Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-00414/USCOURTS-azd-2_09-cv-00414-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

The Armored Group, LLC, a Nevada

Limited Liability Company, 

Plaintiff, 

vs.

Supreme Corporation, a Texas

Corporation; and Supreme Corporation of

Texas, a Texas Corporation, 

Defendants. 

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No. CV 09-414-PHX-NVW

ORDER

Defendants Supreme Corporation and Supreme Corporation of Texas (collectively

“Supreme”) move for judgment on the pleadings against Plaintiff The Armored Group,

LLC (“Armored Group”) on Counts One, Two, and Three of Armored Group’s Third

Amended Complaint under Fed. R. Civ. P. 12(c). (Doc. # 103.) For the reasons stated

below, the Court denies Supreme’s motion. 

I. Background

Armored Group markets and sells armored trucks, armored SUVs, armored vans,

cash in transit vehicles, mobile check cashing and mobile ATM vehicles. Armored Group

alleges that from 2004 to 2006 it contracted with Robert Wilson, President of Supreme

Corporation, to be the exclusive sales representative for all armored vehicle products sold

by it or its sister company, Supreme Corporation of Texas. The written contract (“2004

Written Agreement”) also provided that Armored Group, “shall be entitled to a

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Commission on all purchase orders received and accepted by Supreme prior to the

termination of the Agreement, regardless of the place of delivery of the products and

regardless of whether or not [Armored Group] is directly or indirectly responsible for the

sale.” Armored Group alleges that upon expiration of the 2004 Written Agreement on

December 31, 2006, it entered into an oral agreement with both companies to continue

performing their sales and marketing on a nonexclusive basis. Supreme orally agreed to

pay Armored group a 10% commission on (1) the gross sales price of all armored vehicle

sales brought to Supreme, and (2) the gross sales price of all armored vehicle products

sold to customers under any vendor contract that resulted from Armored Group’s past and

future work efforts. Robert Wilson and James Bandy, Vice President of Supreme

Corporation of Texas, agreed to these terms in telephone conversations with Armored

Group’s CEO, Robert Pazderka, on or about December 31, 2006. 

Thereafter, Armored Group alleges that it continued to maintain office space and

business cards at Supreme Corporation of Texas’s facility and that Supreme in fact paid

the agreed upon 10% commissions on new sales. Armored Group also continued working

to secure a lucrative vendor contract with the U.S. State Department for Supreme, which

it had begun pursuing while the original written agreement was in effect. On or about

June 2007, Supreme learned that it was going to be awarded the vendor contract. Before

the contract was officially awarded, Robert Wilson allegedly terminated the oral

agreement with Armored Group to avoid paying it commissions for securing the vendor

contract. Supreme Corporation of Texas has since sold at least $500,000 worth of

armored vehicle products under the vendor contract. Armored Group alleges that

Supreme never intended to pay the agreed upon commission for the vendor contract, but

orally agreed to do so to induce Armored Group to continue working to close the deal. 

Based upon these allegations, the Third Amended Complaint asserts in Counts One, Two,

and Three that Supreme breached the oral agreement, committed fraud, and has been

unjustly enriched. 

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III. Motion For Judgment on the Pleadings 

A. Legal Standard

Judgment on the pleadings is properly granted when, taking all allegations in the

pleading as true, the moving party is entitled to judgment as a matter of law. 

Knappenberger v. City of Phoenix, 566 F.3d 936, 939 (9th Cir. 2009). 

B. Consideration of Material Referenced by the Parties

As a general rule, a district court may not consider materials not originally

included in the pleadings in deciding a Rule 12 motion. See U.S. v. 14.02 Acres of Land

More or Less in Fresno County, 547 F.3d 943, 955 (9th Cir. 2008). However, a

document not attached to the complaint may be considered if it is referred to in the

complaint and the authenticity of the document is not questioned. Branch v. Tunnell, 14

F.3d 449, 453 (9th Cir. 1994). The Court will consider the email Armored Group

attached to its response and the 2004 Written Agreement included in Supreme’s Motion

for Judgment on the Pleadings because Armored Group refers to the email and to the

2004 Written Agreement in the Third Amended Complaint, and there is no dispute over

the authenticity of these documents. However, the Court will disregard Armored Group’s

eight references to deposition testimony because the testimony is extraneous to the

complaint and can only be considered if the Court treats Supreme’s motion as a motion

for summary judgment, which the Court will not do.

C. A.R.S. § 44-1798.01

Supreme argues that Armored Group cannot maintain Counts One and Three of the

Third Amended Complaint because A.R.S. § 44-1798.01, which is part of Arizona’s sales

representative contracts statute, operates as a statute of frauds and renders the oral

agreement between Armored Group and Supreme unenforceable. Arizona’s sales

representative contracts statute applies to “principals” and “sales representatives.” A.R.S.

§ 44-1798. A principal is a person who is in the business of manufacturing or selling

products or services, uses a sales representative to solicit orders for the product or service,

and compensates the sales representative, at least in part, by commission. Id. A sales

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representative is a person who establishes a business relationship with a principal to

solicit orders for products or services and is compensated, at least in part, by commission. 

Id. 

The statute contains a number of protections for sales representatives. When the

agreement between a principal and a sales representative is terminated, the principal must

pay all of the commissions due to the sales representative at the time of termination

within thirty days after termination, and all of the commissions that become due after the

effective date of the termination within fourteen days after they become due. A.R.S. §

44-1798.02. A principal who fails to comply with these requirements is liable for three

times the amount of the commission owed. Id. The prevailing party in an action brought

under the statute is entitled to costs and attorneys’ fees. Id.

The statute provides additional protections in that it enables a sales representative

to recover his commission if (1) the principal makes a revocable offer and revokes the

offer in order to avoid paying the commission, (2) the revocation occurs after the

principal has obtained an order for his products through the efforts of the sales

representative, and (3) the product is provided to and paid for by the customer. A.R.S. §

44-1798.03. A principal who establishes a business relationship with a sales

representative to solicit orders in Arizona is considered to be doing business in Arizona

for purposes of jurisdiction. Id. § 44-1798.04. Any provision in a contract purporting to

waive a provision of the statute is considered void. Id. 

When first enacted in 1990, the statute provided that, “at the request of either

party,” the sales representative and the principal “shall enter into a written contract.” 

A.R.S. § 44-1798.01(A) (1990). It also stated that the principal “shall provide each sales

representative with a signed copy of the contract” and “shall obtain a signed receipt for

the contract from each sales representative.” Id. § 44-1798.01(B). Thus, the original

statute did not require a written contract. However, in 2006 the statute was amended and

now provides: “The sales representative and the principal shall enter into a written

contract. The contract shall set forth the method by which the sales representative’s

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commission is to be computed and paid.” A.R.S. § 44-1798.01(A) (2006). The

requirement that the principal provide each sales representative with a signed copy of the

contract was kept in its original form. Id. § 44-1798.01(B). Supreme contends that the

amendment created a statute of frauds. 

“When analyzing statutes, [Arizona courts] apply fundamental principles of

statutory construction, the cornerstone of which is the rule that the best and most reliable

index of a statute’s meaning is its language and, when the language is clear and

unequivocal, it is determinative of the statute’s construction.” Backus v. State, 220 Ariz.

101, 104, 203 P.3d 499, 502 (2009). However, when a statute is ambiguous, courts may

look to principles of statutory construction to interpret the statute. See State v. Sweet, 143

Ariz. 266, 269, 693 P.2d 921, 924 (1985). “An ambiguity in a statute is not simply that

arising from the meaning of particular words, but includes such as may arise in respect to

the general scope and meaning of a statute when all its provisions are examined.” Id.

(internal quotation and citation omitted). An ambiguity may also be present where there

is uncertainty as to the meaning of the terms of a statute. Id. In some cases, the

ambiguity may arise not because certain words or groups of words have more than one

meaning, but because the statute does not include necessary words, which causes

confusion as to the scope of the statute. Id. at 270, 693 P.2d at 925. 

The language of A.R.S. § 44-1798.01 is not clear and unequivocal. While it is

clear that a writing is required, the statute does not specify the consequence of not having

a written contract. A statute can sometimes be reasonably construed in more than one

way due to an omission. Sweet, 143 Ariz. at 270, 693 P.2d at 925. There are a number of

possible readings of the writing requirement of A.R.S. § 44-1798.01. One is that either

party can sue to require the other to reduce an agreement to writing. Another is that,

without a writing, a sales representative cannot invoke the protections and benefits, such

as damages in the amount of three times the commission due, of the statute. A third is

Supreme’s construction that A.R.S. § 44-1798.01 operates as a statute of frauds. Finally,

because A.R.S. § 44-1798.01(B) provides that the principal shall furnish a copy of the

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agreement to the sales representative, the failure to have a writing may suggest that the

principal failed to fulfill a duty created by the statute. 

“When there is confusion in statutory interpretation, it is necessary . . . to

determine the legislative intent for the statute.” Sweet, 143 Ariz. at 270, 693 P.2d at 925. 

When determining the intent of the legislature, it is helpful and proper to turn to the

overall purposes and aims of the legislature in enacting the statute in order to glean the

legislative intent. Id. As Armored Group contends, it is apparent from reading the statute

that the legislature enacted A.R.S. § 44-1798 in order to protect sales representatives. The

statute requires principals to pay commissions due to sales representatives promptly upon

termination of their business relationship. It allows a sales representative who

successfully sues under the statute to collect three times the commission due. It also

sharply limits the ability of a principal to object to personal jurisdiction. These provisions

illustrate that the purpose of the statute is to protect sales representatives. 

This understanding is confirmed by the legislative history surrounding the passage

of S.B. 1501, 39th Leg., 2d Reg. Sess. (Ariz. 1990), the first bill that was later codified as

A.R.S. §§ 44-1798–44-1798.05. Courts may look to legislative history to ascertain the

intent of the legislature. See Deer Valley Unified Sch. Dist. No. 97 v. Houser, 214 Ariz.

293, 299, 152 P.3d 490, 496 (2007) (examining committee minutes and senate fact sheet

in order to determine legislative intent). The legislature appears to have adopted the

statements concerning the bill’s purpose of Tom Taradash, past president of the Arizona

Apparel Association. According to the minutes of the Senate Committee on Commerce,

Labor, Insurance, and Banking, Tom Taradash testified that the purpose of the bill “was

to provide a method for which a commissioned sales representative may receive prompt

payments of commissions due him/her upon termination.” Minutes of the Committee on

Commerce, Labor, Insurance, and Banking for S.B. 1501, 39th Leg., 2d Reg. Sess. (Ariz.

1990). The bill would allow the sales representative to pursue compensation due in

Arizona rather than the state in which the company that hired the sales representative was

located. Id. The concern was that many companies put off paying commissions knowing

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that it would be too expensive and time consuming for the sales representative to sue in

another state. Id. The committee ultimately recommended the passage of the bill. Id. 

It also appears that the writing requirement of A.R.S. § 44-1798.01 was intended

to protect sales representatives. A.R.S. § 44-1798.01(B) places the onus of providing a

writing on the principal: “The principal shall provide each sales representative with a

copy of the contract.” If the burden is on the principal, penalizing the sales

representative by rendering the agreement unenforceable when the parties do not reduce

their agreement to writing would appear to run contrary to the legislature’s intent. 

The legislative history generated during the passage of the original bill also

suggests that the writing requirement protects sales representatives. The bill summary

from the Arizona House of Representatives explains that the bill allows either party to the

sales representative agreement to request that the contract be in writing. House Summary

for S.B. 1501, 39th Leg., 2d Reg. Sess. (Ariz. 1990). And, “[i]f there is a written

contract, the principal is required to provide the sales representative with a signed copy of

the contract . . . .” Id. The minutes from the meeting of the House’s Commerce

Committee also contain a short discussion in which Representative Goudinoff asked “if a

written contract is mandated or an option in the bill” or “if they could foresee any

problems where the [principals] would stop using written contracts” in response to the

bill. Minutes of the Commerce Committe for S.B. 1501, 39th Leg, 2d Reg. Sess. (Ariz.

1990). Mr. Taradash, testifying in support of the bill, responded that a written contract

would be an option and that he did not “foresee any problems.” Ms. McCarl, from the

Electronic Industries Association, the organization that sponsored the bill, stated that her

organization was not “opposed to written contracts” but was opposed to legislation that

would mandate contractual terms. Id. This exchange suggests that the concern of the

committee members who passed the original bill was that principals would resist reducing

agreements to writing. 

There is very little legislative history that touches upon the passage of S.B. 1402,

47th Leg. Sec. Reg. Sess. (Ariz. 2006), the bill that amended the statute in 2006. The

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House Summary only states that the bill “requires the principal and the sales

representative to enter into a written contract, rather than at the request of either party.” 

House Summary for S.B. 1402, 47th Leg. Sec. Reg. Sess. (Ariz. 2006). The Senate Fact

Sheet simply states that the amendment “requires the sales representative and the

principal to enter into a written contract.” Senate Fact Sheet for S.B. 1402, 47th Leg. Sec.

Reg. Sess. (Ariz. 2006). However, in light of the fact that the overall goal of the

legislation is to protect sales representatives, and that the option of a writing, at least

when the first bill was passed, was probably included to protect sales representatives, it

seems highly unlikely that the legislature intended, by adding the writing requirement in

2006, to fashion a statute of frauds, which, in effect, would prevent sales representatives

from recovering unless there is a writing. In fact, it is clear that the legislature, at least

initially, did not intend to create a statute of frauds, since having a writing was optional in

the original statute. At a minimum, such a significant change would likely have

generated some discussion. However, there is nothing to suggest that the legislature

contemplated that A.R.S. § 44-1798.01 would operate as a statute of frauds. 

If the legislature intended A.R.S. § 44-1798.01 to be a statute of frauds, it could

have explicitly said so. See Lee v. State, 218 Ariz. 235, 236-38, 182 P.3d 1169, 1170-72

(2008) (declining to abrogate long-held understanding of mail delivery rule in light that

statute requiring that claimant “file” a notice of claim did not speak to the proof required

to show delivery and the legislature could have, but did not, specify what sort of delivery

constituted a filing). A.R.S. § 44-101, which is Arizona’s general statute of frauds, is

titled “Statute of Frauds” and explicitly states that, “no action shall be brought in any

court in the following [nine] cases unless the promise or agreement upon which the action

is brought, or some memorandum thereof, is in writing and signed by the party to be

charged . . . .” In contrast, there is no language whatsoever in A.R.S. § 44-1798.01 that

even suggests that the consequence of not having a written contract is that “no action”

may be brought in court. 

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In addition, a written contract is not necessarily required to satisfy a statute of

frauds. As A.R.S § 44-101 explains, even “some memorandum” of the agreement

between the parties may suffice to take the agreement out of the statute. See Custis v.

Valley Nat’l Bank, 92 Ariz. 202, 205, 375 P.2d 558, 561 (1962) (“A memorandum

sufficient to satisfy the requirements of the Statute of Frauds need not be a writing

intended by the parties to be the integration of their agreement. It may be an informal

writing, such as a letter, and may be addressed to a third party . . . .”) (internal quotations

and citations omitted). The agreement or memorandum must also be signed by the party

to be charged. A.R.S. § 44-101; RESTATEMENT (SECOND) OF CONTRACTS § 131 (1981). 

Had the legislature intended A.R.S. § 44-1798.01 to be a statute of frauds, it is reasonable

to expect that it would have specified that “some memorandum” of the agreement

sufficed, and that the writing had to be signed by the party to be charged. However, there

is no language to that effect in A.R.S. § 44-1798.01. 

The sales representative contracts statute gives sales representatives a number of

generous benefits and protections. If Supreme’s construction were adopted, sales

representatives laboring under oral agreements would be deprived of not only the

additional benefits created by the statute, but also of a run-of-the-mill action in contract,

even though the provision at issue contains none of the terminology that is typically

associated with statutes of frauds, does not specify any consequences for failing to have a

writing, was not initially intended as a statute of frauds, and even though the purpose of

the statute is to protect sales representatives. This cannot be what the legislature intended

in amending A.R.S. § 44-1798.01 to require a writing. 

For these reasons, the Court finds that A.R.S. § 44-1798.01 does not operate as a

statute of frauds. Therefore, Supreme’s contention that Counts One and Three must be

dismissed for failure to comply with the writing requirement of A.R.S. § 44-1798.01 fails. 

D. Unjust Enrichment

Supreme contends that Armored Group may not pursue its unjust enrichment claim

because unjust enrichment is not a remedy that is legally available to a contracting party. 

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It argues that under the 2004 Written Agreement, Armored Group was not entitled to

commissions on any orders received by Supreme after December 31, 2006. According to

Supreme, it therefore follows that Armored Group is entitled to commissions after

December 31, 2006, only if required by a subsequent contract between the parties, such as

the alleged oral agreement. But if the parties entered into a contract, as Armored Group

alleges, then the terms of that contract, and not an unjust enrichment theory, control

Armored Group’s right to recovery. 

Supreme’s contention misses the mark. The 2004 Written Agreement states, 

“After the termination of this Agreement for any reason whatsoever, [Armored Group]

shall be entitled to a Commission on all purchase orders received and accepted by

Supreme prior to the termination of the Agreement, regardless of the place of delivery of

the Products and regardless of whether or not [Armored Group] is directly or indirectly

responsible for the sale.” That provision, Supreme contends, disallows Armored Group’s

claimed commissions on purchase orders not “received and accepted by Supreme prior to

the termination of the Agreement.” However, that provision does not state that Armored

Group will not receive commissions on sales procured by Armored Group after the

termination of the 2004 Written Agreement. Without deciding the issue, the contract

appears to be silent as to what would happen in those circumstances, perhaps because the

parties assumed that if Supreme terminated the contract, Armored Group would no longer

continue to procure sales on Supreme’s behalf. Armored Group’s Third Amended

Complaint, while not crystal clear, fairly alleges that Supreme’s contract with the State

Department was the result, at least in part, of efforts undertaken by Armored Group after

the expiration of the 2004 Written Agreement. The Third Amended Complaint therefore

can be fairly read to state that either the oral agreement governs; or, if the oral agreement

is unenforceable, as Supreme contends, then Armored Group is entitled to restitution

under an unjust enrichment theory. 

Trustmark Insurance Co. v. Bank One, Arizona, NA, 202 Ariz. 535, 541, 48 P.3d

485, 491 (Ct. App. 2002), is inapposite because Armored Group is not trying to “avoid

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1

 Restitution began as a remedy to enforce contractual rights which could not be

enforced in common law courts due to lack of formality of the contract. Murdock-Bryant

Constr. v. Pearson, 146 Ariz. 48, 52, 703 P.2d 1197, 1201 (1985). Quantum meruit was a

common law action which allowed recovery where the plaintiff had performed services for

the defendant, whether the services were provided at the defendant’s request, or under a

theory of implied-in-fact contract, or without the defendant’s request but benefitting him in

some way. Id. at 52-23, 703 P.2d at 1201-02. This concept had as its central core the

principle against unjust enrichment, and it has been adopted by the American Law Institute,

which has stated: “A person who has been unjustly enriched at the expense of another is

required to make restitution to the other.” Id. at 53, 703 P.2d at 1202 (quoting RESTATEMENT

OF RESTITUTION § 1). These concepts are also a part of Arizona jurisprudence. Id. 

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possible contractual limitations on its recovery by resorting to an unjust enrichment cause

of action.” Instead, Armored Group seeks to recover either under the oral agreement or

pursuant to an unjust enrichment theory. A person is unjustly enriched if he has received

a benefit and retention of the benefit would be unjust. RESTATEMENT OF RESTITUTION §

1 cmt. a (1937). If a person performs work, renders services, or expends money under an

agreement which is unenforceable, but not illegal, he may recover in quantum meruit for

the value of the services and expenses reasonably incurred in good faith. Ruck Corp. v.

Woudenberg, 125 Ariz. 519, 522, 611 P.2d 106, 109 (Ct. App. 1980). In fact, where an

express contract is pleaded, it has been held unnecessary to plead a claim in quantum

meruit or in quasi-contract, even though the latter is the only available basis of recovery.1

Trollope v. Koerner, 106 Ariz. 10, 19, 470 P.2d 91, 100 (1970). Rule 8(d) of the Federal

Rules of Civil Procedure provides that a party may state as many separate claims or

defenses as it has, regardless of consistency. Fed. R. Civ. P. 8(d). Armored Group may

therefore plead breach of contract and unjust enrichment as alternate theories.

IT IS THEREFORE ORDERED that Supreme’s Motion for Judgment on the

Pleadings (doc. # 103) is denied. 

DATED this 23rd day of June, 2010.

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