Blackstone Medical, Inc. D/B/A Orthofix Spinal Implants v. Phoenix Surgicals, LLC

470 S.W.3d 636, 2015 WL 4472893
CourtCourt of Appeals of Texas
DecidedJuly 27, 2015
Docket05-13-00870-CV
StatusPublished
Cited by95 cases

This text of 470 S.W.3d 636 (Blackstone Medical, Inc. D/B/A Orthofix Spinal Implants v. Phoenix Surgicals, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Blackstone Medical, Inc. D/B/A Orthofix Spinal Implants v. Phoenix Surgicals, LLC, 470 S.W.3d 636, 2015 WL 4472893 (Tex. Ct. App. 2015).

Opinion

OPINION

Opinion by Justice Lang

Blackstone Medical, Inc. d/b/a Orthofix Spinal Implants appeals the trial court’s final judgment incorporating the jury verdict and award of $705,232.80 in damages in favor of Phoenix Surgieals, L.L.C. In three issues, Orthofix argues the trial court erred when it denied Orthofix’s motions for directed verdict and judgment notwithstanding the verdict because: (1) the statute of frauds precluded, as -a matter of law, Phoenix’s claims for breach of contract due to wrongful termination of the agreement and promissory estoppel; (2) the trial court applied an improper measure of damages and there is “no evidence to prove recoverable damages” under the correct measure of damages; and (3) the evidence is legally insufficient to support Phoenix’s claim for promissory es-toppel as to the expense of hiring of a sales “specialist.”

Phoenix filed a cross-appeal. In its sole issue on cross-appeal, Phoenix argues the trial court erred, as a matter of law, when it awarded Phoenix attorneys’ fees in an amount less than what Phoenix requested.

We conclude the trial court did not err when it denied Orthofix’s motion for a directed verdict and motion for judgment notwithstanding the verdict on Phoenix’s claims for breach of contract due to wrongful termination and promissory estoppel. Also, we conclude the trial court did not err when it declined to award Phoenix all of the requested attorneys’ fees. The trial court’s final judgment is affirmed.

I. FACTUAL AND PROCEDURAL BACKGROUND

Orthofix is a manufacturer and supplier of spinal implants, orthopedics, and biolog-ics-related medical products. Phoenix is an independent, multi-line distributor of medical products, including spinal implant devices. In March 2009, Orthofix and Phoenix executed a sales representative agreement. That agreement was effective from February 1, 2009 to December 31, 2011, with automatic renewal for additional one-year periods. Section 5(J) of the agreement prohibited Phoenix from selling undisclosed competing products:

J. During the Term of this Agreement, and except for those products identified in Exhibit C hereto (“Disclosure of Competitive Products Carried by Representative”), Representative shall not, without the prior written consent of Company, solicit sales of any product competitive with or similar to any of the Products, nor act as distributor, representative, agent, dealer or otherwise on behalf of any manufacturer of any such competitive or similar product. Representative shall keep the Company informed of all other companies or business establishments whose merchandise the Representative represents. In the event Company adds a new Product to this Agreement which competes with a third party product being carried or offered by Representative, Representative agrees to not renew its representation of such third party with respect to the competitive product upon the expiration or termination of such representation without obtaining the written consent of the Company.

In addition, section 9 contained provisions addressing the early termination of the agreement:

9. TERMINATION
*642 A. ' Termination for Cause. The following actions by or events involving [Phoenix] shall each- constitute a material breach of . this Agreement and give [Orthofix] an immediate right, but not obligation, to terminate this Agreement for cause:
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5. -Any material breach of obligations under this Agreement, including, but not limited to- any violation of the provisions of Section 5;
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B. Termination without Cause. Company may terminate this Agreement without cause by providing thirty (30) days’ written notice to [Phoenix]. In the event of termination without cause by [Orthofix], [Orthofix] shall pay to [Phoenix] a lump sum amount equal to the average monthly commission received by [Phoenix] during the previous six (6) months for each month that would have remained during the Term of this Agreement or one (1) year, whichever is shorter.

During the contractual relationship, Phoenix distributed and sold products manufactured by Orthofix’s competitors and Phoenix fully disclosed its sales activities to Orthofix. Also, during the contractual relationship, Orthofix and Phoenix discussed Phoenix hiring a “sales specialist” to exclusively sell Orthofix’s Trinity® Evolution™ biologies product in the Boston area. Orthofix and Phoenix discussed sharing the cost of Phoenix hiring this “sales specialist” for the first six months of employment. Based on this understanding, Phoenix hired a “sales specialist,” Cheri Malo, and paid her salary.

On August 26, 2010, Orthofix sent Phoenix a letter terminating their agreement. That letter stated, in part:

It has come to our attention that Phoenix Surgicals, LLC[>] .has been actively soliciting sales of competitive products in violation of the terms of the above-referenced agreement. In light of Phoenix’s material breach of its obligations, Blackstone hereby terminates the agreement for cause, effective immediately.
The agreement states that “Phoenix shall not, without the prior written Consent of Blackstone, solicit sales of any product competitive with or similar to any of the Products, nor .act as distributor, representative, agent, dealer or otherwise on behalf of any manufacturer of any such competitive or similar product.” Nevertheless, Phoenix has been actively soliciting sales of competitive products manufactured by at least the following Blackstone competitors:. Lanx, Orthovita, Spine Wave, Spinology, U.S. Spine, and Vertiflex. Such activity constitutes a material breach of the agreement.

(Footnotes omitted.)

On September 14, 2012, Phoenix filed its second amended petition, asserting several claims, including one for breach of contract due to wrongful termination. 1 Phoenix alleged, in part:

*643 Notwithstanding Orthofix’s contentions to the contrary, [Orthofix’s] termination of the [a]greement was done without cause or justification. Despite Phoenix having fulfilled all conditions precedent, Orthofix breached the [a]greement -by wrongfully and improperly terminating [Phoenix] without justification or cause. ■ As a result, Orthofix has proximately caused, and continues to cause, Phoenix direct and consequential damages ...

The crux .of Phoenix’s wrongful termination claim was that Orthofix breached the agreement when it claimed it was terminating the agreement “with cause” because “Phoenix had been soliciting the sales of products of Orthofix’s competitors” in violation of the agreement’s exclusivity provision. Phoenix asserted that Orthofix terminated the agreement “without cause,” in part, because. Orthofix was fully aware that Phoenix was selling competitor’s products and waived enforcement of the exclusivity provision prohibiting the sale of competitor’s products.

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Cite This Page — Counsel Stack

Bluebook (online)
470 S.W.3d 636, 2015 WL 4472893, Counsel Stack Legal Research, https://law.counselstack.com/opinion/blackstone-medical-inc-dba-orthofix-spinal-implants-v-phoenix-texapp-2015.