United States District Court, N.D. Indiana, Fort Wayne Division
OPINION AND ORDER
L. Miller, Jr. Judge, United States District Court.
a breach of contract action. Entertainment USA, Inc., which
(along with related companies) used the trade name One
Wireless World, seeks unpaid commissions it says One Wireless
World earned by finding cell phone dealers for Moorehead
Communications, Inc. The case went to trial without a jury in
August 2016, and the parties should have gotten a decision
long before today. The assigned judge underwent two major
surgeries since the trial, which might help explain, but
doesn't justify, the delay in ruling.
is a lot to this case. It involves an agreement drafted
without the benefit of legal advice. It involves plaintiff
One Wireless World, which was, when the agreement was adopted
in January 2006, the largest cellular dealer in central
Pennsylvania, but could no longer carry the Verizon product
line. It involves defendant Moorehead Communications, Inc.,
which agreed to pay One Wireless World for referrals of
stores that didn't want to go exclusively with the Sprint
product line. The case requires resolution of whether that
referral agreement was for a term of years or required
payments as long as any referred store was producing sales;
how the agreement applied to later referrals; what
transactions at the referred stores produced an obligation to
pay One Wireless World a fee; how the fees to One Wireless
World were to be calculated; whether One Wireless World
abandoned the agreement; and whether, as an equitable matter,
One Wireless World is entitled to an accounting.
memorandum is meant to comply with the court's
obligations under Fed.R.Civ.P. 52(a)(1).
USA is in incorporated in, and has its principal place of
business in, Pennsylvania. Moorehead Communications is
incorporated in, and has its principal place of business in,
Indiana. Well over $75, 000 is in controversy. The court has
jurisdiction under 28 U.S.C. § 1332(a)(1).
parties agree that Indiana law applies in this case. When
addressing claims under a contract, a court applying Indiana
law looks to the contract itself to discern the parties'
intent, Citimortage, Inc. v. Barabas, 975 N.E.2d
805, 813 (Ind. 2012); Zukerman v. Montgomery, 945
N.E.2d 813, 819 (Ind.Ct.App. 2011), giving the contract's
terms their clear and ordinary meaning. State Farm Mut.
Auto Ins. Co. v. Cox, 873 N.E.2d 124, 127 (Ind.Ct.App.
Wireless World is a fictitious name registered to
Entertainment USA, Inc., the plaintiff in this case. One
Wireless World was once the largest cellular telephone seller
in central Pennsylvania. Chau Nguyen and his brother Chinh
Nguyen were equal co-owners; Chinh Nguyen served as chief
operating officer. One Wireless World had several dealers in
several locations, selling contracts with a variety of
cellular carriers: AT&T, Singular, T-Mobile, Verizon,
Nextel Partners, and Nextel Communication. Things changed
dramatically in 2006, when Sprint demanded exclusivity with
all of its dealers, meaning that to sell for Sprint, a dealer
could sell nothing but Sprint. Verizon soon followed suit.
Wireless World itself chose to go with Sprint, which meant it
had to sever its relationships with One Wireless World
dealers who chose to go with Verizon or to go in a different
direction altogether. This left One Wireless World with
several associations with business entities that were
valueless to One Wireless World because those entities
decided not to become exclusive Sprint dealers. At the same
time this was happening, Moorehead Communications was trying
to expand its cellular business into central Pennsylvania.
One Wireless World and Moorehead Communications addressed
their problems by entering into the January 2006 agreement
that underlies the parties' dispute. The agreement
recited its purpose this way: “The proposed referral
fee is designed to compensate [One Wireless World] for
locations handoffs and offset loss incurred from adding
another carrier to their Branded Store's existing
lineup.” One Wireless World's Chau Nguyen and
Moorehead's Larry Myers negotiated the referral
agreement described Moorehead's offer as follows:
“For all handoffs/referrals from OWW, dating back to
Jan. 1, 2006 and any locations that are approved following
that date as a direct result of an OWW referral, we will pay
a referral bonus in the amount described below.” Those
“locations” referred to locations with non-Sprint
One Wireless World dealers that couldn't continue as One
Wireless World stores after One Wireless World went
exclusively with Sprint. One Wireless World would be paid if
it referred a location to Moorehead, Verizon approved the
location, and Moorehead signed up the location.
Nguyen gave Eric Schlesselman of Moorehead a list of One
Wireless World dealers that didn't want to become
exclusive Sprint dealers. That list - which One Wireless
World calls the “term letter” and which Mr.
Schlesselman denies receiving - consisted of these locations,
which were named in the referral agreement:
• 800 Calvary Road, Suite 1, Carlisle
• 110 A West Chocolate Avenue, Hershey
• Strawberry Square, 3rd and Walnut St. (no city
• 155 Furnace Hills Pike, Lilitz
• Chambersberg Mall, 3055 Block Gap Road
• 32 N. Market Street, Elizabethtown
• 400 Merkel Street, Lemoyne
• 5360 Lincoln Highway (no city identified)
• 3771 Carlisle Road, Dover
• 190 Leaders Heights Plaza.
referral agreement required Moorehead to pay a fee to One
Wireless World for every activation. The parties no longer
agree on how those fees were to be calculated. The referral
agreement says this:
20$ per activation (New Activations Only) to assist with ramp
up period which will remain in affect 6 months from the date
this agreement is signed by both parties. After which,
referral bonus will be adjusted to the appropriate tier. (See
agreement then set forth various bonus fees for 50-150
activations per month, for 151-250 activations per month, for
251-350, for 351-450, for 451-500, and for more than 500.
Below those bonus fees is this: “there will be a flat
fee of 10$ per 2 year upgrade in addition to items listed
January 1, 2007, Chau Nguyen and Chinh Nguyen divided the
remaining One Wireless World stores between them. Chau Nguyen
bought out Chinh Nguyen's 50 percent interest in One
Wireless World, and formed a new company called One Wireless
World Consulting, Inc. Chinh Nguyen formed a new company
called ChinhCo Inc. The brothers created two more new
companies in 2007: Chinh Nguyen formed Wireless Advisors in
May, and Chau Nguyen formed United Consulting in June.
Neither of these new companies was associated with One
Wireless World. Sprint terminated its relationship with One
Wireless World in 2007, leaving One Wireless World with no
agreements with any cell phone service provider. One Wireless
World locations that had been selling Sprint products and
service could continue to sell those products through someone
approved by Sprint, but Sprint had disapproved One Wireless
World. By January 15, 2008, One Wireless World wasn't
operating any stores selling Sprint. No One Wireless
World-branded stores remained.
Nguyen emailed Moorehead in January 2008 to ask that future
payments under the agreement be divided between his new
company (Wireless Advisers) and Chau Nguyen's new company
(United Consulting). Before providing that email in
discovery, Chau Nguyen altered it to remove the names of the
companies. In any event, under the terms of the email,
Moorehead would send no more referral fees to One Wireless
World. The trial record leaves unclear when Moorehead learned
that One Wireless World had ceased to exist.
Nguyen's role after the split is, at best, murky. He was
to serve as an agent of One Wireless World and he testified
that he worked as a consultant for One Wireless World. Chinh
Nguyen's consulting agreement was between his company
(ChinhCo) and Chau Nguyen's company (OWW Consulting). It
called for payments of $50, 000 on June 1, $50, 000 on June
15, $25, 000 on July 1, $25, 000 on August 1, $35, 000 each
of the first days of September, October, November, December
and January, $75, 000 on February 1, then $45, 000 on each of
the first days of March, April, May and June - a total of
more than $800, 000. Whether One Wireless World ever actually
paid Chinh Nguyen anything for work as an agent isn't
clear from the trial record.
his role as a One Wireless World agent, Chinh Nguyen also
tried in June 2007 to become (or for his wife to become) a
Moorehead sub-dealer through a company called Wireless
Advisors. Verizon demanded that Chinh Nguyen cut all ties
with One Wireless World, and eventually refused to allow him
to sell Verizon products. Chinh Nguyen also formed a business
with Mike Kapp called “Mobile Pros, ” and tried
to get a license to sell T-Mobile products.
point after the brothers split, Chau Nguyen sold T-Mobile
products through another company. In February, 2008, Chau
Nguyen contacted Moorehead and proposed that Moorehead enter
into a new referral agreement with his new company, United
Consulting. Moorehead declined that proposal.
paid One Wireless World a total of $70, 979.50 in referral
fees under the agreement. One Wireless World claims
entitlement to another $2, 211, 752.50, plus upgrades for the
claimed locations through May 2013, the last month for which
it has information. Moorehead sent One Wireless World two
payments after suit was filed. In May 2012, Moorehead sent
$45, 770 (which included interest at 8 percent per annum) on
the Elizabethtown store (which did business as
“Etown”) for April 2008 through July 2011, when
the store relocated. In September 2012, after another One
Wireless World demand, Moorehead sent another $6, 503.24 for
referral fees relative to the Elizabethtown store for the
first quarter of 2008.
Issues Needing Resolution
summary judgment stage, the court held that the
agreement's use of the term “location”
unambiguously limits the agreement to referrals of places,
rather than people. Trial was needed to resolve these
questions: (1) When (if ever) did the referral agreement
terminate? (2) What locations were “referred”
within the meaning of the referral agreement? (3) What is an
“activation” warranting payment of a referral
fee? (4) Did One Wireless World abandon the referral
agreement? (5) What damages, if any, are due One Wireless
World? (6) Is One Wireless World entitled to an accounting?
construing a contract under Indiana law ordinarily is limited
to the plain language within the four corners of the
contract. John M. Abbott, LLC v. Lake City Bank, 14
N.E.3d 53, 56 (Ind.Ct.App. 2014). Construction of an
unambiguous contract is a matter of law. TW Gen.
Contracting Servs., Inc. v. First Farmers Bank &
Trust, 904 N.E.2d 1285, 1287-88 (Ind.Ct.App. 2009). But
if reasonable people could come to different conclusions
about a contract's meaning, it is ambiguous, and its
meaning becomes a fact question. Univ. of S. Ind. Found.
v. Baker, 843 N.E.2d 528, 532 (Ind. 2006); Town of
Plainfield v. Paden Eng'g Co., 943 N.E.2d 904, 909
(Ind.Ct.App. 2011). At the summary judgment stage, the court
found the referral agreement between One Wireless World and
Moorehead unambiguous with respect to “referrals”
and activations with non-Sprint service providers, but
ambiguous with respect to “referred locations, ”
“activations, ” the duration of the referral
agreement, abandonment, damages, and the equitable claim for
an accounting. Entertainment USA, Inc. v. Moorehead
Commc'ns, Inc., 93 F.Supp.3d 915 (N.D. Ind. 2015).
evidence -- evidence outside the four corners of the
contract-- is admissible to prove meaning of an ambiguous
contract term. Shorter v. Shorter, 851 N.E.2d 378,
383 (Ind.Ct.App. 2006). The court's job is to discern the
parties' intent at the time they made the agreement.
Citimortgage, Inc. v. Barabas, 975 N.E.2d 805, 813
(Ind. 2012). When construing an ambiguous contractual
provision, a court may consider extrinsic evidence such as
usage in the business to which the contract relates.
Ecorp, Inc. v. Rooksby, 746 N.E.2d 128, 131
(Ind.Ct.App. 2001); Clark Advert. Agency, Inc. v. Avco
Broad. Corp., 383 N.E.2d 353, 356 (Ind.Ct.App. 1978).
some general comments on the trial evidence that affect
credibility and weight. Conduct of both Chinh Nguyen and Chau
Nguyen gives rise to concerns about credibility. Chau Nguyen
doctored an important email. Chinh Nguyen (while purportedly
serving as a very highly compensated consultant for whatever
remained of One Wireless World) tried mere months into the
referral agreement to get a Verizon franchise with Moorehead
after learning that Verizon demanded that he have no
association whatsoever with One Wireless World. Beyond basic
credibility issues, their testimony was hard to follow at
trial; many answers quickly moved from the topic of the
question to self-laudatory narrative, especially with Chinh
Nguyen. Chinh Nguyen also displayed a troubling fogginess on
dates during cross examination, while Chau Nguyen showed
barely less fogginess on dates even during direct
understanding of the contract has, to be kind, evolved over
time, at least with respect to the term of the contract.
Larry Myers thought when he wrote it that there was no time
limitation. In January 2008, Moorehead decided there was a
2-year limitation. Moorehead's Rule 30(b)(6) witness
testified in his deposition testimony that there was no time
limit, then testified at trial that there was a 2-year limit.
These shifting interpretations require a grain of salt to
accompany the taking of Moorehead's litigation position
One Wireless World objected to two portions of Michael
Trimble's testimony, and the court told the parties it
would rule on those objections in the final ruling. The first
objection addresses Mr. Trimble's answer at lines 3-10 on
page 44 when asked about the Nguyen brothers' reputation
in the industry. Moorehead says One Wireless World put its
(and the Nguyen brothers') reputation in issue by
testifying about One Wireless World dominating the central
Pennsylvania market. The court sustains One Wireless
World's objection to that answer. Their testimony was
very often self-laudatory, but never reached the point of
placing their own reputations in issue. The next objection
addresses Mr. Trimble's answer, from line 8 on page 147
through line 3 on page 148, responding to whether he knew
whether something Chau Nguyen had told him had been
communicated to One Wireless World dealers. The court
overrules that objection. Mr. Trimble began his answer with,
“I believe not, ” but went on to relate the facts
of which he had personal knowledge that led him to believe
that the information hadn't been communicated. The court
overrules that objection.
Duration of the Agreement
referral agreement doesn't specify a termination date, so
its duration is a reasonable period of time. City of
Chicago, Ind. v. E. Chicago Second Century, Inc., 908
N.E.2d 611, 623 (Ind. 2009); Int'l Union, United
Auto., Aerospace & Agr. Implement Workers of Am., U.A.W.
v. Randall Div. of Textron, Inc., 5 F.3d 224, 229-230
(7th Cir. 1993). What time is reasonable turns on the
contract's subject matter and the contracting
parties' conduct and situation. Fraternal Order of
Police Lodge No. 52 v. Civil City of Elkhart, 551 N.E.2d
469, 472 (Ind.Ct.App. 1990). The parties disagree on what is
says the agreement expired two years after its execution, in
early 2008. One Wireless World contends the agreement was to
continue as long as any referred location continued to
industry provides no meaningful guidance as to the term of
this agreement. When the referral agreement was created, cell
phone contracts were for one year or two years,
Moorehead's contract with Verizon was for two years,
Moorehead's contracts with dealers were for two years,
but Moorehead also had other referral agreements for one year
each, and residual payments from carriers to agents usually
were paid over a three-year span. But this isn't a dealer
contract or a customer contract. Nobody has been able to
identify any comparable agreement in the industry.
suggest that this agreement would last into perpetuity would
be unreasonable, but that isn't really what One Wireless
World contends. Chau Nguyen and Larry Myers, who negotiated
the agreement for Moorehead, both testified that the
agreement called for continuing payments as long as a
referred location still was producing activations (whatever
that term might mean) for Moorehead. Nothing in the agreement
is inconsistent with that understanding.
while the referral agreement can be read to live on if a
dealer is still standing, its language doesn't require
such a reading. And so we turn to the parties'
conduct at the time is, like its later shifting statements
about the agreement's duration, conflicting. Moorehead
made few monthly payments under the referral agreement after
2007. In early 2008, Mr. Myers asked why the referral fees
weren't still being paid. Moorehead stopped payments to
One Wireless World in mid-2008 because Moorehead's Chief
Strategy Officer believed that the Referral Agreement had
expired and that the locations qualifying for referral fees
no longer existed. In July 2008, Chinh Nguyen asked
Moorehead's Mike Kapp why Moorehead wasn't paying
referral fees; Mr. Kapp responded that the referral agreement
terminated in early 2008.
Chinh Nguyen's conduct was inconsistent with an
understanding that the agreement expired in early 2008: he
kept finding people to refer to Moorehead. It also appears
that Chinh Nguyen might have been willing to work against his
brother's interest: he tried to become a Verizon dealer,
with full understanding that Verizon would demand that he cut
all ties with One Wireless World, even as he was working
under a substantial consulting agreement with One Wireless
World. But it was Chau Nguyen, not Chinh, who negotiated the
referral agreement, and this record provides no reason to
believe Chinh Nguyen knew much of anything about the
strongest piece of evidence to support Moorehead's 2-year
contention is that in February 2008, shortly after Moorehead
contends the referral agreement ran out, Chau Nguyen tried to
negotiate a new agreement, this one for his new United
Consulting. That act was inconsistent with his asserted
understanding: if he still had a referral agreement with
Moorehead as a partner in One Wireless World, it would seem
pointless to negotiate a new agreement for his post-One
Wireless World company.
Chau Nguyen's February 2008 conduct is only part of the
evidence, and an attempt to take over the referrals to Chinh
Nguyen's exclusion is of a piece with Chinh Nguyen's
efforts to get a Verizon dealership, which would have
required Chinh Nguyen to cut all ties with One Wireless World
and his consulting agreement.
evidence supports both positions; the drafters' testimony
tips the balance for the court. In light of the testimony of
Chau Nguyen and Larry Myers, the court finds that Moorehead
and One Wireless World intended an agreement that would live
on as long as any referred location was producing
activations. It remains to decide what a “referred
location” is, and what an “activation” is.
summary judgment stage, the court held the referral agreement
unambiguously applied only to direct referral of locations,
not to referral of dealers. Relocated locations and
additional locations opened by dealers who occupied referred
locations earned fees only if One Wireless World directly
referred them to Moorehead. The referral agreement says that
One Wireless World would be paid a referral fee for any
locations that Verizon approved after January 1, 2006, as a
“direct result” of a One Wireless World referral.
Moorehead contends that only then-operating One Wireless
World stores could be “referred” within the
meaning of the agreement.
Which Locations Were Referred?
parties agree that One Wireless World referred seven
locations to Moorehead (six of which were named in the
referral agreement itself):
• 32 N. Market Street, Elizabethtown (called
• 5380 Lincoln Highway, Gap (“Wireless
• 132 Strawberry Square, Harrisburg (“Smithmeyer
• 3517 Walnut Street, Harrisburg (“Street
• 155 (or 555) Furnace Hills Pike, Lititz (”ZHY
• 180 Leaders Heights Plaza, York; and
• 1910 Fruitville Pike, Lancaster (“Lancaster
these locations closed years ago. Four remained open at the
outset of 2007; only two remained open through the end of
2007. Moorehead made referral payments on the Elizabethtown
location through July 2011.
Wireless World contends, and Moorehead disagrees, that
referral fees are due and unpaid for ten other locations.
625 (also 623) Lombard Road, Red Lion.
location was listed in the “Annibali email”
(Plaintiff's Exhibit 11) to Moorehead, which set forth
OWW locations as of December 21, 2006. Moorehead's Mr.
Schlesselman returned that list, annotated by colors to
reflect Verizon's decision process, 6 days later. The Red
Lion was highlighted in yellow on the list Mr. Schlesselman
returned, meaning that Verizon had approved the location.
Lion store didn't open in December 2006; post-agreement
sales activity didn't begin there until December 2007. It
also appears that this wasn't a One Wireless World store
before Moorehead took over; it had been a store operated by
Better Deal Cellular, a competitor of One Wireless World.
One Wireless World referred the Red Lion location to
Moorehead, but it wasn't operating as a One Wireless
World store when it was referred.
582 Shrewsbury Commons, Shrewsbury.
location, too, was listed in the Annibali email, and
highlighted in yellow (meaning Verizon had approved it) in
Mr. Schlesselman's return email. Chinh Nguyen testified
that he helped negotiate the lease for this location, but
according to Plaintiff's Exhibit 38, apparently did so in
June 2007. John Forsyth testified that this store wasn't
open in December 2006. Moorehead contends that before
December 2006, this location was a Better Deal Cellular
store, not a One Wireless World store.
Wireless World referred the Shrewsbury store to Moorehead.
The Shrewsbury store wasn't operating as a One Wireless
World store when it was referred.
5201 Sprint Road, Shermansdale ...