Impact Marketing International, LLC v. Big O Tires, LLC
2:10-cv-01809
D. Nev.Feb 2, 2012Background
- Impact and Big O entered contract through Sullivan to sell peeler cards in Las Vegas.
- Addendum in May 2009 extended term and included a liquidated damages provision.
- Sullivan left Big O; Boyd took over and considered cancelling the Addendum.
- Hearne negotiated with Tire Works Total Car Care, creating a separate Tire Works Contract for similar services.
- Big O cancelled the Addendum; Impact sued in Nevada state court, removed to federal court; cross-motions for summary judgment and motions to strike followed.
- Court grants summary judgment in part, denies in part, and rules on strike motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to contract | Sullivan had apparent/actual authority to bind Big O. | Sullivan lacked authority to bind Big O. | Questions of fact remain; summary judgment denied on authority. |
| Liquidated damages validity | Liquidated damages were enforceable; not a penalty. | Damages provision is a penalty and unenforceable. | Issue for trial; not enforceably a penalty as a matter of law; summary judgment denied on this issue. |
| Impact's performance | Impact did not breach; price on mock-up not a contract term. | Impact breached by pricing; not per Addendum terms. | Impact did not breach by selling cards for less than the mocked price; partial summary judgment for Impact. |
| Damages and mitigation | Mitigation affects damages despite liquidated damages clause. | Mitigation irrelevant due to valid liquidated damages. | Mitigation not considered; liquidated damages control; summary judgment denied on mitigation. |
| Covenant of good faith and fair dealing | Big O's conduct breached good faith by cancelling Addendum. | Addendum validity depends on Sullivan's authority; no breach if Addendum invalid. | No separate breach; claim dismissed as essentially restating breach of contract; summary judgment for Big O on this claim. |
Key Cases Cited
- Orr v. Bank of America, 285 F.3d 764 (9th Cir. 2002) (admissibility required for summary judgment evidence; Rule 56(e))
- Beyene v. Coleman Sec. Servs., Inc., 854 F.2d 1179 (9th Cir. 1988) (authentication requirements for evidence)
- Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795 (U.S. 1999) (sham affidavit rule and contradictory deposition testimony)
- Van Asdale v. Int’l Game Tech., 577 F.3d 989 (9th Cir. 2009) (limitations on sham affidavit explanations)
- U.S. v. Crawford, 239 F.3d 1086 (9th Cir. 2011) (court cautions against treating legal terms as fact)
- Hilton Hotels v. Butch Lewis Prods., 808 P.2d 919 (Nev. 1991) (duty of good faith and fair dealing in contract performance)
- Mason v. Fakhimi, 865 P.2d 333 (Nev. 1993) (liquidated damages framework under Nevada law)