Opinion ID: 162593
Heading Depth: 2
Heading Rank: 2

Heading: breach of original equipment manufacturer agreement

Text: 31 Lantec and Lantec Brazil claim Novell breached its Original Equipment Manufacturer Agreements. These Agreements allowed Lantec and Lantec Brazil to package their products with Novell's NetWare and Message Handling System products. Lantec and Lantec Brazil claim Novell terminated the Agreements in April 1994 when Ron Palmeri, a Novell executive, left Mr. Thoillier a voice mail message. They also claim Tom Pesut, a Novell executive, subsequently confirmed the repudiation when he declared that [Novell] would refuse to do business in the future with any of the Lantec Companies. 32 The district court granted Novell's motion for summary judgment dismissing the claims involving the Original Equipment Manufacturer Agreements because there was no showing of anticipatory repudiation by Novell. The court concluded the Agreements required written notice of termination and none was given. In addition, the court noted Novell sent a letter reaffirming the Agreements and demonstrated a willingness to continue with the agreement[s] as [they] existed or to modify [them] in a way that would be acceptable to all at a subsequent meeting with the Lantec companies. The district court later denied Lantec and Lantec Brazil's motion for reconsideration on this issue. 33 We will consider each fact relevant to Novell's alleged wrongful breach of the Original Equipment Manufacturer Agreements in turn. We first consider whether Mr. Palmeri's telephone message constitutes triable evidence indicating Novell repudiated the Original Equipment Manufacturer Agreements. Next, even if Novell did repudiate, we ask whether Novell successfully retracted the repudiation. Finally, we address whether the district court abused its discretion in striking a portion of an affidavit Lantec and Lantec Brazil intended to use to establish Mr. Pesut's alleged threat to refuse to deal with the Lantec companies. Ultimately, we affirm the district court's decisions related to the Agreements.
34 In April 1994, Mr. Palmeri of Novell left a voice mail message for Mr. Thoillier. In relevant part, it stated: 35 I had a meeting with Tom Pesut yesterday and Jim Sullivan, who is the director of channel sales and they want to terminate the relationship between the companies. I want to let you know. Leave me a voice mail and let me know that you did get in fact this message, I don't want you to be surprised when the letter comes from our legal. OK? I'll try to give you a ring back again but it is just gonna be a lit [sic] tough to reach for the next couple of days. 36 Lantec and Lantec Brazil argue this message could reasonably be viewed as an anticipatory repudiation of the Original Equipment Manufacturer Agreements. 37 A repudiation occurs when a party to a contract makes an overt communication of intention or an action which renders performance impossible or demonstrates a clear determination not to continue with performance. Uniform Commercial Code § 2-610 cmt. 1 (1989). [T]o constitute a repudiation, a party's language must be sufficiently positive to be reasonably interpreted to mean that the party will not perform. Scott v. Majors, 980 P.2d 214, 218 (Utah Ct.App.1999) (quotation marks and alterations omitted). See also Utah Code Ann. § 70A-2-610. Mere expression of doubt as to [a party's] willingness or ability to perform is not enough to constitute a repudiation. Restatement (Second) of Contracts § 250 cmt. b (1979). Anticipatory repudiation requires more than statements revealing a party does not want to perform the contract or has misgivings about the contract. Hurwitz v. David K. Richards & Co., 20 Utah 2d 232, 436 P.2d 794, 795-96 (1968). 38 Viewing Mr. Palmeri's voice message in the light most favorable to Lantec and Lantec Brazil, we conclude the message was not definite enough to serve as an anticipatory repudiation. The message only states two Novell executives wanted to terminate Novell's relationship with the Lantec companies. Nowhere in the message does it state Novell would not perform its duties under the Original Equipment Manufacturer Agreements.
39 Even if the voice mail message had been definite enough to act as a repudiation, the undisputed facts show Novell subsequently reaffirmed the Agreements. Utah law provides a repudiating party can retract [its] repudiation unless the aggrieved party has since the repudiation canceled or materially changed [its] position or otherwise indicated that [it] considers the repudiation final. Utah Code Ann. § 70A-2-611(1). A party may retract by any method which clearly indicates to the aggrieved party that the repudiating party intends to perform. Utah Code Ann. § 70A-2-611(2). 40 After receiving the telephone message, Mr. Thoillier sent Novell a letter stating: I am writing this letter to confirm your termination of the [Original Equipment Manufacturer] Agreement[s]. 5 Novell responded with a letter stating: I must take exception to [a] comment[ ] made in your letter. .... [Y]ou referred to Novell's `termination' of the Lantec agreement[s]. [Those] agreement[s] can only be terminated in writing and with appropriate notice. On appeal, Lantec and Lantec Brazil argue the notion that Novell could not repudiate unless it terminated the contract[s] in writing was simply nonsensical and poorly reasoned. Assuming termination did not need to be in writing, the letter nevertheless shows Novell did not intend to terminate the Agreements. Further showing Novell's commitment to the Agreements, the letter established a meeting between Novell and the Lantec companies on May 4, 1994, in Las Vegas. In closing, the letter reaffirmed, Novell is willing to consider any reasonable proposal with respect to the ... [a]greement[s] to make th[ose] agreement[s] workable for Lantec (e.g., mutual termination of the agreement[s], restructuring of payment terms, reduction of volume commitment, etc.). I think you will find Novell to be very accommodating on this issue. 41 Novell's actions following the reaffirming letter also demonstrate a commitment to the Original Equipment Manufacturer Agreements. In May 1994, the parties met in Las Vegas to discuss the Agreements. The undisputed outcome of the meeting was that [t]he parties did not reach any agreement as to their respective rights and duties under the Lantec [Original Equipment Manufacturer] [A]greement[s], but that the Lantec companies would evaluate their business relationship with Novell. 42 Consequently, we conclude the undisputed material evidence shows Novell successfully retracted any repudiation of the Original Equipment Manufacturer Agreements.
43 In their appellate brief, Lantec and Lantec Brazil argue a threat made by Tom Pesut immediately following the Las Vegas meeting raised a clear disputed fact about Novell's intention to repudiate the [Original Equipment Manufacturer] Agreement[s]. According to a portion of an affidavit submitted by Marcello Thoillier, Mr. Pesut, a Novell executive, said if the Lantec companies opposed the Novell/WordPerfect merger Novell would immediately sever its relationship with these companies and put them out of business. Lantec and Lantec Brazil argue the alleged threat belied the notion that Novell intended to continue doing business with Lantec. 44 The district court did not consider whether the alleged threat created a material issue of fact. Instead, the district court struck the portion of Mr. Thoillier's affidavit pertaining to the threat because the court found it was an attempt to create a sham issue of fact. The court noted Mr. Thoillier was extensively deposed over a period of several days on the same subject matters which form the bases for his affidavit. The court determined the relevant allegation conflicts with Mr. Thoillier's prior deposition testimony regarding the meeting. 45 We review a district court's decision to exclude evidence at the summary judgment stage for abuse of discretion. Sports Racing Servs., Inc. v. Sports Car Club, 131 F.3d 874, 894 (10th Cir.1997). Under this standard we will not disturb the district court's decision unless [we have] a definite and firm conviction that the lower court made a clear error of judgment or exceeded the bounds of permissible choice in the circumstances. United States v. Ortiz, 804 F.2d 1161, 1164 n. 2 (10th Cir.1986.) 46 There is authority for the proposition that in determining whether a material issue of fact exists, an affidavit may not be disregarded because it conflicts with the affiant's prior sworn statements. In assessing conflict under these circumstances, however, courts will disregard a contrary affidavit when they conclude that it constitutes an attempt to create a sham fact issue. 47 Franks v. Nimmo, 796 F.2d 1230, 1237 (10th Cir.1986) (citations omitted). In deciding whether an affidavit is an attempt to create a sham issue of fact, the relevant factors are whether the affiant was cross-examined during his earlier testimony, whether the affiant had access to the pertinent evidence at the time of his earlier testimony or whether the affidavit was based on newly discovered evidence, and whether the earlier testimony reflects confusion which the affidavit attempts to explain. Id. Lantec and Lantec Brazil argue affidavit references to the alleged threat did not directly contradict Mr. Thoillier's deposition testimony. According to their argument, counsel for Novell never asked Mr. Thoillier about his meeting with Mr. Pesut. Instead, Mr. Thoillier's deposition testimony only concerned the May 1994 meeting in Las Vegas with Novell officials and counsel for the Lantec companies and Novell. According to the affidavit, Mr. Pesut's threat came not in the scheduled meeting, but in a private conversation immediately following the meeting. 48 After reviewing the deposition and affidavit, we conclude the district court did not abuse its discretion in ruling parts of the affidavit contradicted Mr. Thoillier's deposition testimony. During the deposition Mr. Thoillier was specifically asked whether Mr Pesut was receptive to a discussion about continuing Novell's association with the Lantec companies. Mr. Thoillier answered he did not recall these exact words. Counsel for Novell then asked whether Novell had communicated that as far as it was concerned, it was prepared to go ahead with the [Original Equipment Manufacturer Agreements]. Mr. Thoillier said it was discussed. Searching for further clarification, counsel for Novell asked to identify the result of the meeting. Mr. Thoillier admitted Lantec and Lantec Brazil were supposed to decide whether they wanted to modify their agreements with Novell and then schedule another meeting with Novell. Nothing in the deposition questioning suggested Mr. Thoillier should limit his answers to discussions occurring when all of the people attending the meeting were present. During his deposition, Mr. Thoillier never mentioned any threats from Mr. Pesut. Consequently, the district court did not abuse its discretion in concluding the portions of the affidavit related to the alleged threat were contradictory. 49 Lantec and Lantec Brazil also argue the relevant portion of the affidavit was not intended to create a sham issue of fact. They point to the deposition testimony of LanCompany's Chief Financial Officer, Ovidio Rovell, who testified Mr. Thoillier told him of Mr. Pesut's alleged threat. Novell conducted Mr. Rovell's deposition before Mr. Thoillier's. Because Mr. Rovell's testimony of Mr. Thoillier's hearsay statements gave Novell prior notice of the alleged threat, Lantec and Lantec Brazil argue the affidavit cannot be viewed as an attempt to fabricate a disputed factual issue. 50 While it is true Novell had notice of the alleged threat, we cannot conclude the district court abused its discretion when other factors suggest the affidavit was intended to create a sham issue of fact. First, Mr. Thoillier was represented by counsel and cross-examined during his deposition. See Franks, 796 F.2d at 1237. Second, because the alleged threat is not newly discovered evidence, there is no question Mr. Thoillier should have known about the alleged threat at the time of the deposition. See id. Third, there is nothing in the deposition testimony reflecting any level of confusion or uncertainty concerning Mr. Thoillier's testimony requiring clarification or explanation. See id. Given these circumstances, we do not have a definite and firm conviction the district court exceeded the bounds of permissible choice in striking the portions of Mr. Thoillier's affidavit related to the alleged threat. Consequently, we will not consider whether the alleged threat would have raised a material issue of fact. 51 In short, we conclude Novell was entitled to summary judgment on the claims involving the Original Equipment Manufacturer Agreements. Mr. Palmeri's telephone message was not definite enough to amount to a repudiation of the Agreements. Even assuming otherwise, the record shows Novell subsequently sent a letter reaffirming the Agreements and acted in accordance with the reaffirmation at a subsequent meeting. Aside from properly stricken portions of an affidavit, Lantec and Lantec Brazil have not directed us to any portion of the record suggesting otherwise. Therefore, we affirm the district court's grant of summary judgment on the breach of the Original Equipment Manufacturer Agreement claims. 52