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

District Court, E.D. California·Decided May 26, 2020·No. 1:15-cv-00321·Unknown

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

G.P.P., INC. d/b/a GUARDIAN INNOVATIVE SOLUTIONS,

Plaintiff,

v.

GUARDIAN PROTECTION PRODUCTS, Case No. 1:15-cv-00321-SKO INC., Defendants. ORDER GRANTING PLAINTIFF’S _____________________________________/ SUPPLEMENT THE COMPLAINT (Doc. 359)

INC.,

Counterclaimant, v. G.P.P., INC. d/b/a GUARDIAN Counter-defendant. _____________________________________/ This matter is before the Court on Plaintiff G.P.P., Inc. d/b/a Guardian Innovative Solutions’ (“Plaintiff” or “GIS”) motion for leave to supplement the complaint filed on February 10, 2020. (Doc. 359.) Defendant Guardian Protection Products, Inc. (“Defendant” or “Guardian”) filed an opposition on March 2, 2020, (Doc. 362), and GIS filed a reply on March 9, 2020, (Doc. 363). For the reasons set forth below, the motion is granted.1 I. RELEVANT BACKGROUND2 A. Factual Background GIS is a business that has purchased products from Guardian for over thirty years. Guardian is a Delaware company with its principal place of business in North Carolina that sells furniture and upholstery protection products, furniture warranties, and other related items to distributors such as GIS, who sell the items to retailers and other businesses. (Doc. 67 ¶¶ 1-2.) In 2000, Guardian was acquired by RPM International, Inc. (“RPM”). (Id. ¶ 2.) Between 1988 and 2010, GIS and Guardian entered into, either directly or by assignment, a total of nine warehousing distributor agreements covering the territories of the Mid-Atlantic, Cook County, Indiana, Midwest, Pennsylvania, Florida, Alabama, Tennessee, and Ohio. (See id. ¶¶ 6–11.) Each agreement would renew automatically so long as GIS met a certain purchasing requirement.3 (See id.) GIS alleged a series of wrongful acts by Guardian, including (1) franchise disclosure violations; (2) refusal to pay commission due GIS; and (3) improperly terminating the Alabama, Florida, and Tennessee agreements in October 2013 and threatening to terminate the remaining agreements beginning in December 2014, based upon GIS failing to meet per territory purchase 1 The parties consented to the jurisdiction of a U.S. Magistrate Judge for all purposes. (Docs. 11, 12.) 2 The Court has previously provided extensive discussions regarding the factual and procedural background of this case. (See, e.g., Doc. 133 at 2–10.) Only the factual and procedural background relevant to the motion before the court is provided here. Unless otherwise noted, the factual background summarizes GIS’s allegations as set forth in the second amended complaint (“SAC”), as well as the parties’ briefs related to the motion to supplement the SAC. (Docs. 67, 359, 362, 363.) 3 GIS maintains that it was only required to meet an annual purchase requirement in the aggregate across all territories. (See Doc. 359-1 at 6.) Guardian contends that the purchase requirement is properly measured as per quotas in the applicable territories. (See id. ¶¶ 13–27.) GIS further alleged that Guardian violated the agreements by directly selling products in GIS’s exclusive territory to retail locations associated with Bob’s Discount Furniture. (Id. ¶¶ 14–16.) To resolve this dispute, GIS and Guardian agreed that Guardian would pay GIS a five percent commission on all sales of Guardian’s products made to Bob’s Discount Furniture, but Guardian stopped making this payment in December 2014. (See id.) B. Procedural Background GIS filed this case on February 27, 2015, (Doc. 1), and filed the operative second amended complaint (“SAC”) on July 29, 2016, (Doc. 67). The SAC included the following claims: (1) breach of contract relating to the purported termination of the Florida, Alabama, and Tennessee agreements, (see id. ¶¶ 53–57); (2) breach of the implied covenant of good faith and fair dealing as to the Florida, Alabama, and Tennessee agreements, (see id. ¶¶ 58–64); (3) breach of contract relating to the Bob’s Discount Furniture agreement, (see id. ¶¶ 65–69); (4) breach of the implied covenant of good faith and fair dealing as to the Bob’s Discount Furniture agreement, (see id. ¶¶ 70–75); (5) a claim alleging that termination of the Cook County agreement would violate the Illinois Franchise Disclosure Act, (see id. ¶¶ 76–90); (6) a claim alleging violation of California Business and Professions Code Sections 17200 to 17210, (see id. ¶¶ 91–108); (7) a claim alleging a violation of the California Franchise Investment Law (the “CFIL”), (see id. ¶¶ 109–127); (8) breach of the implied covenant of good faith and fair dealing relating to the threatened termination of the Pennsylvania, Mid-Atlantic, Ohio, Cook County, Indiana, and Midwest agreements, (see id. ¶¶ 128–133); (9) breach of contract as to the Mid-Atlantic agreement, (see id. ¶¶ 134–138); and (10) tortious interference with contract against only Defendant RPM, (see id. ¶¶ 139–146). GIS requested the following relief in the SAC: (1) “[a] declaration that the Alabama, Florida, and Tennessee Agreements were not properly terminated and are currently valid and in full effect”; (2) “[a] declaration that termination of the Cook County, Illinois, Mid-Atlantic, and Midwest Agreements would violate state law”; (3) compensatory, treble, and punitive damages; (4) pre- judgment interest; and (5) attorneys’ fees and costs. (Id. at 26.) Guardian also filed counterclaims, which include the following: (1) requests for declaratory relief regarding (a) “[w]hether Guardian is entitled to immediately terminate the . . . Agreements due to [GIS’s] breaches of their express and implied terms,” (b) “[w]hether [electronic furniture protection plans (“EFPPs”)] qualify as a Guardian Product within the scope of the rights granted by the . . . Agreements,” (c) “[if] the [EFPPs] are within the scope of the . . . Agreements, whether Guardian may establish a purchase quota for the [EFPPs] above that applicable to the [o]riginal [p]roducts,” and (d) “[w]hether [GIS] has used its best efforts to promote the sale of Guardian Products in the exclusive distribution territories established by the . . . Agreements,” (Doc. 36 ¶¶ 26–30); (2) breach of the Florida, Alabama, and Tennessee agreements, (see id. ¶¶ 31–34); (3) breach of the implied covenant of good faith and fair dealing as to the Florida, Alabama, and Tennessee agreements, (see id. ¶¶ 35–38); (4) breach of the Pennsylvania, Mid-Atlantic, Ohio, Cook County, Indiana, and Midwest Agreements, (see id. ¶¶ 39–42); (5) breach of the implied covenant of good faith and fair dealing as to the Pennsylvania, Mid-Atlantic, Ohio, Cook County, Indiana, and Midwest agreements, (see id. ¶¶ 43–46); and (6) breach of California Commercial Code Section 2306, (see id. ¶¶ 47–50). In its counterclaims, Guardian requested declaratory relief, as well as compensatory damages, pre-judgment interest, and attorneys’ fees and costs. (Id. at 36.) On January 18, 2017, the Court granted in part and denied in the part the parties’ cross motions for summary judgment, (Docs. 92, 93, 98), and dismissed GIS’s fifth and seventh causes of action, Guardian’s sixth counterclaim, and certain other partial claims. (Doc. 133 at 78; see also Doc. 161) (granting in part cross-motions for reconsideration and modifying portions of summary judgment order).) Relevant to GIS’s current motion, the Court determined that the Florida, Alabama, and Tennessee agreements required GIS to meet monthly, per-territory purchase quotas, as opposed to an annual, aggregate quota. (Doc. 133 at 18.) The Court further found that as to the Florida, Mid-Atlantic and Cook County agreements, purchases of EFPPs should not be counted towards GIS’s purchase quota. (Id. at 71; Doc. 161 at 4–5.) On May 9, 2017, the Court denied Defendants’ successive motion for partial summary judgment. (See Doc. 200.) The jury trial commenced on June 20, 2017, (Doc. 260), and the jury returned a verdict on June 29, 2017, (Doc. 281). The jury found against Plaintiff on all the

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G.P.P., Inc. v. Guardian Protection Products, Inc., (E.D. Cal. 2020).

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