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

United States District Court, E.D. Louisiana

July 25, 2018

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

         SECTION: "S" (1)

          ORDER AND REASONS

          MARY ANN VIAL LEMMON UNITED STATES DISTRICT JUDGE

         IT IS HEREBY ORDERED that Jolie Design & Decor, Inc.'s Motion to Certify for Immediate Appeal and Stay Proceedings Pending Appeal (Doc. #43) is DENIED.

         BACKGROUND

         This matter is before the court on a motion to certify order for immediate appeal or for entry of final judgment and stay of proceedings pending appeal filed by defendant, Jolie Design & Decor, Inc. ("JDD"). JDD argues that this court should allow JDD immediately to appeal the court's May 4, 2018, Order and Reasons which held that Louisiana Civil Code article 2024 applies to the contract at issue, making it terminable at the will of either party with reasonable notice.[1]

         Annie Sloan Interiors, Inc. ("ASI") designs and manufactures paints and associated products under the trademarks ANNIE SLOAN® and CHALK PAINT®. On April 19, 2010, ASI and JDD entered into an agreement whereby JDD became ASI's exclusive distributor in the United States (the "2010 Agreement"). The operative contractual language in this regard states:

Supplier [ASI] hereby appoints Distributor [JDD] as Supplier's [ASI's] exclusive distributor of Products in the Territory, and Distributor accepts that position on a perpetual basis.

         The 2010 Agreement defines "Territory" as the "United States of America." Working under the 2010 Agreement, JDD successfully built a distribution network for ASI's products in the United States.

         The parties' relationship eventually deteriorated, and they engaged in multiple unsuccessful attempts to discuss and mediate their differences. On November 3, 2017, ASI filed this action against JDD seeking a declaratory judgment finding that: (1) the 2010 Agreement's perpetual term 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 2010 Agreement; (3) JDD's activities in countries other than the United States are not encompassed by the 2010 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 2010 Agreement, the termination of the 2010 Agreement would result in the termination of JDD's exclusive distributorship in those countries. JDD filed an Answer raising affirmative defenses of equitable estoppel, detrimental reliance and waiver. JDD also filed counterclaims, which it voluntarily dismissed without prejudice.

         On December 19, 2017, ASI filed a motion for partial summary judgment seeking a declaration that Louisiana Civil Code article 2024 applies to the 2010 Agreement because the contract does not have a specific or determinable duration. Article 2024 states: "[a] contract of unspecified duration may be terminated at the will of either party by giving notice, reasonable in time and form, to the other party." La. Civ. Code art. 2024. In its May 4, 2018, Order and Reasons ruling on the motion, this court noted that the Supreme Court of Louisiana has not specifically addressed the question whether Article 2024 applies to contracts that state they have a "perpetual" duration. This court examined the applicable jurisprudence from the Louisiana intermediate courts of appeal and the United States Court of Appeals for the Fifth Circuit, and held that Article 2024 applies to the 2010 Agreement making it terminable at the will of either party after giving reasonable notice. This court explained that following the principles outlined in the applicable jurisprudence:

[T]he court determines that Article 2024 is applicable. The 2010 Agreement states that JDD accepts the appointment as ASI's distributor of certain products in the Territory "on a perpetual basis." The 2010 Agreement "specifies" that its term is "perpetual." However, using a specific word to define the term does not automatically mean that the contract has a specific duration. To the contrary, a contract that continues on "a perpetual basis" will presumably go on forever. The "perpetual" term of the 2010 Agreement is for an "unspecified duration" that is also undeterminable. There is nothing in the contract that references a specific future event the happening of which will terminate the contract like there was in [cases decided by the Louisiana intermediate courts of appeal].

Doc. #42. The court further held that it was unnecessary to rule on the merits of JDD's affirmative defenses to answer the legal question posed and resolved by ASI's motion for partial summary judgment, i.e. "whether the 2010 Agreement is subject to Article 2024 because it is for an uncertain and undeterminable term." Id. The court noted that JDD's affirmative defenses, which rely on the amount of time, money and effort JDD has expended in pursuing the 2010 Agreement, pertain to the reasonable notice that ASI must give to JDD to proceed under Article 2024, not whether Article 2024 applies.[2] Id.

         In the present motion, JDD seeks an order under 28 U.S.C. § 1292(b) certifying for immediate appeal this court's May 4, 2018, Order and Reasons as it pertains to the court's ruling regarding the applicability of Article 2024 to the 2010 Agreement. JDD also seeks a stay of these proceeding pending its appeal.

         After JDD filed the present motion, ASI was granted leave to file its First Supplemental and Amended Complaint for Declaratory Judgment and for Damages. In its amended complaint, ASI adds Lisa Rickert, who is a member of JDD, and Jolie Home LLC ("JHL") as defendants. ASI adds allegations that JDD is acting in bad faith under the 2010 Agreement, and that Rickert established JHL to compete with ASI in violation of the 2010 Agreement. ASI seeks a declaratory judgment holding that: (1) the 2010 Agreement is terminable at will by either party, upon reasonable notice given to the other;[3] (2) JDD's representation of ASI in territories outside of the United States is terminable at will by either party, upon reasonable notice given to the other; (3) ASI is the sole owner of certain trademarks and domain names and directing JDD to turn them over to ASI; and, (4) JDD's actions fall short of the 2010 Agreement's implied covenant of good faith and fair dealing and JDD has breached several provisions of the 2010 Agreement, giving ASI the right to immediately dissolve it under La. Civ. Code art. ...


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