Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Qvc, Inc. v. Mjc America

July 18, 2011

QVC, INC.
v.
MJC AMERICA, LTD. D/B/A SOLEUS INTERNATIONAL, INC.



The opinion of the court was delivered by: O'neill, J.

MEMORANDUM

Now before me are the motions of plaintiff QVC for summary judgment on Count V of its complaint against defendant MJC America, Ltd., d/b/a Soleus International, Inc and for summary judgment on Counts VII, IX and XI. For the reasons that follow, I will grant in part and deny in part QVC's motions.

BACKGROUND

QVC retails a wide variety of products directly to consumers. Soleus markets and distributes consumer products and has been a vendor to QVC since at least August 2003. Between February 13, 2007 and January 8, 2008, QVC issued a number of Purchase Orders to Soleus for heaters, fans, air purifiers, dehumidifiers and watercoolers, including units of a model number HM5-15A heater.*fn1 (QVC Exs. 1 to Exs. C) QVC sold some of the merchandise supplied by Soleus to its customers in the ordinary course of business. Subsequently QVC's customers returned some of their purchases to QVC. (QVC Ex. C to Motion on Counts VII, IX and XI at ¶ 6.) Other merchandise remained unsold. (QVC Ex. C to Motion on Count V at ¶ 6.) On February 12, February 27 and March 4, 2008, QVC returned to Soleus certain merchandise which QVC's customers had returned to QVC ("shipped customer return merchandise"). (QVC Ex. C to Motion on Counts VII, IX and XI at ¶ 6.) QVC did not request a refund for this merchandise prior to shipping it back to Soleus.

In an April 8, 2008 letter to Charley Loh, Soleus' CEO, QVC sought to invoke its alleged rights under the Purchase Orders with respect to the shipped customer return merchandise by demanding immediate payment of an "outstanding debit amount . . . arising from prior transactions between the parties" -- including amounts allegedly due for the shipped customer return merchandise. (QVC Exs. 3 to Exs. C at 4.) Also in the letter, QVC wrote that it had received customer reports that certain HM5-15A heaters had smoked, sparked, overheated or caught fire; that the HM5-15A heaters failed to comply with applicable safety standards; and that as a result QVC had stopped all sales of the HM5-15A heaters and was commencing a recall of the product under the procedures of the U.S. Consumer Product Safety Commission. (QVC Exs. 3 to Exs. C at 2, 4.) QVC requested that Soleus provide it with a return authorization number and other information to facilitate the return of both additional customer return merchandise which QVC had in its possession ("unshipped customer return merchandise") and unsold HM5-15A heaters that it intended to ship back to Soleus. (Id. at 3.) QVC requested a refund for unshipped customer return merchandise and for unsold heaters and "request[ed] payment of all refund amounts prior to return shipment of any and all [of the unshipped customer return merchandise and unsold heaters] to Soleus." (Id. at 4.) Citing "reasonable grounds for insecurity with respect to the ability or intention of Soleus to perform its obligations under the Purchase Orders regarding refund of any monies due upon return and delivery of any Merchandise to Soleus," QVC also demanded adequate assurances that Soleus could and would perform as required by the Purchase Orders in the form of a payment of $508,199.02 in advance of QVC's return of the unshipped customer return merchandise and the unsold heaters. (Id. at 5.)

As requested, Soleus provided return merchandise authorizations to QVC for the unshipped customer return merchandise and for the unsold heaters. (Soleus Ex. A at ¶ 9.) On March 15, 2008, Loh wrote a letter to QVC confirming that Soleus would "indemnify QVC for any claims associated with the products that Soleus International Inc. sold to QVC" and informing QVC that QVC was named as an additional insured on Soleus's $7 million product liability insurance policy. (Soleus Ex. 2 to Ex. C at MJC00119.) However, Soleus did not provide the requested refund to QVC for the shipped customer return merchandise, the unshipped customer return merchandise or the unsold heaters. (QVC Ex. C to Motion on Count V at ¶ 10; QVC Ex. C to Motion on Counts VII, IX and XI at ¶ 13.)

On April 18, 2008, counsel for Soleus wrote to counsel for QVC questioning the reasonableness of QVC's decision to recall the HM5-15A heaters and noting that "based on the parties' prior course of dealing, Soleus has always accepted return merchandise, provided appropriate credit, and provided return merchandise authorizations." (Soleus Ex. 2 to Ex. C at MJC00117.) Soleus asserts that prior to April, 2008, when QVC had merchandise to return to Soleus it would return merchandise to Soleus pursuant to a return merchandise authorization. Soleus would then inspect and count returned merchandise and issue a credit memorandum to QVC. QVC would issue a debit memorandum and Soleus would reconcile the two memoranda and remit any credit balance due to QVC. (Soleus Ex. A at ¶ 2.) Soleus also asserts that QVC's failure to return merchandise prevented Soleus from obtaining a refund for the merchandise from its manufacturer, Ningbo Bole Electrical Appliance Co., Ltd.*fn2 (Soleus Ex. A at ¶ 11.)

On August 8, 2008, QVC filed the instant action. In Count V of its complaint, QVC asserts claims for breach of contract against Soleus for its alleged refusal to provide QVC with a full refund for the amounts paid for the unsold heaters.*fn3 In Counts VII, IX and XI of its complaint, QVC asserts claims for breach of contract against Soleus for its alleged refusal to provide QVC with a full refund for the amounts paid for the shipped and unshipped customer return merchandise together with costs of unpacking, examining, repacking, storing, returning and reshipping the merchandise.*fn4

The Purchase Orders relevant to QVC's claims -- numbered 526487, 526488, 533029, 533103, 550957, 559089, 561074 and 567520 -- contain uniform terms and conditions and include provisions for QVC's return of merchandise to Soleus in the event merchandise is returned by its customers or is unsold.*fn5 Section 7 of the Purchase Orders sets forth QVC's rights with respect to returned merchandise as follows, in relevant part:

Merchandise furnished hereunder which is not in compliance with the Laws this Order [sic], the Regulations or the Standards, which is returned by any of Buyer's customers for any reason, which fails to meet Buyer's quality control tests, which fails to meet Buyer's carrier's quality, drop or other tests, or which is or may be used in conjunction with merchandise furnished and rejected (or acceptance thereof revoked under this Order or another order, may be rejected (or acceptance thereof revoked) at Buyer's option and returned to Vendor. All expense of unpacking, examining, repacking, storing, returning and reshipping any Merchandise rejected (or acceptance of which has been revoked) as aforesaid shall be at Vendor's expense and risk. With respect to such returned Merchandise or identical merchandise purchased under a separate purchase order, Buyer shall, at its option, receive a credit or refund equal to the average cost of amounts paid by Buyer for each item of such Merchandise, or other identical merchandise, including, without limitation, in-bound freight charges (notwithstanding contrary Freight Terms, if any, set forth on the face hereof). In the event that Buyer shall opt to receive a refund, Vendor shall pay Buyer in immediately available funds within fifteen (15) days of Buyer's request. Buyer reserves the right to require full refund prior to the return of Merchandise. In the event that Buyer shall opt to receive a credit, Buyer may apply such credit toward any amounts due or which may become due to Vendor. . . . Authorization is expressly granted to Buyer to return Merchandise without additional authorization, and Vendor hereby agrees to accept such returns even without Buyer's request for return authorization labels. Merchandise returned or rejected by Buyer is not to be replaced by Vendor without the prior written approval of Vendor. Vendor acknowledges that Buyer does not inspect each item at receipt of Merchandise and that defects, imperfections or nonconformity with any representations, warranties or covenants set forth herein may not be discovered by Buyer until Merchandise shall have been purchased by its customers and returned to Buyer. Buyer's inspection, discovery of a breach of warranty, failure to make an inspection or failure to discover a breach of warranty shall not constitute a waiver of any of Buyer's rights or remedies whatsoever. (QVC Substituted Exs. 2 to Exs. C at ¶ 7 (emphasis added).)

Section 8 of the Purchase Orders obligates Soleus to accept a return of up to a specified percentage of the aggregate number of units acquired by QVC but not sold in the ordinary course of business. (QVC Substituted Exs. 2 to Exs. C at ¶ 8.) It provides, in relevant part:

If a percentage greater than zero is indicated in the "Sale or Return" designation on the face hereof, then this is a "sale or return" transaction as defined in the Uniform Commercial Code as enacted in Pennsylvania, 13 Pa. C.S. Division 2. In addition to its right to return Merchandise as provided elsewhere in this Order, Buyer may return to Vendor, for credit or cash, at Buyer's option, all or any portion of the following: (a) with respect to "sale or return" transactions only, any Merchandise which is not sold by Buyer up to the percentage indicated in the "Sale or Return" designation on the face hereof (based on the aggregate amount of this Order) within sixty (60) days after remittance of the Subsequent Payment (as also defined in Section 12 herein) or, if no Subsequent Payment, within one hundred and eighty (180) days after remittance of Buyer's Initial payment to Vendor (as defined in Section 12 herein); and (b) with respect to all transactions, any Merchandise which has been sold to and then returned by customers at any time. The expenses incident to the return of Merchandise to Vendor under the foregoing clause (b) shall be paid or reimbursed by Vendor in accordance with Section 7 of this Order. Buyer is not obligated to pay for any Merchandise returned to Vendor and is therefore entitled to an immediate and full refund of any and all monies previously paid to Vendor on account of such returned Merchandise. If Vendor fails or refuses to make arrangements for the return of Merchandise satisfactory to Buyer within five (5) days of receipt of Buyer's request for return authorization, if any, Buyer may make such arrangements on Vendor's behalf and at Vendor's risk and expense. . . . The rights of Buyer set forth in this Section are in addition to, and not in lieu of, any and all other rights and remedies available to Buyer pursuant to this Order, applicable law or in equity. (Id. (emphasis added).) Relevant to QVC's claims under Section 8, Purchase Order 550957, which sets forth an order of 5,952 units of a black model number HM5-15A heater and 21,048 units of a charcoal model number HM5-15A heater, states that it provides for "50% Sale or Return." (QVC Ex. 1 to Ex. C to Motion on Counts VII, IX and XI.)

Section 15 of the terms and conditions provides that each Purchase Order "shall be governed by the laws of the Commonwealth of Pennsylvania applicable to contracts to be performed wholly therein, regardless of the place of acceptance." (QVC Substituted Exs. 2 to Exs. C at ¶ 15.) The terms and conditions also contain a no waiver provision, stating that [n]o waiver by Buyer of any term, provision or condition hereof shall be deemed to constitute a waiver of any other term, provision or condition of this Order, or a waiver of the same or of any other term, provision or condition with regard to subsequent transactions or subsequent parts of the same transaction, including without limitation, subsequent shipments under this Order. (Id. at ¶ 16.) The Purchase Orders also include an integration clause: "[t]his Order and any other written warranties and specifications, the Regulations and Standards, and the terms, conditions and agreements herein and therein, constitute the full understanding of the parties hereto and a complete and exclusive statement of the terms of the parties' agreement concerning the Merchandise furnished hereunder." (Id. at ¶ 19.) The terms and conditions further provide that acceptance of each Purchase Order is effectuated by shipment of conforming merchandise:

THIS PURCHASE ORDER ('ORDER') IS EXPRESSLY CONDITIONED ON ACCEPTANCE OF THE TERMS AND CONDITIONS HEREOF. Oral or written notice of acceptance by Vendor and/or shipment of all or any part of the merchandise specified in this Order ('Merchandise') shall constitute acceptance by vendor of the terms and conditions contained herein. (Id. at Preamble.) Soleus delivered to QVC some or all of the merchandise ordered in each of the Purchase Orders. (QVC Ex. C to Motion on Count V at ¶ 5; QVC Ex. C to Motion on Counts VII, IX and XI at ¶ 5.)

STANDARD OF REVIEW

The party moving for summary judgment has the burden of demonstrating that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). If the movant sustains its burden, the non-movant must set forth facts demonstrating the existence of a genuine dispute. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A dispute as to a material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. A fact is "material" if it might affect the outcome of the case under governing law. Id. The "existence of disputed issues of material fact should be ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.