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House of Brides, Inc. v. Dessy Marketing & Distribution, Inc.

United States District Court, N.D. Illinois, Eastern Division

June 24, 2014

HOUSE OF BRIDES, INC., Plaintiff/Counterclaim Defendant,
v.
DESSY MARKETING & DISTRIBUTION, INC., Defendant/Counterclaimant.

OPINION AND ORDER

SARA L. ELLIS, District Judge.

House of Brides, Inc. ("HOB") and Dessy Marketing & Distribution, Inc. ("Dessy") suffered a breakdown in their long business relationship due to a dispute over the shipment of and payment for wedding attire. HOB brought the current suit against Dessy for breach of contract, breach of the warranty of implied merchantability, defamation, commercial disparagement, fraud, and consumer fraud and deceptive business practices. Dessy counter-claimed for various intellectual property violations related to HOB's continued advertising and sale of Dessy dresses, breach of contract, and account stated.[1] HOB also seeks a declaratory judgment related to Dessy's claims of intellectual property violations. Before the Court is Dessy's motion for summary judgment on all remaining claims and counterclaims. Because the Court finds there are genuine issues of disputed fact on the breach of contract claims, Dessy's motion [51] is denied as to Count I of the Complaint (Breach of Contract) and Counterclaims VII (Breach of Contract) and VIII (Account Stated). Dessy's motion is granted as to HOB's other claims, except Count VII (Declaratory Judgment), which is dismissed as moot.

BACKGROUND[2]

Before the events leading to the filing of this suit, HOB and Dessy did business together for over twenty years. HOB operates retail stores that sell dresses for brides and bridesmaids. Dessy is a manufacturer and distributor of wedding dresses and bridesmaid gowns. HOB was an authorized reseller of certain Dessy products through its retail stores and on-line website. Dessy shipped sample dresses to HOB and HOB displayed photos of certain Dessy products on its website. On or around October 4, 2012, Dessy notified HOB that it was terminating their business relationship due to HOB's creditworthiness.

Over the course of the business relationship, HOB sent purchase orders to Dessy that were accepted by Dessy and Dessy extended credit to HOB to pay on those orders. The parties disagree as to whether Dessy was committed to an exact ship date but agree Dessy's standard shipping window was ten to twelve weeks. The parties also dispute whether HOB was given sixty or ninety days to pay and whether HOB's payment schedule was tied to its seasonal cash flow. The parties have not produced a written contract governing this relationship and agree that no oral contract existed.

In the fall of 2009, Dessy was actively pushing HOB to pay down its aged credit balances by limiting the amount of credit available and threatening to hold dress shipments until HOB complied. HOB and Dessy reached an agreement on a payment schedule, but payment from HOB was erratic. HOB continued to run large sixty- and ninety-day overdue balances, which was a source of concern to Dessy.

About the same time, HOB began experiencing problems with Dessy's shipment of dresses. HOB claims Dessy shipped duplicate, defective, or wrong dresses, or failed to ship dresses altogether. Dessy states any errors in shipment were corrected or never brought to its attention. Dessy admits refusing to ship orders based on HOB's failure to keep up with its credit obligations.

In 2012, HOB discovered the amount Dessy charged for freight was higher than the actual delivery carrier costs. HOB asked Dessy to reduce the amount it charged for freight. Dessy refused.

By the fall of 2012, HOB and Dessy's dealings were increasingly contentious. Dessy requested HOB bring its credit balance to $150, 000 or Dessy would terminate the relationship. In late September 2012, three checks from HOB (totaling around $50, 000) bounced and, in early October 2012, Dessy notified HOB by letter that their business relationship was over.

LEGAL STANDARD

Summary judgment obviates the need for a trial where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. To determine whether a genuine issue of fact exists, the Court must pierce the pleadings and assess the proof as presented in depositions, answers to interrogatories, admissions, and affidavits that are part of the record. Fed.R.Civ.P. 56 & advisory committee's notes. The party seeking summary judgment bears the initial burden of proving that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In response, the non-moving party cannot rest on mere pleadings alone but must use the evidentiary tools listed above to identify specific material facts that demonstrate a genuine issue for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598-99 (7th Cir. 2000). Although a bare contention that an issue of fact exists is insufficient to create a factual dispute, Bellaver v. Quanex Corp., 200 F.3d 485, 492 (7th Cir. 2000), the Court must construe all facts in a light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

ANALYSIS

I. Breach of Contract

A. HOB's Breach of ...


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