Case Title: Resource Technology Corp. v. Fisher Scientific Co.

Citation: 

Docket Number: 96-38

State: wyoming

Court: Wyoming Supreme Court

Date: 1996-10-04T00:00:00Z

Document:
Resource Technology Corp. v. Fisher Scientific Co.1996 WY 129924 P.2d 972Case Number: 96-38Decided: 10/04/1996Supreme Court of Wyoming
RESOURCE TECHNOLOGY CORPORATION, a Wyoming Corporation;

Robert Rucinski; and 
Joseph Morotti,

 Appellants 
(Plaintiffs),

v.

FISHER SCIENTIFIC 
COMPANY, a Delaware Corporation,

 Appellee (Defendant).

Appeal from District 
Court, Albany County, Arthur T. Hanscum, J.

C.M. Aron and K. 
Karla Tull of Aron and Hennig, Laramie, for Appellants 
(Plaintiffs).

Ford T. Bussart 
and B. Joan Dodd of Bussart, West, Rossetti, Piaia & Tyler, P.C., Rock 
Springs, for Appellee (Defendant).

Before 
TAYLOR, C.J., and THOMAS, MACY, GOLDEN* and LEHMAN, 
JJ.

* Chief Justice at time of 
oral argument.

MACY, Justice.

[¶1]      Appellants 
Resource Technology Corporation, Robert Rucinski, and Joseph Morotti appeal from 
the judgment which was entered in favor of Appellee Fisher Scientific 
Company.

[¶2]      We 
affirm.

ISSUES

[¶3]      The appellants 
present the following issues on appeal:

1.         Where 
FISHER SCIENTIFIC COMPANY induced Mr. Morotti and Mr. Rucinski to take part in a 
joint, four-year business project, then FISHER abandoned the project after one 
year, and after ordering production of less than half the quantity of goods 
originally intended: Did the trial court err in holding that the doctrine of 
promissory estoppel did not apply?

2.         Where 
FISHER SCIENTIFIC COMPANY induced RT CORPORATION to build a new facility for 
future production, then FISHER ordered no further production: Did the trial 
court err in holding that the doctrine of promissory estoppel did not 
apply?

3.         Did 
the business relationship between FISHER SCIENTIFIC COMPANY and RT CORPORATION - 
whether or not it was technically a joint venture - impose on FISHER a legal 
obligation of good faith?

FACTS

[¶4]      Fisher 
Scientific, a Delaware corporation whose headquarters were located in 
Pennsylvania, was in the business of supplying and marketing scientific 
equipment and chemical materials. In June 1988, Fisher Scientific and Western 
Research Institute, an affiliate corporation of the University of Wyoming 
located in Laramie, began discussing the potential development and marketing of 
a line of products known as "Solid Waste Reference Standards" (the products). 
Rucinski and Morotti were employed by Western Research Institute at that time 
and were involved in the development of the project and in the discussions with 
Fisher Scientific.

[¶5]      Western Research 
Institute subsequently decided not to continue its involvement in the project. 
Morotti and Rucinski, whose employment had been terminated with Western Research 
Institute, negotiated with Fisher Scientific to take over Western Research 
Institute's role in the project. In order to facilitate that arrangement, 
Morotti and Rucinski formed Resource Technology, a Wyoming 
corporation.

[¶6]      On September 7, 
1988, while the parties were negotiating the particulars of the arrangement, 
Fisher Scientific faxed a worksheet to Rucinski which outlined the "expected 
case scenario" for the production and marketing of the products over a five-year 
period. Resource Technology and Fisher Scientific executed a distribution 
agreement which was dated September 13, 1988. Under this agreement, Resource 
Technology was generally obligated to collect solid waste materials in bulk and 
homogenize, package, and inventory the materials at its place of business in 
Laramie. Fisher Scientific's general duties under the distribution agreement 
were to review the product lot specifications which Resource Technology 
submitted, to certify those lots which Fisher Scientific accepted, and to market 
the products. The distribution agreement did not include the quantity 
projections which had been outlined in the September 7, 1988, facsimile; 
however, it included provisions which set forth the process for determining 
which product lots would be produced and marketed. The distribution agreement 
also stated that the agreement would be in effect for four years from January 1, 
1989, and included provisions for extending the term of the agreement under 
certain circumstances.

[¶7]      In 1991, Resource 
Technology's lease expired on the building where it produced the products. 
Resource Technology purchased land and constructed a new building to house its 
production facility. During the term of the distribution agreement, Fisher 
Scientific accepted and certified fifteen product lots, and it advanced $388,196 
to Resource Technology for inventories.

[¶8]      Unfortunately, 
the product sales were disappointing. The potential customers were reluctant to 
purchase the products because using the products added an element of expense to 
their analytical processes which they were not required or willing to incur. The 
parties believed, however, that a viable market would eventually exist because 
they thought that the United States Environmental Protection Agency was going to 
promulgate a mandate which would encourage customers to use the products. 
Resource Technology and Fisher Scientific took numerous steps to encourage the 
adoption of the mandate and also executed a cooperative research and development 
agreement with the Environmental Protection Agency to promote the use of the 
products. The Environmental Protection Agency notified Resource Technology and 
Fisher Scientific in August 1992 that, despite their efforts, the mandate was 
not going to become law.

[¶9]      In light of the 
Environmental Protection Agency's notification, Fisher Scientific decided not to 
renew the distribution agreement which was slated to expire on December 31, 
1992. Fisher Scientific notified Resource Technology that, effective October 1, 
1992, it would release Resource Technology from its obligation under the 
distribution agreement to deal exclusively with Fisher Scientific with regard to 
the products. Fisher Scientific forfeited all the money which it had advanced to 
Resource Technology and all its claims to any proceeds from future sales of the 
products.

[¶10]   On July 9, 1993, the appellants 
filed a complaint in the district court against Fisher Scientific, asserting 
claims for promissory estoppel and breach of the implied covenant of good faith 
and fair dealing. After holding a bench trial, the trial court entered a 
judgment in favor of Fisher Scientific. The appellants subsequently perfected 
their appeal to this Court.

DISCUSSION

A. Standard 
of Review

[¶11]   The trial court made express 
findings of fact and conclusions of law under W.R.C.P. 52(a). We, therefore, 
apply the standard of review which was recently stated in Garaman, Inc. v. 
Williams, 912 P.2d 1121, 1125 (Wyo. 1996):

In accordance with 
W.R.C.P. 52(a), this Court will not set aside a district court's findings of 
fact unless the findings are clearly erroneous. Hopper v. All Pet Animal Clinic, 
Inc., 861 P.2d 531, 538 (Wyo. 1993). "`A finding is "clearly erroneous" when[,] 
although there is evidence to support it, the reviewing court on the entire 
evidence is left with the definite and firm conviction that a mistake has been 
committed.'" Id. (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525, 542, 92 L. Ed. 746 (1948)). Stated alternatively: "[A] 
determination that a finding is against the great weight of the evidence means a 
finding will be set aside even if supported by substantial evidence." Id. See 
also Samuel v. Zwerin, 868 P.2d 265, 267 (Wyo. 1994). We review a district 
court's conclusions of law de novo on appeal. Hopper, 861 P.2d  at 
538.

McNeiley v. 
Ayres Jewelry Co., 886 P.2d 595, 597 (Wyo. 1994).

B. Choice of 
Law

[¶12]   As an initial matter, we must 
determine which state's laws govern. Wyoming is, of course, the forum state; 
however, the distribution agreement included a choice of law provision which 
stated: "This Agreement shall be governed by and construed in accordance with 
the laws of the Commonwealth of Pennsylvania." The RESTATEMENT (SECOND) OF 
CONFLICT OF LAWS sets forth the following rule for applying choice of law 
agreements:

(1) The law of the state 
chosen by the parties to govern their contractual rights and duties will be 
applied if the particular issue is one which the parties could have resolved by 
an explicit provision in their agreement directed to that issue.

(2) The law of the state 
chosen by the parties to govern their contractual rights and duties will be 
applied, even if the particular issue is one which the parties could not have 
resolved by an explicit provision in their agreement directed to that issue, 
unless either

(a) the chosen state has 
no substantial relationship to the parties or the transaction and there is no 
other reasonable basis for the parties' choice, or

(b) application of the 
law of the chosen state would be contrary to a fundamental policy of a state 
which has a materially greater interest than the chosen state in the 
determination of the particular issue. . . .

RESTATEMENT 
(SECOND) OF CONFLICT OF LAWS § 187 (1971 & Supp. 1989). This Court stated in 
Smithco Engineering, Inc. v. International Fabricators, Inc., 775 P.2d 1011, 
1018 (Wyo. 1989), that we will not apply foreign law when it is contrary to the 
law, public policy, or the general interests of Wyoming's citizens.

[¶13]   Fisher Scientific's headquarters 
were located in Pennsylvania, and that state, therefore, had a reasonable 
relationship to the matters at issue in this case. Additionally, the application 
of Pennsylvania law in this case will not be contrary to the law, public policy, 
or the general interests of our citizens because Pennsylvania's laws and 
Wyoming's laws are very similar on the matters at issue in this case. We will, 
therefore, recognize the parties' agreement and apply Pennsylvania law to 
determine the matters of substantive law which are in dispute in this case. 
RESTATEMENT, supra, at §§ 186, 187; see also Smithco Engineering, Inc., 775 P.2d  
at 1018; J.W. Denio Milling Company v. Malin, 25 Wyo. 143, 155-56, 165 P. 1113 
(1917).

C. 
Distribution Agreement

[¶14]   The trial court found that the 
distribution agreement was not ambiguous and that it was fully integrated. The 
trial court ruled, therefore, that parol evidence was not admissible to 
contravene the written contract. Although the appellants do not raise an issue 
on appeal which directly addresses the integration issue, we must consider this 
matter in order to correctly decide the issues which were raised by the 
appellants. The appellants contend that the distribution agreement was not fully 
integrated because it did not define the types or quantities of products which 
would be produced and marketed under that agreement. They argue that the trial 
court, therefore, should have allowed parol evidence to be admitted at the 
trial.

[¶15]   The determinations of whether a 
contract is integrated and what effect a court will give to parol evidence are 
matters of substantive law. 16 AM.JUR.2D Conflict of Laws § 132 (1979); 
RESTATEMENT, supra, at § 140. In accordance with our earlier decision on the 
choice of law issue, we will apply Pennsylvania law to determine whether the 
distribution agreement was fully integrated.

[¶16]   Under Pennsylvania law, "[w]here 
parties, without any fraud or mistake have deliberately put their engagements in 
writing, the law declares the writing to be not only the best, but the only 
evidence of this agreement.'" Snyder Brothers, Inc. v. Peoples Natural Gas 
Company, 450 Pa. Super. 371, 676 A.2d 1226, 1231 (1996) (quoting Gianni v. R. 
Russell & Co., Inc., 281 Pa. 320, 126 A. 791 (1924)). In Snyder Brothers, 
Inc., the Pennsylvania court went on to state:

"All preliminary 
negotiations, conversations and verbal agreements are merged in and superseded 
by the subsequent written contract . . . and unless fraud, accident or mistake 
be averred, the writing constitutes the agreement between the parties, and its 
terms cannot be added to nor subtracted from by parol evidence."

676 A.2d  at 1231 
(quoting Union Storage Co. v. Speck, 194 Pa. 126, 45 A. 48 (1899)).1 Under the parol evidence rule, 
neither oral testimony nor prior written agreements are admissible to explain or 
vary the terms of a fully integrated written contract. Gemini Equipment Co. v. 
Pennsy Supply, Inc., 407 Pa. Super. 404, 595 A.2d 1211, 1215 (1991). The parol 
evidence rule is particularly applicable to contracts which contain integration 
clauses. See Snyder Brothers, Inc., 676 A.2d  at 1231; National Cash Register 
Company v. Modern Transfer Co., Inc., 224 Pa. Super. 138, 302 A.2d 486, 489 
(1973).

[¶17]   In this case, the distribution 
agreement contained an integration clause which stated:

11.4 Entire 
Agreement: This Agreement, including exhibits, constitute[s] the entire 
agreement between the Parties relating to the subject matter hereof and cancels 
and supersedes all prior agreements and understandings, whether written or oral, 
between the Parties with respect to such subject matter.

In addition to 
the integration clause, the distribution agreement prohibited oral modification 
or waiver of any of the agreement's terms. The distribution agreement also 
defined the period during which the contract would remain in effect and outlined 
the parties' rights and obligations. See Gemini Equipment Co., 595 A.2d  at 1216. 
According to the distribution agreement's plain language, the parties intended 
for the agreement to be a complete recitation of their 
understandings.

[¶18]   The lack of a specification of the 
types or quantities of products which were to be produced did not render the 
distribution agreement incomplete. See id. Given the nature of the agreement - 
Resource Technology submitted product lot specifications to Fisher Scientific 
and Fisher Scientific certified the lots which it accepted - it would have been 
virtually impossible to specify the types of products which would be produced or 
to set an absolute quantity quota. The September 7, 1988, facsimile set forth 
only an "expected case scenario" for the quantities which would be produced and 
marketed during the term of the contract. While the parties could have included 
that earlier document as a part of their distribution agreement, they did not, 
and the integration clause in the distribution agreement expressly canceled all 
prior agreements and understandings. We conclude, therefore, that the contract 
was fully integrated and that parol evidence was not admissible to add to or 
subtract from the written distribution agreement.

D. Promissory 
Estoppel

[¶19]   The appellants presented two 
separate promissory estoppel claims. Morotti and Rucinski asserted the first 
claim. They were apparently contending that Fisher Scientific induced them into 
participating in the project by making express representations as to the number 
of product lots which would be produced and marketed and as to the amount of 
money which Fisher Scientific would appropriate for the project. Morotti and 
Rucinski maintain that they relied upon those representations to their detriment 
when they did not pursue other employment opportunities and encumbered their 
other assets in order to participate in the project.

[¶20]   All the appellants made the second 
promissory estoppel claim against Fisher Scientific. They asserted that Fisher 
Scientific induced them to build the production facility in 1991 by making 
representations as to the additional production which would be required. The 
appellants contend that they relied upon Fisher Scientific's representations to 
their detriment when they incurred costs for construction of the facility and 
environmental cleanup.

[¶21]   In its findings of fact, the trial 
court found that the appellants' "reliance . . ., if any, and inducements made 
by Fisher, if any, have inured to the benefit of [the appellants] and in no way 
to their detriment." The trial court, therefore, concluded:

4. The doctrine of 
promissory estoppel [was] not an appropriate claim for relief under the facts 
and circumstances of this case. In any event, [the appellants] have failed to 
prove by a preponderance of the evidence that they suffered any consequential 
economic damage secondary to any legal obligation created by inducements made by 
Defendant Fisher or reliance thereon by [the appellants].

[¶22]   Much of the evidence which 
pertained to the appellants' promissory estoppel claims was parol evidence that 
added to and varied the express terms of the distribution agreement. Our earlier 
rulings that the contract was fully integrated and that parol evidence was 
inadmissible essentially decide this issue.

[¶23]   Nonetheless, we are convinced that, 
even had all the parol evidence about Fisher Scientific's alleged promises been 
admissible, the appellants still would not have prevailed on their promissory 
estoppel claims. The promissory estoppel requirements in Pennsylvania 
are:

"(1) the promisor must 
make a promise that he should reasonably expect to induce action or forbearance 
on the part of the promisee; (2) the promise must actually induce such action or 
forbearance; and (3) injustice can be avoided only by enforcement of the 
promise."

Holewinski v. 
Children's Hospital of Pittsburgh, 437 Pa. Super. 174, 649 A.2d 712, 714 (1994), 
appeal denied 540 Pa. 641, 659 A.2d 560 (1995) (quoting Cardamone v. University 
of Pittsburgh, 253 Pa. Super. 65, 384 A.2d 1228, 1233 (1978) (en banc)). See 
also Thatcher's Drug Store of West Goshen, Inc. v. Consolidated Supermarkets, 
Inc., 535 Pa. 469, 636 A.2d 156, 160 (1994). The Pennsylvania courts have held 
that the remedy under the promissory estoppel doctrine is determined by taking 
into account what is required to prevent injustice. Arasi v. Neema Medical 
Services, Inc., 407 Pa. Super. 393, 595 A.2d 1205, 1209 (1991), appeal denied 
529 Pa. 655, 604 A.2d 247 (1992). This remedy may include enforcement of the 
promise or payment of damages. Id. The trial court's finding in this case that 
the appellants did not suffer any consequential economic damages as a result of 
Fisher Scientific's representations was tantamount to a finding, under the third 
element of the promissory estoppel requirements, that the appellants did not 
suffer an injustice which Fisher Scientific should remedy.

[¶24]   The appellants presented some 
evidence about other employment which Morotti and Rucinski could have 
potentially accepted instead of forming Resource Technology and executing the 
distribution agreement with Fisher Scientific. That evidence was, however, 
speculative. The trial evidence reveals that Morotti and Rucinski received 
compensation during the time that they were participating in the project. As to 
the appellants' contention that they suffered harm as a result of their 
construction of the production facility, they do not direct us to any evidence 
in the record which supports this claim. In fact, the appellants continued to 
own and use the building after the project ended, and they built up equity in 
the property. The record reveals that Fisher Scientific suffered economic losses 
as a result of its involvement in the project. Fisher Scientific forfeited the 
money which it had advanced to Resource Technology and all its rights to any 
future proceeds from sales of the products. Additionally, Fisher Scientific 
spent a great deal of money to promote the failed product line.

[¶25]   All the parties incurred some 
losses and were disappointed because the project failed. We agree with the trial 
court that the appellants' promissory estoppel claims must fail because they did 
not suffer an injustice. Consequently, we do not need to determine whether the 
representations were actually made or whether the representations induced the 
appellants to act.

E. Implied 
Covenant of Good Faith and Fair Dealing

[¶26]   The appellants contend that the 
trial court erred when it denied their claim for breach of the implied covenant 
of good faith and fair dealing. They maintain that Fisher Scientific owed them a 
duty of good faith and fair dealing because the parties were involved in a joint 
venture to produce and market the products.

[¶27]   The trial court 
concluded:

2.         [The 
appellants'] asserted claim for covenant of good faith and fair dealing is not a 
cognizable claim under the controlling precedents.

3.         [The 
appellants] have failed to prove any facts which would adequately support a 
finding by this Court that a joint venture existed among the 
parties.

[¶28]  The courts look to the parties' 
intentions to determine whether a joint venture has been formed. Newlin 
Corporation v. Commonwealth Department of Environmental Resources, 134 
Pa.Cmwlth. 396, 579 A.2d 996, 999 (1990), appeal denied 527 Pa. 595, 588 A.2d 915 (1991).

"A joint venture is not a 
status created or imposed by law; it is a relationship voluntarily assumed and 
arising wholly from contract. Whether persons have engaged in it must depend 
primarily upon their intention as expressed in agreement and the construction 
they have placed upon it."

Id. (quoting 
Snellbaker v. Herrmann, 315 Pa. Super. 520, 462 A.2d 713, 716 (1983) (citation 
omitted)).

[¶29]   In this case, the distribution 
agreement's express language indicated that Resource Technology and Fisher 
Scientific did not intend to form a joint venture. The distribution agreement 
explicitly stated: "This Agreement does not constitute either Party the agent or 
legal representative of the other for any purpose whatsoever."

[¶30]   The Pennsylvania courts also look 
to a four-part test to determine whether a joint venture exists:

"`To constitute a joint 
venture certain factors are essential: (1) each party to the venture must make a 
contribution, not necessarily of capital, but by way of services, skill, 
knowledge, materials or money; (2) profits must be shared among the parties; (3) 
there must be a "joint proprietary interest and right of mutual control over the 
subject matter" of the enterprise; (4) usually, there is a single business 
transaction rather than a general and continuous transaction.' McRoberts v. 
Phelps, 391 Pa. 591, 599, 138 A.2d 439, 443-444 (1958)."

Newlin 
Corporation, 579 A.2d  at 999 (quoting Snellbaker, 462 A.2d at 716).

[¶31]   Both parties contributed to the 
project by providing capital and scientific expertise, and the parties' 
relationship involved only a single business transaction. The parties did not, 
however, have a joint ownership or a proprietary interest in the business. The 
distribution agreement set out in great detail what the parties' respective 
rights and obligations were; however, it did not include provisions which 
defined the types of mutual control of the business and the sharing of profits 
and losses traditionally associated with a joint venture. See Newlin 
Corporation, 579 A.2d at 999-1000; Wilkins v. Heebner, 331 Pa. Super. 491, 480 A.2d 1141, 1144-45 (1984). We, therefore, agree with the trial court that a 
joint venture did not exist between the parties.

[¶32]   The appellants argue that, even if 
a joint venture did not exist, Fisher Scientific still owed them a duty of good 
faith and fair dealing and that Fisher Scientific breached that duty. 
Pennsylvania law limits the situations in which a separate implied duty of good 
faith and fair dealing exists in the performance of a contract. See Commonwealth 
Department of Transportation v. E-Z Parks, Inc., 153 Pa.Cmwlth. 258, 620 A.2d 712, 717, appeal denied 534 Pa. 651, 627 A.2d 181 (1993); see also Wilder v. 
Cody Country Chamber of Commerce, 868 P.2d 211, 221-22 (Wyo. 1994) (recognizing 
that, in Wyoming, tort recovery under the implied covenant of good faith and 
fair dealing will occur only in rare and exceptional cases when a special 
relationship exists between the parties).

This duty of good faith 
is limited to situations where there is some special relationship between the 
parties, such as a confidential or fiduciary relationship. A confidential 
relationship exists when "one person has reposed a special confidence in another 
to the extent that the parties do not deal with each other on equal terms, 
either because of an overmastering or dominance on one side, or weakness, 
dependence or justifiable trust, on the other." Estate of Clark, 467 Pa. 628, 
635, 359 A.2d 777, 781 (1976). (citation omitted). A business association may be 
the basis of a confidential relationship "only if one party surrenders 
substantial control over some portion of his affairs to the other." In Re: 
Estate of Scott, 455 Pa. 429, 433, 316 A.2d 883, 886 (1974).

E-Z Parks, Inc., 
620 A.2d  at 717.

[¶33]   We have not found any evidence 
which indicates that a special relationship existed between Fisher Scientific 
and the appellants. Their relationship was governed by the distribution 
agreement's terms. Fisher Scientific did not attempt to dominate the appellants, 
and the appellants were not weak or dependent upon Fisher Scientific. Morotti 
and Rucinski were, in fact, experienced and sophisticated businessmen, and they 
did not surrender substantial control of their business affairs to Fisher 
Scientific.

[¶34]   We conclude that the trial court 
correctly denied the appellants' claim for breach of the implied covenant of 
good faith and fair dealing.

CONCLUSION

[¶35]   We hold that the trial court did 
not err by granting a judgment in favor of Fisher Scientific and against the 
appellants.

[¶36]   Affirmed.

FOOTNOTE

1 The appellants do not 
assert that fraud, accident, or mistake occurred in the execution of the 
distribution agreement.