Court Opinion

ID: 2642457
Source: CourtListenerOpinion
Date Created: 2013-11-15 21:31:20.0448+00
Date Added: 2024-06-11T09:01:17.743500
License: Public Domain

FILED
                           NOT FOR PUBLICATION                               NOV 15 2013

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

DPS ELECTRONICS, INC.,                          No. 12-35703

              Plaintiff - Appellant,            D.C. No. 2:08-cv-00082-SEH

  v.
                                                MEMORANDUM*
TRANSPORTATION PRODUCTS
SALES COMPANY, INC.,

              Defendant - Appellee.

                   Appeal from the United States District Court
                           for the District of Montana
                    Sam E. Haddon, District Judge, Presiding

                     Argued and Submitted November 4, 2013
                                Portland, Oregon

Before: ALARCÓN, M. SMITH, and HURWITZ, Circuit Judges.

       In this diversity action, DPS Electronics, Inc. (DPS), appeals from a

judgment entered after a three-day bench trial in favor of Transportation Products

Sales Company, Inc. (TPSC). DPS claimed that TPSC breached the non-compete

clause of an Independent Representative Agreement (Agreement) by representing

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Mu-Del Advanced Technologies, LLC (Mu-Del).           The non-compete provision

prohibited TPSC, during the term of the Agreement and for a period of twelve

months thereafter, from representing “any company, organization or person, which

directly or indirectly competes with the Company or any Company Products and

Services.”

      The district court found that the Agreement extended only to the DPS

products and services that TPSC had agreed to promote, and did not extend to

“products in development or not yet ready for market.” Based on this reading, the

court held that TPSC did not breach the Agreement by representing Mu-Del. The

district court also held that DPS had not proved a breach of the implied covenant of

good faith and fair dealing or that the Agreement created a fiduciary relationship

between the parties.

      We affirm the district court’s holdings as to the covenant of good faith and

fair dealing and breach of fiduciary relationship. We disagree, however, with the

court’s construction of the non-compete provision. The court improperly conflated

the scope of TPSC’s representation of DPS, which was limited to products listed

on Exhibit E of the Agreement, with the scope of the non-compete provision,

which did not contain such a limitation.

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      Because of this error, the district court never determined whether Mu-Del

directly or indirectly competed with DPS or with any of its products and services.

Nor did the court address whether the non-compete provision was reasonable under

Montana law. See Mungas v. Great Falls Clinic, LLP, 221 P.3d 1230, 1237 (Mont.

2009). We therefore vacate the judgment, and remand for a determination of the

provision’s applicability to TPSC’s representation of Mu-Del, and, if applicable, its

reasonableness.

      VACATED in part, AFFIRMED in part, and REMANDED in part. Each

party is to bear its own costs.

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