General Trading Intern., Inc. v. Wal Mart Stores

• Decision Date: 25 February 2003
• Docket Number: No. 02-1947.,No. 02-2064.,02-1947.,02-2064.
• Citation: 320 F.3d 831
• Parties: GENERAL TRADING INTERNATIONAL, INC., Appellee/Cross-Appellant, v. WAL-MART STORES, INC., Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

320 F.3d 831

GENERAL TRADING INTERNATIONAL, INC., Appellee/Cross-Appellant, v. WAL-MART STORES, INC., Appellant/Cross-Appellee.

No. 02-1947.

No. 02-2064.

United States Court of Appeals, Eighth Circuit.

Submitted: December 12, 2002.

Filed: February 25, 2003.

COPYRIGHT MATERIAL OMITTED

David Youngert Trevor, Minneapolis, MN, for appellant.

Thomas J. Olmstead, argued, Fayattevile, AR (William F. Mertins, on the brief), for appellee.

Before BOWMAN, RILEY, and SMITH, Circuit Judges.

BOWMAN, Circuit Judge.

General Trading International, Inc. (GTI), sued Wal-Mart Stores, Inc., for breach of contract, action for goods sold, and action on account in a dispute arising out of Wal-Mart's alleged failure to pay for large numbers of decorative "vine reindeer" sold to Wal-Mart for resale to the public during the 1999 Christmas season. Wal-Mart counterclaimed for breach of contract and for fraud. According to Wal-Mart, most of the reindeer, manufactured in Haiti, were "scary-looking" and unsuitable for sale as Christmas merchandise. Wal-Mart claims that GTI orally agreed to absorb $200,000 of the purchase price because of Wal-Mart's dissatisfaction with the quality of the product. GTI, denying the existence of the alleged oral agreement, filed a motion for partial summary judgment, seeking an award of $200,000 of the unpaid balance, by arguing that the alleged oral agreement was unenforceable and violated the statute of frauds. The District Court¹ granted partial summary judgment in favor of GTI and submitted the remaining claims to a jury, which returned a verdict in GTI's favor. Subsequently, the District Court denied Wal-Mart's motion for judgment as a matter of law or for a new trial and GTI's request for attorney fees. Wal-Mart appeals the grant of partial summary judgment and the denial of its motion for a new trial. GTI cross appeals the denial of attorney fees. We affirm.

I. Background

Although the factual history of this dispute is set forth in detail in the partial summary-judgment opinion of the District Court, see Mem. Op. at 1-17 (Jan. 15, 2002), we will summarize some of the major events, especially as they relate to Wal-Mart's claims on appeal. In February 1999, Beth Gitlin, a seasonal buyer for Wal-Mart, began negotiating with Patrick Francis, the president of GTI (a company that sells seasonal craft items to large retailers) for the purchase of 250,000 vine reindeer for resale to Wal-Mart customers during the 1999 Christmas season. In March 1999, GTI executed Wal-Mart's standard vendor agreement. The vendor agreement provided that any changes in the agreement must be in writing and executed by both parties. Wal-Mart issued separate purchase orders, covering price and quantity terms, to GTI for the purchase of the reindeer.

In mid-August 1999, Wal-Mart noticed serious defects with the reindeer when the first shipments began arriving at its stores and warehouses. Gitlin estimated that, at that time, at least seventy percent of the reindeer were of poor quality. A Wal-Mart employee described the reindeer as "[m]oldy, broken grapevines, shapes that no more resembled a deer than they did a rabbit ... scary-looking." Id. at 3 (quoting Estes Dep. at 19). During the next few weeks, Gitlin communicated with Francis about quality problems with the product. On September 13, 1999, Wal-Mart directed GTI to cancel all further shipments of the reindeer.

On September 23, 1999, Gitlin met with Francis and Jeff Kuhn, a GTI representative, to discuss the slow sales and quality problems. During that meeting, Wal-Mart agreed to accept delivery of any reindeer GTI had already manufactured (approximately 25,000), but at a lower price than the prior purchase orders. In addition, Gitlin requested that GTI agree to Wal-Mart's withholding of $400,000 owed to GTI for potential claims for defective merchandise. Finally, according to Wal-Mart, GTI orally agreed, at some point before September 30, to reduce the total amount due from Wal-Mart by $200,000 because of Wal-Mart's price markdown of the reindeer at its stores in view of their poor quality. On September 30, 1999, Gitlin sent Francis and Kuhn an e-mail stating that sales of the reindeer were "too low" and that Wal-Mart would take a price markdown on the product within the next two weeks. E-mail from Gitlin to Francis and Kuhn (Sept. 30, 1999) (Gitlin's Sept. 30 e-mail). In that e-mail, Gitlin also stated that she was "also concerned about the defective percentage and claims at the end of the season. You say they normally run less than 10%. I'm going to be conservative and estimate 20%. I'm going to change the reserve on the account to $600,000 and will release the rest of the payments." Id. Gitlin did not receive a response to this e-mail from Francis or Kuhn.

On November 12, 1999, Kuhn sent Gitlin an e-mail stating GTI's frustration in obtaining payment from Wal-Mart on past-due invoices for the reindeer. In that e-mail, Kuhn noted that Gitlin said Wal-Mart was "going to hold $400,000 against future defective claims." E-Mail from Kuhn to Gitlin (Nov. 12, 1999). Gitlin replied three days later asking Kuhn to call her to discuss the matter. Gitlin and Kuhn spoke on November 19, 1999, and Gitlin sent Kuhn an e-mail that same day in which she stated, "As we both agree, we have $600,000 on hold now. $200,000 was to go to Markdowns and $400,000 was to cover claims. If you are willing to do this, then I will be able to consider reducing the amount on hold from $600,000 to $500,000." E-mail from Gitlin to Kuhn (Nov. 19, 1999) (Gitlin's Nov. 19 e-mail). Counsel for GTI sent Gitlin a facsimile letter that day demanding payment of the entire balance owed to GTI. Kuhn replied to Gitlin on November 22 and stated that "GTI would accept Wal-Mart withholding the amount of $400,000.00 for present and future charge backs." E-mail from Kuhn to Gitlin (Nov. 22, 1999). Kuhn sent Gitlin another e-mail on November 24 and stated that "[t]he principals [sic] of GTI's position is unwavering and non-negotiable. We want a check for $521,429 next week and on 1/15-2/1/2000 the $400,000 reserve will be revisited and adjusted accordingly." E-mail from Kuhn to Gitlin (Nov. 24, 1999). Thereafter, during the next several weeks, Gitlin and Kuhn continued to exchange e-mails, which can be characterized primarily as GTI continuing to demand immediate payment of outstanding invoices, or some settlement thereof, and Wal-Mart reiterating its position that GTI agreed to Wal-Mart's retention of funds for defective merchandise claims and $200,000 for price markdowns. GTI never acknowledged the $200,000 for price markdowns in any of its correspondence with Wal-Mart.

In December 2000, GTI sued Wal-Mart for breach of contract, action for goods sold, and action on account, alleging that GTI had shipped Wal-Mart 176,217 vine reindeer at an agreed price of $1,839,777.96, of which Wal-Mart had only paid $1,444,093.79. Wal-Mart counterclaimed for fraud and breach of contract. On October 1, 2001, GTI filed a motion for partial summary judgment, seeking an award of $200,000 of the unpaid balance, by arguing that the vendor agreement precluded any oral modifications and that the statute of frauds barred the alleged oral agreement to deduct $200,000 for price markdowns. The District Court granted GTI's motion on January 15, 2002, concluding that both the terms of the vendor agreement and the provisions of the statute of frauds barred the oral agreement to reduce $200,000 from the amount owed to GTI.² The jury heard the remaining claims the next month and returned a verdict in favor of GTI on its breach of contract claim, awarding GTI $63,280, and in favor of GTI on Wal-Mart's counterclaim for breach of contract. Subsequently, the District Court denied Wal-Mart's motion for judgment as a matter of law or new trial and GTI's request for an award of attorney fees. On appeal, Wal-Mart contends the District Court erred in granting partial summary judgment to GTI on the $200,000 claim and abused its discretion in denying Wal-Mart's motion for a new trial on the ground that the erroneous grant of partial summary judgment prejudiced Wal-Mart in the trial of the remainder of the case. GTI cross appeals, arguing the denial of its request for attorney fees was an abuse of discretion.

II. Discussion

We review a district court's grant of a summary judgment motion de novo. Toghiyany v. AmeriGas Propane, Inc., 309 F.3d 1088, 1091 (8th Cir.2002). We will affirm the grant of summary judgment if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). We review a denial of a motion for a new trial for an abuse of discretion. Foster v. Time Warner Entm't Co., 250 F.3d 1189, 1197 (8th Cir.2001).

A. Wal-Mart's Appeal

Wal-Mart first argues the District Court erred when it granted partial summary judgment in favor of GTI by holding that the oral agreement to reduce $200,000 from the amount owed to GTI for price markdowns was barred by the statute of frauds. Subject to certain limited exceptions, the statute-of-frauds provision of the Arkansas version of the Uniform Commercial Code (U.C.C.) renders unenforceable any unwritten contract for the sale of goods with a value of more than $500 "unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought." Ark.Code Ann. § 4-2-201(1) (Michie 2001).³ Both parties agree the case is governed by the so-called "merchants' exception" to the statute of frauds. Under the merchants' exception, a confirmatory writing setting forth the terms of the agreement is sufficient if the recipient of the writing knows its contents and fails to object in writing within ten days. See § 4-2-201(2) (Michie 2001). Here, Wal-Mart claims GTI did not object within ten days of Wal-Mart's sending GTI a confirmatory writing of the oral...