Electrolux Home Prod v. Whitesell Corp

Filing 1410

ORDER denying 1306 Motion for Summary Judgment on liability on Defendants' counterclaims. Signed by Chief Judge J. Randal Hall on 9/10/2020. (pts)

Case 1:03-cv-00050-JRH Document 1410 Filed 09/10/20 Page 1 of 9

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF GEORGIA
AUGUSTA DIVISION

WHITESELL CORPORATION,

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*

Plaintiff,

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*

V.

*

CV 103-050

5

ELECTROLUX HOME PRODUCTS, INC.,

*

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

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*
*

Defendants.

ORDER

On

December

("Whitesell")

13,

filed

2019,

a

motion

Defendants' counterclaims.

Plaintiff
for

Whitesell

summary

Corporation

judgment

on

all

of

Whitesell's motion is based upon its

contention that Defendants have breached Paragraph Three of the

Settlement

Memorandum

and

therefore

are

estopped from

seeking

damages from Whitesell for any Whitesell breach.
The
motion

Clerk

and

affidavits

gave Defendants notice of the

the

summary

or

other

judgment

materials

consequences of default.

rules,
in

of

summary judgment

the

opposition,

(Doc. No. 1311.)

right

to

file

and

of

the

Therefore, the notice

requirements of Griffith v. Wainwright, 772 P.2d 822, 825 (11th

Cir. 1985) (per curiam), are satisfied.
consideration.

The matter is ripe for

Case 1:03-cv-00050-JRH Document 1410 Filed 09/10/20 Page 2 of 9

The parties' contractual relationship began when they entered
into a Strategic Partnership Agreement C'SPA") in December 2000.
Under the SPA, Defendants agreed to purchase and Whitesell agreed

to provide all of Defendants' "current and future needs of cold
headed/threaded fasteners and various related Class C items" from

January 1, 2001 through April 1, 2008.^

(See generally Sec. Am.

Compl., Doc. No. 578, Ex. 1, SPA.)

The initial duration term of

the

by

contract

was

later

modified

the

Memorandum to expire on November 1, 2008.

parties'

Settlement

(Id., Ex. 2, H 3.)

The parts at issue in the present motion concern "Brunner and
wireform"

parts.

The

Court

has

already

determined

that

the

obligation for Whitesell to provide Brunner and wireform parts to
Defendants began with the execution of the Settlement Memorandum
of May 28, 2003.

(See Order of Mar. 9, 2016, Doc. No. 785, at 2-

3 n.2; Order of Jun. 8, 2011, Doc. 429, at 4 ("The Settlement

Memorandum definitively placed the Brunner parts within the scope
of the Supply Agreement . . . .").)

In particular. Paragraph 3 of

the Settlement Memorandum provided as follows:

^

Defendant

Electrolux

Home

Products,

Inc.

("EHP")

was

the

signatory on the SPA. On June 12, 2006, EHP spun off its outdoor
division into a subsidiary of the Swedish company, Husqvarna A.B.
The resulting subsidiary. Defendant Husqvarna Outdoor Products,
Inc., remained bound to the parties' contractual agreements. (See
SPA § 28.2.)
The Brunner and wireform parts at issue here are
Husqvarna-specific parts. Nevertheless, because Whitesell styles
its motion against "Defendants," the Court will not differentiate
either.

Case 1:03-cv-00050-JRH Document 1410 Filed 09/10/20 Page 3 of 9

Whitesell will make product supply capability
presentations to [Defendants] for any or all of the
Brunner and/or wireform parts.
To the extent that
[Defendants do] not transition the supply of all Brunner
and wireform parts to Whitesell, [Defendants] agree [] to
transition additional mutually agreed upon parts for
Whitesell to supply in an amount which creates gross
purchases . . . equal to the calendar year 2002 purchase
value of the Brunner and wireform parts not transitioned
(hereinafter, "substitute parts.")
While the parties
will immediately begin the process of determining which
Brunner, wireform and/or substitute parts to transition
to Whitesell, full transition will not be made until
December 31, 2003.

(Settlement Memo. H 3.)
It

is

undisputed

that Defendants

did

not

transition

the

Brunner and wirefomn parts to Whitesell by December 31, 2003.
Defendants also did not transition agreed upon substitute parts.
This

failure

to

transition

parts,

including

the

Brunner

and

wirefoim parts, forms the basis of Whitesell's breach of contract
claim in Count I of its Second Amended Complaint.

Compl. UK 129-36.)

(Second Am.

The failure to transition also forms the basis

of Defendants' counterclaim (Count III) for damages, based upon

Whitesell's

alleged

refusal

and/or

inability

to

supply

Enforceable Parts to include Brunner and wireform parts.

all
(See

2 Defendants also pleaded counterclaims unrelated to the failure
to transition Brunner and wireform parts. For example, Defendants
seek damages related to Whitesell's alleged failure to pay annual
rebates and to comply with the phase-out inventory obligations.
(See Husq. Ans., Counterclaims I & II; EHP Ans., Counterclaims I
& II.)
In fact, the Court has granted summary judgment to
Defendants on their annual rebate counterclaims.

20, 2019, Doc. No. 1275.)

(Order of Nov.

The Court has also thoroughly addressed
3

Case 1:03-cv-00050-JRH Document 1410 Filed 09/10/20 Page 4 of 9

Husq. Ans., Doc. No. 584, Counterclaim III; EHP Ans., Doc. No.
585, Counterclaim III.)

More specifically. Defendants allege that

their failure to transition parts was due to Whitesell's conduct
such as its failure to timely locate sub-suppliers for parts it

did not have the capability or desire to manufacture; failure to

successfully complete required qualification processes for parts;
failure to make supply capability presentations; and threatening
to cease supplying parts.

Importantly, this Court has determined that the "attribution
of

fault"

as to

why the

Brunner and

wireform

transition to Whitesell is a matter for the jury.
June 8, 2011, Doc. No. 429, at 3.)

parts

did

not

(See Order of

At that time, it was Defendants

who asked this Court to declare, as a matter of law, that they

were

excused

from

any

obligation

under

Paragraph

3

of

the

Settlement Memorandum based upon Whitesell's conduct related to
the transition efforts.

Stated another way. Defendants sought a

declaration from the Court that "Whitesell's conduct at every turn

was unjustified," and therefore they owed Whitesell nothing for
the failed transition.

that

"Whitesell

has

(Id. at 29.)

a

reasonable

evidence, of its own conduct."

The Court found, however,

explanation,

(Id.)

supported

by

In so doing, the Court

denied Defendants' motion for summary judgment, leaving a jury to

the
parties'
conduct
regarding
their
phase-out
inventory
obligations. (See Order of Mar. 25, 2020, Doc. No. 1401.)
4

Case 1:03-cv-00050-JRH Document 1410 Filed 09/10/20 Page 5 of 9

determine

who

was

at

fault

for

the

failure

to

transition

the

Brunner and wireform parts.

Despite this ruling, the basis for which the parties have
undoubtedly

spent

an

exorbitant

amount

of

time

and

money

in

discovery, Whitesell now seeks the Court's declaration that it is
entitled to damages, as a matter of law, for Defendants' failure
to transition the Brunner and wireform parts.

Whitesell believes

this conclusion can be reached regardless of the disputed facts,

regardless of the attribution of fault, and on the basis of a
strict application of Paragraph 3 of the Settlement Memorandum.
First,

the

Court

must

address

Whitesell's

estoppel-type

argument that Defendants cannot recover damages on their contract
because they were first to breach and therefore have repudiated
the contract.

Whitesell raised this same contention in its motion

for reconsideration of the Order granting summaiy judgment as to
Defendants' annual rebates counterclaims.

5-6 Sc 6 n.2

(See Doc. No. 1296, at

[B]reaching a contract therefore extinguishes any

right to recovery that the breaching party may have previously
had." (quoting Moore v. Grady Mem. Hosp. Corp., 778 F. App'x 699,

706 (11*^^ Cir. 2019))).)
because

Defendants

Similarly, Whitesell argues here that

breached

Paragraph

3

of

the

Settlement

Memorandum by their failure to transition Brunner and wireform
parts, they should be "estopped from seeking any damages under the
subject agreements."

(Pl.'s Mot. for Summ. J., Doc. No. 1306, at
5

Case 1:03-cv-00050-JRH Document 1410 Filed 09/10/20 Page 6 of 9

4 (citing Moore) (emphasis added).)

As it relates to Defendants'

counterclaims unrelated to the transition of Brunner and wireform

parts, the Court concludes, as it has previously, that because the
parties continued to perform under the agreements for several years

in

spite

of

Defendants'

failure

repudiation by either party.
No. 1354, at 6-8.)
are

therefore

to

transition,

there

is

no

(See Order of Jan. 30, 2020, Doc.

Instead, the Court reiterates that ''the parties

left

with

resulting damages."

their claims

(Id. at 7.)

of

breach of

contract and

For this reason, Whitesell's

claim for summary judgment on liability with respect to Defendants'
counterclaims other than those related to the Brunner and wireform

parts in Counterclaim III must be denied.
Next, the Court considers whether Whitesell is entitled to

summary judgment on Defendants' damages claim related to the failed
transition of Brunner and wireform parts or substitute parts, i.e.,
Counterclaim III in the Defendants'

answers.

In this regard,

Whitesell essentially contends that Defendants' obligation to
transition substitute parts was unconditionally triggered by the
non-transition of Brunner and wireform parts, regardless of the

underlying reason or cause of the non-transition.
way.

Defendants

were

obligated

to

purchase

Stated another

substitute

parts

regardless of Whitesell's conduct in hindering or preventing the
transition of Brunner and wireform parts.

Defendants counter that

the attributed fault for the failed transition is highly relevant

Case 1:03-cv-00050-JRH Document 1410 Filed 09/10/20 Page 7 of 9

to whether they had an obligation to purchase substitute parts.
In fact, Defendants contend that Whitesell's material breaches {in

not being capable of supplying Brunner and wireform parts and in
not complying with its production supply presentation obligations)

excuse their obligation to transition Brunner and wireform parts
or substitute revenue.^

Under Georgia law,
a court should, if possible, construe a contract so as
not to render any of its provisions meaningless and in
a manner that gives effect to all of the contractual
terms. Furthermore, courts must favor a construction
that upholds the contract in whole and in every part and
look at the whole contract in construing any part.
Courts should not render any language in a contract as

superfluous, and any construction that renders portions
of the contract language meaningless should be avoided.
Argo V. G-Tec Servs., LLC, 791 S.E.2d 193, 195 (Ga. Ct. App. 2016)

(quoted and cited sources omitted).

In consideration of the SPA

and Settlement Memorandum, the Court cannot ignore Whitesell's

alleged breaches in causing the non-transition of Brunner and
wireform parts and nevertheless reward them with damages for

substitute part revenue.

To do so would contravene these basic

2 Again, the attribution of fault for the failed transition of
Brunner and wireform parts is a hotly contested, fact-intensive
inquiry that requires consideration and resolution by a jury. The
Court need not detail the various contentions and evidence of the

parties on this issue because Whitesell's motion calls for the
strict application of a contract provision.
This contract
interpretation question is a matter of law appropriately decided
on summary judgment. See Saregama India Ltd. v. Mosley, 635 F.3d
1284, 1290 (11th cir. 2011).
7

Case 1:03-cv-00050-JRH Document 1410 Filed 09/10/20 Page 8 of 9

contract principles because it would render other portions of the

parties'

agreements meaningless.

For instance,

Whitesell

was

under an obligation under Section 2.0 of the SPA to "provide its
best efforts to fulfill all requirements."

(SPA § 2.0.)

Also,

Whitesell was required to qualify all parts to be transitioned

under the Settlement Memorandum. (Settlement Memo. ^4.) Finally,
the

subject

provision

itself.

Paragraph

3

of

the

Settlement

Memorandum, requires Whitesell to "make product supply capability

presentations to [Defendants] for any or all of the Brunner and/or
wireform parts." (Id. ^ 3.)

The Court concludes that allowing

Whitesell to recover under a provision that it may have breached

through its own conduct would remove all mutuality from

the

provision and unjustly excuse Whitesell's obligation to qualify
parts and to provide its best efforts to fulfill its requirements.
Moreover, in the Court's estimation, such a result undermines the

implied covenant of good faith and fair dealing that underpins all
contracts in Georgia.

See Oconee Fed. Savs.

Sc Loan Ass'n v.

Brown, 831 S.E.2d 222, 231 (Ga. Ct. App. 2019) ("Every contract

implies a covenant of good faith and fair dealing in the contract's

performance and enforcement.").)

Accordingly, Whitesell is not

entitled to summary judgment on Defendants' third counterclaim for

damages related to the failed transition of Brunner and wireform
parts.

Case 1:03-cv-00050-JRH Document 1410 Filed 09/10/20 Page 9 of 9

Upon the foregoing, Plaintiff Whitesell's motion for summaryjudgment on liability on Defendants' counterclaims (doc. no. 1306)
is DENIED.

ORDER ENTERED at Augusta, Georgia, this /^^ay of September,
2020.

riEF JUDGE

\

UNITED States district court
LOUTHERN DISTRICT OF GEORGIA