Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-07-01638/USCOURTS-ca4-07-01638-0/pdf.json

Parties Involved:
C.W. Bearing USA, Incorporated
Appellee
Precision Components, Incorporated
Appellant

Document Text:

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 07-1638

PRECISION COMPONENTS, INCORPORATED,

Plaintiff - Appellant,

v.

C.W. BEARING USA, INCORPORATED,

Defendant - Appellee.

Appeal from the United States District Court for the Western

District of North Carolina, at Charlotte. Graham C. Mullen, Senior

District Judge. (3:05-cv-00389-GCM)

Submitted: June 6, 2008 Decided: July 9, 2008

Before MOTZ, KING, and GREGORY, Circuit Judges.

Affirmed by unpublished per curiam opinion.

Donald M. Brown, Jr., J. Scott Hampton, BROWN & ASSOCIATES, PLCC,

Charlotte, North Carolina, for Appellant. Jackson N. Steele,

Mark R. Kutny, HAMILTON MOON STEPHENS STEELE & MARTIN, PLLC,

Charlotte, North Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

Following a jury trial, Precision Components, Inc.,

appeals the district court’s order granting the motion in limine of

C.W. Bearing USA, Inc., to exclude evidence regarding Precision

Components’ quantum meruit cause of action related to its sales of

C.W. Bearing’s products in Mexico, Michigan, Missouri, and

Arkansas. Finding no error, we affirm the judgment of the district

court. 

The parties arranged for Precision Components to act as

a sales agent for C.W. Bearing, a ball bearings manufacturer. The

parties entered into a “Memorandum of Understanding,” which

provided for commission for product sales only in North Carolina,

South Carolina, Virginia, Maryland, Delaware, Tennessee, Georgia,

Florida, Alabama, and Minnesota, unless the parties agreed

otherwise. The agreement specifically excluded “bearing

manufacturers, brokers and any bearings which a customer takes

possession of outside the US including China, Mexico etc.” (J.A.

181). The memorandum further provided that if it was terminated by

either party for cause, C.W. Bearing would continue to “pay

commissions on shipments made on open orders for 90 days.” (J.A.

181). If the agreement was terminated without cause, a longer

commission period applied. 

Relations between the parties deteriorated, and C.W.

Bearing ultimately terminated the agreement. Precision Components

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filed suit against C.W. Bearing for breach of contract, among other

claims. It additionally alleged alternate grounds for relief,

stating, “In the event that the court finds that the memorandum of

understanding does not technically constitute a contract between

the parties, the plaintiff is entitled to recover based upon

quantum meruit for services rendered by the plaintiff under the

memorandum of understanding.” (J.A. 25).

C.W. Bearing agreed the parties had a contract, as

evidenced by the memorandum of understanding. C.W. Bearing moved

in limine to exclude all evidence not related to the memorandum of

understanding, including evidence related to the quantum meruit

claim. At the pretrial hearing on the motion, Precision Components

argued that the sales to entities in Mexico, Michigan, Missouri,

and Arkansas were not covered by the memorandum of understanding,

and thus it should not be limited to the memorandum’s provision for

C.W. Bearing to pay commissions for only ninety days after a “for

cause” termination. For this argument, Precision Components relied

on the explicit language of the agreement limiting it to certain

territories. C.W. Bearing responded that the parties modified the

agreement by their course of dealing and all of the commissions,

regardless of origin, were limited by the terms of the memorandum.

The district court granted the motion in limine, ruling

that the memorandum of understanding encompassed the territories at

issue even though they were not explicitly enumerated in the

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*A federal court sitting with diversity jurisdiction applies

the choice of law rules from the forum state. Klaxon Co. v.

Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). In North

Carolina, the forum state, the construction of a contract is

determined by the law of the place where the contract was formed.

Davis v. Davis, 152 S.E.2d 306, 310 (N.C. 1967). The parties agree

that North Carolina law applies to the case.

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written memorandum. Thus, the court limited evidence regarding all

sales to the time frame following termination of the agreement

specified in the memorandum. 

The jury concluded that C.W. Bearing terminated the

memorandum of understanding for cause. The parties stipulated to

the amount of damages, and the district court entered judgment

accordingly. Precision Components timely appealed, challenging

only the ruling on the motion in limine. 

In holding that the memorandum of understanding

encompassed the territories at issue even though they were not

enumerated in the written agreement, the district court implicitly

found the parties’ conduct modified the contract to include those

geographic areas. “A modification [of] a contract occurs if there

is mutual assent to the terms of the modification and consideration

for the contract.” Lewis v. Edwards, 554 S.E.2d 17, 23 (N.C. App.

2001).*

 A written contract may be modified by the parties’

subsequent course of conduct. Son-Shine Grading, Inc. v. ADC

Constr. Co., 315 S.E.2d 346, 349 (N.C. App. 1984). 

Precision Components performed services for C.W. Bearing

in four territories not originally listed in the agreement:

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Arkansas, Michigan, Missouri, and Mexico. C.W. Bearing paid

Precision Components commissions for that work. The commission

statements C.W. Bearing issued detailing the payment checks

included accounts both in and out of those territories. The

parties’ conduct thus demonstrated their mutual assent to modify

the terms of the agreement to include additional geographic areas.

C.W. Bearing provided consideration for the sales in the

territories at issue by paying Precision Components commissions for

the additional services provided. Therefore, the district court

did not err in finding that the parties modified the written

agreement, and that the limitations in the memorandum as to the

length of time for which Precision Components could earn

commissions following the termination of the contract were the same

for all territories, including those not enumerated in the written

agreement. 

As for Precision Components’ argument that North Carolina

law allows a plaintiff to recover damages for both breach of

contract and quantum meruit, the district court did not hold

otherwise. Rather, the district court held the parties’ contract

specified the method for calculating commissions following a

termination, thus rendering Precision Components’ request for an

alternative award based upon the reasonable value of those services

moot. See Keith v. Day, 343 S.E.2d 562, 570 (N.C. App. 1986)

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(holding the plaintiff could not recover in quantum meruit for

services provided pursuant to the parties’ express contract). 

Accordingly, we affirm the judgment of the district

court. We dispense with oral argument because the facts and legal

contentions are adequately presented in the materials before the

court and argument would not aid the decisional process.

AFFIRMED

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