Opinion
CIVIL NO. 95-5822 (JBS).
September 30, 1999.
Sanford F. Schmidt, Esq., Medford, New Jersey, Steven D. Weinstein, Esq., Elizabeth S. Washko, Esq., Blank Rome Comisky McCauley LLP Cherry Hill, New Jersey and, Neal A. Jacobs, Esq., Cherry Hill, New Jersey, Attorneys for Defendants Advanced Telecommunication Network, Inc. and Gary Carpenter.
Paul R. Melletz, Esq., Cherry Hill, New Jersey, Attorney for Defendant David Allen.
Table of Contents
I. INTRODUCTION 3
II. FACTUAL BACKGROUND 5
A. Background Concerning Wats and ATT 5
B. Relationship Between Wats and ATN 8
C. The Complaint 17
III. DISCUSSION 18
A. Summary Judgment Standard 18
B. Count IV: Breach of Contract 20
1. Whether the Merger Clause of the 20 Three-Party Agreement Bars This Claim
2. Whether the Alleged Oral Contract is 27 Barred by the Statute of Frauds
C. Counts I and III: Restitution and 33 Quantum Meruit
D. Count II: Accounting 35
E. Count V: Fraud 36
IV. CONCLUSION 41
OPINION
I. INTRODUCTION
The instant case involves a dispute about the existence or nonexistence of a contract between two resellers of telecommunications services. Defendant Advanced Telecommunications Network, Inc. ["ATN"] is in the business of providing telecommunications services, in particular long-distance and "800" service, to its business and residential customers. (Carpenter Decl. ¶ 2.) It purchases telecommunications services in large volumes, from carriers such as ATT, MCI, and Sprint, for substantial discounts, and then it resells those services to its customers, passing on a portion of the discounts. (Id.) ATN is considered an "aggregator" or "reseller" of telecommunications services. (Id.) Defendant Gary Carpenter is its president and CEO. (Id. at ¶ 1.) Defendant David Allen is one of ATN's principals. (Freeman Aff. ¶ 35.) Plaintiff WATS/800 ("Wats"), prior to July 1994, was also an "aggregator" or "reseller of ATT telecommunications services, providing long distance and "800" service to its business and residential customers and passing on some of the discounts. (Freeman Aff. ¶ 3.) Damian Freeman is Wats' president, and he was at all times relevant to this litigation. (Id. at ¶ 1.) Wats is now a bankrupt company. (Carpenter Decl. ¶ 3; Freeman 11/18/97 Dep. at 16:6-14.)
Wats alleges that Wats and ATN entered into an agreement whereby Wats would transfer its customers to ATN and ATN would pay off Wats' debt to ATT and would additionally pay Wats commissions on the gross monthly revenues generated by the transferred customers. Though the customers were transferred and the debt was paid to ATT, no commissions have been paid. As a result of what Wats alleges was fraud and breach of contract, Wats believes that it is owed at least $2.3 million in commissions. More specifically, the Complaint alleges claims for unjust enrichment, an accounting, quantum meruit, breach of contract, and fraud. ATN, on the other hand, argues that the contract provided that the debt to ATT would be paid in exchange for the customers, but the parties never agreed to the payment of commissions, such that ATN's obligation to Wats has been fulfilled.
Now before the Court is defendants' motion for summary judgment. Defendants argue that the statute of frauds and a merger clause in a three party agreement which included ATN and Wats bar a breach of contract claim, that because of the three party agreement, there can be no implied contract claims, that an accounting has already been provided, and that there is no evidence of fraud. For the reasons herein stated, summary judgment will be granted to defendants Carpenter and Allen on Counts IV and V, but summary judgment will otherwise be denied.
II. FACTUAL BACKGROUND
Because this is a summary judgment motion, the facts here are those as found in affidavits, certifications, and other offered evidence, taken in a light most favorable to the plaintiffs.
A. Background Concerning Wats and ATT
In the early 1990s, ATT was becoming concerned about "800" number portability. Prior to that time, "800" customers could not take their existing "800" numbers — along with those numbers' market value — with them if they switched carriers. (Carpenter Decl. ¶ 4.) When "800" numbers began to be portable from one carrier to another in the early 1990s, ATT devised a plan to retain its market share. (Id. at ¶ 5.) ATT encouraged its customers (the aggregators or resellers who sold to end-users) (Id. at ¶ 7) to commit to substantial volumes of annual or monthly usage in exchange for substantial bonuses and discounts. (Id. at ¶ 5.) If the customer failed to utilize the committed amounts, it would be charged back for that failure, dollar for dollar. (Id.)
ATN and Wats both had such plans with ATT. (Id. at ¶ 6.) These plans were known as CSTP plans. Prior to July 1994, Wats had 20 CSTP plans with ATT, each of which would entitle Wats to receive a $1 million bonus from ATT for the commitments made under the plans, for total of $20 million. (Freeman Aff. ¶ 4.) In connection with each of those commitments, ATT required Wats to supply a letter of credit for each plan as collateral (Gutzkow Certif. ¶ 8), and Wats accordingly provided ATT with twenty letters of credit, obtained by Capital Asset Management, Inc. (Freeman Aff. ¶ 4), and drawn on the First National Bank of Chicago (id.) in the amount of $562,500 each. (Carpenter Decl. ¶ 17.) Wats paid Capital Asset Management, Inc. approximately $700,000 for its service but otherwise had no role in the issuance of the letters of credit. (Freeman Aff. ¶¶ 4, 5.)
As of June 1994, ATT was becoming concerned about Wats' account, as Wats was obligated to ATT for $13,862,500 in usage but had only used $5,234,193.56. (Gutzkow Certif. ¶ 10.) Initially, ATT applied some of Wats' earned bonuses to offset the usage delinquencies, transferring the signing bonuses on eight of the twenty plans to cover the deficit. (Id. at ¶ 11.) ATT had already paid Wats $4 million in bonuses (Freeman Aff. ¶ 5), so after applying $8 million in bonuses to cover the deficit, only $8 remained unpaid.
In reviewing Wats' twenty CSTP plans, ATT sought to confirm the validity of the letters of credit that Wats had submitted (Gutzkow Certif. ¶ 12). First National Bank of Chicago sent a letter to ATT advising that all twenty of the letters of credit were fraudulent. (Id.) In July of 1994, ATT threatened to condense all of Wats' plans into one plan, CSTP 1805, despite Wats' willingness to provide replacement letters of credit. (Freeman Aff. ¶ 6.) Wats sued ATT in federal court in Indiana to prevent this condensation, and ATT counterclaimed that failure to provide enforceable Letters of Credit constituted breach of contract and entitled ATT to recoup the bonuses already credited to Wats' accounts. (Id. at ¶ 7; Gutzkow Certif. ¶ 13.) The court refused Wats' request for injunctive relief (Freeman 11/18/97 Dep. at 95:5-12; Carpenter Decl. ¶ 11), and ATT did condense all of Wats' plans to CSTP (Customer Service Term Plan) 1805. (Freeman Aff. ¶ 8.) ATT also stopped providing Wats with monthly usage reports and stopped paying Wats discounts. (Id.; Gutzkow Certif. ¶ 15; Carpenter Decl. ¶ 9.) ATT refused to permit Wats to place any additional customers on CSTP 1805. (Freeman 11/18/97 Dep. at 184:16-17; Carpenter Decl. ¶ 12.) Though it is agreed that Wats continued to market its services and obtain customers, called LSTPs and CustomNets (Carpenter Decl. ¶ 12), Wats maintains that it did not attempt to add any LSTP or CustomNet customers to CSTP 1805. (Freeman Aff. ¶ 9.) ATT demanded that Wats provide "good" collateral and pay for all usage for which it contracted. (Gutzkow Certif. ¶¶ 15-16.) The new LSTPs and CustomNet end-user customers were not placed into CSTP 1805. (Freeman Aff. ¶ 12; Carpenter Decl. ¶ 12.)
Although not of direct relevance to the present motions, it is noted that the fraudulent letters of credit were created in a scheme by Scott Holmberg and Slobodan Lunic (a/k/a Don Anderson) to defraud WATS/800, according to guilty plea entereed by Holmberg in the case of United States v. Scott Holmberg , Cr. No. 98-653-1 (HDL) (N.D.Ill., filed May 13, 1999) [attached to Letter of Sanford F. Schmidt, Esq., dated Aug. 5, 1999].
B. Relationship Between Wats and ATN
Wats maintains that "because of ATT's superior position and because of its actions as described above, WATS felt the only practical way out of its dilemma . . . was to sell its customer base to another aggregator or reseller" (Freeman Aff. ¶ 13), and, towards that end, it attempted to transfer CSTP 1805 customers to One Stop Financial and Winback and Conserve, Inc. (Id. at ¶ 14.) ATT would not approve either of those entities. (Id.) Wats then alerted Joseph Kearney, an independent agent, to its interest in transferring the customers and requested that Kearney assist it in locating an interested buyer. (Carpenter Decl. ¶ 14; Freeman 11/18/97 Dep. at 126:20 — 128:6.) Kearney brought Freeman, Wats' president, into contact with Carpenter, ATN's president, and the two began negotiations concerning the sale of the Wats traffic to ATN. (Freeman Aff. ¶ 15.) Carpenter told Freeman that he had a "special" relationship with ATT and that he would get ATT to approve the transfer, without which the transaction could not occur. (Id.) On August 3, 1994, Freeman provided a letter to ATT authorizing ATT to release information to ATN for the purpose of evaluating Wats. (Freeman Aff. ¶ 16.) That authorization included CSTP numbers, run dates, bad debt, commitment levels, relationship with ATT, complaints from customers, FCC complaints, and other pertinent information, including the lawsuit between ATT and Wats. (Id.)
Between August and October 1994, Carpenter and Freeman talked about the sale of the Wats customer base, at first discussing a 15% commission on customer revenues. (Id. at ¶ 17.) Carpenter indicated that the form he liked to use for the transfer, for tax purposes, was an Agency and Marketing Agreement (AMA), under which Wats would be paid monthly a specific percentage of the monthly gross revenue generated by the customers transferred. (Id. at ¶ 18.) According to Wats, the parties eventually reached an oral agreement that ATN would pay Wats 12% of the gross monthly revenues generated, reduced from 15% because Carpenter had to pay Kearney a larger commission than originally anticipated. (Id.)
On October 10, 1994, Carpenter sent Freeman a mutual non-disclosure agreement to sign and send back. (Id. at ¶ 19.) The cover letter attached to the proposed agreement explained that Carpenter was working on the letter of intent and the agency agreement, both of which would be given to Freeman within a few days. (Id.) The letter also reported that due diligence through ATT showed that the current traffic on Wats' CSTP 1805 was worth about $1.2 million per month. (Id. and Ex. C.)
In October, both Carpenter and Freeman attended a reseller's convention in Boca Raton, Florida, where the two met to discuss the terms of the agreement. The two agreed that for tax purposes there would be an AMA and that payments would be 12% of gross revenues from the customers transferred, and additionally that Carpenter's attorneys would draft their usual AMA memorializing those terms. (Id. at ¶ 20.) Freeman believed that the next step was to draft an agreement. (Id. at ¶ 21.) Both parties also understood that a "Transfer of Service Agreement" ("TSA") would have to be approved by ATT before all of the customers under the former plan would be formally transferred to the new plan. (Id.)
In late October, Wats learned that ATT required payment to satisfy its claims against Wats in the Wats-ATT litigation, as well as a condition that Wats dismiss its claims against ATT, before ATT would approve the transfer. (Id. at ¶ 22.) According to Wats, Freeman ultimately agreed that $800,000 out of the commissions to be paid to Wats could be paid by ATN directly to ATT to be applied towards any amounts Wats was determined to owe ATT in the Wats-ATT litigation, but Freeman would not agree to dismiss Wats' claims. (Id. at ¶ 23.) According to ATN, the $800,000 was not to be paid out of any commissions, but rather constituted the entire payment for the Wats' customer base that was worth $1.2 million. (Carpenter Dec. ¶ 19 and Ex. B.)
On November 7, 1994, the parties signed a "Three-Party Agreement," drafted by ATT's counsel. (Freeman Aff. ¶ 24.) While Wats was represented by counsel in the ATT litigation during this time, it asserts that it was not represented by counsel with respect to the Three-Party Agreement. (Id.) That agreement provided that Wats would transfer to ATN its "CSTP Plan 1805," in exchange for which ATN would pay $800,000 to ATT, on behalf of Wats, to satisfy a portion of Wats' indebtedness to ATT. (Carpenter Decl. ¶ 18 and Ex. A; Freeman Aff. ¶ 24.) The parties' thereafter performed their obligations under the Three-Party Agreement: on November 7, 1994, Wats executed the TSA as to the CSTP Plan 1805 and also gathered the documents for transferring the LSTP and CustomNet customers who were not in CSTP Plan 1805, and ATN paid ATT the $800,000.
Wats and ATN signed the Three-Party Agreement (Carpenter Decl. at ¶ 21); ATT did not sign it, but did act in accordance with it. Though Wats did not actually consult with counsel before signing the Three-Party Agreement, it had the opportunity to do so. (Defs.' Rule 56.1 Statement of Facts ¶ 37.) Freeman did, however, read the Three-Party Agreement and insist on changes to the section of the agreement relating to releases of liability and other changes before signing. (Id. at ¶¶ 38, 39.)
The Three-Party Agreement contains the following language:
Except to the extent that an applicable tariff applies, this Agreement and the TSA are the entire and complete agreement of the parties relating in any way to the subject matter hereof. No statements, promises or representations have been made by any party to any party, or are relied upon, and no consideration has been or is offered, promised, expected or held out, other than as stated in this Agreement. There are no oral or written collateral agreements as to the subject matter hereof. All prior discussions and negotiations as to the subject matter hereof have been, and are, merged and integrated into, and are superseded by, this Agreement.
(Carpenter Decl. Ex. A.)
Wats argues that it was its understanding that the "subject matter hereof" was limited to the issues common to all three parties (ATT's approval of transfer and amounts of Wats' proceeds that should be paid directly to ATT), while the actual terms of sale between Wats and ATN were separate and apart from that agreement, to be handled by the AMA. (Freeman Aff. ¶ 24.) ATN, on the other hand, maintains that the Three-Party Agreement was a full and integrated agreement of the sale between Wats and ATN, and that while Wats and ATN had been discussing the terms of a potential AMA, they had not actually reached an agreement. (Carpenter Decl. ¶ 22.) According to ATN, the Three-Party Agreement, though it identified only CSTP 1805 customers, required Wats to transfer all of its customers, including the CustomNet and LSTP customers; CSTP 1805, as used in the Three-Party Agreement and in the TSA, was just a code word. (Carpenter Decl. ¶ 17.) Wats argues that the Three-Party Agreement was clear on its face that the only plan being transferred by the TSA was CSTP Plan 1805, and that ATT could not in fact approve the transfer of the other customers that were not in the ATT plan. (Freeman Aff. ¶ 27.)
ATN argues that "at or about the time the parties were negotiating the Three-Party Agreement, Wats and ATN were also discussing the terms of a potential Agency Marketing Agreement." (Defs.' Rule 56.1 Statement of Facts ¶ 42). ATN asserts that the purpose of the proposed, but not executed, AMA was for Wats to work as ATN's agent for obtaining new customers and new business in exchange for a commission on the traffic generated by that new business, rather than an agreement on payment above the $800,000 for the sale of the previous customer base. (Carpenter Decl. at ¶ 22.) Wats does not dispute that this was occurring at or about the time of the negotiations over the Three-Party Agreement, but does dispute the term "potential," arguing that an agreement was in fact reached by that time, and does argue that there was not to be any new business at all. (Pl.'s Rule 56.1 Statement of Disputed Facts ¶ 42; Freeman Aff. ¶ 32.)
Subsequent to the signing of the Three-Party Agreement of November 7, 1994, Carpenter forwarded to Freeman his first draft of the AMA dated November 10, 1994, prepared by ATN's attorneys. (Freeman Aff. ¶ 28 and Ex. D.) The proposed AMA provided that Wats would perform certain duties for ATN, such as collecting customer orders, and in return would receive a commission set at around 12.7%. (Freeman Aff. Ex. D.) The parties disagreed as to some aspects of this. For example, Freeman believed that paragraph 12 should specifically reference the Three-Party Agreement of November 7, 1994, and Carpenter assured him that paragraph 12(a) did include the Three-Party Agreement where it made reference to the delivery to ATN of the TSA. (Id. at ¶ 31.)
On December 14, 1994, Carpenter sent Freeman a revised copy of the agreement. (Id. at ¶ 32 and Ex. E.) The cover letter attached to that draft indicated that Carpenter needed the LSTP and CustomNet lists. (Id. at Ex. E.) This revised copy changed the compensation to 11.7% instead of 12.7% (id.), and in later discussions Freeman insisted upon 12.%. (Id. at ¶ 34.)
In January of 1995, Carpenter still had not made the revisions to the AMA that it had requested, and Freeman had not provided Carpenter with the LSTP list or CustomNet list as he had requested. (Id. at ¶ 35.) One of ATN's principals, defendant David Allen, contacted Freeman and told him that ATN needed the CustomNet and LSTPs so that they could put them on ATN's contract tariff. (Id.) Allen indicated in return that he would make the requested changes to the AMA and get it signed and back to Freeman, but that they needed the CustomNet and LSTP information "right now." (Id. at ¶ 35 and Ex. G.) The cover letter attached to that latest copy of the AMA, dated 1/19/95, written by Dan Allen, David Allen's brother, stated "please review it and give Dave, Gary or myself a call so we can discuss it and get it done." (Id.)
On January 23, 1995, David Allen sent Freeman a fax requesting TSAs for each of the thousands of LSTP and CustomNet customers. (Id. at ¶ 36 and Ex. H.) On January 24, 1995, Freeman received a memorandum from David Allen with an attached letter from TT to ATN from Joseph Fitzpatrick. (Id. at ¶ 37 and Ex. I.) The cover letter indicated that ATN needed all TSAs sent no later than February 13, 1995. (Id.) The attached letter required a list of the LSTP and CustomNets to be added by the end of business January 27, 1995 and indicated that ATN had until February 15, 1995 to provide the TSAs for those LSTP and CustomNet customers. (Id.) Based on these deadlines, Wats did everything necessary to transfer the CustomNets and LSTPs by February 15, 1995. (Id. at ¶ 38.)
ATN admits that, at one point, the parties discussed the concept of Wats receiving a retroactive commission on customer traffic already transferred, in conjunction with other components, none of which were ever agreed upon. (Carpenter Decl. ¶ 23.) However, no finalized Agency and Marketing Agreement was ever signed or provided to Wats, and no commission payments have been made. (Id. at ¶ 27; Freeman Decl. ¶ 39.)
Sometime in March or April of 1995, after Wats had transferred all of its 1805, CustomNet and LSTP customers, Freeman avers that he spoke with Carpenter, who stated that though the AMA was not signed, he still owed Wats a payment and he had to get the information from ATT on the amount of revenue that was generated by the Wats customers. (Id. at ¶ 41.) Subsequent to that, Freeman's calls were not returned. Wats also argues that, frustrated by Carpenter not taking Wats' calls (Becker Aff. ¶ 3), Wats sent a fax to Carpenter on June 20, 1995 requesting an accounting of monthly usage (Schmidt Aff., dated March 8, 1999, at ¶¶ 2-3 and Exs. A B), so that Wats' could determine if it had earned commissions "in excess of payments due from ATN to ATT" (Freeman Aff. ¶ 5). ATN contends that it never received that fax. According to Freeman, he had several conversations with David Allen in which Allen said that Carpenter was a "criminal" and that he used to "laugh in the hallways" about how he was "screwing" Freeman, and that "it's been a big joke ever since it happened," and that Carpenter "does this to a lot of people." (Id. at ¶ 42.) According to ATN, neither Carpenter nor ATN ever made promises to Wats of any kind that it did not intend to keep. (Carpenter Decl. ¶ 30.)
In March of 1999, the parties engaged in a round of debate through correspondence to this Court concerning the June 20, 1995 fax. At oral argument, this Court asked plaintiff's attorney, Sanford Schmidt, if plaintiff stood silent when it believed it should have been paid commissions, for the weight of plaintiff's case would be undermined if plaintiff did not assert its rights at the time. In response to this question, Mr. Schmidt sent this Court a copy of the fax and other related information on March 1, 1999; the affidavits of Mr. Becker and Mr. Freeman, coupled with the fax, are evidence that Wats did not stand silent. ATN's letters of March 5 and March 11, 1999 dispute these documents, arguing that they were not produced in discovery, that ATN never received them, and that the fax does not bear an ATN fax confirmation receipt. This Court is satisfied, however, based on Mr. Schmidt's letters of March 1 and March 8, 1999, that there is evidence that the letters were sent and that they were produced in discovery. ATN is free to argue otherwise to a jury, but the documents are considered for the purposes of this motion. In any case, it should be noted that the Court would reach the same result on this motion even in the absence of the fax and other information sent to this Court in March.
These statements would clearly be admissible against ATN, as David Allen was its agent. Whether it would be admissible against Gary Carpenter personally is disputed.
Based on what Wats alleges was fraud, and based upon reports from ATT provided to Wats during discovery, Wats believes it is owed at least $2.3 million (commissions through March 31, 1998 accruing at $45,000 per month, minus the $800,000 already paid to ATT). (Freeman Aff. ¶ 44.)
C. The Complaint
Now before the Court is defendants' motion for summary judgment on the Amended Complaint. The Amended Complaint, filed July 21, 1997 with this Court's permission, seeks the following:
Count One: Restitution Based on Unjust Enrichment
Count Two: Accounting
Count Three: Quantum Meruit
Count Four: Breach of Contract
Count Five: Fraud
Defendants ATN and Gary Carpenter filed a motion for summary judgment and a supporting brief, and defendant David Allen filed a similar motion relying upon ATN's and Carpenter's brief.
Accordingly, any citation to "Defs.' Br." refers to all of the defendants in this case.
III. DISCUSSION
A. Summary Judgment Standard
Summary judgment is appropriate when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c);see Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir. 1986). A dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the non-moving party." See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" only if it might affect the outcome of the suit under the applicable rule of law.Id. Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment. Id.
In deciding whether there is a disputed issue of material fact, the Court must view the evidence in favor of the non-moving party by extending any reasonable favorable inference to that party. See Aman v. Cort Furniture Rental Corp., 85 F.3d 1074, 1080-81 (3d Cir. 1996);Kowalski v. L F Prods., 82 F.3d 1283, 1288 (3d Cir. 1996). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Liberty Lobby, 477 U.S. at 250; Brewer v. Quaker State Oil Refining Corp., 72 F.3d 326, 329-330 (3d Cir. 1995) (citing Anderson, 477 U.S. at 248) ("[T]he nonmoving party creates a genuine issue of material fact if it provides sufficient evidence to allow a reasonable jury to find for him at trial.").
The moving party always bears the initial burden of showing that no genuine issue of material fact exists, regardless of which party ultimately would have the burden of persuasion at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Jalil v. Avdel Corp., 873 F.2d 701, 706 (3d Cir. 1989), cert. denied, 493 U.S. 1023 (1990). However, where the nonmoving party bears the burden of persuasion at trial, "the burden on the moving party may be discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Id. at 325; Brewer, 72 F.3d at 329-330 (citing Celotex, 477 U.S. at 322-23). Once the moving party has carried its burden of establishing the absence of a genuine issue of material fact, "its opponent must do more than simply show that there is some metaphysical doubt as to material facts."Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Thus, if the non-movant's evidence is merely "colorable" or is "not significantly probative," the court may grant summary judgment.Anderson, 477 U.S. at 249-50.
B. Count IV: Breach of Contract
1. Whether the Merger Clause of the Three-Party Agreement Bars This Claim
In the Amended Complaint, Wats contends that in or about November 1994, it entered into an Oral Agreement with ATN whereby Wats would transfer all of its customer traffic to ATN; ATN would pay ATT $800,000 on behalf of Wats; and ATN would pay Wats commissions on the revenues generated by the customer traffic. See Wats' Amended Complaint ¶ 4. Wats also asserts that ATN breached this agreement by failing to pay commissions on the transferred customer traffic. Defendants argue that the express language of the Three-Party Agreement bars any such alleged contract.
According to defendants, the language of the Three-Party Agreement is clear and unambiguous, providing for transfer of CSTP Plan 1805 to ATN, in exchange for which ATN would pay $800,000 to ATT on Wats' behalf. The Agreement also contains a standard merger clause:
Except to the extent that an applicable tariff applies, this Agreement and the TSA are the entire and complete agreement of the parties relating in any way to the subject matter hereof. No statements, promises or representations have been made by any party to any party, or are relied upon, and no consideration has been or is offered, promised, expected or held out, other than as stated in this Agreement. There are no oral or written collateral agreements as to the subject matter hereof. All prior discussions and negotiations as to the subject matter hereof have been, and are, merged and integrated into, and are superseded by, this Agreement.
(Carpenter Decl. Ex. A.) According to defendants, standard merger clauses such as this have repeatedly been held to identify a contract as fully integrated and to preclude a party's assertion that some other prior or contemporaneous contract controls the rights and obligations of the parties. Inter-City Tire Auto Center v. Uniroyal, Inc., 701 F. Supp. 1120 (D.N.J. 1988), aff'd, 888 F.2d 1380 (3d Cir. 1989) (finding that even if alleged oral joint venture agreement was enforceable, it was nullified and precluded by the written contract that contained standard merger clause); Interman, Inc. v. Atlantic Richfield Co., 364 F. Supp. 82, 98 (E.D.Pa. 1973) (writing, by its express terms, constituted entire agreement of the parties and therefore plaintiff was precluded from introducing evidence of consistent additional terms, to explain or supplement the agreement, and prior contradictory terms); Graybar Electric Co. v. Continental Cas. Co., 50 N.J. Super. 289 (App.Div. 195 8); Restatement 2d of Contracts § 209. A fully integrated agreement is adopted by the parties as the complete and exclusive statement of the terms of their agreement, and where the contract itself provides that it is the entire and complete agreement of the parties, defendants say, it is by its own terms a fully integrated contract. See Inter-City, 701 F. Supp. 1120. In the absence of any "ambiguity, the rights, duties and obligations of the parties are to be determined" from the contract when it purports to contain the whole agreement between the parties.Montclair Distributing Co. v. Arnold Bakers, Inc., 1 N.J. Super. 568, 573 (Ch.Div. 1948); Restatement 2d of Contracts §§ 213, 216.
Defendants argue that the purported contract to pay commissions, made around November 1994, contemporaneous with the Three-Party Agreement, is barred by the Agreement's merger clause because the purported contract is within the scope of the Three-Party Agreement. According to defendants, the claim regarding commissions goes to the heart of the transaction covered by the Three Party Agreement and is thus within the scope.
Plaintiff does not dispute that agreements with merger clauses are fully integrated contracts and that fully integrated contracts bar evidence of contemporaneous or previous agreements with consistent or inconsistent terms within the scope of the fully integrated contract. However, plaintiff does dispute that its alleged contract to be paid commissions falls within the scope of the Three-Party Agreement. The cases upon which defendants rely, plaintiff says, all involved merger clauses that conform all prior negotiations and agreements between the parties. Here, by contrast, plaintiff says, the Agency and Marketing Agreement is not a prior or contemporaneous version of the Three-Party Agreement, but rather a separate and distinct two party agreement dealing with a different subject matter. The language of the merger clause here, plaintiff says, does not bar a two party agreement between ATN and WATS covering the terms of sale by Wats to ATN of its customer base.
Additionally, plaintiffs note that parties may always enter into future contracts or later modify existing contracts. Frommeyer v. LR Construction, Inc., 261 F.2d 879, 882 (3d Cir. 1958). The Agency and Marketing Agreement was finalized after the Three-Party Agreement was executed and was fully performed by WATS, plaintiff contends. Therefore, the AMA is not prior in time and is not barred.
Defendant is correct that a merger clause generally makes a fully integrated contract and that prior and contemporaneous agreements are thus not admissible. Restatement (Second) of Contracts §§ 209, 213, 216. See also Winans v. Asbury Park Nat'l Bank and Trust Co., 13 N.J. Super. 577, 581 (Ch.Div. 1951) ("The general rules is that an executed contract which covers the whole subject matter embraced in a prior one between the same parties rescinds the contract."). However, the other agreements which defendants seek to bar must be within the scope of the contract containing the merger clause. Here, the Three-Party Agreement notes that it is entered into by ATT, ATN, and Wats, that ATN wishes to enter into a TSA for the CSTP Plan 1805, and that ATT and Wats are adverse parties in a lawsuit. (Carpenter Decl. Ex. A.) The Three-Party Agreement then goes on to lay out its terms, by which ATN and Wats would execute the TSA attached as Exhibit A on November 7, 1994, ATT agrees to approve the TSA, and ATN agrees to pay ATT $800,000 on behalf of Wats. (Id.) The attached TSA specifically identifies CSTP 1805. (Id. at Ex. B.) According to plaintiff, the $800,000 was paid in consideration for ATT's approval of the transfer but does not constitute the terms of sale to ATN.
I find that while the merger clause here bars prior agreements of the parties relating in any way to the subject matter of that agreement, the Three-Party Agreement is not clear on its face as to what exactly its subject matter is. Arguably, the Three-Party Agreement could constitute the entire agreement between all three parties as to the conditions of approval of transfer only, or it could govern disputes between any two of the three parties relating at all to CSTP Plan 1805. I seek to determine the parties' intentions, as captured by the written agreement. See Graybar, 50 N.J. Super. 289, 294 (App.Div. 1958) ("In seeking to construe a contract the polestar of construction is the intention of the parties to the contract as disclosed by the language used, taken as an entirety."). However, the Three-Party Agreement here does not clearly spell out those intentions on its face. In order to determine how to construe the contract, then, it is necessary to regard other evidence which the parties have put forward as to their intentions in reaching that agreement.
That evidence, as described in the factual background section of this Opinion, is disputed. Defendants have presented evidence that could lead a reasonable factfinder to find that the Three-Party Agreement would bind any of the three parties in any dispute related to CSTP Plan 1805. Plaintiff has presented evidence that could lead a reasonable factfinder to find instead that the Three-Party Agreement solely related to payment for ATT's approval of transfer and that ATN and Wats intended to reach a separate agreement as to the terms of sale. There is thus a genuine issue of material fact as to whether the Three-Party Agreement was meant to bar a contract between ATN and Wats as to the terms of sale, and Count IV will not be dismissed because of the merger clause in the Three-Party Agreement. If plaintiff can prove at trial that the parties contemplated and did not bar a separate contract between ATN and Wats as to the terms of sale, plaintiff may then go on to try to prove that a separate contract indeed was formed.
In any event, summary judgment would not be granted to the defendants as to the CustomNet and LSTP customers who were not included in CSTP Plan 1805. While the Three-Party Agreement may be ambiguous as to whether it contains the terms of sale of business, it is clear as day that it related only to CSTP Plan 1805 and that non-CSTP Plan 1805 customers were not included. The Three-Party Agreement, in its first recital, noted that Wats subscribed to CSTP Plan 1805, and its first term noted that ATN and Wats would execute the TSA annexed to the Three-Party Agreement. (Carpenter Decl. Ex. A.) That TSA specifically named only CSTP Plan 1805 customers and made no mention of any others. (Id. at Ex. B.) This is further confirmed by the facts presented that other TSAs were later required to be executed by Wats in order to transfer the non-CSTP 1805 customers. (Freeman Aff. ¶¶ 37-38.) Those later TSAs are not required by any language of the Three-Party Agreement. As a result, summary judgment for the defendants on the basis of the merger clause would be inappropriate at least as to the non-CSTP Plan 1805 customers.
In reaching this decision denying summary judgment on this ground, I reject plaintiff's contention that the contract here in any case was finalized after the Three-Party Agreement was executed and was fully performed by Wats, thus making the AMA later in time, a modification of the original contract. As discussed infra, the AMA itself was never signed by either Wats or ATN, and the language of the cover letter attached to a later draft of the AMA ("Here's the most recent version of the contract. Please review it and give Dave, Gary or myself a call so we can all discuss it and get it done.") (Carpenter Ex. G) simply does not constitute a writing sufficient to say that the party to be bound by the "contract" (ATN) signed the document. If there was a contract at all, it was an oral one the terms of which are only memorialized in the drafts of the final AMA (Pl.'s Opp'n Br. at 7), and according to plaintiff's own evidence and arguments, the "comprehensive" oral contract to pay 12% commissions was reached sometime between August and October 1994, and the terms were confirmed by Freeman and Carpenter at the resellers' convention in Florida. (Freeman Aff. ¶¶ 17, 18, 20; Pl.'s Br. at 5-6; Joint Final Pretrial Order at 7.)
Plaintiff's theory on page 18 of its opposition brief that the AMA was completed after the Three-Party Agreement is a new one, inconsistent with its own statement of the facts (Freeman Aff.; Joint Final Pretrial Order; Amended Complaint) and previous arguments, and it is not factually accurate, even taking the evidence in a light most favorable to plaintiff. See McElyea v. Navistar Int'l Trans. Corp., 788 F. Supp. 366 (E.D.Pa. 1991) (criticizing party for arguing a new fact and theory that repudiated facts that had been admitted up until that point).
2. Whether the Alleged Oral Contract is Barred by the Statute of Frauds
Defendants' second argument in favor of summary judgment on Count IV of the Amended Complaint is that any claim for breach of an alleged oral agreement to pay retroactive commissions is barred by the Statute of Frauds. As defendant correctly points out, the New Jersey Statute of Frauds bars the enforceability of certain enumerated categories of agreements absent a "writing . . . signed by the party to be charged. . . ." N.J.S.A. 25:1-5. Included among the enumerated categories at the time this lawsuit was filed were "oral agreements that cannot be performed within one year." Inter-City, 701 F. Supp. at 1125.
While the New Jersey Statute of Frauds was amended on January 5, 1996 to eliminate from its purview contracts that could not be performed within one year, N.J.S.A. 25:1-5, the amendment was not made retroactive and thus does not apply to a 1995 case involving facts that allegedly occurred in 1994 and 1995. See Matter of D.C . , 146 N.J. 31, 50 (1996) ("It is well-settled that statutes generally should be given prospective application.").
In Inter-City, the plaintiff alleged that his alleged oral agreement was meant to be in effect for a lifetime. Based on that, the District Court held that the agreement was barred by the Statute of Frauds. Id. at 1126. Here, defendants argue, the Statute of Frauds likewise applies because the draft of the AMA, which allegedly memorialized the terms of an oral agreement, provides that the agreement shall be in force "perpetually" (Freeman Aff. Ex. G. ¶ 2), which, in both its ordinary and dictionary definitions, means "continuing forever." Webster's New Collegiate Dictionary 847 (1979). As this alleged contract was perpetual, it could not have been performed within a year. According to defendants, it is thus unenforceable.
Plaintiff does not argue that the Statute of Frauds does not apply; rather, plaintiff argues that it either has been satisfied or should be ignored.
Plaintiff does argue that the Statute of Frauds does not apply because the parties intended the contract to be put in writing within a year. Whether the parties intended the contract to be in writing in a year, however, is irrelevant to whether the contract itself could be performed within a year.
Plaintiff argues, for example, that the agreement has been fully performed and thus is taken out of the Statute of Frauds. Plaintiff is correct that a contract fully performed by one party takes an agreement out of the statute of frauds. Conopco, Inc. v. McCreadie, 826 F. Supp. 855, 872 (D.N.J. 1993); Klockner v. Green, 54 N.J. 230, 236 (1969); Lahue v. Pio Costa, 263 N.J. Super. 575, 599 (App.Div. 1993); Crowe v. DeGioia, 203 N.J. Super. 22, 34 (App.Div. 1985). However, even taken in a light most favorable to the plaintiff, it is clear that Wats had not fully performed its role under the alleged contract.
Because plaintiff argues that the terms of its oral contract are those contained in and memorialized by the AMA drafts, I must look to that draft. Nowhere in that draft agreement does it mention compensation for the CSTP 1805 customers, nor does it mention the Three-Party Agreement at all. Certainly, it does not indicate that simply transferring Wats' former customers to ATN would fully satisfy the contract; rather, it lays out a host of activities which Wats would have been required to perform, including taking orders from customers on behalf of ATN, selling ATN services to ATN-approved customers, and other related activities. (Freeman Aff. Ex. G, ¶ 3.) Nowhere in the facts presented before this Court is there any indication that plaintiff fully performed all of the duties of what plaintiff itself has alleged to memorialize the terms of the contract. Therefore, Wats' performance here does not take this out of the statute of frauds.
Plaintiff also argues that the writings between the parties satisfy the Statute of Frauds. Again, plaintiff is correct in pointing out that the Statute of Frauds requirement of a "writing" does not always necessitate a formal contract, so long as to terms are memorialized by some writing — including the exchange of correspondence. Vanguard Telecommunications, Inc. v. Southern New England Telephone, 900 F.2d 645, 651 (3d Cir. 1994). Plaintiff argues that the facts of the Vanguard decision are similar to those here. In that case, there had been an exchange of correspondence, so much so that the court held that the contract was essentially written. Id. at 648-651.
However, in that case, the parties both admitted that they had reached an oral agreement and simply disagreed about the terms of that agreement. Defendant memorialized the oral agreement in a signed letter, which clearly laid out each of its terms. Plaintiff then sent on its own confirmatory letter in which plaintiff explicitly stated agreement as to the terms in that letter. Id. at 650 ("We think the terms of our agreement outlined in your letter to Don Van Doren dated January 27, 1984, are acceptable.") Here, on the other hand, plaintiff relies on a strained interpretation of two lines on a fax coversheet — words which do not say "we accept your terms" or indicate that the defendants intended to be bound by the attached draft of the agreement. Those lines, "Here's the most recent version of the contract. Please review it and give Dave, Gary or myself a call so we can all discuss it and get it done." (Carpenter Ex. G), cannot reasonably be interpreted as evidencing final agreement between the parties to provide Wats with a commission for the customer base that was transferred.
Plaintiff's final argument against application of the Statute of Frauds is that the Statute of Frauds may not be used to work a fraud. Plaintiff is correct, and, indeed, defendants do not dispute this legal principle. It is well-settled law in New Jersey that the Statute of Frauds cannot be used to perpetrate a fraud. N.J.S.A. 25:1-5; Klockner, 54 N.J. at 236;Cauco v. Galante, 6 N.J. 128, 138 (1951); Crowe, 203 N.J. Super. at 34. The very purpose of the Statute of Frauds is to prevent fraudulent practices. Lahue, 263 N.J. Super. at 599.
Whether this equitable principle applies here depends upon whether this Court grants summary judgment to the defendants on plaintiff's fraud claim. If no fraud claim survives because evidence of fraud is lacking, then the possibility of fraud in this case no longer exists and cannot be the basis of nonapplication of the statute of frauds. If the fraud claim survives because the plaintiff has raised a genuine issue of material fact as to fraud, then I cannot grant summary judgment to the defendants yet on the breach of contract claim.
That is an issue which would have to be reexamined at trial. If, after trial, the factfinder believes that there was no fraud, then I would have to dismiss the breach of contract claim on the basis of the statute of frauds.
As discussed in section E of this Part, infra, plaintiff has not come forward with any admissible evidence that either Carpenter or Allen, in their individual capacities, made material misrepresentations of fact, and thus because there is no evidence of fraud by either of those two defendants, the statute of frauds must govern. There is, however, evidence that could lead a reasonable factfinder to believe that defendant ATN committed fraud. See infra Part II.E. Therefore, summary judgment is appropriate as to defendants Carpenter and Allen on Count IV of the Amended Complaint, but summary judgment will not be granted to ATN on Count IV.
C. Counts I and III: Restitution and Quantum Meruit
Count I of the Amended Complaint, "Restitution Based on Unjust Enrichment," and Count III, "Quantum Meruit," are both "quasi-contract" or implied contract claims for relief. New Jersey law, as defendants point out and as plaintiff does not dispute, is very clear that implied contract and quasi-contract remedies are only available in the absence of an express contract governing the relationship of the parties. C.B. Snyder Realty Co. v. National Newark Essex Banking Co., 14 N.J. 146, 162-63 (1953); Moser v. Milner Hotels, Inc., 6 N.J. 278, 280-81 (1951);Shalita v. Township of Washington, 270 N.J. Super. 84, 90 (App.Div. 199 4). This is because a valid, unrescinded express contract excludes an implied contract. Shapiro v. Solomon, 42 N.J. Super. 377, 385 (App.Div. 195 6).
Defendants argue that the Three-Party Agreement is the express contract here, and given that an express contract on the subject matter of the terms of sale of WATS' customer base to ATN exists, there can be no action for implied contractual remedies. However, as discussed above,supra, the Three-Party Agreement itself does not clearly identify its subject matter, thus requiring this Court to consider extrinsic evidence of the parties' intent, and that evidence is in dispute.
I could only grant summary judgment to the defendants on Counts I and III at this point if some other express contract prevented implied contractual remedies. The only other possible express contract on the facts of this case would be if plaintiff proved at trial that defendants expressly, orally contracted with it to pay plaintiff commissions. The possibility that the alleged oral agreement was an express contract does not mean that defendants are entitled to summary judgment on Counts I and III of the Amended Complaint. It simply means that a factfinder may not simultaneously grant relief under the contract and quasi-contractual relief, but rather must choose whether an express contract did or did not exist. Plaintiff's contractual and quasi-contractual claims are argued in the alternative, and the factfinder eventually must decide if either of those claims is true.
Indeed, because, as discussed supra , any direct contractual claim against Carpenter and Allen is dismissed because of the Statute of Frauds, and, as discussed infra at II.E., summary judgment is granted to Carpenter and Allen on the fraud claims, the only possible recovery against Carpenter and Allen could be the quasi-contractual relief, and any accompanying accounting.
Given that there is a genuine issue of material fact as to whether the Three-Party Agreement's merger clause bars any claim of additional prior or contemporaneous contracts or implied contracts, as well as an issue as to whether an express oral contract was reached at all, summary judgment for the defendants is not appropriate at this time.
Unlike with the contractual claim, summary judgment will not be granted here for defendants Carpenter and Allen, for the Statute of Frauds plays no part in a quasi-contractual claim.
D. Count II: Accounting
Count II of the plaintiff's Amended Complaint seeks an accounting as to information and documentation concerning the customer accounts that WATS transferred to ATN and the traffic those customers generated. Plaintiff believes that it is entitled to this because of the alleged oral agreement. ATN denies that there was any such oral agreement, but nevertheless notes that it has actually provided WATS' with various ATT reports which constitute ATN's only records of the status of that traffic. Accordingly, defendants argue that this Count is moot and that summary judgment should be entered dismissing Count II of the Amended Complaint.
Plaintiff, on the other hand, argues that this claim is not moot because, in depositions, Carpenter indicated that there was additional income not reflected in the documents produced, which go through August, 1997. (Carpenter Dep. II at 249:4 — 253:12.) Plaintiff seeks an accounting of that additional income, as well a disgorgement of ATN's profits for its wrongful conduct.
It appears that this claim is not moot because the alleged indebtedness continues. Summary judgment cannot yet be granted to the defendants on plaintiff's claim for an accounting because material questions remain open. Should plaintiff prove at trial that ATN did make an oral contract to pay commissions that was not barred by the Three-Party agreement, or that ATN, Carpenter, and Allen breached an implied contract, or that ATN fraudulently induced it to sign TSAs, then the factfinder could award an accounting to plaintiff. Should plaintiff not prove those claims, however, an accounting would be unavailable. This is an issue that must be revisited at trial. Accordingly, summary judgment is denied.
E. Count V: Fraud
The final Count of the Amended Complaint alleges that defendants induced plaintiff to transfer its customer traffic to ATN by promising to pay plaintiff commissions on the traffic. Defendant argues that this does not constitute a claim for fraud, but rather a claim for breach of contract, and thus that summary judgment should be granted.
Plaintiff argues that this aspect of the motion was brought as a 12(b)(6) motion to dismiss and thus must be denied because allegations in the Amended Complaint support a claim of fraud. To the contrary, defendants specifically argued that summary judgment should be granted both because plaintiff did not assert a proper cause of action for fraud and because it has no facts to support that claim. (Defs. Br. at 19-20.)
The elements of fraud are: (1) material misrepresentation of a presently existing or past fact, (2) made with knowledge of its falsity, (3) and with the intention that the other party rely thereon, (4) resulting in reliance by that party to his detriment. Vanguard, 900 F.3d 645, 654-55 (3d Cir. 1990) (citing Jewish Center of Sussex v. Whale, 86 N.J. 619 (1981)); Gennari v. Weichert Co. Realtors, 288 N.J. Super. 504, 535 (App.Div. 1996).
Defendants first argue that plaintiff has presented no evidence that would constitute a material misrepresentation of a presently existing or past fact with knowledge of its falsity. According to defendants, statements of intention to take certain actions in the future, such as ATN's alleged statement to WATS that ATN intended to pay WATS commissions on the traffic generated by customers transferred to ATN by WATS, cannot, as a matter of law, be the basis of a claim of fraud. Defendants quote Alexander v. CIGNA Corp., 991 F. Supp. 427, 435 (D.N.J. 1998), as saying that "[s]tatements as to future or contingent events, to expectations of probabilities, or as to what will or will not be done in the future, do not constitute misrepresentations, even though they may turn out to be wrong." Id. (citing Chatlos Systems, Inc. v. National Cash Register Corp., 479 F. Supp. 738, 749 (D.N.J. 1979), aff'd in part, rev'd in part, 635 F.2d 1081 (3d Cir. 1980)).
Alexander involved insurance agents who had entered into exclusive contracts with defendants to sell insurance on defendants' behalf, and the agents alleged that they had been induced to enter into these exclusive contracts based on promises of lifetime agencies and perpetual relationships, even though the agency agreements had separate consideration and contained termination provisions and integration clauses. The court held that these purported fraudulent statements were "replete with predictions of future events," using words like "will," "plan," or expect." Id. at 436. The court felt that these future predictions were believed when made and could not be the basis of a fraud claim just because they later turn out to be false. Id. Defendants argue that here, too, any inducement was a statement of the future, and thus there was no material misrepresentation of a past fact.
Plaintiff would distinguish Alexander, arguing that the promises made in Alexander were very different than those alleged here. In Alexander, CIGNA alleged represented to insurance agents that "the program would take CIGNA into the 21st Century," that the program would "last into perpetuity," and that "it was a program for the 1990's and beyond." Id. The court in that case found that these statements were advertising, mere puffery that did not rise to the level of misrepresentation. Id. These statements were not capable of being verified at the time they were made, so unbelievable that the agents should have paused before believing them. The facts here, plaintiff argues, is different because defendants made straightforward assurances of fact, not speculation. Not all future statements are speculative. Moreover, if defendants did not believe their statements to be true when made, that would be a material misrepresentation.
Plaintiff is correct. While promises to do or not do things in the future, under New Jersey law, cannot be the basis of a fraudulent misrepresentation, a statement of present intent to do something in the future can be a misrepresentation if the statement was false when made.Ocean Cape Hotel Corp. v. Masefield Corp., 63 N.J. Super. 369, 380 (App. Div. 1960) (determining whether a false intention to do something in the future could be gleaned from the evidence); Comfort Spring Corp. v. Brooks Equipment Corp., 13 N.J. Super. 564 (App.Div. 1951) ("A representation of an intention as existing . . . is a misstatement of fact."); Zuckerman v. Geller, 103 N.J. Eq. 145, 146 (Ch.Div. 1928) ("A misrepresentation as to the state of a man's mind is therefore a misstatement of fact."). Here, plaintiff has produced evidence that ATN never intended to keep its alleged promise to pay commissions in the future, such as David Allen's alleged statements to Freeman that Carpenter was "laughing in the hallways" about "screwing" WATS, that "its been a big joke ever since it happened," and that "Gary does this to a lot of people."
This evidence might not be hearsay under Fed.R.Evid. 801(d)(2) as to ATN because there is evidence that Allen was ATN's agent when it made those statements. However, those statements are not admissible against Carpenter personally because no evidence was presented that Allen was Carpenter's agent. Moreover, plaintiff offered no other evidence which would show that Carpenter or Allen, who were both sued in their individual capacities only, made misrepresentations of fact. Thus, summary judgment will be granted to defendants Carpenter and Allen on Count V of the Amended Complaint.
Defendants also argue that plaintiff has failed to put forward competent evidence that plaintiff reasonably relied on the alleged misrepresentations to its detriment. However, this argument is without merit given that I have already determined in this Opinion that a genuine issue exists as to whether the Three-Party Agreement's subject matter was intended to include the terms of sale of the customer traffic. If, at trial, a factfinder concludes that the Three-Party Agreement's subject matter included the terms of sale, then plaintiff loses its contract, implied contract, and accounting claims as a matter of law because of the Three-Party Agreement's integration clause; moreover, that integration clause would preclude plaintiff from winning its fraud claim because "[a] contractual provision flatly contradictory to prior oral assurances should cause most people — and particularly experienced, knowledgeable business people — to pause." Elias Bros. Restaurants, Inc. v. Acorn Enterprises, Inc., 831 F. Supp. 920, 924 (D.Mass. 1993) (fraud claim rejected where precise terms of contract prevent reasonable reliance on prior oral statements). If, however, the factfinder believed that the subject-matter of the Three-Party Agreement did not include the terms of sale of the customer traffic, then that factfinder would be free to decide, on the basis of that and other evidence presented, that there was either an express or implied contract, that an accounting is due, and that there were material misrepresentations upon which plaintiff reasonably relied. Therefore, because a genuine issue of material fact still exists as to the reasonableness of reliance, summary judgment is not appropriate as to defendant ATN.
The accompanying Order will grant summary judgment in favor of defendants Carpenter and Allen on Count V, and deny summary judgment as to defendant ATN on Count V.
IV. CONCLUSION
For the foregoing reasons, summary judgment is granted to defendants Carpenter and Allen as to Counts IV and V of the Complaint, but summary judgment is denied in all other respects. Material questions still exist as to the subject-matter covered by the Three-Party Agreement, whether an oral agreement was reached to pay plaintiff commissions, whether ATN misrepresented its alleged intention to pay commissions, and whether an accounting is appropriate.
ORDER
This matter having come before the Court upon motions for summary judgment on behalf of defendants Advanced Telecommunications Network, Inc. ["ATN"], Gary Carpenter, and David Allen; and the Court having considered all submissions on behalf of the parties and the oral arguments of counsel; and for the reasons stated in the Opinion of today's date;
IT IS this day of September 1999 hereby
ORDERED and ADJUDGED that summary judgment is granted in part in favor of defendants Carpenter and Allen on Counts IV and V, and Counts IV and V are hereby dismissed as to Carpenter and Allen; and
IT IS FURTHER ORDERED that the motions for summary judgment are otherwise denied.