Am. Signature, Inc. v. Extreme Linen, LLC
| Decision Date | 31 March 2015 |
| Docket Number | Case No. 2:12-cv-00601 |
| Parties | AMERICAN SIGNATURE, INC., Plaintiff, v. EXTREME LINEN, LLC, Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION & ORDER
This matter is before the Court on Plaintiff American Signature, Inc.'s Motion for Summary Judgment (Doc. 64). Plaintiff moves for summary judgment in their favor on Defendant Extreme Linen, LLC's counterclaims for breach of contract and promissory estoppel. (Doc. 64). Plaintiff also requests a declaration that it has no liability to Defendant for the disputed goods at issue in this matter. (Doc. 64 at 1).
For the reasons set forth herein, Plaintiff's Motion is GRANTED IN PART and DENIED IN PART.
Plaintiff American Signature, Inc. ("ASI" or "Plaintiff") is a furniture company based in Columbus, Ohio that operates Value City and American Signature stores across the Eastern, Southern, and Midwestern United States. (Doc. 64 at 8). Plaintiff sells bedroom, living room, and dining room furniture, but also sells some "accessories." (Id.). Defendant, Extreme Linen ("EL" or "Defendant"), is a consumer goods company based in New York that sources top-of-bed products directly from Chinese factories. At issue in this case is the component of ASI's accessory business known as "top-of-bed," which consists of comforters and pillows used to dress the bedroom sets sold at Plaintiff's stores. (Id. at 8-9). According to Plaintiff, ASI has always sold top-of-bed products on a "drop-ship" basis, meaning the customer purchases the item from a store, but, instead of taking the item home at the time of purchase, the vendor ships the product directly to the consumer's home. (Id. at 9).
In the Spring of 2012, ASI began considering a transition from a drop-ship program to an "inventory-based" program, otherwise known as a "cash-and-carry" model. Under a cash-and-carry model, ASI would carry a number of top-of-bed accessories in its retail stores, available for purchase. (Id.). Plaintiff claims that a shift from a drop-ship program to a cash-and-carry program would constitute "a dramatic shift in concept for ASI." For that reason, ASI claims that it intended to, and did, conduct due diligence with a number of potential vendors to assess the viability of [a cash-and-carry] program." (Id.).
Although ASI and EL had never conducted any prior business, ASI considered Defendant a potential vendor for top-of-bed products. (Id.). ASI employee Jennifer Martin, an ASI associate buyer at the time, knew of EL based on her previous employment with Jeff Brooks, who was an EL employee. (Def. Mem. In Opp., Doc. 72 at 3). According to Plaintiff, Martin contacted Brooks in the spring of 2012, "advised [him] of ASI's ongoing review" of a cash-and-carry program, and "inquired whether Defendant was interested in presenting a top-of-bed proposal." (Id.). Martin said "let me know when you can make a visit asap" and informed Brooks that "my boss said 'get him in here quick.'" (Doc. 72 at 8; Doc. 73 at 10).
Defendant asserts that in April 2012, "Mr. Brooks provided Ms. Martin with photos and prices for some of EL's top-of-bed products. (Doc. 72 at 8). Brooks also explained that EL would "customize" the top-of-bed products for what was "best suited for [ASI's] customers." (Id.). Plaintiff claims that, "at all times" Defendant knew ASI was in the process of evaluating a shift from a drop-ship to a cash-and-carry model. (Id.; Doc. 64-3 at 46).
At the time, Steve Nicewicz was ASI's internal "buyer" whom EL employees met and communicated with on occasion. Martin was Nicewicz's assistant. Plaintiff insists that neither Nicewicz nor Martin is authorized to contract on behalf of ASI. (Id. at 10). In fact, Plaintiff claims that ASI maintains a formal, internal "sign-off" process that must take place before any goods can be purchased. Plaintiff describes its sign-off process as follows:
Doc. 64 at 10-11 (internal citations omitted). At that time, ASI's Executive Committee consisted of Jonathan Schottenstein, Brian Woods and Steve Rabe.
On or around May 6, 2012, Brooks and Meshulem Gelman, an EL owner, met with ASI's Martin and Nicewicz at ASI's corporate offices in Columbus, Ohio. According to Plaintiff, the purpose of this meeting was to allow Defendant to "show ASI its capabilities." (Doc. 64 at 11; Doc. 72 at 9). At the meeting, Defendant's representatives presented a variety of products, including "some from market...and some from other lines Defendant had previously developed." (Id.).
The parties' views on how this meeting went vary drastically. Plaintiff claims that "[n]othing Defendant presented was acceptable" and that "Mr. Nicewicz was displeased by the lower-end products presented." Plaintiff believes that the meeting ended with an agreement that Defendant would have the opportunity to submit samples for ASI's consideration.
Defendant, on the other hand, asserts that Gelman met with Martin and Nicewicz in Columbus on May 9, 2012. According to Defendant, during the meeting, Nicewicz explained that: (a) ASI had decided to shift to a cash-and-carry model from the drop-ship model previously used; (b) ASI's target delivery date was September 1, 2012 and had a "sense of urgency attached to it"; and (c) ASI would need quantities of "approx. 1300 per pattern." (Doc. 72 at 9). Defendant also claims that "Mr. Nicewicz stated that he was impressed and wanted EL to come back with more products," and so the parties scheduled a meeting for the following week. (Doc. 72 at 9 citing Gelman Dep. 64-65; Deposition of Steven Nicewicz at 95).
On or about May 15, 2012, EL representatives again traveled to Columbus, "this time with a tractor-trailer full of samples." (Doc. 64 at 11). Defendant was given access to ASI's "lab store" - a warehouse in the basement of ASI's corporate offices used to display items beingconsidered for purchase - to dress a number of beds for display during the meeting and tour scheduled to take place the next day. (Doc. 64 at 11-12; Doc. 72 at 9). Defendant states that Nicewicz introduced EL to Jonathan Schottenstein, ASI's President, and Brian Woods, then Executive Vice President of Merchandising. (Doc. 72 citing Woods Dep. 59; Gelman Dep. 89-90).
The next day, May 16, 2012, Nicewicz toured the lab store with EL's representatives. Defendant claims that, at this meeting, "EL met with Mr. Nicewicz, Ms. Martin, Jonathan Schottenstein, Jay Schottenstein, Bradley Hoffman, and Angela Haddox" and that "[v]arious other ASI personnel - including Messrs. Rabe, Woods and Robert Grimmett - walked through EL's TOB displays." (Doc. 72 citing Gelman Dep. 92; Nicewicz Dep. 96). Again, the parties' have drastically different views on what transpired during this meeting.
Plaintiff insists that "[a]gain, the [EL] products displayed were unacceptable" and so Nicewicz identified for Defendant required revisions to each pattern necessary for the product to be further considered. (Id. at 12). Further, according to Plaintiffs, "[t]wo points were made clear" in the meeting:
First, the samples should be presented as quickly as possible since Labor Day weekend was the target date ASI was contemplating for having inventory in the stores, if it elected an inventory-based system. Second, the revised samples would have to be sent to American Signature for further review, inspection, and approval.
(Doc. 64 at 12 (internal citations omitted)). Despite these points being "made clear," Plaintiff asserts, "by the end of June 2012, Defendant was still in the process of gathering and sending samples to ASI for its review and consideration." (Id.).
Defendant's view of the meeting varies significantly. Defendant claims that during the May 16, 2012 meeting, Jay Schottenstein, an ASI executive, "was impressed by EL's TOBproducts." In fact, according to Defendant, "[h]e identified one of EL's products and said, "you should buy that one" loudly enough "for everybody to hear it." (Doc. 72). During the walkthrough, Defendant claims Nicewicz and Martin selected top-of-bed products in which ASI was interested. (Id.). "Some were deemed perfect 'as is,' while others required minor modification." Defendant insists "[a]ll of the juvenile products were accepted without modification" and "any modifications to the adult products were merely minor design tweaks." (Id.). Further, Defendant claims that EL's products "received nothing but positive feedback"...
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