Smarttran, Inc. v. Alpine Confections, Inc.

1
NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 09-1024
SMARTTRAN, INC.,
Appellant
v.
ALPINE CONFECTIONS, INC.; MAXFIELD CANDY COMPANY; KENCRAFT,
INC.;
FANNIE MAY CONFECTIONS BRANDS, INC; FANNIE FARMER; HARRY
LONDON;
1-800- FLOWERS.COM, INC.
UNITED PARCEL SERVICE, INC.;
FEDEX CORPORATION,
Intervenors in District Court
On Appeal from the United States District Court
for the Western District of Pennsylvania
District Court No. 07-CV-00381
District Judge: The Honorable Terrence F. McVerry
Argued October 27, 2009
Before: SMITH, FISHER, and STAPLETON, Circuit Judges
(Filed: November 19, 2009)
Anthony J. Basinski, Esq. (Argued)
Eric P. Reif, Esq.
Peitragallo, Gordon, Alfano, Bosick & Raspanti
301 Grant Street
One Oxford Center, 38th Floor

-- 1 of 11 --

2
Pittsburgh, PA 15219
Counsel for SmartTran, Inc.
Patricia L. Dodge, Esq. (Argued)
Mary C. McGinley, Esq.
Meyer, Unkovic & Scott
535 Smithfield Street
1300 Oliver Building
Pittsburgh, PA 15222
Counsel for Fannie May Confections Brand, Inc.,
Fannie Farmer, Harry London, Maxfield Candy Co.,
Kencraft, Inc., 1-800-Flowers.com, Inc., and
Alpine Confections, Inc.
D. Craig Parry, Esq.
Parr, Brown, Gee & Loveless
185 South State Street
Suite 800
Salt Lake City, UT 84111
Counsel for Maxfield Candy Co. and Kencraft, Inc.
Kevin P. Lucas, Esq.
Manion, McDonough & Lucas
600 Grant Street
U.S. Steel Tower, Suite 1414
Pittsburgh, PA 15219
Counsel for Fedex Corp.
Judith F. Olson, Esq.
Schnader Harrison Segal & Lewis
120 Fifth Avenue
2700 Fifth Avenue Place
Pittsburgh, PA 15222
Counsel for United Parcel Service, Inc.
OPINION
SMITH, Circuit Judge.
This appeal from summary judgment requires us to interpret a consulting

-- 2 of 11 --

The District Court exercised diversity jurisdiction over this case, 28 U.S.C. §1
1332(a)(1), and we review its grant of summary judgment under 28 U.S.C. § 1291.
We exercise “plenary review over the District Court’s grant of summary judgment.”2
Shuman ex rel Shertzer v. Penn Manor Sch. Dist., 422 F.3d 141, 146 (3d Cir. 2005)
(internal quotation omitted). A court should grant summary judgment “if the pleadings,
the discovery and disclosure materials on file, and any affidavits show that there is no
genuine issue as to any material fact and that the movant is entitled to judgment as a
matter of law.” FED. R. CIV. P. 56(c). In applying that standard, “a court must view the
facts in the light most favorable to the nonmoving party and draw all inferences in that
party’s favor.” Shuman, 422 F.3d at 146 (internal quotation omitted).
3
agreement. SmartTran, Inc. (“SmartTran”), a shipping consultant, and Alpine
Confections, Inc. (“Alpine”), a candy company, entered into a consulting agreement (the
“Agreement”) for shipping advice. Halfway through the Agreement’s term, Alpine
underwent a corporate reorganization and was acquired by 1-800-Flowers.com
(“Flowers”) and some of Alpine’s subsidiaries were spun off to a new corporation.
SmartTran alleges that Alpine and its subsidiaries breached the Agreement by refusing to
pay SmartTran consulting fees after the corporate reorganization. SmartTran also alleges
that Flowers breached the Agreement, and, in any event, owes SmartTran restitution
under the theories of unjust enrichment and quantum meruit. SmartTran and Alpine both
moved for summary judgment and the District Court granted summary judgment for the1
defendants, concluding that the Agreement did not provide for payment of fees when
SmartTran’s recommendations were not used. We agree with the District Court’s
analysis and will affirm its grant of summary judgment.2
The Agreement, as a matter of law, did not provide for SmartTran to receive fees
where its recommendations were not used. As such, SmartTran’s breach of contract

-- 3 of 11 --

Fannie Farmer was named as a defendant, but the parties now agree that Fannie Farmer3
is a brand name and not a company.
4
claim against all defendants cannot survive summary judgment. The claims against
Alpine’s subsidiaries that were spun off fail for the additional reason that they were not
parties to the Agreement and had no obligation to pay SmartTran. The unjust enrichment
and quantum meruit claims against Flowers are unsuccessful because Flowers never
received any benefit from SmartTran’s consulting services.
I.
SmartTran analyzes companies’ small parcel transportation needs and recommends
ways to negotiate discounted contracts with shipping companies, like United Parcel
Service (“UPS”). Alpine, prior to the corporate reorganization, was a candy company that
also owned other candy companies, including defendants Maxfield Candy Co.
(“Maxfield”), Kencraft, Inc. (“Kencraft”), and Harry London (collectively, the “Alpine
Defendants”).3
On January 27, 2004, Alpine entered into the Agreement with SmartTran. The
Agreement’s prefatory recital explained that SmartTran was to “review [Alpine’s] use of
small package transportation services and to determine if [Alpine] can achieve cost
savings.” In the Agreement, Alpine warranted that at the time of entering into the
Agreement it was not “negotiating a rate discount increase, or decrease in rates, with any
small package transportation service provider.” If Alpine received a rate discount
increase, or a decrease in applicable rates during the term of the Agreement, SmartTran
would accrue fees as set forth in paragraph seven of the Agreement. That paragraph

-- 4 of 11 --

5
states that SmartTran is entitled to fifty percent of all savings realized by Alpine through
SmartTran’s recommendations:
SmartTran’s fees for services will be as follows:
A. Fifty percent (50%) of all savings realized payable for a
period of thirty-six (36) months from the date the savings
first become effective.
B. SmartTran shall invoice [Alpine] monthly for the fee earned
pursuant to this Agreement which invoice shall be payable
within five (5) business days of receipt.
C. SmartTran will not be paid a fee unless savings actually
become effective.
The Agreement also required Alpine to pay SmartTran for all fees accrued by Alpine’s
“related corporations, subsidiaries, associations, and related businesses which utilize the
recommendations submitted by SmartTran.” If Alpine began using SmartTran’s
recommendations anytime within two years of the date SmartTran submitted its
recommendations, then the fee structure described in paragraph seven applied.
After entering into the Agreement, SmartTran reviewed Alpine’s shipping
characteristics and offered recommendations to decrease Alpine’s shipping costs. Alpine
used those recommendations to negotiate a contract with UPS (the “Alpine/UPS
Contract”), and began shipping under that contract on June 20, 2005. Because the
Alpine/UPS Contract provided Alpine lower shipping rates than it received prior to
utilizing SmartTran’s recommendations, Alpine began paying SmartTran fifty percent of
its savings, as required under paragraph seven of the Agreement. Approximately ten
months later, in April 2006, Alpine underwent a corporate reorganization. In that
reorganization, Maxfield and Kencraft, Alpine’s subsidiaries, became subsidiaries of a

-- 5 of 11 --

After the corporate reorganization, Alpine changed its name to Fannie May Confections4
Brand, Inc., but for the purposes of this opinion we will continue to refer to the company
as Alpine.
6
newly formed corporation, KDM Holdings (“KDM”), and Flowers purchased Alpine and
Harry London.4
The Alpine Defendants continued to pay fees to SmartTran for another six months,
through October 2006. On November 3, 2006, KDM informed SmartTran that it had
negotiated a new contract with UPS, effective October 22, 2006, based on Maxfield and
Kencraft’s shipping characteristics. KDM stated that it would not pay SmartTran fees for
shipping that occurred after October 22, 2006, because it had not shipped under the
Alpine/UPS Contract after that date. On November 27, 2006, Alpine and Harry London
informed SmartTran that as of October 23, 2006, they were no longer shipping under the
Alpine/UPS Contract and would not pay SmartTran fees for shipping after that date.
After their purchase by Flowers, Alpine and Harry London began shipping under
Flowers’s carrier agreement with UPS (the “Flowers/UPS Contract”). That contract
provided better shipping rates than the Alpine/UPS Contract.
In response to the Alpine Defendants’ refusals to pay fees, SmartTran filed a
complaint in the United States District Court for the Western District of Pennsylvania
charging all defendants with breach of contract and the implied duties of good faith and
fair dealing, and seeking restitution from Flowers under the theories of quantum meruit
and unjust enrichment. SmartTran’s claims are based on its belief that the Agreement
entitled it to fees for the entire thirty-six month fee payment period even though the

-- 6 of 11 --

7
Alpine Defendants ceased shipping under the Alpine/UPS Contract after approximately
sixteen months.
SmartTran moved for summary judgment on liability and the defendants moved for
summary judgment on liability and damages. The District Court referred the matter to a
Magistrate Judge who recommended that SmartTran’s motion for summary judgment be
denied and that defendants’ motion be granted. The District Court adopted the
Magistrate’s reasoning and granted summary judgment for the defendants. This timely
appeal followed.
II.
SmartTran argues that the District Court erred in concluding that the Agreement
entitled SmartTran to fees only when its recommendations were actually used by Alpine.
On appeal, SmartTran raises four arguments challenging the District Court’s
interpretation of the Agreement. As discussed below, none of these arguments justifies
reversal of summary judgment for the defendants on the breach of contract and the
implied duties of good faith and fair dealing claims.
First, SmartTran argues that the District Court failed to view the evidence in the
light most favorable to the non-moving party because it concluded that the Alpine
Defendants’ use of SmartTran’s recommendations was a condition precedent to payment.
This argument fails at the outset because the Agreement was unambiguous and the
interpretation of an unambiguous contract is an issue of law, not an issue of fact. Kripp v.
Kripp, 849 A.2d 1159, 1163 (Pa. 2004). The District Court was not required to interpret

-- 7 of 11 --

Recognizing that it cannot survive summary judgment without an ambiguity in the5
Agreement, SmartTran claims that the District Court concluded that the Agreement was
ambiguous. This claim is baseless—the District Court did not find ambiguity in the
Agreement.
8
the Agreement in the light most favorable to SmartTran because it was interpreting an
unambiguous contract as a matter of law.5
Second, SmartTran argues that, once Alpine used its recommendations to effect
savings, SmartTran was entitled to 50 percent of all savings that could have been realized
by Alpine using SmartTran’s recommendations during the following 36 months, even if
Alpine ceased to use those recommendations during the 36-month period. On the other
hand, Alpine insists that, once Alpine used SmartTran’s recommendations to effect
savings, SmartTran was entitled only to 50 percent of all savings generated by the use of
those recommendations over the ensuing 36 months. Alpine is clearly correct. It
contracted to pay for the right to utilize SmartTran’s recommendations a fee based on “all
small package savings effected by SmartTran” and no savings were effected by
SmartTran’s recommendations after Alpine stopped shipping under the Alpine/UPS
Contract.
Third, SmartTran argues that the Alpine Defendants’ course of conduct shows that
they shared the same understanding of the Agreement as SmartTran. The conduct
identified by SmartTran consisted of Alpine and Harry London employees questioning the
legal implications of the Agreement for the corporate reorganization and the Alpine
Defendants’ payments of fees to SmartTran until October 2006. Neither of these
activities establishes a course of conduct supporting SmartTran’s interpretation of the

-- 8 of 11 --

9
Agreement.
Alpine and Harry London’s questioning of the legal implications of the Agreement
for the corporate reorganization had nothing to do with the parties’ course of conduct
under the Agreement. For example, SmartTran cites a March 16, 2006, email from a
Harry London executive asking questions about the Agreement:
Is the contract with Alpine or some other entity? What is the
term? What are the provisions in the event the Flowers deal
happens—is this a liability that Flowers will assume? Can
KDM be carved out? Are there other factors to be considered?
This email only suggests that a Harry London executive did not have a complete
understanding of the Agreement—not that Harry London agreed with SmartTran’s
interpretation of the Agreement. To establish a course of conduct, one must actually be
acting under the contract. The Alpine Defendants’ payments until October 2006 also fail
to support SmartTran’s argument because Kencraft, Maxfield, and Harry London all
shipped under the Alpine/UPS Contract and accrued fees until the end of that month.
These payments fail to establish a course of conduct supporting SmartTran’s view that it
should receive fees under the Agreement even when its recommendations were not used.
Finally, SmartTran argues that it is entitled to fees even if the Alpine Defendants
were no longer shipping under the Alpine/UPS Contract because the Alpine Defendants
benefitted from the lower rates in the Alpine/UPS Contract in negotiating their own
contracts with UPS. For Alpine and Harry London, the record belies SmartTran’s
assertion. After being purchased by Flowers, Alpine and Harry London shipped under the
Flowers/UPS Contract, a contract that had earlier been negotiated independently by

-- 9 of 11 --

10
Flowers and with no assistance from SmartTran. For Maxfield and Kencraft,
SmartTran’s argument may have some merit. Those two companies negotiated a new
contract and perhaps benefitted from SmartTran’s recommendations in negotiating that
contract. As described in the next section, however, any such claims against Maxfield
and Kencraft fail because they were not signatories to the Agreement.
III.
The breach of contract and the implied duties of good faith and fair dealing claims
against Maxfield and Kencraft also fail because neither company was a signatory to the
Agreement. See Electron Energy Corp. v. Short, 597 A.2d 175, 177 (Pa. Super. Ct. 1991)
(“[O]ne cannot be liable for a breach of contract unless one is a party to that contract.”).
Nowhere in the Agreement are Alpine’s subsidiaries obligated to pay SmartTran for their
use of SmartTran’s recommendations. Alpine was responsible for payment of all fees
accrued by its subsidiaries. As such, neither Maxfield nor Kencraft can be held liable for
breaches arising from the Agreement. SmartTran’s argument that there is a genuine issue
of material fact as to whether Maxfield and Kencraft benefitted from its recommendations
in the negotiation of their new contract with UPS fails because they were not obligated to
pay SmartTran under the Agreement. Thus, any such claim would be one for unjust
enrichment and SmartTran does not allege that Maxfield and Kencraft were unjustly
enriched.
IV.
No genuine issues of material fact exist for the unjust enrichment and quantum

-- 10 of 11 --

11
meruit claims against Flowers. It is undisputed that SmartTran never performed any work
for Flowers and never played any role in Flowers’s negotiation of the Flowers/UPS
Contract. Thus, Flowers never benefitted from SmartTran’s services and was never
unjustly enriched. See AmeriPro Search, Inc. v. Fleming Steel Co., 787 A.2d 988, 991
(Pa. Super. Ct. 2001). SmartTran’s quantum meruit claim fails for the same reason. See
id.
V.
The Agreement, as a matter of law, did not entitle SmartTran to fees if its
recommendations were not used and Flowers never received any benefit from
SmartTran’s recommendations. Thus, we will affirm the District Court’s grant of
summary judgment for the defendants.

-- 11 of 11 --