Quanergy Solutions, Inc. v. EOS Australia PTY LTD

Background

Quanergy and EOS entered a distributor agreement effective March 15, 2022. The agreement appointed EOS as a non-exclusive distributor and reseller of Quanergy products in Australia and New Zealand for an initial three-year term. It also stated that the agreement would automatically renew for one-year periods unless either party gave timely written notice of non-renewal.

The agreement said EOS’s appointment as a distributor was conditioned on meeting certain obligations, including minimum purchase commitments. The agreement’s schedule listed total minimum purchases of $800,000 during the initial term, with annual amounts of $150,000, $250,000, and $400,000. The agreement also stated that Quanergy could terminate it immediately after written notice if EOS failed to meet the minimum purchase requirements and did not cure the failure within 30 days.

On September 30, 2022, EOS sent Quanergy OldCo. a purchase order for 50 sensors and 50 software licenses totaling $416,898. The agreement stated that orders were not accepted until Quanergy provided written acceptance or delivered the products. Quanergy OldCo. did not provide a signed written acceptance or deliver the products. In January 2023, EOS emailed that it wanted to cancel the purchase order. Quanergy later acquired Quanergy OldCo.’s assets and sued EOS.

Quanergy asserted claims for breach of contract, intentional misrepresentation, negligent misrepresentation, violation of California’s unfair-competition law, and unjust enrichment. Its contract claim included theories that EOS failed to meet the purchase order and minimum volume commitment, sold or promoted competing products, and failed to use its best efforts to market and sell Quanergy products.

Summary Judgment Rulings

Both parties moved for summary judgment under Federal Rule of Civil Procedure 56, which permits judgment without a trial when no genuine dispute exists about a material fact and the moving party is entitled to judgment as a matter of law.

The court granted summary judgment for EOS on the issue of whether the distributor agreement was a sales contract requiring EOS to purchase $800,000 of products. Reading the agreement as a whole, the court held that it was a distributor agreement, not a sales or purchase agreement. The minimum volume commitment was a condition of EOS’s continued status as a distributor, not an express obligation to buy $800,000 of products. Under the agreement, Quanergy’s remedy for failing to meet that condition was termination of EOS’s distributor status.

The court also granted EOS summary judgment on Quanergy’s claim that EOS repudiated obligations under the purchase order. The court held that EOS’s purchase order was an offer that Quanergy OldCo. never accepted under the agreement’s written-acceptance or delivery requirements. The court therefore denied Quanergy’s cross-motion for summary judgment on that issue and held that EOS validly rescinded its offer in the January 2023 email.

The court denied summary judgment on whether the distributor agreement had terminated. EOS argued that its January 2023 email terminated the agreement, while Quanergy argued that the agreement remained in effect. The court found a material factual dispute concerning whether and when termination occurred. Because that issue affected Quanergy’s other contract theories and its misrepresentation claims, the court denied EOS’s motion for summary judgment on those claims.

For Quanergy’s claim under California Business and Professions Code section 17200, the court granted summary judgment for EOS to the extent the claim was based on rejecting the purchase order. The court held that the purchase order was never accepted, so Quanergy’s theory concerning bankruptcy-law restrictions on canceling a contract did not apply. The court denied summary judgment to the extent the unfair-competition claim was based on the distributor agreement, because the termination dispute remained unresolved.

The court granted summary judgment for EOS on Quanergy’s unjust-enrichment claim. It reasoned that Quanergy relied on an express distributor agreement covering the subject matter, making a quasi-contract theory unavailable on the facts presented. The court denied Quanergy’s motion for summary judgment on EOS’s 22 affirmative defenses because material factual disputes also affected those defenses.

Other Motions and Disposition

The court denied EOS’s motion to strike Quanergy’s reply. Although sur-replies generally require permission, the court found that Quanergy had filed a reply rather than a technically improper sur-reply.

EOS also moved to exclude testimony from two Quanergy witnesses. Quanergy represented that one witness’s testimony would be offered as lay opinion testimony and that the other would not be offered as a trial witness. The court treated those representations as withdrawing the witnesses as expert witnesses and denied EOS’s motion to exclude without prejudice. In its conclusion, the court stated that it denied the motion to exclude.

The final disposition was that the court granted in part and denied in part EOS’s motion for summary judgment, denied Quanergy’s cross-motion for summary judgment, denied EOS’s motion to strike, and denied EOS’s motion to exclude.