G.P.P., Inc. v. Guardian Protection Products

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 3, 2019
• Docket: 18-15179
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS OCT 3 2019 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

G.P.P. INC., D/B/A Guardian Innovative No. 18-15179 Solutions, D.C. No. Plaintiff-Appellant, 1:15-cv-00321-SKO

v. MEMORANDUM* GUARDIAN PROTECTION PRODUCTS, INC.; RPM WOOD FINISHES GROUP INC.,

Defendants-Appellees.

Appeal from the United States District Court for the Eastern District of California Sheila K. Oberto, Magistrate Judge, Presiding

Argued and Submitted September 13, 2019 San Francisco, California

Before: GOULD, BEA, and FRIEDLAND, Circuit Judges.

Distributor G.P.P. Inc., d/b/a Guardian Innovative Solutions (“GIS”),

appeals the district court’s (1) denial of GIS’s motion for summary judgment as to

its claim that manufacturer Guardian Protection Products, Inc. (“Guardian”)

wrongfully terminated three distribution agreements, (2) partial grant of

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Guardian’s motion for summary judgment as to Guardian’s counterclaim for

declaratory relief regarding electronic warranties (known as “EFPPs”) with respect

to three distribution agreements, and (3) grant of Guardian’s motion for judgment

as a matter of law as to Guardian’s alleged breach of the purported agreement to

pay a 5% commission (the “Bob’s Commission”) with respect to three distribution

agreements.

(1) The district court, in its order denying GIS’s motion for summary

judgment, erred in determining that the Florida, Alabama, and Tennessee

Agreements require GIS to meet per-territory purchase quotas. California law

required the district court to consider the evidence offered by GIS to show the

parties’ course of performance with respect to the purchase quotas when

interpreting the Agreements. See Pac. Gas & Elec. Co. v. G. W. Thomas Drayage

& Rigging Co., 442 P.2d 641, 644 (Cal. 1968); see also Cal. Com. Code § 1303(f);

Cal. Civ. Proc. Code § 1856(c) (West). The district court refused to consider this

evidence and instead relied on language in the Florida Agreement (which was

located in an addendum executed four months after the Agreement itself) that

stated merely what the purchase quota would be, upon the addition of the

remaining counties in Florida, for representing the whole State of Florida. And, in

interpreting the Alabama and Tennessee Agreements, the district court mistook

GIS’s right to represent Guardian in those States with an obligation to satisfy

2 purchase quotas specifically allocated to them. In short, the contractual provisions

cited by the district court do not impose a per-territory purchase requirement on

GIS. Because the written terms of the Agreements do not exclude an interpretation

that the purchase quotas are calculated in the aggregate, the undisputed facts of the

parties’ course of performance is evidence of the parties’ expressed intent as to

what constitutes performance, and the district court should have interpreted the

Agreements to require that GIS meet only aggregate purchase quotas. See Pac.

Gas & Elec. Co., 69 Cal. 2d at 37–38. Nonetheless, given that there was at least a

triable issue on the amount of any damages suffered by GIS, the district court

correctly denied GIS’s motion for summary judgment. Fed. R. Civ. P. 56(a); see

also Dep’t of Indus. Relations v. UI Video Stores, Inc., 64 Cal. Rptr. 2d 457, 464

(Ct. App. 1997). Still, the district court’s denial of summary judgment should not

have foreclosed GIS from proffering evidence and arguing at trial that the

Agreements permit aggregate quotas. Accordingly, we reverse and remand to the

district court for trial on GIS’s claim that Guardian breached the three Agreements.

(2) The district court also erred in granting partial summary judgment to

Guardian on its argument that EFPPs were not covered under the Florida, Mid-

Atlantic, and Cook County Agreements. The district court reasoned that EFPPs

were not listed on any of the “Exhibit[s] which [were] attached [t]hereto” or on any

“mutually agreed upon Addend[a] [t]hereto.” Neither party raised this language in

3 its briefing to support its motion for summary judgment because the exhibits

attached to those Agreements are copies of Guardian’s product list that was current

at the time the Agreements were executed in 1988—before EFPPs were invented.

As with the purchase quotas issue, California law required the district court to

consider the evidence offered by GIS at summary judgment showing that the

parties impliedly modified the Agreements to cover EFPPs. Because GIS should

have the opportunity to present this evidence to a jury, we therefore reverse the

district court’s partial grant of summary judgment to Guardian on its EFPPs

counterclaim and remand it for trial.

(3) The district court also erred in granting judgment as a matter of law to

Guardian on Guardian’s argument that the purported agreement to pay the Bob’s

Commission was not supported by consideration in the territories covered by the

Florida, Mid-Atlantic, and Cook County Agreements. The district court made this

determination on the same grounds it ruled on the EFPPs: that, because a product

known as “Bob’s Goof Proof” was not on the originally attached Exhibits to these

Agreements or any Addenda, they did not provide GIS the exclusive right to sell it,

and thus GIS’s permission for Guardian to sell it to Bob’s Discount Furniture

Stores in these three territories could not constitute valid consideration. First, even

if the district court were ultimately correct in determining that GIS did not have the

exclusive right to sell Bob’s Goof Proof under these Agreements, this would not

4 mean that the agreement to pay the Bob’s Commission was not supported by

consideration: Under California law, the relinquishment of a legal claim at the time

an agreement is made is valid consideration for that agreement. See, e.g., In re

Estate of Bennett, 78 Cal. Rptr. 3d 435, 441–42 (Ct. App. 2008). Guardian

conceded in the district court that the Bob’s Commission was intended “to

accommodate GIS’s gripe.” Second, the district court erred as a matter of law to

the extent that it ruled on the validity of GIS’s consideration on a per-territory

basis. So long as GIS made a single valid promise not to assert its exclusivity

rights, this would constitute valid consideration for a promise made by Guardian to

pay the Bob’s Commission. See Martin v. World Sav. & Loan Ass’n, 112 Cal. 2d

225, 229 (Ct. 2001). We therefore reverse the district court’s grant of judgment as

a matter of law to Guardian as to this issue and remand it for retrial.1

REVERSED and REMANDED FOR TRIAL.

1 We deny as moot Guardian’s motion to strike portions of GIS’s opening brief and excerpts of record.