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Annie Sloan Interiors Ltd. v. Davis Paint Co.

United States District Court, E.D. Louisiana

January 25, 2019

ANNIE SLOAN INTERIORS, LTD.
v.
DAVIS PAINT CO. AND KEVIN OSTBY

         SECTION: "S" (1)

          ORDER AND REASONS

          MARY ANN VIAL LEMMON UNITED STATES DISTRICT JUDGE.

         IT IS HEREBY ORDERED that defendants's 12(b)(6) Motion for Partial Dismissal (Rec. Doc. 12) is GRANTED.

         BACKGROUND

         This matter is before the court on the 12(b)(6) Motion for Partial Dismissal filed by defendants, Davis Paint Company ("Davis") and Kevin Ostby, in which defendants seek dismissal of counts one through three of plaintiff's complaint. Plaintiff, Annie Sloan Interiors, Ltd. (ASI"), opposes the motion.

         ASI is the creator of a line of decorative paint products sold under the ANNIE SLOAN® and CHALK PAINT® trademarks. Davis is the American manufacturer of ASI's paint products, and Ostby is Davis's president. Until recently, non-party Jolie Design & Décor, Inc. (“JDD”), was the American distributor of ASI's paint products, through a tripartite manufacturing agreement among ASI, JDD, and Davis.

         The tripartite manufacturing agreement (hereinafter, "Agreement") was entered into among ASI, JDD, and Davis in April, 2010. Under the Agreement, Davis was the manufacturer of paint for ASI, the supplier, which was distributed by JDD, the distributor.

         Prior to signing the Agreement, Davis had been manufacturing the paint for ASI without a formal written agreement. ASI alleges that when ASI began discussing the Agreement with Davis in 2010, Ostby, on behalf of Davis, promised ASI that Davis would not use the formula developed for ASI for anyone else.

         JDD principal Lisa Rickert apparently took the lead on drafting the Agreement. Accordingly, Rickert sent a draft contract to Davis and ASI on April 6, 2010. Rec. Doc. 12-2. The next day, Davis, through Kevin Ostby, wrote back identifying several changes required for it to sign off on the Agreement. Specifically, he required that the Agreement be modified to reflect that "Davis Paint owns the current formula that we use to manufacture the Annie Sloan Chalk paint. While it is not our intent to sell chalk paint, or chalk paint for furniture to anyone else. We may, in the course of our business, develop another use for this formulation." Id.

         The Agreement was executed on April 21, 2010, with the alterations required by Davis incorporated therein. Specifically, in the "Confidential Information" section of the Agreement, the provision "Written Technical data, drawings, plans and engineering in technical instructions pertaining to the Products are recognized by Manufacturer [Davis] and Distributor [JDD] to be secret and confidential and to be the property of Supplier [ASI]" in the initial draft was specifically revised to provide:"Written Technical data, drawings, plans and engineering in technical instructions pertaining to the Products are recognized by Supplier [ASI] and Distributor [JDD] to be secret and confidential and to be the property of Manufacturer [Davis]." (Emphasis supplied.)

         As well, while the Agreement was drafted to include two exclusivity provisions, namely, that Davis was the exclusive manufacturer of products in the territory, and that JDD was the exclusive distributor of products in the territory, there was no reciprocal exclusivity provision in favor of ASI.

         Upon termination of the parties' Agreement, Davis ultimately reached an agreement to manufacture paint for Jolie Home, LLC ("JHL"), a new company formed by JDD principal Lisa Rickert and others. Davis discontinued manufacturing paint for ASI.

         On September 6, 2018, ASI filed the instant action against Davis and Ostby, asserting claims for (1) breach of contract in bad faith, (2) detrimental reliance, (3) misrepresentation, (4) contributory infringement and unfair competition, and (5) violations of Louisiana's Unfair Trade Practices Act (“LUTPA”). ASI does not allege a breach of the tripartite Agreement.

         With respect to the first three claims, which are the subject of the instant motion, ASI argues that in manufacturing paint for JHL, Davis violated a separate exclusivity agreement, predating but not integrated into the tripartite Agreement, in which Davis agreed to manufacture its chalk paint exclusively for ASI in perpetuity. ASI further contends that it detrimentally relied on Davis's promise of exclusivity, that Davis and Ostby misrepresented the fact that they did not intend to honor the exclusivity promise, and that ASI justifiably relied on this misrepresentation. While the Complaint recites that "Ostby repeatedly communicated his promises of exclusivity to Annie Sloan and to others at ASI, both orally and in writing, the sole specific allegation supporting this claim states: "For ...


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