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Laufen International, Inc v. Larry J. Lint Floor & Wall Covering

January 11, 2012

LAUFEN INTERNATIONAL, INC., PLAINTIFF,
v.
LARRY J. LINT FLOOR & WALL COVERING, CO., INC., JOHN G. POPELY AND EDWARD LINT. DEFENDANTS.



The opinion of the court was delivered by: McVerry, J.

MEMORANDUM OPINION AND ORDER OF COURT

Pending now before the Court is the MOTION FOR SUMMARY JUDGMENT BY DEFENDANTS LARRY J. LINT FLOOR & WALL COVERING CO., INC., AND EDWARD LINT with attached appendix. Doc. # 39. In support to their motion for summary judgment, Defendants Larry J. Lint Floor & Wall Covering Co., Inc., and Edward Lint ("Lint Defendants") also filed a brief in support (Doc. # 41), and a concise statement of material facts (Doc. # 42). Also before the Court is the MOTION OF JOHN G. POPELY FOR SUMMARY JUDGMENT with attached exhibits. Doc. # 40. In support of his motion for summary judgment, Defendant Popely filed a memorandum of law (Doc. # 43), and a concise statement of material facts (Doc. # 44). In opposition to both motions, Plaintiff Laufen International, Inc. ("Laufen") filed a response to the Lint Defendants' motion for summary judgment (Doc. # 47), a response to the Lint Defendants' concise statement of facts with attached exhibits (Doc. # 48), a response to Defendant Popely's motion for summary judgment (Doc. # 49), a response to Defendant Popely's concise statement of facts with attached exhibits (Doc. # 50), and a brief in opposition to both motions (Doc. # 51). The motions are now ripe for disposition. For the reasons that follow, the Lint Defendants' motion for summary judgment will be granted in part and denied in part. Defendant Popely's motion for summary judgment will be granted.

STATEMENT OF THE CASE

1. Procedural history

Generally speaking, this case is a commercial breach of contract action involving the sale of goods, as well as tortious claims stemming from the parties' conduct. Plaintiff brought this diversity cause of action against the Defendants pursuant to 28 U.S.C. § 1332(a), alleging five counts: 1) fraud and concealment, 2) conspiracy, 3) breach of fiduciary duty, 4) interference with contractual relations, and 5) breach of contract. See Doc. # 1. Counts I through IV are brought against all three Defendants, while Count V is brought against Defendant Larry J. Lint Floor & Wall Covering Co., Inc. ("Lint Tile")*fn1 alone. The Lint Defendants and Defendant Popely respectively moved to dismiss Plaintiff's complaint, with Defendant Popely arguing that the Court lacked subject matter jurisdiction over the dispute (see Doc. ## 7 & 8), and the Lint Defendants arguing defects in averments of the complaint under Federal Rules of Civil Procedure 9(b) and 12(b)(6) (see Doc. ## 9 & 10). Both motions were subsequently denied in memorandum opinions and orders by the Court. Doc. ## 16 & 19. Defendant Popely individually and the Lint Defendants collectively each answered the (Doc. ## 17 & 20) with denials of any wrongdoing. Defendant Lint Tile also raised a counterclaim against Plaintiff for breach of contract. Doc. # 20. Plaintiff denied the counterclaim, and discovery commenced, after which, the pending motions for summary judgment were filed.

2. Factual background

The facts as recounted here are taken from Plaintiff's complaint (Doc. # 1), the Lint Defendants' Statement of Material Facts (Doc. # 42), the appendix to the Lint Defendants' motion for summary judgment (Doc. # 39), Defendant Popely's Statement of Material Facts (Doc. # 44), the appendix to Defendant Popely's motion for summary judgment (Doc. # 40), and Plaintiff's respective responses to Defendants' concise statements of material facts with attached exhibits (Doc. ## 48 & 50). The facts and all reasonable inferences are viewed in a light most favorable to Plaintiff, the non-moving party.

Plaintiff Laufen International, Inc. ("Laufen") is a manufacturer of tile and has its principal place of business in Miami, Florida.*fn2 Doc. No. at ¶ 1. Defendant Lint Tile is a wholesaler and distributer of tile and has its principal place of business in Westmoreland County, Pennsylvania. Id. at ¶ 2. Defendant Edward Lint manages Lint Tile and is the son of Larry J. Lint, the owner of Defendant Larry J. Lint Floor & Wall Covering Co., Inc. Defendant Popely was previously the regional sales manager for Plaintiff from February 2005 until July 31, 2008, and now works for Defendant Lint Tile.

The claims within the complaint arise from the previous commercial relationship of the parties that began in 2007. On or about March 25, 2007, Defendant Lint Tile submitted a credit application to Plaintiff in order to establish the ability to purchase Plaintiff's tiles and other goods on credit. At the time, Defendant Popely was employed by Plaintiff, and handled the Lint Tile account. In the course of conducting those responsibilities, Defendant Popely would communicate with Defendant Edward Lint. As a Laufen employee, Defendant Popely answered to Jorge Torres, the company's vice president of sales. Throughout 2007, Plaintiff and Defendant Lint Tile maintained a number of commercial arrangements, including the purchase and shipment of tile orders beginning in and around May 2007. Additionally, and directly at issue in the matter sub judice, Plaintiff and Lint Tile reached an agreement on or about June 28, 2007.

a. General structure of the June 28, 2007 agreement

The terms of the June 28, 2007 agreement between Laufen and Lint Tile are at the heart of the breach of contract dispute. In terms of the actual format of the agreement, it was apparently a single page document that was exchanged between the parties via facsimile transmission, and was signed by Defendant Popely on behalf of Plaintiff. Defendant Popely described the agreement as follows, that Lint Tile "was going to purchase so much material, in return [Plaintiff] was going to supply him some merchandising material." Doc. # 48, Popely Depo. Tr. at Tr. p. 35. As the Court will address supra, there are actually two different writings within the evidentiary record, and the parties disagree over which particular document memorialized the actual agreement. There is no dispute, however, that in either "version" of the agreement, Laufen offered several types of merchandising material support to Lint Tile, such as the purchase and installation of display racks in the Lint facility, and 500 sets of tile sample boards displaying the various types of Laufen tile being sold by Lint Tile under Lint Tile's own brand name. The display racks were installed at Lint Tile in either the latter stages of 2007 or early 2008 (the record is not entirely clear in this regard) at an approximate cost to Plaintiff of $300,000.00. The sample boards, on the other hand, required more time to produce, and were manufactured by a third-party corporation, Brown Industries, Inc., in Georgia.

Under the agreement, if Lint Tile placed purchase orders for tile in an aggregate amount of $2,500,000.00, it would receive certain incentives, including merchandising support with an estimated value of $500,000.00, a rebate of ten percent (estimated to be $250,000.00), and an additional rebate of five percent for payment made within one year. For his part, Defendant Edward Lint testified that he was unaware of the requirement to purchase a certain volume of tile under the agreement. See Doc. No. 50, Depo. Tr. of Lint, at Tr. pp. 51-52.*fn3 Neither Plaintiff nor Defendant Popley shared in Defendant Lint's misapprehension regarding this term of the agreement, however.

For the reasons that follow, a variety of questions exist regarding the terms of the agreement, including, inter alia, the question of time in which the invoices were expected to be paid, the requisite amount of product to be ordered by the Lint Defendants in order to receive the benefit of the merchandising support from Plaintiff, and which party was responsible for the freight charges for delivery of the sample boards to the Lint Tile facility.

b. Two different versions of the agreement are referenced by the parties As referenced above, the Court begins with the question of which document represents the written agreement itself. While the parties agree with the notion that an agreement was reached on or about June 28, 2007, the terms of which were documented on a single page, there is a legitimate question reflected in the record as to which single page document actually memorialized the agreement, as there are two versions of the agreement document being advanced by the parties as the actual agreement.

One of the two versions of the agreement is proffered by the Lint Defendants, and is referenced throughout the record as Lint Deposition Exhibit 4, or "Lint Exhibit 4". Lint Exhibit 4 is generally organized into two parts, with an upper portion (containing typed language) and a lower portion (containing handwritten terms). See Doc. No. 42, Lint Concise Statement of Material Facts at ¶ 20. The Court notes that the upper portion of Lint Exhibit 4 and on the second version of the agreement, the version advanced by Plaintiff, are the same, and set forth the following:

ORDER $2,500,000

New Offer

Description Estimated Value Pricing No discount Merchandising 500 nicer displays $500,000 Additional Marketing Support (rebate) 10% $250,000 Term s 5% $64,167 Total Prom otion Value $814,167 % of First Order 32.6% % of Proj. One Year Sales 17.6%

Doc. No. 39, Lint Deposition Exhibit 4, attached to Lint's Concise Statement of Material Facts at exhibit 5. The handwritten portion of Lint Exhibit 4 sets forth the following four terms which, according to Defendant Lint, were written by Defendant Popely:

Roca will pay for racks for the Roca Room. 30,000 Co-op a training seminar which will be held soon. Hunting trip for Larry to be determined at later date.

Aprox. [sic] 20,000 - 30,000. 5% rebate for payment within 1 year of the date receiving material Id. Contained under this fourth term was additional language, written by Defendant Lint, that added to that term with the following, "of displays and samples not tile. 6-27-07. Ship display first." Id. Lint Exhibit 4 bears the signature of Defendant Popely.

The Lint Defendants' motion for summary judgment is predicated upon these handwritten terms, especially the language written by Defendant Edward Lint himself purportedly prior to the agreement being reached. According to Defendant Edward Lint, "I wrote on the paper that Lint Tile's payment to [Plaintiff] was not due until one year after receiving 'displays and samples not tile.'" Doc. # 39-9, Lint Affidavit. Defendant Edward Lint also testified as to his understanding under the agreement, namely that he was "supposed to buy tile, they were supposed to give me 500 sets of boards, 500 sets of samples, I pay for everything after I receive all my sample boards and displays. A year after I received the sample boards and displays, I pay for them. Case closed, that's the deal." Doc. # 50, Depo. Tr. of Lint at Tr. p. 49.

Plaintiff, on the other hand, disagrees that Lint Exhibit 4 represented the written agreement, and points instead to a second document within the evidentiary record as the agreement. Plaintiff contends that the terms of the agreement are set forth in a different one-page typed document that had been signed by Defendant Popely, and is contained in the evidentiary record as Popely Deposition Exhibit 1, or "Popely Exhibit 1". See Doc. # 48, Laufen's Response to Lint's Concise Statement of Material Facts at ¶ 20; see also, exhibit 12 to Laufen Response. For his part, during his deposition, Defendant Popely identified Popely Exhibit 1 as the written agreement. Unlike Lint Exhibit 4, the version of the agreement identified by Plaintiff and Defendant Popely contains no handwritten terms, but did include the following type-written terms not included in the Lint version of the agreement:

Orders that are shipped out of Roca warehouses Lint Tile will only charged $150 Roca will pay for racking system (Lint Tile will give Roca invoice) $25,000 to $30,000 Roca will honor the 5% rebate for 1 year from the date of the invoice Roca will pay for a trip for Larry Lint which would be used within 1 year. Hunting trip $20,000 to $30,000 Roca will co-op 50% of a sale training seminar If Lint Tile places the USCT orders by June 29 no later than 3:00 PM, Roca will by [sic] Lint Tile a $25,000 Truck Doc. # 48, Exhib. 12 to Plaintiff's Response to Lint Concise Statement of Material Facts ("Popely Exhibit 1"). Generally speaking, there is little variation between the handwritten terms of Lint Exhibit 4 and typed language of Popely Exhibit 1, as both contain references to a racking system, a 5% rebate, and a hunting trip for Defendant Lint's father Larry. The significant difference between the two is the handwritten addendum to the 5% rebate term of Lint Exhibit 4 in which Defendant Lint included the language regarding Plaintiff's condition to ship the displays before the one year time frame for the rebate would accrue.

c. Merchandising support: Display racks and sample boards As noted above, the display racks and sample boards were manufactured by Brown Industries. The custom display racks were completed and shipped to Lint Tile between October and early November, 2007. The cost of the manufacture and freight to ship the displays to Lint Tile were paid by Laufen, and totaled slightly more than $300,000.00. The manufacture of the sets of boards for Lint Tile were based upon specifications provided by Defendant Edward Lint, including particular dimensions corresponding to the display racks and graphics displaying Lint Tile images. The order originally envisioned 12,500 boards, as each of the 500 sets of boards were to be comprised of 25 sample boards. The manufacture of each board occurs in different phases, the printing phase of the board itself, followed by the sampling phase, during which the tile samples are cut to size and attached to the boards.

The production of the sample display boards themselves were beset by a number of occurrences that affected the time required to produce the sets. Some of these occurrences can be categorized as logistical in nature in that they occurred within the course of bringing the necessary materials together at the same time in order to create the boards. For example, the artwork for the boards was not generated by Brown Industries itself, but was provided to them. For some tile series, there was a delay with Brown receiving the artwork, including not receiving the artwork at all for certain series, which either delayed or precluded the creation of boards. Likewise, it appears that some delay was associated with the shipment of the tile to be attached to the boards from either Laufen or Lint Tile to Brown. While the arrangement originally involved the tile to be used in the sample display boards being provided to Brown by Laufen, Lint Tile shipped certain tile samples to Brown at the request of Laufen. Breakage occurred with the shipment of certain tile samples, which required replacement.

Other factors affecting the manufacturing process appear to stem from the disagreement between the parties regarding who would cover the freight charges associated with shipping the boards to Lint Tile. Defendant Lint Tile expected Plaintiff to pay the freight charges, while Plaintiff Laufen contends that it was the responsibility of Lint Tile to do so. As the result of a combination of these factors, in the 12 - 18 months that followed the June 28, 2007 agreement, Brown Industries shipped less than a total of 100 sets of sample boards to Lint Tile. It is unclear who paid for those deliveries, however (apparently it was either Plaintiff or Brown Industries itself). What is clear is the fact that the Lint Defendants did not pay for the freight of those sets that were delivered. The sets of boards that were manufactured by Brown Industries and not shipped to Lint Tile were stored in Brown's warehouse. By 2008, so many sets of sample boards were stored at Brown in the meantime, that Brown was unable to manufacture any additional boards until those that had been produced were shipped.

d. Arrangement for Lint Tile to distribute Laufen tile to Lowe's Home Improvement Apparently at some point beginning either in 2007 or early 2008, there was discussion of some kind of arrangement between the parties wherein Defendant Lint Tile would ship Plaintiff Laufen's tile products to Lowe's home improvement stores ("the Lowe's deal"), an arrangement that would have been economically beneficial for both Laufen and Lint Tile. Under the agreement, Lint Tile would purchase and store Laufen tile that it would later sell to Lowe's stores. Beyond this general description of this arrangement, scant detail is included in the record before the Court. While the prospect of making the Lowes deal was not part of the June 28, 2007, agreement between Laufen and Lint Tile, the Court notes it here for two reasons. The first is that as an extension of the commercial relationship between Laufen and Lint Tile, the Lowe's deal appears to have been taken into consideration by the parties in the interactions that occurred in the course of their dispute involving the June 28, 2007 agreement. The second reason that the Lowe's deal is noted here is due to the fact that it is referenced in a number of email messages that were exchanged between the parties, messages that Plaintiff does contend are relevant to its claims.

e. Email exchanges between Defendants Lint and Popely Throughout a significant portion of both 2007 and continuing until July 31, 2008, Defendant Popely was a regional sales manager for Laufen, and, as such, handled the account of Lint Tile and dealt with Edward Lint on behalf of Plaintiff.*fn4 During this period, a series of email exchanges occurred between Defendants Edward Lint and Popely. Plaintiff's claims, particularly the tort claims alleged in Counts I - IV, are predicated in large part on these email exchanges. In particular, in the complaint, Plaintiff alleges that beginning in or around March of 2008, Defendant Lint requested certain unauthorized credits and financial concessions from Defendant Popely in exchange for a payment of $30,000.00 per year for six years. See Doc. # 1 at ¶¶ 26 -29. The complaint further alleges that Defendant Popely agreed to this arrangement, and improperly authorized financial credits and concessions for Defendant Larry J. Lint Floor & Wall Covering's account with Plaintiff without Plaintiff's knowledge and consent. Id. Within the evidentiary record, Defendants Popely and Lint engaged in email correspondence with one another discussing that which appears to be personal intentions regarding potentially working with one another much earlier than March 2008.

1) Defendant Lint courting Defendant Popely in June 2007 Prior to the June 28, 2007 agreement being reached between Laufen and Lint Tile, the following email exchange occurred between Defendant Edward Lint and Defendant Popely on June 14, 2007:

Defendant Lint to Defendant Popely, "are you ready to join the team over hear [sic]"; Defendant Popely in response:

Hey

What do you think about today.

I hope we can do it, I think we are the right company for you for now and in the future growth. You will benifit [sic] from the inventory in the states.

Just think about it. You can ship direct right out of warehouse.

About joining your team (let's talk)

Johnny Roca Doc. # 48, exhibit to Plaintiff's Response to Lint Defendants' Conc. Stmt. at p. 48-20.

2) Series of messages from November 2007

On November 14, 2007, Missy Irwin, a corporate credit and payroll manager for Plaintiff forwarded an email message to Jorge Torres that was apparently sent from Defendant Edward Lint to Laufen (the originating Lint email itself was not included in the record). Torres responded to Irwin, with a carbon copy of the message to three other individuals including Defendant Popely, on the same day, with the following:

His terms on the order were 30 days. Then he said 30 days from receiving the tile, then 30 days from receiving the displays. Now he says, one year.

We need to go see him and settle this.

Defendant Popely responded with the following:

Jorge

I will talk to Eddy to start making payments I give you an update when I have some kind answer Doc. # 48, Plaintiff's Response to Popely's Conc. Stmt., at Popely Dep. Ex. 20. Shortly thereafter, the following email exchange occurred between Defendants Popely and Lint, also on November 14, 2007, with the following message from Popely to Lint:

I talked to Joe

I am going to travel with him in the next couple weeks Who covers from Madison to Erie Also let's put a game plan for Jorge so when we make the move we are in good standing with Roca We are on the same page so it should be easy. Let's get a date from Bruce Defendant ...


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