Opinion ID: 2979101
Heading Depth: 1
Heading Rank: 4

Heading: analysis

Text: Because the parties’ Agreement provides that Missouri law governs all claims, we proceed by applying Missouri law to evaluate UEP’s claimed errors. A. Breach of Contract UEP argues that the district court improperly granted Emerson summary judgment on its breach of contract claim because: (1) Emerson’s direct sales to UEP’s customers violated the Agreement; (2) even if the Agreement allowed direct sales, there exists a triable issue of fact as to whether the parties modified the Agreement; and (3) Emerson’s conduct violated the implied obligation of good faith and fair dealing inherent in every contract. But UEP fails to demonstrate a genuine issue of material fact to support overturning summary judgment on any of these grounds, and, given the available facts, UEP’s arguments fail as a matter of law. -6- No. 08-2533 Universal Elec. Prod. Co., Inc. v. Emerson Elec. Co. With respect to the first grounds, we agree with the district court that the language in the Agreement is unambiguous. Where a “contract’s language is clear, we discern the parties’ intent from the document alone” and do not apply rules of construction. Bailey v. Federated Mut. Ins. Co., 152 S.W.3d 355, 357 (Mo. Ct. App. 2004). The Agreement clearly stated that nothing in it shall be construed “as granting any exclusive distributorship or rights” to UEP or as preventing Emerson from freely operating in the market area. Emerson was also free to revise the price of its products per the plain language of the Agreement. UEP argues the conflict between Emerson’s ability to sell directly to UEP’s customers and UEP’s contractual obligation to actively and aggressively promote the sale of such products make the terms “freely operate” ambiguous. We disagree. Emerson’s ability to make direct sales to UEP customers does no greater violence to UEP’s obligation to sell Emerson products than does “appoint[ing] other distributors in the Market Area,” conduct the Agreement explicitly authorized. Having determined there is no ambiguity within the four corners of the Agreement itself, there is no need to resort to construction of the contract based on parties’ conduct. See Eisenberg v. Redd, 38 S.W.3d 409, 411 (Mo. 2001). We accordingly hold that the Agreement allowed Emerson to make direct sales and to increase its prices, and that Emerson did not, therefore, breach the Agreement. UEP further asserts there is an issue of fact as to the subsequent modification of the Agreement, pointing to the August 2001 letter from Gary Sajewich as evidence of modification. But although Missouri law allows oral modifications even when a contract specifically requires a writing, -7- No. 08-2533 Universal Elec. Prod. Co., Inc. v. Emerson Elec. Co. to be effective, these modifications must possess all the elements necessary to form a new contract. Peterson v. Cont’l Boiler Works, Inc., 783 S.W.2d 896, 902 (Mo. 1990) (citing Zumwinkel v. Leggett, 345 S.W.2d 89, 94 (Mo. 1961)). Faced with a record lacking any evidence of consent to modify on Emerson’s part or of consideration given by either party, the district court correctly concluded that no modification occurred. Finally, UEP argues even if Emerson’s conduct was authorized under the Agreement, its conduct constituted a violation of the implied obligation of good faith and fair dealing inherent in every contract. This duty prevents a contracting party from exercising a right conferred by an agreement “in a manner that evades the spirt of the transaction or denies the other party the expected benefit of the contract.” Finova Capital Corp. v. Ream, 230 S.W.3d 35, 45 (Mo. Ct. App. 2007). But this argument also fails because the implied covenant of good faith cannot displace the parties’ actual agreement. Schell v. LifeMark Hosps. of Mo., 92 S.W.3d 222, 231 (Mo. Ct. App. 2002). In other words, Missouri law does not allow this covenant to be “an everflowing cornucopia of wishedfor legal duties” imposing an obligation not otherwise contained in the contract’s terms. Comprehensive Care Corp. v. RehabCare Corp., 98 F.3d 1063, 1066 (8th Cir. 1996) (citing Glass v. Mancuso, 444 S.W.2d 467, 478 (Mo. 1969)). Because the Agreement authorized all of Emerson’s actions, its activities failed to interfere with the spirit or benefit of the transaction, and accordingly Emerson did not breach its duty of good faith and fair dealing. -8- No. 08-2533 Universal Elec. Prod. Co., Inc. v. Emerson Elec. Co. B. Tortious Interference In addition to its breach of contract claim, UEP asserts that issues of fact preclude summary judgment on its claim for tortious interference. UEP argues that Emerson’s price increase in March 2006 to “break even” and subsequent conduct of selling to UEP’s customers at prices below what Emerson charged UEP constituted tortious interference with UEP’s business relationships with existing customers. Emerson counters that it was justified in making direct sales due to its legitimate interest in protecting its own relationships with customers buying Emerson’s products, and the Agreement permitted all of its conduct. Because UEP cannot demonstrate that Emerson used improper means, as required by Missouri law, we conclude the district court correctly granted summary judgment to Emerson on this claim. Under Missouri law, tortious interference with a contract or business relationship requires a plaintiff to prove: (1) a valid contract or business relationship; (2) defendant’s knowledge of the contract or relationship; (3) a breach induced or caused by defendant’s interference; (4) absence of justification; and (5) damages. Clinch v. Heartland Health, 187 S.W.3d 10, 14 (Mo. Ct. App. 2006) (citing Rice v. Hodapp, 919 S.W.2d 240, 245 (Mo. 1996)). But “[i]f the defendant has a legitimate interest, economic or otherwise, in the contract or expectancy sought to be protected, then the plaintiff must show that the defendant employed improper means in seeking to further only his own interests.” Nazeri v. Mo. Valley Coll., 860 S.W.2d 303, 317 (Mo. 1993). By contrast, “no liability arises if the defendant had an unqualified legal right to do the act complained of.” Id. -9- No. 08-2533 Universal Elec. Prod. Co., Inc. v. Emerson Elec. Co. Because Emerson has legitimate interests in UEP’s relationships with its customers—UEP distributed Emerson’s products, after all—UEP must demonstrate that Emerson employed improper means. But, as we already concluded, all of Emerson’s actions fall within the ambit of its contractual rights. Thus, though UEP argues “when Emerson told UEP that it needed to raise prices to UEP to break even . . . but then turned around and began secretly selling products to UEP’s customers for prices that were less than what it claimed was the breakeven price, it crossed the tortious interference line,” we disagree. Without breaching the Agreement, Emerson could not have employed improper means, and thus could not have tortiously interfered with UEP’s business relationships. Moreover, none of the cases cited by UEP supports its improper-means argument. Unlike in Western Fireproofing Co. v. W.R. Grace & Co., 896 F.2d 286 (8th Cir. 1990), a case upon which UEP heavily relies, UEP sold the products of several manufacturers, and Emerson did not unfairly join former UEP employees to drive UEP out of business. Also misplaced is UEP’s reliance on Machine Maintenance & Equipment Co. v. Cooper Industries, Inc., 661 F. Supp. 1112 (E.D. Mo. 1987), in which some of plaintiff’s salespeople left to form a competing distributor and the defendant improperly terminated its agreement with the plaintiff in order to work with the new distributor, using information from the former salespeople to contact customers prior to the agreement’s termination. Id. at 1114. In this case, Emerson took actions consistent with its contractual obligations. UEP provides no evidence Emerson intended to drive it out of business or improperly contacted UEP employees to interfere with UEP’s ongoing business relationships. Thus, because - 10 - No. 08-2533 Universal Elec. Prod. Co., Inc. v. Emerson Elec. Co. Emerson’s conduct falls far short of the egregious conduct in these cases, we hold that the district court properly granted summary judgment to Emerson on UEP’s tortious interference claim. C. Counterclaim UEP appeals the district court’s judgment in favor of Emerson for $276,073.78. Although UEP does not dispute its obligation to Emerson for this amount, it contends that Emerson’s material breach of the Agreement suspended its payment obligations. Finding that Emerson complied with the Agreement, we conclude the district court correctly entered judgment on Emerson’s counterclaim.