Opinion

Mr. Bird's Custom Car Wash Equipment v. Ver-Tech Labs

Court: District Court, M.D. Pennsylvania
Filed: Mar 7, 2022
Cited by: 0 cases
Authority: More cited than 29.1%

“[I]t is axiomatic that a contract may be manifest orally, in writing, or as an inference from the acts and conduct of the parties.”

How later courts described this case

“[I]t is axiomatic that a contract may be manifest orally, in writing, or as an inference from the acts and conduct of the parties.”
holding that the defendant’s “actions constituted fraud in the inducement, and therefore, the claim for fraud and misrepresentation was not barred by the gist of the action doctrine”
“[A] failure to state a claim for breach of contract does not mean that a tort claim based on the same conduct cannot be barred by the ‘gist of the action’ doctrine.”
finding that Judge Dalzell’s decision in Vives “is the most instructive and, ultimately, persuasive on [the] issue” of “whether (and when) the gist of the action doctrine applies to bar fraudulent inducement claims”

Written by the judges who cited it.

The opinion

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

MR. BIRD’S CAR WASH No. 4:19-CV-01752

EQUIPMENT, LLC,

(Chief Judge Brann)

Plaintiff,

VER-TECH LABS,

Defendant.

MEMORANDUM OPINION

MARCH 7, 2022

The car wash supply distribution company Mr. Bird’s Custom Car Wash

Equipment, LLC filed suit against one of its suppliers, Ver-Tech Labs, for

allegedly terminating the parties’ contract without cause and then poaching its

clients. Mr. Bird’s pleads breach of contract and related equitable and tort claims.

Ver-Tech now moves for summary judgment, raising valid questions about the

contract and conduct at issue as well as the interplay between the contract and tort

claims. Although certain claims cannot survive summary judgment, most counts

may proceed—albeit in narrower form and on shaky legs. For the reasons provided

below, Ver-Tech’s motion for summary judgment is granted in part, denied in part.

I. BACKGROUND

A. The 2015 Oral Agreement

In 2015, Ver-Tech and Mr. Bird’s “entered into an arrangement” under

which “Ver-Tech agreed to provide car wash cleaning products to [Mr. Bird’s]

with the understanding that [Mr. Bird’s] would sell the products to end users.”1 In

exchange for the “dealer/distributorship relationship” and a discount on Ver-Tech

products, Mr. Bird’s promised to introduce Ver-Tech representatives to its

customers.2

Because the parties reached this agreement orally and did not codify the

terms in writing, certain provisions remain in dispute. According to Mr. Bird’s,

Ver-Tech promised “not to contact and/or sell directly to [Mr. Bird’s] customers.”3

Ver-Tech does not explicitly affirm or deny that it made this commitment. It notes

that “there was no written agreement preventing Ver-Tech from soliciting or doing

business with any [Mr. Bird’s] customers”4 and later asserts (incorrectly) that

1 Doc. 46 ¶ 3; see also Doc. 50 at 3 (noting that the parties “operat[ed] under a verbal agreement

from 2015 through 2017”).

2 Doc. 1 ¶ 13; see also Doc. 50, Ex. J (Apr. 12, 2021 M. Early Dep.) 46:20–47:6 (“Q. Now, in

Paragraph 13 you say, ‘In 2015, Ver-Tech’s representatives, Brian Chipman and Allen Luce,

both acting on behalf of Ver-Tech, promised Mr. Bird’s a dealer distribution relationship if

Mr. Early would introduce the Ver-Teck representatives to Mr. Bird’s customers. You say that,

right? A. Yeah. Q. When in 2015 did that occur? A. I want to say that was late spring when we

were working out our distributor oral agreement.”).

3 Doc. 50 at 15; see also Doc. 50, Ex. J (Apr. 12, 2021 M. Early Dep.) 56:20–25 (“Q. Okay. So

you had a verbal agreement [in 2015] with Ver-Tech that they would not sell to your customers

forever? A. How about they communicated [to] me and made lots of promises that they would

not sell to my customers.”).

Mr. Bird’s CEO Mike Early repudiated the claim that Ver-Tech made this oral

promise.5 It does not, however, cite any testimony from its current or former

employees rejecting or otherwise questioning the oral agreement. Additionally,

Ver-Tech maintains that the parties did not agree to a set term or timeframe for the

venture and similarly did not agree to any conditions that would determine the

parties’ right to terminate the arrangement.6 Mr. Bird’s asserts that the parties

understood the agreement would remain in place for a “reasonable period of

time.”7

Despite this, the parties maintained their arrangement without issue from

2015 to 2017. Mr. Bird’s sold Ver-Tech products to its customers, generating

substantial revenues for both companies.8 Additionally, Mr. Bird’s introduced

5 Doc. 45 at 8 (citing Doc. 46, Ex. 2 (Apr. 12, 2021 M. Early Dep.) 57:6–9, 63:18–65:6, 169:1–

15).

6 Doc. 46 ¶¶ 5 (“Plaintiff does not contend that the purported ‘verbal agreement’ contained any

sort of fixed term or duration”), 8 (asserting that the verbal agreement did not “specif[y] any

conditions that would give rise to a limitation on either party’s right to terminate the

agreement”).

7 Doc. 50 at 7.

8 Doc. 46, Ex. 2 (Apr. 12, 2021 M. Early Dep.) 126:11–15 (“Q. Okay. Now, with respect to

being lied to to get into the relationship, was the relationship profitable, or was it not profitable?

A. It was very profitable for both of us.”), 128:18–24 (“Q. But you—I’m asking you about

your fraud claim. You said you were defrauded into this relationship. I’m asking you if that

made you money or cost you money? You’re saying it made you money, right? A. Until it was

terminated.”), 131:3–15 (“Q. Do you understand that by filing this complaint you’ve made an

allegation that you were lied to and tricked into this relationship? A. It seems that way to me.

Q. And the result of that trick was that you made profits for 2015, 2016, and 2017, correct? A.

Yeah. Q. Have you offered to give those profits back to Ver-Teck? A. Why? Q. Have you? A.

I haven’t.”), accord Doc. 50, Ex. B (Mar. 29, 2021 A. Luce Dep.) 28:20–29:3 (“Q. Okay. And

would you say that Mr. Bird’s—Early’s business grew with the sale of Ver-Tech products from

2015 through the end of 2017? A. Mike’s—say that again. Mike’s what? Q. Would you say

that Mr. Bird’s sales of Ver-Tech products grew from 2015 through the end of 2017? A. I

Ver-Tech representatives to its customers—specifically, New York-based Foam &

Wash and Scrub-a-Dub9—and Ver-Tech provided Mr. Bird’s exclusive distribution

rights to this customer base.10

B. The 2017 Email Negotiations

In 2017, Mr. Bird’s CEO Mike Early approached Ver-Tech Business

Development Manager Allen Luce about entering a formal, written distributor

agreement.11 Asked during his deposition why, after operating under an oral

agreement since 2015, he “all of a sudden want[ed] a written agreement,” Early

testified that he “needed to protect [his] investment and [his] relationships.”12 Early

further explained that he believed “[i]n business you should always have an

agreement” because “people don’t always do the right thing.”13

Between June and November 2017, Early and Ver-Tech representatives—

namely, Luce and Ver-Tech CEO Tony Vertin—attempted to negotiate a written

9 See Doc. 50, Ex. B (Mar. 29, 2021 A. Luce Dep.) 27:23–28:6 (“Q. And did [Mike Early]

introduce you—introduce you and Ver-Tech to Gary Baright’s businesses? A. I already knew

Gary Baright, but yes, Michael had a—had chemicals up at Gary Baright’s, and I went up with

him to set up Ver-Tech chemicals. Q. And did Mike Early or Mr. Bird’s introduce you to the

business account of Scrub-a-Dub? A. Yes.”).

10 See Doc. 46 ¶ 3 (“In or around April 2015, [Ver-Tech] entered into an arrangement with [Mr.

Bird’s] where Ver-Tech agreed to provide car wash cleaning products to [Mr. Bird’s] with the

understanding that [Mr. Bird’s] would sell the produce to end users.”), accord Doc. 50 at 2

(“[Mr. Bird’s] became a distributor of Ver-Tech produce for which he was exclusively

responsible for distributing products to his customers in Pennsylvania and New York

beginning in 2015.”).

11 Doc. 46, Ex. 2 (Apr. 12, 2021 M. Early Dep.) 61:25–62:23.

12 Id. at 63:18–22.

agreement with Early. Although certain conversations were in person,14 the

discussions relevant here occurred over email. They are as follows:

June 8, 2017:

Allen Luce emailed Mike Early a draft “Distribution Agreement” between

“Ver-Tech Labs and Mister Birds Custom Car Wash Equipment.” The agreement

provides that “Ver-Tech labs will not sell to any customers of Mister Birds unless

the following occur: Mister Birds chooses to no longer sell Ver-tech lab chemicals

(VTL), [or] Mister Birds goes out of business.” Further, the agreement notes that

“[b]oth parties can cancel this agreement with a 30 day notice provided in writing

and after both parties have worked to resolve any issues in the 30 days of

cancellation notice.”15

October 11–12, 2017:

Four months after sending the initial draft “Distribution Agreement,” Luce

followed up with Early: “Mike, I have not received the distributor agreement back

from you that I started[.] [C]an you please send me that before you send to Tony

[Vertin] as I would like to review it.”16 The next day, Early responded with an

email attaching a new document titled “Vert-Tech And Mr Birds Distributor Rep

Agreement.” The undated document includes the following relevant provisions:

14 See id. at 62:8–12 (“[Q.] My question to you is what were your requests for a written distributor

agreement? How were they made? A. They were conversation between me and Allen [Luce]

face-to-face, oral.”).

15 Doc. 1, Ex. A (June 8, 2017 A. Luce Email).

 Non-solicitation: “[Ver-tech] acknowledges and agrees that it will not solicit

sales from [Mr. Bird’s] customers, nor sell [car wash products] directly to

[Mr. Bird’s] customers, during the terms of this Agreement and for a period

of three (3) years immediately following the termination of this

agreement.”17

 Product Pricing: “For all [car wash] Products, [Ver-Tech] shall charge [Mr.

Bird’s] at least 40% off of the [Ver-Tech’s] retail price for the Products.

Notwithstanding the foregoing, the prices [Ver-Tech] charges [Mr. Bird’s]

for Products at any time during the term of this Agreement shall be no

greater than the lowest prices [Ver-Tech] charges any of its other customers

or representatives anywhere in the United States.”18

November 9, 2017:

Tony Vertin emailed Early detailing “what we are prepared to offer you.”

Vertin noted that “[t]he Ver-tech Labs Distributor policy is the guideline for this

agreement.” Further, he outlined the following “[s]pecific terms” that Ver-Tech

was “prepared to offer”:

1. Mr. Birds receives a 45% discount on products with

the exception of Drying Agents and Powders.

2. Mr. Birds pays freight for all drop shipments, plus a

$50 fee. Freight allowance for shipment to Mr. Birds

warehouse is per distributor policy.

3. Terms: 2% net 10, net 30. Quick pay discount is not

allowed when paying by credit card.

4. In the event of termination of this agreement, Ver-tech

labs will wait 45 days to pursue customers. Any

customers given to Mr. Birds by Ver-tech Labs can be

pursued immediately upon termination.19

17 Id. at 4 ¶ 3.

18 Id. at 4–5 ¶ 4(a).

Vertin concluded the email by writing, “I hope this email settles your

concerns. I am unwilling to negotiate on this topic any further.”20

November 10, 2017:

 1:08 p.m.: Luce emailed Early that “[a]s of Monday Nov 13th your

orders will be at 45% off list price and 40% off on drying agent and

powders. Mr Birds will be responsible for freight and drop ship fee. All

orders paid in 10 days [or] less will get a 2% discount. We would still

like to see Mr Birds at 50% and being a stocking distributor.” Luce

concluded the email by noting that he “look[s] forward to working

together and growing the business.”21 These terms generally accord with

those outlined by Vertin the day prior; however, there is no mention of

(a) the discount carveout for “Drying Agents and Powders,” (b) the

discount available for order payments “net 30,” or (c) the 45-day non-

competition period following termination of the agreement. Additionally,

Luce’s November 10 email preceded any response from Mr. Bird’s

accepting Vertin’s November 9 offer.

 2:10 p.m.: Early responded to Vertin’s November 9 email, writing: “Got

it, [i]t’s just what we spoke about. I will forward over to our council [sic].

Do you have clarification on how this agreement will terminate?”22 Early

makes no mention of Luce’s email sent an hour prior.

 2:43 p.m.: In response to Early’s question about “how this agreement will

terminate,” Vertin wrote, “First of all, I would prefer that you direct these

questions to Allen or Brian. I have empowered them to deal with this

situation. I will say that I am somewhat mystified about the sudden

urgency for a distributor contract. . . . I am not sure I understand the

question about termination. I am going to sound like a smart ass, but it

seems to me the only way the proposed contract would terminate is if you

drop VTL. I do not have any contracts with any distributor currently, nor

do I want any. How does any agreement terminate? Typically,

agreements are for set terms and have conditions that would cause a

breach in the contract. I am not sure we have agreed to any of those

conditions. If I am going [through] the expense to have a contact written

more than our general agreement previously presented[,] [h]ere are

20 Id.

21 Doc. 1, Ex. E (Nov. 10, 2017 A. Luce Email).

several breach conditions that I would insist upon: 1. If Mr. Birds or any

entity associated with Mr. Birds sells or uses any chemical products other

than from Ver-tech Labs, the whole agreement is in breach[;] 2. Non-

payment[;] 3. If Mr. Birds fails to grow business[;] 4. If Mr. Birds fails to

make a good faith effort to sell VTL products. I am sure there are other

conditions, but these come to mind.”23

November 13, 2017:

Early responded to Luce’s email from November 10 writing, “Sorry, I did

not notice Friday’s Nov 10th Email changed shipping deal to end on 10th of

October instead of Nov 13th.”24 Early then detailed his understanding of the

parties’ relationship moving forward:

I would appreciate Ver-Tech Labs, contacting me

directly [with] regards [to] any of Mr Bird’s Customers.

Moving forward Mr. Bird will be doing [m]onthly

servicing and paying freight cost to all of Mr. Birds

[c]ustomers. Including Scrub A Dub, Foam & Wash and

EZ Wash as agreed.

Ver-Tech Labs [h]as [p]icked up shipping cost for a few

years. Mr. Birds will now take its turn picking up

shipping costs. When order is placed from Mr Bird’s

customers, I will text order to you.

Two weeks is not enough time to fix our shipping issues.

By First Quarter of next year, Mr Bird’s will contract a

freight company to deliver product to Williamsport.

Mr Bird’s will set up staff to do fulfillment out of our

Williamsport warehouse.

23 Doc. 1, Ex. G (Nov. 10, 2017 T. Vertin Email).

Today, I Just finished meeting with R&L Rep. Still must

meet with FedEX Rep.”25

C. Termination of the Business Relationship

On December 15, 2017, Ver-Tech terminated its relationship with Mr. Bird’s

and informed Mr. Bird’s that it would no longer be able to distribute Ver-Tech

products.26 According to Early, Ver-Tech did not provide any reason or

explanation for why it ended this arrangement.27

Shortly after, Mr. Bird’s learned that prior to terminating their agreement,

Ver-Tech had been in contact with certain Mr. Bird’s customers about selling its

products to them directly—that is, without going through Mr. Bird’s.28 Indeed, on

November 30, 2017, Luce and Vertin traveled to New York to meet with

representatives from Foam & Wash and Scrub-a-Dub—both Mr. Bird’s customers

at that time—about establishing a direct distribution relationship.29 According to

25 Id.

26 Doc. 46, Ex. 2 (Apr. 12, 2021 M. Early Dep. Tr.) 106:13–107:13.

27 Doc. 50, Ex. J (Apr. 12, 2021 M. Early Dep. Tr.) 164:5–12 (“Q. Did they tell you whenever

they spoke to you when they terminated your agreement in December of 2017 that they were

terminating your agreement for cause? A. No. Q. Did they give you any reason whatsoever?

A. No.”).

28 Doc. 1 ¶ 37.

29 Doc. 50, Ex. B (Mar. 29, 2021 A. Luce Dep.) 113:6–18 (“Q. November 30th, 2017, there were

flight arrangements made on behalf of you and Tony Vertin to go to New York. It says, looks

like me might be dropping Mr. Bird’s. Tony and Allen are going to see if they can get some

accounts direct. What accounts did you and Tony go to in New York on or about November

30th, 2017, to get accounts direct? A. The only accounts that were being done [sic] business

up there we discussed. Q. Which ones? A. I would say we probably saw Foam & Wash and

Scrub-a-Dub.”), 115:14–21 (“Q. Well, the intention of Ver-Tech before this meeting, Allen, is

clearly stated in Exhibit 26. A. Mm-hmm. Q. We’ll be dropping Mr. Bird’s, and we’re going

to New York to get customers direct? A. Looks like we might be dropping Mr. Bird’s, might

Luce, during their meeting, a Scrub-a-Dub representative stated that “they don’t

really need Mike Early. They don’t need to pay through a middleman. They buy

everything else direct, and, you know, they didn’t see the value in Mike Early.”30

These meetings proved fruitful for Ver-Tech. After ending its relationship

with Mr. Bird’s, Ver-Tech started providing its products directly to Foam & Wash

and Scrub-a-Dub, who promptly stopped doing business with Mr. Bird’s.31

Ver-Tech maintains that these customers stopped purchasing car wash supplies

from Mr. Bird’s because of its “non-performance and charging them freight.”32

According to Early, he spoke to representatives from Foam & Wash and Scrub-a-

Dub, and they both told him that “[t]hey got a better deal” from Ver-Tech: by

bypassing Mr. Bird’s and purchasing the supplies directly from Ver-Tech, they

were able to get a “better discount.”33 Mr. Bird’s denies ever charging these

customers freight.34

D. Procedural Posture

On October 7, 2019, Mr. Bird’s filed suit against Ver-Tech based on

Ver-Tech’s termination of the parties’ relationship and successful efforts to

30 Id. at 113:25–114:11.

31 Doc. 50 at 10; see also Doc. 46, Ex. 2 (Apr. 12, 2021 M. Early Dep. Tr.) 104:5–106:6.

32 Doc. 46 ¶ 22.

33 Doc. 46, Ex. 2 (Apr. 12, 2021 M. Early Dep. Tr.) 105:1–106:1.

34 Id. at 104:19–25 (“Q. Did [Scrub-a-Dub] tell you that they had to get rid of you because you

were charging them freight? A. I never charged them freight. Q. Same question with Foam &

establish direct distribution arrangements with Mr. Bird’s customers.35 The

Complaint consists of six claims: (1) Count I – Breach of Contract; (2) Count II –

Tortious Interference with Contractual Relations; (3) Count III – Fraud in the

Inducement; (4) Count IV – Unjust Enrichment; (5) Count V – Promissory

Estoppel; and (6) Count VI – Violation of the Pennsylvania Unfair Trade Practices

and Consumer Protection Law.36

After discovery, Ver-Tech moved for partial summary judgment on

Count VI.37 On May 20, 2021, the Court granted Ver-Tech’s motion and dismissed

that count.38

On June 11, 2021, Ver-Tech moved for summary judgment on the remaining

five counts.39 That motion has been fully briefed and is now ripe for disposition.40

II. LAW

Under Federal Rule of Civil Procedure 56, summary judgment is appropriate

where “the movant shows that there is no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law.”41 Material facts are

those “that could alter the outcome” of the litigation, “and disputes are ‘genuine’ if

evidence exists from which a rational person could conclude that the position of

35 Doc. 1.

36 Id.

37 Doc. 27.

38 Doc. 41; Doc. 42.

39 Doc. 44.

40 Doc. 45; Doc. 50; Doc. 52.

the person with the burden of proof on the disputed issue is correct.”42 A defendant

“meets this standard when there is an absence of evidence that rationally supports

the plaintiff’s case.”43 Conversely, to survive summary judgment, a plaintiff must

“point to admissible evidence that would be sufficient to show all elements of a

prima facie case under applicable substantive law.”44

The party requesting summary judgment bears the initial burden of

supporting its motion with evidence from the record.45 When the movant properly

supports its motion, the nonmoving party must then show the need for a trial by

setting forth “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.”46 The

nonmoving party will not withstand summary judgment if all it has are “assertions,

conclusory allegations, or mere suspicions.”47 Instead, it must “identify those facts

of record which would contradict the facts identified by the movant.’”48

In assessing “whether there is evidence upon which a jury can properly

proceed to find a verdict for the [nonmoving] party,”49 the Court “must view the

42 EBC, Inc. v. Clark Bldg. Sys., Inc., 618 F.3d 253, 262 (3d Cir. 2010) (quoting Clark v. Modern

Grp. Ltd., 9 F.3d 321, 326 (3d Cir. 1993)).

43 Clark, 9 F.3d at 326.

44 Id.

45 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

46 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

47 Betts v. New Castle Youth Development Center, 621 F.3d 249, 252 (3d Cir. 2010).

48 Port Authority of N.Y. and N.J. v. Affiliated FM Insurance Co., 311 F.3d 226, 233 (3d Cir.

2002).

49 Liberty Lobby, 477 U.S. at 252 (quoting Schuylkill & Dauphin Imp. Co. v. Munson, 81 U.S.

facts and evidence presented on the motion in the light most favorable to the

nonmoving party.”50 Moreover, “[i]f a party fails to properly support an assertion

of fact or fails to properly address another party’s assertion of fact as required by

Rule 56(c),” the Court may “consider the fact undisputed for purposes of the

motion.”51 Finally, although “the court need consider only the cited materials, . . . it

may consider other materials in the record.”52

III. ANALYSIS

A. Breach of Contract (Count I)

Ver-Tech first moves for summary judgment on Count I (breach of

contract). To maintain a breach of contract claim, a plaintiff must establish three

things: “(1) the existence of a contract, including its essential terms; (2) a breach of

the contract; and (3) resultant damages.”53 Additionally, the Supreme Court of

Pennsylvania has held that “it is axiomatic that a contract may be manifest orally,

in writing, or as an inference from the acts and conduct of the parties.”54

Here, the issue of which alleged contract governs the dispute and therefore

what conduct purportedly constituted breach remains, to put it mildly, muddled. In

presenting its breach of contract claim, Mr. Bird’s discusses two separate contracts:

50 Razak v. Uber Technologies, Inc., 951 F.3d 137, 144 (3d Cir. 2020).

51 Fed. R. Civ. P. 56(e)(2); see also Weitzner v. Sanofi Pasteur Inc., 909 F.3d 604, 613–14 (3d

Cir. 2018).

52 Fed. R. Civ. P. 56(c)(3).

53 Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C.,

137 A.3d 1247, 1258 (Pa. 2016).

(1) a 2015 oral agreement; and (2) an alleged 2017 agreement negotiated via email

between June and November of that year.55 At the onset of this litigation,

Mr. Bird’s presented the former as the only contract at issue; however, in its most

recent filings, Mr. Bird’s discusses a separate, “newly negotiated” contract from

2017.56

To this Court, that seems an odd (and rather misguided) strategic choice. For

the reasons provided below, there is a genuine dispute over whether Ver-Tech

breached the 2015 oral agreement. But the alleged 2017 agreement simply never

existed.

1. The 2015 Oral Agreement

Although Mr. Bird’s has shifted its focus to the alleged 2017 agreement in

its opposition to Ver-Tech’s summary judgment motion, the Court must

nevertheless address whether the facts adduced in discovery establish a genuine

dispute about Ver-Tech’s purported breach of the 2015 oral agreement. They do—

though not for the precise reasons Mr. Bird’s articulates.

a. The Contract

The parties agree that in 2015, they “entered into an arrangement” under

which “Ver-Tech agreed to provide car wash cleaning products to [Mr. Bird’s]

55 The parties also reference Ver-Tech’s National Distributor Policy, see, e.g., Doc 45 at 4, but

Mr. Bird’s does not claim that this policy governed the parties’ arrangement and accordingly

does not premise its breach of contract claim on this policy. See Doc. 50 at 2–9.

with the understanding that [Mr. Bird’s] would sell the products to end users.”57

Although the parties dispute certain material terms—namely, the duration of the

contract58 and the alleged non-solicitation provision59—as well as whether

Mr. Bird’s “ever truly became a ‘distributor’ as defined by Ver-Tech,”60 these

disagreements do not negate or call into doubt the existence of the contract.

b. The Breach

In its Complaint, Mr. Bird’s identified two ways in which Ver-Tech

allegedly breached the 2015 agreement: (1) “by terminating the contract without

cause and or no reason on or about December 15, 2017”; and (2) “by immediately

contacting Mr. Bird’s customers for the purpose of selling directly to Mr. Bird’s

customers to the immediate harm and detriment of Mr. Bird’s.”61 Although the first

argument fails as a matter of law, the second raises a genuine dispute.

Under Pennsylvania law, distribution agreements are governed by the

Pennsylvania Uniform Commercial Code (the “Code”).62 Section 2–309(b) of the

57 Doc. 46 ¶ 3; see also Doc. 50 at 3 (noting that the parties “operat[ed] under a verbal agreement

from 2015 through 2017”).

58 Compare Doc. 46 ¶ 5 (“[Mr. Bird’s] does not contend that the purported ‘verbal agreement’

contained any sort of fixed term or duration.”), with Doc. 51 ¶ 5 (admitting that “the initial

agreement entered into by and between the parties in April 2015 was a verbal agreement,” but

denying that “the references to Mr. Early’s deposition stand for the propositions stated in this

[p]aragraph” of Doc. 46).

59 Compare Doc. 45 at 8 (“[S]worn testimony in this case established that it is undisputed that no

such agreement (verbal or written) actually existed.”), with Doc. 50 at 8 (“Mr. Early testified

that Ver-Tech verbally agreed to not sell to his customers.”).

60 Doc. 46 ¶ 9; see also Doc. 50 at 3 (arguing that Ver-Tech “cannot, in good conscience, deny

that [Mr. Bird’s] was a distributor of Ver-Tech products”).

61 Doc. 1 ¶¶ 46, 47.

62 D & M Sales, Inc. v. Lorillard Tobacco Co., 2010 WL 786550, at *3 (E.D. Pa. Mar. 8, 2010);

Code states that “[w]here the contract provides for successive performances but is

indefinite in duration it is valid for a reasonable time but unless otherwise agreed

may be terminated at any time by either party.”63 This provision tracks with

Pennsylvania courts’ longstanding disfavor of contracts of perpetual duration.64

Still, Pennsylvania courts recognize that in rare instances, contracts silent on

duration may nevertheless be “construed as providing for a reasonable time or

some particular period.”65 But this determination is permissible only when the

court—by looking at “the surrounding circumstances, the situation of the parties,

the objects they apparently have in view, and the nature of the subject-matter of the

agreement”—can confidently “infer [that] the parties intended the agreement to

last for a particular period.”66 Absent any “unusual circumstances manifesting an

intention that [a contact] would continue for any particular period of time,” courts

view the contract as “at will, terminable by either party.”67

63 13 Pa. C.S.A. § 2309(b).

64 See, e.g., Hutchinson v. Sunbeam Coal Corp., 519 A.2d 385, 390 n.5 (Pa. 1986) (recognizing

the following “well-settled rule[] of construction”: “a lease will not be construed to create a

perpetual term unless the intention is express in clear and unequivocal terms”); Slonaker v.

P.G. Publishing Co., 13 A.2d 48, 50 (Pa. 1940) (“The general rule is that when a contract

provides that one party shall render service to another, or shall act as his agent, or shall have

exclusive sales rights within certain territory, but does not specify a definite time or prescribe

conditions which shall determine the duration of the relation, the contract may be terminated

by either party at will.”).

65 Slonaker, 13 A.2d at 51; see also Weilersbacher, 218 A.2d at 807 (noting that “[i]n some few

instances, [the Pennsylvania Supreme] Court permitted an exception to the general rule” that

contracts that “did not specify a definite term or prescribe conditions which would determine

the duration thereof, . . . could be terminated at will by either party”).

66 Roberts Technology Group, Inc. v. Curwood, Inc., 2015 WL 5584498, at *4 (E.D. Pa. Sept.

23, 2015) (citing Slonaker, 12 A.2d at 50–51).

Here, Ver-Tech argues that Mr. Bird’s “does not contend that the purported

‘verbal agreement’ contained any sort of fixed term or duration,” or specify “any

conditions that would give rise to a limitation on either party’s right to terminate

the agreement.”68 Although understandably reluctant to do so, Mr. Bird’s

effectively admits as much.69 More importantly, there is no evidence contradicting

Ver-Tech’s representation that the 2015 oral agreement was silent on the

agreement’s duration or term. Because the 2015 oral agreement was indefinite, this

Court must presume that it is “at will, terminable by either party.”70

Mr. Bird’s asserts that this presumption is “overcome” by the circumstances

surrounding the parties’ performance under the contract.71 Specifically, Mr. Bird’s

notes the following:

 The “sales [for Mr. Bird’s] grew materially from 2015 through 2017”;

 Mr. Bird’s was “part of [Ver-Tech’s] business development plan for the

year 2018”;

 Ver-Tech intended to “help [Mr. Bird’s] find and train a sales

representative and continue to grow the business”;

 Mr. Bird’s CEO Mike Early “told [Ver-Tech CEO Tony Vertin] that [Mr.

Bird’s] was close to hiring a sales representative to handle the market in

Pittsburgh, Pennsylvania”; and

68 Doc. 46 ¶¶ 5, 8.

69 Doc. 51 ¶ 8 (“It is admitted that neither the referenced paragraphs in the complaint, nor the

National Distributor Policy make reference to any conditions that would determine the parties

[sic] rights to terminate the initial agreement the parties entered into in April 2015.”).

70 Weilersbacher, 218 A.2d at 808.

 The Mr. Bird’s “warehouses were, at all times, stocked with Ver-Tech

products.”72

According to Mr. Bird’s, “[i]t is axiomatic that [it] would not have invested in any

of these things, but for the expectation that the agreement with Ver-Tech would

remain in place for a reasonable period of time.”73

Be that as it may, none of these facts—assessed individually or

collectively—qualify as the type of “unusual circumstances” evidencing both

parties intended the agreement to last for a particular period.74 At most, these facts

show that the parties had maintained their manufacturer-distributor relationship

and were prepared to sustain it moving forward. Both contractually and practically,

the parties “were bound to nothing.”75 As such, the 2015 verbal agreement was “at

will, terminable by either party.”76 The Court therefore agrees with Ver-Tech that

its “termination of the relationship or contract for any reason or no reason at all

was permitted and was, as a matter of law, not a breach.”77

However, Ver-Tech representatives contacting Mr. Bird’s customers is an

entirely different matter. In its Complaint, Mr. Bird’s alleges that as part of the

2015 verbal agreement, Ver-Tech “promised it would not interfere with Mr. Bird’s

customers by selling directly to or directly pursuing Mr. Bird’s customers or

72 Id. at 6.

73 Id. at 7.

74 Weilersbacher, 218 A.2d at 808.

75 Id.

76 Id.

otherwise interfering with Mr. Bird’s customer relationships”; however,

“[i]mmediately following termination of the distributor agreement, Mr. Bird’s

became aware that, beginning in late November to early December, Ver-Tech had

already been directly contacting Mr. Bird’s customers and had already started

selling its products directly to Mr. Bird’s customers.”78 In discovery, Mr. Bird’s

produced or obtained evidence that arguably supports both allegations.

Specifically, Mike Early testified that Ver-Tech orally agreed it would not sell to

Mr. Bird’s customers.79 And then Ver-Tech Business Development Manager Allen

Luce gave deposition testimony acknowledging that he and Tony Vertin made a

trip to New York on November 30, 2017—sixteen days before Ver-Tech

terminated its relationship with Mr. Bird’s—to meet with two Mr. Bird’s

customers about removing the “middleman” (i.e., Mr. Bird’s) and establishing

direct account relationships.80

78 Doc. 1 ¶¶ 37, 44.

79 Doc. 46, Ex. 2 (Apr. 12, 2021 M. Early Dep. Tr.) 56:20–25 (“Q. Okay. So you had a verbal

agreement [in 2015] with Ver-Tech that they would not sell to your customers forever? A.

How about they communicated [to] me and made lots of promises that they would not sell to

my customers.”).

80 Doc. 50, Ex. B (Mar. 29, 2021 A. Luce Dep.) 113:6–114:23 (“Q. November 30th, 2017, there

were flight arrangements made on behalf of you and Tony Vertin to go to New York. It says,

looks like me might be dropping Mr. Bird’s. Tony and Allen are going to see if they can get

some accounts direct. What accounts did you and Tony go to in New York on or about

November 30th, 2017, to get accounts direct? A. The only accounts that were being done [sic]

business up there we discussed. Q. Which ones? A. I would say we probably saw Foam &

Wash and Scrub-a-Dub. Q. And what was the purpose of this trip? A. To discuss business with

those accounts, chemicals and where they stood. Q. Did you offer direct shipment and a deal

or discounts directly with these accounts? A. Did I personally? . . . Q. I’m asking you, you

were part of those meetings, and what was said with regards to dealing directly with these

accounts on behalf of— A. It was said by—it was said by Scrub-a-Dub that they don’t really

Ver-Tech disputes the enforceability of this alleged oral non-solicitation

provision. Specifically, Ver-Tech asserts that because “there are no

contemporaneous writings evidencing this purported ‘non-solicitation’ term,” it is

unenforceable under Pennsylvania’s statute of frauds.81 But an agreement may

escape the statue of frauds’ purview if “there is evidence to establish that the

agreement was made.”82 Evidence demonstrating that an agreement was made

must be clear and competent, and “it may be proven by the acts and declarations of

the parties, either together or separately.”83

Although far from overwhelming, that evidence exists here. Not only did

Early testify that Ver-Tech made this commitment in 2015, but when he

approached Luce in June 2017 about codifying this commitment in writing, Luce

responded with a draft proposal that included multiple provisions restricting Ver-

Tech from “selling chemicals direct to Mister Birds customers.”84 If Luce or Ver-

Tech had concerns with this request or considered it unrelated to the 2015 verbal

agreement, there is no indication of that in the June 2017 email.85 Indeed, when

direct, and, you know, they didn’t see the value in Mike Early, and that they would have no

problem—they would like to buy direct to begin with, that they didn’t feel they needed them,

and I was servicing them.”).

81 Doc. 45 at 8–9 (citing 13 Pa. S.C.A. § 2201).

82 Stelwagon Manufacturing Co. v. Tarmac Roofing Systems, Inc., 63 F.3d 1267, 1276 (3d Cir.

1995).

83 Kurland v. Stolker, 533 A.2d 1370, 1373 (Pa. 1987).

84 Doc. 1, Ex. A (June 8, 2017 A. Luce Email) (attached “Distributor Agreement” provides that

“Ver-Tech labs will not sell to any customers of Mister Birds unless the following occur:

Mister Birds chooses to no longer sell Ver-tech lab chemicals (VTL), [or] Mister Birds goes

out of business”).

asked about it at his deposition, Luce stated only that he “didn’t understand why

[Early] was worried about [Ver-Tech selling directly to his customers] because he

had no reason to be at the time.”86

Moreover, Ver-Tech’s representatives have had multiple opportunities to

explicitly deny the existence of this oral commitment, but to the Court’s

knowledge, they never have. In its Statement of Material Facts, Ver-Tech asserts

only that “there was no written agreement preventing Ver-Tech from soliciting or

doing business with any [Mr. Bird’s] customers.”87 Ver-Tech does not cite any

testimony from its current or former employees rejecting or otherwise calling into

question the oral agreement. Indeed, Ver-Tech’s Statement of Material Facts

makes no mention of the alleged oral agreement whatsoever.88

In its moving brief, Ver-Tech claims that “sworn testimony in this case

established that it is undisputed that no such agreement (verbal or written) actually

existed,” asserting that “Mike Early testified to this at his deposition both on cross-

examination and on his counsel’s rehabilitation.”89 But the deposition testimony it

cites does not support this claim. Early testified that it “would be [Ver-Tech’s]

choice” to “immediately sell” to Mr. Bird’s customers “after they terminated” the

86 Doc. 50, Ex. B (Mar. 29, 2021 A. Luce Dep.) 51:2–19.

87 Doc. 46 ¶ 11 (emphasis added).

88 See id.

89 Doc. 45 at 8 (citing Doc. 46, Ex. 2 (Apr. 12, 2021 M. Early Dep.) 57:6–9, 63:18–65:6, 169:1–

parties’ agreement.90 But that’s not the issue here. The issue is whether Ver-Tech

orally promised “not [to] directly pursue Mr. Bird’s customers” while engaging

Mr. Bird’s as a distributor. When asked about that, Early testified that Ver-Tech

representatives “communicated [to] me and made lots of promises that they would

not sell to my customers.”91 Although Early later testified that he wanted this

commitment codified in writing,92 he never repudiated his central claim that

Ver-Tech orally promised not to pursue Mr. Bird’s customers.

Given the existence and likely enforceability of the oral non-solicitation

provision and the evidence that Ver-Tech representatives met with Mr. Bird’s

customers prior to terminating the contract to discuss possible direct distribution

arrangements, there is, at the very least, a genuine dispute about whether Ver-Tech

breached the 2015 verbal agreement.

c. The Damages

Finally, Mr. Bird’s argues that it “suffered damages as a result of

[Ver-Tech’s] interference, as Mr. Bird’s no longer had a relationship with either

Foam & Wash or Scrub-a-Dub”—the two New York-based Mr. Bird’s customers

that Ver-Tech representatives met with prior to terminating its agreement with Mr.

Bird’s.93 Ver-Tech does not dispute this.94

90 Doc. 46, Ex. 2 (Apr. 12, 2021 M. Early Dep.) 57:6–9 (emphasis added).

91 Id. at 56:20–25.

92 See id. at 169:1–15.

93 Doc. 50 at 10.

Instead, Ver-Tech asserts that it is entitled to judgment as a matter of law

because Mr. Bird’s “has presented no evidence to establish legally-recoverable

damages.”95 Ver-Tech challenges the expert report Mr. Bird’s submitted, arguing

that the proffered expert relied on “an improper method of calculating damages”—

that is, “lost gross profits.”96 Ver-Tech cites the United States Court of Appeals for

the Third Circuit’s 1973 opinion in Deaktor v. Fox Grocery Co. for the proposition

that “[t]he proper measure of damages under Pennsylvania law is net profits, not

gross profits.”97

In a relatively recent decision in Roberts Technology Group, Inc. v.

Curwood, Inc., the Third Circuit analyzed Deaktor and declined to adopt the

categorical rule that Ver-Tech proposes here.98 In Roberts Technology, the Third

Circuit held that although the plaintiff’s damages expert “focused on gross lost

profits, rather than net lost profits,” the trial record “contain[ed] sufficient evidence

upon which a jury could rely to conclude that [the plaintiff] would not have

incurred any additional substantial expenses in the absence of a breach.”99

Importantly, the Third Circuit emphasized that its denial of the defendant’s motion

for judgment as a matter of law on damages “does not amount to an endorsement

95 Doc. 45 at 18.

96 Id. at 17–18.

97 Id. at 18 (citing Deaktor v. Fox Grocery Co., 475 F.2d 1112 (3d Cir. 1973)).

98 695 F. App’x. 48, 51, 54 (3d Cir. 2017).

of [the plaintiff’s damages expert’s] analytical approach.”100 Rather, the Third

Circuit explained the limitations associated with the procedural mechanism the

defendant employed:

[T]he proper way to challenge improper expert testimony

is through a Daubert motion filed before trial, or, if

testimony extends beyond the scope of an expert report,

through an objection made at the time the improper

testimony is elicited. A motion for a judgment as a matter

of law is not an adequate substitute for those well-

established mechanisms. At this point, we are reviewing

the jury’s verdict and must affirm if any reasonable jury

could have reached the verdict in light of the evidence

presented at trial.101

Here, Ver-Tech requests judgment as a matter of law, but neither Ver-Tech

nor Mr. Bird’s analyzes the expert report in any detail. Importantly, neither party

assesses whether the expert report—or the summary judgment record—“contain[s]

sufficient evidence” about whether Mr. Bird’s “would not have incurred any

additional substantial expenses in the absence of a breach.”102 Indeed, the scant

briefing on this subject underscores the Third Circuit’s admonition that “[a] motion

for judgment as a matter of law is not an adequate substitute” for a Daubert

motion.103

At this juncture, the Court declines to grant Ver-Tech summary judgment

based on the adequacy of the damages calculation presented by Mr. Bird’s. To the

100 Id. at 54.

101 Id.

102 Roberts Technology, 695 F. App’x. at 54.

extent Ver-Tech wishes to challenge the legal applicability of the damages report

Mr. Bird’s relies on, there are other, more appropriate avenues for doing so.

2. The 2017 Agreement

Separately, Mr. Bird’s asserts that documentary evidence of email

communications between Mike Early (on behalf of Mr. Bird’s) and Allen Luce and

Tony Vertin (on behalf of Ver-Tech) “demonstrate[] that the parties had reached a

new agreement [in November 2017] relative to the distributorship between

[Mr. Bird’s] and [Ver-Tech].”104 Ver-Tech disagrees, arguing that this “secondary

breach of contract claim fails because no actual agreement ever came to fruition

and no such offer was ever accepted.”105 On this, the Court agrees with Ver-Tech.

Under Pennsylvania law, “a contract is created where there is mutual assent

to the terms of a contract by the parties with the capacity to contract.”106 To

establish mutual assent to the contractual terms, a party seeking to an enforce the

alleged contract must first show “that an offer has been made.”107 This offer “must

be intentional, definite, in its terms, and communicated; otherwise, no meeting of

the minds can occur.”108 As such, “it is well established that evidence of

preliminary negotiations or a general agreement to enter a binding contract in the

104 Doc. 50 at 5.

105 Doc. 52 at 12.

106 Shovel Transfer and Storage, Inc. v. Pennsylvania Liquor Control Board, 739 A.2d 133, 136

(Pa. 1999).

107 Stumpp v. Stroudsburg Municipal Authority, 658 A.2d 333, 335 (Pa. 1995).

future fail as enforceable contracts because the parties themselves have not come

to an agreement on the essential terms of the bargain and therefore there is nothing

for the court to enforce.”109

The Supreme Court of Pennsylvania has held that “the question of whether

an undisputed set of facts establishes a contract is a matter of law.”110 Accordingly,

when a plaintiff argues on summary judgment that letters or emails “create an

enforceable contract between [the parties]” and the documents “are not susceptible

to more than one reasonable interpretation or construction,” the existence of a

contract is a question of law properly adjudged by the Court.111

Here, the email communications between Mr. Bird’s and Ver-Tech from

June to November 2017 constitute only preliminary negotiations, and therefore did

not create a binding contract. On November 9, 2017, Tony Vertin emailed Mike

Early “[s]pecific terms” that Ver-Tech was “prepared to offer.”112 The following

day—before Early responded to Vertin—Ver-Tech Business Development

Manager Allen Luce sent Early an email detailing contractual terms that would

govern the parties’ relationship moving forward.113 Although Luce generally

109 ATACS Corp. v. Trans World Communications, Inc., 155 F.3d 659, 666 (3d Cir. 1998) (citing

Goldman v. McShain, 247 A.2d 455, 468 (Pa. 1968)).

110 Refuse Management Systems, Inc. v. Consolidated Recycling and Transfer Systems, Inc., 671

A.2d 1140, 1146 (Pa. 1996); see also 17 Am.Jur.2d, Contracts § 18 (“While the existence of a

contract is a question of fact, whether a certain or undisputed state of facts establishes a contract

is a question of law for the court.”).

111 EBC, Inc. v. Clark Building Systems, 2007 WL 4563518, at *4 (W.D. Pa. Dec. 21, 2007).

112 Doc. 1, Ex. F (Nov. 9–10, 2017 T. Vertin & M. Early Emails).

reiterated the terms Vertin outlined, he omitted certain material provisions—

critically, the proposed 45-day non-competition period.114

Early ignored Luce’s email and instead responded to Vertin, stating that he

would send the proposed terms to his attorney and asking for clarification on “how

this agreement will terminate.”115 Vertin replied shortly thereafter, stating that

“[t]ypically, agreements are for set terms and have conditions that would cause a

breach in the contract,” but noting, “I am not sure we have agreed to any of those

conditions.”116

That’s where the negotiations ended. Based on the documents presented, it

appears Early never responded to Vertin. Instead, Early replied to Luce’s

November 10 email, addressing only the limited set of terms Luce discussed.

Mr. Bird’s never accepted the proposed 45-day non-competition period or any

“breach conditions”—indeed, Mr. Bird’s made no mention of these proposed

terms.

Mr. Bird’s cannot now enforce proposed contractual provisions it nether

accepted nor even acknowledged. Because the undisputed statement of facts does

not establish a “meeting of the minds,” the Court finds that the alleged 2017

agreement is not an enforceable contract.

114 Id.

115 Doc. 1, Ex. F (Nov. 9–10, 2017 T. Vertin & M. Early Emails).

B. Tortious Interference with Contractual Relations (Count II)

Ver-Tech next argues that Count II (tortious interference) is barred by the

gist of the action doctrine because the alleged interference—specifically,

Ver-Tech’s direct contacts with Mr. Bird’s customers—relates only to a purported

contractual obligation: “there exists no implied social policy against ordinary and

standard industry competition.”117 Mr. Bird’s responds that it pleads tortious

interference “as an alternative to the breach of contract claim,” and as such, it “may

proceed unless, and until, a decision is determined as to the contractual obligations

of [Ver-Tech] as it relates to [Mr. Bird’s] customers.”118 Mr. Bird’s is mistaken.

Under Pennsylvania law, “the ‘gist of the action’ doctrine bars plaintiffs

from bringing a tort claim that merely replicates a claim for breach of an

underlying contract.”119 To determine whether a claim sounds in contract or tort,

Pennsylvania courts consider “the nature of the duty breached.”120 If the duty

breached “is one created by the parties by the terms of their contract—i.e., a

specific promise to do something that a party would not ordinarily have been

obligated to do but for the existence of the contract—then the claim is to be viewed

as one for breach of contract.”121 Conversely, if the claim “involves the defendant’s

117 Doc. 45 at 9.

118 Doc. 50 at 9–10.

119 Werwinski v. Ford Motor Co., 286 F.3d 661, 680 n.8 (3d Cir. 2002) (citing Phico Insurance

Co. v. Presbyterian Medical Services Corp., 663 A.2d 753, 757 (Pa. Super. 1995)).

120 Bruno v. Erie Insurance Co., 106 A.3d 48, 63 (Pa. 2014).

violation of a broader social duty owed to all individuals, which is imposed by the

law of torts and, hence, exists regardless of the contract, then it must be regarded

as a tort.”122

As a general matter, “courts agree that dismissals under the gist of the action

doctrine should take care not to preclude a party’s right to plead claims in the

alternative.”123 However, when the alleged tortious conduct implicates a duty

whose source “could only be contractual,” such as “a duty not to compete,” a

plaintiff cannot elide the gist of the action doctrine simply by asserting it pleads the

tort claim in the alternative.124

Here, Mr. Bird’s predicates its tortious interference claim on Ver-Tech’s

efforts to compete with Mr. Bird’s over its established customers: “[Ver-Tech]

took intentional and purposeful action to contact [Mr. Bird’s] customers, without

[Mr. Bird’s] knowledge, in an effort to obtain their direct business.”125 But

Mr. Bird’s “does not have a right to be free from competition and [Ver-Tech] has

no duty ‘imposed by law as a matter of social policy’ not to compete with

122 Id.

123 DePuy Synthes Sales, Inc. v. Globus Medical, Inc., 259 F. Supp. 3d 225, 235 (E.D. Pa. 2017);

see also USG Insurance Services, Inc. v. Bacon, 2016 WL 6901332, at *7 (W.D. Pa. Nov. 22,

2016) (“[C]ourts should be cautious when considering whether to dismiss a claim under the

gist of the action doctrine because the Federal Rules of Civil Procedure allow parties to plead

multiple claims as alternative theories of liability.”).

124 Chemtech International, Inc. v. Chemical Injection Technologies, Inc., 170 F. App’x 805, 806

(3d Cir. 2006).

[Mr. Bird’s].”126 It is well established that “[o]nly a contract can confer such a right

and impose such a duty.”127

Properly understood, the tortious interference claim sounds in contract, not

tort. This ruling is in no way contingent on “the contractual obligations of

[Ver-Tech] as it relates to [Mr. Bird’s] customers”;128 rather, it is dictated by “the

nature of the duty” Ver-Tech allegedly breached.129 Accordingly, Ver-Tech’s

motion for summary judgment as to Count II is granted.

C. Fraud in the Inducement (Count III)

Ver-Tech argues that summary judgment as to Count III (fraud in the

inducement) is proper for three reasons: (1) the claim is barred by the gist of the

action doctrine; (2) the claim is barred by the economic loss doctrine; and (3) Mr.

Bird’s failed to establish the essential elements of the claim.130 The Court

disagrees. The first two points fail as a matter of law. For the third, although the

evidence is far from overwhelming, there is enough to establish a genuine factual

dispute on the contested elements of the claim.

126 Chemtech, 180 F. App’x at 809.

127 Id.

128 Doc. 50 at 10. See Chemtech, 170 F. App’x at 809 (“[A] failure to state a claim for breach of

contract does not mean that a tort claim based on the same conduct cannot be barred by the

‘gist of the action’ doctrine.”).

129 Bruno, 106 A.3d at 63.

1. Gist of the Action

Ver-Tech contends that as with the tortious interference claim, the fraud in

the inducement claim is barred by the gist of the action doctrine. Specifically,

Ver-Tech notes that “the alleged representation (Ver-Tech will not contact

[Mr. Bird’s] customers for the purpose of selling to them directly) . . . was

incorporated into the parties’ alleged ‘contract,’” and, as such, “[i]f any action can

be maintained, it is then only an action in contract.”131 Again, Mr. Bird’s responds

that it “pled fraud in the inducement as an alternative to the breach of contract

claim,” and, as such, “should it ultimately be determined that [Ver-Tech] did not

owe to [Mr. Bird’s] a contractual duty not to contact [its] customers directly, then

. . . [Ver-Tech] has, instead, fraudulent[ly] induced [Mr. Bird’s] into engaging in

business with [Ver-Tech].”132 Although the arguments here mirror those for the

tortious interference claim, the law dictates a different outcome.

As discussed, the parameters of the gist of the action doctrine are well

established;133 however, the question of “whether (and when) the . . . doctrine

applies to bar fraudulent inducement claims” remains unresolved.134 Because the

Pennsylvania Supreme Court has not settled this issue, Pennsylvania’s intermediate

131 Id. at 12.

132 Doc. 50 at 11–12.

133 See Bruno, 106 A.3d at 63.

courts and courts of this Circuit have endeavored to predict how it would likely

rule. The results vary.

Pennsylvania appellate courts have adopted a categorical approach, holding

that where a party’s “tort claims relate to the inducement to contract, they are

collateral to the performance of the contracts and therefore, are not barred by the

gist of the action doctrine.”135 Conversely, following Judge Stewart R. Dalzell’s

cogent and persuasive opinion in Vives v. Rodriduez,136 district courts in this

Circuit generally employ a fact-specific analysis to determine whether the tort and

contract claims are “interwoven,” thus precluding the tort claim, or whether the

fraud claim is “collateral” to the contract.137 Courts consider claims “interwoven”

where the alleged misrepresentations that induced the plaintiff to enter the contract

were “later incorporated” into the agreement.138 Put differently, courts of this

135 Sullivan v. Chartwell Investment Partners, LP, 873 A.2d 710, 719 (Pa. Super. 2005); see also

Mirizio v. Joseph, 4 A.3d 1073, 1085 (Pa. Super. 2010) (holding that the defendant’s “actions

constituted fraud in the inducement, and therefore, the claim for fraud and misrepresentation

was not barred by the gist of the action doctrine”).

136 849 F. Supp. 2d at 516–22.

137 Diodato v. Wells Fargo Insurance Services, USA, Inc., 44 F. Supp. 3d 541, 554–55 (M.D. Pa.

2014) (Connor, J.); see also Wen v. Willis, 117 F. Supp. 3d 673, 681–83 (E.D. Pa. 2015)

(finding that Judge Dalzell’s decision in Vives “is the most instructive and, ultimately,

persuasive on [the] issue” of “whether (and when) the gist of the action doctrine applies to bar

fraudulent inducement claims”); Irish Isle Provision Co., Inc. v. Polar Leasing Co., Inc., 2013

WL 6077362, at *5 (M.D. Pa. Nov. 19, 2013) (adopting Judge Dalzell’s analysis in Vives).

138 Wen, 117 F. Supp. 3d at 682–83; see also Niiaryee v. Davison Design & Development, Inc.,

2018 WL 1072439, at *6 (W.D. Pa. Feb. 27, 2018) (“[T]he ‘gist of the action’ doctrine bars

fraudulent inducement claims where the false representation concerned duties later enshrined

in the contract.”); cf. Morrison v. AccuWeather, Inc., 2015 WL 4357346, at *6 (M.D. Pa. July

14, 2015) (holding that “the gist of the action doctrine does not act to bar Plaintiff’s fraudulent

Circuit have consistently held that “the gist of the action bars tort claims

concerning the promisor’s intent to perform under the contract.”139

Consistent with the courts of this Circuit, this Court declines to adopt the

categorical approach propounded by the Pennsylvania Superior Court in

Sullivan,140 and instead endorses the fact-specific analysis offered by Judge Dalzell

in Vives.141 Accordingly, the Court must analyze the alleged misrepresentation that

Mr. Bird’s argues induced it to enter the 2015 oral agreement with Ver-Tech and

determine whether it is interwoven with, or collateral to, the agreement underlying

the breach of contract claim.

For this, Mr. Bird’s pleading in the alternative becomes dispositive. As

discussed, Mr. Bird’s predicates its breach of contract claim, in part, on Ver-Tech’s

verbal commitment to refrain from soliciting direct relationships with Mr. Bird’s

customers—the same alleged misrepresentation underlying its fraudulent

inducement claim.142 If, as Mr. Bird’s contends, this commitment became a part of

the 2015 verbal agreement, then the fraudulent inducement claim concerns only

Ver-Tech’s intention to follow through on its alleged contractual obligations. Such

139 North American Communications, Inc. v. Herman, 2018 WL 2186422, at *4 (W.D. Pa. May

11, 2018); see also Malone v. Weiss, 2018 WL 827433, at *5 (E.D. Pa. Feb. 12, 2018)

(“Permitting a fraudulent inducement claim [based on the allegation that the defendant never

intended to honor the contract] would essentially negate the entire . . . gist of the action doctrine

because a Plaintiff would have only to allege that Defendants never intended to abide by a

provision in their contract in order to escape dismissal.”).

140 873 A.2d at 719.

141 849 F. Supp. 2d at 516–22.

tort claims are barred by the gist of the action doctrine.143 However, if it is

ultimately determined that the non-solicitation provision did not become an

enforceable part of the parties’ agreement, the fraudulent inducement claim would

not be impermissibly “interwoven” with the breach of contract claim.144

Here, Ver-Tech argues that the non-solicitation provision is unenforceable

under the statute of frauds.145 Although the Court considers the evidence, as

presented, sufficient to take this provision outside the purview of the statue of

frauds, that determination remains subject to the facts of the case. This uncertainty

renders Ver-Tech’s request for dismissal based on the gist of the action doctrine

premature.

2. Economic Loss Doctrine

Separately, Ver-Tech argues that the fraudulent inducement claim should be

dismissed under the economic loss doctrine.146 According to Ver-Tech, “fraud

claims can survive the economic loss doctrine only if they are not related to the

terms of the alleged contract.”147 But Ver-Tech dedicates only a sentence of its

moving brief to this argument. That’s for a good reason. In Werwinski v. Ford

Motor Co.—the sole case Ver-Tech cites—the Third Circuit predicted that the

Pennsylvania Supreme Court would apply the economic loss doctrine to claims of

143 See, e.g., North American Communications, 2018 WL 2186422, at *4.

144 Wen, 117 F. Supp. 3d at 682–83.

145 Doc. 45 at 8–9.

146 Doc. 45 at 13 (citing Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002)).

intentional fraud,148 but it carved out a “limited exception to the economic loss

doctrine for fraud-in-the-inducement claims if the fraud is extraneous to the

contract and not interwoven with the breach of contract.”149 As addressed in the

previous sub-section, if the non-solicitation term is ultimately deemed

unenforceable, the fraudulent inducement claim would be distinct from, rather than

interwoven with, the breach of contract claim. The Court therefore declines to

grant Ver-Tech’s motion for summary judgment as to Count III on this basis.

3. Elements of the Claim

Finally, Ver-Tech asserts that based on the undisputed facts, Mr. Bird’s

failed to establish certain elements required to maintain a claim for fraud in the

inducement—namely, intent to defraud and justifiable reliance.150 Mr. Bird’s

disagrees, arguing that “there remain substantial disputes regarding issues of

material facts in this case.”151 Although it is a close call, the Court agrees with

Mr. Bird’s.

Under Pennsylvania law, to maintain a claim for fraud in the inducement, a

plaintiff must show the following: “(1) a representation; (2) which is material to

148 286 F.3d at 681.

149 Air Products and Chemicals, Inc. v. Eaton Metal Products Co., 256 F. Supp. 2d 329, 337 (E.D.

Pa. 2003); see also Morrison v. AccuWeather, Inc., 2015 WL 4357346, at *7 (M.D. Pa. July

14, 2015) (holding that “the economic loss doctrine will not bar Plaintiff’s claims for fraudulent

misrepresentation” because “Plaintiff alleges fraud in the inducement and the allegations that

he relays are undoubtedly distinct from, rather than interwoven with, his breach of contract

claim”).

150 Doc. 45 at 12–13; Doc. 52 at 15.

the transaction at hand; (3) made falsely, with knowledge of its falsity or

recklessness as to whether it is true or false; (4) with the intent of misleading

another into relying on it; (5) justifiable reliance on the misrepresentation; and

(6) the resulting injury was proximately caused by the reliance.”152 The plaintiff

must prove each element “by clear and convincing evidence.”153

Here, Mr. Bird’s asserts that “while the parties were negotiating an oral

contract” regarding the distribution of Ver-Tech’s products, Ver-Tech “promised

not to sell to [Mr. Bird’s] customers.”154 According to Mr. Bird’s, “but for

[Ver-Tech’s] promises not to interfere with and contact [Mr. Bird’s] customers,

[Mr. Bird’s] would not have agreed to enter into any contractual arrangement with

[Ver-Tech].”155 Further, Mr. Bird’s argues that “as a result of these fraudulent

misrepresentations [it] has lost customers, namely Foam & Wash and Scrub-a-

Dub, thus resulting in lost profits for the company.”156

Ver-Tech considers the summary judgment record insufficient to establish

that it acted with the requisite intent or that Mr. Bird’s justifiably relied on the

representation at issue. For the intent prong, Ver-Tech contends that the only

evidence of its purported intent to defraud Mr. Bird’s comes from Mike Early’s

deposition testimony, in which he stated that Ver-Tech orchestrated a “secret plot”

152 Freeman v. Pittsburgh Glass Works, LLC, 709 F.3d 240, 256–57 (3d Cir. 2013).

153 Id. at 257.

154 Doc. 50 at 11 (citing Doc. 50, Ex. J (Apr. 12, 2021 M. Early Dep.) 56:20–25).

155 Id.

to steal Mr. Bird’s customers.157 When asked whether this “plot” began at the onset

of the parties’ relationship (i.e., 2014–2015), Early responded that “it seemed like

that’s what’s happening towards the end of the relationship” (i.e., 2017).158

Ver-Tech asserts that “[i]f the ‘secret plot’ occurred in late 2017, Ver-Tech could

not have induced [Mr. Bird’s] to enter into the parties relationship in 2015, and

Ver-Tech could not have induced [Mr. Bird’s] to introduce Ver-Tech to customers

in 2017 that [Mr. Bird’s] had already introduced to Ver-Tech in 2015.”159

But Ver-Tech ignores a critical fact: in direct contravention of the alleged

non-solicitation commitment, Ver-Tech representatives met with certain Mr. Bird’s

customers in November 2017 to discuss removing the “middleman”

(i.e., Mr. Bird’s) and establishing direct account relationships.160 It’s not simply

that Early believed there was a plot to steal Mr. Bird’s customers; Ver-Tech tried to

poach the customers while its exclusive distribution agreement with Mr. Bird’s

remained in effect. Additionally, when asked whether he understood Early’s

concern that Ver-Tech may sell directly to Mr. Bird’s customers, Allen Luce

testified that he “didn’t understand why [Early] was worried about it because he

had no reason to be at the time.”161 Given Ver-Tech’s efforts to solicit business

from Mr. Bird’s customers and the temporal limitation Luce placed on Ver-Tech’s

157 Doc. 52 at 15 (citing Doc. 46, Ex. 2 (Apr. 12, 2021 M. Early Dep.) 124:10–15).

158 Id.

159 Id.

160 Doc. 50, Ex. B (Mar. 29, 2021 A. Luce Dep.) 113:6–114:23.

alleged non-solicitation commitment, there is a genuine dispute as to whether

Ver-Tech’s oral commitment not to sell to Mr. Bird’s customers was “made

falsely.”162

For the reliance prong, Ver-Tech asserts that the fraud in the inducement

claim is barred because any reliance on the alleged representation “is unjustifiable

and unreasonable as a matter of law.”163 Ver-Tech points to Early’s deposition

testimony—specifically, Early’s statements that he “had concerns that [his]

customers would be taken” and that “in business, you should have a written

agreement”—as evidence that any reliance was unreasonable.164 According to

Ver-Tech, Early knew he could not “rely on [Ver-Tech’s] ‘verbal’

representation.”165

The Court finds this argument wholly unpersuasive. Under Ver-Tech’s

formulation, no individual or business could ever justifiably rely on oral

representations made by a contracting counterparty. If the Court were to adopt this

standard, it would arguably render unenforceable all oral contracts—a counterparty

could simply assert that the plaintiff should have known its oral representations

162 Freeman, 709 F.3d at 257.

163 Doc. 45 at 12.

164 Id. (citing Doc. 46, Ex. 2 (Apr. 12, 2021 M. Early Dep.) 61:25–62:25, 169:1–15).

were not reliable. That position cannot be reconciled with existing contract law in

Pennsylvania and throughout the United States.166

Analyzing the summary judgment record in the light most favorable to

Mr. Bird’s, the Court concludes that a reasonable jury could find that Ver-Tech’s

oral commitment not to sell to or interfere with Mr. Bird’s customers was false and

that Mr. Bird’s reliance on this commitment was justifiable. Accordingly, the

Court denies Ver-Tech’s motion for summary judgment as to Count III.

D. Unjust Enrichment (Count IV)

Ver-Tech next moves for summary judgment as to Count IV (unjust

enrichment), arguing that Mr. Bird’s cannot maintain this claim because it

“benefitted from the parties’ relationship and benefitted from all purported

agreements between the parties.”167 Mr. Bird’s disputes Ver-Tech’s

characterization of the facts, asserting that it “conferred a benefit upon [Ver-Tech]

when [it] introduced its customers to [Ver-Tech], and [Ver-Tech] proceed[ed] to

directly contact these customers in order to sell to them directly, cutting

[Mr. Bird’s] out of the transaction entirely.”168 Mr. Bird’s contends that as a result,

the benefit conferred “lies solely with [Ver-Tech] and, in fact, to the detriment of

166 See Meyer, Darragh, 137 A.3d at 1258 (“[I]t is axiomatic that a contract may be manifest

orally, in writing, or as an inference from the acts and conduct of the parties.”).

167 Doc. 45 at 14.

[Mr. Bird’s] who lost those customers as a result of [Ver-Tech’s] actions.”169 Here,

the Court agrees with Ver-Tech.

Pennsylvania courts recognize that “[u]njust enrichment is essentially an

equitable doctrine.”170 To maintain a claim for unjust enrichment, a plaintiff must

prove the following: “(1) benefits conferred on defendant by plaintiff; (2)

appreciation of such benefits by defendant; and (3) acceptance and retention of

such benefits under such circumstances that it would be inequitable for defendant

to retain the benefit without payment of value.”171 For the third prong, it is well

established that “the mere fact that one party benefits from the act of another is not

itself sufficient to justify restitution.”172 Indeed, “[c]ourts will not find unjust

enrichment where [a] plaintiff has rendered services to advance [its] own

interest.”173

Mr. Bird’s argues that “[i]n 2015, Ver-Tech’s representatives . . . promised

Mr. Bird’s a dealer/distributorship relationship if [Mr. Bird’s CEO Mike Early]

would introduce the Ver-Tech representatives to Mr. Bird’s customers.”174 Both

169 Id.

170 Mitchell v. Moore, 729 A.2d 1200, 1203 (Pa. Super. 1999) (internal quotation marks and

citation omitted).

171 Id.

172 Norris Sales Company, Inc. v. Target Division of Diamant Boart, Inc., 2002 WL 31771169, at

*4 (E.D. Pa. Dec. 11, 2002) (citing Meehan v. Cheltenham Township, 189 A.2d 593, 595 (Pa.

1963)).

173 Id.; see also King of Prussia Equipment Corp. v. Power Curbers, Inc., 117 F. App’x. 173, 176

(3d Cir. 2004) (affirming that “unjust enrichment will not be found where Plaintiff rendered

services to advance its own interests”).

174 Doc. 1 ¶ 13; see also Doc. 50, Ex. J (Apr. 12, 2021 M. Early Dep.) 46:20–47:6 (“Q. Now, in

parties adhered to these commitments—Mr. Bird’s introduced Ver-Tech to its

customers,175 and Ver-Tech provided Mr. Bird’s exclusive distribution rights to

this customer base.176 The parties further agree that this arrangement proved “very

profitable for both.”177

Because Mr. Bird’s profited from this venture, it cannot credibly dispute that

it “rendered services to advance [its] own interest.”178 Therefore, Mr. Bird’s cannot

recover damages for unjust enrichment.179 If Ver-Tech improperly poached