Southland Metals, Inc. v. American Castings, LLC
2015 U.S. App. LEXIS 14943
| 8th Cir. | 2015Background
- American Castings (manufacturer) and Southland Metals (sales rep) entered an Exclusive Representation Agreement (Nov. 15, 2010) granting Southland exclusivity to solicit listed Accounts and commissions on sales of “Products.”
- The contract referenced “Products” as defined in attached schedules (A/B), but no schedule or contract provision actually defined the term; contract also contained noncompete, confidentiality, and termination provisions (90‑day at‑will, 30‑day cure for breach, two years’ post‑termination commissions unless termination followed uncured breach).
- In May 2012 American found international quotes on a Southland notepad (Turkey, Brazil) and later alleged additional breaches (use of American quotes to win business, representing a domestic foundry); American planned to replace Southland with an internal sales team.
- American sent a termination letter (Oct. 4, 2012) invoking a Section 5 breach and terminating effective 30 days later; when Southland sought details and offered to cure, American did not provide substantive response and ceased paying commissions after 30 days.
- Southland sued for breach (state court → removed), claiming American failed to follow the contract’s notice-and-cure termination procedure and sought two years’ post‑termination commissions; the jury found American breached and awarded ~ $3.8 million in damages.
- On appeal, American argued (1) the contract was unambiguous and Southland’s breaches were incurable (no notice/cure required), and (2) trial errors warranted JMOL or a new trial; the Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument (Southland) | Defendant's Argument (American) | Held |
|---|---|---|---|
| Whether the contract was ambiguous (esp. term “Products”) | Term is limited to products American actually chooses/can manufacture for Accounts; therefore noncompete should be narrowly read | Term covers all products manufactured for Schedule A/B Accounts regardless of American’s ability/choice; contract clear | Contract ambiguous as to “Products” and “compete”; ambiguity for jury to resolve |
| Whether American complied with termination provisions (notice and 30‑day cure) | American failed to provide sufficient breach particulars and denied Southland opportunity to cure | American’s notice was adequate and need not provide cure because breaches were incurable | Sufficient evidence for jury to find American failed to afford an opportunity to cure; verdict stands |
| Whether Southland’s breaches were incurable (excusing notice/cure) | Any alleged breaches were misunderstandings or curable (e.g., customer‑requested international quotes, Schedule C exceptions) | Breaches went to essence of contract, irreparably damaging trust, thus cure unnecessary | Jury had sufficient evidence to find breaches were curable; incurability not established as matter of law |
| Whether trial errors (waiver instruction, parol/extrinsic evidence) required a new trial | Waiver instruction and extrinsic evidence were proper given ambiguity and evidence of American’s conduct | Instruction and evidence admission were improper and prejudicial | No abuse of discretion in giving waiver instruction or admitting extrinsic evidence; no plain error |
Key Cases Cited
- Am. Bank of St. Paul v. TD Bank, N.A., 713 F.3d 455 (8th Cir. 2013) (standard for reviewing JMOL and viewing evidence favorably to jury)
- Pitco Prod. Co. v. Chaparral Energy, Inc., 63 P.3d 541 (Okla. 2003) (contract is ambiguous if reasonably susceptible to two constructions)
- Fowler v. Lincoln Cty. Conservation Dist., 15 P.3d 502 (Okla. 2000) (ambiguous contract construction is a mixed question for the jury)
- Osborn v. Commanche Cattle Indus., Inc., 545 P.2d 827 (Okla. Civ. App. 1976) (when contract specifies termination method, parties must follow it)