Geremia v. Gem-Craft, Inc. (In re Scope Display & Box Co.)

27 B.R. 956, 1983 Bankr. LEXIS 6602
CourtDistrict Court, D. Rhode Island
DecidedMarch 16, 1983
DocketBankruptcy No. 8000894; Adv. No. 820344
StatusPublished

This text of 27 B.R. 956 (Geremia v. Gem-Craft, Inc. (In re Scope Display & Box Co.)) is published on Counsel Stack Legal Research, covering District Court, D. Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Geremia v. Gem-Craft, Inc. (In re Scope Display & Box Co.), 27 B.R. 956, 1983 Bankr. LEXIS 6602 (D.R.I. 1983).

Opinion

DECISION AND ORDER ON TRUSTEE’S COMPLAINT FOR DAMAGES FOR BREACH OF CONTRACT

ARTHUR N. VOTOLATO, Jr., Bankruptcy Judge.

Heard on the Trustee’s Complaint alleging that the Defendant, Gem-Craft, Inc., owes the debtor, Scope Display and Box Co., Inc., $2000.00 for damages resulting from Gem-Craft’s wrongful rejection of goods partially completed pursuant to an oral contract.1

Scope and Gem-Craft disagree on virtually all pertinent points, and the evidence presents two wholly irreconcilable versions of a purported contract between Scope and Gem-Craft. Accordingly, the Court must rely exclusively on its own observations and conclusions regarding the credibility and/or reliability of the testimony. Stephen Wilbert, vice president of Scope, testified that he regularly received telephone orders from Gem-Craft, over a period of several years, for jewelry display cases. Wilbert dealt with both Richard Verri, counsel and general manager for Gem-Craft, and Ronald Ver-ri, vice president of the company, although the great majority of his discussion regarding displays for rings was with Richard Verri.

[957]*957Wilbert testified that on December 6, 1979 he received a telephone order for 75 ring-display cases from Ronald Yerri of Gem-Craft. Wilbert further testified that he can distinguish Ronald Verri’s voice from that of his brother Richard, and that he is certain that it was Ronald to whom he spoke. Wilbert had a note prepared by a member of his staff to the effect that an order for “75 special paradise ring units” had been placed by Gem-Craft, and that the price per unit was expected to be approximately $35.00. The notation “verbal — Ron Verri” also appears on this document (Plaintiff’s Exhibit 2), and on the typed order form prepared by Wilbert’s secretary (Plaintiff’s Exhibit 3).

According to Wilbert, Ronald Verri indicated in the December 6 conversation that four units were needed immediately, and it is undisputed that Scope shipped and that Gem-Craft paid for and received four ring-display cases in January 1980. (Plaintiff’s Exhibit 4). Later in January, Gem-Craft returned four units to Scope for minor modifications because (according to Wilbert) Gem-Craft’s customer had requested a color change in part of the display case. The changes were made and the units returned to Gem-Craft (Plaintiff’s Exhibits 5 and 6).

Wilbert testified that he talked with Richard Verri in February 1980 regarding the choice of color of inserts for the remaining display units. At that time, Richard Verri informed Wilbert that Gem-Craft’s customer had cancelled its order, and that they (Gem-Craft) would attempt to sell the remaining display units to another customer. According to Wilbert, many subsequent calls to Gem-Craft were not returned, perhaps because Gem-Craft had failed to pay Scope for some prior orders.

Wilbert testified that Scope was unable to complete production of the ring-display units because Gem-Craft failed to notify Scope of the final choice of color for the inserts. Because he was unable to contact either Richard or Ronald Verri by telephone, Wilbert finally sent Gem-Craft an invoice on May 12, 1980 for 80 units, “90% finished”, at $25.00 each, for a total of $2000.00 (Plaintiff’s Exhibit 7). Wilbert stated that $25.00 rather than the contract price of $32.50 was charged because the units were unfinished.

In contrast to Stephen Wilbert’s testimony, Richard and Ronald Verri, principals in Gem-Craft, testified that no one at Gem-Craft had placed an order for the ring-display cases with Scope. Ronald Verri asserted that his brother Richard handled all business pertaining to rings. Ronald also testified that he did not place an order with Scope for any ring displays. Gem-Craft produces hundreds of items, and this fact may provide an explanation for Ronald Verri’s difficulty in recalling the dates and the precise nature of his contacts with Scope.

Richard Verri testified that at the end of November 1979, he was on vacation for approximately ten days, and that Ronald Verri was in charge of Gem-Craft during his absence. Ronald Verri testified that although he had no recollection of contacts with Scope while his brother was on vacation, he had the authority to handle matters that required immediate attention during his brother’s absence.

Richard Verri testified that in November 1979 he talked with someone at Scope about a ring-display case for Gem-Craft’s customer, Paradise, and he received a sample from Scope which held five dozen rings, instead of the six dozen capacity which Paradise desired. He sent the case manufactured by Scope to Paradise, and it was apparently rejected by Paradise. Paradise referred Richard Verri to another manufacturer of display cases, which Paradise believed would produce displays at less expense and of better quality than those produced by Scope. Richard Verri testified that he did not inform Scope about Gem-Craft’s business dealings with the new manufacturer, since he did not wish to harm Gem-Craft’s relationship with Scope. Although Scope had produced at least one prototype unit for Gem-Craft, Richard Verri testified that nei[958]*958ther he nor anyone else at Gem-Craft2 placed an order with Scope for additional units. Verri stated that the four units which Gem-Craft received from Scope in January 1980 were probably for an order placed prior to the November 1979 discussion regarding the Paradise display units.

When Gem-Craft received an invoice from Scope in May 1980 for $2000.00 for 80 “Pyramid Units” that were “90% finished” (Plaintiffs Exhibit 7), Richard Verri responded in a letter dated May 19, 1980 that he did not know to what the invoice referred (Defendant’s Exhibit D). After receiving a written explanation, he responded on June 4 that at no time did he place such an order (Defendant’s Exhibit A).

FINDINGS AND CONCLUSIONS

1. Stephen Wilbert did receive a telephone order from Gem-Craft on or about December 6, 1979, for 75 “Paradise” ring-display units, and the order was placed by Ronald Verri, whose memory for dates and other details was understandably vague. We further find that Ronald Verri was authorized to place such orders for Gem-Craft.

2. Conflicting testimony was presented concerning the number of rings which each display case was to hold. Richard Verri testified, however, that a prototype which was designed for five dozen rings was modified by Gem-Craft by making additional slots to accommodate six dozen rings. Based upon all of the evidence, we find that such adaptations or changes are easily made, and that the exact number of rings which the units were designed to hold is not critical or relevant to this proceeding.

3. We reject the contention of Gem-Craft’s counsel that the principals of Scope, preparing to file a Chapter 11 petition, were so eager for the Gem-Craft order that they specially manufactured 80 ring-display units in order to generate accounts receivable. Our experience is that business debtors on the verge of bankruptcy often receive or accept payment for work not completed, but they rarely engage in the expense of production of specially manufactured goods, in the hope of generating receivables on their books. That contention is totally unsupported by the record.

4.

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Related

§ 6A-2-708
Rhode Island § 6A-2-708

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Bluebook (online)
27 B.R. 956, 1983 Bankr. LEXIS 6602, Counsel Stack Legal Research, https://law.counselstack.com/opinion/geremia-v-gem-craft-inc-in-re-scope-display-box-co-rid-1983.