Canon, U.S.A., Incorporated v. Lease Group Resources, Incorpo, No. 08-1068 (4th Cir. 2009)
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UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 08-1068 CANON, U.S.A., INCORPORATED, Plaintiff - Appellant, v. LEASE GROUP RESOURCES, INCORPORATED; LUIS G. ROGERS, Defendants - Appellees. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. James C. Cacheris, Senior District Judge. (1:03-cv-01192-JCC-TRJ) Argued: January 28, 2009 Decided: February 25, 2009 Before NIEMEYER and MICHAEL, Circuit Judges, and Arthur ALARCĂ N, Senior Circuit Judge of the United States Court Appeals for the Ninth Circuit, sitting by designation. L. of Dismissed by unpublished per curiam opinion. ARGUED: Russell James Gaspar, COHEN & MOHR, L.L.P., Washington, D.C., for Appellant. Benjamin Sorrells Boyd, DLA PIPER US L.L.P., Washington, D.C., for Appellees. ON BRIEF: Andrew J. Mohr, COHEN & MOHR, L.L.P., Washington, D.C., for Appellant. Mitka T. Baker, DLA PIPER US L.L.P., Washington, D.C., for Appellees. Unpublished opinions are not binding precedent in this circuit. PER CURIAM: This case arises out of the complex business arrangements and dealings between Canon, U.S.A., Inc. (Canon) and Lease Group Resources, Inc. (LGR) relating to photocopier equipment leasing. In February 2002 the two companies entered into a Settlement Agreement (or Agreement) which purported to settle all claims that had arisen between them. arose during Canon the brought implementation the present of action the in When disputes Settlement the Eastern Agreement, District Virginia alleging fraud and breach of the Agreement by LGR. counterclaimed, alleging fraud, misrepresentation, of LGR breach of contract, intentional interference with contract and conspiracy by Canon. Canon now appeals from the district court s order granting LGR s motion for summary judgment on all of Canon s fraud and breach of contract claims; denying Canon s motion to dismiss or grant judgment on count I (breach of contract) of LGR s counterclaim prejudice; and -- a count dismissing (misrepresentation and eventually without fraud) of dismissed prejudice LGR s without counts III-V counterclaim. The district court s order also granted Canon s motion to dismiss counts II (intentional interference (conspiracy) of LGR s counterclaim. with contract) and VI We conclude that all of Canon s claims and all of LGR s counterclaims are covered by the provisions governing Disputes in the parties February 2002 2 Settlement appellate Agreement. review Because of the these provisions disposition of foreclose district court determinations governing Disputes, we hold that Canon s appeal is barred by contract. Accordingly, the appeal is dismissed. I. Canon machines, and sells other and leases products to photocopier federal through its federal marketing division. equipment, government fax agencies LGR is a lease finance company that purchases equipment from distributors and delivers the equipment to end-user customers in exchange for assignment of the lease payment stream. In September 1993 Canon and LGR entered into a lease finance letter agreement under which Canon agreed to sell to LGR copy equipment to be leased to government and non-profit customers. Blanket Purchase In June 1998 Canon was awarded a Agreement (BPA) by the Defense Automated Printing Service (later renamed Document Automation Production Service) (DAPS) under which DAPS obtained photocopier equipment and related services. Pursuant to the BPA, Canon entered into approximately 1,500 lease transactions. transactions proceeded as follows: and LGR The lease A federal agency would issue to Canon a purchase order for the lease of equipment, which Canon would forward to LGR. LGR would commit to purchasing from Canon the equipment covered by the lease. 3 Canon or its dealers would install and maintain the equipment and invoice LGR. And, finally, LGR would invoice the federal lessee monthly and collect the lease payment stream. Many of the leases that LGR financed included a requirement that Canon supply maintenance for the equipment as part of the maintenance monthly through lease local charge. dealers, Canon which provided were businesses that sell and service Canon equipment. this independent In exchange, LGR agreed to remit to Canon s dealers the maintenance portion of each monthly lease payment it received. In 2000 DAPS began withholding lease payments due to LGR. As a result, LGR became delinquent on its payments to Canon for the leased equipment and stopped remitting the maintenance portion of the lease payments to Canon s dealers. In February 2001 Canon began issuing monthly payments or credits to its dealers to compensate them for the maintenance payments they should have received from LGR. In July of that year Canon sued LGR in the Eastern District of Virginia (Civ. Action No. 01-1086). Canon sought to recover approximately $4.7 million that LGR allegedly owed for photocopier equipment it had agreed to purchase and also to recover payments and credits Canon had given to its local dealers in lieu of maintenance payments that LGR failed to remit. LGR counterclaimed Canon for failure to buy back certain cancelled or defaulted leases. In 4 against February 2002, shortly before trial, the parties entered into a Settlement invoices Agreement (the Lease which established Payment Pool) a pool whose of revenues unpaid were to LGR be placed in escrow to secure payment to Canon. After the Settlement Agreement was signed, Canon claimed that LGR had misrepresented certain information relating to the amount size of of money Agreement. In accordance with the Lease that would May the Payment Pool be available at 2003, the and Settlement consequently the Canon the to parties Agreement, the under request and district in judge appointed a Special Master to fully and finally reconcile the parties accounts and to calculate the final dollar amount due to Canon, net of all payments made by and credits due to Lease Group Resources, Agreement. In pursuant to the terms before the of the Settlement J.A. 150. September 2003, Special Master had completed his work, Canon initiated the present action (Civ. Action No. 03-1192) against LGR and its president, Rogers, in the Eastern District of Virginia. assigned to a different district judge. Luis G. This action was Canon s new complaint alleged fraud and constructive fraud relating to the amount of unpaid invoices in the Lease Payment Pool and various breach of contract claims under the Settlement Agreement related to LGR s alleged failure to make certain 5 escrow payments, to pay equipment invoices for certain undocumented and disputed leases, and to remit certain dealer payments and maintenance payments to Canon. Canon LGR counterclaimed alleging, among other things, that breached fraudulent contractual or negligent federal lessees, rather than to LGR misrepresentations including LGR. obligations The DAPS, second to remit district by and made instructing payments judge to Canon stayed the proceedings in this action pending the report of the Special Master in the first action, Civ. Action No. 01-1086. In Supplemental a Final Report Report dated dated April 4, July 2006, 22, the 2005, and Special a Master resolved the factual disputes at issue in the first action. On May 31, 2006, the district judge in that action issued an order fully adopting the Special Master s Supplemental Report. The Supplemental Report concluded that Canon was entitled to a total of $4,004,717 of which $2,862,899 would be paid over time through the Lease Payment Pool with the difference ($1,141,818) due immediately Special Master s to Canon. The Supplemental judge s Report order awarded adopting a the deficiency judgment to Canon for $1,141,818. Following the May 2006 order that adopted the Special Master s Supplemental Report in the first action, the (second) district judge vacated the stay in the present action. Canon therefore sought to use the findings from the Special Master s 6 report in conjunction with a theory of collateral estoppel to move in the present action for summary judgment on all of its claims and to obtain a judgment against LGR for the $2,862,899 deficiency. In May 2007 the judge denied Canon s motion and granted LGR s cross-motion for summary judgment, reasoning that all of Canon s claims arose out of the same nucleus of common fact as those in the first action (Civ. Action No. 01-1086) and were thus barred by res judicata. The judge concluded that [t]he [Lease Payment Pool] remains effective as the means of remitting the remaining amount of liability, and Canon maintains a right to draw the money owed from any lease payments made into the [Lease Payment Pool]. J.A. 481. review grant a district court's summary judgment de novo. or Canon now appeals. denial of a motion We for Nader v. Blair, 549 F.3d 953, 958 (4th Cir. 2008). II. Article 10 of the Settlement Agreement provides the [s]ole under and the exclusive Agreement. process J.A. for 108. settlements Section of disputes 10.1.1, titled Disputes Generally provides that Canon and LGR each acknowledges that disputes may arise between them concerning their respective rights and obligations under or relating to this Agreement ( Disputes ), including, but not limited to, the interpretation of documents, reconciliation and 7 confirmation of lists appended to or developed under this Agreement, and the payment of money. J.A. 108. Under section 10.1.3 Canon and LGR each agrees and consents that the United States District Court for the Eastern District of Virginia will have sole and exclusive jurisdiction and venue to settle any and all Disputes and that the parties will not submit, file or litigate Disputes in any other forum. J.A. 108. Pursuant to section 10.2 Canon and LGR agree to raise all Disputes with each other in writing and attempt to resolve them informally. In the event that this informal dispute resolution fails, section 10.3 permits submission of unresolved disputes to a Special Master. either Canon or LGR do not Section 10.4 provides that [i]f agree with the decision of the Special Master, they may submit an objection to the Special Master s decision resolution. in J.A. 109. writing to the District Court for Finally, section 10.5 (titled No Appeal to Court of Appeals ) provides that Canon and LGR each agrees that the decision of the District Court of a Dispute pursuant to Section 10.4 will be final, binding and non-appealable. Canon and LGR each agrees that it may not and will not submit, file or litigate in the United States Court of Appeals for the Fourth Circuit, or elsewhere, an appeal of the District Court s decision. Canon and LGR agree to abide by such orders, directions and instructions of the District Court s decision in a Dispute. J.A. 109. 8 All of the parties claims and counterclaims in this case, properly construed, are covered by the Dispute resolution provisions of the Settlement Agreement. All of Canon s fraud and breach of contract claims relate to the parties respective rights and obligations under or relating to th[e] [Settlement] Agreement and are consequently disputes under the Agreement. J.A. 108. Similarly, LGR s fraud, misrepresentation and breach of contract claims pertain to the appropriate payment protocol under the Agreement under the Agreement. and thus concern the payment of money Article 10 provides the sole and exclusive process for resolving disputes. Consequently, all of Canon and LGR s claims are governed by the express language of Article 10 of the Settlement Agreement, and Article 10 forbids appellate review of a district court s disposition of any dispute. Canon s appeal is therefore DISMISSED. 9
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