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Maverick Grp. Mktg., Inc. v. Worx Envtl. Prods., Inc.

United States District Court, W.D. Tennessee, Western Division

April 9, 2015

MAVERICK GROUP MARKETING, INC., Plaintiff/Counter-Defendant,

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Chancery Court Clerk and Master, Miscellaneous, Pro se, Memphis, TN.

For Maverick Group Marketing, Inc., Plaintiff, Counter Defendant: Malcolm Brown Futhey, III, LEAD ATTORNEY, THE FUTHEY LAW FIRM PLC, Memphis, TN; Malcolm Brown Futhey, III, THE FUTHEY LAW FIRM PLC, Memphis, TN.

For Worx Environmental Products, Inc., Defendant, Counter Claimant: Ahsaki Baptist, Amber D. Floyd, WYATT TARRANT & COMBS, LLP- Memphis, Memphis, TN; Robert E. Craddock, Jr., WYATT TARRANT & COMBS- Memphis P.O., Memphis, TN; Matthew F. Jones, MATTHEW F. JONES, ATTORNEY AT LAW, Southaven, MS.

For Worx Environmental Products, LTD., Worx Environmental Products of Canada, Inc., Defendants: Amber D. Floyd, Ahsaki Baptist, WYATT TARRANT & COMBS, LLP- Memphis, Memphis, TN.

For Worx Environmental Products of Canada, Inc., Counter Claimant: Ahsaki Baptist, WYATT TARRANT & COMBS, LLP- Memphis, Memphis, TN.

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Before the Court are the parties' cross-motions for summary judgment. First, On January 8, 2015, Defendants Worx Environmental Products, Ltd., Worx Environmental Products of Canada, Inc., and Worx Environmental Products, Inc. (collectively, " Worx" ) filed a Motion for Summary Judgment on the claims asserted by Plaintiff Maverick Group Marketing, Inc. (" Maverick" ). (ECF No. 56). Maverick responded on February 4, 2015 (ECF No. 62), to which Worx replied on February 18, 2015. (ECF No. 67). Second, on January 13, 2015, Maverick filed its Motion for Summary Judgment. (ECF No. 58). Maverick's Motion seeks partial summary judgment on its claims against Worx and full summary judgment on Worx's counterclaims

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against Maverick. Worx filed its Response on February 10, 2015 (ECF No. 64), to which Maverick filed its Reply on February 27, 2015. (ECF No. 69).


Local Rule 56.1(a) mandates that each party should provide a " separate, concise statement of material facts as to which the moving party contends there is no genuine issue for trial." That concise statement of facts " shall not exceed 10 pages without prior Court approval." Maverick's Statement of Undisputed Facts, affixed to its Motion for Summary Judgment, contains 92 separately numbered paragraphs and spans 13 pages without prior court approval. Although the Court here considers the additional material, such a voluminous statement of facts containing issues irrelevant to the legal questions presented for summary judgment is inappropriate.

More importantly, in responding to its opponent's statement of facts, each party took some liberty in presenting its case rather than simply disputing a statement and citing to the record, as required by the Local Rule. Argument in responses to statements of material facts clouds issues and encumbers the court with motions-within-motions. Furthermore, the parties' lengthy, conclusory statements of fact left the Court with little room to begin to discuss questions of law: in total, the Court counts only 29 out of a possible 162 " facts" as simply " undisputed." Most of these uncontested facts are references to dates, the death of certain witnesses, each company's business purpose, and general statements about the relevant actors.


Worx is a manufacturer of environmentally-friendly cleaning products. (Worx's Statement of Undisputed Facts ¶ 1, ECF No. 56-2). Maverick is a marketing company whose sole owner is John Garrison. ( Id. ¶ 2). On February 12, 2007, Maverick and Worx executed a Marketing Agency Agreement (the " Agreement" ), which forms the basis for this lawsuit. (Maverick's Statement of Undisputed Facts ¶ 8, ECF No. 59). From this point on, the parties essentially " dispute" every material fact in question, but some facts are clear. After the parties executed the Agreement, Maverick began its attempt to establish a relationship with Wal-Mart, one of Maverick's accounts, for the benefit Worx. At some point in 2007 or 2008, a previous outside consultant named Sergio Abarca became Worx's Vice President. ( Id. ¶ 36). Garrison continued to pursue a business relationship with Wal-Mart and communicated with Abarca during the process. Abarca also began contacting Wal-Mart on his own. On February 2, 2009, Abarca drafted a letter to Garrison and sent it as an email attachment on February 8, 2009. Worx claims that this letter terminated the Agreement. Garrison and Abarca had some communication after the February 8 email until Abarca sent another email purporting to terminate the Agreement on March 10, 2009. Maverick claims that this email terminated the Agreement, if the Agreement was terminated at all. Maverick then ceased communication with Wal-Mart and Worx.

Abarca continued to pursue Wal-Mart business, as evidenced by a string of emails between Abarca and Wal-Mart buyer Zach Freeze. The parties dispute the legal significance of these emails with regard to whether they imply that an " order" had been " solicited" under the Agreement. In a July 2, 2009 email, Abarca wrote to several Worx employees: " We just finished the teleconference with Wal-Mart. I am pleased to announce that we got a three-year contract. It is also confirmed that there are a total of 3,100 centers that we will service." ( Id. ¶ 61; Email from Sergio Abarca to Jack Neufeld et al. (July 2, 2009, 9:42 AM), ECF No.

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60-2, PageID 630).[1] On July 31, 2009, Wal-Mart ordered 3,118 cases of Worx product and sent a Production Notice. (Maverick's Statement of Undisputed Facts ¶ 63). On August 25, Wal-Mart received shipments of Worx product. ( Id. ¶ 64). On August 26, Wal-Mart drafted an " award letter" to Worx. ( Id. ¶ 65). Worx never paid commissions to Maverick.

Maverick filed its complaint in the Chancery Court of Shelby County, Tennessee on March 27, 2013, and Worx removed the action to this Court on May 1, 2013. (ECF No. 1). Maverick then filed an Amended Complaint with Court approval on September 18, 2013. (ECF No. 41). The Amended Complaint seeks damages for breach of contract and unjust enrichment, as well as declaratory relief. Worx answered and counterclaimed, asserting that Maverick breached the agreement, misrepresented a material fact, and committed fraud. (ECF No. 24, 42). Maverick claims that it is entitled to commissions under the Agreement's provisions for post-termination commissions on " orders solicited," discussed in detail below. Worx, on the other hand, claims that Maverick never solicited any orders and therefore is not entitled to commissions under the Agreement. Whether Maverick is entitled to commissions also hinges on timing: the Agreement provides for commissions on " orders solicited prior to the effective date" of termination. That effective date of termination is 120 days from effective notice.


Federal Rule of Civil Procedure 56(a) provides that a party is entitled to summary judgment if the moving party " shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." [2] In reviewing a motion for summary judgment, the court views the evidence in the light most favorable to the nonmoving party,[3] and it " may not make credibility determinations or weigh the evidence." [4] When the motion is supported by documentary proof such as depositions and affidavits, the nonmoving party may not rest on his pleadings but, rather, must present some " specific facts showing that there is a genuine issue for trial." [5] It is not sufficient " simply [to] show that there is some metaphysical doubt as to the material facts." [6] These facts must be more than a scintilla of evidence and must meet the standard of whether a reasonable juror could find by a preponderance of the evidence that the nonmoving party is entitled to a verdict.[7] When determining if summary judgment is appropriate, the Court should ask " whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." [8] In this Circuit, the nonmoving party must " put up or shut up" as to the critical issues

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of the claim.[9] The Court must enter summary judgment " against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." [10]


I. The Agreement

A. Which " Agreement" Controls

Worx's fraud claim, discussed thoroughly below, alleges that Garrison, on behalf of Maverick, sent an altered Agreement to Abarca. In its Response, Worx asserts that " a dispute exists as to the authenticity of the Agreement." [11] Moreover, in its Answer to Maverick's Complaint, Worx frequently " denies the authenticity and validity of the Agreement attached to the Second Amended Complaint as Exhibit A." [12] At the same time, Worx " admits that it entered into an Agreement with Maverick on or about February 12, 2007." [13] It further admits, for the purposes of its own Motion for Summary Judgment, that " the relevant provisions, Paragraphs Four (4) and Six (6) are the same in each version" of the Agreement.[14] Worx uses the Agreement before the Court in each of its arguments, only to challenge the " authenticity and validity" of the " altered" Agreement when it comes to its own fraud claim. Therefore, the parties agree that they are bound by the relevant language in the Agreement. Worx's allegation of fraud is based on an alleged misrepresentation that did not alter the validity of the February 12, 2007 Agreement. The Court further addresses the fraud argument below.

II. Commissions

A. Contract Interpretation

Above all, " [i]n 'resolving disputes concerning contract interpretation, [the Court's] task is to ascertain the intention of the parties based upon the usual, natural, and ordinary meaning of the contractual language.'" [15] But " [a] court's initial task in construing a contract is to determine whether the language of the contract is ambiguous." [16] Second, if the contract is ambiguous, Tennessee courts apply " established rules of construction to determine the parties' intent." [17] Finally, " '[o]nly if ambiguity remains after the court applies the pertinent rules of construction does [the legal meaning of the contract] become a question of fact' appropriate for a jury." [18] The Court is concerned with the intent of the parties at the time of contracting. Such intent " is presumed to be that specifically expressed in

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the body of the contract," [19] but when a contractual provision is " susceptible to more than one reasonable interpretation, [it] renders the terms of the contract ambiguous."

B. The MANA Code of Ethics

The parties concede that the Agreement--or at least the provisions relevant to this action--is binding. At the end of the Agreement, below the signature lines and in a separate text box, are 15 " accords" under the heading " MANA [Manufacturers' Agents National Association] Code of Ethics." Maverick claims that Worx breached the Agreement in failing to abide by the MANA Code of Ethics. Worx responds that these provisions represent an " aspirational code of conduct," which the parties did not intend to be binding. Maverick counters that the provisions were on the face of the Agreement and drafted by Worx, and therefore both parties intended the terms to be binding. This case represents the unusual circumstance in which the non-drafter of a contract seeks the inclusion of terms appended to the contract. When determining whether the parties intended the MANA Code of Ethics to be binding contractual language, the Court must " judge[] by an objective standard, i.e., what a reasonable onlooker would conclude the parties intended from the words expressed in the instrument." [20] Despite the inclusion of the words below the signature line, no reasonable mind could conclude that the parties intended to be bound by the MANA terms.

First, the format of the document shows that the parties could not have intended to include the MANA terms as contractual provisions. While not determinative, every provision of the Agreement other than the MANA provisions is listed above the signature line. The Code of Ethics is separately numbered and confined in a text box in a different format, contains check-boxes next to each provision, and is not referenced anywhere in the body of the Agreement. Maverick points to American General Equity Services Corp. v. Schablick, in which the Tennessee Court of Appeals enforced a bolded arbitration provision on the back side of the Agreement. [21] But in that case, the body of the contract contained the following language: " Notice: This document contains a pre-dispute arbitration clause, which appears on the reverse side at paragraphs 13 and 14." [22] More importantly, the terms on the reverse side of that contract were in standard contractual language, clearly showing the parties' intent to impose duties and conditions with respect to arbitration. Maverick also presents Staubach Retail Services-Southeast, LLC v. H.G. Hill Realty Co., in which the court enforced an unsigned, separate brokerage ...

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