Mass Cash Register, Inc. v. Comtrex Systems Corp.Mass Cash Register, Inc. v. Comtrex Systems Corp.
MEMORANDUM AND ORDER
INTRODUCTION
This dispute arises out of an alleged agreement between plaintiff Mass Cash Register, Inc. (Mass Cash) and defendant Comtrex Systems Corporation (Comtrex). In its complaint, Mass Cash alleges breach of contract (Count I), tortious interference with advantageous contractual relationships (Count II), unjust enrichment (Count III), fraud (Count IV), and violation of Mass.Gen.L. ch. 93A (Count V).
1
On May 24, 1995, the Court heard oral argument on defendant Comtrex’s motion for summary judgment on all counts pursuant to Fed.R.Civ.P. 56(b). For the reasons illustrated below, after hearing, the mo
FACTUAL BACKGROUND
For the purposes of this motion, the undisputed facts are as follows.
1.The Players.
a.Mass Cash.
Plaintiff Mass Cash is a Massachusetts corporation which sells, installs, and services electronic cash registers. In 1990, Mass Cash was a dealer for various companies which produced point-of-sale (POS) equipment and cash registers, including Omron, Sharp Electronics, and TEC. 2
Since its incorporation in 1978, Thomas Speropoulos has served as the president of Mass Cash. From January 1985 until January 1991, William Mitchell was employed by Mass Cash as its sales manager and major account manager.
b.Comtrex.
Defendant Comtrex is a New Jersey corporation with its principal place of business located in Moorestown, New Jersey. Formed in 1981, Comtrex originally serviced electronic cash registers but extended its business to include the manufacturing, marketing, and distribution of electronic cash registers used in the food service industry, including fast-food establishments. In 1993, Comtrex sold approximately 3500 electronic cash registers. Since February of 1989, Jeffrey Rice has been the president, chief executive officer, and a director of Comtrex.
c.Dunkin’ Donuts.
Although not named in the lawsuit, Dun-kin’ Donuts is at the vortex of this controversy. In 1990, Dunkin’ Donuts had approximately 2000 to 2500 stores, including both franchised and company-owned stores. Under Dunkin’ Donuts franchise agreements, the ultimate decision of whether to purchase a new POS terminal was for the franchisee to make, but franchisees could purchase only those POS terminals which Dunkin’ Donuts had approved.
Davie Bent, a Dunkin’ Donuts’ employee since 1984 and the manager of field service systems in 1989, was in charge of personally evaluating and testing various POS terminals. Comtrex, Tranti, TEC, Fastfax, Panasonic, Sharp, and Omron were among the brands evaluated by Bent during the period pertinent to this controversy.
2. Mass Cash’s Relationship With Dun-kin’ Donuts.
Beginning in 1978, Mass Cash sold cash registers and POS equipment to Dunkin’ Donuts, and serviced them. For the past eleven years, Mass Cash has been the principal supplier of cash register terminals to Dunkin’ Donuts, most of which are manufactured by Omron Systems Corporation (Omron), a competitor of Comtrex. Indeed, from 1985 to 1990 Omron provided about 2500 registers to Dunkin’ Donuts and its franchisees. Mass Cash would buy the registers from Omron at 40-48 percent off list price and then resell them to Dunkin’ Donuts at ten percent off list plus charge an installation fee.
Dunkin’ Donuts was Mass Cash’s largest major account in 1990. William Mitchell was the salesman for Mass Cash handling the Dunkin’ Donuts account.
Beginning in 1988, Dunkin’ Donuts informed Mass Cash of its need for a new POS terminal. Accordingly, Mitchell talked to various manufacturers, including Citizen, Tranti, Sanyo, Sharp, FDS, and others. Mass Cash also notified Omron of Dunkin’ Donuts’ request for more sophisticated POS terminals in May, 1989. Mitchell’s search proceeded for two years until he found a manufacturer that offered a solution for Dun-kin’ Donuts. That manufacturer was Com-trex.
3. Comtrex’s Relationship With Dunkin’ Donuts.
Dunkin’ Donuts’ introduction to Comtrex originated in 1987, when Bent attended a
After his visit, Bent concluded that Com-trex could not fulfill Dunkin’ Donuts’ need without changes on Comtrex’s part. Dunkin’ Donuts decided not to pursue the Comtrex POS terminals in 1988 for three reasons: (1) the price point of the basic terminal was too high; (2) the software operated under a UNIX system instead of MS-DOS, and; (3) the hardware was limited in its memory capacity.
Although Bent does not recall any further conversations with Comtrex until the meeting set up by Mass Cash in October 1990, Rice testified that he spoke with Bent in May of 1990 and provided a detailed update on the Comtrex Sprint product line. Rice also testified that he had numerous follow-up conversations with Bent from May to September 1990.
4. Mass Cash’s Relationship With Com-trex.
In 1988, Speropoulos met with a Comtrex salesperson at Mass Cash’s office to view Comtrex’s product. As a result of the meeting, Speropoulos attended a Comtrex meeting at their New Jersey office that same year. Between 1988 and 1990, Speropoulos had three or four telephone conversations with Comtrex personnel regarding the possibility of selling the Comtrex product. In these discussions, no dealership agreement was reached.
a. Negotiations.
Sometime in the spring of 1990, Andy Fus-co, a consultant for Comtrex, contacted Sper-opoulos to inform him that Comtrex had a new president, Jeff Rice, and that a new product was being enhanced. Comtrex had hired Fusco to review Comtrex sprint systems, and introduce it to some of the dealers. During this conversation between Fusco and Mass Cash, there was a “very light discussion” on a dealer agreement including negotiations over a geographic region. At no time during the conversation did the issue of compensation arise. Despite a discussion on the pricing of Comtrex products, no agreement was reached. Indeed, these preliminary negotiations were undertaken with an eye toward executing a written dealer agreement. Speropoulos told Fusco he would require three things to be a dealer for Comtrex: (1) exclusivity with respect to a specific geographic area encompassing Eastern Massachusetts, Eastern Connecticut, Rhode Island, and Southern New Hampshire; (2) training for Mass Cash personnel; and (3) that Com-trex upgrade its software. Fusco said that the selling price to Mass Cash would be consistent with the standard in the industry, which was approximately forty percent off price, plus or minus ten percent. Fusco also told Speropoulos that with the exception of Fall River, the desired territory would not be a problem. Despite the lack of a formalized written dealer agreement, in May, 1990, Mass Cash ordered some point of sale terminals from Comtrex, and Comtrex forwarded pricing information. Mass Cash did not reveal the opportunities presented by the Dun-kin’ Donuts account at this time.
Soon thereafter, in June, 1990, Fusco conducted a product demonstration at Mass Cash’s office before Speropoulos, Mitchell, and other Mass Cash employees. Further discussions ensued regarding the proposed dealer agreement. Fusco also brought a written dealer agreement and dealer application with him to the meeting, and Speropou-los agreed to review it at a later date. The parties also agreed that Mass Cash would have to look at the Comtrex products further before they would formalize the agreement.
Discussions between Comtrex and Mass Cash continued through the summer of 1990. Mass Cash pursued Comtrex because Omron did not have the solution for which Dunkin’ Donuts was looking, and Comtrex might satisfy Dunkin’ Donuts’ needs. However, Mass Cash did not yet reveal the Dunkin’ Donuts’ account to Comtrex.
In August 1990, Mass Cash attended another meeting at Comtrex’s office in New
The next month, Mass Cash, along with other dealers, attended another meeting at Comtrex’s office to view its product line. Again, negotiations on the dealer agreement continued in September and October 1990 and the parties expected to ultimately sign a written agreement, but no formal agreement was reached at this meeting: The main unresolved issue was the scope of the geographical territory of Mass Cash.
In its next communication (telephone) with Comtrex, Mass Cash expressed its desire to formalize a written agreement before it introduced Comtrex to Dunkin’ Donuts. Although no agreement was forthcoming, Mass Cash nevertheless arranged an October meeting with itself, Comtrex, and Dunkin’ Donuts.
b. The October Meeting.
On October 2, 1990, Comtrex demonstrated its new prototype POS terminal to Dun-kin’ Donuts. In addition, Comtrex’s role in the meeting included paying for the room, setting up the room, providing, preparing, and transporting the equipment. Mass Cash’s role in the meeting comprised of introducing Comtrex to the Dunkin’ Donuts account, establishing the time and date for the meeting, providing specifications, hardware, and software to Comtrex, and informing Comtrex of Dunkin’ Donuts needs, plans, and growth potential. At end of meeting, Dunkin’ Donuts did not approve of the Com-trex system and no agreements were reached with Dunkin’ Donuts by either party.
Both prior to and after the meeting with Dunkin’ Donuts, Mass Cash met privately with Comtrex to discuss the handling of the Dunkin’ Donuts’ account. The parties orally agreed that: (1) Comtrex and Mass Cash would jointly fulfill Dunkin’ Donuts requirements, including the installation and service of the equipment; (2) Mass Cash would sell Comtrex’s products directly to Dunkin’ Donuts; and (3) Mass Cash would purchase the equipment at a discount from Comtrex. However, two significant issues — geographic region and the discount price offered to Mass Cash — remained unresolved. Although the parties agreed that Mass Cash would get an additional “five points” from the normal selling price, the specific discount figure off the dealer price list could not be resolved because, in part, it depended on volume. Mass Cash concedes there was no contract in October.
c. Comtrex Meets with Dunkin’ Donuts.
In November 1990, Comtrex met with Dunkin’ Donuts without Mass Cash. This meeting was to allay Dunkin’ Donuts’ fears of dealing with Comtrex due to Comtrex’s financial situation. As a result of this meeting, Dunkin’ Donuts requested Comtrex to prepare a preliminary proposal.
In a letter dated December 5, 1990 from Rice, president of Comtrex, to James Yincen-zi, Dunkin’ Donuts’ director of operations services and branded products, Comtrex outlined its preliminary proposal. In it, Com-trex included provisions regarding technical/product capabilities, installation/service, and pricing. The letter proposed that Mass
Mass Cash undertook no part in drafting this proposal, although it corresponds to previous discussions between Mass Cash and Comtrex. Mass Cash was unaware of the proposal until it was sent to Dunkin’ Donuts on December 5, 1990. Upon reviewing the proposal, Mitchell of Mass Cash concluded that the volume discount to Dunkin’ Donuts and fee were unacceptable.
d. The December 28, 1990 Letter.
In late December 1990, Mitchell, Spero-poulos, and Rice discussed the contractual issues further. Speropoulos initiated the call when he became concerned something was happening to the Dunkin’ Donuts account. He anticipated a dispute with Comtrex and even the possibility of litigation over the Dunkin’ Donuts account. He had called Rice numerous times, but his calls were not returned. After a lengthy telephonic discussion, Rice and Speropoulos reached agreement on certain terms. They agreed that Speropoulos would draft a letter memorializing the agreement between Comtrex and Mass Cash, and that Speropoulos would send it to Rice so that he could review it to determine whether it was satisfactory and approve it. Accordingly, Speropoulos prepared his letter of December 28, 1990, which reads, in pertinent part:
I am reiterating my conversation with you on our agreement on this subject, the role of each party and the compensation Mass Cash Register would be receiving if the account were sold.
Comtrex would receive 65% of list, Mass Cash Register would receive 15% of list for sales of 1-750 machines per year. That would drop to 13% for sales over 750 machines. The installing dealer or company would receive 10% of selling price.
Comtrex would be responsible for the warranty of the hardware. Mass Cash Register and the installing dealer would have the responsibility for handling the service and shipping of any defective equipment to Comtrex for repair.
Mass Cash Register would provide a sales rep, Bill Mitchell, to handle the following:
—order taking from Dunkin’ Donuts
—day to day responsibility for sales and minor program changes
—setting up the delivery and installation of equipment
—selecting the dealer or company to handle the installation
(Comtrex would help in the selection and have the right to override any decision in this process)
Mass Cash Register would provide a HOTLINE to help with installations and ongoing support 16 hours a day, 7 days a week.
Mass Cash Register would provide help to Comtrex in setting up the billing and making sure it is done right.
Mass Cash Register would handle any test site installation and handle all installations in our own selling area.
Comtrex would provide a person to assist Bill Mitchell with Dunkin’ Donuts. Bill would handle the bulk of the responsibility in this area.
Comtrex would directly bill the buyer for the equipment.
Comtrex [sic] would have the responsibility for the programming of the terminal and shipping. Any program changes would be submitted to Comtrex by Mass Cash Register. After delivery, the Mass Cash Register HOTLINE would handle all program and operations questions.
Servicing of the equipment will have to be negotiated with Dunkin’ Donuts. As per our meeting with Dunkin’ Donut officials at Comtrex and discussions with them on the way back from that meeting, they felt that the plan you and I had talked about would be very feasible.
What we both felt was reasonable is that Mass Cash Register and Comtrex would share in the service income which wouldprobably be in the area of 10-12% of the purchase price of the equipment per year. This is tentative, realizing that Dunkin’ Donuts will have the final say in the matter.
Def.Exh. 8. There was no discussion of a general dealership agreement.
The percentage of list that Mass Cash was to receive was reflected in contemporaneous notes made by Rice. Absent from the letter, however, are provisions regarding the geographic selling area for Mass Cash, which had been a bone of contention in the past, terms for servicing the equipment, the division of service income, and the duration of the agreement.
Speropoulos sent the letter to Rice “for review.” No one from Comtrex ever advised Mass Cash that the letter was satisfactory. Additionally, Dunkin’ Donuts never agreed to the terms of the letter.
Sometime in December 1990 or early January 1991, Comtrex sent Mass Cash another Dealer Sales Agreement, which limited Mass Cash’s territory, gave Comtrex the exclusive right to pursue major accounts, set artificial sales quotas, and allowed Comtrex to terminate Mass Cash at any time. Previously, Comtrex had sent Mass Cash other Dealer Agreements, none of which were signed or returned.
On January 16, 1991, Speropoulos signed the proposed Dealer Sales Agreement, but never sent it to Comtrex. As reasons therefore, Speropoulos stated that the agreement did not include the geographical regions he desired, and “[bjecause we had not gotten the rest of the contract settled.” Under the agreement, Mass Cash’s assigned territories were limited to the counties of Essex, Mid-dlesex, Suffolk, and Norfolk in Massachusetts. Mass Cash wanted to be assigned all of eastern Massachusetts, eastern Connecticut, Rhode Island, and southern New Hampshire.
e. Omron Enters the Picture.
In the fall of 1990, Omron, the company which had supplied registers to Dunkin’ Donuts through Mass Cash, discovered Mass Cash’s involvement with Comtrex with respect to the Dunkin’ Donuts account. Kraus, Omron’s Regional Sales Vice President, was upset and thought that Mass Cash would have allegiance to it because Omron had introduced Mass Cash to the Dunkin’ Donuts account. Kraus was “shocked when [he] found out that Mass Cash Register had gone and brought the Comtrex people in.” When Omron relayed its ire to Mass Cash, Mitchell provided evidence that Mass Cash had sought Omron’s assistance over a period of time and Omron had failed to respond.
In an effort to appease Omron and at Omron’s request, Mitchell set up a meeting on January 7, 1991, between Omron and Dunkin’ Donuts to demonstrate Omron’s replacement products which could compete with Comtrex. Comtrex soon became aware of Mass Cash’s continued involvement with Omron. 3
Rice and Speropoulos discussed Mass Cash’s involvement with Omron, but Rice was not satisfied that Mass Cash was merely acting out of courtesy to Omron. Comtrex contends that this was one of the reasons it ceased doing business with Mass Cash. Mass Cash asserts, however, that this reason is pretextual to justify Mass Cash’s exclusion from the Dunkin’ Donuts deal.
f. The Controversy.
In January of 1991, Comtrex and Dunkin’ Donuts entered into a relationship to develop software for Dunkin’ Donuts. In attempting to sever the relationship between the parties, Comtrex initially claimed that Dunkin’ Donuts did not want to deal with Mass Cash because of its poor service. While Dunkin’ Donuts acknowledges that there were some problems with Mass Cash, it claims it was not concerned with whether Mass Cash was involved in the transaction.
In early February, 1991, Rice proposed a more limited role for Mass Cash and offered Mass Cash two percent of retail as a commission for bringing Comtrex and Dunkin’ Donuts together. Mass Cash rejected this proposal. Later that same month, Rice disa
DISCUSSION
1. Summary Judgment Standard.
A motion for summary judgment must be granted if:
[T]he pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Fed.R.Civ.P. 56(e). “To succeed, the moving party must show that there is an absence of evidence to support the nonmoving party’s position.”
Rogers v. Fair,
Rule 56(e) “requires nonmovants to submit evidence that would be admissible at trial to oppose properly submitted motions for summary judgment.”
Federal Deposit Ins. Corp. v. Fonseca,
2. Breach of Contract.
Mass Cash contends that the letter dated December 28, 1990, is an enforceable contract. To recover damages in a breach of contract claim, the plaintiff must prove the existence of a valid binding agreement, the defendant’s breach thereof, and damages resulting from the breach.
Coll v. PB Diagnostic Systems, Inc.,
When “parties contemplate the execution of a final written agreement,” a strong inference is made that they “do not intend to be bound by earlier negotiations or agreements until the final terms are settled.”
Rosenfield v. United States Trust Co.,
(1) The Standard Dealer Sales Agreement.
As Mass Cash concedes, the dealer sales agreement did not constitute an enforceable contract between the parties. It is undisputed that Comtrex sent Mass Cash various dealer sales agreements, none of which were signed by Mass Cash until Janu
(2) The December 28, 1990 Letter.
(a) Mutual Assent.
Mass Cash also argues that the letter of December 28, 1990, constitutes the contract between the parties. The question here is whether there was mutual assent.
Parties do not become contractually bound until they mutually assent to bind themselves to an agreement. Courts determine that mutual assent, not on the basis of what goes on inside the parties’ heads, but rather on the basis of what they say and do.... Parties can agree on every term in a contract, yet not be bound until they sign a written agreement, if they so indicate.
Salem Laundry Co. v. New England Teamsters and Trucking Ind. Pension Fund,
In
Novel Iron Works, Inc. v. Wexler Const. Co., Inc.,
The legal principles which are to be applied in resolving the issue are well established. While, as here, parties negotiate orally as to the terms of an agreement while intending to execute a written contract, the parties generally are not bound until the contract is signed. If, however, the parties orally agree to the essential terms of the transaction, it may be inferred that they intended to bind themselves at that time and that the writing to be drafted and delivered is a mere memorial of the contract, which is already final by the clearly mutual assent of the parties to those terms. Further, where the facts show that the parties intended to be bound at some point in their negotiations before execution of a formal contract, they will not be bound unless there is agreement as to the basic terms of the undertaking. There must be agreement on the essential terms of the transaction in order that the nature and extent of the parties’ obligations can be determined, and hence, enforced.
Id. (Emphasis added) (internal citations omitted).
“[L]anguage looking to execution of a final written contract justifies a
strong inference
that significant items on the agenda of the transaction are still open, and hence, that the parties do not intend to be bound.”
Goren v. Royal Investments, Inc.,
A contract based on the December 28, 1990 letter hinged upon review and approval by Rice. Rice’s failure to assent to the writing is fatal.
See Laprade v. Fitchburg & L. St. Ry. Co.,
Plaintiff argues that the parties bound themselves irrevocably to a contract during their telephone conversation in December 1990. Here, even drawing all experiences in favor of Mass Cash, there was no mutual assent to all the essential terms. According to Speropoulos, Rice had been so elusive that Speropoulos even contemplated litigation. During the one hour telephone conversation, there had continued to be disagreements over significant items, like geo
(b) Concrete and Definite.
The alleged agreement between the parties is unenforceable due to its indefiniteness. It is axiomatic that a contract’s essential terms must be “sufficiently definite so that the nature and extent of the obligations of the parties” are ascertainable.
Simons v. American Dry Ginger Ale Co.,
‘[i]t is essential to the existence of a contract that its nature and the extent of its obligations be certain.’ It is not enough if parties negotiating have agreed upon certain important terms if there has been no agreement on other essential elements of the undertaking, although a contract is not necessarily unenforceable because the parties agree that the details for certain of its terms shall be left to be fixed at a future time or by the happening of later events.
George W. Wilcox, Inc. v. Shell Eastern Petroleum Products, Inc.,
While courts are powerless to write an entire contract,
L.R.J. Ryan v. Wer-si Electronics GmbH and Co.,
This is not a case where all material terms were agreed upon so that the written agreement merely memorialized a contract previously made final by an earlier mutual assent.
See Rosenfield v. United States Trust Co.,
The Uniform Commercial Code (UCC) permits a court to consider the circumstances and background between the parties, and their course of dealing to the extent that such evidence explains or supplements existing contractual terms.
See
M.G.L. ch. 106, § 2-202;
ITT Corp. v. LTX Corp., 732
F.Supp. 1225, 1236 (D.Mass.1990),
rev’d on other gds,
Accordingly, the parties failure to agree on material terms militates against the finding of a contract.
See Rosenfield v. United States Trust Co.,
(c) Statute of Frauds.
Comtrex asserts that if the Court finds an oral distributorship agreement between the parties with respect to the Dunkin’ Donuts account, it is unenforceable as it runs afoul of the Statute of Frauds.
See
Def.Br. at 21. To be enforceable, an agreement need not be reduced to writing unless required by the Statute of Frauds.
ESO, Inc. v. Kasparian,
Under Massachusetts law,
a contract for the sale of goods for the price of five hundred dollars or more is not enforceable ... unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.
M.G.L. ch. 106, § 2-201(1).
As a threshold matter, the Court must first determine whether there was an oral agreement on the essential terms of a contract regarding the Dunkin’ Donuts account. For the reasons stated above with respect to the December 28 letter, which Speropoulos states reflects the oral discussion, the Court concludes there was no meeting of the minds during the telephonic discussion on all the essential terms.
However, even if there were an oral agreement, the statute of frauds would bar. its enforcement. The majority have held that Section 2-201(1) applies to distributorship agreements.
Compare L.R.J. Ryan v. Wersi Electronics GmbH and Co.,
Article two does not apply to the rendition of services.
ITT Corp. v. LTX Corp.,
Here, the parties vacillated in their negotiations over whether Mass Cash or Comtrex would sell the cash registers to Dunkin’ Donuts. As the parties left open the question of which company would be responsible for servicing, and provided that both companies would share in the profits from the sales, the Court concludes that the primary thrust of any oral agreement was the sale of cash registers. Neither party argues that the alleged contract is outside the scope of article two. Accordingly, the article two’s Statute of Frauds, M.G.L. eh. 106, § 2-201(1), is applicable to the instant case.
In support of its contention that the Statute of Frauds is inapplicable to the present controversy, Mass Cash advances the following: (1) the written confirmation exception; (2) partial performance by Mass Cash removes the requirement of the Statute of Frauds; and (3) promissory estoppel vitiates the Statute of Frauds defense. 4 The Court addresses these arguments in seriatim.
1.The Written Confirmation Exception.
First, under the written confirmation exception, “failure to answer a written confirmation of a contract within ten days of receipt ... is sufficient against both parties under subsection (1).” Mass.Gen.L. ch. 106, § 2-201, UCC Comment, Comment 3. Mass Cash argues that Comtrex’s failure to respond to its December 28, 1990, falls within the exception’s purview. In opposition, Comtrex asseverates that because both parties understood the December 28, 1990 letter as requiring Comtrex’s approval and does not contain a quantity term, the exception is inapplicable. Comtrex’s position is persuasive.
To satisfy the written confirmation exception, the writing must: (1) evidence a contract for the sale of goods, (2) be ‘signed’ by the party to be charged; and (3) contain a quantity term. M.G.L. ch. 106, § 2-201, UCC Comment, Comment 1.
See Columbus Trade Exchange, Inc. v. AMCA Internat’l Corp.,
Here, although it specifies a percentage of list price to be paid to Mass Cash for the first 750 cash registers, and a lesser percentage for all cash registers over 750, the letter is devoid of any specific quantity term. Rather the letter contemplates the sale of an indefinite number of cash registers. Therefore, even as a written confirmation, the letter fails to meet the requirements of the UCC. Finally, the undisputed facts evince that both parties agreed that Comtrex’s approval was required. The agreement was not signed by the party to be charged. Accordingly, the written confirmation exception provides no relief for Mass Cash.
2. Partial Performance.
Second, Mass Cash asserts, without explanation, that its performance removes the ease from the Statute of Frauds. Mass Cash’s performance consisted of its prior action introducing Comtrex to the Dunkin’ Donuts account and providing the necessary specifications for Comtrex to pursue this business opportunity. Mass Cash engaged in these activities prior to the December 28, 1990 letter, when negotiations were still underway. Accordingly, Mass Cash’s activities prior to the alleged oral agreement fail to bring it within the partial performance rule.
3. Promissory Estoppel.
Finally, Mass Cash relies on the doctrine of promissory estoppel to vitiate the Statute of Frauds defense. The Court notes that under Massachusetts law, the doctrine
In order for promissory estoppel to apply, however, three elements must be present:
(1) A representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made; (2) An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made; (3) Detriment to such person as a consequence of the act or omission.
Cellucci v. Sun Oil Co.,
Here, Mass Cash claims that the unambiguous promise was Comtrex’s assurance that it would not cut Mass Cash out of the picture and deal directly with Dunkin’ Donuts. When Mass Cash realized that Comtrex could meet the needs of Dunkin’ Donuts, it asked what Comtrex’s position was with respect to national accounts. Although Comtrex was upfront with Mass Cash that it dealt directly with another national account, Wang Laboratories, it stated that it tried to access dealers not major accounts, and would not cut out its major dealer. Mitchell then presented the Dunkin’ Donuts account because he felt “comfortable”. Mass Cash has presented specific facts to support a claim that Comtrex made a representation intended to induce Mass Cash to disclose a national account, and that Mass Cash relied on that statement in disclosing the identity of the Dunkin’ Donuts account.
See John Alden Transp. Co., Inc. v. Bloom,
The problem is that Mass Cash must demonstrate that it relied on the representation to its detriment. Mass Cash argues that because it presented the opportunity, provided the data necessary for Comtrex to redesign its system, and arranged for a meeting with the senior Dunkin’ Donuts personnel, it is entitled to the benefit of the bargain for the products sold to Dunkin’ Donuts. However, because it is undisputed that Mass Cash had been looking for two years to find another manufacturer with an adequate product to no avail, it cannot be argued that its reliance on the representation resulted in lost profits. However, Mass Cash has argued that it relied to its detriment by losing its prior business as a dealer to Omron. That would be sufficient to support a promissory estoppel claim. However, there is no evidence in the record to support the claim.
The December 5 and December 28, 1990 letters cannot be enforced under a promissory estoppel theory as Mass Cash has not relied on the alleged promises contained therein to its detriment.
See Cellucci v. Sun Oil Co.,
Comtrex also moves for summary judgment on Mass Cash’s claim of tortious interference with advantageous contractual relationships (Count III). Mass Cash argues that Comtrex interfered with its longstanding relationship with Dunkin’ Donuts and engaged in improper conduct in seeking to cut Mass Cash out of the deal with Dunkin’ Donuts. In support of its position, Mass Cash claims the following: (1) Comtrex lied to Mass Cash claiming that Dunkin’ Donuts personnel did not want Mass Cash involved in the deal; (2) Comtrex sought assurances from Dunkin’ Donuts that excluding Mass Cash would not jeopardize Comtrex’s future sales to Dunkin’ Donuts; and (3) “an inference can be drawn that Comtrex also lied to Dunkin’ Donuts regarding its reason for excluding Mass Cash.” Pl.Brief at 26. The Court finds these arguments unpersuasive.
In a claim of unlawful interference with contractual relations, the plaintiff must prove that he had a contract with a third party and that the defendant “knowingly induced the third party to break that contract.”
Draghetti v. Chmielewski,
In the instant case, however, it is beyond dispute that no contract existed between Dunkin’ Donuts and Mass Cash to which Comtrex interfered. Although the complaint alleges that Comtrex interfered with Mass Cash’s contractual relations with Dunkin’ Donuts and its franchisees, Mass Cash does not offer any evidence of a contract between Dunkin’ Donuts and itself. Mass Cash admits as much in its brief, stating that the Comtrex interfered in the longstanding relationship between the parties, but failing to identify the contract to which Comtrex interfered.
A claim of intentional interference with advantageous business relations requires proof of four elements: (1) the existence of a business relationship or contemplated contract of economic benefit; (2) defendant’s knowledge of such relationship; (3) the defendant’s intentional and improper interference with that relationship; and (4) the plaintiffs loss of advantage as a direct result of the defendant’s conduct.
See United Truck Leasing Corp. v. Geltman,
[the] [defendant's liability may arise from improper motives or from the use of improper means_ No question of privilege arises unless the interference would be wrongful but for the privilege; it becomes an issue only if the acts charged would be tortious on the part of an unprivileged defendant.
United Truck Leasing Corp. v. Geltman,
In the context of the present controversy, Mass Cash’s claim for interference with advantageous business relationships is likewise without merit.
6
First, Mass Cash fails to direct the Court to any improper interference on the part of Comtrex. The fact that Comtrex initially lied to Mass Cash regarding the reasons for its exclusion from the contract does not support such a claim.
See Riseman v. Orion Research Incorp.,
Second, Mass Cash has failed to identify, aside from the contract between the parties, what damage it has suffered as a result of Comtrex’s conduct.
See Morochnick v. Quigley,
Third, any assurance Comtrex sought from Dunkin’ Donuts that Mass Cash’s exclusion would not jeopardize Comtrex’s position is not improper. Merely furthering one’s interest as a competitor does not rise to the level of tortious activity absent improper conduct.
See Beekman v. Marsters,
4. Unjust Enrichment.
Mass Cash asserted the equitable claim of unjust enrichment in its complaint (Count III) and seeks the creation of a constructive trust “as to the profits to be made by Com-trex on its sale of goods to Dunkin’ Donuts.” (¶ 41). It claims it lacks an adequate remedy at law.
A court in equity generally may impose a constructive trust “in order to avoid the unjust enrichment of one party at the
Plaintiff has presented no evidence of fraud, mistake, breach of fiduciary duty or breach of contractual duty. However, it has presented evidence that it gave Comtrex confidential business information about the Dun-kin’ Donuts account which Comtrex used to its advantage and to the disadvantage of Mass Cash. Although Comtrex claims that it knew about the Dunkin’ Donuts’ business opportunity long before it was even disclosed by Comtrex, this is a disputed issue of material fact. Comtrex also claims that Mass Cash is not entitled to equitable relief because it breached a duty to it by representing Omron as a dealer. This, too, is an issue of fact. Accordingly, the Court DENIES the motion to dismiss on this Count.
5. Quantum Meruit
Mass Cash also argues that summary judgment is inappropriate as a jury could find a contract implied in fact and law or a quasi contract.
See LiDonni, Inc. v. Hart,
Under Massachusetts law, an implied contract claim requires: (1) a measurable benefit conferred by Mass Cash upon Comtrex; (2) a reasonable person in Comtrex’s position would have expected to pay for the services accepted; and (3) Mass Cash furnished the services with the reasonable expectation of securing compensation from Comtrex.
Bolen v. Paragon Plastics, Inc.,
The law creates an obligation under a quasi or implied contract theory “for the reasons of justice, without any expression of assent and sometimes even against a clear expression of dissent.... ‘ [Considerations of equity and morality play a large part ... in constructing a quasi contract_’ ”
Salamon v. Terra,
The Supreme Judicial Court explained:
“It is not really a contract, but a legal obligation closely akin to a duty to make restitution” (citation omitted). “A person who has been unjustly enriched at the expense of another is required to make restitution to the other.” Restatement of Restitution § 1 (1937). The underlying basis for awarding quantum meruit damages in a quasi-contract case is unjust enrichment of one party and unjust detriment to the other.
Id.
at 859,
Where, as here, an unenforceable contract is found, Massachusetts courts permit quantum meruit recovery on the theory of unjust enrichment.
J.A. Sullivan Corp. v. Commonwealth,
Where services are rendered by one party and voluntarily accepted by another, the presumption that there is an expectation of payment therefor, as well as an implied promise of payment for the reasonable worth of those services, may be rebutted by a showing of a strong self-interest in the outcome of the transaction by the party furnishing those services. Compensation on a quasi contract theory is not mandated where the services were rendered simply to gain a business advantage or where the plaintiff did not contemplate a personal fee. “[Cjhagrin, disappointment, vexation, or supposed ingratitude cannot be used as a subsequent basis for a claim of compensation where none was originally intended or expected.”
Salamon v. Terra,
The existence of an implied in fact contract is a factual question for the jury.
See Bushkin Assoc., Inc. v. Raytheon Co.,
6. Fraud.
In its complaint, Mass Cash claims that Comtrex made two fraudulent representations: that the two would pursue the Dunkin’ Donuts account jointly and that Dunkin’ Donuts had urged Mass Cash’s exclusion. Comtrex also moves for summary judgment on this count.
An action for fraud will lie under Massachusetts law where a defendant makes “a false representation of a material fact with knowledge of its falsity for the purpose of inducing the plaintiffs to act thereon, and that the plaintiffs relied upon the representation as true and acted upon it to their damage.”
Graphic Arts Finishers, Inc. v. Boston Redevelopment Auth.,
Fraudulent intent may be proved by “a statement made as of the party’s own knowledge, which is false; provided the thing
In the case at bar, there is no evidence that Comtrex’s statement that it would jointly pursue the Dunkin’ Donuts account with Mass Cash and would not cut out Mass Cash was fraudulent. Mass Cash invites the Court to draw the inference that Comtrex intended to freeze it out of the deal with Dunkin’ Donuts from the outset based on Comtrex’s later false assertion that Dun-kin’ Donuts did not want Mass Cash involved. However, the overwhelming evidence indicates that the parties were attempting to hammer out the essential terms of the Dunkin’ Donuts venture. Comtrex kept sending written dealership agreements to Speropoulos, which he refused to sign. Indeed, on December 5, 1990, Comtrex still considered its deal with Dunkin’ Donuts a joint effort as evidenced by its letter to Dun-kin’ Donuts which it forthrightly “ec’ed” to Mass Cash. To infer that deceit is at work any time contractual negotiations sour is untenable.
See Saxon Theatre Corp. v. Sage,
Additionally, Mass Cash cannot maintain an action in fraud based on the statement made by Comtrex regarding Dun-kin’ Donuts desire to exclude Mass Cash as it has failed to demonstrate any reliance on: the falsehood. Accordingly, the Court ALLOWS Comtrex’s motion for summary judgment on Count IV.
7. Chapter 93A.
General Laws, ch. 93A, § 2(a) prohibits “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” To fall within the purview of chapter 93A, conduct between businessmen must be “(1) within ‘at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) ... immoral, unethical, oppressive, or unscrupulous.’”
Levings v. Forbes & Wallace,
Because the Court finds no tortious or otherwise unscrupulous activity on the part of Comtrex, the wrath of chapter 93A cannot be unleashed. Summary judgment on Count V is therefore ALLOWED.
ORDER
For the foregoing reasons, defendant Com-trex’s motion for summary judgment (Docket No. 28) is ALLOWED on Counts I, II, IV and V. Defendant’s motion for summary judgment on Count III is DENIED. Plaintiff may amend its complaint to assert a quantum meruit claim within twenty days.
Notes
. In its brief, Mass Cash also asserts its relationship with Comtrex was a partnership or joint venture. At argument, as well as in its subsequent memoranda to the Court, however, Mass Cash represented that it is not pressing this argument.
. Mass Cash had written dealership agreements with Omron and TEC in 1990. Although no written dealership agreement existed between Mass Cash and Sharp Electronics for 1990, Mass Cash had such an agreement from 1978 to about 1986 or 1987, and again after 1990.
. Contradictory testimony exists concerning whether Mass Cash informed Comtrex of the Omron-Dunkin’ Donuts meeting, or whether Comtrex found out on its own.
. In its initial brief, Mass Cash also asserted that the transaction was a partnership or joint venture, not a contract for the sale of goods. However, in subsequent memoranda to the Court, as well as in oral argument, the plaintiffs do not pursue this theory. Based on these representations, the Court will not entertain the argument.
. Because this court concludes there is no enforceable contract, the court need not determine if it is terminable at will. When no definite term is set forth in a contract, the contract is terminable at will.
Maddaloni v. Western Mass. Bus Lines, Inc.,
Mass Cash does not dispute the lack of dura-tional term in the contract, but it seeks to fit its
This dispute buttresses the court's earlier conclusion that there was a lack of agreement on essential terms. Comtrex's standard agreement is terminable on thirty days notice. Even if Mass Cash could argue that there was a specific agreement on at least the first 750 registers, there was no agreement on the servicing. However, this dispute may well be relevant with respect to the remedies available under the claim of unjust enrichment and quantum meruit.
. Although not pleaded in its complaint, Mass Cash advances an argument under this cause of action in its brief.
. Mass Cash should be warned, however, that it is not entitled to the benefit of the bargain, but only reasonable compensation.