Id. ¶ 14.)
Generally, sales representatives receive 10% sales commissions. However, because sales to house accounts are made through JPC's customer service department, sales representatives do not receive commissions on these sales. They also do not receive commissions on close-out sales or other liquidation sales. (Id. ¶¶ 16-17.) Sales representatives also receive reduced commissions for bigger, nation-wide customers who are not house accounts, but who consistently buy large quantities of product at a discount. Commission payments for sales to these larger accounts "generally equals" 5% of the sale price. (Id. ¶ 17.)
B. The Plaintiffs' Relationship with JPC and Sharma
As Sharma was preparing to enter the equine-products market in the United States, he consulted with a lawyer in New Hampshire, who provided him with a form document that was entitled "Sales Representation Agreement, " which the lawyer suggested could be exchanged with the independent sales representatives that Sharma intended to use to market and sell products on behalf of JPC in the United States.
In January 2002, Sharma arranged to meet with the plaintiffs and other sales representatives in the business at a trade show in King of Prussia, Pennsylvania. (Sharma Aff. ¶ 25; Wells Dep. at 46-47; Krutoff Dep. at 29.) Sharma had some familiarity with the plaintiffs due to their involvement in the equine business, specifically as sales representatives for another equestrian-supply wholesaler, English Equestrian Group ("EEG"), and they met during the convention to discuss the possibility of the plaintiffs representing JPC's product line as independent sales representatives. Sharma recalls have some "general discussions" with the plaintiffs about how the prospective company would operate, what types of products representatives would be expected to sell, and how the representatives would market product and get paid for sales. (Sharma Aff. ¶ 25; Wells Dep. at 46-47; Krutoff Dep. at 25-31.) Although no agreements were reached at this meeting, Sharma claims that in April "without discussing any particulars about the company with me, plaintiffs said they would serve JPC Equestrian as independent sales representatives." (Sharma Aff. ¶¶ 25, 27.)
To memorialize this new business relationship, sometime in 2002, after the plaintiffs had begun marketing product on JPC's behalf, Sharma "inserted plaintiffs' respective names and addresses" into the "document template" for a sales representation agreement that Sharma had been provided by the New Hampshire lawyer, entitled "Sales Representation Agreement, " which purported to outline the parties' relationship. None of the parties has produced a copy of the Agreement signed by all parties; instead, Wells has submitted a copy that does not bear his own signature, and Krutoff has not provided a copy of the Agreement that he received and further represents that his copy was not signed by Sharma or anyone else at JPC. (Doc. 1; Wells Dep. at 53; Krutoff Dep. at 40:15-19.) The plaintiffs testified during their depositions that they considered the Agreement to be a formality, which they even deemed to be "unnecessary, " and which was largely "forgotten about." (Krutoff Dep. at 36:6-12; 39:22-24; 62:2-3; Wells Dep. at 58:20-24.) It appears that none of the parties engaged in any discussions regarding the terms of the Agreement itself. (Krutoff Dep. at 36:19-23 ("there was no discussion about it. It was just a formality"); Wells Dep. at 57:19-25; 58:1-5 ("I don't recall discussing it that much at all, really. I don't recall").) Although he inserted the plaintiffs' names into the Agreement and sent a copy to each of the plaintiffs, Sharma now claims that "subjectively speaking, I, on behalf of JPC Equestrian, never intended for the purported terms of the Document to govern JPC Equestrian's relationship with the plaintiffs." (Sharma Aff. ¶ 32.) Sharma does not explain why, if that was the case, he prepared the Agreement and sent the same to the plaintiffs for their signature.
Although the defendants seem to dispute that Wells and Krutoff ever executed the Agreement, both Wells and Krutoff have testified that they did so. Wells testified as follows:
I got a call or an e-mail - and I'm not sure which - from Nina DePetris, the vice president, asking had I returned it. And I said, No, I don't even know where the thing is at the moment, Nina. I don't know if it's in one of my briefcases or one of my vehicles. I'll have to find it. She said, Well, we're going to overnight you another copy of it. If you will just sign it and put it in the return mail. I said, I'll do it. And that is was happened.
So therefore, when I finally found this one [i.e., the copy attached to the complaint] in a briefcase I had discarded - not discarded; quit using - I just happened to have it, which meant nothing to me at the time. But I sad, well, I'll just keep it anyhow. So that's how come. There is no reason for this one to be signed, because I never did get around to returning this one. The one that was sent back to them definitely was signed by me and dated.
(Wells Dep. at 52-53.) Krutoff likewise testified that he received a copy of the Agreement, which he signed and returned to the company. (Krutoff Dep. at 35-36.) Nevertheless, in marked contrast, Sharma testified that he never received a signed copy of the Agreement from either of the plaintiffs. (Sharma Aff. ¶¶ 30-31.)
Pursuant to the terms of the Agreement,  the plaintiffs agreed to be engaged as sales representatives for JPC as independent contractors. Wells' Agreement provided that he would act as an independent marketing representative for JPC products, in a defined territory of Maryland, Virginia, North Carolina, and South Carolina. Krutoff represents that pursuant to the Agreement that he received, he would serve as a marketing representative in Pennsylvania, New York, New Jersey, and Delaware.
The plaintiffs also claim that they had substantive discussions with Sharma about the terms of their Agreements and relationship with JPC, and the plaintiffs' version of these discussions differed markedly from that recalled by Sharma. Thus, Wells testified during his deposition that Sharma assured him that he would be paid a 10% commission on all sales made within his territory, and that Sharma agreed to furnish Wells with samples at no charge to enable him to "get right out and go" begin marketing and selling on JPC's behalf. (Wells Dep. at 47-48.) Krutoff similarly testified that he made it clear to Sharma that he wanted a 10% commission on all sales within his territory, which was exclusive, and that there would be no house accounts on which commissions would not be paId. ...