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H&H Wholesale Services, Inc. v. Kamstra International

United States District Court, E.D. Michigan, Southern Division

May 21, 2019

H&H WHOLESALE SERVICES, INC., HOWARD GOLDMAN, and DAVID GULAS, Plaintiffs,
v.
KAMSTRA INTERNATIONAL, B.V. d/b/a HOLLAND TRADING GROUP, Defendant.

          OPINION AND ORDER DENYING DEFENDANT'S MOTION FOR RECONSIDERATION [51]

          HONORABLE LAURIE J. MICHELSON, JUDGE

         The old saying, “if at first you don't succeed, try, try, try again, ” William Edward Hickson, The Singing Master (1836), is not always the best way to proceed in litigation. Here, Kamstra International filed a motion to dismiss on a host of grounds. Although H&H Wholesale Services' Vendor Agreement explicitly stated that this Court was an appropriate forum for H&H to sue Kamstra, Kamstra argued that the Vendor Agreement was not enforceable, and, if that were not the case, then H&H abandoned the Vendor Agreement, and, if that were not the case, then Kamstra terminated the Vendor Agreement, and, if that were not the case, then the parties reached a later agreement that superseded the Vendor Agreement. This Court thoroughly studied and explicitly addressed those and other issues. H&H Wholesale Servs., Inc. v. Kamstra Int'l, B.V., - F.Supp.3d -, No. 217CV13422, 2019 WL 78892 (E.D. Mich. Jan. 2, 2019). As relevant for present purposes, the Court found that H&H had made a prima facie showing that the Vendor Agreement permitted this Court to exercise personal jurisdiction over Kamstra and that it was plausible that the Vendor Agreement was enforceable. Now Kamstra asks this Court to reconsider those determinations and, in doing so, again makes a host of arguments. As is detailed below, Kamstra has not only failed to show that that this Court's prior decision rests on an indisputable mistake that, if corrected, would result in a different outcome, see E.D. Mich. LR 7.1(h)(3), many of Kamstra's arguments for reconsideration are mistaken.

         Start with Kamstra's claim that this Court “erred in finding that the Vendor Agreement is a distribution/distributorship agreement that is not ‘a contract for the sale of goods.'” (ECF No. 51, PageID.1048.) This argument relates to Kamstra's belief that the Vendor Agreement is “a contract for the sale of goods” as that phrase is used in the statute-of-frauds provision, Mich. Comp. Laws § 440.2201, yet does not meet that statute's demand for a written quantity term. In support of this basis for reconsideration, Kamstra distinguishes the Vendor Agreement from the distribution agreements in Wolverine World Wide, Inc. v. Wolverine Canada, Inc., 653 F.Supp.2d 747 (W.D. Mich. 2009), and Lorenz Supply Co. v. Am. Standard, Inc., 300 N.W.2d 335 (Mich. Ct. App. 1980). (See ECF No. 51, PageID.1048-1049.)

         This argument does not warrant altering this Court's prior opinion and order. Contrary to Kamstra's characterization of this Court's opinion (ECF No. 51, PageID.1048), the Court never held that the Vendor Agreement was (or was not) a “distribution/distributorship agreement.” And this Court did not cite Wolverine. And this Court never claimed that the Vendor Agreement made Kamstra a “preferred” distributor like the contract in Lorenz. This Court cited Lorenz to show that absence of an obligation to sell or buy suggests that an agreement is not “a contract for the sale of goods” under § 440.2201. See Lorenz Supply Co. v. Am. Standard, Inc., 300 N.W.2d 335, 338 (Mich. Ct. App. 1980) (finding contract was not one for the sale of goods under § 440.2201 where it did not require the plaintiff “to buy a certain quantity of goods or, indeed, to buy any goods from the defendant in the future”).

         Moreover, this Court explained the nature of the Vendor Agreement. As indicated from the text of the agreement (e.g., “in consideration of being considered a Vendor for H&H”), H&H wanted to ensure that if it bought goods from one of its vendors, the goods would be accompanied by certain warranties (e.g., “in original manufacturer's packaging”). For each vendor that agreed to the terms of the Vendor Agreement, H&H could add that vendor to its “rolodex” assured that the vendor had agreed to all representations and warranties in the Vendor Agreement. That way when H&H was looking to source a product, it only needed to flip through its rolodex and ask about availability and price. H&H could make that streamlined inquiry knowing that any vendor it chose from its rolodex had already agreed to, for example, sell products “in original manufacturer's packaging” and litigate disputes in Michigan.

         As another grounds for reconsideration, Kamstra says that in finding that the Vendor Agreement was not “a contract for the sale of goods” under § 440.2201, this Court failed to “distinguish between the ‘transaction in goods' criteria for the general of Article 2 and the more specific finding of a ‘contract for the sale of goods.'” (ECF No. 51, PageID.1053-1054.) Kamstra's argument proceeds this way: Article 2 of the UCC “applies to transactions in goods, ” the Vendor Agreement was a “transaction in goods, ” the Vendor Agreement was thus subject to the provisions of Article 2, one of the provisions of Article 2 is the statute-of-frauds provision, and so the Vendor Agreement was subject to the statute-of-frauds provision.

         This argument is flawed. Article 2 of the UCC broadly applies to “transactions in goods” while Article 2's statute-of-frauds provision more narrowly applies to “a contract for the sale of goods.” Kamstra acknowledges as much. (See ECF No. 51, PageID.1054 (citing Great Lakes Exteriors, Inc. v. Dryvit Sys. Canada Ltd., No. 01-73173, 2002 WL 34381134, at *3 (E.D. Mich. Sept. 12, 2002)).) Because “a contract for the sale of goods” is a subset of those contracts that are “transactions in goods, ” a contract may fall within the latter but without the former. See Monetti, S.P.A. v. Anchor Hocking Corp., 931 F.2d 1178, 1185 (7th Cir. 1991) (“The fact that Article 2 . . . [applies] to ‘transactions in goods,' § 2-102, while its statute of frauds is limited to ‘contract[s] for the sale of goods,' § 2-201(1), could be thought to imply that the statute of frauds does not cover every transaction that is otherwise within the scope of Article 2.”). Indeed, the Michigan Supreme Court has expressly acknowledged this possibility. In Lorenz, the Michigan Supreme Court found that the agreement at issue was not “a contract for the sale of goods” as that phrase is used in the statute-of-frauds provision while noting that the “agreement may fall within the broader category of ‘transactions in goods.'” Lorenz Supply Co. v. Am. Standard, Inc., 358 N.W.2d 845, 847 n.8 (Mich. 1984); see also Lorenz, 358 N.W.2d at 853 (Brickely, J.) (“I have no difficulty in finding the distributorship agreement in question to be subject to Article 2 of the UCC. The more difficult and separate question is the applicability of the Statute of Frauds . . . . I see it as a separate question because the term ‘contract for the sale of goods' is clearly more restrictive than the term ‘transaction in goods'.”). Thus, it might follow that all “contract[s] for the sale of goods” are “transactions in goods”; but it does not follow that all contracts that are “transactions in goods” are “contract[s] for the sale of goods.” The Court's logic was based on the former. Indeed, the Court never said one way or the other whether Article 2 provisions other than the statute of frauds might apply to the Vendor Agreement.

         In resisting this relationship between “transaction in goods” and “a contract for the sale of goods, ” Kamstra cites Imaging Fin. Servs., Inc. v. Lettergraphics/Detroit, Inc., 178 F.3d 1294 (table), 1999 WL 115473 (6th Cir. Feb. 9, 1999). While Imaging could be read to say that if a contract concerns a “transaction in goods” it is also a “contract for sale” (Kamstra's desired relationship), it appears that the appellant in Imaging argued that Article 2-in its entirety-did not apply to the lease agreement at issue. See 1999 WL 115473, at *4 (“Lettergraphics claims that the transaction at issue is a lease and not a sale, thus removing it from the ambit of the U.C.C. and allowing application of the longer statute of limitations under Michigan general contract law.” (emphasis added)). It is thus unclear whether the Court of Appeals was forced to draw a distinction between “transactions in goods” and a “contract for sale”-it only had to decide whether the lease was a “transaction in goods” to address the appellant's argument. In any event, Imaging is non-binding precedent so it cannot possibly show a “palpable defect” in this Court's opinion. Carhartt, Inc. v. Innovative Textiles, Inc., 356 F.Supp.3d 657, 661 (E.D. Mich. 2018) (“A ‘palpable defect' is a defect that is obvious, clear, unmistakable, manifest or plain.”).

         Kamstra next claims that “[t]his case is not any different than Acemco, Inc. v. Olympic Steel Lafayette, Inc., 2005 WL 2810716, at *3 (Mich. Ct. App. Oct. 27, 2005) which the Court acknowledges, but does not distinguish.” (ECF No. 51, PageID.1051.)

         But, again, a non-binding decision cannot possibly show that this Court's decision rested on unmistakable error that, if corrected, would result in a different outcome. More importantly, the contract at issue in Acemco specified the products that would be purchased, the price at which they would be sold, and provided that the seller would sell to buyer whatever quantities the buyer specified. 2005 WL 2810716, at *1. As explained, the Vendor Agreement mentioned no products, mentioned no prices, and did not obligate Kamstra to sell H&H anything. Thus, the fact that the agreement in Acemco was “a contract for the sale of goods” subject to § 440.2201 does nothing to undermine this Court's decision that the Vendor Agreement was not such a contract.

         Before turning to Kamstra's other arguments for reconsideration, the Court notes that not one of the above arguments addresses this Court's alternate holding. In particular, this Court found that “the Vendor Agreement is not a ‘contract for the sale of goods' as that phrase is used in Michigan Compiled Laws § 440.2201 or, if it is such a contract, it is not one that is unenforceable for lack of a quantity term.” 2019 WL 78892, at *7 (emphasis added). So even if the above arguments were persuasive, none would justify changing the outcome.

         Kamstra next claims that the Vendor Agreement is not enforceable because H&H never signed it. (ECF No. 51, PageID.1058.) According to Kamstra, Hamilton Foundry & Mach. Co. v. Int'l Molders & Foundry Workers Union of N. Am., 193 F.2d 209 (6th Cir. 1951), says “‘the general rule is settled that an unsigned contract can not be enforced by either of the parties.'” (ECF No. 51, PageID.1058 (quoting Hamilton Foundry, 193 F.2d at 213-14).)

         Kamstra misquotes Hamilton Foundry. More completely, it says, “the general rule is settled that an unsigned contract can not be enforced by either of the parties, however completely it may express their mutual agreement, if it was also agreed that the contract should not be binding until signed by both of them[.]” 193 F.2d at 213-14 (emphasis added). Or, restated, the general rule is that if the parties agree that there will not be a binding contract until the contract is signed by both of them, the unsigned contract cannot be enforced by either of the parties. See Laurence C. Smith & Laura C. Smith v. Onyx Oil & Chem. Co., 218 F.2d 104, 108 (3d Cir. 1955); Loloee v. Ali, No. 284881, 2010 WL 1330663, at *5 (Mich. Ct. App. Apr. 6, 2010).

         Indeed, it is well settled that a contract merely requires offer and acceptance (and consideration) and thus can be formed without signatures-indeed, a ...


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