may not be cited except as provided by
Minn. Stat.§ 480A.08, subd. 3 (1994).
STATE OF MINNESOTA
IN COURT OF APPEALS
Cardiac Pacemakers, Inc.,
TPLC, Inc., d/b/a
Telectronics Pacing Systems
a Delaware corporation,
Filed November 26, 1996
Reversed and remanded
Toussaint, Chief Judge
Ramsey County District Court
File No. C8-95-8573
Jeffrey J. Keyes, James J. Long, and Michael J. Tostengard, Briggs and Morgan, P.A., 2400 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for appellant).
Timothy D. Kelly, Wendy A. Snyder, Jennifer L. Frisch, Kelly & Berens, P.A., 3720 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondent).
Craig D. Diviney, Michael A. Lindsay, J. Thomas Vitt, Dorsey & Whitney, P.L.L.P., Pillsbury Center South, 222 So. Sixth Street, Suite 1300, Minneapolis, MN 55402 (for defendant).
Feldman, Gale & Weber, 100 Southeast Second Street, Suite 3850, Miami, FL 33131 (for defendant)
Considered and decided by Crippen, Presiding Judge, Toussaint, Chief Judge, and Parker, Judge.
Appellant Medtronic contends that the district court erred by granting the motion for summary judgment of respondent Cardiac Pacemakers, Inc. (CPI) in an action for breach of contract. Because genuine issues of material fact exist regarding (1) the meaning of the terms "personal" and "distributor" in Medtronic's and CPI's settlement agreement, license, and purchase agreement, and (2) whether the contract between CPI and Telectronics Pacing Systems (TPLC) constituted an assignment, we reverse and remand.
D E C I S I O N
On an appeal from the summary judgment, we make two inquiries (1) whether there are any genuine issues of material fact, and (2) whether the lower courts erred in their application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990) (citing Offerdahl v. University of Minn. Hosp. & Clinics, 426 N.W.2d 425, 427 (Minn. 1988)).
A reviewing court may make a determination of whether a contract is ambiguous without deference to the district court's determination. City of Virginia v. Northland Office Properties Ltd. Partnership, 465 N.W.2d 424, 427 (Minn.App. 1991). A contract is ambiguous if it is reasonably susceptible to more than one construction. Id.; Ecolab, Inc. v. Gartland, 537 N.W.2d 291, 295 (Minn.App. 1995) (If "both of the definitions offered by the parties could reasonably be applied to the contract language, * * * the language is ambiguous").
Medtronic, CPI, and TPLC are competitors in the cardiac pacemaker industry. A dispute arose between Medtronic and CPI over patent rights. After eight years of litigation in six different cases, Medtronic and CPI resolved their disputes by entering into (1) a settlement agreement, which established the settlement terms for the pending litigation, (2) a license agreement, which enabled the parties to agree to terms and conditions upon which to cross license their patents for certain cardiac stimulation devices, and (3) a purchase agreement, which provided the terms, expiration dates, and conditions under which Medtronic would allow CPI to "market, sell, distribute, and have distributed through CPI's distributors throughout the world," Medtronic produced pacemakers. This was to comprise one "agreement." The "agreement" contained an integration clause.
CPI entered into a "distribution agreement" with TPLC, granting TPLC the "exclusive right (except to fulfill existing CPI obligations), to market, sell, distribute and have distributed," the Medtronic-manufactured pacemakers that CPI gained rights to under the CPI-Medtronic "agreement." The distribution agreement provided that TPLC would sell and distribute, for the life of the pacemakers, CPI's Medtronic-manufactured pacemakers "through TPLC's normal channels of distribution" under terms independently determined by TPLC.
Under the distribution agreement, TPLC was required to conform with the Food and Drug Administration (FDA) regulations, to provide "traceability information to CPI on a timely basis," and to "comply with all FDA distributor requirements." CPI also required TPLC to report failure of any of the pacemakers to CPI.
Medtronic discovered that CPI and TPLC had entered into the distribution agreement. Medtronic brought a motion for a temporary restraining order and later moved for injunctive relief. Both were denied. Medtronic then moved for summary judgment seeking declaratory judgment that:
(1) [TPLC] may not sell any Medtronic-manufactured pacemakers on or after November 27, 1995, because all rights to sell under the 1991 purchase agreement between Medtronic and defendant CPI expired on that date and (2) the August 10, 1995, 'distribution agreement' between CPI and TPLC constitutes an impermissible assignment and transfer of CPI's rights under the May 13, 1991, purchase agreement.
Medtronic contends that CPI breached its contract with Medtronic by assigning and delegating to TPLC certain CPI's contractual rights and duties. Medtronic asserts that this assignment and delegation violates the clause designating that the "agreement is personal * * *." Medtronic explains that it must be careful that the pacemakers it produces are cared for and monitored in an appropriate fashion because Medtronic is liable for its pacemakers' defects and malfunctioning. Thus, Medtronic claims that it entered into a "personal" agreement with CPI only "out of personal trust and confidence in the competence and risk worthiness" of CPI.
The district court found that Medtronic's construction of the term "personal" was unreasonable. In its order granting summary judgment, the district court stated
Medtronic, Inc. emphasizes that the right of sale granted to CPI was a "personal" right and that CPI could not in turn grant that right to another. It is correct that CPI could not properly assign its contract with Medtronic, Inc. But the implication of Medtronic's interpretation of "personal" is that only CPI and its own distributors could sell to the ultimate consumer.* * * Thus, if CPI sold pacemakers to a hospital and the hospital re-sold them to another buyer, there would be a contract violation because the right to sell these pacemakers is "personal" to CPI. There is no such limitation * * *.
The district court previously stated, however
As to the term "personal" appearing in the contract, I'm not certain what that means. And I appreciate Medtronic's argument that all words in the contract have to be given meaning * * *.
Despite this statement, the district court stated that the term "personal" was "clear and unambiguous." We disagree.
Executory contracts for personal services can be performed ordinarily only by the person who has contracted to render them. This is especially true where the contract shows that authority has been conferred upon another because of personal confidence or trust. The reason is that personal qualities of the person who is to render the services, such as his ability, skill, taste, integrity, dependability, and the like are a material factor and consideration * * * .
Egner v. States Realty Co., 223 Minn. 305, 312, 26 N.W.2d 464, 469 (Minn. 1947). Because Egner has construed the term "personal" in a similar fashion to the meaning urged by Medtronic, we find that the interpretation of "personal" raises a genuine issue of material fact.
Further, because interpretation of the term "personal" was material to the determination of whether there was a breach of contract, the district court's grant of summary judgment was an abuse of discretion. See Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993) (citation omitted) (summary judgment should not be granted where there are genuine issues of material fact). This court remands to the district court for inquiry into the parties' intended construction of the term "personal." See Midway Ctr. Assocs. v. Midway Ctr., Inc., 306 Minn. 352, 356, 237 N.W.2d 76, 78 (1975) (to resolve an ambiguity in a contract, courts must give effect to the parties' intent at the time that the parties entered into the contract).
Medtronic further contends that CPI breached its contract with Medtronic by granting TPLC the right to distribute Medtronic-manufactured pacemakers. The CPI-Medtronic agreement grants CPI the right to "distribute and have distributed through CPI's distributors throughout the world," Medtronic-manufactured pacemakers. Medtronic contends that TPLC is not a "CPI distributor" because CPI has no control over TPLC's choice of distributors or methods of distribution.
Additionally, the CPI-Medtronic agreement states that the Medtronic-produced pacemakers "must be sold * * * by [CPI]'s sales forces or established distributor network." Medtronic contends that TPLC was neither a member of CPI's sales force nor a member of CPI's established distributor network because TPLC's sales representatives did not represent themselves as CPI sales agents nor did TPLC ever act as a distributor of CPI products before distributing the Medtronic-produced pacemakers.
At the very least, Medtronic asserts that the term "distribute" is ambiguous and that it ought to have the opportunity to have the word judicially construed in its favor.
The district court's temporary restraining order found
There is some evidence and some facts presented that it was the intent of the parties, at least from Medtronic's view, that they, would have some say over who -- or at least had a contemplation -- as to who CPI would select as distributors.
However, the district court summary judgment order provided
The Purchase Agreement did not define "distributor" or place any restrictions on who could be a distributor * * *. For the court to impose definitions and restrictions would be to rewrite the parties' contract. The court has no power to do so."
Because (1) the district court's findings suggest that the intent of the parties may have been to interpret "distributor" as a specific group and (2) both Medtronic's and CPI's constructions of the term distributor were reasonable, we conclude that the term "distributor" is ambiguous.
If, as Medtronic asserts, CPI did not have the right to allow TPLC to distribute, then the district court's finding that "CPI sold to TPLC for distribution" implies that CPI's action constituted breach. Thus, the interpretation of "distributor" is material.
Reversed and remanded.
[ ]1 Pursuant to a settlement between appellant Medtronic, Inc. and respondent TPLC, Inc. TPLC has been dismissed with prejudice from this action.