Opinion
EP-02-CA-439-DB.
March 29, 2005
MEMORANDUM OPINION AND ORDER
On this day, the Court considered Defendant's "Motion For Partial Summary Judgment," filed in the above-captioned cause on May 4, 2004. On May 24, 2004, Plaintiff Sunshine Traders of El Paso, Inc. filed a "Response To Defendant's Motion For Partial Summary Judgment." Defendant filed a "Reply In Support Of Motion For Partial Summary Judgment" on June 4, 2004. After due consideration, the Court is of the opinion that Defendant's Motion should be granted, and that Plaintiff's remaining claims be set for trial.
BACKGROUND
This case arises out of a contract dispute involving the manufacture, purchase, and sale of boy's and men's jeans. Plaintiff alleges three causes of action. Plaintiff, a Texas corporation, with its principal place of business in El Paso, Texas, initially filed suit in the 120th District Court of El Paso County, Texas on August 7, 2002. On September 12, 2002, Defendant, a Kentucky corporation, with its principal place of business in Tennessee, filed a "Notice of Removal," pursuant to 28 U.S.C. § 1446, claiming that the Court possesses diversity jurisdiction over the instant cause because the Parties are citizens of different states, and the amount in controversy exceeds $75,000.
Section 1446 establishes the procedures by which a defendant may remove a suit filed in state court to federal court. See 28 U.S.C.A. § 1446 (West 1994). 28 U.S.C. § 1332 grants the Court original jurisdiction over civil actions where the matter in controversy exceeds $75,000 and is between citizens of different states. 28 U.S.C.A. § 1332 (West Supp. 2004).
Plaintiff is an apparel manufacturer and wholesaler, specializing in jeans. Defendant solicited business from Plaintiff. Starting in February 1998, Defendant issued Plaintiff a series of purchase orders for boy's jeans. On or about March 27, 1998, Defendant's purchasing agent, Lee Babin ("Babin"), visited Plaintiff's manufacturing facilities in Mexico to inspect them. Hitherto the visit, Plaintiff had manufactured approximately 182,265 pieces of "light wash" boy's jeans. During the visit, Babin advised Plaintiff that the color of the jeans produced to date was not satisfactory. Plaintiff ceased producing the "light wash" jeans, and began producing a second batch of jeans utilizing a "dark wash" that Babin selected while at the factory. However, approximately one month later, Babin contacted Plaintiff and also deemed the "dark wash" unacceptable. At that time, Plaintiff had produced 122,728 pairs of "dark wash" jeans. Plaintiff halted production of the "dark wash" jeans, and began producing a third batch of jeans washed with "number 4 standard," a color standard which Defendant accepted.
Plaintiff contends that the Parties entered into a sales contract for 525,000 pieces of boy's jeans, with a sale price of $6.60 per pair of jeans, and an initial delivery date in May 1998. Defendant only admits that it submitted purchase orders, but does not specify how many total pieces it ordered, nor a delivery date for the orders. Defendant's purchase orders that are part of the record corroborate a sale price of $6.60.
All terms used for the color washes of the jeans are the Parties. The Court is unaware whether these terms have any particular significance in the industry.
On or about April 13, 1998, Tom Boone ("Boone") met with Defendant's vice-president, Bob Warner ("Warner"), in Scottsville, Kentucky. Boone informed Warner that Plaintiff was displeased with Defendant's rejection of the light and dark wash jeans, and would stop producing jeans for Defendant unless they could reach an agreement on proper remuneration for the jeans manufactured to date. Plaintiff contends that the 182,265 pairs of "light wash" jeans and 122,728 pairs of "dark wash" jeans were manufactured according to Defendant's specifications. Defendant maintains that Plaintiff failed to submit a sample of the "light wash" boy's jeans for Defendant to approve prior to manufacturing the jeans. It is unclear to the Court exactly what remedy Plaintiff sought during the April meeting. The Parties dispute how this conflict was resolved; this dispute is at the heart of Plaintiff's first cause of action.
Boone's role at this meeting is in contention. See, infra, pg. 12-13.
On April 30, 1998, Boone sent a letter to Plaintiff's President, Roberto Tohme, Jr. ("Tohme"). Boone's letter states in pertinent part that:
"To help us with the sell off of the light standard [Defendant] is offering before negotiating $1.00 per pair in mark down money. They also want to know if we can sell off the dark standard and replace with the New #4 Wash and give us $1.00 per pair on the darks as mark down money. I do not have an offer on the table so at this pont so [ sic] the $1.00 offer does not mean anything other than a starting point.
"[Defendant] is also offering to give us the Kids program in Girls and Boys for the first year and not import cheaper goods. They would do this to help us recover from all of the problems."
A copy of Boone's April 30 letter was sent Babin on May 1, 1998. On May 2, 1998, Babin sent a letter to Boone, in relevant part, stating:
"We are more confused then ever on [ sic] your faxes. Sounds like everything is being tied to the wrong wash produced for Boys. It's not acceptable and we are not taking, [ sic] the bad wash.
"Can we move forward on the Boys jeans that you are rewashing to the #4 spec.
Understand that material is ready to produce? Please answer give quantity.
"If this not [ sic] going to be done this will jeopardize our future production in other Genders and our desire to help participate on the dark wash that was made by mistake."
Between July 29, 1999 and August 3, 2003, Plaintiff sold to various third parties 72,316 pairs of the boy's jeans that Defendant rejected. Plaintiff did not maintain records which specify from which batch the jeans originated.
In addition to the dispute over the boy's jeans, this suit also involves a claim regarding black men's jeans, which is Plaintiff's second cause of action. On June 5, 1998, Plaintiff issued invoices 334 and 335 to Defendant. Invoice 334 was for a total of 2,424 pieces of black men's jeans. Invoice 335 was for a total of 16,872 pieces of black men's jeans. The invoices stated that payment was due within 30 days. Defendant initially paid the amounts due under these invoices, but in a check dated July 23, 1998, Defendant charged-back a total of $7,236.
When Defendant placed orders, it would submit initial purchase orders for large quantities of jeans. These initial purchase orders would later be replaced by several purchase orders which directed that certain quantities be sent to one or more of Defendant's distribution centers. Plaintiff invoiced each of these separate orders to Defendant. Rather than pay each invoice separately, Defendant would remit payment according to Defendant's purchase order, such that one purchase order might cover several of Plaintiff's invoices. However, if Defendant discovered that Plaintiff failed to comply with one or more of the requirements listed on Defendant's purchase orders, Defendant would charge-back a portion of the payment remitted. In essence, Defendant would subtract an amount in dispute from Defendant's next payment to Plaintiff.
On August 7, 2002, Plaintiff filed its "Original Petition." On November 13, 2003, Plaintiff filed a "First Amended Complaint." Therein, Plaintiff asserts three causes of action against Defendant. Through the first cause of action, Plaintiff seeks to recover payment under invoices 334, 335, 502, 634, and 640, for jeans Plaintiff claims it manufactured for and delivered to Defendant between June 26, 1998 and October 6, 1998. In the second cause of action, Plaintiff asserts that the Parties entered into an oral contract regarding the light and dark washes at the April 1998 meeting and that Defendant breached said contract. Through the third cause of action, Plaintiff seeks to recover damages for men's jeans which it claims it produced for Defendant, but which Defendant allegedly refused to take delivery of. The instant Motion followed.
STANDARD
Summary judgment should be granted only where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). The party that moves for summary judgment bears the initial burden of identifying those portions of the pleadings and discovery on file, together with any affidavits, which it believes demonstrate the absence of a genuine issue of material fact. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). "If the moving party fails to meet this burden, the motion must be denied, regardless of the nonmovant's response." Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995). If the movant does meet this burden, however, the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial. See, e.g., Celotex, 477 U.S. at 324, 106 S. Ct. at 2553. "If the nonmovant fails to meet this burden, then summary judgment is appropriate." Tubacex, 45 F.3d at 954.
When making a determination under Rule 56, factual questions and inferences are viewed in a light most favorable to the nonmovant. See Calbillo v. Cavender Oldsmobile, Inc, 288 F.3d 721, 725 (5th Cir. 2002). The party opposing a motion supported by evidence cannot discharge his burden by alleging mere legal conclusions. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S. Ct. 2505, 2510-11, 91 L. Ed. 2d 202 (1986). Instead, the party must present affirmative evidence in order to defeat a properly supported motion for summary judgment. See id.
DISCUSSION
As an initial matter, the Court takes up Defendant's assertion that the Parties contractually agreed that the terms and conditions of Defendant's purchase orders would be governed by Kentucky law. Under Erie R. Co. v. Tompkins, a federal court must apply state law to cases not governed by federal law. Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S. Ct. 817, 822, 82 L.Ed. 1188 (1938). Here, because the Court's jurisdiction is based upon diversity of citizenship, Erie dictates that the Court apply Texas law. Ramming v. Natural Gas Pipeline Co. of America, 390 F.3d 366, 372 (5th Cir. 2004). Defendant, however, argues that Kentucy law controls the portion of this dispute premised on Defendant's purchase orders, because the purchase orders contained a choice of law provision.District courts sitting in diversity apply the choice of law rules of the forum state. Smith v. EMC Corp., 2004 WL 2827942, *4 (5th Cir. 2004). In Texas, contractual choice-of-law provisions are typically enforced. Id. Nonetheless, in this case the Court finds that Plaintiff is not bound by the choice of law provision because Plaintiff did not sign the purchase orders containing the clause. United Int'l Holdings, Inc. v. Wharf (Holdings) Ltd., 210 F.3d 1207, 1223 (10th Cir. 2000) (holding that an unsigned document stating that the parties must submit to certain rules of law was insufficient to constitute a binding choice of law provision). Therefore, the Court is of the opinion that Erie binds the Court to apply Texas law to this dispute. Having clarified that the Court applies Texas law to this case, the Court turns to Defendant's Motion.
Through its instant Motion, Defendant requests the Court grant summary judgment on the portion of Plaintiff's first claim that regards invoices 334 and 335 for black men's jeans, because any claim premised on those invoices is barred by the applicable statute of limitations. Additionally, Defendant ask the Court to grant summary judgment on Plaintiff's second claim on the grounds that it is barred by the statute of frauds. The Court addresses each of Defendant's requests in turn.
I. Plaintiff's First Cause of Action
As part of Plaintiff's first cause of action for breach of contract, Plaintiff seeks to recover $7,236 due under invoices 334 and 335. Defendant argues that any claims premised on invoices 334 and 335 are barred by the statute of limitations. Under Texas law, "an action for breach of any contract for sale must be commenced within four years after the cause of action has accrued." TEX. BUS. COM. § 2.725 (Vernon 1994). A breach of contract claim accrues when a party has sufficient notice of facts to place it on notice of the breach. Rose v. Baker Botts, 816 S.W.2d 805, 810 (Tex.App. 1990). Further, a breach of contract occurs when a party fails or refuses to do something it promised it would. Townewest Homeowners Ass'n, Inc. v. Warner Communications, Inc., 826 S.W.2d 638, 640 (Tex.App. 1992). Plaintiff filed this suit on August 7, 2002. Because the statute of limitations bars claims more than four years old, any claims Plaintiff may have accrued before August 7, 1998 are time-barred. Plaintiff is precluded as a matter of law from proceedings with its claims under invoices 334 and 335 if they accrued before August 7, 1998.
While the record reflects that Plaintiff's first claim was also premised on invoice 379, in its Response to the instant Motion, Plaintiff clarifies that invoice 379 was an invoice for the same goods as invoices 334 and 335.
At issue here is when Plaintiff's claims for invoices 334 and 335 accrued. Defendant emphasizes that invoices 334 and 335 were issued on June 5, 1998, stating that payment was due within 30 days, or by July 5, 1998. Defendant argues that because payment for invoices 334 and 335 was due on or before July 5, 1998, Plaintiffs claims based on invoices 334 and 335 accrued on July 5, 1998, and are barred by the statute of limitations, as they are more than four years old. Plaintiff does not dispute that it issued the invoices on June 5, 1998, or that payment was due by July 5, 1998. Nonetheless, Plaintiff asserts two arguments to rescue its claims from the statute of limitations. The Court address each of Plaintiff's argument in turn.
First, Plaintiff contends that Defendant breached the terms of the invoices when it failed to remit payment for the charge-back. Defendant, while not conceding Plaintiff's argument, retorts that the charge-backs were made and disclosed in a check dated July 23, 1998, and that Plaintiff would have been on notice of Defendant's refusal to pay on July 23, 1998, when Plaintiff received the check disclosing the charge-backs. The Court agrees with Defendant.
Here, Plaintiff's cause of action on invoices 334 and 335 accrued when it had sufficient notice that Defendant failed or refused to pay the amount due under invoices 334 and 335. See Rose, 816 S.W.2d at 810; Townewest Homeowners Ass'n, Inc., 826 S.W.2d at 640. Invoices 334 and 335 were issued on June 5, 1998, and stated that payment was due within 30 days. Thus, payment was due on or before July 5, 1998. On July 6, 1998, the day after payment on invoices 334 and 335 was due, if Plaintiff had not received payment from Defendant, it had sufficient notice of facts to place it on notice that Defendant had breached their agreement. As for Plaintiff's assertion that the date of breach is altered because Plaintiffs claims are premised on charge-backs, the Court notes that Plaintiff fails to cite any authority for that claim. Assuming, arguendo, that such authority existed, Defendant's July 23, 1998 check, which disclosed the charge-backs, put Plaintiff on notice that Defendant was refusing to pay $7,236 due under invoices 334 and 335. See Townewest Homeowners Ass'n, Inc., 826 S.W.2d at 640. The Court determines, subject to Plaintiff's second argument, that Plaintiff had sufficient notice of Defendant's breach before August 7, 1998, and that the claims under 334 and 335 are barred by the statute of limitations because they are more than four years old.
To save its claims under invoices 334 and 335 from the statute of limitation, Plaintiff also argues that it provided Defendant the goods billed under invoices 334 and 335 on an open account. Plaintiff further asserts that because the goods were provided on an open account, pursuant to Texas Civil Practice and Remedies Code § 16.004, a different statute of limitations would apply, and as such, Defendant's breach would not have occurred until the Parties ceased doing business together, in June 2000. Defendant replies that Plaintiff cannot avail itself of the statute of limitations applicable to open accounts because open accounts are a state procedural construction, which is not available in federal court, pursuant to the Erie doctrine. See Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 427, 116 S. Ct. 2211, 2219, 135 L. Ed. 2d 659 (1996). The Court agrees with Defendant.
Open accounts are governed by Texas Rule of Civil Procedure 185, and the applicable statute of limitation is found in Texas Civil Practice and Remedies Code § 16.004. It is well established that a federal court sitting in diversity applies substantive law and federal procedural law. Gasperini, 518 U.S. at 427. Rule 185 is not a rule of state substantive law. Hou-Tex Printers, Inc., v. Marbach, 862 S.W.2d 188, 190 (Tex.App. 1993). Instead, it "is a rule of [state] procedure stating the evidence necessary to establish a prima facie right of recovery or defense . . . [and] cannot be the basis for any cause or causes of action." Id. Consequently, the Court cannot utilize the statute of limitations under § 16.004 which applies to goods provided on an open account. Therefore, the Court finds that breach did not occur when the parties ceased doing business on June 2000 because to reach such a conclusion the Court would have to apply Texas rules of procedure. Rather, as discussed above, when Defendant did not pay the $7,236.00 under invoices 334 and 335, Plaintiff was put on notice of Defendant's breach. Because said breach occurred before August 7, 1998, the claims under invoices 334 and 335 are barred by the statute of limitation, pursuant to Texas Business and Commerce Code § 2.725. Therefore, the Court finds that Plaintiff's claims based on invoices 334 and 335 should be dismissed.
II. Plaintiff's Second Cause of Action
Plaintiff's second claim alleges that during the April 1998 meeting between Tohme and Boone, the Parties entered into an oral contract for the sale of jeans and for Plaintiff to serve as a broker for the rejected jeans. Plaintiff alleges that under the contract, Defendant would grant Plaintiff exclusive production rights for their boy's jeans for a period of one year, from May 1998 through May 1999, that Defendant would pay Plaintiff a $1.00 per pair subsidy for Plaintiff to sell the rejected boy's jeans to third parties who would not offer them for sale in any competitive market, and that Plaintiff would be subsidized for any loss realized from cover sales of the rejected wash standards. Defendant denies entering into any oral agreement and argues that any such contract is barred by the state of frauds because the agreement is for a sale of goods valued at more than $500, and is not in writing.
For the sale of any goods for the price of $500 of more, the Texas statute of frauds requires a 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. See TEX. BUS COM. CODE ANN. § 2.201 (West 1994); Hugh Symons Group, plc. v. Motorola, Inc., 292 F.3d 466, 469 (5th Cir. 2002) (applying the Texas statute of frauds). The lack of such a writing bars enforcement of an alleged oral contract. Id. The party who seeks to enforce an alleged oral contract, bears the burden of proving that the statute of frauds is satisfied. Hugh Symons Group, plc., 292 F.3d at 469 (citing Otto Vehle Reserve Law Officers Assoc. v. Brenner, 590 S.W.2d 147, 152 (Tex.App. 1979).
In the case at bar, the alleged oral contract is subject to the statute of frauds only if it is for the sale of goods valued at more than $500. While neither Party suggests that the statute of frauds should not govern the alleged agreement, for the sake of thoroughness, the Court analyzes the statute of fraud's applicability. The Court's initial inquiry is whether the alleged agreement was for a sale of goods. The alleged oral contract contains terms regarding Defendant's purchase of its jeans requirements from Plaintiff, Plaintiff being paid $1.00 per pair subsidy for finding a third party to buy the rejected jeans, as well as Defendant subsidizing any loss Plaintiff realized in the sales of the rejected color standards. While this alleged agreement involves the sale of the jeans, it also involves Plaintiff serving as a broker for the rejected jeans, which constitutes a service. As such, the Court employs a hybrid analysis to determine if the instant alleged contract is governed by the statute of frauds. See Propulsion Technologies, Inc. v. Attwood Corp., 369 F.3d 896, 901 (5th Cir. 2004).
In such hybrid transactions, the question becomes "whether the dominant factor or essence of the transaction is the sale of materials or of services." Id. The test is whether the thrust of the contractual agreement is the rendition of services, with goods incidentally involved, or is a transaction of sale, with services peripherally involved. See Freeman v. Shannon Construction, Inc., 560 S.W.2d 732, 738 (Tex.App. 1977). Here, Plaintiff avers that Defendant entered into the instant alleged contract to ensure Plaintiff would continue producing boy's jeans for Defendant. The essence of the Parties transactions were for the manufacture and purchase of jeans. While the alleged oral contract required Plaintiff to provide Defendant with the service of finding a third party to purchase the rejected jeans, these services were incidental to the transaction for the jeans Plaintiff would produce for and sell to Defendant. Thus, the Court finds that the alleged contract was essentially for a sale of goods because the services Plaintiff would provide were an incidental part of the alleged contract.
For the alleged agreement to be governed by the statute of frauds, the goods at issue in the alleged contract need to be valued at more than $500. See TEX. BUS COM. CODE ANN. § 2.201. The goods at issue in the alleged contract are Defendant's requirement of jeans for May 1998 to May 1999. Plaintiff claims that the agreed upon price per pair of jeans is $6.60. While Plaintiff does not aver how many pairs of jeans Defendant would likely purchase in a year, the Parties past dealings — none of which were for less than $500, nor were for such a long period of time — suggest that the alleged requirements contract would be valued for more than $500. Moreover, Plaintiff has offered no evidence to the contrary. Because the Parties' course of business indicate that a requirements contract would be valued at more than $500, the Court determines that the alleged agreement was for goods valued at more than $500.
Having found that the transaction in question is primarily for goods valued at more than $500, in order for the Court to enforce the alleged oral contract, Plaintiff bears the burden of proving up that the statute of frauds is satisfied. Hugh Symons Group, plc., 292 F.3d at 469. Plaintiff either needs to produce a writing sufficient to indicate that the Parties entered into a contract for sale, signed by the Defendant or its agent, or Plaintiff must demonstrate that the alleged oral argument falls into one of the exceptions to the statute of frauds. See TEX. BUS COM. CODE ANN. § 2.201.
Plaintiff initially argues that Boone was Defendant's authorized agent, who at all times acted in the best interest of Defendant, and whose April 30, 1998 letter and subsequent writings support the alleged oral contract formed at the April 13 meeting. Plaintiff contends that Boone served as the Parties' agent at the April meeting, and that because Boone's letters record the terms of the agreement, and are signed by him, Defendant's agent, the statute of frauds is satisfied, as the letter constitutes a writing signed by the party against whom enforcement is sought. Defendant retorts that Boone is not Defendants' agent, making his letters meaningless as to whether they bind Defendant. The Court agrees with Defendant that Boone is not Defendant's agent, and that his letters can not serve to bind Defendant.
Through its Response, Plaintiff represents to the Court that Boone served as a broker for the Parties. To support its assertion, Plaintiff submitted with its Response an affidavit from Boone which states that he was a "buyer for [Defendant]" and that his "first priority was to service [Defendant's] interest." This is the first time that Plaintiff or Boone assert that Boone served as Defendant's agent. Indeed, at his deposition, Boone testified that he did not serve as Defendant's agent, employee, or representative, and that he received all of his instructions from Plaintiff's president. Because Boone's affidavit contradicts his deposition testimony, the Court will not consider it. See S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 495 (5th Cir. 1996) (holding that an affidavit which conflicts with prior deposition testimony is not proper summary judgment evidence). The record hitherto Plaintiff's Response, contradicts Plaintiff's assertion that Boone served as Defendant's agent. Up to this point, Plaintiff had consistently represented to the Court that Boone served as Plaintiff's agent, and cannot suddenly assert that Boone was a broker, serving as an agent for both Parties. Therefore, the Court concludes that Boone is not Defendant's authorized agent. As such, none of Boone's letters qualify as a writing "signed by the party against whom enforcement is sought," and cannot be used to enforce the alleged oral agreement against Defendant because Boone's writings do not bind Defendant. Thus, there is no writing which satisfies the statute of frauds.
Alternatively, Plaintiff claims two exceptions to the statute of frauds. First, Plaintiff asserts that the alleged oral contract is exempted from the statute of frauds because it falls within the "merchant exception," or because the jeans were "specially manufactured." Defendant retorts that neither of the exceptions apply. The Court addresses each of Plaintiff's contentions in turn. The Court ultimately agrees with Defendant that the alleged oral contract does not fall within an exception to the statute of frauds. A. Merchant Exception to the Statute of Fraud
First, Plaintiff claims that, as between two merchants, it sent Defendant a confirmation of the contract, in accordance with Texas Business and Commercial Code § 2.201(b). Section 2.201(b) provides that "[b]etween merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies [the statute of frauds] against such party unless written notice of objection to its contents is given within ten days after it is received." TEX. BUS COM. CODE ANN. § 2.201(b). Here, in order to enforce the alleged oral agreement against Defendant, Plaintiff must show that Defendant received a writing sufficient against Plaintiff, and that Defendant did not object to its contents within ten days.
To be "sufficient against the sender," here Plaintiff, a writing must evidence a contract for the sale of goods, it must contain an authentication of the sending party, like a signature, and it must specify a quantity. Cox Eng'g, Inc. v. Funston Mach and Supply, Co., 749 S.W.2d 508, 510 (Tex App. 1988). Here, to evidence that Defendant received a writing sufficient against Plaintiff, Plaintiff again points to Boone's April 30th letter, which Plaintiff claims records the terms of the alleged oral agreement. Defendant retorts that the April 30th letter's own terms negate that a prior, oral agreement was ever finalized. The Court agrees with Defendant that the April 30th letter fails to sufficiently evidence confirmation of a previously reached final contract, as it does not document that an ultimate agreement was realized.
In its Response, Plaintiff loosely directs the Court's attention to all of Boone's correspondence written between April 30 through May 22, 1998. However, because Plaintiff dedicates its argument to April 30th letter, therefore the Court only discusses the April 30th letter.
A "writing in confirmation" must state a binding or completed transaction was actually made. See Rockland Indus. v. Frank Kasmir Assoc., 470 F. Supp. 1176, 1179 (N.D. Tex. 1979). Plaintiff alleges that the Parties agreed that Defendant would grant Plaintiff exclusive production rights for their boy's jeans for a period of one year, from May 1998 through May 1999, that Defendant would pay Plaintiff a $1.00 per pair subsidy to sell off to third parties the boy's jeans with the rejected color standards, that Plaintiff would keep the proceeds from those sales, but that Plaintiff was limited to selling the jeans to third parties who would not offer the boy's jeans for sale in any competitive market, and that Plaintiff would be subsidized for any loss realized from cover sales of the rejected wash standards. The April 30th letter does not reflect a previously finalized oral agreement with those terms. Rather, the letter speaks purely in terms of what Defendant offered and demonstrates that, at best, the Parties were negotiating. For example, the letter states: "To help us sell off of [ sic] light standard [Defendant] is offering before negotiating $1.00 per pair in mark down money;" "I do not have an offer on the table so at this point so [ sic] the $1.00 offer does not mean anything other than a starting point;" "[Defendant] is also offering to give us the Kids program. . . ." This language illustrates that more was needed to realize an agreement, and rebuts Plaintiff's suggestion that the April 30th letter is confirmation of a previously finalized transaction between the Parties. See Haase v. Glazner, 62 S.W.3d 795, 797 (Tex. 2002). Plaintiff has not produced a writing in confirmation that evidences a final contract for the sale of goods. Therefore, Plaintiff's claim that the alleged oral contract is exempt from the statute of frauds by the merchant exception fails.
B. Specifically Manufactured Exception to the Statute of Frauds
Plaintiff also argues that the alleged contract is exempt from the statute of frauds because the goods were specifically manufactured for Defendant and are not suitable for sale to others in the ordinary course of Plaintiff's business. See TEX. BUS COM. CODE ANN. § 2.201(c)(1). Plaintiff argues that the jeans are unsuitable for sale to others in the ordinary course of its business because the jeans bear Defendant's "Open Trails" trademark. To bolster its argument, Plaintiff points to Defendant's alleged insistence that Plaintiff make cover sales solely to third parties who would not offer the boy's jeans for sale in any competitive market. Defendant argues that the trademark alone does not qualify the jeans as specifically manufactured, and buttresses its assertion by point to the fact that Plaintiff has already sold 72,316 pairs of the jeans in question. The Court agrees with Defendant.
The crucial inquiry is whether Plaintiff can sell the jeans in question in the ordinary course of its business to someone other than the original buyer, Defendant. See RM Engineered Products, Inc. v. UOP, Inc., 793 F. Supp. 1373, 1384-85 (W.D. La. 1991) (applying Texas law, held that a good is not specifically manufactured when product is marketable to another). Plaintiff is a jeans manufacturer. Its ordinary course of business is to make jeans and sell them. Plaintiff does not dispute Defendant's assertion that it has already sold 72,316 pairs of the rejected jeans to various third parties. Indeed, Plaintiff states as much in its Amended Complaint. Because Plaintiff has already sold several thousand pairs of the jeans, it cannot establish that they were specifically manufactured for Defendant and are not suitable for sale to others in the course of Plaintiff's business. See id. Thus, the alleged oral contract is not exempt from the statute of frauds under the specifically manufactured exception.
Ultimately, Plaintiff fails to demonstrate that it can satisfy the statute frauds or that the alleged oral agreement comports with any exceptions to the statute of frauds. As a result, the Court finds that Plaintiff's second breach of contract claim is barred by the state of frauds.
CONCLUSION
For the reasons stated, the Court finds there is no genuine issue of material fact as regards Plaintiff's first cause of action for breach of contract, premised on invoices 334 and 335, and Plaintiff's second cause of action for breach of an oral contract. Further, the Court finds that Defendant is entitled to judgment as a matter of law on these claims. The Court notes that the Plaintiff's breach of contract claim premised on invoices 502, 634, and 640, as well as Plaintiff's third cause of auction concerning refused jeans, were not challenged in Defendant's instant Motion, remain in tact, and should be set for trial.
Accordingly, IT IS HEREBY ORDERED that Defendant Dolgencorp, Inc.'s "Motion For Partial Summary Judgment" is GRANTED. Under separate Order, the above-captioned cause is set for trial on May 23, 2005.