1AMX is now known as “AMX LLC.” P. July 11, 2006 Br. 1.

Although AMX’s corporate form has apparently changed, there is no

suggestion that the court lacks diversity jurisdiction in this

removed case.

 IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

AMX CORPORATION, §

 §

Plaintiff-counterdefendant,§

 § Civil Action No. 3:04-CV-2035-D

VS. §

 §

PILOTE FILMS, §

 §

Defendant-counterplaintiff.§

MEMORANDUM OPINION

 AND ORDER 

In this lawsuit arising from the termination of a long-term

relationship between an American company and its French

distributor, the parties’ cross-motions for summary judgment

present questions to be decided under Texas and French law.

Despite the plethora of claims and counterclaims, the court

concludes that comparatively few (and none governed by French law)

remain to be tried, and it grants in part and denies in part both

motions.

I

Plaintiff-counterdefendant AMX Corporation (“AMX”)1 sues

defendant-counterplaintiff Pilote Films (“Pilote”), and Pilote

counterclaims, under various theories of liability arising from the

events surrounding the termination of an agreement under which

Pilote served as the exclusive distributor of AMX’s products in

 

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2

Because both parties have filed motions for summary judgment,

the court will principally recount only the evidence that is

undisputed. If it is necessary to set out evidence that is

contested, the court will do so favorably to the party who is the

summary judgment nonmovant in the context of that evidence. In

this way it will comply with the standard that governs resolution

of summary judgment motions. See, e.g., U.S. Bank Nat’l Ass’n v.

Safeguard Ins. Co., 422 F.Supp.2d 698, 701 n.2 (N.D. Tex. 2006)

(Fitzwater, J.) (citing Clift v. Clift, 210 F.3d 268, 270 (5th Cir.

2000)). 

- 2 -

France.2 AMX, a Texas-based company, designs, develops, and

markets hardware and software products for integrated control

systems. AMX entered into a distributorship agreement with Pilote

on February 1, 1994 (“1994 Agreement”), under which Pilote became

the sole distributor of AMX products in France. 

The 1994 Agreement was for an initial term of one year unless

sooner terminated in accordance with its provisions or extended for

additional one-year terms by mutual written consent. Pilote and

AMX never extended the 1994 Agreement by written agreement. They

did, however, continue their relationship for the next ten years,

during which Pilote acted as AMX’s exclusive distributor in France.

The parties disagree about whether their relationship after

February 1, 1995 was governed by an oral extension and modification

of the 1994 Agreement or by a new, implied agreement arising under

French law.

Through the course of its business relationship with AMX,

Pilote developed a customer list of dealers in France who purchased

AMX products. Pilote considered this customer list to be a trade

 

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- 3 -

secret, and it at all times maintained its confidentiality. In

April 2004 AMX scheduled a visit with Pilote in France to learn

about the French market. As part of the trip, AMX requested to

visit some of Pilote’s dealers. Pilote complied with this request

by introducing AMX to certain dealers, including TVSAT2 Design.

Although Pilote introduced AMX to dealers, it did not authorize AMX

to contact them or to use for any other purpose the information

Pilote provided. Pilote alleges that, from August 6, 2004 to

January 2005, AMX sold at least $48,194.74 of products to TVSAT2

Design in France.

In May 2004 AMX notified Pilote in writing that it did not

intend to renew the 1994 Agreement beyond the current term of

February 1, 2005. On June 9, 2004 AMX announced the appointment of

a Regional Sales Support Manager for Europe, including France.

Later that month, AMX invited Pilote to join AMX in organizing an

informative road show (the “Road Show”) to promote new AMX products

to dealers and prospective dealers, planned for September 2004.

Pilote failed to respond to this invitation and to three additional

requests that AMX made in July 2004. Because Pilote never

responded, AMX sent invitations to French dealers and prospective

dealers without being in a position to present Pilote’s role in the

events.

At the end of July 2004, Pilote responded to AMX’s notice of

nonrenewal. Pilote stated, inter alia, that AMX could not

 

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3

AMX filed on September 20, 2006 objections to Pilote’s

evidence submitted in opposition to summary judgment.

Specifically, AMX objects to Philippe Migeot’s expert report,

Bettina Hulsmeyer’s affidavit, and various other documents. In

view of the court’s reasoning and the result reached in this

decision, the court overrules the objections as moot.

- 4 -

terminate the 1994 Agreement without compensating Pilote, and that

AMX did not have the right to have its own Regional Sales Support

Manager in France or to contact French dealers and prospective

dealers to invite them to the September Road Show.

AMX filed this lawsuit in Texas state court, seeking a

declaratory judgment and to recover on claims for breach of

contract, breach of fiduciary duty, and tortious interference with

prospective relations. Pilote removed the case to this court and

filed counterclaims. It seeks to recover on claims for breach of

contract, sudden breaking off an established business relationship,

unfair competition under Texas and French law, trademark

infringement, obtaining an advantage unrelated to a commercial

service, common law misappropriation, misappropriation of trade

secrets under the French Civil, Intellectual Property, and Labor

Codes, trade secret misappropriation, restitution/unjust

enrichment, conversion, tortious interference with an existing

contractual and/or business relationship, breach of exclusivity by

interference with a third party contract, and business

disparagement under Texas and French law. Pilote and AMX have both

filed motions for summary judgment,3 and the court has heard oral

 

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argument.

II

 AMX and Pilote both move for summary judgment on claims

asserted by the opposing party. Because neither will have the

burden of proof at trial on the other party’s claims, each can

obtain summary judgment by pointing the court to the absence of

evidence to support an essential element of the claim in question.

Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once AMX or

Pilote does so, the opposing party must go beyond its pleadings and

designate specific facts showing there is a genuine issue for

trial. See id. at 324; Little v. Liquid Air Corp., 37 F.3d 1069,

1075 (5th Cir. 1994) (en banc) (per curiam). Summary judgment is

mandatory if the nonmovant fails to meet this burden. Little, 37

F.3d at 1076. An issue is genuine if the evidence is such that a

reasonable jury could return a verdict for the nonmovant. Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The nonmovant’s

failure to produce proof as to any essential element renders all

other facts immaterial. Edgar v. Gen. Elec. Co., 2002 WL 318331,

at *4 (N.D. Tex. Feb. 27, 2002) (Fitzwater, J.) (citing Celotex

Corp., 477 U.S. at 323).

III

AMX and Pilote both assert breach of contract claims, but they

disagree about whether their relationship is governed by the 1994

Agreement or instead by a new, implied agreement that, for purposes

 

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4

AMX disagrees that there is a “French Agreement,” and it

refers to the term as a misnomer. The court will use the term in

this memorandum opinion and order as a matter of convenience. The

court holds infra at § IV(D) that Pilote cannot recover against AMX

under the so-called French Agreement because it cannot establish

the essential terms necessary for there to be a binding agreement

under Texas law. 

5Because the parties have filed multiple appendixes in

briefing their cross-motions, the court will refer to each appendix

by the date filed.

- 6 -

of deciding these motions, the court will call the “French

Agreement.”4 Each moves for summary judgment dismissing the other

party’s breach of contract claim. In § III the court will address

Pilote’s motion directed to AMX’s breach of contract claim, and in

§ IV it will decide AMX’s motion concerning Pilote’s claim. 

A

Pilote contends that AMX’s breach of contract claim fails

because the 1994 Agreement expired by its own terms in 1995, AMX’s

claim is based on an expired contract, and the claim is barred by

limitations. Section 12 of the 1994 Agreement, entitled “Term,”

states: “[t]his Agreement shall be for an initial term of one (1)

year from the date hereof unless sooner terminated in accordance

with the provisions of Section 13 below. By mutual written

agreement, AMX and [Pilote] may extend this Agreement for

additional one (1) year terms.” P. July 13 App. 10.5 It is

undisputed that AMX and Pilote did not extend the 1994 Agreement in

writing.

AMX contends the parties’ contract did not expire until

 

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February 1, 2005. It argues that although § 12 of the 1994

Agreement provided that the parties “may” extend the contract by

written agreement, they were not required to do so; under the law

a contract can be extended or modified by means other than writing,

and AMX and Pilote orally modified the 1994 Agreement and extended

it by their words and actions; and Pilote is estopped from

asserting that the 1994 Agreement expired before February 1, 2005

because it has repeatedly taken the opposite position and has

directly benefited from continuing to operate under the 1994

Agreement.

B

The court rejects AMX’s principal argument, in which it seeks

to read § 12 permissively to provide that the 1994 Agreement might,

but need not, be extended in writing. 

Under Texas law, “[i]n construing a written contract, the

primary concern of the court is to ascertain the true intentions of

the parties as expressed in the instrument.” Coker v. Coker, 650

S.W.2d 391, 393 (Tex. 1983). “In construing an unambiguous

contract, a court should attempt to harmonize and give effect to

all provisions so that none is rendered meaningless.” Harmon v.

1401 Elm St. Condo. Ass’n-Insignia/Esc of Tex., Inc., 139 S.W.3d

411, 414 (Tex. App. 2004, no pet.) (citing Coker, 650 S.W.2d at

393; Hill v. Heritage Res., Inc., 964 S.W.2d 89, 139 (Tex. App.

1997, pet. denied)). “No single provision taken alone will be

 

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- 8 -

given controlling effect; rather, all the provisions must be

considered with reference to the whole instrument.” Coker, 650

S.W.2d at 393. “No phrase, sentence, or section of a contract

should be isolated and considered apart from the other provisions.”

Trinity Prof’l Plaza Assocs. v. Metrocrest Hosp. Auth., 987 S.W.2d

621, 625 (Tex. App. 1999, pet. denied) (citing Forbau v. Aetna Life

Ins. Co., 876 S.W.2d 132 (Tex. 1994)). Moreover, “[i]t is logical

to assume that . . . words [used in different clauses of the

contract] were intended to convey the same meaning both times they

were used.” Matador Petroleum Corp. v. St. Paul Surplus Lines Ins.

Co., 174 F.3d 653, 657 (5th Cir. 1999) (quoting Nat’l Ropes v.

Nat’l Diving Serv., Inc., 513 F.2d 53, 58 (5th Cir. 1975) (brackets

and alterations in original)). When a word is used in one sense in

one part of a contract, it is presumed to retain that same meaning

throughout the contract, absent indications to the contrary. Tenn.

Gas Pipeline Co. v. FERC, 17 F.3d 98, 105 (5th Cir. 1994) (citing

Gonzalez v. Mission Am. Ins. Co., 795 S.W.2d 734, 736 (Tex. 1990);

Johnson v. Dick, 281 S.W.2d 171, 175 (Tex. Civ. App. 1955, no

writ); Green Ave. Apts., Inc. v. Chambers, 239 S.W.2d 675, 685

(Tex. Civ. App. 1951, no writ)). 

Section 12 of the 1994 Agreement states: “[t]his Agreement

shall be for an initial term of one (1) year from the date hereof

unless sooner terminated in accordance with the provisions of

Section 13 below. By mutual written agreement, AMX and [Pilote]

 

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- 9 -

may extend this Agreement for additional one (1) year terms.” P.

July 13, 2006 App. 10. The word “may” that AMX contends makes

merely permissive the method of extending the contract by written

agreement is the same word “may” that enables the parties to extend

the 1994 Agreement at all. Therefore, if “may” is interpreted as

a permissive term for purposes of determining the method by which

the agreement can be extended, it must also be interpreted in the

same way when construing the balance of the sentence in which it is

found, absent indications to the contrary. Under AMX’s reasoning,

the court for consistency would be obligated to interpret the

second sentence of § 12 to mean that AMX and Pilote could have

extended the 1994 Agreement for additional one-year increments, but

they could also have extended it in other increments (e.g., two,

three, or perhaps more years), even though the initial term of the

contract set out in the first sentence is one year and the second

sentence provides for extensions in one-year increments. This is

because the second sentence states that AMX and Pilote “may extend

this Agreement for additional one (1) year terms,” and AMX reads

the word “may” permissively. But this interpretation would not

read the two sentences that make up § 12 of the 1994 Agreement

harmoniously. The first sentence would be read to contemplate an

agreement renewable in one-year increments, and the second would

view the duration of the extensions in permissive terms. This

interpretation would also potentially require that the word “may”

 

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- 10 -

be given two different meanings: the 1994 Agreement may be extended

in writing, but also by another method, but it must be extended

only for one-year increments. And it would isolate and consider

the word “may” apart from the other provisions in § 12 and give it

controlling effect. 

Properly interpreted, the permissive term “may” used in the

second sentence of § 12 refers to the parties’ option to extend the

1994 Agreement for additional one-year terms, not to the method

they must use to effect the extension. Accordingly, the court

holds that although the 1994 Agreement makes permissive the

decision to extend the contract, it makes mandatory the method of

doing so: by mutual written agreement.

C

AMX also maintains that the 1994 Agreement could have been

extended or modified through the parties’ course of dealing and

conduct, when they continued to do business in the same manner as

they had during the contract’s initial term, or by oral agreement.

It posits that Pilote’s motion must be denied because there is a

fact question whether the 1994 Agreement was extended on this

basis.

AMX cannot establish that the parties extended the 1994

Agreement through their course of dealing and conduct. Under Texas

law, when parties initially operate under an express contract but

continue to operate in essentially the same manner after the

 

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- 11 -

contract has expired, the rights of the parties are determined

under implied contract principles. See, e.g., Emmer v. Phillips

Petroleum Co., 668 S.W.2d 487, 490 (Tex. App. 1984, no writ). The

resulting contractual relationship stems from a new, implied

contract, not an extension of the old, expired contract. See id.

at 490-91 (holding that after express contract expired by its

terms, if parties had rights and obligations toward each other,

these existed under implied contract created by the acts and

conduct of the parties after express contract expired); Double

Diamond Inc. v. Hilco Elec. Coop., Inc., 127 S.W.3d 260, 265-67

(Tex. App. 2003, pet. denied) (concluding that where contract

expired but parties continued to deal with each other for two years

as they had under previous contract, Texas law did not prohibit

parties from impliedly extending agreement or entering into new

agreement after written agreement expired, and holding that there

was fact issue whether parties had entered into implied agreement);

Celadon Trucking Servs., Inc. v. Lugo’s Sec. Agency, 2005 WL

2401886, at *2 (Tex. App. Sept. 28, 2005, no pet.) (not designated

for publication) (concluding there was fact issue as to whether

contract existed when express contract expired but parties

continued to act as if agreement was still in effect, and stating

that “[w]hen the evidence consists of the conduct of the parties

and their course of dealing with one another, then mutual agreement

may be inferred from the circumstances, in which event the contract

 

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- 12 -

is said to be ‘implied’ as opposed to being an ‘express’

contract.”); but cf. Sieber & Calicutt, Inc. v. La Gloria Oil & Gas

Co., 66 S.W.3d 340, 347 (Tex. App. 2001, pet. denied) (“The parties

here continued to perform under the July 1, 1991 maintenance

contract even after it had expressly expired on July 1, 1992. . .

[this, in combination with a letter agreement extending the

contract on November 15, 1993] was sufficient evidence to support

the trial court’s finding that the maintenance contract of July 1,

1991, was in effect on April 28, 1993.”). The 1994 Agreement

expired on February 1, 1995 because it was not extended by written

agreement. Accordingly, even if AMX and Pilote continued to

operate in essentially the same manner after the 1994 Agreement

expired, their rights would be determined under implied contract

principles, not on the basis of an extension of the 1994 Agreement

itself.

The court also rejects AMX’s reliance on conversations,

emails, and correspondence to argue that the parties extended the

1994 Agreement through oral modification. The court recognizes, as

AMX argues, that Texas law provides that “a written agreement not

required by law to be in writing may be modified by a later oral

agreement, even though it provides that it can be modified only in

writing.” Double Diamond, 127 S.W.3d at 267 (citing Mar-Lan

Indus., Inc. v. Nelson, 635 S.W.2d 853, 855 (Tex. App. 1982, no

writ); Adams v. Can-Dee Oil Corp., 357 S.W.2d 808, 808 (Tex. Civ.

 

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- 13 -

App. 1962, writ ref’d n.r.e.)). But assuming that this rule can be

applied in the present context, AMX has not adduced sufficient

summary judgment evidence to enable a reasonable jury to find that

the parties orally agreed to modify and extend the 1994 Agreement.

AMX has presented evidence of the parties’ conduct and course of

dealing——shipping products, providing services (e.g., promoting,

selling, and distributing AMX products), and issuing written

invoices——not of an explicit oral agreement to extend the 1994

Agreement. As the court in Double Diamond explained, “[w]hen [the]

evidence consists of the conduct of the parties and their course of

dealing with one another, then mutual agreement may be inferred

from the circumstances, in which event the contract is said to be

‘implied’ as opposed to being an ‘express’ contract. Id. (citing

Haws & Garrett Gen. Contractors, Inc. v. Gorbett Bros. Welding Co.,

480 S.W.2D 607, 609 (Tex. 1972)).

Accordingly, subject to AMX’s ability, addressed below, to

establish that Pilote is estopped from denying that the 1994

Agreement did not expire until February 1, 2005, the court holds

that the contractual relationship between AMX and Pilote was not

governed by the 1994 Agreement. To the extent any contractual

relationship existed between AMX and Pilote, it was based on an

implied contract. AMX cannot recover for breach of an implied

contract, however, because it has not pleaded (and it is now too

late to assert) such a claim. AMX only alleges a claim for breach

 

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6AMX could have alleged an alternative claim for breach of an

implied agreement. But because it has not done so, the court need

not consider whether such a breach claim would be viable. 

- 14 -

of the 1994 Agreement.6

D

AMX relies on theories of quasi-estoppel, equitable estoppel,

and judicial estoppel to argue that Pilote is precluded from

denying that the 1994 Agreement expired on February 1, 2005. It

maintains that in a prior legal proceeding, Pilote repeatedly took

the opposite position; that Pilote has relied on the existence and

extension of the 1994 Agreement to charge AMX with wrongdoing; and

that Pilote has benefited by continuing to operate under the 1994

Agreement because it has maintained its exclusive distributor

status in France, orally modified the 1994 Agreement to extend its

distributorship to North African countries, asserted that AMX

violated the 1994 Agreement as a basis to persuade a Belgium trial

court to prevent AMX from conducting the Road Show in France, and

filed a grievance with a French governmental agency alleging that

AMX violated the 1994 Agreement. 

Pilote responds that its prior position was not inconsistent

with its argument that the 1994 Agreement expired on February 1,

1995, after which the parties’ relationship was controlled by the

French Agreement, which included some of the terms of the 1994

Agreement. It essentially maintains that the expired 1994

Agreement is evidence of what is included in the French Agreement

 

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7AMX also asserts as a basis for its quasi-estoppel theory

that Pilote took the position before a Belgium judicial body that

the 1994 Agreement governed the parties’ actions. It does not

elaborate on that assertion, however, except as part of its

contention that Pilote is judicially estopped from denying that the

1994 Agreement did not expire until February 1, 2005. The court

will therefore address the argument in connection with judicial

estoppel rather than quasi-estoppel. See infra § III(G).

- 15 -

but is not dispositive of the parties’ contractual relationship.

E

The court considers first AMX’s reliance on quasi-estoppel.

AMX argues that it would be unconscionable to allow Pilote to

maintain that the 1994 Agreement expired by its own terms because

Pilote previously asserted that the 1994 Agreement governed the

parties’ relationship and sought to enforce its own rights under

the Agreement. AMX contends that between February 1, 1995 and the

commencement of this lawsuit, Pilote accepted benefits of the 1994

Agreement.7 It therefore posits that Pilote is precluded by the

doctrine of quasi-estoppel from taking an inconsistent position and

arguing to this court that the 1994 Agreement no longer governs its

actions.

Pilote replies that AMX has produced no evidence that Pilote’s

position has been inconsistent. It argues that it has accepted

benefits and performed duties under the French Agreement, not the

expired 1994 Agreement. Pilote also maintains that the expired

1994 Agreement was irrelevant to its claims against AMX Ltd.

Belgium (“AMX Belgium”) in the Belgium court.

 

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- 16 -

“Quasi-estoppel precludes a party from asserting, to another’s

disadvantage, a right inconsistent with a position previously

taken.” Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 864

(Tex. 2000) (citing Atkinson Gas Co. v. Albrecht, 878 S.W.2d 236,

240 (Tex. App. 1994, writ denied). “The doctrine applies when it

would be unconscionable to allow a person to maintain a position

inconsistent with one to which he acquiesced, or from which he

accepted a benefit.” Id. (citing Atkinson Gas Co., 878 S.W.2d at

240; Vessels v. Anschutz Corp., 823 S.W.2d 762, 765-66 (Tex. App.

1992, writ denied)). “[Q]uasi-estoppel forbids a party from

accepting the benefits of a transaction or statute and then

subsequently taking an inconsistent position to avoid corresponding

obligations or effects.” Atkinson Gas Co., 878 S.W.2d at 240

(citing Mexico’s Indus., Inc. v. Banco Mex. Somex, S.N.C., 858

S.W.2d 577, 581 n.7 (Tex. App. 1993, writ denied); Turcotte v.

Trevino, 499 S.W.2d 705, 712-13 (Tex. Civ. App. 1973, writ ref’d

n.r.e.)). “The doctrine essentially requires (1) a previous action

and (2) a subsequent inconsistent action which is thereby sought to

be estopped.” Mulvey v. Mobil Producing Tex. & N.M. Inc., 147

S.W.3d 594, 607 (Tex. App. 2004, pet. denied).

AMX has adduced facts from which a reasonable jury could find

that Pilote took the position that the 1994 Agreement applied and

is now taking an inconsistent position in this case. For example,

in a letter that Bettina Hulsmeyer (“Hulsmeyer”), Pilote’s General

 

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Manager, wrote in response to AMX’s notice of nonrenewal, she

referred specifically to the 1994 Agreement——which she called the

“Distributorship Agreement”——stating, inter alia, that there was no

reason to terminate the agreement because Pilote did not break any

of the clauses on which AMX relied. P. July 13, 2006 App. 153. A

jury could find that Pilote was invoking the 1994 Agreement to

control AMX’s right to terminate the parties’ relationship. 

Pilote replies that AMX fails to acknowledge Hulsmeyer’s

statement in the same letter that “[b]y not presenting Pilot[e]

Films a written extension, the Distributorship Agreement presents

now, after ten years of commercial relationship, a character of

indefinite term, which cannot be terminated by AMX at the date of

January 31st 2005 without any reasonable compensation to Pilote

Films.” Id. It contends that a reasonable jury could infer from

this statement that Pilote did not believe the parties were

operating under the 1994 Agreement as written. Although this

argument may persuade the jury to find against AMX on its quasiestoppel theory, the court cannot say that a reasonable jury would

be unable to find from other record evidence (including other

statements that Hulsmeyer made in the same letter), that Pilote

accepted the benefits of the 1994 Agreement and later took the

inconsistent position that the agreement was not controlling, in

order to avoid corresponding obligations or effects.

AMX also relies on evidence of Pilote’s submission of the 1994

 

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- 18 -

Agreement to the Direction Régionale de la Concurrence, de la

Consommation et de la Répression des Fraudes, a French governmental

agency that investigates allegations of business practices that

violate French law. AMX cites a September 3, 2004 letter that

Hulsmeyer submitted to the French agency that referred to an

earlier telephone conversation with an agency representative and

stated: “As agreed, I am sending you a copy of our exclusive

contract signed in February 1994 with this same manufacturer, and

this to give you more information about our relationship with it.”

P. July 13, 2006 App. 234. 

Pilote argues in reply that the evidence it submitted was

necessary to support its argument that the French Agreement

included an exclusivity provision, as established by the expired

1994 Agreement, and that this proof was provided for the purpose of

giving the agency more information about the parties’ relationship.

Pilote points out that Hulsmeyer did not state in the letter that

the 1994 Agreement controlled the relationship.

This evidence would not alone permit a reasonable jury to find

that Pilote was estopped from asserting that the 1994 Agreement had

expired. Viewed in isolation, it shows that Pilote provided a

French governmental agency a copy of the 1994 Agreement so that it

would have more information about the parties’ relationship.

Hulsmeyer’s letter stated that was her intent in enclosing a copy

of the 1994 Agreement. She did not claim that the 1994 Agreement

 

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8Of course, the jury could also find, as Pilote argues, that

Pilote was citing the 1994 Agreement as the source of the

exclusivity provision of the French Agreement. But this is an

issue for the jury to decide.

- 19 -

itself was currently in effect. But in combination with other

evidence that AMX has adduced——including the content of Hulsmeyer’s

letter to AMX in response to its notice of nonrenewal——a reasonable

jury could find that the submission was part of Pilote’s continuing

effort to rely on the 1994 Agreement to control the AMX-Pilote

relationship after February 1, 1995.8

Accordingly, the court concludes that AMX has adduced

sufficient evidence from which a reasonable jury could find that

Pilote is precluded based on quasi-estoppel from defeating AMX’s

breach of contract claim on the ground that the 1994 Agreement

expired.

F

AMX next argues that Pilote is equitably estopped from denying

that the 1994 Agreement expired before February 1, 2005. It

maintains that Pilote knowingly concealed its belief that the

agreement expired, intending that AMX unknowingly rely to its

detriment on that concealment. AMX posits that Pilote’s failure to

inform AMX that it believed the 1994 Agreement had expired and that

the parties were operating under a new agreement pursuant to French

law worked a detriment to AMX because it was unable to hire a

lawyer and negotiate the terms of the French Agreement. It argues

 

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- 20 -

that, had it known this was occurring, it would not have accepted

Pilote’s proposal and would have discontinued the parties’

relationship.

Pilote responds that AMX cannot rely on equitable estoppel

because it possessed the means of acquiring knowledge that the 1994

Agreement had expired since it had a copy of the agreement and thus

had constructive knowledge of the contract’s extension clause.

Therefore, AMX could have known that the 1994 Agreement had expired

by its own terms and that the parties were in fact operating under

an implied contract under French law.

Equitable estoppel arises where, by the fault of one, another

is induced to change its position for the worse. Herschbach v.

City of Corpus Christi, 883 S.W.2d 720, 736 (Tex. App. 1994, writ

denied). It is established when (1) a false representation or

concealment of material facts, (2) is made with knowledge, actual

or constructive, of those facts, (3) with the intention that it

should be acted upon, (4) to a party without knowledge or means of

obtaining knowledge of the facts, (5) who detrimentally relies on

the representations. Johnson & Higgins of Tex., Inc. v. Kenneco

Energy, Inc., 962 S.W.2d 507, 515-16 (Tex. 1998) (citing Schroeder

v. Tex. Iron Works, Inc., 813 S.W.2d 483, 485 (Tex. 1991)).

As a threshold matter, the court observes that AMX’s position,

if accepted, would appear to undermine settled Texas law governing

the establishment of implied contractual relationships after an

 

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- 21 -

express contract expires. See e.g., Emmer, 668 S.W.2d at 490;

Double Diamond, Inc., 127 S.W.3d at 267. Under AMX’s argument, a

party seeking to defeat the terms of an implied contractual

relationship could always argue that the opposing party’s silence

concerning the expiration of the express contract equitably

estopped it from contending that the parties had entered into an

implied contract. Yet implied contracts necessarily arise from the

conduct of the parties and their course of dealing with one

another. See Double Diamond, Inc., 127 S.W.3d at 267. And that

conduct will often be marked by at least one party’s silence

regarding the fact that the express contractual relationship has

ended and an implied contractual relationship has begun.

But the court need not decide whether AMX’s equitable estoppel

theory is even plausible under Texas law because a reasonable jury

could not find that AMX has met all the required elements of this

doctrine. Among the requirements for equitable estoppel is that

AMX was without knowledge or means of obtaining knowledge of the

facts. AMX had a copy of the 1994 Agreement and could have

correctly interpreted it, as has the court above, see supra §

III(B), to mean that the parties were obligated to extend the

agreement by mutual written agreement. AMX was also aware that the

parties had not done so. It therefore had the means of knowing

that the 1994 Agreement had expired and that the parties were

operating under an implied contract. AMX cannot rely on equitable

 

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estoppel to recover from Pilote under the 1994 Agreement.

G

AMX also relies on the doctrine of judicial estoppel to defeat

Pilote’s contention that the 1994 Agreement expired. It argues

that Pilote brought suit against AMX U.K., Ltd. (“AMX UK”) (AMX’s

affiliate) in Belgium, specifically relying on the 1994 Agreement

to establish that Pilote and AMX had an exclusive distributorship

agreement, signed February 1, 1994, and that AMX was not permitted

to promote its products in a number of cities during the Road Show

in France. AMX cites Pilote’s argument before the Belgium court

that it had an exclusive representation agreement with AMX, and

that 

this agreement was entered into for one year

and . . . was tacitly renewed during a period

of ten years . . . [and] without waiting until

the end of the agreement in 2005, a “Road

Show” was organized for the current month

(September 2004) . . . in violation of the

exclusivity agreement that is in force. 

P. July 13, 2006 App. 191. AMX maintains that Pilote is judicially

estopped from taking a contrary position in this court because

Pilote persuaded the Belgium court to rule in its favor——i.e., to

hold that AMX was precluded under the 1994 Agreement from

conducting the September 2004 Road Show——based on the contention

that it had an exclusive distributorship under the agreement. It

contends that Pilote submitted the 1994 Agreement and at no time

referred to an alleged French Agreement.

 

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Pilote responds that it did not take an inconsistent position

in the Belgian litigation, and, if it did refer to the 1994

Agreement, the reference was unintentional and inadvertent. It

maintains, as it has in opposing AMX’s other estoppel arguments,

that in Belgium it merely argued that the French Agreement included

an exclusivity provision, which it relied on to support an

extracontractual claim against AMX Belgium. It contended that AMX

Belgium, a division of AMX UK, was helping AMX violate that

agreement by assisting AMX in organizing a Road Show in France.

Pilote posits that although it distinguished the contract claims in

this court from those in the Belgium tribunal, AMX Belgium tried to

insert the expired 1994 Agreement into the Belgium proceeding. It

asserts that AMX is citing Pilote’s statements to the Belgium court

out of context and that, read properly, they are consistent with

Pilote’s position that although the exclusivity provision

originated in the 1994 Agreement, it continued in effect for ten

years thereafter as a term of the implied French Agreement. Pilote

also argues that AMX is misrepresenting to this court that Pilote

asserted in the Belgium tribunal that Texas law applied; instead,

AMX UK advanced arguments under Texas law. It contends that if it

did take inconsistent positions, any implied reference to the 1994

Agreement was inadvertent.

“The doctrine of judicial estoppel bars a party who

successfully maintains a position in a prior judicial proceeding

 

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from afterward adopting an inconsistent position if so doing would

result in prejudice to his adversary.” Moore v. Neff, 629 S.W.2d

827, 829 (Tex. App. 1982, writ ref’d n.r.e.) (citing Long v. Knox,

291 S.W.2d 292, 295 (Tex. 1956); Yarber v. Pennell, 443 S.W.2d 382,

384 (Tex. Civ. App. 1969, writ ref’d n.r.e.); Van Deusen v. Conn.

Gen. Life Ins. Co., 514 S.W.2d 951 (Tex. Civ. App. 1974, no writ)).

“[T]he doctrine is intended to protect the integrity of the

judicial system and to prevent a party from ‘playing fast and

loose’ with the courts to suit the party’s purposes.” Brown v.

Lanier Worldwide, Inc., 124 S.W.3d 883, 899 (Tex. App. 2004, no

pet.) (quoting Stewart v. Hardie, 978 S.W.2d 203, 208 (Tex. App.

1998, pet. denied)). 

The elements of judicial estoppel are (1) a

sworn, prior inconsistent statement made in a

prior judicial proceeding; (2) the successful

maintenance of the contrary position in the

prior action; (3) the absence of inadvertence,

mistake, fraud, or duress in the making of the

prior statement; and (4) the statement was

deliberate, clear, and unequivocal.

Id. (citing DeWoody v. Rippley, 951 S.W.2d 935, 944 (Tex. App.

1997, pet. dism’d by agr.)). 

AMX has presented a fact issue that prevents summary judgment

rejecting its judicial estoppel theory. A reasonable jury could

find from the evidence presented in the summons from the Belgian

court that Pilote relied on the continuing validity of the 1994

 

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9

A reasonable jury could also find that Pilote did not

maintain the position that the 1994 Agreement still governs, but

simply used it as evidence of the terms of an implied contract that

arose when the 1994 Agreement expired. But this is a question for

the jury to decide.

- 25 -

Agreement in the Belgian proceedings,9 was successful in those

proceedings and was able to use the 1994 Agreement to stop the

actions of AMX Belgium, and that Pilote is only now attempting to

take an inconsistent position and argue that the parties’

relationship was controlled by an implied French Agreement. The

possibility that AMX may prevail on a judicial estoppel or quasiestoppel theory, and thereby bar Pilote from arguing that the 1994

Agreement does not control, precludes the court from granting

Pilote’s motion for summary judgment on AMX’s breach of contract

claim. 

IV

The court next considers whether AMX is entitled to summary

judgment dismissing Pilote’s breach of contract counterclaim.

A 

Pilote alleges that AMX breached the French Agreement by

placing an agent to work in Pilote’s exclusive territory,

conducting road shows in the exclusive territory without Pilote,

and directly contacting Pilote’s dealers and/or customers.

Alternatively, if the court determines that the relationship

between AMX and Pilote is governed by the 1994 Agreement, Pilote

asserts that AMX breached that contract through the same actions.

 

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AMX moves for summary judgment on this counterclaim, arguing

that Pilote has failed to prove the existence of the alleged French

Agreement or of any of its material terms. It maintains that

Pilote cannot point to a single discussion, negotiation, or

agreement with anyone at AMX regarding the alleged French

Agreement, or of its contractual terms, and that Hulsmeyer’s

testimony shows that no such agreement was clearly established.

AMX argues that Pilote has recently asserted for the first time

that the French Agreement is an implied agreement that contains

some of the terms of the 1994 Agreement, but that Pilote cannot

adduce evidence sufficient to support the finding of an implied

agreement; that Pilote cannot successfully assert that the French

Agreement arose and operated under French law because Pilote would

be required by French law to prove that AMX expressly agreed to

every material term included in the contract, which it cannot do in

light of Hulsmeyer’s contrary testimony; and that if Pilote relies

on Texas law to establish that the French Agreement is enforceable,

it must prove all material terms in the agreement, which it cannot

do. AMX cites three specific allegations that Pilote makes

concerning how AMX breached the alleged French Agreement, and it

argues that Pilote cannot recover on any of them because it lacks

evidence that the French Agreement ever existed or that AMX

expressly agreed to be bound by a specific contractual term that

 

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10AMX also maintains that to the extent a French Agreement

existed, Pilote’s claim for damages for any purported breach of the

contract would be limited, because the agreement would have expired

at the latest on February 1, 2005, and Pilote cannot recover

damages after that date. AMX also contends that even if an implied

exclusive distributorship agreement arose under French law, it

expired on February 1, 2005 (ten years after the French agreement

began). Because the court holds that Pilote cannot recover under

the French Agreement, it need not address these arguments.

- 27 -

would have prevented AMX’s conduct.10

Regarding Pilote’s alternative claim for breach of the 1994

Agreement, AMX contends that, assuming there was a breach, Pilote’s

damages are limited. Relying on a contractual limitation-ofliability clause, AMX posits that Pilote cannot recover lost

profits, consequential, or related damages and, alternatively, that

Pilote is precluded from recovering contractual damages allegedly

incurred after February 1, 2005, when AMX properly notified Pilote

that it was not renewing the contract.

Pilote responds that the terms of the French Agreement are a

question of fact; that after AMX and Pilote failed to extend the

1994 Agreement in writing, the parties’ relationship was governed

under French law by a contrat de concession exclusive because they

continued their business relationship for a period of ten years;

that under the French Commercial Code, the continuation of the

relationship by both parties and the nature of the obligations of

both parties can be proved by any means; that this is similar to

Texas law governing implied contracts, under which a contract ends

and the parties continue in a commercial relationship; that the

 

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terms of the French Agreement can be proved by any means, including

documents, conversations, actions, or anything else; that it has

consistently pleaded that the French Agreement arose under French

law after the 1994 Agreement expired and that Hulsmeyer explained

in her deposition the material terms of the agreement; and that the

summary judgment evidence is sufficient for a jury to determine the

terms of the French Agreement.

Pilote also argues that § 14 of the 1994 Agreement does not

limit all damages but restricts only those incurred by reason of

termination or nonrenewal. Therefore, if the 1994 Agreement

governs the parties’ relationship, § 14 would not limit damages

before termination of the contract and, after termination, would

only limit those directly caused by the termination. This would

still allow Pilote to recover damages not related to AMX’s

termination of the agreement.

Pilote argues that applying the “most significant

relationship” test prescribed by § 6 of the Restatement (Second) of

Conflict of Laws Restatement (“Restatement”), French law controls.

It contends that if even Texas law applies, Pilote’s French

Agreement claims still exist.

B

It is well settled that “[i]f the laws of the states do not

conflict, then no choice-of-law analysis is necessary.” Schneider

Nat’l Transp. v. Ford Motor Co., 280 F.3d 532, 536 (5th Cir. 2002)

 

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(citing W.R. Grace & Co. v. Continental Cas. Co., 896 F.2d 865, 874

(5th Cir. 1990); Nat’l Union Fire Ins. v. CNA Ins. Cos., 28 F.3d

29, 32 n.3 (5th Cir. 1994)). In that case, the court would simply

apply forum law to the dispute. Id. Based on the arguments of the

parties, and Pilote’s failure to refute AMX’s explanation of French

law, the court acknowledges that it is possible that the laws of

France and Texas on the formation of an implied contract are

essentially the same. AMX provides only the testimony of its

expert, Philip R. Kimbrough (“Kimbrough”), to support the

contention that a party seeking to establish an implied contract

under French law must adduce evidence that the parties agreed to

every material term. The court is unable to determine from AMX’s

evidence whether Kimbrough’s opinion is supported by French law.

Because of the uncertainty regarding French law on the requirements

for an implied conflict, and because the court would apply Texas

law under either scenario, it will perform a complete choice-of-law

analysis.

C

1

To decide whether French or Texas law controls, the court

applies the choice-of-law rules of Texas, the state in which it

sits. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496

(1941). “In Texas, when, as here, a contract does not contain an

express choice-of-law provision, a court must determine whether a

 

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relevant statute directs the court to apply the laws of a

particular state.” Reddy Ice Corp. v. Travelers Lloyds Ins. Co.,

145 S.W.3d 337, 340 (Tex. App. 2004, pet. denied). When no

statutory directive governs in a contract dispute, Texas courts

apply the “most significant relationship” test set out in §§ 6 and

188 of the Restatement. Duncan v. Cessna Aircraft Co., 665 S.W.2d

414, 421 (Tex. 1984) (“[I]n all choice of law cases, except those

contract cases in which the parties have agreed to a valid choice

of law clause, the law of the state with the most significant

relationship to the particular substantive issue will be applied to

resolve that issue.”). No statute controls the agreement between

AMX and Pilote. The court must therefore determine whether France

or Texas bears the most significant relationship to the contractual

relationship at issue. 

Under the “most significant relationship” test, the court

considers several factors to determine which forum has the most

significant relationship to the litigation. See Restatement

(Second) of Conflict of Laws § 6(2) (1971). These include (1) the

needs of the interstate and international systems, (2) the relevant

policies of the forum, (3) the relevant policies of other

interested states and the relative interests of those states in the

determination of the particular issue, (4) the protection of

justified expectations, (5) the basic policies underlying the

particular field of law, (6) certainty, predictability, and

 

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uniformity of result, and (7) ease in the determination and

application of the law to be applied. Id. The contacts the court

should consider in applying these principles to a contract dispute

include (1) the place of contracting, (2) the place of negotiation,

(3) the place of performance, (4) the location of the contract’s

subject matter, and (5) the domicile, residence, nationality, place

of incorporation, and place of business of the parties.

Restatement (Second) of Conflict of Laws § 188(2) (1971). “Once

these contacts are established, the question of which . . . law

will apply is one of law.” Duncan, 665 S.W.2d at 421 (citing

Guiterrez v. Collins, 583 S.W.2d 312, 319 (Tex. 1979)). “[T]he

number of contacts with a particular state is not determinative.”

Id. “Some contacts are more important than others because they

implicate state policies underlying the particular substantive

issue.” Id. “Consequently, selection of the applicable law

depends on the qualitative nature of the particular contacts.” Id.

(citing Guiterrez, 583 S.W.2d at 319). 

2

The court considers first the relevant contacts with France

and Texas. It is undisputed that the 1994 Agreement was contracted

and negotiated in Texas. Section 18, entitled “Governing Law:

Venue,” contains the following provision:

This Agreement shall be deemed to have been

executed and delivered and is to be performed

in part in the State of Texas, United States

of America. 

 

 Case 3:04-cv-02035-D Document 169 Filed 06/05/07 Page 31 of 85 PageID 2308
11Because the outcome of the court’s choice-of-law analysis

would be the same regardless whether the 1994 Agreement controlled

the parties’ relationship only through February 1, 1995 or lapsed

at that time, the court need not undertake the potentially more

difficult task of factoring AMX’s estoppel arguments into the

equation.

- 32 -

P. July 13, 2006 App. 12. But unless estoppel applies (and the

court will assume for purposes of its choice-of-law analysis that

it does not), the 1994 Agreement did not control the parties’

relationship after February 1, 1995.11 To the extent the parties

had any contractual relationship after that, it was based on an

implied contract. AMX and Pilote would not have contracted or even

negotiated the implied contract; it would have arisen from the

conduct of AMX and Pilote after February 1, 1995. As discussed

below, this conduct occurred both in Texas and in France. 

The court next considers together the place of performance and

the location of the contract’s subject matter. It concludes that

the contract was performed and its subject matter was located in

both Texas and France. AMX’s products were developed and produced

in Texas; Pilote transmitted its purchase orders to Texas and paid

for the products by direct wire transfers to AMX’s Texas bank

account; AMX’s products were delivered to common carriers in Texas

for shipment to Pilote, such that ownership changed hands in Texas;

Pilote’s employees visited AMX’s Texas offices for business and

training purposes; and Pilote’s officers visited Texas several

times to conduct business with AMX. On the other hand, the subject

 

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of the relationship between AMX and Pilote was marketing and

selling AMX products in the French market, and Pilote promoted and

distributed AMX’s products, and performed related services, in

France. The court holds that the place of performance and location

of the contract’s subject matter point to both Texas and France. 

Finally, the domicile, residence, nationality, place of

incorporation, and place of business of the parties point to both

Texas and France, because AMX is a Texas corporation and Pilote is

a French company that is akin to a limited liability company. 

Considering the relevant contacts of AMX and Pilote does not

yield a clear answer as to which law applies. But application of

the most significant relationship test does not turn simply on the

number of contacts each forum has with the controversy. See Albany

Ins. Co v. Anh Thi Kieu, 927 F.2d 882, 891 (5th Cir. 1991). The

court next considers the § 6 principles to determine whether Texas

or France has a greater interest in the outcome of the litigation.

The court begins with factors one, three, and five: the needs

of the interstate and international systems, the relevant policies

and relative interests of other interested states in the

determination of the particular issue, and the basic policies

underlying the particular field of law. Pilote correctly points

out that France’s choice-of-law principles are immaterial to this

court’s choice-of-law determination. But the choice-of-law

principles that France would apply to a distribution agreement do

 

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12AMX had filed two appendixes in support of its motion for

summary judgment, and the page numbers in each overlap to some

extent. Cf. N.D. Tex. Civ. R. 56.6(b)(1) (requiring one appendix

“assembled as a self-contained document”). The court will

therefore refer to the one that contains “French Legal Authorities”

as “FLA App.”

- 34 -

shed light on the relative interest France has in applying its own

laws to a contract of this type. Under French choice-of-law

principles, if the contract is a distributorship agreement, French

courts apply the law of the manufacturer’s, rather than of the

distributor’s, residence. See P. July 31, 2006 FLA App. 52-53.12

Thus it appears that a French court faced with this dispute would

apply Texas rather than French law. This suggests that France’s

interest in this dispute is less significant, and that France does

not have a strong need for its own laws to be applied. 

Texas, on the other hand, does have an interest in applying

its laws to distribution contracts when the goods are manufactured

in Texas and delivered to common carriers in Texas, and when the

payment for the goods is handled through Texas banks. Texas’s

interest in applying its own laws may be diminished by the fact

that this contract is not solely for the sale of goods, but also

involves the performance of services, many of which took place in

France. But because France’s choice-of-law principles would

dictate the application of Texas law——despite the fact that many

of the services involved in this distributorship agreement occurred

in France——the court concludes that factors one, three, and five

 

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weigh in favor of applying Texas law. 

Factor four considers the protection of justified expectations

of the parties which, in this case, also weighs in favor of

applying Texas law. The 1994 agreement contained a choice of law

provision that states, in pertinent part, that “[t]he substantive

laws of the State of Texas, excluding any conflicts of law or

principle that might otherwise refer to the substantive law of

another jurisdiction, shall govern the interpretation, validity and

effect of this Agreement.” P. July 13, 2006 App. 12. Pilote and

AMX both agreed to this provision. Although the 1994 Agreement

expired by its terms on February 1, 1995 and no longer controls the

relationship between AMX and Pilote, it is nonetheless helpful in

determining the expectations of the parties. 

The terms of the 1994 Agreement corroborate the finding that,

from the beginning, AMX and Pilote both knew and explicitly agreed

that their relationship would be governed by Texas law. There is

no evidence that they ever agreed to a different choice-of-law

provision or that it was implied or agreed that they expected to be

bound by French law. Thus there is no reason to conclude that

either expected French law to govern. The evidence suggests that

AMX and Pilote both expected their relationship to be governed by

Texas law. The court therefore concludes that factor four weighs

in favor of applying Texas law. 

Finally, factor seven, which assesses the ease in the

 

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13Because the court has determined that Texas law governs the

contractual relationship between AMX and Pilote, and since it

dismisses below all of Pilote’s French-law claims, the court denies

the following three motions as moot: AMX’s July 31, 2006 motion to

exclude expert testimony, AMX’s September 26, 2006 motion for leave

to file motion for leave to designate French-law expert, and AMX’s

March 2, 2007 supplemental motion to exclude expert testimony. 

- 36 -

determination and application of the law to be applied, weighs in

favor of applying Texas law. Although this court is capable of

applying French law to this contract dispute, its familiarity with

Texas law is far superior. 

Based on the above, and balancing the relevant interests of

France and Texas, the court concludes that Texas has the most

significant relationship to the present dispute and that therefore

Texas law governs the contractual relationship between AMX and

Pilote.13 

D

The court now considers whether, under Texas law and on the

facts that Pilote has produced, Pilote can show that the so-called

French Agreement is an enforceable contract.

1

Texas courts will imply a contractual relationship “when the

facts and circumstances surrounding the parties’ relationship imply

a mutual intention to contract.” Harrison v. Williams Dental

Group, P.C., 140 S.W.3d 912, 916 (Tex. App. 2004, no pet.) (citing

Haws & Garrett Gen. Contractors, Inc., 480 S.W.2d at 609). For a

contract to be enforceable, however, the parties must have agreed

 

 Case 3:04-cv-02035-D Document 169 Filed 06/05/07 Page 36 of 85 PageID 2313
14Several cases that the court cites to support its analysis

involve express rather than implied contracts. The law stated in

these cases applies with equal force to implied contract cases,

however, because “the elements of a contract, express or implied,

are identical.” Univ. Nat’l Bank v. Ernst & Whinney, 773 S.W.2d

707, 710 (Tex. App. 1989, no writ.); see also Leal v. Weightman,

2004 WL 2251570, at *4 (Tex. App. Oct. 7, 2004, no pet.) (finding

no implied contract when party did not produce more than scintilla

of evidence of essential terms). 

- 37 -

on the essential terms.14 T.O. Stanley Boot Co. v. Bank of El Paso,

847 S.W.2d 218, 221 (Tex. 1992). An “essential” term is

one that the parties reasonably regarded, at

the time of contracting, as a vitally

important ingredient in their bargain. Failure

to fulfill such a promise, in other words,

would seriously frustrate the expectations of

one or more of the parties as to what would

constitute sufficient performance of the

contract as a whole. 

Neeley v. Bankers Trust Co. of Tex., 757 F.2d 621, 628 (5th Cir.

1985). If an agreement is so indefinite that a court cannot

determine the legal obligations and liabilities of the parties, it

is not an enforceable agreement. Moore v. Dilworth, 142 Tex. 538,

179 S.W.2d 940, 942 (1944). “Whether an agreement fails for

indefiniteness is a question of law to be determined by the court.”

COC Servs., Ltd. v. CompUSA, Inc., 150 S.W.3d 654, 664 (Tex. App.

2004, pet. dismissed) (citing Castroville Airport, Inc. v. City of

Castroville, 974 S.W.2d 207, 211 (Tex. App. 1998, no pet.); Am.’s

Favorite Chicken Co. v. Samaras, 929 S.W.2d 622 & n.3 (Tex. App.

1996, writ denied)).

“The rules regarding indefiniteness of material terms of a

 

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- 38 -

contract are based on the concept that a party cannot accept an

offer to form a contract unless the terms of that contract are

reasonably certain.” Ski River Dev., Inc. v. McCalla, 167 S.W.3d

121, 133 (Tex. App. 2005, pet. denied) (citing Restatement (Second)

of Contracts § 33(1)(1981)). Although “Texas courts prefer to

validate transactions rather than void them . . . court[s] may not

create a contract where none exists and they generally may not

interpolate or eliminate material terms.” Ski River Dev., Inc.,

167 S.W.3d at 133 (citations omitted). “A contract will fail for

indefiniteness if evidence is not presented on all essential

terms.” Meru v. Huerta, 136 S.W.3d 383, 390 (Tex. App. 2004, no

pet.) (citing T.O. Stanley Boot Co., 847 S.W.2d at 221-222); see,

e.g., Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d

831, 847 (Tex. 2000) (holding that alleged contract was

unenforceable where it lacked evidence of essential term of amount

or percentage of payment to be received); Farone v. Bag’n Baggage,

Ltd., 165 S.W.3d 795, 801-02 (Tex. App. 2005, no pet.) (concluding

that oral statement that employee would be “compensated” fails for

indefiniteness because there is no evidence of essential terms such

as price, whether payment would be in cash or in an equity

interest, and, if in an equity interest, the method of compilation

of value, and source of equity interest); Meru, 136 S.W.3d at 391

(holding there was no evidence that parties had agreed to sum

certain in alleged agreement to pay bonus).

 

 Case 3:04-cv-02035-D Document 169 Filed 06/05/07 Page 38 of 85 PageID 2315
15Because Pilote acknowledges that proof of the alleged

contract under French law is similar to proof of an implied

contract under Texas law, its offer of proof would apparently be

substantially the same under either law.

16In support of this assertion, Pilote purports to rely on

evidence that AMX submitted in opposing Pilote’s motion to dismiss

and to incorporate that evidence by reference. This reliance

violates Rule 56.6(a) and (b)(1) and Rule 56.5(c). Under Rule

56.6(a) and (b)(1), Pilote must include its evidence in an

appendix, which must be assembled as a self-contained document.

All evidence on which Pilote relies must be included in its

appendix, not incorporated by reference from evidence filed with

respect to a separate motion. And under Rule 56.5(c), Pilote must

cite each page of the appendix that supports each assertion that it

- 39 -

2

AMX argues that Pilote has not established the existence of an

enforceable, implied agreement (the French Agreement) because

Pilote must, but cannot, establish all the material terms of the

agreement. It points to the absence of evidence of any discussion

of a French Agreement with anyone at AMX, and of proof from which

the essential terms of the French Agreement can be determined. And

it maintains that each ground on which Pilote relies to allege a

breach of contract must fail because it cannot show that AMX agreed

to the contractual term on which Pilote relies. 

Apart from relying on French law15——which the court need not

consider in view of its decision that Texas law controls——Pilote

responds that the terms of the French Agreement are a question of

fact. It maintains that the record contains ample evidence that

would permit a jury to determine the terms of the French

Agreement.16 But the threshold question whether an enforceable

 

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makes concerning the summary judgment evidence. Even had Pilote

included these documents in its appendix, it is not permitted to

cite 582 pages of documents and rely on them en masse, without

citing each appendix page.

- 40 -

contract even exists is one of law to be determined by the court.

See Texaco, Inc. v. Pennzoil, Co., 729 S.W.2d 768, 814 (Tex. App.

1987, writ ref’d n.r.e.) (“Whether an agreement is legally

enforceable or binding is a question of law”); Am.’s Favorite

Chicken Co., 929 S.W.2d at 622 (“the issue of whether an agreement

fails for indefiniteness is a question of law to be determined by

the court.”). 

Having considered the evidence on which Pilote relies, the

court concludes as a matter of law that the essential terms of the

French Agreement are too indefinite to be enforceable. In moving

for summary judgment, AMX has pointed to the absence of evidence of

the essential elements of the alleged French Agreement. Pilote

thus has the burden of producing evidence of the material terms of

the implied contract. Celotex Corp., 477 U.S. at 324. 

In its response, Pilote adduces evidence that the implied

French Agreement included an exclusive distributorship provision.

It points to the testimony of Hulsmeyer, in which she stated:

My understanding is that AMX granted [Pilote]

the exclusive right to market and to sell AMX

products into the French market without

interfering in any way and that on the way

back, [Pilote] granted to AMX to not market

and sell products that might have been

competitive with the AMX products.

 

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17This method of citing the record is improper. See, e.g.,

Akop v. Goody Goody Liquor, Inc., 2006 WL 119146, at *3 n.4. (N.D.

Tex. Jan. 17, 2006) (Fitzwater, J.) (holding that plaintiffs’

citation to entire 137-page appendix was inadequate under Rule

56.5(c) because it dramatically increased burden on court to locate

evidence on which summary judgment nonmovant relied) (citing Hagen

v. BeautiControl Cosmetics, Inc., 1999 WL 451228, at *4 n.2 (N.D.

Tex. June 28, 1999) (Fitzwater, J.)). 

- 41 -

D. Aug. 28, 2006 Br. 9. Pilote also cites a letter in which an AMX

executive wrote that the agreement with Pilote establishes it as

the exclusive distributor in the region. It also relies on

statements in letters and emails that refer to a “contract,”

“agreement,” and “manufacturer and distributor.” Id. at 13. 

But Pilote has not adduced evidence of even one other term of

the implied agreement. Although it maintains that the parties

impliedly adopted some provisions of the 1994 Agreement, Pilote

does not point to any evidence that they agreed to continue to

operate under any particular terms. It cites collectively to 582

pages in AMX’s appendix as evidence of the conduct between the

parties after February 1, 1995,17 but points to no specific evidence

that would establish which, if any, of the terms of the 1994

Agreement were adopted. 

Pilote’s proof does not address, for example, the prices at

which Pilote would purchase and sell AMX’s products; the duration

of the relationship; the method by which the relationship could be

terminated; the law that would govern the relationship; or any of

Pilote’s corresponding contractual obligations, such as the

 

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requirement that Pilote meet certain sales quotas. Such terms

would all be considered essential to a contract under which Pilote

would serve as AMX’s exclusive distributor in France. See, e.g.

Univ. Nat’l Bank v. Ernst & Whinney, 773 S.W.2d 707, 710 (Tex. App.

1989, no writ) (“A lack of definiteness in an agreement may concern

the time of performance, the price to be paid, the work to be done,

the service to be rendered or the property to be transferred.”

(citing Terrell v. Nelson Puett Mortgage Co., 511 S.W.2d 366, 369

(Tex. Civ. App. 1974, writ ref’d n.r.e.)). Because the purported

exclusive distribution agreement would require AMX to relinquish

complete control over the promotion and sale of its products in

France, it would be expected that the essential terms of the

agreement would at a minimum include provisions designed to protect

AMX’s interests. The sole contractual term for which Pilote

provides evidence is Pilote’s agreement to serve as AMX’s exclusive

distributor in France and AMX’s agreement not to interfere. But

even if Pilote’s evidence establishes that Pilote agreed to be

AMX’s exclusive distributor in France, an agreement on this single

provision would not be enough of itself to address all essential

terms of a contractual agreement.

Accordingly, the court holds that AMX is entitled to summary

judgment dismissing Pilote’s counterclaim for breach of the French

 

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18In view of this conclusion, the court need not address

whether Pilote’s damages are limited to those incurred before

February 1, 2005. See supra note 10.

19AMX broadly states that the court should grant its summary

judgment motion because all of Pilote’s counterclaims fail as a

matter of law. Although AMX seeks to limit the damages Pilote can

recover under the 1994 Agreement, it does not point the court to

the absence of evidence to support Pilote’s alternative claim for

breach of the 1994 Agreement. Assuming that AMX intended to move

for summary judgment on the alternative claim, it did not discharge

its initial summary judgment burden. Therefore, AMX is not

entitled to summary judgment on this basis. 

- 43 -

Agreement.18 

E

Pilote alleges in the alternative that AMX breached the 1994

Agreement. AMX seeks summary judgment limiting Pilote’s damages on

the basis that the 1994 Agreement contained a limitation-ofliability clause.19 AMX argues that Pilote cannot recover any

damages as a result of the decision not to renew the contract and

thus is not entitled to any damages that it seeks under this claim.

AMX asserts in the alternative that Pilote cannot recover

contractual damages incurred after February 1, 2005, the date on

which it says it properly terminated the agreement.

Pilote argues that AMX reads § 14 too broadly. It maintains

that because the clause is explicitly limited to damages incurred

“by reason of the termination or nonrenewal,” it does not limit any

damages incurred before termination of the contract; that after

termination of the contract, § 14 only limits damages directly

caused by the termination; and that it can recover damages not

 

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related to AMX’s termination of the 1994 Agreement.

Section 14 of the 1994 Agreement states:

No Liability for Termination or Nonrenewal.

AMX shall not, by reason of the

termination or nonrenewal of [Pilote’s]

distributorship, whether such termination or

nonrenewal is with or without cause, be liable

to [Pilote] for compensation, reimbursement or

damages on account of the loss of prospective

profits or anticipated sales, or on account of

expenditures, investments, losses or

commitments in connection with the business or

goodwill of [Pilote] or otherwise.

P. July 13, 2006 App. 11. 

The court concludes from the plain meaning of § 14 that AMX

cannot be held liable to Pilote for any damages for lost

prospective profits or anticipated sales, or expenditures,

investments, losses, or commitments in connection with Pilote’s

business or goodwill incurred by reason of the termination or

nonrenewal of the 1994 Agreement. It is not entirely clear what

Pilote considers to be the importance of its contention that the

clause does not limit any damages incurred before termination. But

if Pilote means that the clause is inapplicable to damages flowing

from profits that were prospective, or sales that were anticipated,

before the contract ended, the court disagrees. Section 14 clearly

precludes a recovery of any such damages. And the damages need

only have arisen “by reason of” the termination or nonrenewal of

the agreement, not, if different, directly caused by the

termination or nonrenewal. The court also concludes that Pilote

 

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20In its July 31, 2006 brief, AMX appears to argue that Texas

law governs the entire relationship between AMX and Pilote and that

Pilote therefore cannot sustain any cause of action based on French

law. AMX’s arguments in support of Texas law, however, only

address the contractual relationship between it and Pilote,

ignoring Texas’s choice-of-law rules as they apply to tort claims.

Nonetheless, the court need not address whether the application of

Texas choice-of-law rules mandates the dismissal of all of Pilote’s

French-law claims because, even assuming that French law controls,

AMX is entitled to summary judgment dismissing the claims for the

reasons explained below.

- 45 -

cannot recover contractual damages incurred after February 1, 2005.

Pilote is not foreclosed under § 14 from recovering damages that

are unrelated to AMX’s termination or nonrenewal of Pilote’s

distributorship. 

Accordingly, if is determined through trial that the 1994

Agreement controls the relationship between AMX and Pilote and that

AMX breached the contract, as Pilote alleges, § 14 will be applied

as set forth in this opinion to limit Pilote’s recovery on its

alternative claim for breach of the 1994 Agreement. 

V

Pilote moves for summary judgment dismissing AMX’s breach of

fiduciary duty claim.20

A 

AMX alleges that Pilote is liable for breach of fiduciary duty

because it failed to use its best efforts to market, sell, and

distribute AMX’s products in France, to update its website with new

AMX products, and to participate in organizing the September Road

Show. Pilote moves to dismiss this claim on the basis that the

 

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parties did not have a fiduciary relationship. It argues that,

under Texas law, to impose a fiduciary relationship in a business

transaction, the fiduciary relationship must have existed prior to,

and apart from, the agreement made the basis of the suit. Pilote

contends that AMX is relying on the exclusive distributorship

agreement itself to establish the fiduciary relationship, not on

evidence of a prior relationship, and that AMX’s breach of

fiduciary duty claim must fail because there is no evidence of a

prior relationship apart from the agreement made the basis of the

suit.

AMX responds that AMX and Pilote did have a relationship prior

to and apart from the transactions made the basis of the suit,

because the parties entered into an exclusive distributorship

agreement from February 1, 1994 until February 1, 1995. After this

relationship, they continued to transact business for the next ten

years. AMX maintains that it had a fiduciary relationship with

Pilote based on their long-standing dealings. It also argues that

Pilote owed AMX a fiduciary duty because it accepted AMX’s trade

secrets and confidential information. And it posits that, in

combination, the nature and length of their business relationship,

and AMX’s disclosure of trade secrets to Pilote, support the

premise that Pilote owed a fiduciary duty to AMX.

 

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B

Texas law recognizes two types of fiduciary

relationships: (1) the formal fiduciary

relationship, which arises as a matter of law

and includes relationships such as those

between attorney and client, principal and

agent, and partners; and (2) the informal

fiduciary relationship, which may arise from a

moral, social, domestic, or purely personal

relationship of trust and confidence.

Golden v. McNeal, 78 S.W.3d 488, 493 (Tex. App. 2002, pet. denied)

(citing R.R. Street & Co. v. Pilgrim Enters., Inc., 81 S.W.3d 276

(Tex. App. 2001), rev’d on other grounds, 166 S.W.3d 232, 255 (Tex.

2005)). “Under Texas law, a supplier/distributor relationship is

not the type of formal relationship that automatically gives rise

to a fiduciary duty.” ARA Automotive Group v. Cent. Garage, Inc.,

124 F.3d 720, 723 (5th Cir. 1997) (citing Crim Truck & Tractor v.

Navistar Int’l, 823 S.W.2d 591, 594 (Tex. 1992); Adolph Coors Co.

v. Rodriguez, 780 S.W.2d 477, 481 (Tex. App. 1989, writ denied)).

Thus to withstand summary judgment, AMX must adduce facts that

would permit a reasonable jury to find the existence of an informal

fiduciary relationship.

“An informal fiduciary duty may arise from a moral, social,

domestic or purely personal relationship of trust and confidence,

generally called a confidential relationship.” Associated Indem.

Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 287 (Tex. 1998)

(citing Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1962)). To

demonstrate a relationship of “confidence and trust” that can

 

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support the existence of a fiduciary relationship, the party must

establish facts that would permit the jury to infer that the

relationship “require[d] the fiduciary to ‘put the interests of the

beneficiary ahead of its own if the need ar[ose].’” Imperial

Premium Fin., Inc. v. Khoury, 129 F.3d 347, 353 (5th Cir. 1997)

(citing ARA Auto. Group, 124 F.3d at 723). “In order to give full

force to contracts, [Texas courts] do not create such a

relationship lightly.” Schlumberger Tech. Corp. v. Swanson, 959

S.W.2d 171, 177 (Tex. 1997). In fact, “since the Texas Supreme

Court’s decision in Crim Truck, few Texas cases have found

fiduciary relationships outside of legal relationships that carry

fiduciary duties as a matter of law [,] and none had found such a

relationship in a transactional setting involving experienced

managers[.]” Khoury, 129 F.3d at 353-54 (quotation marks omitted)

(citing ARA Auto. Group, 124 F.3d at 723, 726). 

An arm’s-length business transaction will not alone support a

finding that a fiduciary relationship exists because, as a rule, “a

party to a contract is free to pursue its own interests, even if it

results in a breach of that contract, without incurring tort

liability.” Crim Truck, 823 S.W.2d at 594 (citing Amoco Prod. Co.

v. Alexander, 622 S.W.2d 563, 571 (Tex. 1981)); see also ARA

Automotive Group, 124 F.3d at 726-27 (finding no fiduciary duty

where “two sophisticated businesses entered into a number of

contracts for mutual benefit, but the evidence does not demonstrate

 

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that either party agreed to put the other’s interests ahead of its

own.”). Further, “[t]o impose an informal fiduciary duty in a

business transaction, the special relationship of trust and

confidence must exist prior to, and apart from, the agreement made

the basis of the suit.” Associated Indem. Corp., 964 S.W.2d at 288

(citing Transp. Ins. Co. v. Faircloth, 898 S.W.2d 269, 280 (Tex.

1995)). 

C

 As evidence of a relationship “prior to and apart from” the

one on which it bases its claim——i.e., the long-standing ten-year

relationship——AMX relies on the 1994 Agreement, under which the

parties had an exclusive distributorship agreement from February 1,

1994 to February 1, 1995. But this relationship would not permit

a reasonable jury to find that AMX and Pilote had a special

relationship of trust and confidence prior to and apart from the

one that AMX says existed from February 1, 1995 to February 1,

2005. The 1994 Agreement was an arm’s-length transaction entered

into for the parties’ mutual benefit. As such, the agreement is

insufficient of itself to permit a reasonable jury to find that a

special relationship of confidence and trust existed prior to the

ten-year relationship on which AMX relies. See Associated Indem.

Corp., 964 S.W.2d at 288. 

Nor can AMX rely on evidence of the ten-year relationship to

establish the existence of a fiduciary duty. Even if the

 

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distribution arrangement between AMX and Pilote continued for ten

years after the expiration of the 1994 Agreement, AMX has not

established that this ten-year relationship is anything more than

a prolonged business relationship. The length of the relationship,

without more, does not transform a business relationship into a

fiduciary one. And even if AMX trusted Pilote in promoting its

products abroad, it is well established that “mere subjective trust

does not . . . transform arm’s-length dealing into a fiduciary

relationship.” Schlumberger Tech. Corp., 959 S.W.2d at 177.

Rather, to establish the existence of an informal fiduciary

relationship, the record must show that one of the parties relied

on the other “for moral, financial, or personal support or

guidance.” Trostle v. Trostle, 77 S.W.3d 908, 915 (Tex. App. 2002,

no pet.). AMX may have, in fact, “trusted” Pilote to act in its

best interest in promoting AMX’s products in France. But it has

not adduced evidence from which a reasonable jury could find that

this amounted to anything more than AMX’s subjective trust. AMX

has not produced proof that it relied on Pilote for guidance or

that suggests that Pilote had a duty to put the interests of AMX

above its own financial interests. A reasonable jury could only

find that AMX and Pilote were operating under an arm’s-length

business transaction.

The fact that AMX provided Pilote with the type of

confidential information involved here——e.g., a customer list——is

 

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also insufficient to enable a reasonable jury to find that their

arm’s-length business dealings constituted a fiduciary

relationship. Businesses frequently must exchange confidential

information of this type so that they can do business with each

other. Such information will often include confidential details

about customers, marketing strategy, and pricing. But the mere

sharing of this type of information in this context does not

establish an informal fiduciary relationship. See, e.g. Exxon

Corp. v. Breezevale Ltd., 82 S.W.3d 429, 444 (Tex. App. 2002, pet.

denied) (finding evidence that plaintiff shared confidential

information with defendant was not evidence of informal fiduciary

relationship). If it did, many otherwise arm’s-length business

relationships would be transformed into fiduciary relationships.

Accordingly, even assuming that AMX subjectively trusted Pilote,

its providing Pilote with the confidential information needed to

promote and distribute AMX’s products effectively in France is

insufficient evidence to support the reasonable finding of an

informal fiduciary relationship.

The court therefore grants Pilote’s motion for summary

judgment to the extent of dismissing AMX’s breach of fiduciary duty

claim. 

 

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VI

Pilote moves for summary judgment dismissing AMX’s claim

under Texas law for tortious interference with prospective

relations.

A

AMX alleges that Pilote is liable under Texas law for tortious

interference with prospective relations because Pilote’s failure to

participate in the Road Show——in which it would have marketed,

sold, and distributed AMX’s products——prevented AMX from entering

into new business relationships with other dealers in France.

Pilote moves for summary judgment on this claim. Citing Wal-Mart

Stores, Inc. v. Sturges, 52 S.W.3d 711 (Tex. 2001), it argues that

AMX cannot prove that Pilote’s conduct was independently tortious

or unlawful, as Texas law requires. Pilote reasons that because

there is no independent duty, apart from an alleged contractual

provision, that would require Pilote to participate in organizing

the Road Show, AMX cannot prove any conduct that could be

independently tortious or unlawful.

AMX responds that Pilote owed AMX a fiduciary duty, and the

breach of this fiduciary duty supplies the requisite independent

tort sufficient to support the tortious interference claim. It

alleges that Pilote’s failure to respond to AMX’s attempts to

contact Pilote to discuss the Road Show is a failure to fulfill

fiduciary obligations, and it argues that Pilote repeatedly

 

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breached fiduciary duties owed to AMX regarding the marketing,

selling, and distributing of AMX’s products in France.

Furthermore, AMX maintains that Pilote has failed to return any of

AMX’s materials and alleges that Pilote may be using AMX’s

confidential information and trade secrets in competition against

AMX.

B

“[T]o establish liability for interference with a prospective

contractual or business relation the plaintiff must prove that it

was harmed by the defendant’s conduct that was either independently

tortious or unlawful.” Wal-Mart Stores, 52 S.W.3d at 713. For

conduct to be “independently tortious,” it must be “conduct that

would violate some other recognized tort duty.” Id. AMX maintains

that Pilote engaged in independently tortious conduct by breaching

the fiduciary duties it owed to AMX and by using AMX’s confidential

information and trade secrets in competition against AMX. AMX has

not produced evidence, however, that would permit a reasonable jury

to find that Pilote engaged in either of these independent torts.

The court has already dismissed AMX’s claim for breach of

fiduciary duty, finding that AMX cannot establish that a fiduciary

relationship existed between it and Pilote. See supra § V(C).

Although AMX supports its tortious interference claim with

allegations and evidence that Pilote breached alleged fiduciary

duties, AMX adduces no evidence that would support a finding that

 

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the relationship between AMX and Pilote was a fiduciary

relationship. And without such a relationship, there can be no

breach of a fiduciary duty. Thus the allegation that Pilote

breached a fiduciary duty it owed to AMX is insufficient to provide

the basis for AMX’s tortious interference claim. 

Likewise, the assertion that “Pilote may be using AMX’s

confidential information and trade secrets in competition against

AMX”——to the extent this allegation is separate from AMX’s

allegation that Pilote breached the fiduciary duty it owed to AMX——

is insufficient to overcome Pilote’s motion. AMX has adduced no

evidence that Pilote is using AMX’s confidential information and

trade secrets in competition against it, and AMX’s mere assertion

that this is true is not competent summary judgment evidence.

Accordingly, the court grants summary judgment dismissing

AMX’s Texas-law claim for tortious interference with prospective

business relations.

VII

Pilote seeks summary judgment dismissing AMX’s declaratory

judgment action on the basis that each claim is redundant of

another pending cause of action and is moot.

A

AMX requests a declaratory judgment that (1) the 1994

Agreement was terminated by Pilote’s failure to use its best

efforts to market, sell, and distribute AMX’s products in France;

 

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(2) Pilote must return AMX’s product literature and immediately

cease distributing any of AMX’s sales or promotional materials; (3)

the 1994 Agreement permitted AMX to have a regional sales support

manager for Europe, including the Territory; (4) the 1994 Agreement

permitted AMX to conduct the September Road Show; and (5) AMX is

not liable to Pilote by reason of the termination or nonrenewal of

Pilote’s distributorship. Pilote argues that each claim is

redundant of another pending claim and/or is moot. It maintains

that AMX’s requested declarations revolve around the interpretation

of the 1994 Agreement and that each asks about a specific provision

of the 1994 Agreement or about whether the 1994 Agreement permits

AMX to take some action. Pilote maintains that the court will

address these questions in dealing with the other causes of action.

Pilote also argues that because the 1994 Agreement no longer

controls, all declarations regarding the contract are moot.

AMX concedes in response that its first, third, and fourth

requests can be resolved by resolution of its breach of contract

claim. Accordingly, the court grants Pilote’s motion for summary

judgment insofar as it seeks dismissal of the first, third, and

fourth grounds of AMX’s declaratory judgment action. 

AMX contends that neither its second (that Pilote must return

AMX’s product literature and immediately cease distributing any of

AMX’s sales or promotional materials) nor fifth (that AMX is not

liable to Pilote by reason of the termination or nonrenewal of

 

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Pilote’s distributorship) ground for a declaratory judgment is moot

or redundant. AMX asserts that neither concerns whether the

parties entered into an enforceable contract, or whether Pilote

breached the contract.

B

The Declaratory Judgment Act, 28 U.S.C. § 2201, states: “In a

case of actual controversy within its jurisdiction, . . . any court

of the United States, upon the filing of an appropriate pleading,

may declare the rights and other legal relations of any interested

party seeking such declaration, whether or not further relief is or

could be sought.” Federal courts have broad discretion to grant or

refuse declaratory judgment. Torch, Inc. v. LeBlanc, 947 F.2d 193,

194 (5th Cir. 1991). 

In AMX’s second request for declaratory relief, it seeks the

following:

Within ten days after the final judgment in

this case, Pilote shall return to AMX all

catalogs, price lists, advertising and other

printed materials relating to the products, in

its possession. Immediately upon final

judgment in this case, Pilote shall cease

distributing any sales or promotional

materials on the AMX Products including any

materials prepared by or at the direction of

Pilote.

Pet. ¶ 22. This request is nearly identical to § 13(b) of the 1994

Agreement.

 

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21The court does not suggest that this would invariably be the

court’s approach, but it is the one called for under the facts of

this particular case.

- 57 -

The DJA remedy was designed as a means to

facilitate early and effective adjudication of

disputes at a time when a controversy, though

actual, may still be incipient, but before it

expands into larger conflict. The action

generally commences at the instance of a party

facing potential liability to another who may

have an accrued claim at that time but has not

yet commenced coercive litigation to pursue

relief. By enabling the parties to narrow the

issues and differences and expedite resolution

of their conflict, the DJA procedure helps to

minimize the prolongation of disputes, reduce

the risk of loss and avoid the unnecessary

accumulation of damages.

Dow Jones & Co. v. Harrods, Ltd., 237 F.Supp.2d 394, 405 (S.D.N.Y.

2002). AMX’s second request does not seek early and effective

adjudication of an incipient controversy, before it expands into

larger conflict, or seek to expedite resolution of that conflict.

AMX seeks remedial relief arising from the termination of the 1994

Agreement. The court declines in its discretion to entertain a

declaratory judgment request that seeks a remedy arising from a

contractual relationship that has already been terminated and that

has ripened into litigation.21

As explained in AMX’s response, its fifth request is based on

the limitation-of-liability clause, § 14 of the 1994 Agreement,

which the court has addressed supra at § IV(E). See P. July 11,

2006 Br. 33-34. To the extent the court’s ruling has not resolved

this question, the court declines, in its discretion, to exercise

 

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its declaratory judgment jurisdiction for the same reasons it has

declined to entertain AMX’s second request. The contractual

relationship between AMX and Pilote has already been terminated and

ripened into litigation, and, insofar as AMX seeks to use the

limitation-of-liability clause to limit the damages Pilote can

recover on its alternative breach of contract claim, it can do so

in the context of this litigation.

 Accordingly, the court dismisses AMX’s claim for declaratory

relief. 

VIII

The court now turns to AMX’s motion for summary judgment

addressed to Pilote’s counterclaims. The first counterclaim as to

which AMX seeks relief is for unfair competition under Texas law.

A

Pilote alleges that AMX’s use of Pilote’s trademark in and

affecting commerce is unfair competition and a false designation of

origin that is likely to cause confusion or mistake, or to deceive

as to the affiliation, connection, or association of AMX with

Pilote. AMX maintains that it is entitled to summary judgment

because Pilote cannot recover on its unfair competition claim

without some finding of an independent substantive tort or other

illegal conduct. Citing Texas law, AMX contends that unfair

competition is not a stand-alone cause of action, and that,

although Pilote alleges claims for trademark infringement, common

 

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law misappropriation, and trade secret misappropriation, and other

claims under French law, since it cannot establish the essential

elements of any of the claims, it cannot recover for unfair

competition.

Pilote responds that recovery is available for unfair

competition where proper notice of the claim is given, and that it

has adequately alleged and given notice of a claim based on palming

off.

B

Under Texas law, “unfair competition” is “a general rubric

under which fall all statutory and non-statutory causes of action

arising out of dishonesty in industrial or commercial matters.”

Keane v. Fox Television Stations, Inc., 297 F.Supp.2d 921, 938

(S.D. Tex. 2004) (citing Am. Heritage Life Ins. Co. v. Heritage

Life Ins. Co., 494 F.2d 3, 14 (5th Cir. 1974)). To prevail on a

claim of unfair competition, “the plaintiff must show that the

defendant committed an illegal act that interfered with the

plaintiff’s ability to conduct its business; the illegal act need

not necessarily violate criminal law, but must at least be an

independent tort.” Id. (citing Taylor Publ’g Co. v. Jostens, Inc.,

216 F.3d 465, 486 (5th Cir. 2000)). “Without some finding of an

independent substantive tort or other illegal conduct . . .

liability cannot be premised on the tort of ‘unfair competition.’”

Schoellkopf v. Pledger, 778 S.W.2d 897, 904-05 (Tex. App. 1989,

 

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writ denied).

Pilote identifies as the basis for its unfair competition

claim the assertion that AMX used Pilote’s trademark unfairly, as

a false designation of origin that was likely to cause confusion,

mistake, or deception as to affiliation, connection, or association

with AMX as to origin, sponsorship, or approval, i.e., palming off.

As discussed infra at § IX, AMX is entitled to summary judgment

dismissing each of Pilote’s claims based on AMX’s improper use of

Pilote’s trademark.

Accordingly, because Pilote cannot show that AMX committed the

independent tort on which it relies, AMX is entitled to summary

judgment dismissing Pilote’s unfair competition counterclaim. 

IX

AMX moves for summary judgment dismissing Pilote’s

counterclaim for trademark infringement.

A

Pilote asserts a counterclaim for trademark infringement,

alleging that the intentional, unauthorized use of its trademark is

likely to cause confusion between AMX’s goods and goods associated

with Pilote and that such use palms off AMX’s goods as those of

Pilote, thereby injuring Pilote’s reputation and goodwill and

unjustly diverting from Pilote to AMX the benefits arising from the

use of the trademark. AMX argues that it is entitled to summary

judgment because, aside from Pilote’s bare allegations, it cannot

 

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prove that any alleged use of its trademark was likely to cause

confusion, mistake, or deception as to the affiliation, connection,

or association of AMX with Pilote, or as to the origin,

sponsorship, or approval of AMX’s goods. 

Pilote responds that likelihood of confusion is a question of

fact. It points to evidence that AMX used Pilote’s name and

trademark after February 1, 2005, without Pilote’s permission.

Pilote also cites AMX’s Pocket Guide and website as evidence of

AMX’s continued use of Pilote’s name in association with AMX

products, asserting that such use necessarily confused the French

market as to the supplier for whom Pilote was the distributor.

Pilote avers that this affected its marketing of Crestron products

in the French market after February 1, 2005. It contends that the

summary judgment record contains sufficient evidence to enable a

jury to find that there was a likelihood of confusion.

B

The elements of a common law trademark infringement action

under Texas law are no different than those under federal trademark

law. All Am. Builders, Inc. v. All Am. Siding of Dallas, Inc., 991

S.W.2d 484, 488 (Tex. App. 1999, no pet.) (citing Waples-Platter

Cos. v. Gen. Foods Corp., 439 F. Supp. 551, 583 (N.D. Tex. 1977)

(Mahon, J.)). To establish a claim for trademark infringement, the

plaintiff must demonstrate: (1) the name it seeks to protect is

eligible for protection; (2) it is the senior user of the name; (3)

 

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there is a likelihood of confusion between its mark and that of the

other user; and (4) the likelihood of confusion will cause

irreparable injury for which there is no adequate legal remedy.

Horseshoe Bay Resort Sales Co. v. Lake Lyndon B. Johnson

Improvement Corp. 53 S.W.3d 799, 806 (Tex. App. 2001, pet. denied)

(citing Zapata Corp. v. Zapata Trading Int’l, Inc., 841 S.W.2d 45,

47 (Tex. App. 1992, no writ)). The only element AMX challenges is

the third element——likelihood of confusion——which is a question of

fact. See id. (citing Pebble Beach Co. v. Tour 18 I, Ltd., 155

F.3d 526, 537 (5th Cir. 1998)). 

In determining likelihood of confusion, the trier of fact may

consider a number of factors, including 

(1) the type or strength of the mark; (2) the

degree of similarity between the plaintiff’s

and defendant’s mark; (3) the similarity

between plaintiff’s and defendant’s goods or

services; (4) the identity of plaintiff’s and

defendant’s customers; (5) the similarity of

plaintiff’s and defendant’s advertising; (6)

the defendant’s intent; and (7) the existence

of actual confusion. 

Id. at 809 (citing Pebble Beach Co., 155 F.3d at 543). “This list

is not exhaustive, and it is not necessary for the plaintiff to

show that all of the factors are present.” Id.

Here, however, Pilote has failed to present evidence that

would permit a reasonable jury to find likelihood of confusion. It

has cited proof that would support a finding that AMX used Pilote’s

trademark without authorization. But assuming arguendo that this

 

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evidence is admissible, it is insufficient to support such a

finding. The only proof that Pilote has adduced that even

addresses likelihood of confusion is its statement that “[s]uch use

of Pilote’s name in association with AMX products could not help

but confuse the French market.” D. Aug. 28, 2006 Br. 28. But this

assertion——which represents essentially the subjective opinion of

Hulsmeyer, Pilote’s General Manager——is alone insufficient to

present a genuine issue of material fact. 

Because Pilote has not adduced evidence that would permit a

reasonable jury to find that AMX’s use of Pilote’s trademark is

likely to cause confusion, the court dismisses Pilote’s trademark

infringement counterclaim.

X

AMX moves for summary judgment on Pilote’s French-law unfair

competition counterclaim.

A

Pilote alleges that AMX is liable for unfair competition and

passing off, in violation of Articles 1382 and 1383 of the French

Civil Code. It avers that, among other things, AMX improperly

contacted Pilote’s employees and improperly used Pilote’s name

and/or trademark without permission. 

AMX maintains that this claim must be dismissed because Pilote

cannot establish that AMX improperly used Pilote’s name and/or

trademark without permission or establish that Pilote suffered any

 

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harm or damages. In response, Pilote relies on the same evidence

that it uses to support its trademark infringement counterclaim

based on AMX’s use of Pilote’s name and trademark: Hulsmeyer’s

testimony that AMX used Pilote’s name and trademark without

permission, and the evidence of AMX’s Pocket Guide and website. It

maintains that dealers in the French market were confused as to

which products Pilote was actually endorsing and selling in France,

causing lost sales because of confusion in the French market. 

B

Under the French Civil Code, to recover for an intentional or

unintentional tort, the plaintiff must have suffered damages.

Article 1382, on which Pilote bases its counterclaim, provides:

“Any act whatever of man, which causes damage to another, obliges

the one by whose fault it occurred, to compensate it.” P. July 31,

2006 FLA App. 6. Article 1383 states: “Everyone is liable for the

damage he causes not only by his intentional act, but also by his

negligent conduct or by his imprudence.” Id. Under these Code

provisions, Pilote cannot recover on its claim that AMX improperly

contacted Pilote’s employees and used its name and trademark unless

it can show that it has suffered damages from AMX’s actions.

Pilote alleges that it has lost sales because of the confusion in

the French market, but it has not presented summary judgment

evidence from which a reasonable jury could find in its favor.

Hulsmeyer’s testimony is insufficient of itself to permit such a

 

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22The court addresses these claims together because its reason

for dismissing both is the same.

23Under Texas Common law, to establish a claim for

misappropriation, the plaintiff must establish

(i) the creation of plaintiff’s product

through extensive time, labor, skill and

money, (ii) the defendant’s use of that

product in competition with the plaintiff,

thereby gaining a special advantage in that

competition (i.e., a “free ride”) because

defendant is burdened with little or none of

the expense incurred by the plaintiff, and

(iii) commercial damage to the plaintiff.

U.S. Sporting Prods., Inc. v. Johnny Steward Game Calls, Inc., 865

S.W.2d 214, 218 (Tex. App. 1993, writ denied) (citing Synercom

Tech., Inc. v. Univ. Computing, 474 F. Supp. 37, 39 (N.D. Tex.

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finding and thus to raise a genuine fact question regarding whether

the French market was confused by AMX’s use of Pilote’s trademarks

and, as a result, Pilote lost sales.

The court therefore grants summary judgment dismissing this

counterclaim. 

XI

AMX seeks summary judgment dismissing Pilote’s counterclaims

for common law misappropriation and trade secret misappropriation.22

A

Pilote alleges that AMX is liable for common law

misappropriation because AMX used Pilote’s trade secrets in

competition with Pilote, thereby gaining a special advantage

because AMX was not burdened with the expense that Pilote

incurred.23 It also asserts that AMX misappropriated Pilote’s trade

 

 Case 3:04-cv-02035-D Document 169 Filed 06/05/07 Page 65 of 85 PageID 2342
1979) (Higginbotham, J.)).

24Under Texas law, a plaintiff can recover for misappropriation

of a trade secret by establishing “(1) existence of a trade secret;

(2) breach of a confidential relationship or improper discovery of

a trade secret; (3) use of the trade secret; and (4) damages.”

Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d 452,

463 (Tex. App. 2004, pet. denied) (citing IBP, Inc. v. Klumpe, 101

S.W.3d 461, 476 (Tex. App. 2001, pet denied)). 

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secrets by acquiring them through improper means and using them for

its own commercial benefit without Pilote’s authorization, knowing

that the trade secrets had been obtained through improper means.24

AMX contends that it is entitled to summary judgment on

Pilote’s common law misappropriation claim, arguing that Pilote

cannot demonstrate that AMX gained a special advantage by

misappropriating Pilote’s trade secrets, that Pilote is unable to

show how AMX used the trade secrets to compete with Pilote, and

that Pilote cannot prove what, if any, harm it endured due to AMX’s

alleged trademark infringement. It also posits that Pilote cannot

establish its trade secret misappropriation claim because it cannot

establish the existence of a trade secret and cannot establish that

it has suffered any injury as a result of any alleged trade secret

misappropriation. In response, Pilote avers that it developed a

customer list of dealers in France that showed who purchased AMX

products, and in what amounts, and took over ten years to develop.

It argues that its customer list has significant value to AMX and

other traditional competitors in the French market because of the

time and money it required to develop. It maintains that it kept

 

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the customer list confidential, and only permitted AMX to meet some

of its dealers on AMX’s trip to France because it believed doing so

was in furtherance of their business relationship, not for AMX to

acquire Pilote’s customer list. Pilote alleges that AMX

nevertheless used the customer list to contact Pilote’s dealers and

to sell at least $48,194.74 of products to TVSAT2 Design, Pilote’s

dealer in France. Pilote maintains that it suffered injury when it

lost over $48,000 in sales. 

AMX argues in reply that the evidence on which Pilote relies

of sales to TVSAT2 Design were made by AMX UK, and Pilote has

failed to adduce evidence that AMX UK is the same entity as AMX.

It therefore argues that Pilote has not established that AMX

obtained profits or other economic benefits based on the use of

Pilote’s consumer lists, and therefore Pilote’s common law

misappropriation and trade secret misappropriation counterclaims

must be dismissed.

B

“Texas law presumes that two separate corporations are

distinct entities.” Carlson Mfg., Inc. v. Smith, 179 S.W.3d 688,

693 (Tex. App. 2005, no pet.) (citing BMC Software Belgium, N.V. v.

Marchand, 83 S.W.3d 789, 799 (Tex. 2002)). Accordingly, unless

Pilote can establish a basis for a reasonable jury to treat AMX and

AMX UK as the same entity, the actions of AMX UK cannot be

attributed to AMX. 

 

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Under the “single business enterprise” theory, “when

corporations are not operated as separate entities but rather

integrate their resources to achieve a common business purpose,

each constituent corporation may be held liable for debts incurred

in pursuit of that business purpose.” Paramount Petroleum Corp. v.

Taylor Rental Ctr., 712 S.W.2d 534, 536 (Tex. App. 1986, writ ref’d

n.r.e.); see also Allright Tex., Inc. v. Simons, 501 S.W.2d 145,

150 (Tex. Civ. App. 1973, writ ref’d n.r.e.); Murphy Bros.

Chevrolet Co. v. E. Oakland Auto Auction, 437 S.W.2d 272, 275-76

(Tex. Civ. App. 1969, writ ref’d n.r.e.). Courts use several

factors to determine whether the constituent corporations have not

been maintained as separate entities, including, but not limited

to, the following: “common employees; common offices; centralized

accounting; payment of wages by one corporation to another

corporation’s employees; common business name; services rendered by

the employees of one corporation on behalf of another corporation;

undocumented transfers of funds between corporations; and unclear

allocation of profits and losses between corporations.” Paramount

Petroleum Corp., 712 S.W.2d at 536 (citing Allright, 501 S.W.2d at

150; Murphy Bros. Chevrolet Co., 437 S.W.2d at 275-76.). “The

doctrine looks to see if principles of equity support a holding

that the two entities should be treated as one for purposes of

liability for their acts.” N. Am. Van Lines, Inc. v. Emmons, 50

S.W.3d 103, 120 (Tex. App. 2001, pet. denied). “In order to grant

 

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relief under [the single business enterprise theory], the fact

finder must determine whether the relationship between the parties

satisfies the tests for imposing liability under the single

business enterprise . . . exception[ ].” In re Tex. Am. Exp.,

Inc., 190 S.W.3d 720, 726 (Tex. App. 2005, orig. proceeding)

(citing Airflow Houston, Inc. v. Theriot, 849 S.W.2d 928, 931 (Tex.

App. 1993, no writ); Gensco, Inc. v. Canco Equip., Inc., 737 S.W.2d

345, 347 (Tex. App 1987, no writ)).

Although the single business enterprise theory is an equitable

theory of liability, the court will assume that the doctrine also

applies when a plaintiff is attempting to prove that the defendant

misappropriated a trade secret and enabled a related corporation to

use the trade secret to the plaintiff’s detriment. In its first

amended counterclaims, Pilote alleges that AMX integrated its

resources with AMX UK and AMX Belgium, forming a single business

enterprise. But Pilote has adduced no evidence from which a

reasonable jury could find that AMX and AMX UK formed a single

business enterprise within the meaning of Texas law. Pilote’s

evidence that AMX UK sold $48,194.74 worth of products to a dealer

on Pilote’s customer list is insufficient to establish that AMX

benefited from the use of the customer list or that Pilote suffered

harm as a result. Accordingly, absent the necessary evidence to

prevail on this claim, Pilote cannot recover for common law or

trade secret misappropriation. 

 

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XII

AMX seeks summary judgment dismissing Pilote’s counterclaim

for restitution/unjust enrichment under French law, contending that

it cannot establish that AMX is obtaining profits or other economic

benefits based on the use of Pilote’s customer information that is

not covered by contract. Pilote responds by pointing to the

$48,000 in products AMX UK sold to TVSAT2 Design during the time

Pilote was AMX’s exclusive distributor in France. For the reasons

explained supra at § XI(B), evidence of sales by AMX UK is

insufficient to permit a reasonable jury to find for Pilote,

because these sales do not establish a claim against AMX. Pilote

has not adduced evidence that would permit a reasonable jury to

find that AMX has obtained profits or economic benefit from the use

of Pilote’s consumer list. AMX is therefore entitled to summary

judgment dismissing Pilote’s counterclaim for restitution/unjust

enrichment under French law. 

XIII

AMX moves for summary judgment dismissing Pilote’s

counterclaim under French law for obtaining an advantage unrelated

to a commercial service.

 

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25Article L. 442-6 of the French Commercial Code provides:

I. The following acts committed by any

producer, trader, manufacturer or person

listed in the trade register render the

perpetrator liable and entail the obligation

to redress the prejudice caused: 

. . . 

2. a) Obtaining, or seeking to obtain,

from a trading partner any advantage unrelated

to a commercial service effectively rendered

or which is manifestly disproportionate to the

value of the service rendered. Such an

advantage might consist, inter alia, of

participation in the financing of promotional

activities, an acquisition or an investment

which is not justified by a common interest

and does not offer proportionate compensation,

particularly in the context of shop renovation

or access to outlets or central listing or

purchasing facilities . . . .

P. July 31, 2006 FLA App. 9.

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A

Pilote asserts a counterclaim under Article L. 442-6 2o of the

French Commercial Code,25 alleging that AMX obtained or sought to

obtain from Pilote advantages unrelated to commercial services

effectively rendered or that were manifestly disproportionate to

the value of the service rendered. AMX moves for summary judgment

on the ground that Pilote cannot establish that AMX obtained or

sought to obtain from Pilote advantages unrelated to the commercial

services effectively rendered or that were manifestly

disproportionate to the value of the service rendered. It also

maintains that Pilote cannot establish that it has suffered any

damages as a result of AMX’s conduct. 

 

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26AMX contended in its summary judgment brief that Pilote could

not recover because it was unable to prove that it suffered

damages. In response, Pilote has not argued that it can recover on

its French-law claim in the absence of damages. Accordingly, the

court assumes that, under French law, damages would be a necessary

component of an Article L. 442-6 2o claim.

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Pilote responds that, under the French Commercial Code, AMX

can be liable if it sought to obtain from Pilote any advantage

manifestly disproportionate to the value of the service it

rendered. It maintains that AMX violated this law by seeking

Pilote’s participation and investment of manpower and resources for

the Road Show. Pilote contends that an email sent by an AMX

employee is proof that the Road Show was for AMX’s benefit, not

Pilote’s. It argues that because AMX sought to use Pilote’s

participation in the Road Show to gain a benefit for itself, AMX

has violated Article L. 442-6 2o.

B

 Although Pilote has raised a genuine issue of material fact

regarding whether AMX violated Article L. 442-6 2o, it has not

adduced evidence that would permit a reasonable jury to find that

Pilote suffered damages as a result. Nor does it argue that it can

recover under Article L. 442-6 2o without adducing proof that it

suffered harm as a result of AMX’s actions.26 Pilote did not

participate in the Road Show and has not introduced proof that it

expended financial resources or manpower on it. 

Accordingly, because Pilote cannot establish that it suffered

 

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damages as a result of this violation, AMX is entitled to summary

judgment dismissing this counterclaim.

XIV

AMX maintains that Pilote’s counterclaim for French statutory

trade secret misappropriation fails because Pilote cannot establish

that AMX revealed or attempted to reveal Pilote’s trade secrets

without authority. Pilote agrees that AMX is correct. D. Aug. 28,

2006 Br. 1, 42. Accordingly, the court grants AMX’s motion for

summary judgment dismissing this counterclaim. 

XV 

AMX moves for summary judgment dismissing Pilote’s

counterclaim under French law for sudden breaking off an

established business relationship.

A

Pilote asserts a counterclaim for sudden breaking off an

established business relationship, in violation of Article 442-6 5o

of the French Commercial Code and 1134 of the French Civil Code.

It avers that it is entitled to this relief based on AMX’s failure

to provide prior notice commensurate with the duration of the

business relationship and consistent with the minimum notice period

determined with the multi-sector agreements in line with standard

French commercial practices.

AMX moves for summary judgment dismissing this claim. It

recognizes that, under French statutory law, a manufacturer may be

 

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liable for the sudden breaking off of an established business

relationship if the manufacturer does not provide sufficient prior

written notice commensurate with the duration of the business

relationship. But it contends that under French law the judge is

the arbiter of what length of time is reasonable, he may consider

the distributor’s economic dependence on the manufacturer, and the

eight months’ notice of termination that AMX provided Pilote was

sufficient in the context of their ten-year relationship. It

further points out that within a month of the February 2005

termination, Pilote began marketing and selling the products of

AMX’s competitor, Crestron, and that this evidences the fact that

Pilote’s ability to reorganize its business activity was not

hindered.

Pilote relies in response on the testimony of its French-law

expert, Philippe L. Migeot (“Migeot”), who opines that the minimum

notice period is determined by standard French commercial

practices. According to Migeot, notice is controlled by Art. L.

442-6 1 5o

; the most frequent delay between the first contact with

the prospect and the final installation of AMX equipment at the

client is from six to eighteen months; the length of time needed to

consummate a sale with a client after initial contact is probative;

and the issue of notice is to be determined at trial commensurate

with the duration of the business relationship and consistent with

the minimum notice period determined by the multi-sector agreements

 

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in line with standard commercial practices. Migeot opines that AMX

failed to provide this notice. Pilote therefore contends there is

sufficient evidence for a jury to find that AMX failed to provide

Pilote sufficient notice under French law.

AMX replies that, in determining whether notice of nonrenewal

was sufficient, French courts look to the distributor’s economic

dependence on the manufacturer and whether the distributor was

allowed sufficient time to reorganize its business activity. It

points to evidence that AMX provided Pilote more than eight months’

notice of nonrenewal; Pilote became a distributor for Crestron

(AMX’s direct competitor) the very same month that the

distributorship relationship with AMX ended; and AMX only accounted

for 28 to 36% of Pilote’s sales. AMX maintains that Migeot’s

testimony supports AMX’s position, because he states that the delay

between the first contact with a prospect and the final

installation of AMX equipment is from six to eighteen months, and

AMX’s notice falls within this time frame. It argues that the more

accurate measure is the amount of time between the initial contact

and the time when the order was placed, and that this is

undoubtedly shorter than the period that Migeot predicted. AMX

posits that the court must examine AMX’s notice in the context of

Pilote’s economic dependence on AMX, its ability to reorganize, and

the length of time between initial contact and consummation and

that, based on the undisputed facts, AMX has established that its

 

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27The court recognizes that, as a civil law country, the

decision of a French court——here the Appeal Court Lyon——has no

binding effect. See, e.g. Fin. One Public Co. v. Lehman Bros.

Special Fin., Inc., 414 F.3d 325, 343 (2d Cir. 2005)(explaining

that in civil law jurisdictions, “judicial decisions in general are

of only persuasive and not binding authority); Am. Int’l Specialty

Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254, 261 (5th Cir.

2003) (recognizing that in civil law jurisdictions, judicial

decisions are secondary law source). The court cites the Appeal

Court Lyon’s explanation and reasoning, not as binding precedent,

but as a helpful explanation of, and persuasive authority

concerning, the appropriate role for the court in deciding Pilote’s

sudden breaking off claim. 

- 76 -

notice was sufficient as a matter of French law.

B

The court holds that AMX’s notice to Pilote was sufficient

under French law. In dealing with the question whether notice was

sufficient in breaking off an established relationship, the Appeal

Court Lyon stated, “[i]t is the judge’s duty to ascertain the

legality of the notice period and whether or not it allows the

operator enough time to seek and find another business activity.”

P. July 31, 2006 FLA App. 51. It further explained, “[i]n order to

investigate what constitutes a reasonable or sufficient notice

period, one has to dwell on the circumstances surrounding the facts

pertaining to the broken commercial relationship.” Id.27

The summary judgment record establishes that AMX provided

Pilote more than eight months’ notice of nonrenewal. Pilote does

not dispute the fact that it became a distributor for AMX’s direct

competitor, Crestron, the same month that Pilote’s relationship

with AMX ended. And it is uncontested that AMX only accounted for

 

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28 to 36% of Pilote’s sales. Based on these facts, the court holds

as a matter of law that the eighth months’ notice AMX gave Pilote

was sufficient. It therefore grants summary judgment dismissing

counterclaim under French law for sudden breaking off. 

XVI

The court now considers the ground of AMX’s motion in which it

seeks dismissal of Pilote’s counterclaim under French law for

breach of exclusivity by interference with a third party contract.

A

Pilote asserts a counterclaim under Article L. 442-6 6o

 of the

French Commercial Code for breach of exclusivity by interference

with a third party contract. It alleges that AMX had direct and/or

indirect involvement in the French market, in violation of the

prohibition on reselling outside the network imposed on Pilote by

its exclusive distribution agreement with AMX. AMX argues that it

is entitled to summary judgment dismissing this claim because

Pilote cannot establish that AMX had direct and/or indirect

involvement in the French market or that Pilote suffered any damage

as a result of AMX’s conduct. 

Pilote responds that AMX is not entitled to summary judgment;

instead, there is sufficient evidence to grant summary judgment in

Pilote’s favor as to liability. Pilote maintains that there is no

dispute that the parties’ relationship was governed by an

exclusivity provision; the exclusivity period did not end until

 

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February 1, 2005; and TVSAT2 Design placed orders with AMX UK

before February 1, 2005. It therefore maintains that the jury need

only decide how much Pilote was damaged.

Pilote also contends that AMX UK reports directly to Michael

Olinger (“Olinger”), and that AMX makes no distinctions among AMX,

AMX UK, and AMX Belgium. In support of this assertion, Pilote

cites statements that refer to a “seamless state of affairs” among

AMX, AMX UK, and AMX Belgium. D. Aug. 28, 2006 Br. 46.

AMX replies, as it has in opposition to other counterclaims,

that evidence of sales by AMX UK to TVSAT2 Design does not

establish that AMX sold products outside Pilote’s distribution

network. It argues that because Pilote has not established as a

matter of law that AMX and AMX UK operated as a single business

entity, the references to sales by AMX UK cannot serve as evidence

of AMX’s business activities.

B

Pilote has not introduced summary judgment evidence that would

permit a reasonable jury to find in its favor for breach of

exclusivity by interference with a third party contract. According

to the summary judgment evidence, AMX and AMX UK are separate legal

entities. Aside from the references in Olinger’s deposition that

suggest that the three AMX entities’ sales forces work together,

Pilote has not provided evidence that would enable a reasonable

jury to find that AMX and AMX UK should be treated as the same

 

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entity. Pilote sues only AMX and has not adduced any evidence from

which a reasonable jury could find that AMX participated in the

French market. The sales by AMX UK to TVSAT2 Design would not

permit a reasonable jury to find in Pilote’s favor on this

counterclaim. Accordingly, it is dismissed.

XVII 

AMX moves for summary judgment dismissing Pilote’s

counterclaim under French law for business disparagement.

A

Pilote sues AMX for business disparagement under Article L.

443-2o

 of the French Commercial Code and Articles 1382 and 1383 of

the French Civil Code. It alleges that AMX broadcast false or

slanderous information and/or made offers intended to disrupt

prices, or threw on the market offers at the prices requested by

sellers and/or used other fraudulent means to artificially increase

or reduce the price of goods or services. Pilote also alleges that

AMX published disparaging words about Pilote, thus harming Pilote’s

business reputation, and that these words were false and made with

malice and without privilege.

AMX moves for summary judgment on the ground that Pilote

cannot establish that AMX broadcast false or slanderous

information, made offers intended to disrupt prices, threw on the

market offers at the prices requested by sellers, or used other

fraudulent means to artificially increase or reduce the price of

 

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28AMX also maintains that, due to her health, Berriat was

unable to travel abroad for the initially scheduled deposition, but

that AMX’s counsel offered her for deposition in France, Belgium,

or London; that Pilote continually demanded that Berriat be

produced for deposition in Dallas, despite being told on numerous

occasions that her health prevented transatlantic travel; and that

Pilote was able to depose Berriat before its summary judgment

response was due. The court need not consider these contentions in

concluding that Rule 56(f) relief should be denied. 

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goods or services. It maintains that Pilote’s only evidence of

business disparagement is a statement in Hulsmeyer’s deposition

that it was brought to her attention that Catherine Berriat

(“Berriat”), an AMX employee, “was not too fond about Pilote

Films,” P. July 31, 2006 Br. 29, and it argues that this is

insufficient to establish a business disparagement counterclaim.

In response, Pilote requests a continuance under Fed. R. Civ.

P. 56(f), arguing that Berriat is the only person who knows to whom

she corresponded or spoke, and that Berriat will not be deposed

until after Pilote’s summary judgment response is due.

AMX replies that Pilote’s only allegation regarding its claim

for business disparagement is that an AMX employee was “not too

fond” of Pilote, and that this is insufficient to support a

business disparagement counterclaim. It points to the absence of

any other defamatory statements outside the Pilote representative’s

inadmissible hearsay statement, and argues that because this

hearsay statement was never published and Pilote has not offered

any evidence of harm, summary judgment should be granted on this

counterclaim.28

 

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B

Rule 56(f) provides that 

[s]hould it appear from the affidavits of a

party opposing the motion [for summary

judgment] that the party cannot for reasons

stated present by affidavit facts essential to

justify the party’s opposition, the court may

. . . order a continuance to permit affidavits

to be obtained or depositions to be taken or

discovery to be had or may make such other

order as is just. 

“The Rule is an essential ingredient of the federal summary

judgment scheme and provides a mechanism for dealing with the

problem of premature summary judgment motions.” Parakkavetty v.

Indus Int’l, Inc., 2004 WL 354317, at *1 (N.D. Tex. Feb. 12, 2004)

(Fitzwater, J.) (citing Owens v. Estate of Erwin, 968 F.Supp. 320,

322 (N.D. Tex. 1997) (Fitzwater, J.)). “The continuance authorized

by Rule 56(f) is a safe harbor built into the rules so that summary

judgment is not granted prematurely.” Id. (citing Union City Barge

Line Inc. v. Union Carbide Corp., 823 F.2d 129, 136 (5th Cir.

1987)). “To comply with the Rule, the party opposing summary

judgment must file the specified non-evidentiary affidavit,

explaining why he cannot oppose the summary judgment motion on the

merits.” Id. “The party may not rely on vague assertions that

additional discovery will produce needed, but unspecified, facts,

but must instead identify a genuine issue of material fact that

justifies the continuance pending further discovery. Id.

(citations omitted). “A party seeking a continuance of a motion

 

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for summary judgment must demonstrate why he needs additional

discovery and how the additional discovery will create a genuine

issue of material fact.” Id. (citing Krim v. BancTexas Group,

Inc., 989 F.2d 1435, 1442 (5th Cir. 1993)). 

Pilote has failed to show how additional discovery will create

a genuine issue of material fact. It requests Rule 56(f) relief to

develop evidence concerning AMX’s improper contacts and

communications with dealers and customers in France. It maintains

that Douglas Davis, the person with the most direct knowledge of

Berriat’s activities in France, had no actual knowledge of to whom

she talked or what she said in France. But while this evidence

could establish Berriat’s (and thus AMX’s) publication of

actionable statements or conduct, Pilote fails to show that the

discovery, if obtained, would enlarge on the single comment

attributed to Berriat. The statement that Hulsmeyer attributed to

Berriat——that “Berriat was not too fond about Pilote Films”——is

insufficient as a matter of law to establish the claim for business

disparagement regardless where it was published. Accordingly,

Pilote is not entitled to Rule 56(f) relief to develop evidence of

publication, because the statement in question, even if published,

cannot constitute business disparagement. 

The court therefore denies Pilote’s request for a continuance

under Rule 56(f), and it grants AMX’s motion dismissing Pilote’s

French-law business disparagement counterclaim. 

 

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XVIII

Pilote has asserted counterclaims for conversion, tortious

interference with an existing contractual and/or business

relationship, and business disparagement under Texas law. Although

AMX states in its motion that it is seeking to dismiss all of

Pilote’s claims asserted in its first amended counterclaims, it has

not pointed to the absence of evidence to support these three.

Because AMX has not met its initial summary judgment burden, the

court denies AMX’s motion insofar as it seeks summary judgment

dismissing Pilote’s Texas-law claims for conversion, tortious

interference with an existing contractual and/or business

relationship, and business disparagement.

XIX

In sum, the court dismisses AMX’s declaratory judgment, breach

of fiduciary duty, and tortious interference with prospective

relations claims. Although AMX cannot establish that the 1994

Agreement was extended, it has presented fact issues on the

doctrines of quasi-estoppel and judicial estoppel. The court

therefore denies Pilote’s motion for summary judgment on AMX’s

breach of contract claim. At trial, AMX will have the burden of

establishing that quasi-estoppel or judicial estoppel prevents

Pilote from denying that the 1994 Agreement governs the contractual

relationship between AMX and Pilote. If it does not meet this

burden, its breach of contract claim will likewise fail.

 

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29Essentially, at that point, AMX and Pilote will both have

breach of contract claims against each other based on the 1994

Agreement.

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The court dismisses the following counterclaims asserted by

Pilote: breach of implied contract (i.e., the French Agreement),

French-law sudden breaking off an established business

relationship, unfair competition, unfair competition under the

French code, French-law obtaining an advantage unrelated to a

commercial service, trademark infringement, French-law

restitution/unjust enrichment, common law misappropriation, Frenchlaw statutory misappropriation of trade secrets, trade secret

misappropriation under Texas law, French-law breach of exclusivity

by interference with third party contract, and French-law business

disparagement. All of Pilote’s claims brought under French law are

dismissed. Because AMX did not meet its initial summary judgment

burden of pointing to the absence of evidence in support of

Pilote’s Texas-law conversion, tortious interference with an

existing contractual and/or business relationship, and business

disparagement claims, these causes of action remain for trial.

Pilote has also asserted an alternative claim for breach of

the 1994 Agreement. If AMX is successful in establishing at trial

that one of the doctrines of estoppel applies, thus preventing

Pilote from taking the position that the 1994 Agreement did not

control the relationship between Pilote and AMX, Pilote will also

be permitted to prove its alternative breach of contract claim.29

 

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30There are two other pending motions in this case that are

being decided in a separate memorandum opinion and order that is

forthcoming: AMX’s November 13, 2006 motion to strike Robert

Hancock’s supplemental report, and AMX’s March 30, 2007 motion for

leave to file motion to exclude expert witness.

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If AMX does not prevail on one of its estoppel theories, however,

it is questionable whether Pilote can succeed on its alternative

claim, because the court has concluded that the 1994 Agreement

expired by its own terms. And any recovery that Pilote could

obtain under the 1994 Agreement would of course be limited by the

limitation-of-liability clause in the 1994 Agreement. See supra

§ IV(E).

* * *

Pilote’s May 31, 2006 motion for summary judgment is granted

in part and denied in part. AMX’s July 31, 2006 motion for summary

judgment is granted in part and denied in part. AMX’s July 31,

2006 motion to exclude expert testimony, September 26, 2006 motion

for leave to file motion for leave to designate French-law expert,

and March 2, 2007 supplemental motion to exclude expert testimony

are denied.30

SO ORDERED.

June 5, 2007.

_________________________________

SIDNEY A. FITZWATER

UNITED STATES DISTRICT JUDGE

 

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