Electrolux Home Prod v. Whitesell Corp

Filing 1276

ORDER granting 970 Motion for Partial Summary Judgment as to L'Assomption parts. Whitesell Corporation may not assert a claim for damages for breach of contract against EHP for the 92 L'Assomption parts listed on Exhibit A to the motion. Signed by Chief Judge J. Randal Hall on 11/20/2019. (jlh)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF GEORGIA
AUGUSTA DIVISION

WHITESELL CORPORATION,

*
*

Plaintiff,

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*

V.

*

CV 103-050

*

ELECTROLUX HOME PRODUCTS, INC.,

*

HUSQVARNA, A.B., and HUSQVARNA
OUTDOOR PRODUCTS, INC.,

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*
*

Defendants.

ORDER

Defendant Electrolux Home Products, Inc. ("EHP") has filed a

"Motion for Partial Summary Judgment as to L'Assomption Parts."
The motion seeks a determination as a matter of law that Plaintiff

Whitesell Corporation does not have standing to seek damages for

EHP's failure to purchase Whitesell parts for its L'Assomption,
Canada facility.

For the following reasons, EHP's motion for

partial summary judgment is GRANTED.

I.

FACTUAL BACKGROUND

The contractual relationship at issue in this case began with
a Strategic Partnership Agreement ("SPA") entered into on "the
14th Day of December, 2000, by Electrolux Home Products [Defendant
herein],

of

White

Consolidated

Industries

Inc.,

a

Delaware

corporation, its Affiliates and related organizations . . . and
Whitesell

Corporation

[Plaintiff

herein]."

(EHP's

Undisputed Material Facts, Doc. No. 970-1, H 2.)

St.

of

Unlike EHP,

Whitesell Corporation was not defined to include "Affiliates and
related

corporations,"

and

no

other

entities

Whitesell Corporation were parties to the SPA.
Under

the

SPA,

EHP

agreed

to

affiliated

with

(Id. H 3.)

purchase

and

Whitesell

Corporation agreed to provide all of EHP's "current and future
needs of cold headed/threaded fasteners and various related Class

C items" from

January 1,

2001

through April

generally Doc. No. 568, Ex. 1, SPA.)

1,

2008.^

Whitesell Corporation began

supplying goods to EHP shortly after the SPA was executed.

St. of Undisputed Material Facts, K 6.)
facilities

in

North

America,

L'Assomption, Quebec, Canada.
at

its

L'Assomption

Whitesell

of

headquartered in Vaughn, Ontario,

was

located

in

The requirements of EHP

however,

Rather,

(EHP's

EHP operates several
which

(Id. H 9.)

facility,

Corporation.

one

(See

were

Whitesell

not

supplied

Canada,

which

by
was

Canada, and distributed all

types of fasteners and Class C components, supplied parts to this

facility.2

(Id. Hf 11 & 16; see also id. H 19.)

^ This was the initial term of the SPA.

The duration term of the

contract would later be modified by the parties.
2 Whitesell Corporation admits in brief that only Whitesell Canada
supplied parts to the L'Assomption facility.
(Whitesell Br. in
Opp'n, Doc. No. 984, at 6, 13.)
2

At all times relevant, Mr. Neil Whitesell, the president and

CEO of Whitesell Corporation, was also the sole shareholder of

Whitesell Canada.^
separate

(Id. H 10.)

entities.

Although

The two corporations were whollythere

were

transactions

between

Whitesell Corporation and Whitesell Canada, those transactions

occurred at arm's length.

(Id. H 14.)

The two entities had

different customers with only limited overlap.

(Id. H 15.) They

had different email servers and different systems for tracking

part purchases.

(Id. H 12.)

Mr. Whitesell used Whitesell Canada to supply parts to the

L'Assomption facility because "it made logical sense for [his]

Canadian business to service [EHP's] Canadian facility."
17.)

(Id. H

At issue here are 92 parts EHP's L'Assomption facility

purchased from Whitesell Canada.
J., Doc. No. 970, Ex. A.)

(See EHP's Mot. for Partial Summ.

Sales between Whitesell Canada and the

L'Assomption facility did not flow through Whitesell Corporation.
The L'Assomption facility received invoices for all of its part
purchases directly from Whitesell Canada and made payment for those

purchases directly to Whitesell Canada. (EHP's St. of Undisputed
Material Facts, K 18.)
lawsuit.

3

Mr.

Whitesell Canada is not a party to this

(Id. H 22.)

Whitesell

sold

Whitesell

Canada in 2017.

Undisputed Material Facts, H 23.)
3

(EHP's

St.

of

In the lawsuit, Whitesell Corporation has sued EHP for an

alleged breach of contract, seeking lost profits for EHP's failure
to

purchase

all

of

its

requirements

for

covered

parts

Whitesell Corporation during the contract duration term.

from

Through

its present motion for summary judgment, EHP points out that
Whitesell Corporation never supplied any of the 92 subject parts
to the L'Assomption facility; thus, Whitesell Corporation could
not have suffered lost profit damages related to the L'Assomption

parts.

Further, EHP contends that Whitesell Corporation does not

have standing to seek damages, if any, on behalf of Whitesell
Canada.

II.

LEGAL STANDARD

The Court should grant summary judgment only if "there is no
genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law."

Fed. R. Civ. P. 56(a).

The

purpose of the summary judgment rule is to dispose of unsupported
claims or defenses which, as a matter of law, raise no genuine
issues

of

material

fact

suitable

for

trial.

Celotex

Corp.

v.

Catrett, 477 U.S. 317, 322-23 (1986).

In considering a motion for summary judgment, all facts and
reasonable inferences are to be construed in favor of the nonmoving
party.

Hogan v. Allstate Ins. Co., 361 F.3d 621, 625 (11th Cir.

2004).

Moreover,

[t]he mere existence of some factual dispute will not
defeat summary judgment unless the factual dispute is
material to an issue affecting the outcome of the case.
The

relevant

rules

of

substantive

materiality of a disputed fact.

law

dictate

the

A genuine issue of

material fact does not exist unless there is sufficient

evidence favoring the nonmoving party for a reasonable
jury to return a verdict in its favor.

Chapman v. AX Transp., 229 F.3d 1012, 1023 (11th Cir. 2000) (en

banc) (quoted source omitted) (emphasis supplied).

The party

opposing the summary judgment motion, however, "may not rest upon
the mere allegations or denials in its pleadings.

Rather, its

responses . . . must set forth specific facts showing that there
is a genuine issue to be tried."

Walker v. Darby, 911 F.2d 1573,

1576-77 (11th Cir. 1990).

The Clerk has given the nonmoving party, Whitesell, notice of
the summary judgment motion and the summary judgment rules, of the
right to file affidavits or other materials in opposition, and of

the consequences of default.

(Doc. No. 971.)

Therefore, the

notice requirements of Griffith v. Wainwright, 772 F.2d 822, 825

(11th Cir. 1985) (per curiam), are satisfied.

The time for filing

materials in opposition has expired, and the motion is ripe for
consideration.

III.

The

relevant facts

undisputed.

LEGAL ANALYSIS

necessary to

resolve

this

matter are

Whitesell Canada was not a party to the SPA and is

not a party to this lawsuit. Whitesell Canada is a separate entity
from Whitesell Corporation.^

And, the 92 parts at issue here,

the L'Assomption parts, were never purchased by EHP from Whitesell

Corporation; rather,

the parts

were purchased from

Whitesell

Canada.

Setting aside the issue of whether Whitesell Canada has any

claim against EHP since it is not a party to this lawsuit, the
undisputed facts demonstrate that Whitesell Corporation cannot
seek lost profits on the L'Assomption parts because they did not
supply those parts to EHP.^

Moreover, Whitesell Corporation does

not have standing to bring a claim for any lost profits suffered

by Whitesell Canada.

See Fed. R. Civ. P. 17(a) ("An action must

be prosecuted in the name of the real party in interest."); Canton
Plaza, Inc. v. Regions Bank, Inc., 732 S.E.2d 449, 454 (Ga. App.

2012) (stating that it is "axiomatic that each corporation is a
separate entity" and citing O.C.G.A. § 9-2-20(a) ("As a general

4 Mr. Whitesell testified that Whitesell Canada "operated as a

completely standalone entity" and that "[t]he two businesses
operated completely autonomous of each other."
(EHP's Mot. for
Partial Summ. J., Doc. No. 970, Ex. B, Whitesell Dep. at 279, 282.)
5
On October 14, 2008, this Court limited the parts covered by
the SPA to four enforceable categories, one of which has been

designated the Course of Performance category.
(Neither party
contends that the 92 L'Assomption parts fall within any of the
other three enforceable part categories.)
Parts that EHP never
purchased from Whitesell Corporation cannot qualify as Course of
Performance parts.

(See Order of June 18, 2018, Doc. No. 1017, at

4-5.)
6

rule, an action on a contract . . . shall be brought in the name
of the party in whom the legal interest in the contract is vested
. . .

Mitchell Co. v. Campus, 2009 WL 1758835, at *5 (S.D.

Ala. June 17, 2009) {"[A] corporation does not have standing to
assert

claims

belonging

to

a

related

or

closely

affiliated

corporation simply because their businesses are intertwined.");
cf.

AEP-PRI Inc.

(S.D.N.Y.

Aug.

V.

13,

Galtronics

2013)

Corp.,

("Under

New

2013

WL 4400833,

York

law,

*8

fact

the

at

of

corporate affiliation does not give an entity the right to bring
a suit in its own name to remedy an injury to an affiliate.");
Clarex

Ltd.

(S.D.N.Y.

v.

Oct.

Natixis

12,

Sec.

2012)

Am.

("It

LLC,

is

2012

WL

4849146,

black-letter

law

at

that

*6

one

corporation cannot assert an affiliate's legal rights.").

In response, Whitesell Corporation asserts the doctrine of
equitable estoppel.

expected

and

Whitesell Corporation points out that EHP

received

the

same

benefits

under

the

parties'

contractual agreements for parts supplied to EHP's L'Assomption

facility

by

domestically

Whitesell
by

Canada

Whitesell

as

it

Corporation

did

for

(i.e.,

parts
a

2%

supplied
rebate

as

provided for in the parties' Settlement Memorandum of 2003).
Whitesell Corporation also notes that EHP's Canadian facility
saved money from accepting the parts domestically from Whitesell

Canada.®

Finally,

the

evidence

indicates

that

EHP

expressly

acknowledged that its requirements for the L'Assomption facility
fell under the terms of the contractual agreements between EHP and

Whitesell Corporation even though the parts were at all times
supplied

by

Whitesell

Canada.

(See

Elsberg, Doc. No. 986, Exs. 1-8.)

generally Decl.

of

David

In sum, Whitesell Corporation

argues that EHP should be estopped from denying the validity of
its contractual agreements with Whitesell Corporation after having
availed itself of the rights and obligations of those agreements
for nearly a decade.

The

estoppel

Court

is

not

arguments.

persuaded

The

issue

by

is

Whitesell

not

whether

Corporation's

EHP

accepted

performance from Whitesell Canada such that it should be estopped
from disclaiming liability for any breach.
to

whom

are

damages

from

any

alleged

Rather, the issue is

breach

owed.

Because

Whitesell Canada was the supplier of parts to the L'Assomption

facility profiting thereby, any claim for lost profits inures to
the benefit of Whitesell Canada.

Further, performance by Whitesell

Canada in place of Whitesell Corporation, whether agreed to or not

by the parties, does not confer standing on Whitesell Corporation
to

seek

lost

profit

damages.

More

succinctly,

Whitesell

® In fact, the evidence shows that the use of Whitesell Canada was
a mutually agreeable decision. (See Elsberg Decl., Exs. 10, 1214.)
8

Corporation has not presented any evidence that it lost profits
from EHP's failure to purchase L'Assomption parts, and thus, its

claim for lost profits on the 92 L'Assomption parts cannot be
sustained.

Faced

with this

reality,

Whitesell Corporation argues in

brief that EHP has misunderstood its damages theory as it relates

to the L'Assomption parts.

Here, Whitesell Corporation argues

that it sustained loss as a result of EHP's alleged breach of

contract in the form of "commission payments."

16-17.)

(Doc. No. 984, at

In particular, Whitesell Corporation contends that from

2001 to 2009, Whitesell Canada made regular commission payments to

Whitesell Corporation on its sale of parts to EHP's L'Assomption
facility; accordingly, any breach of the supply agreement resulted
in a loss of commission to Whitesell Corporation.

(Id.; see also

Wiese Aff., Doc. No. 987, f 9.)

In

support

thereof,

Whitesell

Corporation

submits

the

affidavit of Robert R. Wiese, the former Chief Operating Officer

of Whitesell Corporation, who explains that two types of documents
evidence the commission payments.

First, Mr. Wiese explains that

the commission payments were individually tracked on Whitesell

Corporation's internal spreadsheets. (Wiese Aff. f 12.) Mr. Wiese
attaches 6

example.

different

Exhibit

13

spreadsheets.

is

a

(Id.,

seventy-page

payments for year-end December 31, 2006.
9

Exs.

11-16.)

spreadsheet

For

tracking

On 12 of those pages, a

single line item appears labeled ''EHP Commission Fee."

Second,

Mr.

audited

Wiese

attaches

Whitesell

Corporation's

annual

financial statements, stating that the "commission payments" are
reflected thereon and appear as "Revenue/Sales" or "Other Income."

(Id. H 10; Exs. 1-10.)
In response, EHP complains that this evidence is insufficient
to show that Whitesell Corporation suffered damages in the form of

lost commission payments.

The Court agrees.

The audited financial

statements are too unspecific to be of any evidentiary value.

The

general term "Other Income" makes no reference to Whitesell Canada,
EHP, L'Assomption or commission payments.''

Moreover, the internal

charts noting sporadic "EHP Commission Fees" fare no better.

This

vague reference does not tie this fee to Whitesell Canada or the

L'Assomption parts.

Telling of Whitesell Corporation's lack of

evidence is the fact that in more than four years of document

The language that Mr. Wiese points out in the audited financial
statements under the heading "Related Party Transaction" does not

provide

necessary

clarity.

The

provision

states:

"Certain

transactions have occurred between the Company and other companies

related by common ownership.
Whitesell Corporation performs
management, accounting and certain administrative activities on a
fee basis for related parties. The income generated covers related
expenses."
(See generally Wiese Aff., Exs. 1-10.)
However,
Whitesell Corporation had several related corporations to which
this statement could be referring. (See Whitesell Corporation's
Resp. and Obj. to Defs. Sixth Interrogatory, Ex. A to EHP's Reply
'
Br., Doc. No. 999.) Further, commission payments based upon sales
are not the same as income which covers expenses related to the

"management, accounting, and certain administrative activities" of
related corporate parties.
10

discovery in this case, Whitesell Corporation has not provided any
infomnation about an alleged commission relationship between it
and Whitesell Canada.

In

short,

Whitesell

Corporation

has

failed

to

provide

evidence to create a genuine dispute of material fact that it

suffered any recoverable damages relating to the 92 L'Assomption
parts.

IV.

CONCLUSION

Upon the foregoing, EHP's motion for partial summary judgment
as to L'Assomption parts (doc. no. 970) is GRANTED.

Whitesell

Corporation may not assert a claim for damages for breach of
contract against EHP for the 92 L'Assomption parts listed on
Exhibit A to the motion.

ORDER ENTERED at Augusta, Georgia, this

day of November,

2019.

J. RAMAL hall, ^CHIEF JUDGE

UNITEP^ STATES DISTRICT COURT
IJeRN DISTRICT OF GEORGIA

11