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Annie Sloan Interiors, Ltd. v. Jolie Design & Decor, Inc.

United States District Court, E.D. Louisiana

July 18, 2018

ANNIE SLOAN INTERIORS, LTD.
v.
JOLIE DESIGN & DÉCOR, INC.

         SECTION: “S“(1)

          MARY ANN VIAL LEMMON JUDGE

          ORDER AND REASONS

          JANIS VAN MEERVELD UNITED STATES MAGISTRATE JUDGE

         Before the Court is the Motion for Leave to File First Amended and Supplemental Complaint (Rec. Doc. 55). For the following reasons, the Motion is GRANTED.

         Background This lawsuit arises out of a distributorship arrangement between Plaintiff Annie Sloan Interiors, Inc. (“ASI”) and JDD. ASI, which maintains its principal place of business in Oxford, England, designs and manufactures paints and associated products under the trademarks ANNIE SLOAN® and CHALK PAINT®. JDD was founded by Lisa Rickert. Pursuant to a 2010 agreement (the “Distributorship Agreement”), JDD began serving as ASI's exclusive distributor of CHALK PAINT® in the United States. The Distributorship Agreement states that JDD would serve as exclusive distributor “on a perpetual basis.” JDD successfully built a distribution network for ASI's products in the United States, and JDD claims that ASI asked JDD to expand its territory cover all of North America, Central America, South America, and Australia.

         The relationship between JDD and ASI began to deteriorate. ASI claims that it was concerned with certain actions on the part of JDD that ASI deemed detrimental to its brand, while JDD claims that ASI improperly attempted to insert itself into JDD's distribution and operational practices.

         After years of attempts to negotiate a resolution to their differences, on November 3, 2017, ASI filed this lawsuit against JDD seeking a declaratory judgment finding that (1) the perpetual term contained in the Distributorship Agreement is against Louisiana public policy and is terminable at the will of either party upon a reasonable notice pursuant to Louisiana Civil Code article 2024; (2) 180 days constitutes reasonable notice for terminating the Distributorship Agreement; (3) JDD's activities in countries other than the United States are not encompassed by the Distributorship Agreement and JDD does not have rights to the exclusive distributorship of ASI's products in those countries; and, (4) to the extent that JDD's activities in countries other than the United States are conducted under the Distributorship Agreement, the termination of the Distributorship Agreement would result in the termination of JDD's exclusive distributorship in those countries.

         JDD filed an Answer and Counterclaim. In its Counterclaim, JDD sought a declaratory judgment finding that: (1) the Distributorship Agreement is legally enforceable, including its provisions regarding its duration and the grounds for resolution or termination; (2) JDD is in full compliance with its obligations under the Distributorship Agreement and has not breached it by any action or inaction, and that the Distributorship Agreement is in full force and effect; (3) the Distributorship Agreement permits JDD to sell ASI's products directly to consumers, including over the Internet; (4) to the extent JDD has not implemented some or all of ASI's “brand guidelines” in territories where JDD sells ASI's products, such action does not constitute a breach of JDD's obligations under the Distributorship Agreement or a justification for ASI to resolve or terminate it; (5) JDD has the right under the Distributorship Agreement to market, advertise, promote, distribute and sell ASI's products using whatever methods and means JDD, in its reasonable discretion, deems appropriate; (6) JDD has exclusive distribution rights for ASI's products in North America, the United States, Canada, Central America, South America, Australia, New Zealand, and other parts of Australasia; (7) the Distributorship Agreement applies to control the relationship between ASI and JDD in all of those geographical areas where JDD is the exclusive distributor of ASI's products; (8) JDD has the sole right to select and terminate stockists in its reasonable discretion in those geographical areas where JDD is the exclusive distributor of ASI's products; and, (9) in the alterative, if the court declares that ASI is entitled to terminate the Distributorship Agreement at will with reasonable notice, that reasonable notice under the circumstances would consist of a substantial period of time, the precise duration of which to be established by evidence at trial.

         On May 4, 2018, the District Court granted the motion for partial summary judgment filed by ASI and held that Louisiana Civil Code article 2024 applies to the Distributorship Agreement. The Court found that under that article, the Distributorship Agreement (which states that it continues on a “perpetual basis”) is a contract for an unspecified and undeterminable duration. Contracts for an unspecified and undeterminable duration may be terminated at the will of either party upon giving reasonable notice to the other party.

         On May 8, 2018, ASI notified JDD that the distributorship agreement would be terminated on November 5, 2018. On May 18, 2018, JDD filed a motion to certify the District Court's May 4, 2018, order for immediate appeal or for entry of final judgment and stay of proceedings pending appeal (“Motion to Certify”). On June 5 2018, JDD filed a Notice of Voluntary Dismissal without Prejudice as to its Counterclaims against ASI. On June 13, 2018, the morning of oral argument on the Motion to Certify, ASI filed a Motion for Leave to File a First Amended Complaint. The District Judge instructed the parties to meet with the undersigned. A settlement conference was held on June 21, 2018, but was unsuccessful. On June 27, 2018, ASI moved to substitute the proposed amended complaint filed on June 13, 2018, with a new proposed First Amended Complaint. The Court allowed the substitution and set the Motion for Leave to Amend.

         In its proposed First Amended Complaint, ASI adds additional factual allegations regarding communications by Ms. Rickert to her stockists in April, May, and June 2018 that ASI says disparage the ASI brand. ASI also asserts that, upon information and belief, Ms. Rickert formed a new entity, Jolie Home, LLC (“Jolie Home”), for the purpose of competing directly with ASI. It asserts that Ms. Rickert has recruited stockists to represent competing paint products and that JDD has stopped using the ANNIE SLOAN® mark in conjunction with the CHALK PAINT® mark on social media. ASI has dropped its claims for a declaratory judgment regarding whether 180 days constitutes reasonable notice and JDD's activities in other countries, but seeks to add claims seeking declaratory judgment that JDD's representation of ASI in territories outside of the United States is terminable at will by either party, that ASI is the sole owner of certain Annie Sloan trademarks and domain names, and that JDD has breached the Distributorship Agreement's implied duty of good faith and fair dealing as well as several provisions of the agreement, including the provision prohibiting JDD from representing products that compete with ASI's products. ASI also seeks to add Ms. Rickert and Jolie Home LLC (“Jolie Home”) as parties and to assert a claim under the Louisiana Unfair Trade Practices Act (“LUTPA”), a claim for Tortious Interference with Contractual Relations, and a claim of Conspiracy.

         ASI insists that it can establish good cause to allow the amended pleading. It says it could not file the motion earlier because it did not discover the facts until after the pleading amendment deadline. ASI argues that the amendment is important because it asserts separate grounds for terminating the Distributorship Agreement and asserts a LUTPA claim, which is subject to a short, one-year-peremptive period. ASI says that amendment will not unduly prejudice JDD's defense because there is sufficient time to conduct discovery and because a continuance could cure any deadlines. Of note, since the filing of the motion and opposition, the District Judge has now continued the trial.

         JDD opposes the proposed amendment. It separately argues that ASI cannot establish good cause for the addition of its trademark claims, its domain name claim, its tortious interference with contract claim, and its civil conspiracy claim. JDD argues that each of these claims is futile and asserted in bad faith. JDD does not address ASI's proposed amendments to its claim for declaratory relief, including the breach of contract claim, or its LUTPA claim.

         With regard to the trademark claims, JDD points out that ASI does not explain what facts were missing before the March 20, 2018, pleading amendment deadline that precluded seeking amendment. JDD further argues that ASI's trademark validity claims are futile. JDD insists the claims are not justiciable because they fail to identify any dispute concerning the “claimed trademarks.” Specifically, JDD notes that ASI does not allege that JDD is liable for trademark infringement. JDD further argues that ASI's trademark claims are brought in bad faith. JDD points out that when ASI moved to substitute its proposed amended pleading, the new pleading only added new claims-including the trademark claim. But, JDD says, the new proposed pleading did not add any new facts. JDD argues that ASI only added the trademark claims in response to JDD's argument in its Supplemental Memorandum in Support of its Motion to Certify that LUTPA does not provide a private right to an injunction and that ASI's breach of contract claim had been plead “solely in the alternative” to ASI's article 2024 claims. JDD argues that ASI has only added the trademark claims in an attempt to defeat the Motion to Certify and ...


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