SYNERGIST, LLC; and ROBERTA MANNING v. STAR BANC CORPORATION; and STAR BANK, N.A.
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RENDERED: JULY 6, 2001; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-002463-MR
SYNERGIST, LLC; and
ROBERTA MANNING
v.
APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE THOMAS WINE, JUDGE
ACTION NO. 98-CI-006557
STAR BANC CORPORATION; and
STAR BANK, N.A.
APPELLEES
OPINION
REVERSING and REMANDING
** ** ** ** **
BEFORE:
BUCKINGHAM, EMBERTON AND TACKETT, JUDGES.
EMBERTON, JUDGE: This is an appeal from an order of summary
judgment dismissing Synergist’s claim against Star Banc
Corporation on the grounds of the statute of frauds and the
parole evidence rule.
Synergist is a marketing company whose primary product
is the Blowsdrier, a cloth garment bag which, when used with a
hair dryer, removes wrinkles from clothing.
In early 1998, the
owners of Synergist, Roberta Manning and Rod and Gloria Wenz, met
with Star Banc representatives to discuss a collaborative effort
to promote credit cards to over-the-road truck drivers.
The
cards, issued by Star Banc, would carry the trademark of Mama
Tucker, a trademark of Catawba Holdings, LLC.
A travel kit,
consisting of a Blowsdrier, a travel bag and several other small
items, was to be assembled by Synergist as an incentive for truck
drivers to open a credit card account.
Synergist alleges that on
or about March 2, 1998, Faris Weber, senior vice-president and
manager for credit card services at Star Banc, requested quotes
on quantities of 10,000, 50,000 and 100,000 travel kits.
Because
it anticipated high demand by Star Banc for the kits, Synergist
identified prospective suppliers, obtained quotes, and took steps
to replace its prior Blowsdrier manufacturer in Mexico with a
larger factory in Korea.
Synergist alleges that there were various telephone
conversations between it and representatives of Star Banc which
led to the placing of a verbal order of 10,000 travel kits.
There was a sense of urgency to have the kits produced for
availability at a Las Vegas truck show in mid-May of 1998.
On
March 10, 1998, representatives from Synergist, Star Banc and
Catawba met at Star Banc’s headquarters and Weber reduced the
size of Star Banc’s order to 5,000.
Synergist claims that there
was an oral agreement that Star Banc would purchase 5,000 kits
for delivery in sixty days, and 2,000 kits per month thereafter
for a three-year period.
The price for each kit was $36.90.
Synergist contends it was instructed to proceed immediately.
There is no written contract evidencing the alleged oral
agreement and Star Banc denies any oral agreement to purchase
more than 1,000 kits.
-2-
There are several pieces of correspondence which are
worthy of mention.
On March 12, 1998, Rod Wenz from Synergist
wrote a letter to Weber expressing his appreciation for Star
Banc’s order and confirming that at the March 10, 1998, meeting
the order had been changed from 10,000 kits to 5,000 kits.
Star
Banc and Synergist representatives again met on March 13, 1998,
to complete a purchase order for 5,000 travel kits, 1,000 to be
delivered to Las Vegas, and 4,000 for delivery elsewhere.
Synergist alleges, however, when Weber sought advice from Star
Banc as to the method of payment for the kits, Weber was informed
that the purchase orders would have to be staggered with orders
of 1,000 kits at a time.
Synergist alleges that Weber assured it
that Star Banc would need all 5,000 kits.
Star Banc alleges that
Weber was informed that he had no authority to commit to more
than 1,000 kits and Weber signed and provided the following
purchase order:
March 13, 1998
Ms. Bobbi Manning
Synergist, LLC
2435 Carolina Avenue
Louisville, KY 40255
Dear Ms. Manning:
This letter will serve as Star Banc’s initial
order for the purchase of your product,
Trucker’s Traveler.
Star will purchase 1,000 units for a May
deliver to Las Vegas, Nevada.
This also serves as our non-binding Letter of
Intent to purchase an additional 4,000 units
by July 31, 1998.
Very Truly Yours,
-3-
Faris Weber
Senior Vice President
CREDIT CARD SERVICES
Synergist did not sign the purchase order.
Following
the March 13, 1998, meeting, Synergist placed an order with GO
Global for 1,000 kits to be shipped to Las Vegas and 4,000 to be
shipped elsewhere.
The order was immediately passed to the
factory in Korea.
The Mama Tucker credit card program made its debut at
the Las Vegas truck show and was a failure.
Prior to leaving Las
Vegas, Manning alleges she reminded Weber about the sixty-day
delay in shipping, and that based on his order, Synergist
committed to buying 2,000 units every month after May.
Manning
gave Weber a copy of a telefax received from Wenz which showed
that 2,000 units were en route, 2,000 were due to leave Korea the
next day, 2,000 units were committed for June production, and
2,000 for July production unless canceled by May 18, and 2,000
for August production unless canceled by June 15.
When Manning
did not hear from Weber on Monday, May 16, she allowed the
production order to remain.
However, as June approached and
realizing that the 8,000 kits on hand were sufficient to meet
Star Banc’s need, Synergist suspended the production order.
As of September 1998, Synergist alleges it received and
paid for 9,000 travel kits yet, Star Banc paid for only 1,000.
By correspondence dated September 28, 1998, Weber denied an
agreement to purchase more than 1,000 kits.
There is no dispute that Star Banc ordered a quantity
of kits for use in its Mama Tucker’s credit card promotion.
-4-
The
dispute arises as to the number ordered.
Star Banc contends and
the trial court agreed, that the March 13, 1998, purchase order
is a written contract and that an oral agreement between the
parties is unenforceable.
The statute of frauds for the sale of goods is codified
in KRS 355.2-201 which provides in part:
(1) Except as otherwise provided in this
section a contract for the sale of goods for
the price of $500 or more is not enforceable
by way of action or defense unless there is
some writing sufficient to indicate that a
contract for sale has been made between the
parties and signed by the party against whom
enforcement is sought or by his authorized
agent or broker. . . .
. . . .
(3) A contract which does not satisfy the
requirements of subsection (1) but which is
valid in other respects is enforceable
(a) if the goods are to be specially
manufactured for the buyer and are not
suitable for sale to others in the
ordinary course of the seller’s business
and the seller, before notice of
repudiation is received and under
circumstances which reasonably indicate
that the goods are for the buyer, has
made either a substantial beginning of
their manufacture of commitments for
their procurement. . . .
The trial court held that the March 13th purchase order
signed only by Star Banc precludes Synergist from relying on the
specifically manufactured goods exception.
Contrary to the
finding of the trial court, Synergist was not attempting to
enforce the purchase order against Star Banc.
Star Banc asserted
the order as a defense to payment for more than 1,000 kits and
-5-
since it was not signed by Synergist cannot be asserted against
it.1
The trial court found there was no evidence that the
kits were “specially manufactured.”
If the kits were specially
manufactured for Star Banc, the oral contract alleged by
Synergist would be taken out of the statute of frauds.
In
Marilyn Shoe Company v. Martin’s Shoe Store, Inc.,2 the court
held that shoes shipped to the buyer were not specially
manufactured:
We agree with the trial court that the shoes
were not manufactured by the seller
especially for the buyer and were suitable
for sale to others in the ordinary course of
the seller’s business. . . . The shoes were
ordered from a sample shoe, and the colors
were selected from ‘swatches’ of leather
shown by appellant’s salesman. The order was
placed according to ‘stock numbers.’ The
shoes were not made according to any special
design, plan, or specification, or any model
furnished by the buyer such as the seller did
not use in the ordinary course of its
business. The fact that the shoes were of
the ‘fad type’ is not important since the
business of appellant is making shoes of this
type.3
In this case, Synergist alleges that Star Banc agreed
to purchase 5,000 kits plus an additional 2,000 kits every month
for three years.
Synergist enlarged its factory, moved it to
another country, extended its line of credit at the bank, and
ordered the kits.
The kits included not only the Blowsdrier but
also five items imprinted with the Mama Tucker logo.
Although
1
Nicholson v. Clark, Ky. App., 802 S.W.2d 934, 938 (1990).
2
Ky., 253 S.W.2d 18 (1952).
3
Id. at 19-20.
-6-
Synergist manufactured the Blowsdrier, the kits were specifically
for the Star Banc credit card promotion.
We find that the trial
court erred when it found that the statute of frauds precludes
proof of an oral agreement between Synergist and Star Banc.
Synergist concedes that if the oral agreement it
alleges was made contemporaneous with a written contract to
purchase only 1,000 kits, then the parol evidence rule precludes
evidence of the oral contract.4
Synergist, however, contends
that Star Banc, through the March 13, 1998, purchase order,
attempted to modify the pre-existing oral contract by a
unilateral issuance of an order for a reduced quantity of kits.
KRS 355.2-202 provides:
Terms with respect to which the confirmatory
memoranda of the parties’ agree or which are
otherwise set forth in a writing intended by
the parties as a final expression of their
agreement with respect to such terms as are
included therein may not be contradicted by
evidence of any prior agreement or of a
contemporaneous oral agreement but may be
explained or supplemented. . . .
The purchase order submitted was not signed by
Synergist and only by Star Banc.
In summary, Synergist claims
that there was an oral agreement made on or before March 13,
1998, and that the purchase order does not reflect the intentions
of it or Star Banc.
The trial court erred in failing to consider
the facts as alleged by Synergist.
The summary judgment entered by the trial court is
reversed and this case is remanded for further proceedings.
4
Mario’s Pizzeria v. Federal Sign & Signal Corp., Ky., 379
S.W.2d 736 (1964).
-7-
ALL CONCUR.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEES:
Glenn A. Cohen
Michael C. Bratcher
Jackie L. Chauvin
Louisville, Kentucky
Kimberly K. Greene
Wendy L. Anderson
Louisville, Kentucky
ORAL ARGUMENT FOR APPELLEES:
ORAL ARGUMENT FOR APPELLANTS:
Wendy L. Anderson
Louisville, Kentucky
Michael C. Bratcher
Louisville, Kentucky
-8-
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