FB&I executed this contract, Michael
Johnson joined FB&I. Kermit and Michael had met previously when they were
working for separate companies in the construction business. Kermit wanted
Michael to join FB&I because of his "technical knowledge in reading and
interpreting construction plans." On December 30, 1998, Michael became a forty-
nine percent owner of FB&I, and he and Kermit agreed to split the commissions
equally.
[¶5.] FB&I and Superior both acknowledge that in the first year FB&I
exceeded the annual sales required under the contract. Yet, sometime in February
2000, FB&I began discussions with a different company, Component Manufacturing
Company, about the possibility of FB&I selling Component products in Colorado.
FB&I did not inform Component about its exclusive sales agreement with Superior.
Component and FB&I ultimately executed a sales agreement near the end of March
2000, whereby FB&I agreed to exclusively sell Component's building products in
Colorado. In accord with this agreement, in March 2000, FB&I sent a project to
Component for bidding.
#24000
[¶6.] During this same time, Kermit and Michael's relationship began to
deteriorate. In May 2000, Superior hired Michael. Through Michael, Superior
learned that FB&I had entered into the exclusive sales agreement with Component
in violation of FB&I's contract with Superior. On May 2, 2000, Superior sent notice
to FB&I of its election to "terminate" the exclusive sales agreement with FB&I
effective June 1, 2000.
[¶7.] After ending its agreement with FB&I, Superior continued to do
business with certain customers brought to it by FB&I. In the sales agreement, a
provision dealt with cancellation: "In the event of cancellation of this agreement,
FB&I will be allowed to remain as an independent dealer without exclusive
territory, and will be entitled to retain the customers that they continue to sell and
service with Superior products." Nonetheless, in a letter dated July 18, 2000,
Superior informed Kermit that, effectively, it had no intention of honoring this
provision. Kermit would later explain that he "sold everybody on Superior"
products and when Superior denied FB&I's right to sell Superior's products to
FB&I's established customer base, while Superior at the same time sold directly to
these customers, Superior was able to reap the benefits of FB&I's hard work
without paying compensation. From 2000, when the agreement was cancelled, until
2004, Superior sold $2,327,528 in products to customers originally brought to
Superior by FB&I, without paying FB&I commissions on these sales.
#24000
[¶8.] FB&I brought suit against Superior alleging breach of contract,
tortious interference with business relationships, conversion, and civil conspiracy. 1
FB&I argued that Superior breached the sales agreement when it cancelled it and
refused to allow FB&I to retain its customers as expressly provided for under the
agreement. In response, Superior insisted that it was justified in canceling the
agreement with FB&I because FB&I breached the contract by entering into its sales
agreement with Component. Superior further asserted that it was not obligated to
pay FB&I commissions under the contract because FB&I's actions amounted to a
material breach, thereby excusing Superior from