Court Opinion

ID: 4096861
Source: CourtListenerOpinion
Date Created: 2016-11-09 20:00:32.648871+00
Date Added: 2024-06-11T07:45:31.740984
License: Public Domain

Not for Publication in West's Federal Reporter

          United States Court of Appeals
                       For the First Circuit

No. 16-1007

                         ADA SOLUTIONS, INC.,

                                Plaintiff,

                                     v.

               CHUCK MEADORS; CHUCK MEADORS, INC.,

         Defendants/Third-Party Plaintiffs, Appellants,

                                CMI, INC.,

                       Third-Party Plaintiff,

                                     v.

              CONTINENTAL STRUCTURAL PLASTICS, INC.,

                 Third-Party Defendant, Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Douglas P. Woodlock, U.S. District Judge]
        [Hon. Marianne B. Bowler, U.S. Magistrate Judge]

                                  Before

                    Lynch, Lipez, and Thompson,
                          Circuit Judges.

     Timothy K. Cutler, with whom Cutler & Wilensky LLP was on
brief, for appellants.
     Thomas H. Walters, with whom Howard & Howard Attorneys PLLC
was on brief, for appellee.

                        November 9, 2016
              THOMPSON, Circuit Judge.           This case arises from what the

district      court    characterized       as     "the        worst-papered     set   of

arrangements [it had] ever seen."               Chuck Meadors — along with his

company, Chuck Meadors, Inc. (collectively, Meadors) — appeals

from    the    entry   of    summary    judgment       in     favor   of   Continental

Structural Plastics, Inc. (CSP) and from the denial of his motion

for summary judgment.          We reverse in part and affirm in part.

              Because we write primarily for the parties and the

district court judge — all of whom are familiar with the facts —

we offer only a brief summary of the relevant background before

cutting to the chase.             In August 2005, Meadors entered into a

written agreement with ADA Solutions, Inc. (ADA), under which

Meadors       acted    as     ADA's     agent    in      negotiations       with      its

suppliers.       This agreement specified the compensation Meadors

received from ADA for his services.               Shortly after executing this

contract, Meadors entered into a written agreement with CSP, an

ADA supplier, in which CSP agreed to pay Meadors a 5% commission

on all sales by CSP to ADA.             ADA says it was unaware Meadors had

made this deal until later. At first, everything went smoothly.

              That all changed in June 2006, when CSP requested a

meeting with ADA.           At this meeting, CSP indicated that its price

would    be    lower   if    it   did   not     have     to    pay    Meadors   the   5%

commission.       Upon learning this news, ADA decided that Meadors

should no longer accept the commission from CSP while acting as

                                         - 3 -
ADA's agent. From that point until ADA terminated Meadors in 2012,

CSP did not pay Meadors his commission under their contract.

            Meadors   filed   suit    against   CSP,   alleging   breach   of

contract (among other claims).1         The parties filed cross-motions

for summary judgment, and the district court entered summary

judgment in CSP's favor on the ground that Meadors had waived his

contractual right to the commission from CSP.              Meadors timely

appealed.

            Before addressing the district court's waiver analysis,

we first pause to explain why we need not concern ourselves with

third-party-beneficiary principles.          Although CSP had not asserted

its status as a third-party beneficiary below and neither party

discussed it in the summary judgment papers, the district court

concluded in its decision that CSP was an intended third-party

beneficiary of an agreement between ADA and Meadors, which stated

that Meadors would no longer accept a commission from CSP.2                The

     1 The procedural history of this case is more complex than
our summary lets on. We need not dwell on the details, and we
refer the interested reader to the district court's decision, ADA
Sols., Inc. v. Meadors, 98 F. Supp. 3d 240, 251-52 (D. Mass. 2015),
for a full recap.
     2 Meadors characterizes CSP's third-party-beneficiary status
as an affirmative defense.     By contrast, CSP asserts that the
district court merely applied "a 'third party beneficiary' legal
analysis." (Emphasis omitted.) But cf. First Nat'l State Bank of
N.J. v. Commw. Fed. Sav. & Loan Ass'n of Norristown, 610 F.2d 164,
170 (3d Cir. 1979) (concluding that a bank could not argue that it
was a third-party beneficiary on appeal because the bank "did not
set forth this affirmative defense in its pleadings as required by

                                     - 4 -
district court then stated that "CSP may enforce that agreement as

a third-party beneficiary, and may pursue its [defenses] of waiver

and novation," and it ultimately concluded that Meadors had waived

his right to the CSP commission.3

          The district court assumed that it could only address

the issue of waiver after first determining that CSP was a third-

party beneficiary of an agreement between Meadors and ADA.     The

primary focus of the parties' briefing on appeal is the propriety

of the district court's sua sponte determination that CSP was in

fact a third-party beneficiary of such an agreement.       But the

third-party-beneficiary analysis is unnecessary under Ohio law.4

Meadors's right to the commission was based on the written contract

between CSP and Meadors.   If Meadors waived that contractual right

expressly or by inconsistent conduct, CSP would be entitled to

enforce that waiver, regardless of whether it was a third-party

beneficiary of any agreement between Meadors and ADA.    See Chubb

v. Ohio Bur. of Workers' Comp., 690 N.E.2d 1267, 1269 (Ohio 1998)

("A waiver may be enforced by the person who had a duty to perform

and who changed his or her position as a result of the waiver.");

Fed. R. Civ. P. 8(c)"). We need not enter this fray because our
disposition of this appeal focuses solely on CSP's waiver defense.
     3 Because of its conclusion on the issue of waiver, the
district court did not address CSP's novation defense.
     4 The district court found — and the parties agree — that Ohio
law applies to this dispute.

                               - 5 -
CosmetiCredit, L.L.C. v. World Fin. Network Nat'l Bank, 24 N.E.3d
762, 772 (Ohio Ct. App. 2014) ("When a party to a contract offers,

by word or action, a waiver of certain duties under the contract,

other parties who change their position as a result of the waiver

may enforce the waiver.").      Therefore, we proceed to analyze the

district    court's    conclusion   that    CSP   is   entitled   to   summary

judgment on the ground that Meadors waived his contractual right

to the CSP commission.5

            In conducting our de novo review of the district court's

summary judgment ruling, see Matusevich v. Middlesex Mut. Assur.

Co., 782 F.3d 56, 59 (1st Cir. 2015), we conclude that genuine

disputes of material fact preclude summary judgment on the issue

of waiver.     "A waiver is a voluntary relinquishment of a known

right."     Chubb, 690 N.E.2d at 1269; see also CosmetiCredit, 24
N.E.3d at 772.     Waiver of a contractual right can be accomplished

expressly     or      through   a    party's       inconsistent        conduct.

CosmetiCredit, 24 N.E.3d at 772.            In either case, "[t]he party

asserting the existence of a waiver must prove the waiving party's

clear, unequivocal, and decisive act to waive."            Id.

            Typically, the question of whether a waiver has occurred

is for the factfinder to determine.          See id. at 772-73 ("Whether

     5 In doing so, we assume that CSP adequately developed in its
appellate brief the argument that it is entitled to summary
judgment on the basis of waiver alone.

                                    - 6 -
a party's inconsistent conduct amounts to a waiver involves a

factual determination to be resolved by the trier of fact."); Palek

Corp. v. A.P. O'Horo Co., No. 05 MA 141, 2007 WL 752159, at *4

(Ohio Ct. App. 2007) (unpublished decision) ("Whether or not there

has been waiver of all or certain terms of a prior written

agreement is a question of fact for the trier of fact."           (quoting

Vocke v. Third Nat'l Bank & Trust Co., 267 N.E.2d 606, 617 (Ohio

Mun. Ct. 1971))); cf. Pottschmidt v. Klosterman, 865 N.E.2d 111,

117 (Ohio Ct. App. 2006) ("[I]t is for the trier of fact to

determine whether . . . a waiver [of a no-oral-modification

provision] occurred.").     This case fits snugly within this general

rule.

            In its discussion of the factual background of this case,

the district court stated that, either during or shortly after the

June 2006 meeting between ADA and CSP, John Flaherty, ADA's

president, issued Meadors an ultimatum: he could either receive

payment under his agreement with ADA or continue to receive his

commission from CSP; Meadors could not receive both.       According to

the     district   court,   "[f]aced     with   this   choice,     Meadors

relinquished [his] claim to the five percent commission on CSP's

sales, opting instead to receive a payment as the purchasing agent

of ADA."     The district court concluded that "[t]his knowing and

voluntary choice [was] sufficient to effect a waiver of the right

to continue to receive commission payments from CSP."            We cannot

                                 - 7 -
go along with this reasoning because its factual premise was

disputed.

             It was not an undisputed fact that Meadors was presented

with an ultimatum and chose to forgo his contractual right to a

commission from CSP.            At his deposition, Meadors testified that,

at some point after the June 2006 meeting between ADA and CSP, he

was told by Scott Ober, vice president and co-owner of ADA, that

he could no longer accept the commission from CSP.                      According to

Meadors, he protested to Ober, "You can't do that" because "I have

a legal and binding contract" with CSP.                 Ober was unmoved, telling

Meadors: "I did it.            It's over."     Similarly, while acknowledging

that he was aware that he was no longer receiving a commission,

Meadors also testified that he never volunteered, agreed, or

consented to the cessation of the CSP commission.                       Viewing the

facts in the light most favorable to Meadors — as we are required

to do when analyzing the grant of summary judgment in favor of

CSP, see Prescott v. Higgins, 538 F.3d 32, 39 (1st Cir. 2008) — a

jury     could    conclude       that   Meadors     did    not     expressly     waive

his contractual right to the CSP commission.

             We    reach       the   same   conclusion      with    respect     to    a

waiver    arising       from    inconsistent       conduct.        Although    it    is

undisputed       that    Meadors     continued     to     work   for    ADA    without

receiving    his    5%     commission       from   CSP    for    over   five   years,

he represents in his affidavit that he "repeatedly voiced [his]

                                        - 8 -
objections to the unilateral termination of [his right to the

CSP commission] to [David] Murtha[, the plant manager of one of

CSP's facilities,] as well as other managers at CSP."6           Along

similar lines, Meadors testified at his deposition that, although

he did not formally demand his commission from CSP, he raised the

issue of nonpayment of the commission with Murtha on more than one

occasion.     Meadors also broached the issue with John Berwald,

another employee of CSP.    The determination of whether a party has

waived a contractual right by inconsistent conduct is generally

left to the factfinder, CosmetiCredit, 24 N.E.3d at 772-73, and,

on these facts, a jury could reasonably conclude that CSP has not

carried its burden to show that Meadors's conduct represented the

requisite "clear, unequivocal, and decisive act to waive," id. at

772.7

        6
       CSP argued below that Meadors's affidavit was incompetent
summary judgment evidence under the sham-affidavit doctrine. See
generally Escribano-Reyes v. Prof'l HEPA Certificate Corp., 817
F.3d 380, 384-87 (1st Cir. 2016).     The district court did not
address this argument in its decision (or anywhere else, as far as
we can tell), and CSP does not press it before this court.
Therefore, the argument is not properly before us.     See United
States v. Hogan, 722 F.3d 55, 61-62 (1st Cir. 2013).
        7
       In staking out a contrary position, CSP relies upon the
following exchange from Meadors's deposition:
        Q.   Well, from July of 2006 forward, you continued to
             perform a contract with ADA that did not include
             the five percent that was part of the earlier
             arrangement, correct?
        A.   Correct.

                                - 9 -
            For these reasons, the district court erred in granting

summary judgment in CSP's favor on the ground that Meadors waived

his contractual right to a commission from CSP.8     Meadors argues

that this conclusion entitles him to the entry of judgment in his

favor.    We disagree.

            The evidence in this record is not one sided.9   In their

respective depositions, Flaherty and Ober both testified that ADA

     Q.     And you did so knowingly and voluntarily? I mean,
            you knew that you weren't getting the five percent
            during all those years, 20 -- end of 2006, 2007,
            '08, '09, '10, '11, you knew that, correct?
     A.     Correct.
According to CSP, this passage establishes that Meadors made a
"knowing and voluntary choice" to waive his right to receive the
commission from CSP. We think that is not necessarily so, and a
jury could find otherwise.
     Although Meadors was asked whether he continued to perform
"knowingly and voluntarily," the examiner posed an additional
question before Meadors could respond. That question simply asked
whether Meadors knew he was not getting the commission while he
continued to perform. An affirmative answer to that question does
not establish beyond genuine dispute that Meadors voluntarily
relinquished — expressly or by inconsistent conduct — his right to
the commission, especially in light of the evidence that his
continued performance was punctuated by repeated objections to
CSP.
     8 Although its motion for summary judgment offered several
defenses, CSP has pressed only the waiver defense before this
court. Any arguments relating to the other defenses, therefore,
are not properly before us. See Hogan, 722 F.3d at 61-62.
     9 Where, as here, parties have cross-moved for summary
judgment, "we evaluate each motion independently and determine
'whether either of the parties deserves judgment as a matter of
law on facts that are not disputed.'" Matusevich, 782 F.3d at 59
(quoting Barnes v. Fleet Nat'l Bank, N.A., 370 F.3d 164, 170 (1st
Cir. 2004)).

                               - 10 -
gave Meadors the ultimatum discussed by the district court and

that Meadors agreed to continue to work for ADA and to forgo

collection of the CSP commission.    Additionally, there is evidence

that might cast doubt on Meadors's assertions that he raised the

issue of nonpayment of his commission with Murtha and Berwald; in

an interrogatory response, Meadors admitted that "no one on behalf

of [Meadors] ever contacted anyone at CSP during the years 2007,

2008, 2009, 2010, or 2011 relative to the CSP payment agreement."

Similarly,   Flaherty   and   Ober   testified   that   Meadors   never

complained to them about CSP's nonpayment of the commission, and

Ober further testified that, to his knowledge, Meadors lodged no

such complaint with anyone at CSP.       Moreover, even if Meadors did

voice his objections to Murtha and Berwald, that circumstance would

not, in itself, necessarily preclude a factfinder from concluding

that, based on his continued performance for over five years,

Meadors waived his right to the commission by his inconsistent

conduct.

           Because of the existence of genuine issues of material

fact as to whether Meadors waived the commission expressly or by

inconsistent conduct, Meadors was not entitled to summary judgment

in his favor.    The district court properly denied his summary

judgment motion.10

     10Of course, the district court did not deny Meadors's motion
for summary judgment because a genuine issue of material fact

                                - 11 -
          In   sum,    the   fact-intensive   nature   of   the   waiver

determination under Ohio law cuts both ways in this case; on this

conflicting evidentiary record, the factfinder must resolve the

question of whether Meadors waived his contractual right to receive

a commission from CSP.11     Accordingly, neither party was entitled

to summary judgment.     Each side shall bear its own costs on this

appeal.

               Reversed in part and affirmed in part.

existed on the question of waiver; instead, the judge reached the
opposite conclusion and entered summary judgment for CSP on the
basis of waiver. Nevertheless, we are free to affirm the district
court's summary judgment ruling on any grounds supported by the
record, see Cordero-Suárez v. Rodríguez, 689 F.3d 77, 81 n.4 (1st
Cir. 2012), and we do so here.
     11 CSP's alternative affirmative defense of novation is
entirely dependent upon the same factual ambiguities entangled in
the waiver analysis and likewise can only be resolved by a
factfinder.

                                 - 12 -