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Whitesell Corporation v. Electrolux Home Products, Inc.

United States District Court, S.D. Georgia, Augusta Division

November 20, 2019




         Presently before the Court in the captioned matter are cross-motions for summary judgment on the parties' separate claims concerning Annual Rebates. (Doc. Nos. 1035, 1109.) In particular, Plaintiff Whitesell Corporation ("Whitesell") asserted in Count V of its Second Amended Complaint that Defendants improperly took partial Annual Rebates under their Settlement Memorandum without satisfying a condition precedent.[1] (Doc. No. 578, ¶¶ 159-65.) Conversely, in Count I of their Counterclaims, Defendants seek payment of Annual Rebates earned but not taken. (Husq. Ans., Doc. No. 584; EHP Ans., Doc. No. 585.) The cross-motions for summary judgment call upon the Court to resolve the entitlement to Annual Rebates as a matter of law.


         On December 14, 2000, the parties to this lawsuit executed a purported Supply Agreement entitled "Strategic Partnership Agreement" ("SPA").[2] (See SPA, Ex. 1 to Second Am. Compl., Doc. No. 578-1.) Pursuant to the SPA, Defendants agreed to buy all of their current and future requirements for certain goods from Whitesell during the term of the Agreement, and Whitesell agreed to supply all of Defendants' requirements for such goods.

         Section 6.0 of the SPA provided for "Cost Reduction Programs," whereby the parties agreed to "work together to reduce costs, improve processes, and generate savings." It further provides:

After full transition by plant location, during the initial term to Whitesell, annual cost reduction programs will have a minimum annual cost/price improvement guarantee of 2% of Whitesell's annual sale to Electrolux of cold headed threaded fasteners it had the in-house manufacturing capability to provide to Electrolux on Good(s) which did receive the initial pricing discounts. Although the guarantee is 2% Whitesell will work toward cost reductions goals of 5% per year. ... In the event cost improvement ideas submitted for implementation during a calendar Agreement year do not accumulate to at least 2%, then the unit prices of cold headed threaded fasteners shall be proportionately adjusted by Whitesell in Exhibit B to provide for such shortfall deficiency. Such price reduction will be implemented at the beginning of the next calendar year.

(SPA, § 6.0 (emphasis added).)

         Whitesell began supplying EHP with goods shortly after the SPA was executed; however, a dispute arose between the parties regarding whether the SPA obligated EHP to purchase certain parts for lawn tractors manufactured by EHP at its Orangeburg, South Carolina, Plant. This dispute led to EHP's filing of this lawsuit in March 2003.

         After mediation, the parties executed a Settlement Memorandum on May 23, 2003. (See Settlement Memorandum, Ex. 2 to Second Am. Compl., Doc. No. 578-2.) The Introductory Section of the Settlement Memorandum states thatWEHP and Whitesell desire to resolve any and all disputes which they have with each other arising out of the [SPA]." The Settlement Memorandum further provides that the SPA, "except as modified herein, shall continue in full force and effect." (Id. ¶ 14 .) Relevant here, the parties agreed as follows in Paragraph 7:

Whitesell agrees, at the end of each calendar year beginning with calendar year 2003, to pay to EHP a two percent (2%) rebate of the total receipts for all parts purchased which Whitesell receives from EHP during that calendar year. Such rebate satisfies all of Whitesell's obligations of the unit piece price under Section 6.0 of the Agreement however Whitesell will continue to provide its best efforts to provide EHP with annual Total Cost Reductions.

(Id. ¶7.)

         It is undisputed that both Husqvarna and EHP took partial annual rebates in the amount of $3, 931, 187.34 and $969, 901.60, respectively.[3] (Defs.' Resp. to Whitesell's Counterstatement of Undisputed Material Facts, ¶¶ 75-76.) In Count V of its Second Amended Complaint, Whitesell seeks reimbursement of these monies plus interest. Whitesell alleges that Defendants did not comply with the provisions of the Settlement Memorandum by failing and refusing to fully and timely transition and purchase all parts required by the parties' agreements; Whitesell points to the Brunner and wireform parts that were never fully transitioned to Whitesell. Whitesell draws the Court's attention to the condition precedent in Section 6.0 of the SPA, which reads "[a]fter full transition by plant location." Because of the failure to fully transition, Whitesell contends Defendants are not entitled to the Annual Rebate.

         For their part, Defendants contend that their entitlement to the Annual Rebate provided in Paragraph 7 of the Settlement Memorandum is not dependent on the "full transition" of parts. Rather, Defendants claim that Paragraph 7 of the Settlement Memorandum supersedes Section 6.0 of the SPA.

         In April 2 011, Defendants filed a motion for summary judgment asking this Court to declare that Whitesell is obligated to pay-Defendants a 2% Annual Rebate on their total calendar year purchases from Whitesell, beginning in 2003. There, Defendants similarly argued that the unambiguous language of Paragraph 7 of the Settlement Memorandum compelled this result. By Order of March 29, 2013, this Court terminated Defendants' motion to allow for discovery, noting that the motion "brought into focus the intent behind Paragraph 7 of the Settlement Memorandum and the fact-intensive claims of failure of consideration and estoppel." (Order of Mar. 29, 2013, Doc. No. 496, at 4.) In particular, the parties have consistently and vehemently pointed the blame finger at each other when it comes to the transition failure. (See generally Order of June 8, 2011, Doc. No. 429.) To be sure, the failure to transition the Brunner and Matrix parts is a fact-intensive matter, and the "attribution of fault is not a matter for a judge of the law but one for a jury." (Id. at ...

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