Thomasville Furniture Industries, Inc. v. JGR, Inc.

3 F. App'x 467
CourtCourt of Appeals for the Sixth Circuit
DecidedFebruary 7, 2001
DocketNos. 99-4480, 99-4481
StatusPublished
Cited by15 cases

This text of 3 F. App'x 467 (Thomasville Furniture Industries, Inc. v. JGR, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thomasville Furniture Industries, Inc. v. JGR, Inc., 3 F. App'x 467 (6th Cir. 2001).

Opinion

CLAY, Circuit Judge.

Defendant, JGR, Inc., appeals from the district court orders dismissing Defendant’s motion for reconsideration and granting summary judgment in favor of Plaintiff, Thomasville Furniture Industries, Inc., in this diversity of citizenship action brought pursuant to 28 U.S.C. § 1332(a)(1) seeking payment for furniture and services which Defendant purchased from Plaintiff. For the reasons set forth below, we REVERSE the district court’s award of summary judgment and REMAND for further proceedings.

BACKGROUND

Procedural Background

On July 1, 1996, Plaintiff, a Delaware corporation with its principal place of business in North Carolina, filed a complaint against Defendant, an Ohio corporation, in the district court, pursuant to diversity jurisdiction under 28 U.S.C. § 1332(a)(1), to collect over $650,000 for furniture and service charges owed to Plaintiff. In response, Defendant filed a separate claim against Plaintiff in Ohio state court, alleging that Plaintiffs breach of contract and fraudulent misrepresentation caused Defendant to go out of business. Plaintiff, as cross-defendant, removed the case to U.S. District Court. Plaintiff also filed a motion for summary judgment in the district court, asserting that no genuine issue of material fact existed as to either Defendant’s breach of oral contract or fraudulent misrepresentation claims because both claims were barred by the Ohio statute of frauds. Defendant, in its response to the [469]*469summary judgment motion, argued that even if the Ohio statute of frauds barred those claims, Plaintiffs conduct also violated the implied covenant of good faith and fair dealing arising out of the parties’ contractual relationship which was beyond the reach of the Ohio statute of frauds.

On September 7, 1999, the district court granted Plaintiffs motion for summary judgment, finding that (i) the Ohio statute of frauds barred Defendant’s breach of oral contract claim; (ii) Defendant had waived its fraudulent misrepresentation claim; and (iii) Defendant had not raised a genuine issue of material fact as to its implied covenant of good faith and fair dealing claim because the claim was based on a non-existent oral contract. Defendant then filed a motion for reconsideration, arguing that the district court had misinterpreted the implied covenant of good faith and fair dealing claim to be based on an oral, rather than written, contract with Plaintiff. The district court denied Defendant’s motion on November 15, 1999, finding that Defendant had not articulated how the written contract at issue created an implied duty which barred Plaintiff from engaging in competitive business practices, and ordered Defendant to pay Plaintiff over $850,000.00 in damages. Defendant appeals from the district court’s denial of its motion for reconsideration of the court’s grant of summary judgment, pursuant to 28 U.S.C. § 1291 and § 1294.

Factual Background

In March of 1988, Gerald Yosowitz resigned as President of Furniture Land, Inc., a company which then operated nine furniture stores in northeastern Ohio. Yosowitz then sought out a business in the area to purchase, own, and operate. According to Yosowitz, it soon appeared that Mike Baker, the principal owner of Furniture Land, was attempting to thwart Yosowitz’s efforts to establish a business so that Yosowitz would return to Furniture Land. In January of 1990, Yosowitz formed JGR, Inc., a furniture retailer. Yosowitz remained convinced that Baker wanted to see him fail in his new endeavor. In April of 1990, Yosowitz, as Defendant JGR, went to a major furniture exposition in North Carolina to acquire a primary line of furniture. Defendant was determined to contract with a manufacturer who did not do business with Furniture Land, in order to avoid Baker’s influence. When Defendant heard that Plaintiff had broken off negotiations with Furniture Land, Defendant entered into negotiations with Plaintiff.

Defendant informed Plaintiff that he would not do business if Plaintiff still considered supplying Furniture Land with merchandise. Defendant requested assurances from Plaintiff that negotiations with Furniture Land had indeed ceased, so as to prevent the two stores from selling the same furniture line. Defendant received oral assurances from Plaintiff that it would not sell to Furniture Land, or to Baker’s, an alter ego of Furniture Land that was in development at the time. On May 6, 1990, Defendant and Plaintiff signed a written agreement (the “1990 Agreement”) establishing Defendant as a “Thomasville Gallery” retailer, but never reduced Plaintiffs oral assurances of no future dealings with Furniture Land or Baker’s to writing. The 1990 Agreement provided, in relevant part, as follows:

Thomasville will grant retailers designated as Thomasville Galleries the nonexclusive right to use the trademarks “Thomasville” and “Thomasville Gallery” ....
That right will exist only so long as the Gallery designation is applicable, and so long as the use of the trademarks is [470]*470compatible with the Thomasville quality image....
The “Thomasville Gallery” designation may be withdrawn by Thomasville or retailer at any time.

(J.A. at 62).

On September 15, 1990, Defendant opened its first store, named Gerald’s. A large percentage of Gerald’s stock was Thomasville furniture. In its advertising campaign, Defendant heavily emphasized that its store was a Thomasville Gallery. Subsequently, the Thomasville brand became associated with Gerald’s, and initial business was good.

In February of 1991, a Thomasville marketing representative informed Defendant that Plaintiff had reentered negotiations with Furniture Land. Defendant reminded Plaintiff of Plaintiffs oral assurance not to sell to Furniture Land or Baker’s. Plaintiff responded that they were “just talking” with Furniture Land, and for the next year did not give Defendant a definite answer on whether Plaintiff would ultimately sell to Furniture Land. Defendant was convinced that if Furniture Land began to sell Thomasville products, Furniture Land would undercut Gerald’s and drive Defendant out of business. Defendant considered dropping the Thomasville fine, but decided that Gerald’s had become so associated with the brand that switching product lines would be financially disastrous. Nevertheless, because Gerald’s employees were aware of the uncertainty, they began to steer customers away from Thomasville products, and sales dropped.

In April of 1992, Plaintiff asked Defendant to sign a new Thomasville Gallery agreement, which raised the minimum gallery space requirement for Thomasville furniture from 6,000 to 7,500 square feet (the “1992 Agreement”). Existing Thomasville Gallery retailers were also informed, in an accompanying letter sent by Thomasville’s Executive Vice President, Dan Grow, that they would be given until January 1, 1993 to comply with the new 7,500 square footage requirements, and that any new Thomasville Gallery retailers would also have to comply with the new requirements (the “1992 Letter”).

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3 F. App'x 467, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thomasville-furniture-industries-inc-v-jgr-inc-ca6-2001.