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Bank of America, N.A v. R. B. Gustafson Company D/B/A Gustafson Lighting

July 31, 2012

BANK OF AMERICA, N.A., PLAINTINFF,
v.
R. B. GUSTAFSON COMPANY D/B/A GUSTAFSON LIGHTING, DEFENDANT.



The opinion of the court was delivered by: Judge Blanche M. Manning

MEMORANDUM AND ORDER

Defendant R. B. Gustafson Company, better known as Gustafson Lighting, sells low-voltage lighting fixtures for use in recreational vehicles. For nearly a quarter century, it obtained parts it needed to assemble those lighting fixtures from Berman Industries, Inc. and related companies.

The relationship was uneventful until 2007, when Berman allegedly began to deliver thousands of parts Gustafson contends it did not want and for which it has not paid. Bank of America subsequently purchased Berman's accounts receivable and now seeks payment of more than $362,784.58 for the unwanted parts.

Before the court is Bank of America's motion for summary judgment, in which it argues Gustafson must pay for the delivered parts. Gustafson responds that disputed questions of fact about the terms of the parties' agreements preclude the entry of summary judgment. For the reasons that follow, the motion for summary judgment is denied.

BACKGROUND

The following facts are agreed except where noted. Gustafson began ordering lighting parts from Berman in 1985. The parties did not have a written agreement that governed their relationship. Instead, Gustafson submitted what were entitled "Purchase Order Request Forms" to Berman identifying the quantity of parts it wanted Berman to manufacture at its factories in China and have shipped to Berman's warehouse in Olive Branch, Mississippi. The Purchase Order Request Forms contained no terms and conditions-they contained only a description of the product, the quantity requested, and the price per item.

After the product was received at the Olive Branch warehouse, Gustafson would either "release" the goods, meaning it asked that the goods be shipped from the Berman warehouse in Olive Branch to Gustafson's facility in Elkhart, Indiana, or on one occasion Gustafson directed Berman to destroy products that Gustafson could not use. According to Gustafson, it was obligated to purchase only the product it "released" from Olive Branch, though it admits it paid for the products it directed Berman to destroy rather than "release."

In April 2008, Berman complained to Gustafson about the amount of products that Gustafson had requested on Purchase Order Request Forms dating back to 2007, but had not "released" and so were accumulating at the Olive Branch warehouse. In response, Gustafson "released" all of the products that had been sitting at Olive Branch for more than 150 days. The parties began discussing ways to further reduce the amount of product left sitting at the Olive Branch warehouse, but the discussions were unfruitful.

In November 2008, a Gustafson employee forwarded to Berman an internal e-mail in which Gustafson sent a warning to its suppliers like Berman to stop over shipping products:

We will not accept any over shipments of products. Please email our suppliers and advise them that overshipments will be sent back to them at their expense unless they call and we change our PO.

November 5, 2008 e-mail (attached as Exhibit 4 to Gustafson's Response [68-1]).

The following month, Berman delivered to Gustafson a large number of products that Gustafson had not "released." Gustafson did not immediately discuss the shipment with Berman. The first discussion about the December 2008 delivery occurred about four months later sometime after April 2009. By then, Berman had defaulted on a loan from Bank of America, and had assigned its assets, including the accounts receivable it had put up as collateral for the loan, to a trust for the benefit of Berman's creditors.

The April 2009 discussion occurred between Kirk Sobecki, the chief executive officer of Gustafson, and Ronald Benishy, a representative of the assignee. Sobecki told Benishy that Gustafson had not "released" the products that had been delivered in December 2008, and offered to return the products. The assignee never accepted the offer, and Gustafson never returned the product and never paid for it. However, it did sell or use some of the delivered product, though it does not know how much.

In addition to the December 2008 shipment of products, Bank of America contends that Gustafson also failed to pay for products delivered on a number of other occasions between 2007-09. In total, Bank of America contends that Gustafson has failed to pay for $362,784.58 worth of products. On June 26, 2009, the assignee wrote to Gustafson demanding payment of $362,784.58. After Gustafson failed to comply, Bank of America (which by then had purchased the accounts receivable at auction) filed the instant suit.

Bank of America alleges four claims against Gustafson under the court's diversity jurisdiction. In Count I, it alleges that Gustafson breached its contract with Berman by failing to pay for all of the products for which it had submitted a Purchase Order Request Form. In Count II, it alleges a claim of unjust enrichment based upon Gustafson's acceptance of product for which it never paid. In Count III, it alleges a claim of conversion based upon Gustafson's failure to pay for the delivered products. And finally in Count IV, Bank of America alleges a claim of account stated based on Gustafson's failure to comply with the demand for payment.

Before the court is Bank of America's motion for partial summary judgment. In it, Bank of America seeks judgment on its claims for breach of contract (Count I) and unjust enrichment (Count II). For the reasons that follow, the motion is denied.

ANALYSIS

I. Standard of ...


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