Court Opinion

ID: 2979171
Source: CourtListenerOpinion
Date Created: 2015-09-22 18:42:52.479602+00
Date Added: 2024-06-11T13:16:58.383101
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 10a0553n.06

                                           No. 09-5123                                  FILED
                                                                                    Aug 26, 2010
                          UNITED STATES COURT OF APPEALS                       LEONARD GREEN, Clerk
                               FOR THE SIXTH CIRCUIT

MARK NAIYU SUN,                                        )
                                                       )
       Plaintiff-Appellant,                            )
                                                       )   ON APPEAL FROM THE
v.                                                     )   UNITED STATES DISTRICT
                                                       )   COURT FOR THE EASTERN
CM PRODUCTS, INC.; CHICAGO METALLIC                    )   DISTRICT OF KENTUCKY
PRODUCTS, INC.,                                        )
                                                       )
       Defendants-Appellees.                           )

Before:        KEITH, COLE, and GIBBONS, Circuit Judges.

       DAMON J. KEITH, Circuit Judge. Appellant Mark Naiyu Sun (“Sun”) sued Appellee CM

Products, Inc. (“CM”), alleging that CM breached its oral contract with him and violated the implied

covenant of good faith and fair dealing. Sun claims that CM retained him to assist in the purchase

of Chinese aluminum foil products from Loften Aluminum Foil Industry Company (“Loften”), and

that he was to receive a commission in exchange for his services. Upon learning that CM had

bypassed him and directly contacted Loften to discuss purchasing foil products, Sun filed this

lawsuit. At the close of discovery, the district court granted CM’s motion for summary judgment

on Sun’s claims against it, and Sun filed a timely appeal. For the reasons discussed below, we

REVERSE.

                                                 I
No. 09-5123
Mark Naiyu Sun v. CM Products, Inc.
Page 2

       CM is a manufacturer of recyclable aluminum foil containers and plastic packaging products,

and is a subsidiary of Chicago Metallic Products, Inc., which is located in Lake Zurich, Illinois. On

July 5, 2006, Sun had a telephone conversation with Ron Kelly (“Kelly”), CM’s Director of

Purchasing, during which Sun claims that the parties entered into an oral contract for Sun’s brokering

services. Sun claims that in exchange for introducing CM to a Chinese aluminum foil manufacturer,

Loften, he was to receive a commission for any purchases that CM made from that manufacturer.

Additionally, CM would be prohibited from contacting Loften directly without his assistance. Sun

had sent an email to Kelly, stating that he brokers transactions between Chinese aluminum foil

manufacturers and inviting Kelly to contact him. He introduced Kelly to Loften’s products in this

email. Kelly responded by stating that “[w]e currently do not import household foils but are strongly

considering” it, inquired about Sun’s availability for a meeting, and requested price quotations. (R.

77-2, Ex. A-1, Email Exchange at 10.)

       Sun emailed Kelly, with price quotations for “food service roll foil,” “food service roll foil

premium,” and “interfolded foil sheets.” The price quotation dated July 5, 2006, stated that Sun

International Company, Sun’s brokering company, would receive a five percent commission fee.

After receiving the quotations from Sun, on July 5, 2006, Kelly sent an email to Sun stating that CM

“would like the attached list quoted delivered to Lake Zurich, IL.” (R. 77-2, Ex. A-1, Email

Exchange at 11.) On July 18, 2006, Kelly requested that Sun provide “quote prices DDP Lake

Zurich.” (Id. at 16.) DDP is the international trade term for “delivery duty paid.”1 Sun responded

       1
        See World Class Shipping, http://www.worldclassshipping.c om/ incoterm_ddp.html (last
visited May 31, 2010). DDP is a term published by the International Chamber of Commerce that
is widely used in international trade. See Appellant’s Br. at 2 (citing use of DDP by which is detailed
No. 09-5123
Mark Naiyu Sun v. CM Products, Inc.
Page 3

to Kelly’s request for a DDP Lake Zurich quote on July 17, 2006. Kelly emailed Sun on August 10,

2006, stating that Sun’s quotations were helpful and that CM needed to “gauge customer

requirements and determine the size of the market.” (R. 89, Ex. R, Email Exchange at 13.)

       Sometime in late summer or early fall of 2006, Sun claims that CM contacted Loften directly

regarding the purchase of foil products. Sun claims that Ted Leung of CM began contacting Loften

on its behalf. Leung did not begin his employment with CM until September 2006. On September

22, 2006, Sun emailed Kelly stating that he became aware of CM’s efforts to contact Loften directly

and stated that Kelly was engaging in unfair business practices. Kelly responded to Sun’s email by

stating that CM did not have contact with Loften, and that it was simply exploring its options with

a variety of brokers and suppliers. Soon after receiving this correspondence from Sun, in October

2006, CM retained China Smart Sourcing, an Illinois and Shanghai-based sourcing firm, to assist

with the identification, selection, and negotiation with Chinese manufacturers. Frank Cai of China

Smart Sourcing assisted in the ordering and shipping of products from Loften to CM. Since 2006,

Loften has manufactured sample aluminum foil coil products for CM’s inspection. CM claims that

its relationship with Loften is the result of the work of Frank Cai of China Smart Sourcing and of

CM, not the efforts of Sun.

       On April 1, 2007, Sun emailed Kelly and stated that he was entitled to a commission of five-

percent of the value of the contract that CM and Loften had entered for 1,800 metric tons of

aluminum, and he calculated his commission as $342,000. Kelly responded by stating that CM’s

in     International          Chambers          of    Commerce             Incoterms,
http://www.iccwbo.org/incoterms/preambles/pdf/DDP.pdf (last visited May 31, 2010)).
No. 09-5123
Mark Naiyu Sun v. CM Products, Inc.
Page 4

business with Loften had nothing to do with Sun, and that Sun had merely provided him with price

quotations. Kelly emailed Lenny Liu, Loften’s Export Manager, stating that Sun claimed he had an

“exclusive right to represent Loften for all products.” (R. 77-3, Ex. B-1, Email Exchange at 5.) Liu

confirmed that Sun was not a Loften agent although Sun had sent an inquiry to Loften before Liu

joined the company in September 2006. On July 7, 2007, CM and Loften entered into a sales

contract for “aluminum container foil.”

       At the close of discovery, CM moved for summary judgment, and the district court granted

its motion. The court noted that the alleged contract failed to specify “critical terms for any broker

contract – when the contract would begin, how long it would last, what specific services the broker

would provide, and how his commission would be determined.” (R. 91, Order at 10.)

                                                 II.

A.     Standard of Review

       This Court reviews a district court’s grant of summary judgment de novo. See Spencer v.

Bouchard, 449 F.3d 721, 727 (6th Cir. 2006) (citing McQueen v. Beecher Cmty. Sch., 433 F.3d 460,

463 (6th Cir. 2006)). Summary judgment is only appropriate where “the pleadings, the discovery

and disclosure materials on file, and any affidavits show that there is no genuine issue as to any

material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 56(c). “In

considering a motion for summary judgment, the district court must construe the evidence and draw

all reasonable inferences in favor of the nonmoving party.” See Jones v. Potter, 488 F.3d 397, 402-

03 (6th Cir. 2007) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587

(1986)).
No. 09-5123
Mark Naiyu Sun v. CM Products, Inc.
Page 5

B.     Choice of Law

       This case was brought pursuant to 28 U.S.C. §1332 as a diversity of citizenship lawsuit. In

a diversity action, the choice of law principles of the forum state apply. See Montgomery v. Wyeth,

580 F.3d 455, 459 (6th Cir. 2009). Accordingly, Kentucky choice of law principles apply here

because Sun brought this action in the Eastern District of Kentucky.

       Under Kentucky law, the law of the state with “the most significant relationship to the

transaction and the parties” and “the greatest concern with the specific issue raised in the litigation”

applies. Breeding v. Massachusetts Indem. & Life Ins. Co., 633 S.W.2d 717, 719 (Ky. 1982); see

also Lewis v. American Family Ins. Group, 555 S.W.2d 579, 581 (Ky. 1977). Sun claims that the

oral contract was formed during a telephone conversation on July 5, 2006, between himself in

Kentucky and Kelly in Illinois. Neither state has a greater connection to the alleged contract in this

respect. However, any goods ordered by CM would be delivered to CM’s place of business in

Illinois, and CM would have processed the goods in Illinois. In light of this connection to Illinois,

the district court properly applied Illinois substantive law to construe the alleged contract between

Sun and CM.

C.     Enforceability of the Alleged Contract

       An oral agreement is enforceable under Illinois law if there is an offer, acceptance, and

meeting of the minds regarding the terms of the agreement. See Quinlan v. Stouffe, 823 N.E.2d 597,

603 (Ill. App. Ct. 2005). The essential terms of the contract must be “reasonably certain.” Lewis-

Kearns v. Mayflower Transit, Inc., 932 F. Supp. 1061, 1070 (N. D. Ill. 1996) (citing Caporale v. Mar

Les, Inc., 656 F.2d 242, 245 (7th Cir. 1981)). An oral agreement must “meet the same requirements
No. 09-5123
Mark Naiyu Sun v. CM Products, Inc.
Page 6

as a written contract . . . including the requirements that the subject matter be sufficiently identified.”

Ashline v. Verble, 370 N.E.2d 613, 615 (Ill. 1977). “When material terms and conditions are not

acscertainable, there is no enforceable contract, even if the intent to contract is present.” Midwest

Builder Distrib., Inc. v. Lord and Essex, Inc., 891 N.E.2d 1, 16 (Ill. App. Dist. 1 2007) (quoting

Wagner Excello Foods, Inc. v. Fearn Int’l Inc., 601 N.E.2d 956, 960 (Mich. 1992)). However,

“[e]ven though one or more terms are left open a contract for sale does not fail for indefiniteness if

the parties have intended to make a contract and there is a reasonably certain basis for giving an

appropriate remedy.” Id. (citation omitted).

        The district court held that no enforceable contract existed because the oral agreement did

not “specify the duration of the contract, the specific nature of the services Sun would provide, or

perhaps most tellingly, the price of his services.” (R. 95, Order at 11.) These factual findings by the

district court were erroneous. The July 5, 2006 price quotation indicated the commission percentage

that Sun would receive, the international trade definition for DDP outlines the obligations that Sun

would undergo, and the general obligations of the parties appear to be identifiable under the alleged

contract. The only ambiguity concerns the duration of the alleged contract. “However, a contract

‘is sufficiently definite and certain to be enforceable if the court is enabled from the terms and

provisions thereof, under proper rules of construction and applicable principles of equity, to ascertain

what the parties have agreed to do.’” Midland Hotel Corp. v. Reuben H. Donnelley Corp., 515
N.E.2d 61, 65 (Ill. App. Ct. 1987).

        According to Sun, he was to introduce CM to a Chinese manufacturer and be the sole contact

between CM and the manufacturer. The contract would include the sale of aluminum foil products,
No. 09-5123
Mark Naiyu Sun v. CM Products, Inc.
Page 7

DDP to Lake Zurich, and there would be a five percent commission as noted on the July 5, 2006

price quotation. There is a genuine issue of material fact concerning the existence of a contract, the

credibility and weight of the evidence presented by Sun, and whether Sun fulfilled the terms of the

alleged agreement by providing Loften’s web address and submitting multiple quotations to Kelly.

Kelly’s initial response to Sun, denying any contact with Loften, suggests that Kelly recognized that

he was expected to refrain from contacting Loften directly. Further, there is continuing ambiguity

concerning CM’s contact with Loften after Sun provided the quotations to it. The Loften and CM

employees, other than Kelly, who should be knowledgeable about this subject, Leung and Liu, did

not begin their employment until September 2006, after Sun claims that alleged breach of contract

occurred.

        A reasonable juror could credit Sun’s version of the facts and find that there was a reasonably

discernable agreement here, and that Kelly considered himself bound by its terms. It is for the fact-

finder to make such credibility determinations. “Weighing of the evidence or making credibility

determinations are prohibited at summary judgment - rather, all facts must be viewed in the light

most favorable to the non-moving party.” Keweenaw v. Bay Indian Comm. v. Rising, 477 F.3d 881,

886 (6th Cir. 2007) (citation omitted). “It is error for the district court to resolve credibility issues

against the nonmovant: ‘In effect, any direct evidence offered by the plaintiff in response to a

summary judgement motion must be accepted as true. The district errs by granting summary

judgment for defendant where issue of credibility are determinative of the case.’” Centra, Inc. v.

Estrin, 538 F.3d 402, 412 (6th Cir. 2008). CM argues that its relationship with Loften relates to the

provision of “foil coil,” not the food service foil provided in the price quotations. However, Sun’s
No. 09-5123
Mark Naiyu Sun v. CM Products, Inc.
Page 8

initial email to CM pertained to aluminum products in general, and Sun claims that his July 5, 2006

telephone conversation with Kelly related to the sale of aluminum products generally. There is

sufficient evidence for a reasonable fact-finder to conclude that a contract existed, and that Sun was

expected to broker a deal pertaining to aluminum foil products in general as indicated in his initial

email. Accordingly, summary judgment is inappropriate.

D.     Plaintiff’s Claim for Breach of the Implied Covenant of Good Faith and Fair Dealing

       As the district court noted, “Sun’s claim for breach of the implied covenant of good faith and

fair dealing clearly arises out of the alleged breach of contract by CM . . . .” (R. 91, Order, at 13.)

Under Illinois law, the covenant of good faith and fair dealing is not an independent source for relief

but instead “guides the construction of explicit terms in an [already existing] agreement.” Beraha

v. Baxter Health Care Corp., 956 F.2d 1436, 1443 (7th Cir. 1992) (citing Illinois case law). While

understanding the covenant of good faith and fair dealing is relevant in reviewing the alleged

contract between Sun and CM, it is not an independent cause of action. To the extent that Sun

asserts a separate basis of recovery based on a breach of the covenant of good faith and fair dealing,

summary judgment concerning such a claim is appropriate.

                                                 III.

       For the aforementioned reasons, we REVERSE the district court’s grant of summary

judgment on Sun’s breach of contract claim.
No. 09-5123
Mark Naiyu Sun v. CM Products, Inc.
Page 9

       JULIA SMITH GIBBONS, concurring in part and dissenting in part. I concur with

Judge Keith’s conclusions that Illinois state law applies to this matter and that summary judgment

is appropriate on Sun’s covenant-of-good-faith claim, but I respectfully dissent from his conclusion

that a genuine issue of material fact remains with respect to Sun’s breach-of-contract claim. The two

pieces of evidence upon which the majority relies in so finding are insufficient to demonstrate that

a contract exists and inappropriate for consideration as evidence of contract formation. Because the

record indicates that no contract was formed between Sun and CM Products, I would affirm the

district court’s grant of summary judgment to CM Products on this claim.

       Federal Rule of Civil Procedure 56(c) “mandates the entry of summary judgment, after

adequate time for discovery and upon motion, against a party who fails to make a showing sufficient

to establish the existence of an element essential to that party’s case, and on which that party will

bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 321 (1986). Thus, in order

for Sun to prevail at trial on his breach-of-contract claim, he must prove the element that an

enforceable contract existed. As the district court correctly determined, Sun has not and cannot

demonstrate that the parties formed such a contract. See Sun v. CM Prods., Inc., No. 5:07-cv-227-

JMH, 2009 WL 482523 (E.D. Ky. Feb. 25, 2009).

       An oral contract, like a written contract, is enforceable only if there is an offer, acceptance,

and a meeting of the minds regarding the material terms. See Quinlan v. Stouffe, 823 N.E.2d 597,

603 (Ill. Ct. App. 2005) (citation omitted). The “essential terms of the contract must be definite and

certain,” which is satisfied only “if the court is enabled from the terms and provisions thereof, under

proper rules of construction and applicable principles of equity, to ascertain what the parties have
No. 09-5123
Mark Naiyu Sun v. CM Products, Inc.
Page 10

agreed to do.” Id. (internal quotation marks and citations omitted). The majority finds that “the

general obligations of the parties appear identifiable under the alleged contract” and that “[t]he only

ambiguity concerns the duration of the alleged contract.” Slip Op. at 6. I respectfully disagree.

        First, Sun does not present evidence sufficient to establish an enforceable contract. Although

Sun makes numerous unsupported arguments and accusations, the only evidence in the record

pertaining to contract formation is contained in various emails exchanged by the parties. Those

certainly do not reflect offer, acceptance, meeting of the minds, or definite and certain terms.

Moreover, even if we assume that Sun’s baseless allegations could be supported by evidence, his

description of the contract is insufficient to establish one. In response to defendants’ interrogatory

asking the “specific terms” of the alleged contract, Sun stated:

        The terms of the contract were that Sun would convey CM Packaging inquiries to
        Loften Aluminum Foil Industry Co. LTD. Sun International Company would get
        Loften Aluminum Foil Industry Co.’s quotation, would add Sun’s commission fee
        to the quotation, and would send the quotation to CM Packaging. Mark Sun also
        explicitly told CM Packaging that without Sun involvement, CM Packaging could
        neither contact nor deal with the company that Sun introduced.

In contrast, in his brief before this court, Sun provided a different but more detailed description of

the contract at issue:

        The critical procedures for this oral agreement are[:] when Kelly sends his inquiries,
        the contract would begin; when Sun offers the quotation of international trade term
        and Kelly accepts the quotation, the term is implemented; when Kelly sends the
        payment and Sun delivers the goods to CM, the sale contract is completed; when
        Kelly stops to send his inquiries and purchasing order, the obligations of the contract
        do not allow Kelly to contact Sun’s suppliers.

In neither description are the terms “definite and certain” such that a court could enforce the contract.

There are no specifics about terms regarding delivery, duration of the contract, the products to which
No. 09-5123
Mark Naiyu Sun v. CM Products, Inc.
Page 11

the contract applies, the amount of the commission, or when or how payment would be received.

This alleged contract does not outline the parties’ obligations beyond the exchange of quotations,

and, therefore, does not demonstrate a “meeting of the minds as to the terms of the agreement.”

Most importantly, the commission fee—a standard element of a broker’s contract—was not agreed

upon before the alleged execution of that contract began when Sun’s email provided the first price

quotations.

       Second, the evidence upon which Sun and the majority rely cannot properly be considered

as evidence of the formation of the alleged contract. The majority first finds that the price quotation

sent by Sun to Kelly on July 5, 2006, that stated that there was a five percent commission for the

order is evidence of a contract. Slip Op. at 6. However, the price quotation cannot provide evidence

of what terms were agreed upon in any oral contract entered into by Kelly and Sun by phone earlier

that day. More importantly, under Illinois law, the acts of a principal and not those of an agent (such

as a broker) create the agency relationship, and it is the agent’s burden of proof to demonstrate that

relationship using evidence other than his own actions. See First Am. Title Ins. Co. v. TCF Bank,

676 N.E.2d 1003, 1008 (Ill. App. Ct. 1997); Granite Props. Ltd. P’ship v. Granite Inv. Co., 581
N.E.2d 90, 92 (Ill. App. Ct. 1991); Hajeck v. Wyrick, 463 N.E.2d 1348, 1352 (Ill. App. Ct. 1984).

Consequently, Sun cannot use evidence of his own actions that post-date the formation of the

contract as proof of the existence of that contract.

       The majority also relies on the use of the trade term “DDP” in emails between Kelly and Sun

as evidence that the parties agreed to certain obligations with respect to delivery and conduct. Slip

Op. at 6. It is common for businesses to solicit price quotations from different distributers, and the
No. 09-5123
Mark Naiyu Sun v. CM Products, Inc.
Page 12

use of trade language in doing so is not itself evidence of the existence of a contract or the terms of

an alleged contract. Neither the use of standard trade terms nor Sun’s email on their own provide

sufficient evidence of the essential terms of the alleged contract. Sun offers no other objective

evidence regarding the formation of the contract.

       Because Sun failed to produce sufficient evidence that he and CM Products agreed to the

material elements of the alleged contract, he failed to establish the essential elements of his breach-

of-contract claim.

       Therefore, I respectfully dissent and would affirm the district court’s grant of summary

judgment.