779 F. Supp. 2d 416
E.D. Pa.2011Background
- Kamco filed a diversity suit against Lovejoy in 2011 alleging breach of contract and PCSRA violations related to a 2003 sales representation agreement.
- Kamco served as Lovejoy’s exclusive commissioned sales representative in designated territories including parts of PA, MD, DE, DC, and NJ; House Accounts were carved out with no commissions.
- Addendum A listed six House Accounts; Lovejoy reserved the right to redefine these accounts.
- The Agreement set commission schedules (3%/8% for initial six months; 5% thereafter), a one-year term with automatic renewal, and a 60-day notice requirement to terminate; mutual termination by written agreement was allowed.
- Starting in 2009, Lovejoy discussed cost savings, proposed terminating or redefining Kamco’s accounts, and ultimately redefined almost all Kamco’s accounts as House Accounts, effectively limiting Kamco’s commissions.
- Kamco filed suit on April 1, 2009, alleging breach of contract (including an implied covenant claim) and PCSRA violations; Kamco sought unpaid commissions and damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of Kamco’s claims by conduct | Kamco’s actions show no intent to waive; express intent to pursue suit remained. | Kamco’s continued servicing of three accounts and adherence to non-compete implied waiver. | Kamco did not waive its claims; conduct viewed with intent to pursue suit and mitigate damages. |
| Breach of contract – implied covenant of good faith and fair dealing | Lovejoy abused discretion in redefining House Accounts to deprive Kamco of contract benefits. | House Accounts provision grants unilateral discretion to redefine accounts. | Genuine issues of material fact exist; good-faith duty may apply to Lovejoy’s exercise of House Accounts discretion. |
| PCSRA coverage for Kamco as a sales representative | Kamco fits PCSRA’s definition as a sales rep for wholesale orders from retailers. | Kamco is not a PCSRA “sales representative” because OEMs and distributors are not retailers to consumers. | Kamco is not a PCSRA claim winner; Kamco failed to prove its status as a PCSRA sales representative. |
| Constructive termination claim | Kamco alleged constructive termination via removal of accounts and termination of the contract. | PA law does not recognize constructive termination outside employment/franchise contexts. | Kamco waived constructive termination theory; dismissal of that theory granted. |
Key Cases Cited
- Ash v. Continental Ins. Co., 932 A.2d 877 (Pa. 2007) (implied good faith duty under Section 205 discussed; limits noted)
- AMP Inc. v. Pennsylvania, 852 A.2d 1161 (Pa. 2004) (defines ultimate consumer vs. retailer in PCSRA context)
- LJL Transp., Inc. v. Pilot Air Freight Corp., 962 A.2d 639 (Pa. 2009) (contractual intent; avoid interpreting one provision to annul another)
- Conomos, Inc. v. Sun Co., Inc., 831 A.2d 696 (Pa. Super. Ct. 2003) (implied good faith considerations; duty limited but meaningful)
- Murphy v. Duquesne Univ. of the Holy Ghost, 777 A.2d 418 (Pa. 2001) (contracting parties’ duty to perform in good faith)