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Display Shop, Inc. v. Vaughn Associates

April 15, 2010

THE DISPLAY SHOP, INC., A MICHIGAN CORPORATION, PLAINTIFF,
v.
VAUGHN ASSOCIATES, INC., A FOREIGN CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Hon. John Corbett O'Meara

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

Before the court are Defendant's motions for summary judgment and for Rule 11 sanctions, filed December 11, 2009. The court heard oral argument on April 1, 2010, and took the matter under advisement.

BACKGROUND FACTS

Plaintiff, The Display Shop, Inc. ("DSI"), filed this suit for breach of contract, account stated, and unjust enrichment against Vaughn Associates, Inc. ("Vaughn"), on April 7, 2009. DSI produces displays for use in retail stores. Vaughn is a sales representative for toy manufacturers.

In February 2008, Kevin Robertson of Vaughn contacted DSI's owner, Sam Gatto, about creating certain displays for K-mart. These "bubble" displays consisted of two columns of plastic bowls or "bubbles," which would be filled with small inexpensive toys. Robertson solicited toy manufacturers to participate in the "Bubble Program." According to Vaughn, Robertson was to negotiate "slotting fees" with his clients in an amount sufficient to cover the cost of manufacturing the bubble displays, approximately $112,000. According to DSI, however, Robertson orally agreed that Vaughn would pay for the displays.

Although Robertson initially lined up several toy manufacturers to participate, most backed out or declined to pay the slotting fee. (The reasons why the manufacturers backed out is in dispute, but is not material to these motions.) DSI attempted to collect payment for the displays from Vaughn, who also refused. DSI contends that it produced the displays and packed them with toys without full compensation.

The displays were installed in K-mart stores and the toys were sold. DSI also contends that it was supposed to receive a packing/warehouse fee of twenty cents per unit from the sale of the toys. According to DSI, Vaughn failed to ensure that the K-mart computer system accurately reflected the price DSI was to be paid. As a result, DSI claims that it suffered a loss of approximately $21,500.

LAW AND ANALYSIS

I. Standard of Review

Summary judgment is appropriate 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). When reviewing a motion for summary judgment, the facts and any reasonable inferences drawn from the facts must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The party opposing summary judgment, however, must present more than a "mere scintilla" of evidence; the evidence must be such that a reasonable jury could find in favor of the plaintiff. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

II. Count I -- Breach of Contract

A. Contract for Bubble Displays

Vaughn seeks summary judgment on Plaintiff's breach of contract claim relating to the displays (Count I), arguing that there was no agreement between the parties. There is no written agreement regarding who was to pay for the bubble displays and the paper record is fairly sparse otherwise. Vaughn claims that the participating manufacturers were supposed to pay and that Sam Gatto admitted as much in his deposition. A review of the deposition testimony as a whole, however, shows that Gatto did not clearly admit that the manufacturers were obligated to pay for the displays instead of Vaughn. Indeed, Gatto testified that Vaughn agreed to pay for the displays. See Gatto Dep. at 18, 26-28, 30; Pl.'s Ex. 14 (Gatto Affidavit). Given the conflicting evidence, there is a question of fact as to whether the parties had an agreement that Vaughn would pay for the bubble ...


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