Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-06-02379/USCOURTS-ca8-06-02379-0/pdf.json

Parties Involved:
Johnson Outdoors
Appellee
Sokol & Associates
Appellant
Techsonic Industries
Appellee

Document Text:

1

 The Honorable Arthur J. Boylan, United States Magistrate Judge for the

District of Minnesota, presiding with the consent of the parties pursuant to 28 U.S.C.

§ 636(c)(1).

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 06-2379

___________

Sokol & Associates, Inc., *

*

Plaintiff-Appellant, *

* Appeal from the United States

v. * District Court for the

* District of Minnesota.

Techsonic Industries, Inc.; *

Johnson Outdoors, Inc., *

*

Defendants-Appellees. *

___________

Submitted: February 13, 2007

Filed: July 26, 2007

___________

Before RILEY, MELLOY, and SHEPHERD, Circuit Judges.

___________

MELLOY, Circuit Judge.

Sokol & Associates, Inc. (“SA Inc.”) appeals the district court’s1

 grant of

summary judgment in favor of Techsonic Industries, Inc. (“Techsonic”) and Johnson

Outdoors, Inc. (“Johnson”) on SA Inc.’s claim for breach of a sales representative

agreement. We affirm. 

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I. Background 

SA Inc., the sole appellant in this matter, is a Minnesota corporation that serves

as an independent sales representative to manufacturers of hunting, fishing, and

marine products. SA Inc. is a successor-in-interest to Sokol and Associates (“S&A”),

a sole proprietorship under which Paul Sokol (“Mr. Sokol”) conducted the same type

of business. Although Mr. Sokol created both entities and they have similar names,

they are legally distinct.

Appellee Techsonic is an Alabama corporation that manufactures fishing and

marine products, such as fishfinders, under a variety of brand names. In May 2004,

appellee Johnson, a publicly-held marketer of outdoor recreation products, acquired

Techsonic from Teleflex Incorporated (“Teleflex”). Until May 2004, Techsonic was

a wholly owned subsidiary of Teleflex. Teleflex is not a party to this lawsuit. 

In 1997, Techsonic purchased Zercom Marine (“Zercom”), a company that also

manufactured marine products. Mr. Sokol had been involved in the founding of

Zercom. As a result of Zercom’s acquisition, Techsonic entered into a sales

representative agreement (“the 1997 Agreement”) with S&A whereby Mr. Sokol,

doing business as S&A, would sell Zercom-branded products to customers within a

specific geographic area and to certain non-territory-based customers. The agreement

contained a choice-of-law provision invoking Minnesota state law. The agreement

stated, in pertinent part:

The Representative shall faithfully, diligently and to the best of its ability

endeavor to promote and extend the sales of the Company’s Zercom

Marine branded products (the “Products”) which are presently those

products described in Exhibit A. 

The 1997 Agreement had a ten-year term and allowed Techsonic to terminate the

agreement prior to the end of that period only if S&A breached a material term of the

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2 There was some confusion in the record below as to Cinis’s position during

the events in question. After SA Inc. asserted on appeal that Cinis was a “Techsonic

executive” during these negotiations, the appellees filed a Motion to Modify the

record to clarify this question. The appellants do not object to the motion, which we

hereby grant. According to the modified record, Cinis worked for Techsonic as vice

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contract and failed to cure the breach within ninety days. Techsonic had the right to

discontinue the sale of products that were no longer economically viable. S&A was

to earn a five percent commission on all of S&A’s Zercom sales. The agreement did

not explicitly provide for modification; SA Inc. contends the parties anticipated

modifications with respect to the product lines to be sold by S&A. Techsonic

president Charles Stott signed the agreement on behalf of Techsonic and Mr. Sokol

signed it on behalf of S&A. 

In the fall of 1998, Techsonic acquired Fisheye, a marine products brand.

Shortly thereafter, Stott verbally assigned S&A the right to sell Fisheye products and

set a commission rate of five percent for those sales. 

Beginning in November 1998, Techsonic and S&A engaged in negotiations

regarding the sale of Humminbird products. Humminbird is another brand of marine

products manufactured by Techsonic. In August 1999, Dave Overstreet, a regional

sales manager for Teleflex, informed Mr. Sokol that S&A would be gaining

responsibility for selling Humminbird products. Overstreet states that “one of the

main reasons why Teleflex decided that [S&A] would take over for [the previous sales

representatives] with respect to selling Humminbird products, was the fact that

Techsonic and [S&A] were party to a 10-year agreement, which agreement did not

expire until 2007.” S&A records reflect S&A began to sell Humminbird products in

October 1999.

Also in October 1999, Teleflex proposed a written contract to S&A (“the 1999

Agreement”). Tom Douglass , a vice president with Teleflex, copied John Cinis2

 and

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president of sales from September 1998 through approximately July 1999. At that

point, he began to work as vice president of sales for Teleflex. 

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Techsonic President Stott on the proposal. The products covered by the agreement

and the commissions to be applied to sales were listed in Exhibits A and C attached

to the contract, which were dated October 15, 1999 and referenced in the contract’s

main text. The products listed in Exhibit A included the Zercom, Fisheye, and

Humminbird brands. The 1999 Agreement specified that either party could terminate

the agreement with thirty days notice. S&A initially rejected the proposal and further

negotiations ensued. 

During the course of the negotiations, S&A requested a letter confirming the

relationship between the 1997 Agreement with Techsonic and the proposed 1999

Agreement with Teleflex. On January 4, 2000, Douglass sent S&A a letter which

stated, in part: 

To confirm our conversation in regards to the old vs. new contract,

Teleflex Marine agrees that your Original Contract for Representation of

Zercom, which was written as a result of the acquisition of Zercom by

Techsonic Industries, will continue in effect for its duration as stated in

that contract.

The new contract, dated October 15, 1999, supplements your original

contract. Changes in territory and commission paid, as agreed by you,

John Cinis and me, are stated in Exhibits “A” and “C” of the new

contract. These Exhibits are dated January 4, 2000. 

The exhibits were enclosed with the letter. 

SA Inc. contends Mr. Sokol received assurances that the 1999 Agreement was

a matter of housekeeping and would not affect the 1997 Agreement. However, S&A

failed to obtain any further written assurances regarding either contract. Notably,

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3 SA Inc. originally listed Teleflex as a defendant in this action. Subsequently,

SA Inc. and Teleflex stipulated to the dismissal of Teleflex from the suit with

prejudice and the district court dismissed Teleflex. 

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S&A did not obtain, or even request, written confirmation that the ten-year term of the

1997 Agreement governed Humminbird products, which were not expressly listed in

the 1997 Agreement. 

S&A ultimately made no changes to the proposed 1999 Agreement, and Mr.

Sokol signed and returned the 1999 Agreement on February 25, 2000. SA Inc. notes

that at the time Mr. Sokol executed the 1999 Agreement, the exhibits were not

attached. SA Inc. does not contest, however, that Mr. Sokol received the exhibits

attached to Douglass’s letter or that the main text of the 1999 Agreement referenced

exhibits. 

On April 24, 2000, S&A assigned the 1997 Agreement to SA Inc., a newly

formed corporate entity. Techsonic agreed to the assignment. S&A did not assign the

1999 Agreement. Thus, none of the parties to this case—SA Inc., Johnson, or

Techsonic—are parties to the 1999 Agreement between S&A and Teleflex.3

As of 2002, Techsonic had discontinued both Fisheye and Zercom product

lines. SA Inc. has not alleged bad faith in those discontinuations and has not pursued

claims for breach of contract on those grounds. SA Inc. continued to sell Humminbird

products and to receive commissions from Techsonic until July 2004. 

On May 6, 2004, Johnson acquired Techsonic from Teleflex. The Stock

Purchase Agreement finalizing the transaction specifically listed the 1997 Agreement

as part of the purchase, describing the contract as “Sales Representative Agreement

dated December 12, 1997 between [Techsonic] and Sokol and Associates—Sokol and

Associates territories were changed in 1999.” 

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After it acquired Techsonic, Johnson notified SA Inc. that it would be

realigning its sales force. In June 2004, Johnson told SA Inc. to discontinue its sales

of Humminbird products. At that time, Humminbird was the only product line SA

Inc. sold for Techsonic or Johnson. October 4, 2004, Johnson gave SA Inc. thirty

days notice of its intent to terminate SA Inc. as a sales representative for Techsonic.

SA Inc. filed suit in state court, and Johnson and Techsonic removed the case

to the District Court for the District of Minnesota. SA Inc. alleged that the 1997

Agreement had been modified to apply to SA Inc.’s sales of Humminbird products,

and therefore its representation of Humminbird was subject to the 1997 Agreement’s

ten-year term. Thus, SA Inc. claimed Johnson and Techsonic breached the 1997

Agreement by wrongfully terminating the contract before the expiration of the tenyear term. SA Inc. also asserted a claim under the Minnesota Sales Representative

Act, Minn. Stat. § 325E.37, alleging wrongful termination of the 1997 Agreement

without good cause and proper notice. Techsonic and Johnson moved for summary

judgment.

The district court granted summary judgment on behalf of Techsonic and

Johnson. Among other findings, the district court found that SA Inc. had not

presented sufficient evidence of modification of the 1997 Agreement to create a

genuine issue for trial. Because SA Inc. only asserted claims based upon the 1997

Agreement, and modification of the contract was necessary to establish the claims,

failure to provide sufficient evidence of modification necessarily resulted in summary

judgment for Techsonic and Johnson. This appeal followed. 

II. Discussion

Although the factual background of this case is somewhat convoluted and

involves changing parties, multiple products, and two written agreements, there is one

basic question before the court: is there a genuine issue of material fact as to whether

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the 1997 Agreement was modified so that its ten-year term applies to the sale of

Humminbird products? SA Inc.’s claims rest solely upon an alleged breach of the

1997 Agreement, and the text of that agreement limits its application to Zercom

products; therefore, unless there was a modification, SA Inc. has no cause of action.

SA Inc. alleges it presented sufficient evidence of oral and written modification, as

well as modification by conduct, of the 1997 Agreement to foreclose summary

judgment. We disagree. 

We review de novo the district court’s grant of summary judgment. Winthrop

Res. Corp. v. Eaton Hydraulics, Inc., 361 F.3d 465, 468 (8th Cir. 2004). Summary

judgment is appropriate when the evidence, viewed in the light most favorable to the

non-moving party, demonstrates “there is no genuine issue as to any material fact and

. . . the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P.

56(c); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-

87 (1986). A genuine issue of fact exists when there is “sufficient evidence favoring

the non-moving party for a jury to return a verdict for that party.” Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). “Mere allegations not supported with

specific facts are insufficient to establish a material issue of fact and will not

withstand a summary judgment motion.” Henthorn v. Capitol Comm., Inc., 359 F.3d

1021, 1026 (8th Cir. 2004). 

Here, the question is whether there is a genuine issue as to whether the 1997

Agreement was modified to include Humminbird products. In considering this

question, we “view the evidence presented through the prism of the substantive

evidentiary burden.” Anderson, 477 U.S. at 254. Minnesota law applies to this case.

“[T]he well-established rule in [Minnesota] [is] that a party asserting the parol

modification of a written contract has the burden of proving the modification by clear

and convincing evidence. The burden is not met by a mere preponderance of the

evidence.” Merickel v. Erickson Stores Corp., 95 N.W.2d 303, 305 (Minn. 1959). If

a rational trier of fact could not conclude by clear and convincing evidence that the

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1997 Agreement was modified so that its ten-year term applied to Humminbird

products, summary judgment is proper. Id. 

“A ‘modification of a contract’ is a change in one or more respects, which

introduces new elements into the details of the contract . . . but leaves the general

purpose and effect undisturbed.” 17A Am. Jur. 2d Contracts § 507. A written

contract can be modified by oral agreement of the parties. Larson v. Hill’s Heating

and Refrig. of Bemidji, Inc., 400 N.W.2d 777, 781 (Minn. Ct. App. 1987). Further,

“[i]n the absence of an express verbal agreement, subsequent acts and conduct of the

parties may establish implied modification of the contract.” Reliable Metal, Inc. v.

Shakopee Valley Printing, Inc., 407 N.W.2d 684, 687 (Minn. Ct. App. 1987). The

parol evidence rule does not bar evidence of alteration to a contract after its execution.

Duffy v. Park Terrace Supper Club, Inc., 206 N.W.2d 24, 27 (Minn. 1973). However,

allegations of modifications inconsistent with the written terms of a contract are

subject to “rigorous examination.” Bolander v. Bolander, 703 N.W.2d 529, 541-42

(Minn. Ct. App. 2005).

SA Inc. asserts the 1997 Agreement was modified to include representation of

Humminbird products. SA Inc. points to oral statements, writings, and the conduct

of the parties as evidence sufficient to raise a genuine question of fact regarding

modification of the 1997 Agreement. We discuss each in turn. 

First, SA Inc. offers oral statements, including those made by Dave Overstreet,

as evidence of modification of the 1997 Agreement. Overstreet, however, never stated

or even implied that the terms of the 1997 Agreement were modified to apply to the

sale of Humminbird products. Overstreet indicated that the long-term nature of the

relationship between Techsonic and S&A, SA Inc.’s predecessor-in-interest, was the

motivation behind assigning S&A the rights to sell Humminbird products.

Overstreet’s statements show why S&A, and subsequently SA Inc., would be selling

Humminbird, not the terms under which the sales would occur. Considering a preAppellate Case: 06-2379 Page: 8 Date Filed: 07/26/2007 Entry ID: 3333830
4

 Techsonic and Johnson assert that all of the statements proffered by SA Inc.

are inadmissible hearsay and we should therefore not consider them. Indeed, only

evidence that would be admissible at trial may be relied upon to counter a motion for

summary judgment. Shaver v. Indep. Stave Co., 350 F.3d 716, 723 (8th Cir. 2003).

However, if the individuals making the statements were agents speaking on behalf of

a party, either Techsonic or Johnson, the statements would be non-hearsay admissions

of a party opponent and therefore admissible. See Fed. R. Evid. 801(d)(2)(D). The

record does not establish either Cinis or Douglass’s ability to bind either of the

appellees. Nevertheless, because we conclude the statements, even if considered, fail

to raise genuine issue of material fact warranting denial of summary judgment, we

need not make that determination. 

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existing contractual relationship in deciding on the best sales representative for

another brand does not evince an intent to transpose the terms of the pre-existing

agreement onto the new arrangement. Nothing in Overstreet’s affidavit, or in his

statements as recounted by Mr. Sokol, supports SA Inc.’s assertion that the 1997

Agreement was modified so that it’s ten-year term applied to the sale of Humminbird

products.

In addition to Overstreet’s statements, SA Inc. relies upon oral representations

allegedly made to Mr. Sokol by John Cinis, Charlie Stott, and Tom Douglass as

evidence of oral modification of the 1997 Agreement. SA Inc. does not provide the

court with citations to the record in support of its claims regarding statements by Stott,

and we therefore do not consider those allegations. See United States v. Wadlington,

233 F.3d 1067, 1081 (8th Cir. 2000) (citing Fed. R. App. P. 28(a)(9) and declining to

consider contentions raised without reference to the parts of the record supporting the

claims). Some statements allegedly made by Cinis and Douglass provide support for

SA Inc.’s assertion that the 1997 Agreement was modified to include Humminbird

products. In his deposition, Mr. Sokol alleged that Cinis and Douglas stated during

negotiations for the 1999 Agreement that Humminbird responsibilities “would be part

of my 1997 agreement.”4

 However, when asked to clarify what he meant by that

statement, Mr. Sokol obfuscated:

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Q: So you specifically asked whether the Humminbird line would be

handled under your 1997 agreement. And [Cinis and Douglass] told

you, yes, it would?

A: No. I specifically—I already had Humminbird assigned to me verbally.

Having Humminbird assigned to SA Inc. or its predecessor verbally does not

demonstrate modification of the 1997 Agreement. Minnesota law provides for oral

agreements for sales representative contracts. See Minn. Stat. § 325E.37(e) (defining

“sales representative agreement”). Many of the statements alleged to support

modification of the 1997 Agreement only evince an oral agreement for representation

of Humminbird prior to the effectuation of the 1999 Agreement. Some of Mr. Sokol’s

own statements belie SA Inc.’s assertion that the 1997 Agreement’s specific terms

were grafted onto the sales relationships for Fisheye or Humminbird. In his

deposition, Mr. Sokol stated that paragraph 15 of the 1997 Agreement, which

addresses Techsonic’s right to discontinue sales of products that are no longer

economically viable, only applied to Zercom. SA Inc. does not explain why this

paragraph would be so limited if the 1997 Agreement as a whole had been modified

to apply to Humminbird products. If the 1997 Agreement was not in toto modified

to apply to the sale of Humminbird products, evidence of the provisions that were

expanded is required. Notably, SA Inc. proffers no evidence of any statements

specifically expanding the ten-year term of the 1997 Agreement to apply to

Humminbird products. 

Second, SA Inc. highlights written documents as demonstrating modification

of the 1997 Agreement. Specifically, SA Inc. cites 1) the January 2000 letter from

Tom Douglass, 2) the exhibits attached to Douglass’s letter, 3) the document assigning

rights to the 1997 Agreement from S&A to SA Inc, and 4) the 2004 Stock Purchase

Agreement. SA Inc. alleges the writings confirm the oral representations discussed

above. We disagree. The writings instead undermine the conclusion SA Inc.

advocates. Turning first to the Douglass letter, SA Inc. argues the letter confirms

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Douglass’s alleged oral representations that the 1997 Agreement had been modified

to include Humminbird products. However, in the letter Douglass refers to the 1997

Agreement as Mr. Sokol’s “Original Contract for Representation of Zercom” and

states that the agreement was reached “ as a result of the acquisition of Zercom by

Techsonic Industries.” The letter, therefore, underscores that the 1997 Agreement

pertains to Zercom products: it highlights the unique origins of the contract and labels

the contract as for Zercom representation. The letter in no way indicates expansion

of the 1997 Agreement beyond Zercom products. Moreover, the letter states the 1997

Agreement will “continue in effect.” This specific acknowledgment of the continuing

validity of the 1997 Agreement, separate from the 1999 Agreement, undermines any

claim that the two agreements were intertwined by the use of the term “supplement”

in the following paragraph. 

Likewise, the exhibits attached to the Douglass letter are not beneficial to SA

Inc. SA Inc. claims the exhibits modify the 1997 Agreement, not the 1999 Agreement

and asserts there is a genuine question of fact as to which agreement the exhibits

apply. However, the Douglass letter to which the exhibits were attached identifies the

exhibits as “Exhibits ‘A’ and ‘C’ of the new contract” and identifies the “new

contract” as the contract dated October 15, 1999. In addition, the 1999 Agreement

explicitly references the exhibits, which provide specific terms for the contract. Thus,

from the plain language of the letter and the 1999 Agreement, these new exhibits,

dated January 4, 2000, modify the 1999 Agreement. We cannot accept SA Inc.’s

invitation to disregard the plain language of Douglass’s letter and the contract’s

explicit terms to create a question of fact.

Nor do the assignment of rights or the Stock Purchase Agreement buttress SA

Inc.’s claim of modification of the 1997 Agreement so that the ten-year term applied

to Humminbird products. The assignment of rights has no information whatsoever

about the nature of the agreement that is being assigned. Nothing in the assignment

or in Techsonic’s consent to the assignment even suggests a modification. The Stock

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Purchase Agreement, however, can be read as suggesting modification to the 1997

Agreement. The Stock Purchase Agreement states that “Sokol and Associates[’]

territories were changed during 1999.” That phrasing can be interpreted as meaning

the territories covered by the 1997 Agreement had been modified in 1999. There are

other possible interpretations. But, even under this most favorable reading, nothing

suggests the 1997 Agreement was expanded to apply to additional products.

Finally, SA Inc. looks to the actions of the parties to demonstrate the

application of the 1997 Agreement’s ten-year term to Humminbird sales. SA Inc.

asserts S&A’s sales of Fisheye products based upon verbal agreement and the sales

of Humminbird products prior to the signing of the 1999 Agreement are evidence of

modification of the 1997 Agreement. These actions, however, simply demonstrate the

parties agreed orally for S&A and SA Inc. to represent additional brands. Nothing in

those actions raises an inference that the parties intended for the specific terms

outlined in the 1997 Agreement—an agreement entered into as part of Techsonic’s

acquisition of Zercom—to apply to the unrelated brands. SA Inc. also points to its

receipt of payments from Techsonic after SA Inc.’s creation and without the

assignment of the 1999 Agreement to SA Inc. as evidence of a modification to the

1997 Agreement. SA Inc. argues that, because only the 1997 Agreement was

assigned, the payments must have been made pursuant to that agreement and not the

1999 Agreement. As the district court stated, “[t]his argument fails, however, because

the parties’ conduct suggests a modification of the 1999 agreement, not the 1997

agreement.” Unlike the 1997 Agreement, the 1999 Agreement specifically covers

Humminbird sales. While neither SA Inc. nor Teleflex chose to assign the 1999

Agreement when SA Inc. was formed, they continued to perform the obligations under

that agreement. 

Relying upon the evidence outlined above, SA Inc. asserts the 1997 Agreement

was modified so that its ten-year term applied to the sale of Humminbird products.

Considering the steep evidentiary standard Minnesota law requires to demonstrate

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modification of a written contract, this position is unsupportable. SA Inc. fails to offer

anything near clear and convincing evidence that the ten-year term of the 1997

Agreement applied to the sale of Humminbird products. The weight of the evidence

indicates the 1997 Agreement pertained solely to Zercom products. Because no

reasonable factfinder could find in SA Inc.’s favor, summary judgment was properly

granted. 

III. Conclusion

For the foregoing reasons, the judgment of the district court is affirmed. 

______________________________

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