Anderson Marketing, Inc. v. Design House, Inc.

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No. 95-1951
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Anderson Marketing, Inc., *
*
Plaintiff-Appellant, *
*
v. *
* Appeal from the United States
Design House, Inc.; Benson * District Court for the
Manufacturing Corporation; * District of Minnesota.
The Butter Hardware Co.; *
Roy Butter; Bruce A. Littman; * [TO BE PUBLISHED]
Terry L. Mather; James A. *
Felber; Ed Harlin, *
*
Defendants-Appellees. *

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Submitted: November 17, 1995

Filed: December 5, 1995
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Before HANSEN, LAY, and MURPHY, Circuit Judges.

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PER CURIAM.

This is a diversity case involving an alleged breach of contract.
We affirm the judgment of the district court.

In 1986, Anderson Marketing, Inc. ("Anderson") entered into a sales
representation agreement ("the 1986 Agreement") with Design House, Inc.
("Design House"). By its terms, Anderson was to serve as the exclusive
marketing agent for Design House's plastic exterior shutters, bathtub and
shower wall kits, and rain diffusion products. The 1986 Agreement was
terminable at will by either party upon thirty days written notice.

In May 1991, Anderson secured an account with Menards for the
purchase and sale of a new product, "tub-surrounds." On October 1,
1991, Design House advised Anderson that, effective November 1, 1991, it
was terminating the 1986 Agreement.

Anderson then brought this litigation against Design House, alleging
promissory estoppel, quantum meruit, fraud, and, most important to this
appeal, breach of contract under Minn. Stat. § 325E.37 (1994), which
prohibits the termination of sales repre-sentation agreements without good
cause, ninety days written notice, and sixty days to cure deficiencies in
performance.1

1
Minn. Stat. § 325E.37(2) provides in relevant part:

Termination of agreement. (a) A manufacturer . . . may
not terminate a sales representative agreement unless the
person has good cause and:

(1) that person has given written notice setting
forth the reason(s) for the termination at least 90 days
in advance of termination; and

(2) the recipient of the notice fails to correct the
reasons stated for termination in the notice within 60
days of receipt of the notice.

The statute applies to all sales representation agreements entered
into or renewed on or after August 1, 1990, the effective date of
the statute. 1990 Minn. Laws, ch. 539, § 5. In 1991, the
Minnesota legislature clarified that an agreement is "renewed" if:

(1) the period as specified in the agreement has expired
or expires, but the relationship has continued or
continues, either for a new specified period or for an
indefinite period; or

(2) the agreement is for an indefinite period, and "with
the principal's consent or acquiescence, the sales
representative solicits orders on or after" August 1,
1990.

1991 Minn. Laws, ch. 190, § 2(a).

The Minnesota Court of Appeals has interpreted this provision
as a clarification of Minn. Stat. § 325E.37 which is applicable
retroactively to the effective date of the statute. New Creative
Enters., Inc. v. Dick Hume & Assoc., 494 N.W.2d 508, 511 (Minn. Ct.

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 The district court granted summary judgment in favor of Design House.
The court reasoned that, although Minn. Stat. § 325E.37 applies
retroactively to the parties' 1986 Agreement, the act thus applied violates
the Contract Clauses of the Minnesota and United States Constitutions. The
district court also dismissed Anderson's various other state law claims on
the grounds that they do not allege a proper claim upon which relief can
be granted.

On appeal, although Anderson challenges virtually all of the district
court's rulings, the company primarily contends the court erred in
dismissing its breach of contract claim under Minn. Stat. § 325E.37.2
Anderson argues that the parties entered into a new and separate agreement
governing the tub-surrounds account in 1990, subsequent to the adoption of
Minn. Stat. § 325E.37. If we were to accept this argument, there would be
no need to apply the statute retroactively. However, we find no support
for Anderson's claim that the parties entered into a new agreement in 1990.
There is no dispute that the 1986 Agreement expressly precluded oral
modifications. Yet Anderson offers no evidence of any written
modification. Moreover, the district court expressly rejected Anderson's
claim in holding that the parties did not substantially or materially alter
the 1986 Agreement; if the parties did not substantially alter the 1986
Agreement, they certainly did not create a new agreement.3

App. 1993).
2
Anderson challenges the lower court's rulings with one
notable exception: he does not contest its ruling that, applied
retroactively, Minn. Stat. § 325E.37 is unconstitutional. When
asked at oral argument whether he conceded that the statute,
applied retroactively, is unconstitutional, counsel for Anderson
Marketing replied that a challenge to that holding was implicit in
his other arguments. We disagree. One searches Anderson's briefs
in vain for even hints of such an argument.
3
The district court observed:

The object of any sales representation agreement,
including the one at issue herein, is to solicit and
obtain orders for the manufacturer. Therefore, merely
requiring a sales representative to solicit orders with the
principal's consent or acquiescence to trigger application of the

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 Contrary to Anderson's contention, had the lower court accepted the
argument that there was a new agreement, it would not even have reached the
question of retroactivity and the constitutional issue. Thus, we think it
is clear that, unless the statute is applied retroactively, Design House
did not breach the 1986 Agreement when it exercised its right to terminate
on thirty days notice. As indicated, however, the trial court found that
the 1986 Agreement was renewed, but held that applying the statute
retroactively would violate the Contract Clause.

We affirm the judgment of the district court without review of its
constitutional reasoning for two reasons: first, the record amply
demonstrates that the parties did not enter into a new contract after
passage of the statute; and second, although, contrary to Anderson's
assertions, the district court did find that the 1986 Agreement was
renewed,4 the company raises no argument, either in its briefs or at oral
argument, that the district court's constitutional reasoning was incorrect.

It is a fundamental rule of federal appellate procedure that we may
only pass on a district court's ruling if a party challenges that ruling
on appeal by raising the issue in its opening brief. Fed. R. App. P.
28(a)(2), (4); see, e.g., Nolte v. Peterson, 994 F.2d 1311, 1315 (8th Cir.
1993); Borough v. Duluth, Missabe & Iron Range Ry., 762 F.2d 66, 68 n.1
(8th Cir. 1985); Mississippi River Corp. v. F.T.C., 454 F.2d 1083, 1085-86
(8th Cir. 1972); Pet Milk Co. v. Boland, 185 F.2d 298, 302 (8th Cir. 1950).
This rule

statute is nothing more than a continuing of the contractual
relationship. This results in [a] retroactive application of the
statute.

Dist. Ct. Op. at 4.
4
See Note 3, supra.

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applies with even greater force in a case involving a constitutional
question, as federal courts should be hesitant to render an unnecessary
decision that a statute, as applied, is or is not constitutional. Here,
Anderson raises no argument concerning the constitutional issue. We are
thus precluded from addressing the constitutional reasoning of the court
below.

In summary, we find that the evidence does not support Anderson's
claim that the parties entered into a second agreement after passage of the
Minnesota statute. We agree with the district court's conclusion that, at
best, the evidence supports only the finding that the 1986 Agreement was
renewed to include Menards' sales, which requires the retroactive
application of the statute. Since the constitutional issue is not before
us, this finding alone requires that we affirm. We also affirm the
dismissal of Anderson's alternative claims of promissory estoppel, quantum
meruit, and fraud, for the reasons set out by the district court.
AFFIRMED.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

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