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Segal Wholesale, Inc. v. United Drug Service

August 16, 2007


Appeal from the Superior Court of the District of Columbia (CA-8637-02) (Hon. Michael L. Rankin, Trial Judge).

The opinion of the court was delivered by: Kramer, Associate Judge

Argued May 5, 2006

Before FARRELL and KRAMER, Associate Judges, and VINCENT,*fn1 Associate Judge, Superior Court of the District of Columbia.

This appeal involves a challenge to the trial court's dismissal of the appellant's breach of contract claim against the appellee. The appellant specifically claims that the trial court erred in entering a judgment as a matter of law based on the statute of frauds. We affirm the trial court's order dismissing the appellant's claim, though for a reason different from that relied on by the trial court.*fn2

The appellant, Segal Wholesale, Inc. ("Segal"), is a tobacco wholesaler headquartered in Minneapolis, Minnesota that owns several retail stores in northern Virginia where it sells tobacco goods. The appellee, United Drug Service ("UDS"), is a convenience store wholesaler*fn3 headquartered in Washington, D.C., that sold tobacco goods to Segal for approximately two years. Thereafter, UDS filed a breach of contract claim in the Superior Court against Segal, alleging that Segal had failed to render payment on the final shipment of goods. In turn, Segal filed a counterclaim against UDS, alleging that UDS had overcharged it for the goods in breach of an oral agreement between the parties.

The sales relationship between Segal and UDS began in June 2000, when two sales representatives from UDS met with a representative from Segal to discuss a potential business arrangement. At the end of that meeting, a preliminary agreement was reached between the parties that UDS would sell goods to Segal's northern Virginia stores. The parties do not dispute that they agreed on a price for the goods, but the details of that agreement form the basis of this controversy. Segal claims that it agreed to purchase goods from UDS for a sale price that was two cents below the competition's best price. While UDS acknowledges that agreement, it claims that price only pertained to the initial shipment of goods and did not extend through the duration of the sales relationship.

There is also some evidence that Segal's owner spoke with UDS's CEO on at least one occasion over the telephone about this deal. Segal's owner claimed that they reached an agreement regarding the sale price of the goods during this conversation as well, the terms of which correspond somewhat with Segal's version of the price agreement at the June 2000 meeting between the representatives. At trial, however, UDS's CEO was never questioned about the agreement and essentially denied having made or approved of any such deal.

During the two years that Segal and UDS did business together, Segal's representatives would place weekly orders for goods and UDS would process and deliver those orders to the northern Virginia stores. This arrangement ended, however, when Segal was solicited by another tobacco wholesaler and was offered a sale price that was, by its account, much lower than what it had been paying UDS for the same goods. After some communication between the parties regarding the sale price, Segal ceased doing business with UDS and refused to pay for the final shipment of goods. UDS thus filed its complaint in the Superior Court.

At trial, UDS presented evidence that Segal had not rendered payment on the final shipment of goods, which Segal did not refute. Segal instead put on evidence to show that the parties had, at their initial meeting, agreed upon a set sale price and that UDS had deviated from that agreement by overcharging it during the two years the parties had done business. Segal claimed damages in the amount that it asserted it had paid in excess of the agreed-upon price. The jury returned a verdict in favor of UDS, awarding it the amount due for the final shipment of goods plus attorneys fees and interest. The jury deadlocked, however, on Segal's counterclaim, and the trial court declared a mistrial on that claim.

Thereafter, UDS renewed its motion for judgment as a matter of law initially made at trial on Segal's remaining breach of contract claim. After a hearing on the motion, the trial court issued a written order entering judgment as a matter of law on Segal's counterclaim. In doing so, the court explained that it "adopt[ed] UDS's argument as its rationale and dismisse[d] the counterclaim based on the statute of frauds."*fn4 Segal appealed the dismissal of its claim.

Segal argues on appeal that the trial court erred in granting the judgment as a matter of law because its claim is not barred by the District of Columbia's statute of frauds. UDS, however, argues that the judgment as a matter of law should be affirmed based on the same grounds it argued in the trial court, namely, that the claim is barred by the statute of frauds and the parol evidence rule. We review the judgment as a matter of law de novo, viewing the record in the light most favorable to the non-moving party. Caulfield v. Stark, 893 A.2d 970, 973-74 (D.C. 2006) (citing Washington Metro. Transit Auth. v. Jeanty, 718 A.2d 172, 174 (D.C. 1998)). Judgment as a matter of law is appropriate where "a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on [an] issue," D.C. Super. Ct. Civ. R. 50 (a)(1), or, in other words, "only when the material facts are undisputed and when reasonable jurors could reach only one possible conclusion based on those facts." Caulfield, supra, 893 A.2d at 973-974 (quoting Bushong v. Park, 837 A.2d 49, 53 (D.C. 2003)).

Statute of Frauds

The statute of frauds requires that contracts for the sale of goods for over $500 be memorialized by "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" in order to be enforceable. D.C. Code § 28:2-201 (1) (2001). There are three exceptions to this rule, which make "[a] contract which does not satisfy the requirements of [the general statute of frauds] but which is valid in other respects . . . 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 ...

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