Court Opinion

ID: 769427
Source: CourtListenerOpinion
Date Created: 2012-04-18 09:58:53+00
Date Added: 2024-06-11T17:55:42.990114
License: Public Domain

218 F.3d 770 (7th Cir. 2000)
TINGSTOL COMPANY, Plaintiff-Appellee,v.RAINBOW SALES INCORPORATED, Defendant-Appellant.
No. 00-1163
In the  United States Court of Appeals  For the Seventh Circuit
Argued June 2, 2000Decided July 7, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 97 C 8867--William J. Hibbler, Judge.
Before FLAUM, EVANS, and WILLIAMS, Circuit Judges.
EVANS, Circuit Judge.

1
This case requires  interpreting what a contract meant by the word  "orders" and whether something called a "blanket  order" qualified.

2
Tingstol Company of Chicago manufactures printed  circuit boards, a car part. In 1983 Rainbow Sales  Incorporated became Tingstol's exclusive sales  agent in Florida, which entitled Rainbow to a 5  percent commission on all of Tingstol's sales  there. Under the terms of their 1993 written  contract, either side could pull out of the deal  with 60 days notice. Tingstol gave Rainbow 60  days notice to end the relationship in November  1996.

3
The contract required Tingstol to pay Rainbow  "the commissions provided for herein only on  orders received by [Tingstol] prior to the  termination date." Before Rainbow's termination,  Tingstol's biggest Florida customer, United  Technologies Automotive (UTA), placed a "blanket  order." After the termination, UTA executed a  "release" and it was only then that UTA paid  Tingstol and Tingstol shipped the circuit boards  to UTA.

4
Rainbow demanded that Tingstol fork over  commissions for the sales that followed the  blanket order. Going to federal court under  diversity jurisdiction, 28 U.S.C. sec. 1332  (a)(1), Tingstol sought a declaratory judgment  that it owed Rainbow nothing. District Judge  William J. Hibbler sided with Tingstol on summary  judgment, and we now take up Rainbow's appeal.

5
We review de novo the district court's summary  judgment order, mindful that summary judgment is  particularly appropriate in cases involving the  interpretation of written contracts. Independent  Constr. Equip. Builders Union v. Hyster-Yale  Materials Handling, Inc., 83 F.3d 930, 932-33  (7th Cir. 1996); Omnitrus Merging Corp. v.  Illinois Tool Works, Inc., 628 N.E.2d 1165, 1168  (Ill. App. Ct. 1994). A contract is unambiguous  if it is susceptible to only one reasonable  interpretation. Hyster-Yale, 83 F.3d at 933;  Omnitrus, 628 N.E.2d at 1168. Whether a contract  is clear or ambiguous is a matter of law for the  court, but the meaning of any ambiguity is a  question of fact for a jury. Atlantic Mut. Ins.  Co. v. Metron Engr. and Constr. Co., 83 F.3d 897,  901-02 (7th Cir. 1996); Omnitrus, 628 N.E.2d at  1168. Extrinsic evidence is considered only if  the contract itself is ambiguous. Metron, 83 F.3d  at 901-02; Omnitrus, 628 N.E.2d at 1168.

6
Rainbow gives two reasons why it deserves  commissions (or at least a trial) for the post-  termination Tingstol-UTA transaction that  followed UTA's pre-termination blanket order.  First, it contends that the meaning of "orders"  in the contract is ambiguous, does not  necessarily connote a binding sale, and requires  resolution by a trier of fact. Second, even if  only a binding transaction constitutes an order,  Rainbow says the blanket order at issue was  binding and thus qualifies as an order that  generates commissions.

7
Neither side tarries long--and neither will we--  over whether by "orders" the contract could have  meant anything less than a firm commitment to  buy. The contract's failure to define "orders"  does not automatically render the term ambiguous.  Sales agents generally earn commissions when  there is a sale, not when a customer expresses a  vague or tentative interest in a product.  Webster's Third New International Dictionary  defines this use of order as "a commission to  purchase, sell, or supply goods a direction in  writing to furnish supplies." Black's Law  Dictionary says "an 'order' is a direction to pay  and must be more than an authorization or  request." Common understanding of the term is the  same. When you place an order at a restaurant, or  at a hardware store, or through a web site, you  pledge to pay for the goods that the seller will  provide. There may be circumstances when you may  return the food or the merchandise and get your  money back, but there is nothing ambiguous or  exploratory about the order itself. Courts that  have interpreted similar termination clauses have  held that "orders" means enforceable contracts.  See Chicago Fineblanking Corp. v. D.J. Cotter &  Co, 1996 U.S. Dist. LEXIS 21882, *12-13 (E.D.  Mich. 1996), aff'd, 1998 U.S. App. LEXIS 639 (6th  Cir. 1998); Robich v. Patent Button Co., 417 F.2d 890, 892-93 (6th Cir. 1969). Similarly, in this  context the only reasonable interpretation of  "orders" is that it means a definite commitment  by the customer to buy.

8
The crux of this case is whether UTA's "blanket  order" constitutes a binding sale. If the blanket  order really was an enforceable sale, Rainbow  deserves commissions; if not, Rainbow gets zilch.  Rainbow, naturally, contends that the blanket  order was the all-important moment and that the  "release" was merely a timing device that  controlled payment and delivery. Tingstol,  unsurprisingly, pooh-poohs the significance of  the blanket order and argues that the release is  what locked UTA into buying and Tingstol into  selling at a certain price.

9
The blanket order itself expressly limited UTA's  liability to the parts it scheduled for release.  In other words, UTA had no obligation to buy  until it executed a release, and in this case the  release came after Rainbow was cut out as  Tingstol's sales agent.

10
The deposition testimony also is consistent on  this point. John P. Zopp, Jr., Tingstol's  president and chief executive officer, said that  the toughest part of getting an order is setting  the price, and the price is determined in the  release. Zopp said "the only thing that counts in  this business is the release." William M. Shaw,  UTA's purchasing manager, said that UTA's  liability was limited to the amount of circuit  boards the company ordered in the release. And  Charles M. Plotts, Rainbow's sole shareholder,  said in his deposition that he received  commissions only after Tingstol shipped the  parts--and Tingstol shipped the parts only after  they were scheduled for release. He characterized  a blanket order as "the carrot that [UTA] waves  in front of you. 'This is what we think we're  going to use.' You jump on that. Business is  business." Asked whether the blanket order was a  commitment by UTA to buy, Plotts answered, "No.  It's their way out when they want to."

11
Because it did not bind UTA and there was no  element of exclusivity, the blanket order was not  a requirements contract. Because there was no  consideration, the blanket order was not an  options contract, either. What purpose the  blanket order served and why Tingstol bothered  with something it claimed was so superfluous is  puzzling, but unraveling that mystery is  unnecessary to resolving this case. Rainbow only  deserves commissions if the blanket order was a  firm commitment by UTA to buy. Based on the  language of the blanket order itself and the  deposition testimony of Zopp, Shaw, and Plotts,  there is no genuine issue over the material fact  that the blanket order was not binding on UTA.

12
This case is another example that trust and  long-standing personal relationships are no  substitute in the business world for a well-  written contract. Zopp and Shaw testified that  Rainbow was canned because Plotts was not  providing good service. Plotts, on the other  hand, thought that because he first brought in  UTA as a Tingstol customer he deserved  commissions from all subsequent Tingstol sales to  UTA "until hell freezes over." It is unclear  whether Plotts' service truly had deteriorated or  whether Zopp turned on his old friend to earn a  few extra bucks by cutting out the middle man.  What is clear is that the contract only provided  sales commissions for pre-termination orders,  that orders means binding sales, and that a  blanket order was not a binding sale.  Consequently, we AFFIRM the district court's grant  of summary judgment.