Opinion ID: 771387
Heading Depth: 2
Heading Rank: 3

Heading: The Distributorship Agreement between Chance and Fasteel

Text: 9 In April 1989, Ruiz incorporated Fasteel to provide building stabilization services using Chance's products and methods. Ruiz is Hispanic, and is the sole owner of Fasteel. In June 1989, Chance and Ruiz entered into a Distributorship Agreement, whereby Chance appointed Fasteel to act as an authorized, non-exclusive distributor. The Agreement contained a best efforts clause. For the next few years, Ruiz and Fasteel sold Chance products exclusively and only used the Chance underpinning method. Ruiz and Fasteel also recruited dealers for the Chance method, created marketing materials, developed products, and conducted training programs. Ruiz extolled the advantages of the Chance methods over the prior art to other contractors. 10 In the 1990s, Ruiz expanded his business by forming other companies. In 1993, Ruiz incorporated Foundation Technology, Inc. (FTI), originally the Kansas City, Missouri, office of Fasteel. Ruiz was the sole owner of FTI. At first, FTI only sold Chance products, but by 1997, it was also the distributor for foundation repair parts not manufactured by Chance. In 1995, Ruiz and Steven Gregory established R.J. Enterprises, L.L.C., to sell Ram Jack products, which were competitive with Chance's products. The Ram Jack products utilized the Gregory patented push pier method. Ruiz had a 51 percent interest in R.J. Enterprises. Ruiz also set up Advanced Building Technology, Inc. (ABT), wholly-owned by Ruiz, to sell Ram Jack products. According to Ruiz, FTI or ABT would distribute Ram Jack products in locations where Ruiz was already a Chance distributor. R.J. Enterprises would service those areas where Ruiz did not distribute Chance products. 11 In 1996, Chance became aware that Ruiz, through one of his companies, had offered Ram Jack products to a dealer in Chance territory for which Ruiz was responsible. Chance requested that Ruiz stop the activity. Ruiz wrote Chance a letter arguing that Chance had allowed other distributors to sell competitive products, and that he believed Chance's actions to be motivated by a discriminatory purpose. 12 On February 18, 1997, Gary Bartee, a Chance manager, and Mike Estes, Chance's controller, signed a Distributor Termination Request form. The form stated that Chance was terminating Fasteel because Fasteel, Inc., is establishing itself to promote and sell competitive underpinning system[s] through the existing Chance system dealers. The next day, Jeff Witten, the Senior Vice-President of Chance's parent company, terminated Fasteel's distributorship pursuant to a provision in the Distributorship Agreement, which permitted termination for any reason upon one year's notice. 13 After the termination, Ruiz began to market and install a combination of screw anchors manufactured by Dixie and metal brackets manufactured by Gregory. Chance alleged that Ruiz's activities infringed its method patents, and ordered Ruiz to cease his activities. Ruiz refused.