Unpublished Disposition, 902 F.2d 39 (9th Cir. 1990)

MEMORANDUM^* 

In 1980, Harry Long, president and sole shareholder of H. Long, Jr. Company ("Long"), entered into a five-year Sales Solicitation Agreement ("Agreement") with International Paper ("IP"), effective January, 1981 to December, 1986.

In 1987, Long filed a complaint against IP, alleging, among other claims, breach of contract. IP responded with a counter-claim also alleging breach of contract.

Based on two prior grants of partial summary judgment, summary judgment was eventually entered against Long on his complaint, and in favor of IP on its counter-claim. The district court also denied Long's motion for leave to file a first amended complaint, as well as his subsequent motion for reconsideration. Long now appeals. We affirm.

In Long's first claim for relief, Long maintained that IP breached paragraph 4 of the Agreement when IP solicited business from Long's customers, without Long's assistance or prior knowledge and without paying him the required commissions.

Long admits that only one customer, Naturipe, was listed on Schedule "A" of the Agreement. Yet he maintains that the Agreement was orally modified, pursuant to Cal.Civ.Code 1698(b). Specifically, Long maintains that the contract was orally modified and executed when IP treated Long's other customers in the same manner as Naturipe (i.e., paid commissions to Long identical to those paid to Long for Naturipe).

Under California law, " [a] party complaining of the breach of a contract is not entitled to recover therefor unless he has fulfilled his obligations." Pry Corp. of Am. v. Leach, 2 Cal. Rptr. 425, 429, (Cal.Ct.App.1960). Thus, before Long could successfully bring a breach of contract action against IP, it was incumbent on Long to prove that he had performed his obligations under the Agreement.

Long has failed to make this requisite showing. The undisputed facts show that Long materially breached the Agreement prior to any alleged breach by IP. Long's material breach discharged IP's duties under the Agreement as originally executed or as orally modified. Id. Thus, we need not decide whether the Agreement was orally modified and if IP breached the modified Agreement.

a. Breach

Long maintains that he did not breach the Agreement. The district court found that Long materially breached the Agreement by soliciting Weyerhaueser products for sale to Naturipe in violation of paragraph 6 of the Agreement. Long argues that although he was in contact with Weyerhaueser on behalf of Naturipe in early 1986, that his communication was in the form of an "introduction" rather than a "solicitation" within the meaning of the Agreement. According to Long, his relationship with Weyerhaueser was in anticipation of future orders, after the contract with IP expired, and thus was not a breach of the Agreement. At the very least, Long claims that these assertions create a genuine issue of material fact precluding summary judgment.

In order to survive a motion for summary judgment, Long "need only present evidence from which a jury might return a verdict in his favor." Anderson v. Liberty Lobby, 477 U.S. 242, 257, 106 S. Ct. 2505, 2514 (1986). Here, however, we conclude that the evidence presented by Long precludes a jury finding in his favor.

Long admitted that he contacted Weyerhaueser in early 1986. Long also admitted that he received commissions from Weyerhaueser for sales that occurred in 1986. We can see no other plausible characterization of Long's activities, other than to find them a solicitation in violation of the Agreement. Neither Long's asserted failure to demand payment of the commissions received, nor his receipt of payment in 1987, rather than 1986, alters our conclusion.

b. Materiality of Breach

The materiality of a breach is "ordinarily a question for the trier of fact." Superior Motels, Inc. v. Rinn Motor Hotels, Inc., 241 Cal. Rptr. 487, 496 (Cal.Ct.App.1987) (quoting Whitney Inv. Co. v. Westview Dev. Co., 78 Cal. Rptr. 302 (Cal.Ct.App.1969)). Here, however, the undisputed facts show that no "rational or reasonable jury might return a verdict in [Long's] favor." T.W. Elec. Serv. v. Pacific Elec. Contractor's Ass'n, 809 F.2d 626, 631 (9th Cir. 1987). Therefore, the materiality of Long's breach was properly decided, as a matter of law.

Under the Agreement, Long was to solicit customers exclusively for IP products, and was to be paid commissions by IP for his services. Long's solicitation of customers for Weyerhaueser products and receipt of commissions from Weyerhaueser for his services goes to the essence of his Agreement with IP. Long's relationship with Weyerhaueser during the term of the Agreement therefore constituted a material breach. See, e.g., Wilson v. Corrugated Kraft Containers, 117 Cal. App. 2d 691, 692 (Ct.App.1953).

Long's material breach in early 1986 discharged IP's duties under the Agreement. Because the undisputed facts show that Long's breach occurred prior to any alleged breach by IP, the district court's entry of summary judgment was proper.

After the court granted IP's motion for summary judgment, Long moved for leave to file a first amended complaint. The proposed amendment sought to add (1) a cause of action for breach of "an implied-in-fact contract", and (2) a cause of action for breach of the Agreement alleging that IP directly solicited business from Naturipe in 1986 and failed to pay Long the required commissions.

The district court rejected Long's attempt to add a cause of action for implied-in-fact contract because it was a futile attempt to get around the court's previous summary judgment motion on the scope of the contract. Futility of the proposed amendment is a proper basis for denying a motion to amend. Foman v. Davis, 371 U.S. 178, 182 (1962).

Long argues that his attempt to plead a cause of action for implied-in-fact contract was not futile because it described the relationship between IP and Long's other customers besides Naturipe. Because he accepted the court's interpretation of the Agreement as applying only to Naturipe, Long maintains that the cause of action in the proposed amended complaint was not an attempt to circumvent the court's prior ruling.

Under California law, "a valid express agreement precludes a contradictory implied contract embracing the same subject matter." Baker v. Kaiser Aluminum and Chem. Corp., 608 F. Supp. 1315, 1320 (N.D. Cal. 1984); see also Mediterranean Enter., Inc. v. Ssangyong Corp., 708 F.2d 1458, 1464 (9th Cir. 1983). Here, the subject matter of the written contract and the implied-in-fact contract proposed by Long are the same. Long interprets the subject matter of the written contract as a contract applying only to Naturipe. However, the written contract contemplated that Long would solicit future customers on behalf of IP. Thus, Long's alleged implied-in-fact contract describing the relationship between IP, Long and Long's other customers, besides Naturipe, pertains to the same subject as the written contract. Therefore, Long's first cause of action in the proposed amended complaint would have been futile.

Long's attempt to add a second cause of action alleging that IP breached the Agreement in 1986, was also futile in light of the district court's ruling that IP's duties under the Agreement were discharged by Long's material breach in early 1986.¹ 

Because both of Long's proposed causes of action were futile, the district court did not abuse its discretion when it denied Long's motion to amend. See Foman, 371 U.S. at 182.

After his motion to amend was rejected, Long filed a motion for reconsideration per Local Rule 7.16. The district court did not abuse its discretion when it denied Long's motion to reconsider because Long did not allege any new facts or law that were not previously asserted in his motion to amend. See Central District of California Local Rule 7.16; see also Fed. R. Civ. P. 59(e).

AFFIRMED.