Electrolux Home Prod v. Whitesell Corp

Filing 429

ORDER denying 339 Motion for Summary Judgment; denying 353 Motion to Strike. Signed by Judge Dudley H. Bowen on 06/08/2011. (thb)

" LED
U.S. DISTRICT COURT
THE AUGUSTA DIV.

IN THE UNITED STATES DISTRICT COURT FOR
SOUTHERN DISTRICT OF GEORGIA
AUGUSTA DIVISION
2OH JUN -8 AMIO:53
WHITESELL CORPORATION,
Plaintiff
V.
ELECTROLUX HOME PRODUCTS,
INC., HUSQVARNA, A. R., and
HUSQVARNA OUTDOOR PRODUCTS,
INC.,
Defendants.

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CL

CV 103-050

ORDER

Presently before the Court is Defendant Husqvarna Outdoor
Products Inc.'s ("Husqvarna") motion for summary judgment on
Plaintiff Whitesell Corporation's ('Whitesell") claims
concerning the transition of Brunner and Matrix parts. In
addition to filing materials and a brief in opposition to the
motion, Whitesell filed a 'Response Under Federal Rule of
Civil Procedure 56(f)" and a 'Motion to Strike." The parties
have thoroughly briefed all motions, and they are ripe for
consideration.

1 On December 1, 2010, Rule 56 was amended. Rule 56(f) now appears
as Rule 56(d).

I. INTRODUCTION

The parties to this lawsuit have been in a business
relationship with each other since at least December 14, 2000,
the date upon which Electrolux Home Products, Inc. ('EHP") and
Whitesell executed a purported Supply Agreement entitled
"Strategic Partnership Agreement." Throughout most of that
time, the parties have been involved in this litigation with
numerous stops and starts attributable in large part to their
efforts to resolve their business differences.
The present motion is another attempt by the defendants
to narrow the issues through the elimination of one of
Whitesell's claims. It is worth noting at the outset,
however, that this motion for summary judgment requires the
Court to delve into matters pertaining to the parties' course
of conduct to evaluate issues of good faith and fair dealing.
This is an area, unlike contract interpretation, that
typically is better left to the province of a jury.'
Moreover, as Whitesell points out in its Rule 56(f) response,
discovery in the case has been limited despite the age of the
case. And, while the Court does not suggest that additional

2
The Court's prior orders addressing summary judgment motions
largely revolved around matters of contract interpretation. For instance,
in the Order of October 14, 2008, the Court determined that the Supply
Agreement was too indefinite to be enforced. In the Orders of March 25,
2010, the Court considered the duration term of the contract and applied
it to information provided by the parties which was largely undisputed.
Finally, the cost justification provision of the Supply Agreement was at
issue in the Order of November 4, 2010.

2

discovery is necessary in order for Whitesell to 'present
facts essential to justify its opposition ,3 to Husqvarna's
motion, I am wary of disposing of an integral fact-intensive
claim based upon the competing representations and averments
of witnesses who have never been deposed.
The arguments and hyperbole of counsel in brief and the
finger-pointing tenor of the declarations filed in support are
stark reminders that there are indeed two sides to every
story. For whatever reason, the Brunner and Matrix parts have
never been fully transitioned to Whitesell. 4 The attribution
of fault is not a matter for a judge of the law but one for a
jury. It really is as simple as that. Nevertheless, I will
now discuss the relevant factual background and attendant
allegations of the parties. In doing so, the number of
factual disputes becomes fairly obvious.

II. FACTUAL BACKGROUND

Pursuant to the Supply Agreement," Husqvarna agreed to
buy all of its current and future requirements for certain
goods from Whitesell during the pendency of the Agreement, and
Whitesell agreed to supply all of I-Iusqvarna's requirements for

See Fed. R. Civ. P. 56(d).
The term 'transition" as it is used herein and by the parties
refers to the transfer of Husqvarna's supply of relevant parts from its
existing parts supplier (such as Brunner Drilling and Manufacturing Inc.
and matrix Wire, Inc.) to Whitesell.
3

suchgoods. 5 (See generally Ex. 1 to the EHP Compl., Doc. No.
1.) The problem with the Supply Agreement, however, is that
it never defined the 'goods" that were subject to the
agreement. Indeed, the first dispute to come before this
Court in March of 2003 was whether certain parts used in the
production of outdoor products (the "Brunner" parts) fell
within the scope of the Supply Agreement. 6 (See EHP Compl.,
Doc. No. 1.)
After filing suit, the parties entered into mediation,
which yielded a Settlement Memorandum dated May 28, 2003.
(Settlement Memorandum, Doc. No. 127, Ex. 3.) The Settlement
Memorandum definitively placed the Brunner parts within the
scope of the Supply Agreement as follows:7
Whitesell will make product supply capability
presentations to [Husqvarna] for any or all of the

EHP, not Husqvarna, was an original party to the Supply Agreement.
On June 12, 2006, EHP transferred its outdoor products division to
Husqvarna A.B., which in turn transferred the business to Husqvarna
Outdoor Products, Inc. The Matrix and Brunner parts are primarily used in
outdoor products; thus, the instant dispute involves only Husqvarna
Outdoor Products, Inc., which the Court refers to herein as "Husqvarna"
For the sake of convenience, the Court will substitute "Husqvarna" in
place of "EHP" when referring to relevant events that occurred prior to
June 12, 2006.
6
In filing its original suit, Husqvarna (formerly EHP) had sought
a declaratory judgment that it was not obligated to purchase from
Whitesell certain parts for use at its Orangeburg, South Carolina plant,
at which Husqvarna manufactures outdoor equipment such as chainsaws and
lawnmowers. While the complaint referred only to the "Orangeburg" parts,
the parts are now referred to as the "Brunner" parts because they have
been supplied by Brunner Drilling and Manufacturing, Inc. at all relevant
times.

In fact, because the Settlement Memorandum mentioned the Brunner
parts by name, the Court named the "Brunner parts" as one of the four
categories of enforceable parts in its Order of October 14, 2008. (See
Doc. No. 212, at 23.)
4

Brunner and/or wireform parts. 8 To the extent that
[Husqvarna] does not transition the supply of all
Brunner and wireform parts to Whitesell,
[Husqvarna] agrees 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.
( ¶ 3.) The Settlement Memorandum went on to provide that
the parties would list the Brunner and wireform parts to be
supplied in an exhibit and that Whitesell would offer
Husqvarna a 5W discount off of the prices then being paid to
incumbent suppliers of Brunner and wireform parts. (L)
While the parties were presumably operating under the
Settlement Memorandum, this case was closed. On March 9,
2005, however, Whitesell filed a motion to enforce the
Settlement Memorandum outlining various pricing and supply
disputes. In an attempt to maintain the status quo, the
parties entered into a Consent Order on May 17, 2005, "to
preserve and govern the rights of the parties prior to this
Courts final judgment on the parties' disputes regarding the
interpretation, enforcement, validity and meaning of the

While the Settlement Memorandum referred specifically to the
Brunner parts, it did not refer to the "Matrix parts," Nevertheless, the
parties do not dispute that the term "wireform parts" as used in the
Settlement Memorandum encompasses the parts supplied by Matrix Wire, Inc.
("Matrix") . The parties also do not dispute that Matrix parts fall within
the enforceable parts categories delineated in the October 14, 2008 Order.
5

parties' Settlement Memorandum and [Supply Agreement] ." (Doc.
No. 30, at 4.)
In October of 2005, Whitesell filed its Third-Party
Complaint, in

which

the subject claim appears, against

Husqvarna, A.B. Whitesell filed an Amended Complaint on
October 20, 2006, in which Husqvarna Outdoor Products, Inc.
was added as a defendant.' In Counts I, II and III of
Whitesell's Third-Party Complaint and Amended Complaint,
Whitesell alleges that Flusqvarna breached the Supply
Agreement, the Settlement Memorandum, and the 2005 Consent
Order due in part to its failure to transition covered parts
to include the 'Brunner and wireform parts or other mutually
agreeable parts .

."

(See, e. g ., Doc. No. 47, ¶ 37.)

Through its present motion for summary judgment,
Husqvarna claims it is entitled to judgment as a matter of law
on Whitesell's breach of contract claims as they relate to the
failure to transition the Brunner and Matrix parts because
Whitesell has"stymied" Husqvarna's attempt to do so at every
turn. (Doc. No. 340, at 2.) In particular, Husqvarna asserts
the affirmative defense found at O.C.G.A. § 13-4-21: 'If the
nonperformance of a party to a contract is caused by the
conduct of the opposite party, such conduct shall excuse the
other party from performance."

(Id. at 1-2.)

Husqvarna

The docket was not officially changed to reflect that Whitesell
was the party plaintiff until the case was re-opened on February 19, 2008.
6

contends that the evidence of record indisputably shows that
the parties' inability to fully transition the Brunner and
Matrix parts to Whitesell was directly caused by Whitesell's
nonperformance under the governing contracts and its lack of
good faith and fair dealing. The Court will now set forth the
relevant facts relating to the parties' course of performance
with respect to the Brunner and Matrix parts.

A.

Early Transition Efforts (Prior to Whitesell Filing
its Complaint Against Husqvarna)

It is worth reiterating that the claim upon which
Husqvarna seeks summary judgment is a claim for breach of the
Supply Agreement executed in 2000, the Settlement Memorandum
executed in May 2003, and the 2005 Consent Order. Whitesell
first filed this claim in October of 2005. Thus, the events
that took place prior to October of 2005 form the initial
basis of Whitesell's claim that Husqvarna failed to transition
the Brunner and Matrix parts as required by these three
agreements. The Court will begin there.
According to Husqvarna, Whitesell expressed no interest
in completing the transition of Matrix parts in the early
years of their business relationship. On the other hand, the
transition of Brunner parts was a focus of the parties,
particularly as Husqvarna's multi-year supply contract with

7

Brunner Drilling and Manufacturing ! Inc. was set to expire on
September 30, 2003.
The Brunner parts were specialized parts that no other
supplier was qualified to supply; thus, Husqvarna claims it
had always stressed that if Whitesell was interested in
supplying the parts, it would need to obtain qualification
from Husqvarna to supply all of the Brunner parts before
Husqvarna could replace Brunner Drilling and Manufacturing,
Inc.'-" (Doc. No. 336, Leon Decl. ¶ 10.) It is undisputed that
Whitesell planned to provide all of the Brunner parts to
Husqvarna by September 30, 2003. Ud., Ex. 4 - Letter dated
Nov. 19, 2001 from Whitesell, stating: "We will plan on a 100%
transition to occur for all [Brunner] parts no later than
September 30, 2003 when the Brunner contract expires.")
Whitesell, however, was unable to obtain PPAP approval for all
of the Brunner parts prior to September 30, 2003.' (Id. ¶
12.) As a result, Husqvarna entered into another multi-year
contract with Brunner Drilling and Manufacturing, Inc. in
order to continue to receive competitive terms and pricing for
the subject parts.

(.)

The qualification process is referred to as "PPAP approval."
PPAP is an acronym for "Production Part Approval Process." Doc. No. 347,
Whitesell Deci. ¶ 21.) When a part is PPAP approved, it signifies that
the supplier has demonstrated to the purchaser that it is capable of
producing the part according to the purchaser's specifications. (Id.)
Whitesell became qualified to supply 33 Stunner parts, which was
approximately 50% of the parts Husqvarna was purchasing from Stunner
Drilling and Manufacturing, Inc. at that time. (Doc. No. 336, Leon Deci.
¶ 12.)
8

Husqvarna has produced an email sent to it by Mr. Neil
Whitesell, Chief Executive Officer of Whitesell, dated August
23, 2003, which states: "[Whitesell] accept[s] and
understand[s] the decision [I-lusqvarna] has made in regards to
not awarding us the Brunner business and I am totally
committed to doing whatever we possibly can to support your
decision and minimize any adverse effects regarding that
decision. We had a[n] agreement and I certainly understood
this could occur."

(Id., Ex. 7.)

Whitesell offers additional information on its early
attempted transition of Brunner parts however. According to
Whitesell, it worked for two years to have all the Brunner
parts qualified and built an inventory of parts worth
approximately $5 million. (Doc. No. 347, Whitesell Decl. ¶
2.) However, at a critical time in the transition efforts,
Husqvarna disputed Whitesell's right to supply the Brunner
parts under the Supply Agreement, and in February 2003,
I-Iusqvarna sent a notice of termination of the Supply
Agreement. (Id. ¶ 3; Doc. No. 348, Duffner Decl. ¶ 4..)
Husqvarna then filed the instant lawsuit, claiming that the
Brunner and wireform parts were not covered by the Supply
Agreement. The lawsuit caused Whitesell to stop work on the
Brunner transition until the parties signed the Settlement
Memorandum at the end of May 2003. (Doc. No. 347, Whitesell
Decl. ¶ 3.)
9

Whitesell also complains that in June and July of 2003,
Husqvarria further delayed Whitesell's efforts to qualify the
Brunner parts by redesigning the Brunner steering shafts and
adding new, critical dimensions to the prints for other
Brunner parts.

¶ 4.)

Then, in August 2003, one month before its contract with
Brunner Drilling and Manufacturing, Inc. was set to expire,
Husqvarna informed Whitesell that it had entered into a new
contract with Brunner Drilling and Manufacturing, Inc.
Whitesell believed at that time, however, that Husqvarna would
make up for any shortfall in revenue caused by the failure to
transition the Brunner parts by transitioning other "mutually
agreed upon" parts by the end of 2003, as provided for in
Paragraph 3 of the Settlement Memorandum quoted above. (
¶ 5.) Indeed, in the aforementioned email of August 23, 2003,
Mr. Whitesell states: "Besides you will be replacing this
[Brunner] business volume with other business for us anyway."
(Doc. No. 336, Leon Deci., Ex. 7.) Whitesell contends that
this substitute part transition never occurred. Whitesell
states that it is this failure to transition the Brunner parts
or other "mutually agreed upon" parts that led to its filing
of a motion to enforce the Settlement Memorandum in 2005.
The 2005 Consent Order was signed shortly after Whitesell
filed its motion to enforce the Settlement Memorandum. The
2005 Consent Order required Husqvarna to transition all
10

wireform products used or to be used by the Orangeburg plant
(which would include the Brunner parts) and all parts that
were to be transitioned under the Settlement Memorandum by
December 31, 2005. Shortly thereafter, however, Husqvarna
took the position that it may not be bound to the Supply
Agreement, Settlement Memorandum, or 2005 Consent Order
because it was a spin-off of EHP and not a party to the
contracts. (Doc. No. 347, Whitesell Decl. ¶ 7 & Ex. F..)
According to Whitesell, this position caused another delay in
the transition of parts. (

1

7.) Ultimately, in October

2005, Whitesell filed the subject breach of contract claims
against Husqvarna through its Third-Party Complaint.

B.

Transition Efforts After October 2005

With respect to the Matrix parts, Husqvarna contends that
Whitesell expressed no interest in completing the transition
of the Matrix parts pursuant to the Consent Order. I-Iusqvarna
has produced an email dated December 20, 2005 from Whitesell
which states that no Matrix parts were to be transitioned at
that time. (Doc. No. 270, Agee Deci., Ex. 1.) Contrarily,
Whitesell contends that the decision to postpone the
transition of Matrix parts was a joint decision because other
wireforms were being transitioned at that time and there were
several new product launches involved. (Doc. No. 348, Duff fner
Deci. ¶ 5.) Moreover, Husqvarna agreed to allow Whitesell to
11

supply some Matrix parts, which Whitesell submitted to
Husqvarna for PPAP approval in late 2005.12 ()
In January 2007, Whitesell indicated that it was
preparing to supply all the Matrix parts to Husqvarna for the
2008 season. 13 (Doc. No. 271, Sentell Dec l., Ex. 1.) On March
13, 2007, Husqvarna tendered its Matrix parts to Whitesell.14
(Doc. No. 338, Sentell iJeci., Ex. 1.) And, on March 28, 2007,
Husqvarna also tendered a select number of Brunner parts.
(Doc. No. 347, Whitesell Deci. ¶ 8 & Ex. G.) In the ensuing
months, Whitesell requested physical samples of each part and
copies of the invoices paid by I-Iusqvarna to the incumbent
Matrix and Brunner suppliers. 15 (See, e.g., Doc. No. 338,
12
Viewing the evidence in the light most favorable to Whitesell,
the Court will assume that postponing the transition of Matrix parts was
a joint decision. Even so, Husqvarna could not be in breach of contract
for failing to transition the Matrix parts until Whitesell indicated a
willingness to supply all the Matrix parts to Husqvarna.
13
Husqvarna complains in brief, however, that Whitesell initially
conditioned this offer upon Jiusqvarna's concession that it would accept
the parts unpainted. (Husqvar-na's Memo. in Supp. of Mot. for Summ. J., at
11-12.) Husqvarna further contends that, when that concession was not
forthcoming, Whitesell demanded an agreement to supply parts outside of
the scope of the Supply Agreement and Settlement Memorandum.
at 1213,) Whitesell, on the other hand, contends that Mr. Roger Leon of
Husqvarna originated the idea to supply unpainted parts for Husqvarna to
paint. (Doc. No. 347, Whitesell Decl. ¶ 9.) Whitesell also disputes that
its provision of Brunner parts was in any way conditioned upon the
provision of additional parts; rather, Whitesell contends that it was
simply requesting more information. In any event, the scope of the Supply
Agreement had always been a hotly debated issue between the parties, which
was ultimately resolved in part by this Court's October 14, 2008 Order.

Through the letter of March 13, 2007, Husqvarna supplied pricing
information, prints and specifications for the Matrix parts. (Doc. No.
338, Sentell Deci., Ex. 1.)
The invoices were arguably relevant to a determination of pricing
for the Brunner and Matrix parts in that the Settlement Memorandum
provided that Husqvarna would pay prices equal to the prices then being
paid to incumbent suppliers less a 5% discount. (Settlement Memorandum,
12

Sentell fled., Ex. 2.) IIusqvarna complains that Whitesell's
requests were unreasonable;" yet, it provided the part samples
and invoices to Whitesell by the end of 2007.

(See, e.g.,

j, Ex. 3.) Whitesell complains of Husqvarna's delay in
responding to its requests. 7 (See Doc. No. 347, Whitesell
fled. ¶ 8.)
Following the supply of parts and pricing information,
Husqvarna inquired of Whitesell about receiving price quotes
on the subject parts. 18 (Doc. No. 337, Sadler fled., Ex. 1.)

Doc. No. 127, Ex. 3, ¶ 3.)
Specifically, Husqvarna asserts, inter alia, that it "exerted
tremendous, time-consuming effort in manually searching through its
archives to pull and copy Matrix and Brunner part invoices." (Husqvarna's
Memo. in Supp. of Mot. for Summ. J., at 14.)
Of note, Husqvarna conceded to Whitesell in a letter dated June
13, 2007, that it had put its transition efforts on hold because it
believed White sell had been making unreasonable demands for the transition
of parts that fell outside the scope of the parties' agreements. (Doc.
No. 347, Whitesell Deci., Ex. H.) As previously stated, until the Court's
Order of October 14, 2008, the parties continually disagreed about the
scope of their Supply Agreement.
17

is While Husqvarna demanded of Whitesell price quotes, Whitesell
demanded of Husqyarna inventory commitment data in order to establish firm
transition dates, which, according to Whitesell, was not forthcoming.
Whitesell has produced several email communications from Whitesell to
Husqvarna to support its position that Husqvarna delayed the Brunner and
Matrix transitions by withholding the commitment data, to wit:
February 4, 2008 - "We have not heard back from you on the
Brunner transition with the information we outlined as needed
to continue the process." (Doc. No. 347, Whitesell Decl., Ex.
K.)
• February 15, 2008 - "Do we know the Brunner and Matrix
commitments? Really need to know to set fixed transition
dates and keep this going forward . . . ." (Id., Ex. L.)
• February 21, 2008 - "[Whitesell.) really need[s] to hear from
[Husq-varna] on the stock and commitment data for the Brunner
and the Matrix parts to able us to set firm transition dates.
Whitesell has been requesting this data for months and has
continually been put off for one reason or the other." (Id.)
13

Although Whitesell initially indicated that it did not have
enough information to finalize price quotes (see the
parties do not dispute that some agreement was reached in
March or April of 2008 concerning the pricing for the
transition of the Matrix and Brunner parts. (Doc. No. 336,
Leon Decl. ¶ 3; Doc. No. 347, Whitesell fled. ¶ 11.) In
particular, the parties agreed that the initial pricing for
the transitions would be the incumbent supplier pricing minus
a 5% discount as provided in the Settlement Memorandum. The
parties further agreed that any final pricing disputes would
be resolved through the instant litigation.

(Doc. No. 347,

Whitesell Decl. ¶ 11; Doc. No. 337, Sadler Decl. ¶J 6-7.)
It appears, however, that while the parties agreed in
theory on the price structure, the specific prices for the
Brunner and Matrix parts were not finalized in March or April

•

February 24, 2008 - White8ell is at a loss as to why we can
not get any response from (Husqvarnal in regards to the
commitment data regarding the Matrix and Brunner transition."
(Id.)

•

March 19, 2008 - "Once we have the final commitment numbers
from Brunner and Matrix we can work with the Divisions to
establish firm transition dates."
(Doc. No. 337, Sadler
Decl., Ex. 3.)

In these emails, Whitesell asserted that it had "fully ramped up on these
parts and ha [d] millions of dollars of these parts produced and waiting to
be transitioned," but it had been met by the "continued delays and
roadblocks" of Husqvarna. (Doc. No. 347, Whitesell Deci., Exs. K & L.)
Husqvarna explains that it told Whitesell during this time that it could
not supply the inventory commitment data without notifying its incumbent
suppliers that it planned to transition the parts to Whitesell. (Doc. No.
337, Sadler Deel. ¶ 5 & Ex. 2.) Husqvarna explained that it was reluctant
to do so unless and until Whitesell confirmed its pricing and
qualifications. (Id.)
14

4

of 2008.19 For instance, in an email dated April 7, 2008 from
Husqvarna to Whitesell, Husqvarna stated that it had been
waiting on the pricing verification. (Doc. No. 336, Leon
Deci., Ex. 1.) Similarly, in an email dated April 8, 2008
from Husqvarna to Whitesell, Husqvarna referred to its
attached p rop osed pricing list but then asked to receive price
quotes from Whitesell.

(Doc. No. 337, Sadler Decl., Ex. 4.)

Nevertheless, both parties indicated a willingness to proceed
with the transition of the parts. (, Exs. 4 & 5.)
According to Whitesell, by March 2008, Husqvarna had completed
PPAP approvals and line trials on the Matrix parts and PPAP
approvals on select Brunner parts.

(Doc. No. 348, Duffner

Deci. ¶ 8.)
In mid-April 2008, Husqvarna notified its incumbent
suppliers that the Brunner and Matrix parts would be
transitioned to Whitesell. (Doc. No. 337, Sadler Deci. ¶ 8 &
Ex. 6.) According to Husqvarna, both incumbent suppliers
raised prices on their subject parts following this notice;
also, Matrix Wire, Inc. began imposing temporary surcharges to
cover short term spikes in the cost of steel to manufacture
" Husqvarna will probably disagree with the statement that the
specific prices were not finalized because it appears that Husqvarna
contends the parties agreed to use the pricing it provided when it
tendered the parts in March 2007. However, Husqyarna relies upon an
unrecorded telephone conversation and an ambiguous follow-up email to
establish that specific pricing is an undisputed fact. (See Doc. No. 336,
Leon Deci. ¶ 3 & Doc. No. 337, Sadler Dccl., Ex. 6.) This evidence is
simply too uncertain to establish that the parties, particularly
Whitesell, agreed on pricing provided in March 2007 during a March 2008
telephone conversation.
15

its parts.

(Id. ¶ 9.)

On May 12, 2008, Whitesell began

requesting information regarding the price increases of the
incumbent suppliers:
Please verify any of the specific associated costs
per part mentioned above or any additional cost per
part we may not be aware of that are related to the
Brunner/Matrix parts not included in or new since
the tendered sales prices supplied to Whitesell by
Husqvarna on 03/28/2007.
Ex. 7.) Husqvarna responded:
May I remind you that the official answer to
proceed with transition came only after Neil
Whitesell and Roger Leon came to agreement on the
5% discount pricing as reflected in my email to you
dated April 8, 2008. We later heard back that your
position had changed yet again, citing a need for
MORE information regarding the cost of these
products since the transition had been announced.
Such information is clearly irrelevant to
determining incumbent supplier pricing under
pertinent parameters, and your request for such
information is directly at odds with the pricing
agreement previously reached.
Clearly Whitesell's request for additional
pricing information is an attempt to break the
agreement on the 5% discount pricing and capitalize
on our misfortune since the suppliers have acted in
a hostile manner in response to the transition
announcement. [Flusqvarna] is absorbing tremendous
risk to its production and additional excessive
costs in order to follow through and transition
these parts to Whitesell as we agreed.
(Id., Ex. 8.) In brief, Whitesell contends that Husqvarna has
offered no support for its contention that the incumbent
suppliers raised their prices in response to Husqvarna's
notification of termination; rather, Whitesell contends that
discovery will show the incumbent suppliers raised prices
16

because of the dramatic worldwide increase in steel prices.20
(Whitesell's Memo. in Opp'n to Mot. for Summ. J., at 12.)
By the end of June 2008, the parties had failed to agree
on pricing, and the transition of Brunner and Matrix parts had
not been accomplished. Whitesell's point of view at that time
was as follows:
Husqvarna chose to ignore for years its obligations
to buy [the Brunner and Matrix] parts from
[Whitesell] , despite the clear language of the 2003
Settlement Memorandum and the 2005 Consent Order.
It is not right for [Husqvarna] to now demand that
Whitesell immediately compromise for less than
[Husqvarna] promised. . . . Whitesell invested
millions to ramp up for a transition based on prior
I-Iusqvarna promises. Even as we speak, the damages
continue to increase as [Whitesell] pay[s] to store
significant quantities of inventory [Husqvarna]
refused to buy.
(Doc. No. 336, Leon Deci., Ex. 3.) For Husqvarna's part, it
explained at about the same time:
LHusqvarnai would like nothing more than to
complete the transition of all Matrix and Brunner
parts to Whitesell pursuant to the terms of our
Agreements; however, we must have Whitesell's
cooperation to do so. [Husqvarna does] not want to
continue to absorb excess cost and be exposed to
risk since notifying the suppliers. We have been
operating toward the goal of complete transition
for some time now. The point is that this hogwash
about an intentional delay is exactly opposite;
however, Whitesell's flip flopping decisions
regarding agreement to the transition language and
pricing calculations in the settlement memorandum

20

As further evidence that only a price structure and not specific
prices had been agreed upon, Mr. John Duffner of Whitesell testified that
Whitesell had requested updated pricing information from Husqvarna in May
2008 to 'establish the relevant pricing for the transitions under the
Partnership Agreement." (Doc. No. 348, Duffner Deci. ¶ 9 (emphasis
added).)
17

have continuously set us back. . . . [Husqvarna]
never stopped working on [transition] despite
constantly shifting demands from Whitesell.
(Doc. No. 337, Sadler Deci., Ex. 8.)
On July 2, 2008, the matter entered into another
mediation phase with the court-appointed Mediator and Special
Master. In the ensuing thirteen-month period, the parties
engaged in extensive mediation efforts with the goal of
reaching a global resolution of all remaining issues in the
case to include the transition of Brunner and Matrix parts.21
Those efforts failed in August 2009.

C.

Transition Efforts After August 2009

Without a global resolution of matters, the parties
turned back to the transition of Brunner and Matrix parts.
Uusqvarna prepared a proposed transition plan for both the
Brunner and Matrix parts entitled Memorandum of
Understanding" ('MOtJ"). The Brunner and Matrix MOUs were
drafted, exchanged, and redrafted over a several week period.
The MOUs, however, were never fully executed. According to
Husqvarna, Whitesell's demands in negotiation of each of the
.11

MOU5 were unreasonable and further evidence of Whitesells

Also during this period, this Court entered its Order of October
14, 2008, defining the four categories of enforceable parts.
18

continued course of conduct in refusing to allow the Brunner
and Matrix transitions to take place.22

1. The Matrix MOU
According to I-Iusqvarna, it made several concessions less
favorable to its business position in drafting the Matrix MOU.
For instance, the Matrix MOU contained a price adjustment
mechanism which was tied to the movement of a steel prices
index known as the 11 CRU Index." (Doc. No. 272, Sadler fled.,
¶ 8.)

Husqvarna also agreed to forego the 5% discount

provided in the Settlement Memorandum. (. ¶ 9.)
Nevertheless, Whitesell refused to finalize the Matrix MOU
unless the pricing on Matrix parts included the steel
surcharges that had been imposed by Matrix Wire, Inc. in April
2008. (See Doc. No. 271, Sentell Decl., Ex. 6.) Husqvarna
argues that this pricing was unreasonable given that Matrix
Wire, Inc. had stopped imposing the surcharge in March 2009,
and thus, it was not part of the incumbent supplier's pricing
at the time of negotiating the MOU. Moreover, according to
Husqvarna, the surcharges were only imposed as a result of
Whitesell's refusal to transition the Matrix parts in April
2008, a point that Whitesell claims has yet to be proven.

22
Whitesell has filed a motion to strike all evidence and argument
related to the negotiation and preparation of the MOUs under Federal Rule
of Evidence 408 on the basis that the negotiations were "settlement
discussions." This motion will be addressed below.

19

Whitesell counters that Husqvarna had previously agreed
to the inclusion of the steel surcharges during their
mediation efforts. Whitesell first points to an email dated
December 12, 2008, that it received from Husqvarna along with
a "matrix spreadsheet" of pricing information which included
the steel surcharges. (Doc. No. 254, Whitesell Deci.,, Ex. K.)
Then, in an April 14, 2009 letter, Husqvarna summarized its
position on the mediation efforts to date, and, in discussing
the transition of Matrix and Brunner parts, Husqvarna stated:
Finally, with or without a global resolution,
the parties must finalize transition plans for the
Brunner and Matrix parts, and [I4usqvarna] needs a
definite commitment from Whitesell concerning
these. . . . The beginning pricing for the Brunner
and Matrix parts currently being held in
Whitesell's on-hand inventory will be as provided
by the e-mail from [Husqvarna) to [Whitesell] dated
December 12, 2008.
(Doc. No. 255, Washburn Decl., Ex. A.)

Mr. Neil Whitesell

further testified that the parties confirmed this agreement
during a meeting on July 8, 2009.

(Doc. No. 254, Whitesell

Decl., ¶ 30.)
In response, Husqvarna points out that the steel
surcharges were included in the December 12, 2008 pricing
sheet only because they were in place at that time. Husqvarna
then argues that the use of this pricing was conditioned upon
the parties reaching a global resolution of the litigation at
that point. As evidence, I-Iusqvarna submits an email to that
effect dated August 3, 2009 - seven months after the December
20

12, 2008 pricing email.

(Doc. No. 337, Sadler Decl., Ex. 9.)

Ultimately, the pricing dispute prevented the parties
from executing the Matrix MOD.

2. The Brunner MOU
Husqvarna provided similar concessions in the Brunner MOD
as it had in the Matrix MOU concerning the use of the CRU
Index and the forbearance of the 5 discount rate. Husqvarna
contends that an agreement was reached on the transition of
Brunner parts through an email dated November 11, 2009, in
which Whitesell provides: t[Husqvarnas] proposed changes
are acceptable to Whitesell. Please make the changes and
have [Husqvarna] execute the MOU and send it to [Whitesell]

•11

(Doc, No. 338, Sentell Decl., Ex. 7.) Accordingly, on
November 30, 2009, I-Iusqvarna emailed Whitesell an executed
Brunner MOD for Whitesell's signature.

Ex. 8.)

Whitesell did not execute the MOD, but instead redrafted
it with additional modifications including a requirement that
Husqvarna purchase all on-shelf inventory within the first
year and a change to the on-shelf quantities Whitesell was
required to provide under the MOU. (See id., Ex. 9.)
Nevertheless, Husqvarna made further concessions or
modifications to the Brunner MOD and resubmitted it to
Whitesell for approval.

Ex. 11.)

21

On December 17, 2009, Whitesell rejected the proposal,
indicating that the "fundamental problem" with the Brunner MOU
was the inclusion of Husqvarna's right to the "unilateral
selection of a third party expert coupled with a veto right
that the contract does not currently provide." Ex. 12.)
Whitesell continues: "In light of Husqvarna's past efforts to
create quality and other production supply issues where none
existed, Whitesell will never agree to give Husqvarna the
unilateral right to refuse to purchase Whitesell's goods based
upon some undefined standard of 'production readiness' which
can be determined by someone of Husqvarna's exclusive
choosing."

()

The term "production readiness" appears in Paragraph 2 of
the MOU as a pre-condition to the determined transition date:
"The February 15, 2010 transition date for these parts is
contingent upon Whitesell's assurance of the following onshelf quantities and production readiness . . . (3) full
production readiness on all 02/15/10 Brunner transition parts
by January 1, 2010." (Doc. No. 338, Sentell Deci., Ex. 4.)
This provision remained unchanged and was included in all
drafts of the MOU until I-lusqvarna Sent an amendment to
Whitesell on December 15, 2009, which provided: "The assurance
of 'full production readiness' set forth in Paragraph 2 of the
Brunner MOU will be conducted by an independent, qualified
third party consultant of Husqvarna's choosing." (I, Ex.
22

11.) Whitesell lodged its complaint about this provision on
December 17, 2009, as set forth above.
Husqvarria explains that the requirement of "full
production readiness" is intended to ensure that Whitesell can
meet its peak demands for the Brunner parts. 23 Husqvarna
points out that the Settlement Memorandum similarly provides
for a requirement that "Whitesell will make product supply
capability presentations to IHusqvarnal for any and all of the
Brunner and/or wireform parts." (Settlement Memorandum, Doc.
No. 127, Ex. 3, ¶ 3.)
For its part, Whitesell contends that it had understood
the production readiness requirement to simply involve
Husqvarna visiting Whitesell to verify on-shelf quantities.
(Doc. No. 347, Whitesell Deci. ¶ 22.) Yet, by December 17,
2009, Whitesell viewed Husqvarna's production readiness
requirement as a contract modification that it was not
required to agree to; thus, Whitesell now contends that its
failure to agree cannot excuse Husqvarna's failure to
transition the Brunner parts. In support of its position that
Husqvarna was imposing a new requirement, Whitesell points out
that the Brunner parts had been PPAP approved, which evidenced
Whitesell's capability of producing the parts to Husqvarna's

23
Husqvarna contends that 'full production readiness" is of
paramount importance with respect to the Brunner parts because aside from
Brunner Drilling and Manufacturing, Inc., with whom relations were
strained, Husqvarna did not have a qualified supplier for many of the
parts.
23

specifications. Also, Whitesell had had no supply problems in
the previous nine years of supplying billions of parts to
Husqvarna, and it already had several months' worth of Brunner
parts in stock. Finally, Whitesell points out that Flusqvarna
never demanded an inspection of Whitesell's plants in 2004,
when Husqvarna purchased and used $5 million of Brunner parts
manufactured by Whitesell, or in 2007 and 2008, when Husqvarna
tendered the Brunner business to Whitesell and notified its
incumbent supplier of the transition.
Ultimately, despite Husqvarna's attempts to allay
Whitesell's concerns about this requirement, Whitesell did not
sign the Brunner MOU.

III. LEGAL ANALYSIS
A.

Motion to Strike

In response to Husqvarna's instant motion for summary
judgment, Whitesell filed a motion to strike, pursuant to
Federal Rule of Evidence 408, any arguments or evidence
pertaining to the 2009 negotiations surrounding the Brunner
and Matrix MOUS. Whitesell contends that these negotiations
constitute inadmissible settlement discussions between the
parties. Husqvarna, on the other hand, contends that the
negotiations were business discussions. The Court agrees with
Husqvarna.

24

First, as admitted by Mr. Neil Whitesell, the mediation
efforts aimed at a global settlement broke down in August
2009. (See Doc. No. 347, Whitesell Deci. ¶ 19.) Second, if
Whitesell's position, i.e., that any efforts between the
parties to transition parts are settlement discussions, then
a large majority of the communications between the parties
since Whitesell filed its breach of contract claims in October
of 2005 should be considered settlement discussions.24
Finally, the draft MOU5 contain a provision which states:
[B]oth Parties hereby waive and release the other
Party from any and all claims challenging the
pricing for [Brunner or Matrix] Parts, including,
but not limited to, I-Tusqvarna's claim for
entitlement to a five percent pricing discount for
[Brunner or Matrix] Parts. This waiver and release
shall not p revent either Party from asserting
claims or defenses to such claims with respect to
the alleged delay in the transition of [Brunner or
Matrix] Parts, or for claims of breach of
representation and warranty concerning Exhibit A
pricing contained in Paragraph 3 of this MOU.
Except for the pricing claims discussed above,
execution of this MOU does not waive any of the
Parties' other claims, including, but not limited
to, Husqvarna's claim for entitlement to a two
percent annual rebate for future purchases of
[Brunner or Matrix] Parts.
(E.g., Doc. No. 338, Sentell Decl. Exs. 4, 5, 8, 9 & 14
(emphasis added).) Thus, the MOUs clearly did not settle the
subject claims for breach of contract based upon Husqvarna's
failure to transition the Brunner and Matrix parts prior to

24 It is of little moment that communications regarding the MOtJs
occurred between counsel for the parties. Counsel have been intimately
involved in communications between these parties for several years now.
25

the anticipated execution of the MOUs. 25 Accordingly,
Whitesell's motion to strike (doc. no. 363) is DENIED.

B. Motion for Summary Judgment

The Court should grant summary judgment only if "there is
no genuine issue as to any material fact and . . * the movant
is entitled to a judgment as a matter of law." Fed. R. Civ.
P. 56(c). 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 Iris. 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 law dictate the materiality of a
disputed fact. 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. Al Trans p ., 229 F. 3d 1012, 1023 (11th Cir. 2000) (en
banc) (quoted source omitted) (emphasis supplied). The party

25 Whitesell's attempt to differentiate between a claim for failure
to transition the parts and a claim for unwarranted delay in transition of
the parts is unavailing.

26

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 (111h Cir. 1990)
The Clerk has given the nonmoving party 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. 342.) Therefore,
the notice requirements of Griffith v. Wainwright, 772 F.2d
822, 825 (11th Cir. 1985) (per curiam) , are satisfied.
In this case, Husqvarna seeks judgment as a matter of law
on Whitesell' s breach of contract claims involving Husqvarna' s
alleged failure to transition the Brunner and Matrix parts.
More particularly, Husqvarna contends that undisputed material
facts show that Whitesell's nonperformance under the contract
should excuse Husqvarna's performance with respect to the
transition. In short, Husqvarna asks this Court to conclude
as a matter of law that no reasonable juror could conclude
that Husqvarna should not be excused from its performance
based upon Whitesell's conduct related to the transition
efforts.
As the factual background shows, the parties characterize
the many dealings between them differently, and, importantly,
each party has submitted evidence to support its
27

characterization. For instance, Husqvarna claims that the
reason the Brunner parts were not transitioned in the early
years is because Whitesell did not qualify its parts in a
timely fashion. Whitesell, however, places the blame for its
delay on Husqvarna. Indeed, Whitesell presents evidence that
Husqvarna redesigned certain parts and the record shows that
Husqvarna participated in certain procedural posturing, such
as a refusal to recognize that it was bound to the Supply
Agreement, which may have delayed the transition process.
Another example lies in the 2007 and 2008 transition efforts,
wherein Whitesell has presented evidence that tends to show
Husqvarna's delay in providing sample parts and arguably
necessary invoices. Whitesell has also produced several
ernails from early 2008 that tend to show I-Iusqvarna was nonresponsive to Whitesell's inquiries and demands.
In viewing the totality of the facts, the Court notes at
least two material disputes that contributed to the failure to
transition the Brunner and Matrix parts. First, the parties
differ on the manner and level of qualification that Whitesell
had to demonstrate before the Brunner parts could be
transitioned. Second, the parties differ on the specific
pricing to be used for the transitioned parts. Through its
motion, Husqvarna contends that Whitesells positions on these
matters is simply unreasonable. Yet, the reasonableness of a
parties' position vis-á-v±s the contracts and the parties'
28

course of performance is a jury question. That is, the Court
cannot determine that one party's conduct, which was based in
large part upon subjective interpretations of certain events
and communications, was unreasonable as a matter of law.
One example of a genuine issue of material fact arises
out of the negotiations of the Matrix MOU in 2009. Whitesell
believed that the steel surcharges that had been applicable in
December 2008 should apply to the Matrix MOU because I-Iusqvarna
had agreed to that pricing. Whitesell submits an email in
which Husqvarna agrees to this pricing. Yet, I-Iusqvarna
conclusorily argues that this position is unreasonable and
provides its own evidence, albeit seven months after the fact,
that the December 2008 pricing with steel surcharges was
conditional upon a global resolution. Based upon this
evidence, the Court cannot conclude that no reasonable juror
could find that Whitesell was justified in insisting upon the
use of pricing with steel surcharges for the Matrix MOD.
In short, I-Iusqvarna's motion seeks a determination from
this Court that Whitesell's conduct at every turn was
unjustified. Yet, at every turn, Whitesell has a reasonable
explanation, supported by evidence, of its own conduct.
Simply put, Husqvarna has failed to establish as a matter of
law that Whitesell's performance or non-performance under any
agreement between the parties was sufficient to excuse
Husqvarna of its obligations under the agreements.
29

Accordingly, Husqvarna is not entitled to summary judgment on
Whitesell's breach of contract claims based upon O.C.G.A. §
13-4-23.

IV. CONCLUSION
Upon the foregoing, the motion for summary judgment filed
by Husqvarna Outdoor Products, Inc. on Plaintiff's claims
concerning the transition of Brunner and Matrix parts (doc.
no. 339) is hereby DENIED. Plaintiff's motion to strike (dcc.
no. 353) is also DENIED.
ORDERED ENTERED at

Augusta, Georgia, this

June, 2011.

UNITED STA

30

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