Windsor Card Shops, Inc. v. Hallmark Cards, Inc.

• Decision Date: 20 February 1997
• Docket Number: Civil Action No. 96-5424 (JEI).
• Citation: 957 F.Supp. 562
• Parties: WINDSOR CARD SHOPS, INC., David Ricci, Paul Ricci, Margaret Ricci and Carol Ricci, Plaintiffs, v. HALLMARK CARDS, INC., and Hallmark Marketing Corporation, Defendants.
• Court: U.S. District Court — District of New Jersey

957 F.Supp. 562

WINDSOR CARD SHOPS, INC., David Ricci, Paul Ricci, Margaret Ricci and Carol Ricci, Plaintiffs, v. HALLMARK CARDS, INC., and Hallmark Marketing Corporation, Defendants.

Civil Action No. 96-5424 (JEI).

United States District Court, D. New Jersey.

February 20, 1997.

Tomar, Simonoff, Adourian, O'Brien, Kaplan, Jacoby & Graziano by Josiah A. Knapp, Justin T. Loughry, Haddonfield, NJ, for Plaintiffs.

Patterson, Belknap, Webb & Tyler, L.L.P. by Thomas C. Morrison, New York City, Herrick, Feinstein by Ronald J. Levine (Not Appearing), Princeton, NJ, for Defendants.

OPINION

IRENAS, District Judge:

This matter arises out of a dispute over a debt owed by the plaintiff, Windsor Card Shops ("Windsor"), to defendants Hallmark Cards, Inc. and Hallmark Marketing Corporation (collectively "Hallmark"), who supplied Hallmark products to Windsor for sale in Windsor's stores. Plaintiffs claim that they are unable to pay the debt because Hallmark, allegedly in breach of contract, opened additional retail card stores in Windsor's geographic area, thereby causing a decrease in plaintiffs' sales. Defendant has filed the instant motion, seeking to dismiss plaintiffs' complaint on two grounds: (1) failure to comply with the applicable statute of limitations, and (2) failure to state a claim upon which relief can be granted. Because we find that eight out of the nine counts in plaintiffs' complaint are barred by the statute of limitations and the remaining count fails to state a claim upon which relief can be granted, we will grant defendant's motion and dismiss the complaint in its entirety. Plaintiffs have filed a cross-motion to amend their complaint, which will be denied.

I. FACTS

A. Background of the Hallmark-Windsor Relationship

In 1968, Hallmark began supplying Windsor with greeting cards and related merchandise for sale in Windsor card stores. Windsor avers that it purchased over $2 million worth of merchandise each year. During the course of their relationship, Hallmark extended credit to Windsor for the purchase of the merchandise. The Hallmark-Retailer relationship is not one of exclusivity.¹ See Statement of the Hallmark Market Development Policy, Callicott Aff.Ex. A. Hallmark and Windsor did not enter into a trademark licensing agreement. Thus, Windsor sold Hallmark products but operated its stores under its own name.

In 1987 and 1988, Hallmark authorized the opening of additional card stores in the vicinity of the Windsor stores. Following the openings, David Ricci ("Ricci"), president of Windsor, wrote to Hallmark on more than one occasion to complain about the new stores' impact on his business. First, in a letter dated September 6, 1988, Ricci noted the geographic proximity of the four new stores to his store and the two others in the area. He opined that the area could not support "this kind of growth" and that sales volume had fallen from $825,000 to $575,000. See Callicott Aff.Ex. B. By 1992, Windsor accumulated close to $300,000 in debt to Hallmark.

B. 1993 Security Agreement and Addendum

In August 1993, Ricci wrote to Doyle Reed ("Reed"), Hallmark's Vice-President of Trade Development, explaining that the new stores had caused a decrease in sales, thereby hindering Windsor's ability to pay off its debt to Hallmark. By the fall of 1993, the debt was nearly $400,000. In October 1993, the parties entered into a Security Agreement, which was secured by a Promissory Note for $464,427.08.² See Callicott Ex. G H. Windsor was the primary signatory and the individual plaintiffs signed as guarantors. After the agreement was signed, Windsor requested a debt reduction. Hallmark agreed and the parties signed an Addendum to the Security Agreement on October 21, 1993. Callicott Aff.Ex. J. The Addendum reduced the debt to $183,000, payable in one lump sum by February 1, 1996.³ This amount has not yet been paid by Windsor.

C. January 1996 Settlement Offer

In 1994, Windsor ceased operations as a Hallmark licensee and entered into an agreement with American Greetings Corporation. By letter dated January 4, 1996, Ricci requested a further reduction of the debt owed Hallmark and reiterated his belief that the opening of the additional stores in 1987 and 1988 caused Windsor's financial instability. See Callicott Aff.Ex. D. In response to Ricci's letter, Hallmark made a new settlement proposal via letter dated January 24, 1996. See Callicott Aff.Ex. K. Hallmark agreed to accept $100,000 in full satisfaction of the debt, provided that $50,000 was paid on February 28, 1996 and $50,000 was paid on December 10, 1996. Hallmark's offer demanded a response from Windsor no later than February 15, 1996.

In response to Hallmark's offer, on February 14, 1996, Windsor phoned G. Thomas Callicott ("Callicott"), Hallmark's now-retired Relationship Development Director. Both parties agree that Windsor accepted the offer to pay $100,000. See Def.Reply Br. at 8; Ricci Certification ¶ 72. However, after accepting the debt reduction, Ricci offered an alternate payment schedule: to pay $25,000 immediately and $75,000 on December 31, 1996, or, in the alternative, to pay the entire $100,000 in December 1996.⁴ Callicott avers that he flatly rejected Ricci's counterproposal. See Callicott Aff. at ¶ 18. Ricci claims that Callicott said he would consider the counteroffer and get back to him. By letter dated March 18, 1996, Hallmark notified Windsor that the settlement offer of January 24, 1996 was no longer an option and that the full amount of the debt was due and owing. Hallmark maintained that Windsor breached the Addendum to the 1993 Security Agreement, thereby reviving Windsor's obligation to pay Hallmark $386,000, the amount of the original debt.

By letter dated April 12, 1996, Ricci told Callicott that Windsor had accepted the offer to settle for $100,000 during the February 14, 1996, phone conversation and that the challenge to the method of payment should not nullify that acceptance. On May 2, 1996, Hallmark responded by letter, stating that the new proposal, raised by Ricci during the February phone conversation and confirmed by the April letter, was unacceptable to Hallmark and that the original amount of the debt was still due. In the same May 2, 1996 letter, Hallmark informed Windsor that Hallmark would pursue legal remedies if Windsor failed to produce a new proposal by May 20, 1996. Four months later, Windsor commenced this litigation.

D. Procedural History of this Lawsuit

On September 24, 1996, Windsor filed, but did not serve, a complaint in the Superior Court of New Jersey, including three counts and seeking the following relief from Hallmark: (1) a declaratory judgment that Hallmark breached its contract when it opened additional stores in 1987 and 1988; (2) specific performance of the "contract" to settle the case for $100,000; and (3) damages for lender liability. See Morrison Aff.Ex. C. Hallmark filed suit in Missouri on October 7, 1996 to enforce the original 1993 Security Agreement and to recover the full amount of the debt plus interest — an amount totaling $480,356 at the time Hallmark's affidavits were filed. See Callicott Aff. at ¶ 19; Morrison Ex. D. That lawsuit has since been removed to federal court in Missouri. On October 9, 1996, plaintiffs served an amended complaint on the defendants, which added Hallmark Marketing Corporation as a defendant and included essentially the same counts as the unserved complaint of September 24, 1996.

On November 5, 1996, Windsor served a Second Amended Complaint on Hallmark. See Morrison Ex. E. The amended complaint alleged the following counts: (1) breach of contract, (2) fraud, (3) violation of the New Jersey Consumer Fraud Act, (4) negligence, (5) equitable fraud, (6) unfair trade practices, (7) violation of the New Jersey Franchise Practices Act, (8) detrimental reliance, and (9) duress. On November 7, 1996, Hallmark removed the action to this Court. On November 13, 1996, plaintiffs filed another version of their second amended complaint, which presented counts identical to those in the first version. See Morrison Aff.Ex. A.

II. DISCUSSION

Hallmark filed a motion to dismiss for failure to comply with the applicable statute of limitations and for failure to state a claim upon which relief can be granted. Because defendants submit affidavits and exhibits in support of their motion, we treat it as one for summary judgment. See Fed.R.Civ.P. 12(b).

A. Standard for Summary Judgment

Under Fed.R.Civ.P. 56(c), a court may grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The non-moving party may not simply rest on its pleadings to oppose a summary judgment motion but must affirmatively come forward with admissible evidence establishing a genuine issue of fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).

In deciding a motion for summary judgment, the Court must construe the facts and inferences in a light most favorable to the non-moving party. See Pollock v. American Telephone & Telegraph Long Lines, 794 F.2d 860, 864 (3d Cir.1986). The role of the court is not "to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

The substantive law governing the dispute will determine which facts are material, and only disputes over those facts "that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. A genuine issue for trial does not exist "unless the party opposing the motion can adduce evidence which, when considered in...