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Craftsman Chemical Corp. v. IVC Industrial Coatings, Inc.

United States District Court, S.D. Indiana, Terre Haute Division

January 25, 2017

CRAFTSMAN CHEMICAL CORP., and MICHAEL MALONEY, Plaintiffs,
v.
IVC INDUSTRIAL COATINGS, INC., and PPG INDUSTRIES, INC., Defendants.

          ORDER

          LARRY J. McKINNEY, JUDGE

         This matter comes before the Court on Defendant IVC Industrial Coatings, Inc.'s (“IVC's”), Motion for Partial Summary Judgment, Dkt. No. 67; and on Defendant PPG Industries, Inc.'s (“PPG's”), Motion for Summary Judgment. Dkt. No. 64. For the reasons set forth below, the Court GRANTS in part and DENIES in part IVC's Motion for Partial Summary Judgment and GRANTS PPG's Motion for Summary Judgment.

         I. BACKGROUND

         Plaintiff Craftsman Chemical Corporation (“Craftsman”) is a corporation, owned by Plaintiff Michael Maloney (“Maloney, ” and collectively with Craftsman, the “Plaintiffs”), that specializes in selling pretreat chemicals and serves as an independent sales representative for other chemical and paint suppliers. Dkt. No. 68 at 2; Maloney Dep., 11:6-11. In the winter of 2010, Maloney contacted IVC's President, Michael McCracken (“McCracken”), about the possibility of Craftsman acting as an independent sales representative for IVC. Maloney Dep., 80:18-81:12. While discussing this possibility with McCracken, Maloney indicated that he had an existing business relationship with Lozier Corporation (“Lozier”), a potential buyer of IVC's powder paints. Maloney Dep., 82:3-5, 85:4-10; McCracken Dep., 32:25-33:6. Based on Maloney's existing relationship with Lozier, McCracken told Maloney that if Craftsman could acquire Lozier's business for IVC, IVC would pay Craftsman a commission for its sales to Lozier. Maloney Dep., 85:4-86:17.

         In early 2010, Craftsman began working for IVC as an independent sales representative with the goal of acquiring Lozier's business for IVC. Id. at 97:12-100:5. On March 3, 2010, Maloney introduced McCracken to Fred Lopez, the primary contact for Lozier. Maloney Dep., 93:9-11; McCracken Dep., 28:18-24, 32:11-24. However, while the conversations with Lozier were generally positive, Lozier believed IVC's prices were too high, and the parties were unable to agree to a deal. McCracken Dep., 29:2-31:19.

         On February 9, 2015, Fred Lopez contacted Maloney and McCracken asking for help after its powder paint supplier told Lozier it could no longer meet Lozier's needs. Maloney Dep., 134:21-24; McCracken Dep., 31:20-32:10. In light of Lozier's emergent situation, IVC secured Lozier's business and began supplying powder paint to Lozier's facilities in Missouri, Pennsylvania, Nebraska, and Alabama in March 2015.[1] Dkt. No. 69, Ex. D.

         Although IVC had agreed to pay a commission to Craftsman if it was able to acquire Lozier's business, IVC and Craftsman did not establish the percentage of Craftsman's commission until Lozier began ordering from IVC. Maloney Dep., 107:5-13. On March 9, 2015, Maloney sent an email to McCracken, indicating that he believed a 3.5% commission was appropriate for IVC's sales to Lozier and that a 2% commission seemed “too low for the time already spent and the time going forward needed.” Dkt. No. 69, Ex. E. McCracken responded to Maloney's email on March 10, 2015, saying that a 2% commission was “more than fair for the effort expended, and our expectations moving forward.” Id. Based on this exchange, IVC began paying Craftsman a 2% commission for IVC's sales to Lozier. Dkt. No. 69, Ex. F at 9; Maloney Dep., 28:14-16, 148:11-149:12.

         On June 11, 2015, PPG announced its plan to acquire IVC. Dkt. No. 41 at 3. By July 2015, McCracken had lost his patience with Craftsman, believing that it no longer added value to IVC's business, and informed PPG that he did not intend to retain Craftsman as an independent sales representative. McCracken Dep., 85:9-24.

         On August 7, 2015, Maloney sent an email to McCracken asking about Craftsman's continued status with IVC in light of PPG's acquisition. Dkt. No. 73, Ex. 5. That same day, Mark Price (“Price”), IVC's Regional Sales Manager who had worked with Plaintiffs since 2012, sent an email to PPG's Vice President of Industrial Coatings for the Americas, Kevin Braun (“Braun”), recommending that IVC discontinue its independent sales representative arrangement with Craftsman after PPG's acquisition of IVC was finalized. Dkt. No. 73, Ex. 6 at 1-2. Braun then asked McCracken if he agreed with Price's recommendation, and McCracken indicated that he did. Id. at 1. McCracken further indicated to Braun that he would communicate with IVC's attorney to determine how best to terminate IVC's relationship with Plaintiffs. Id.; Dkt. No. 73, Ex. 5.

         PPG officially acquired IVC on September 1, 2015. Dkt. No. 41 at 4. On October 1, 2015, after IVC had already recommended terminating its arrangement with Craftsman, McCracken asked Wyatt Aasen (“Aasen”), a representative of PPG, if IVC should pay Craftsman commissions for IVC's September sales to Lozier. Dkt. No. 73, Ex. 7 at 3. Aasen confirmed that IVC should pay those commissions to Craftsman because they did not “want to have a loose thread that [Maloney's] lawyers can pull.” Id. at 2.

         On November 10, 2015, IVC sent a letter to Craftsman to inform it that IVC was terminating its independent sales representative arrangement with Craftsman, effective December 18, 2015 (the “Termination Letter”). Dkt. No. 69, Ex. G; Dkt. No. 73, Ex. 8. In the Termination Letter, IVC agreed to pay Craftsman commissions for all sales to Lozier through the Termination Letter's effective date. Id. Craftsman received approximately $80, 000.00 from IVC in commission payments for sales to Lozier between March 2015, and December 18, 2015. Maloney Dep., 228:23-229:2.

         Upon being terminated by IVC, Plaintiffs commenced this action on December 31, 2015. Dkt. No. 1. In their Amended Complaint, Plaintiffs allege that Craftsman and IVC entered into an oral contract in early 2015, by which Craftsman would earn a 2% commission on all future sales between IVC and Lozier if Craftsman could secure Lozier's business for IVC (the “Commission Contract”).[2] Dkt. No. 35, ¶¶ 7-8. Plaintiffs allege that Craftsman fully performed its obligations under the Commission Contract by securing Lozier's business for IVC and that IVC breached the Commission Contract by failing to continue paying commissions to Craftsman after December 18, 2015. Id. at ¶¶ 20-25. Plaintiffs also allege that IVC was unjustly enriched as a result of Plaintiffs' efforts. Id. at ¶¶ 27-31. Furthermore, Plaintiffs seek declaratory judgment against IVC, declaring that the Commission Contract is a valid and enforceable contract that entitles Craftsman to a 2% commission on all of IVC's future sales to Lozier. Id. at ¶ 46. In addition to their claims against IVC, Plaintiffs claim that PPG tortiously interfered with the Commission Contract and with Craftsman's business relationship with IVC. Id. at ¶¶ 33-43.

         In its Motion for Partial Summary Judgment, IVC asserts that it did not breach the Commission Contract and that Craftsman is not entitled to declaratory judgment for a 2% commission on all future sales to Lozier because Craftsman has not continued performance as required by the Commission Contract to earn commission payments. Dkt. No. 68 at 11-13. IVC also argues that Craftsman is not entitled to further commission payments because the Commission Contract did not define the duration of the contract and was terminable at will. Id. at 13-16. IVC further sought summary judgment with regard to Plaintiffs' claim for unjust enrichment, arguing that such equitable relief is improper where a valid, enforceable contract governs the relationship between IVC and Craftsman. Id. at 16-17. In response to IVC's Motion, Plaintiffs argue that Craftsman was only obligated under the Commission Contract to acquire Lozier's business in order to receive a 2% commission on all of IVC's future sales to Lozier until the end of the business relationship between Lozier and IVC. Dkt. No. 70 at 7-10. Plaintiffs further argue that their claim for unjust enrichment is necessary to ensure that they would be compensated for their work to acquire Lozier's business between 2010 and 2015. Id. at 10-13.

         In its Motion for Summary Judgment, PPG claims that it is entitled to summary judgment with regard to Plaintiffs' claims for tortious interference with a contractual relationship and tortious interference with a business relationship because Plaintiffs have provided no evidence demonstrating intentional inducement or any invalid justification for PPG's actions. Dkt. No. 65 at 6-10. Additionally, with regard to Plaintiffs' claim for tortious interference with a business relationship, PPG argues that Plaintiffs did not provide any evidence showing that PPG performed any illegal activity. Id. at 10-11. Plaintiffs responded by arguing that there is sufficient evidence proving that questions of fact exist as to whether PPG intentionally induced IVC's actions, and as to whether PPG had a valid justification for its actions. ...


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