Allan Block Corp. v. County Materials Corp.

239 F.R.D. 523, 2006 U.S. Dist. LEXIS 87336, 2006 WL 3505529
CourtDistrict Court, W.D. Wisconsin
DecidedDecember 1, 2006
DocketNo. 06-C-476-S
StatusPublished

This text of 239 F.R.D. 523 (Allan Block Corp. v. County Materials Corp.) is published on Counsel Stack Legal Research, covering District Court, W.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allan Block Corp. v. County Materials Corp., 239 F.R.D. 523, 2006 U.S. Dist. LEXIS 87336, 2006 WL 3505529 (W.D. Wis. 2006).

Opinion

MEMORANDUM AND ORDER

SHABAZ, District Judge.

Plaintiff Allan Block Corporation commenced this breach of contract action against [525]*525defendant County Materials Corporation seeking monetary and injunctive relief. Jurisdiction is based on 28 U.S.C. § 1332(a)(1). The matter is presently before the Court on defendant’s motions for summary judgment.1 The following facts are either undisputed or those most favorable to plaintiff.

BACKGROUND

Plaintiff Allan Block Corporation is a Minnesota corporation with its principal place of business in Edina, Minnesota. Defendant County Materials Corporation is a Wisconsin corporation with its principal place of business in Marathon, Wisconsin. In April of 1993 plaintiff entered into a production agreement (hereinafter the 1993 agreement) with County Concrete Corporation. Said agreement was subsequently assigned to defendant with plaintiff’s approval. Additionally, in October of 1997 plaintiff entered into a production agreement (hereinafter the 1997 agreement) with Quality Concrete Products, Inc (hereinafter Quality). Plaintiff alleges defendant assumed the 1997 agreement in 2004 when it purchased Quality’s assets. However, defendant vigorously disputes that it assumed the 1997 agreement when said purchase occurred.

Both the 1993 agreement and the 1997 agreement contain a covenant not to compete provision. The covenant not to compete contained within the 1993 agreement provides as follows:

The parties agree that during the term of this agreement and for a period of eighteen months following the termination of this agreement, [defendant] will not directly or indirectly engage in the manufacture and/or sale of any other mortarless, stack-able, concrete block retaining wall product, with the following exceptions: 1) The Ver-sa-lok product line for resale, 2) Manufacture, market and promote the “Wall Block” product currently in production at their facility.

While the covenant not to compete contained within the 1997 agreement is similar to the one included within the 1993 agreement, the two provisions are not identical. Accordingly, the covenant not to compete contained within the 1997 agreement provides as follows:

The parties agree that during the term of this Agreement, and for a period of eighteen (18) months following the termination of this Agreement, Producer will not directly or indirectly engage in the manufacture and/or sale of any other mortarless, stackable, concrete block wall products in the Territory, except with written consent of Licensor.

Additionally, both the 1993 agreement and the 1997 agreement contain sections entitled “Events of Default” identified as section nine in the 1993 agreement and as section thirteen in the 1997 agreement. Section nine of the 1993 agreement provides in relevant part as follows:

9. EVENTS OF DEFAULT

9.1 Each of the following shall entitle the nondefaulting party to declare an “Event of Default”:
... 9.1.3 Either party shall fail to keep, observe or perform any other covenant or provision of, or otherwise shall have breached any provision of this Agreement, not relating to the payment of money, but including specifically the standards set forth in Exhibit A, and shall have failed to cure such a default within ten (10) days after notice from the other party
... 9.2 Upon declaration of an Event of Default, the nondefaulting party may, but shall not be obligated to, terminate this Agreement and seek all remedies available to it at law or in equity....

Again, while the “Events of Default” section contained within the 1997 agreement is similar to the one included within the 1993 agreement, its language is not identical. The “Events of Default” section contained within the 1997 agreement provides in relevant part as follows:

13. Events of Default:

[526]*526Each of the following shall entitle the nondefaulting party to declare an “Event of Default:”
... 13.3 Either party shall fail to keep, observe, or perform any other covenant or provision of this Agreement not relating to the payment of money, and including specifically the terms of Sections 4.4, 10.5,11.5, violations of the Product Control Standards set forth in Exhibit B, and shall have failed to cure such a default within thirty (30) days after notice from the other party.

Accordingly, the “Events of Default” section contained within the 1997 agreement does not contain the procedure for termination language included in section nine of the 1993 agreement.

However, declaring an event of default is not the exclusive method for terminating either the 1993 agreement or the 1997 agreement. Rather, both agreements provide for termination pursuant to section five which states in relevant part as follows:

The initial term of this Agreement will be one year [three years for the 1997 agreement] from the date set forth in Section 1 and will continue thereafter until terminated as provided herein. In addition to the right to terminate as provided in Section 9, [Section 13 for the 1997 agreement] either party shall have the right to terminate this Agreement at the expiration of the one year period [three year period for the 1997 agreement] or anytime thereafter, with or without cause, by giving at least one-hundred-twenty (120) days prior written notice to the other party of its intent to terminate the Agreement.

Additionally, both the 1993 agreement and the 1997 agreement contain a section entitled “Procedures after Termination” which provides in relevant part as follows:

In the event of any termination of this Agreement, whether pursuant to Section 5 or Section 9 [Section 13 for the 1997 agreement] or otherwise ... Any termination of this Agreement shall be without prejudice to any monies due or to become due to Licensor under this Agreement, and without prejudice to any other rights of Li-censor.

On April 27, 2005 plaintiff notified defendant of its intent to terminate the 1993 agreement pursuant to section five. Accordingly, the 1993 agreement actually terminated on August 25, 2005. At the time of termination, defendant was aware that a considerable market for landscape block existed. As such, defendant began designing a new block that would be comparable to plaintiffs block. Defendant completed its initial design work for a new mortarless stackable concrete block retaining wall product (subsequently named “Victory” block) in or about May of 2005. Defendant’s intent was to introduce its new block into the market it previously served with plaintiffs products. Defendant’s Victory block product was neither a Versa-lok nor a Wall Block product.

On November 16, 2005 defendant commenced a declaratory judgment action against plaintiff in this Court (hereinafter the 2005 action) seeking a declaration that the covenant not to compete contained within the 1993 agreement was invalid and unenforceable. The covenant not to compete contained within the 1997 agreement was not at issue in the 2005 action. Defendant had not begun production of its Victory block product when plaintiff filed its answer in the 2005 action.

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Bluebook (online)
239 F.R.D. 523, 2006 U.S. Dist. LEXIS 87336, 2006 WL 3505529, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allan-block-corp-v-county-materials-corp-wiwd-2006.