Source: http://mn.gov/law-library-stat/archive/ctapun/0705/opa060765-0501.htm
Timestamp: 2018-01-24 03:39:12
Document Index: 539798038

Matched Legal Cases: ['§ 325', '§ 325', '§ 325', '§ 325', '§ 325', '§ 325']

Midland Glass Co., Inc., Appellant, vs. Aluma Spec, Inc., Respondent, EFCO Corporation, Respondent, Minneapolis Public Schools, Special School District No. 1, Respondent, C. L. Paulson & Associates, Inc., Respondent, Rozeboom Miller Architects, Inc., Defendant. A06-765, Court of Appeals Unpublished, May 1, 2007.
A06-765
Midland Glass Co., Inc.,
Aluma Spec, Inc.,
C. L. Paulson & Associates, Inc.,
Rozeboom Miller Architects, Inc.,
File No. 27-CV-04-016555
Floyd E. Siefferman, Jr., Boris Parker, Saliterman & Siefferman, P.C., U.S. Bank Plaza, Suite 2000, 220 South Sixth Street, Minneapolis, MN 55402 (for appellant)
Philip J. Young, Moss & Barnett, P.A., 4800 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402-4129 (for respondent Aluma Spec, Inc.)
Kevin R. Coan, Parsinen Kaplan Rosberg & Gotlieb, P.A., 100 South Fifth Street, Suite 1100, Minneapolis, MN 55402-6798 (for respondent EFCO Corporation)
Alan I. Silver, David A. Turner, Jeffery S. Brockmann, Bassford Remele, P.A., 33 South Sixth Street, Suite 3800, Minneapolis, MN 55402-3707 (for respondent Minneapolis Public Schools, Special School District No. 1)
C. L. Paulson & Associates, Inc., 1499 Jackson Avenue Northeast, St. Michael, MN 55376 (respondent)
Appellant Midland Glass Co., Inc. challenges the district court’s grant of summary judgment on its antitrust, promissory estoppel, and intentional interference with contractual relations claims against respondents Aluma Spec, Inc., EFCO Corp., C.L. Paulson & Associates, and Minneapolis Public Schools, Special School District No. 1. We affirm.
Appellant Midland Glass Co., Inc. (Midland) is a glazing contractor. Appellant was awarded a subcontract to replace windows for a project of Minneapolis Public School District, Special District No. 1 (MPSD), but was subsequently removed from the project after appellant was unable to obtain products that met MPSD’s specifications. Appellant was unable to obtain these materials because respondents Aluma Spec, Inc., (Aluma Spec), EFCO Corporation (EFCO), and C.L. Paulson (Paulson) refused to sell the specified products to appellant.
After reviewing several window products, MPSD specified two manufacturers of the specified products for use in the project: EFCO and Duracraft. Aluma Spec is EFCO’s exclusive distributor in Minnesota. Duracraft is exclusively distributed through Paulson.
Appellant did not obtain a price quote for either the EFCO or Duracraft products before submitting its bid, but intended to use the EFCO products for the project. Instead of obtaining a price quote for the products from Aluma Spec, appellant estimated the cost of the specified EFCO products based on the cost of other EFCO products. Appellant was awarded the subcontract based on this bid.
In mid-February 2003, after appellant learned it was the winning bidder, appellant called a representative of Aluma Spec to inquire about the purchase of EFCO products for the project. The representative informed appellant that Aluma Spec would not sell the specified EFCO products to appellant because appellant had not requested a quote before the bid deadline. The representative stated that he considered it unethical to sell the products to appellant because the other glazing contractors
were competing for the Project based on real product costs for EFCO products whereas [appellant] competed based on product costs which might have been completely wrong. As many of the glazing contractors which had requested a quote from Aluma Spec before the bid deadline were significant customers of Aluma Spec, I was concerned that those contractors would think it improper for Aluma Spec to sell to a contractor which had not . . . obtained actual product cost information before submitting a bid. I felt that selling to [appellant] under these circumstances could affect my future sales with these larger customers.
Appellant then sought to purchase the other specified product, Duracraft, from respondent Paulson. Paulson informed appellant that it would not sell the Duracraft product to appellant for the same reason cited by Aluma Spec. On approximately March 17, 2003, appellant contacted EFCO and requested EFCO to force Aluma Spec to sell to appellant. EFCO declined appellant’s requests.
Appellant attempted to use a substitute product, but failed to follow the required procedure for getting approval and the attempt failed. After failing to obtain the specified products, appellant submitted shop drawings to the project architect using products from another supplier not specified in the project manual. When appellant was unable to obtain either of the specified products, the general contractor terminated appellant’s subcontract.
Appellant brought suit against all respondents. Respondents EFCO and MPSD filed motions for summary judgment and Aluma Spec filed a memorandum in support of summary judgment in favor of respondents.
Appellant alleges that (1) Aluma Spec, EFCO, and Paulson conspired unlawfully in their refusal to sell the specified products to appellant under Minn. Stat. § 325D.53, subd. 1(3) (2006); (2) MPSD conspired with Aluma Spec and Paulson to specify EFCO and Duracraft products in the project manual, knowing that Duracraft was not a commercially available product and therefore restrained competition in the letting of a public contract under Minn. Stat. § 325D.53, subd. 1(2)(c) (2006); (3) Aluma Spec, EFCO, and Paulson were estopped from declining to sell to appellant under appellant’s theory of promissory estoppel; and (4) Aluma Spec, EFCO, MPSD, and Paulson intentionally and unjustifiably interfered with appellant’s contractual relationship with the general contractor.
“When appealing from summary judgment, we ask whether there are any genuine issues of material fact and whether the lower courts erred in their application of the law.” Howard v. Minn. Timberwolves Basketball Ltd. P’ship, 636 N.W.2d 551, 555 (Minn. App. 2001), review denied (Minn. Feb. 19, 2002). “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Id. at 556 (quotation omitted). “[T]he party resisting summary judgment must do more than rest on mere averments.” Id. Summary judgment is “mandatory against a party who fails to establish an essential element” of its claim. Lloyd v. In Home Health, Inc., 523 N.W.2d 2, 3 (Minn. App. 1994).
We construe Minnesota antitrust law consistently with the federal court’s interpretation of analogous federal antitrust provisions. Keating v. Philip Morris, Inc., 417 N.W.2d 132, 136 (Minn. App. 1987). The United States Supreme Court addressed the standards governing motions for summary judgment in the antitrust context in Matsushita Elec. Indus. Co. v. Zenith Radio Corp., Ltd., 475 U.S. 574, 106 S. Ct. 1348 (1986). The court instructed that although inferences on summary judgment must be viewed in the light most favorable to the nonmoving party, “antitrust law limits the range of permissible inferences from ambiguous evidence.” Id. at 588, 106 S. Ct. 1356. “To survive a motion for summary judgment . . . a plaintiff . . . must present evidence that tends to exclude the possibility that the alleged conspirators acted independently.” Id. (quotation marks omitted). The court further noted that “conduct that is as consistent with permissible competition as with illegal conspiracy does not, without more, support even an inference of conspiracy.” Id. at 597, 106 S. Ct. at 1361 n.21.
Pursuant to Minnesota’s antitrust statute, “[a] contract, combination, or conspiracy between two or more persons in unreasonable restraint of trade or commerce is unlawful.” Minn. Stat. § 325D.51 (2006). The definition of “unreasonable restraint” and “unlawful combination or conspiracy” is clarified in Minn. Stat. § 325D.53, subd. 1 (2006), which states:
[T]he following shall be deemed to restrain trade or commerce unreasonably and are unlawful:
(2) A contract, combination, or conspiracy between two or more persons whereby, in the letting of any public contract, (a) the price quotation of any bid is fixed or controlled . . . or (c) competition is in any other manner restrained.
(3) A contract, combination, or conspiracy between two or more persons refusing to deal with another person.
Because a single entity cannot contract, combine, or conspire with itself, to withstand summary judgment appellant must provide evidence that respondents acted together. See Howard, 636 N.W.2dat 559 (affirming summary judgment when nonmoving party failed to establish that the actors to an alleged conspiracy were economically independent entities and failed to establish collusion or conspiracy with any other entity). Here, the district court correctly determined that appellant failed to introduce any evidence showing that any combination of respondents acted in concert.
I. Refusal to Deal
A private business generally has a right to deal, or refuse to deal, with whomever it chooses, as long as it does so independently. See United States v. Colgate & Co., 250 U.S. 300, 307, 39 S. Ct. 465, 468 (1919); see also Steele v. City of Bemidji, 114 F. Supp. 2d 838, 849 (D. Minn. 2000) (under Minnesota law, “[i]t is the right . . . of a trader engaged in an entirely private business, ‘freely to exercise his own independent discretion as to the parties with whom he will deal’”), aff’d in part, rev’d in part on other grounds, 257 F.3d 902 (8th Cir. 2001).
Appellant relies on its owner’s inference that an MPSD employee seemed surprised that appellant was awarded the contract as evidence of a conspiracy whereby MPSD communicated to Paulson, Aluma Spec, and EFCO not to sell the specified products to appellant. But representatives of MPSD, Aluma Spec, and Paulson testified that they never communicated with one another regarding the sale of the specified products to appellant. And appellant’s owner testified that he did not have any evidence that anyone instructed Aluma Spec not to sell the product to appellant.
Moreover, the record indicates that EFCO did not know that appellant was the subcontractor on the project until appellant sought to purchase the specified products directly from EFCO, after Aluma Spec and Paulson refused to supply the specified products. The record contains no evidence of any communication between EFCO and either MPSD or Paulson. Although the record indicates that EFCO supported Aluma Spec’s decision not to sell to appellant, it was not EFCO’s usual business practice to sell directly to subcontractors. Because EFCO’s decision to support its distributor is at least as consistent with permissible competition as with an impermissible conspiracy, appellant has failed to produce evidence sufficient to warrant an inference of conspiracy and avoid summary judgment.
Appellant also claims that MPSD’s specification of Duracraft products, which according to appellant failed to meet project specifications, is evidence of MPSD’s involvement in the alleged conspiracy. But even if MPSD should have specified different products or allowed substitutions, appellant has the burden of producing evidence from which an inference can be made that the respondents acted in concert. Appellant has failed to meet this burden.
Absent evidence of collusion, or even communication, among the respondents, appellant has failed to show that a genuine issue of material fact exists. See Minn. Stat. § 325D.53, subd. 1(3) (requiring collusion); Howard, 636 N.W.2d at 559. We conclude that summary judgment for respondents is appropriate on this claim.
II. Restraint of Competition in a Public Contract
An antitrust violation occurs when a contract, combination, or conspiracy in the letting of any public contract restrains competition. Minn. Stat. § 325D.53, subd. 1(2)(c). Appellant alleges that MPSD, EFCO, Paulson, and Aluma Spec conspired to ensure that EFCO products were the only specified products available and thereby ensured that only EFCO products would be used in the project, restraining competition. The basis for this argument is appellant’s allegation that Duracraft, the other specified products of choice, were not commercially available and did not meet the project specifications. But appellant has failed to produce any evidence in support of these allegations, and allegations alone are not sufficient to withstand summary judgment. See Howard, 636 N.W.2d at 556. We conclude that the district court did not err in granting respondents summary judgment on this claim.
Appellant argues that Aluma Spec is promissorily estopped from refusing to sell the specified EFCO products. We disagree.
The elements of promissory estoppel are: (1) a clear and definite promise; (2) that the promissor intended to induce reliance and did induce reliance; and (3) enforcement of the promise is necessary to prevent injustice. Hous. & Redev. Auth. of Chisholm v. Norman, 696 N.W.2d 329, 336 (Minn. 2005).
Appellant’s promissory estoppel claims rests upon three allegations: (1) “Aluma Spec’s interactions with [MPSD] in fixing and limiting the allowed manufacturer constituted a clear promise . . . that Aluma Spec would sell the EFCO products to the successful bidder”; (2) Aluma Spec “put itself in a position, by its dealings with [MPSD], to be the only possible product supplier”; and (3) Aluma Spec intended that the successful bidder of the project would rely on its promise to supply EFCO products.
Assuming, but not deciding, that these allegations would support a claim of promissory estoppel, appellant has failed to produce any evidence supporting any of the allegations and may not withstand summary judgment by resting on “mere averments.” Howard, 636 N.W.2d at 556. We affirm the district court’s grant of summary judgment on this claim.
Appellant argues that MPSD, Aluma Spec, and EFCO intentionally interfered with appellant’s contract with the general contractor. We disagree.
To establish a prima facie case for intentional interference with contractual relations, a plaintiff must show: (1) the existence of a contract, (2) knowledge of the contract by the alleged wrongdoer, (3) intentional procurement of the contract’s breach, (4) absence of justification, and (5) damages caused by the breach. Kjesbo v. Ricks, 517 N.W.2d 585, 588 (Minn. 1994).
Appellant alleges that because each respondent acted deliberately in refusing to sell, respondents intentionally procured the contract’s breach. But a business may deal or refuse to deal with any party as long as it does so independently. Steele, 114 F. Supp. 2d at 849. Here, Aluma Spec, EFCO, and Paulson were each entitled to refuse to sell to appellant absent an illegal agreement. Appellant has not produced any evidence that the respondents’ refusals to sell were unjustified or were intended to procure the breach of appellant’s contract with the general contractor. Therefore appellant has failed to produce evidence sufficient to withstand summary judgment on this claim.
We affirm the district court’s grant of summary judgment with respect to all of appellant’s claims.