Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-91-07113/USCOURTS-ca10-91-07113-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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• 

• FIL~O 

United State& C.OUrt £Appeal• UNITED STATES COURT OF APPEALS Tenth Circuit 

ALVIN J. WATSON, INC., and 

CONTROL POWER, INC., 

TENTH CIRCUIT 

Plaintiffs-Appellants, 

EMERSON ELECTRIC CO., a Missouri 

corporation, 

Defendant-Appellee. 

NOV 2 3 1992 

ROBERT L. HOECKER 

Clerk 

No. 91-7113 

(D.C. No. CIV-91-168-S) 

(E.D. Okla.) 

ORDER AND JUDGMENT* 

Before ANDERSON,Circuit Judge, and McWILLIAMS and GIBSON**, Senior 

Circuit Judges. 

Alvin J. Watson, Inc. (Watson, Inc.) and Control Power, Inc. 

(Control) brought this action against Emerson Electric Company 

(Emerson) in the United States District Court for the Eastern District of Oklahoma for breach of an oral contract and for tortious 

interference with another contract. Jurisdiction was based on 

diversity. 28 U.S.C. § 1332. After discovery, the district 

court, on motion, granted summary judgment for Emerson on both 

counts. The plaintiffs appeal the judgment thus entered. 

* This order and judgment has no precedential value and shall not 

be cited, or used by any court within the Tenth Circuit, except 

for purposes of establishing the doctrines of the law of the case, 

res judicata, or collateral estoppel. 10th Cir. R. 36.3. 

** Honorable Floyd R. Gibson, Senior Judge, U.S. Court of Appeals, Eighth Circuit, sitting by designation. 

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Plaintiffs' amended complaint was filed on April 19, 1991. 

From it we learn that Watson, Inc. and Control are sister corporations organized by Alvin J. Watson (Watson) under the laws of Wyomipg and that their principal place of business is now in Ardmore, 

Oklahoma. Emerson, the defendant, is a corporation organized under the laws of Missouri. 

Plaintiffs alleged in Count 1 of the amended complaint that 

Watson provided services in 1984 as a manufacturer's representative for Emerson for sale of designated components and that 

Emerson breached the agreement and owed Watson in excess of 

1 $50,000. 

Plaintiffs alleged in Count 2 that Control had provided labor, services and material to Emerson under certain written and 

oral contracts, which Emerson had breached, and, accordingly, that 

Emerson owed Control in excess of $50,000. 

Plaintiffs alleged in Count 3 that Emerson tortiously interfered with a contract Control had with TRW Reda, Inc. (Reda) and 

that, as a result, Control sustained damages in excess of $50,000. 

Plaintiffs alleged in Count 4 that based on engineering data 

Emerson furnished them, they purchased AS5100 Accuspede Drives 

from Emerson, which did not thereafter perform to the standards 

set forth by Emerson in its engineering data, and that, as a result of this misinformation and reliance thereon, Watson, Inc. and 

Control sustained damages in excess of $50,000. 

1 As to Count 1, Watson, Inc. is suing as the assignee of Alvin 

J. Watson. 

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By answer, Emerson denied liability and asserted a counterclaim against Watson seeking damages in excess of $50,000. 

Discovery ensued, and Emerson then filed a motion for summary 

judgment as to Count 1. 2 Emerson also filed a motion for judgment 

on the pleadings as to Count 3, which motion the district court 

converted to ' f ' d 3 a motion or summary JU gment. After hearing, the 

district court granted summary judgment for Emerson on Counts 1 

and 3. The plaintiffs then dismissed Counts 2 and 4 of their complaint, and Emerson dismissed its counterclaim. Plaintiffs now 

appeal the final judgments entered on Counts 1 and 3. 

The essential background facts, as established by the pleadings and developed by discovery, relevant to the grant of summary 

judgment, are not disputed by plaintiffs. The facts shall be summarized separately as they relate to Counts 1 and 3, inasmuch as 

these counts are based on separate transactions. 

2 In the supporting brief for the motion for summary judgment 

on Count 1, Emerson argued that the plaintiffs' claim for a commission was barred by Oklahoma's 3-year statute of limitations. 

Emerson argued that Oklahoma's statute of limitations should apply 

because the applicable statute of limitations in California, where 

Watson performed his obligations under the alleged oral agreement, 

was only two years, and Oklahoma's "borrowing statute" required 

the application of the longer of the two limitations periods. In 

response, Watson argued that Oklahoma's borrowing statute required 

the use of Wyoming's 8-year statute of limitations. 

3 In the supporting brief for the motion for judgment on the 

pleadings, Emerson argued that because the alleged "interference" 

occurred in Cody, Wyoming, Wyoming law should apply. Conceding 

that Wyoming had adopted the Restatement (Second) of Torts definition of tortious interference, Emerson went on to assert that the 

Wyoming Supreme Court had held that such an action does not lie 

against one who was a party to the contract allegedly interfered 

with, and further, that a "refusal to deal" is not actionable as 

tortious interference under Wyoming law. 

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Count 1: The Commission Claim 

Watson, Inc. claims that in the late summer or early fall of 

1984, Watson entered into an oral agreement with a representative 

of Emerson whereby he would receive a 10% commission if he was 

successful in causing Cities Service Company (Cities Service) to 

specify use of Emerson variable speed drives in bid specifications 

for an off-shore drilling project Cities Service was constructing 

in California. The initial contact on this particular matter was 

a telephone call from Bob Corey, an employee of Emerson's Industrial Controls Division located in Santa Ana, California, to 

Watson in Cody, Wyoming. In his performance of this oral understanding, Watson apparently first visited Emerson's offices in 

Oklahoma, then traveled to Bakersfield, California, to meet with 

Cities Service's employees, thereafter went to San Francisco to 

meet with Cities Service's consulting engineers, and finally went 

to San Miguel, the site of the off-shore project. 

Count 3: Tortious Interference Claim 

In paragraph 8 of the amended complaint, the plaintiffs alleged as follows: 

Control Power entered into a written agreement 

in 1986 to manufacture "submersible pump variable speed drives" for TRW Reda, Inc. ( "Reda" ) 

which resulted in a manufacturing relationship 

between Control Power, Emerson and Reda 

wherein Control Power was an "exclusive" manufacturer for Reda for these particular products. 

The "written agreement" mentioned in paragraph 8 provided 

that Control would repackage Emerson's variable speed drives exclusively for Reda so that the drives could withstand an outdoor 

environment. Emerson in turn agreed that it would supply the 

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' variable speed drives to Control for repackaging. Control asserts 

that Emerson also agreed that Control would not be required to pay 

Emerson for the variable speed drives until Control received payment from Reda. 

The record discloses that on November 3, 1987, at a meeting 

held in Control's offices in Cody, Wyoming, Emerson's representative refused to continue to supply variable speed drives for Control to repackage for Reda unless Control either immediately paid 

its account with Emerson in full or agreed to change the business 

relationship between the parties so that Emerson would thereafter 

sell directly to Reda, and Control would do the repackaging for 

Emerson as its subcontractor. Apparently, Control could not make 

immediate payment of its account with Control and agreed to change 

the business relationship of the parties, as Emerson suggested. 

The district court held that Watson Inc.'s claim for a commission (Count 1) for Watson's efforts persuading Cities Service 

to require the use of Emerson's speed drives on an off-shore 

drilling project Cities Service was constructing in California was 

barred by Oklahoma's three-year statute of limitations and that 

Wyoming's eight-year statute of limitations did not apply under 

Oklahoma's "borrowing" statute. As to plaintiffs' claim for tortious interference with Control's contract with Reda (Count 3), 

the district court held that Emerson was itself a party to the 

very contract with which it allegedly interfered and that, under 

Wyoming law, a party to a contract cannot tortiously interfere 

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with his own contract. We shall consider these two matters separately. 

Count 1: The Commission Claim 

This action was filed in the United States District Court for 

the Eastern District of Oklahoma on April 4, 1991. The parties 

apparently agree that Watson's claim for an unpaid commission accrued, at the latest, in early 1985. 12 O.S. § 95 provides that 

an action upon a contract, express or implied, not in writing, can 

only be brought within 3 years "after the cause of action shall 

have accrued." Since the present action was brought some six 

years after the date when the cause of action accrued, the district court held that Oklahoma's 3-year statute barred Watson's 

claim for an unpaid commission. Watson, Inc. argues that the district court erred in its interpretation of Oklahoma's borrowing 

statute and that had the district court properly construed 

Oklahoma's borrowing statute, Wyoming's 8-year statute of limitations would have applied and its commission claim would not be 

time barred. 

lows: 

Oklahoma's borrowing statute, 12 O.S. § 105, reads as folThe period of limitation applicable to a claim 

accruing outside of this state shall be that 

prescribed either by the law of the place 

where the claim accrued or by the law of this 

state, whichever last bars the claim. 

The district court concluded that Watson's claim for an unpaid commission accrued in California, which had a 2-year statute 

of limitations for an action of the present type, and did not accrue in Wyoming, which had an 8-year statute. We agree. 

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• 

The general rule is that a claim accrues within the meaning 

of a borrowing statute in the place where the contract is to be 

performed. In Guaranty State Bank of Tishomingo v. First National 

Bank of Ardmore, 260 P. 508, 510 (Okla. 1926), the Oklahoma Supreme Court spoke as follows: 

A cause of action arises, in the nature of 

things, at the time when and place where the 

act is done or ommitted which gives the plaintiff the cause of complaint. 

In the instant case, Watson "performed" his obligation under 

the alleged oral agreement with Emerson in California. At that 

point in time, Watson had a "claim" against Emerson. When Emerson 

did not make payment, this claim became the basis for a cause of 

action. Had there been payment, apparently it would have come 

from Emerson's office in Santa Ana, California. Neither party 

f d h f . . w. 4 per orme t e agreement, or any part o it, in yarning. The district court did not err in refusing to borrow Wyoming's 8-year 

statute of limitations. Since California's statute of limitations 

was only 2 years, the district court correctly held that Watson, 

Inc.'s claim for an unpaid commission was barred by Oklahoma's 3-

year statute of limitations. 

We are not impressed with Watson, Inc.'s argument that since 

the oral agreement did not itself designate a place of performance, the law of the place where the contract is made governs 

with respect to the "nature, validity and interpretation" of the 

4 We reject Watson, Inc.'s suggestion that since Watson expected Emerson to pay his commission at his Cody, Wyoming office, 

"performance," under the contract, was in Wyoming, making 

Wyoming's 8-year statute applicable. 

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contract, citing Rhody v. State Farm Mutual Ins. Co., 771 F.2d 

1416 (10th Cir. 1985) . 5 We are not here concerned with the "na -

ture, validi ty and interpretation" of any agreement between Watson 

and Emerson. Rather, we are concerned with Oklahoma's borrowing 

statute. When an action is brought in Oklahoma on a claim accruing outside Oklahoma, Oklahoma borrows the statute of limitations 

of the state where the claim accrued, if it be greater than 

Oklahoma's 3-year statute. However, if the statute of limitations 

in the state where the claim accrued is shorter than Oklahoma's, 

Oklahoma's statute controls. Hence, the district court's use of 

Oklahoma's 3-year statute was proper. 

Count 3: Tortious Interference Claim 

As above indicated, the acts which gave rise to the plaintiffs' tortious interference claim occurred in Control's offices 

in Cody, Wyoming, on November 3, 1987 . At that time and place, 

Emerson's representative demanded that Control immediately pay its 

account with Emerson in full or agree to a new arrangement whereby 

Emerson would deal directly with Reda and Control would do the 

repackaging work for Emerson as Emerson's subcontractor. Control 

could not, or did not, make immediate payment in full and apparently agreed to the new arrangement between Control, Emerson and 

Reda. 

s The contract forming the basis for Count 1 being oral rather 

than written, it is not too surprising that the place of performance was not spelled out. The verbal contract was at best "bare 

bones," and there were other details apparently never discussed. 

In any event, it would appear that the parties contemplated that 

the contract would be performed in California, where Cities Service was going to construct an off-shore drilling project, and of 

course that is where Watson's performance actually did occur. 

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• 

As mentioned, plaintiffs assert that Control's understanding 

with Emerson was that Control would not have to pay Emerson until 

Control had received payment from Reda . Apparently, the reason 

Control could not immediately pay Emerson in full was that Control 

had not yet received payment from Reda. However, plaintiffs did 

not sue Emerson for breach of contract. Rather, they claimed that 

Emerson tortiously interfered with Control's agreement with Reda. 

In their complaint, the plaintiffs did not identify the precise 

statutory or common law basis for their claim of tortious interference. However, in this court, counsel indicates that this 

claim is based on Section 766A of the Restatement (Second) of 

Torts, "as adopted by this court in Henry & Co., Ltd. v. T G & Y 

Stores, 941 F.2d 1068 (lO~h Cir. 1991) . 116 Section 766A provides 

as follows: 

One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and 

a third person, by preventing the other from 

performing the contract or causing his performance to be more expensive or burdensome, is 

subject to liability to the other for the pecuniary loss resulting to him. 

The general rule is that a claim for tortious interference 

will not lie where the alleged interferer is a party to the contract with which he allegedly interfered. One's breach of his own 

contract is not a basis for the tort. To give rise to the tort of 

intentional interference with a contract, the offending party must 

6 

F .2d 

court 

claim 

In John A. Henry & Co., Ltd. v. T. G. & Y. 

1068 (10th Cir. 1991), we held that even 

had adopted§ 766A, we were nonetheless 

under§ 766A was actionable in Oklahoma. 

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Stores Co., 941 

though no Oklahoma 

satisfied that a 

Appellate Case: 91-7113 Document: 010110149205 Date Filed: 11/23/1992 Page: 9 
be an "outsider," not an "insider," to the contract with which he 

interfered. In this regard, the Supreme Court of Wyoming, in 

Board of Trustees v. Holso, 584 P.2d 1009, 1017 (Wyo. 1978), 

stated that the tort of int~ntional interference with contractual 

obligations did not apply to actions between parties to an existing contract; "they lie only against outsiders who interfere with 

the contractual expectancies of others." To like effect, the Wyoming Supreme Court, in Kvenild v. Taylor, 594 P.2d 972, 977 (Wyo. 

1979), held that under Holso "[the defendant] cannot be held liable for tortious interference with contract because she was a 

party to the contract she is alleged to have interfered with. 117 

In granting Emerson summary judgment, the district court held 

that, under the Wyoming authorities above cited, the plaintiffs 

had no claim against Emerson for intentional interference with 

their contract with Reda since Emerson was itself a party to that 

contract. We agree. John A. Henry & Co., Ltd. v. T.G.& Y. Stores 

Co., 941 F.2d 1068 (10th Cir. 1991)•, relied on by the plaintiffs, 

did not involve the issue here involved, namely, whether a claim 

for tortious interference with a contract lies where the alleged 

7 

of 

Both Holso and Kvenild involved claims based on Section 766 

the Restatement (Second) of Torts. That section reads as follows: 

One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and 

a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other 

for the pecuniary loss resulting to the other 

from the failure of the third person to perform the contract. 

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interferer is a party to the contract with which he allegedly interfered. 

As set forth above, paragraph 8 of the written agreement between plaintiffs and Reda states that Control's written agreement 

with Reda "resulted in a manufacturing relationship between Control Power, Emerson and Reda .... " Further, paragraph 10 in 

the amended complaint reads as follows: 

10. Emerson, although not a [sic] actual 

party to the written contract between Control 

Power and Reda, was designated in the contract 

between Control Power and Reda as a party to 

the contract, it being understood between 

Emerson, Control Power and Reda that Emerson 

would supply the key components, and at all 

times would be responsible for ensuring that 

these components were shipped to Control Power 

so that they could be repackaged by Control 

Power as the original equipment manufacturer 

of "submersible pump variable speed drives" in 

the exclusive agreement with Reda (emphasis 

added) . 

By the allegations in their complaint, the plaintiffs in effect conceded that Emerson was considered a party to plaintiffs' 

written agreement with Reda. At least, that is what they alleged. 

And Watson's testimony upon deposition was in line with those allegations. Such being the case, under Wyoming law, a claim that 

Emerson tortiously interfered with a contract to which it was 

deemed a party will not lie. 8 

8 As an alternative position, Emerson also argues in this 

court, though not in the district court, that under Price v. 

Sorrell, 784 P.2d 614 (Wyo. 1989), the Wyoming Supreme Court has 

rejected Section 766A of the Restatement (Second) of Torts. As 

indicated, this was not the basis for the district court's grant 

of summary judgment as to Count 3. In Price, there was no actual 

breach, failure to perform, or termination of the contract allegedly interfered with, and the Wyoming Supreme Court was primarily 

concerned with the language in§ 766A, "or causing his performance 

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Judgment affirmed . 

Entered for the Court 

Robert H. Mcwilliams 

Senior Circuit Judge 

to be more expensive or burdensome." In the instant case, Emerson 

allegedly interfered with Control's contract with Reda, resulting 

in an outright termination of the contract. For the purposes of 

this case, we assume that the Wyoming Supreme Court would adopt 

that part of§ 766A which creates a claim for tortious interference against one (Emerson) who intentionally and improperly interferes with the performance of a contract between another (Control), and a third party (Reda), by preventing the other (Control) 

from performing the contract. The present case is not one where 

the contract in question, despite the interference, was nonetheless performed, although such performance was "more expensive or 

burdensome." 

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