THE SHERWIN-WILLIAMS COMPANY v. TMZ. ENTERPRISES, INC et al

Filing 60

OPINION filed. Signed by Judge Brian R. Martinotti on 9/18/2017. (mps)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

THE SHERWIN-WILLIAMS COMPANY,
Plaintiff,
v.
TMZ ENTERPRISES, INC. d/b/a PINTO AUTO
BODY, INC. and DOMINICK ZAPPIA,
Defendants.

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Civil Action No. 15-8409 (BRM)(LHG)
OPINION

MARTINOTTI, DISTRICT JUDGE
Before this Court is Plaintiff The Sherwin-Williams Company’s (“Sherwin-Williams” or
“Plaintiff”) Motion for Summary Judgment. (ECF No. 44.) Defendants TMZ Enterprises, Inc.
d/b/a Pinto Auto Body, Inc. (“TMZ”) and Dominick Zappia (individually, “Zappia”; collectively
with TMZ, “Defendants”) oppose the motion. (ECF No. 48.) Pursuant to Federal Rule of Civil
Procedure 78(a), the Court heard oral argument on August 24, 2017. For the reasons set forth
below, Plaintiff’s Motion for Summary Judgment is GRANTED.
I.

FACTUAL BACKGROUND

This matter arises from a dispute over a supply contract (the “Supply Agreement” or
“Agreement”) in which TMZ agreed to purchase automotive paint and related products from
Sherwin-Williams. Sherwin-Williams is an Ohio corporation that manufactures and sells
automotive paints. (Plaintiff’s Statement of Undisputed Material Facts (ECF No. 44-2) ¶ 1 and
Defendant’s Reply to Plaintiff’s Statement of Undisputed Material Facts (ECF No. 49) ¶ 1.) TMZ
is a New Jersey corporation in the business of painting and repairing automobiles. (ECF No. 44-2
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¶ 2 and ECF No. 49 ¶ 2.) On or around June 20, 2014, Sherwin-Williams installed a water-based
paint system at TMZ for which TMZ was not charged. (ECF No. 44-2 ¶ 4 and ECF No. 49 ¶ 4.)
On or about July 7, 2014, TMZ entered into the Supply Agreement with Sherwin-Williams, which
Zappia negotiated on behalf of TMZ. (ECF No. 44-2 ¶¶ 8-9 and ECF No. 49 ¶¶ 8-9.) TMZ tested
the water-based paint system and decided it no longer wanted to use it, so Sherwin-Williams
installed a solvent-based system at TMZ on or around July 15, 2014. (ECF No. 44-2 ¶¶ 10-11 and
ECF No. 49 ¶¶ 10-11.)
A. The Supply Agreement’s Terms
The Supply Agreement provided TMZ would purchase exclusively from SherwinWilliams all of its requirements for all automotive paints, coatings, and related products from July
7, 2014, until TMZ has purchased $554,000.00 worth of supplies. (ECF No. 44-2 ¶ 12 and ECF
No. 49 ¶ 12.) Pursuant to the Agreement, on or about July 21, 2014, Sherwin-Williams made a
prepaid discount of $85,000.00 (the “Advance”) to TMZ. (ECF No. 44-2 ¶¶ 13-14 and ECF No.
49 ¶¶ 13-14.) The Supply Agreement included an acceleration clause, which provided, in pertinent
part, TMZ would repay the Advance if: (1) TMZ failed to pay the amount owned under the
Agreement or breached the Agreement in any way; (2) TMZ terminated the Supply Agreement
before it reached the required amount of purchases; (3) TMZ ceased or substantially curtailed its
operation; or (4) TMZ ceased purchasing from Sherwin-Williams. (ECF No. 44-2 ¶¶ 15-16 and
ECF No. 49 ¶¶ 15-16.) The parties agreed Sherwin-Williams disclaimed all warranties of any kind,
including but not limited to, the implied warranty of merchantability of fitness for a particular
purpose. (ECF No. 44-2 ¶ 19 and ECF No. 49 ¶ 19.) The parties also agreed the Supply Agreement
constituted the entire agreement between them and that no statement made before the execution of

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the Agreement could modify its terms. 1 (ECF No. 44-2 ¶ 20 and ECF No. 49 ¶ 20.) The parties
further agreed the Supply Agreement would be governed by Ohio law and could be amended only
by a written document that specifically stated it was an amendment of the Agreement. (ECF No.
44-2 ¶¶ 21-22 and ECF No. 49 ¶¶ 21-22.)
B. The Guaranty
On or around July 7, 2014, Zappia personally guaranteed TMZ’s payment and performance
under the Supply Agreement, including TMZ’s obligation to repay the Advance. (ECF No. 44-2
¶¶ 23-24 and ECF No. 49 ¶¶ 23-24.)
C. The Parties’ Performance Under the Supply Agreement
From July 2014 to July 2015, Sherwin-Williams supplied TMZ with paint products that
TMZ used to refinish roughly 1300 vehicles. (ECF No. 44-2 ¶¶ 34, 37 and ECF No. 49 ¶¶ 34, 37.)
TMZ purchased some water-based paint products, but it used solvent-based paint products to
refinish cars 98% of the time. (ECF No. 44-2 ¶¶ 32-33 and ECF No. 49 ¶¶ 32-33.) Defendants
cited problems with the water-based paint as a significant factor in their decision to terminate the
supply agreement. (ECF No. 21 ¶¶ 7, 9.) At oral argument, counsel for Sherwin-Williams argued
Defendants abandoned their emphasis on this factor after Plaintiff pointed out TMZ used the
solvent-based product for nearly the entire course of the Agreement. TMZ never rejected any

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At Oral Argument, Defendants’ counsel argued Brian Penta (“Penta”), a Sherwin-Williams
representative who visited TMZ’s worksite, made representations regarding the quality and
performance of the products. Penta made these alleged representations before the parties entered
into the Agreement. Even if the Court accepted Defendants’ claims as true, it could not consider
Penta’s representations, because “[i]f contracting parties integrate their negotiations and promises
into an unambiguous, final, written agreement, then evidence of prior or contemporaneous
negotiations, understandings, promises, representations, or the like pertaining to the terms of the
final agreement are generally excluded from consideration by the court.” Bollinger, Inc. v.
Mayerson, 689 N.E.2d 62, 69 (Ohio App. 1996) (citing Charles A. Burton, Inc. v. Durkee, 109
N.E.2d 265 (Ohio 1952)).
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orders it received from Sherwin-Williams, and TMZ did not experience significant increases or
decreases in gross sales from the middle of 2014 to 2016. (ECF No. 44-2 ¶¶ 38, 40 and ECF No.
49 ¶¶ 38, 40.) At oral argument, Defendants’ counsel argued it would have been difficult, if not
impossible, for TMZ to reject any orders, because Sherwin-Williams entices businesses to enter
into what amount to contracts of adhesion.
D. The Termination of the Supply Agreement
In July 2015, TMZ ceased purchasing its requirements for automotive paints and related
products exclusively from Sherwin-Williams, though it had not yet purchased $554,000.00 worth
of goods. (ECF No. 44-2 ¶¶ 42-43 and ECF No. 49 ¶¶ 42-43.) Per the terms of the Supply
Agreement, TMZ’s cessation of purchases triggered the acceleration clause. (ECF No. 44-2 ¶ 44
and ECF No. 49 ¶ 44.) Defendants have not repaid the $85,000.00 Advance. (ECF No. 44-2 ¶ 45
and ECF No. 49 ¶ 45.) Defendants believed they could terminate the Agreement at any time by
repaying the advance. (ECF No. 44-2 ¶ 46 and ECF No. 49 ¶ 46.)
On September 11, 2015, Sherwin-Williams provided Defendants a notice of breach. (ECF
No. 44-2 ¶ 44 and ECF No. 49 ¶ 44.) At the time TMZ terminated the Supply Agreement, it had
purchased $54,861.00 worth of paints and coatings and $10,736.00 worth of associated products. 2
(ECF No. 44-2 ¶ 49 and ECF No. 49 ¶ 49.) If TMZ had completed the Supply Agreement, it would
have purchased an additional $499,139.00 worth of paints and coatings and, based on a projection
from those sales, an additional $97,674.00 worth of associated products. (ECF No. 44-2 ¶ 50 and
ECF No. 49 ¶ 50.) Sherwin-Williams calculates the profit on those lost sales would have totaled

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Pursuant to the Supply Agreement, TMZ’s purchases of products other than paints and coatings
were not counted toward the $554,000.00 it was required to purchase. (ECF No. 44-2 ¶ 12 and
ECF No. 49 ¶ 12.)
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$473,831.54, inclusive of Defendants’ obligation to return the $85,000.00 Advance. (ECF No. 442 ¶ 51 and ECF No. 49 ¶ 51.)
In June 2015, TMZ entered into an exclusive supply agreement for automotive paints,
coatings, and related products with Axalta Coating Systems (“Axalta”). (ECF No. 44-2 ¶ 54 and
ECF No. 49 ¶ 54.) Axalta, which is a direct competitor of Sherwin-Williams, paid TMZ a cash
advance of $110,000.00 to switch from Sherwin-Williams. (ECF No. 44-2 ¶¶ 56-57 and ECF No.
49 ¶¶ 56-57.) 3
II.

PROCEDURAL BACKGROUND

On December 3, 2015, Sherwin-Williams filed the Complaint. (ECF No. 1.) On January
15, 2016, Sherwin-Williams filed a motion for entry of default (ECF Nos. 9), and on January 18,
2016, the Clerk entered default for failure to appear. On February 1, 2016, Defendants filed their
Answer (ECF Nos. 10), and on February 15, 2016, Sherwin-Williams filed a motion to strike
Defendants’ Answer (ECF No. 13). On March 20, 2016, Defendants filed a motion to set aside
default. (ECF No. 17.)
On April 27, 2016, the Honorable Lois H. Goodman, U.S.M.J. entered a stipulation and
order that: (1) withdrew Sherwin-Williams’ motion to strike; (2) set aside the entry of default; and
(3) allowed Defendants’ Answer to stand. (ECF No. 25.) As a condition of setting aside the default,
Zappia produced a sworn affidavit stating what Defendants’ defenses were. (ECF No. 21.) Zappia
stated TMZ was not in breach, because the products Sherwin-Williams supplied were not “highquality” and were not suited to TMZ’s needs. (Id. ¶¶ 4-5.) Specifically, Zappia said the paint was
not suitable because Sherwin-Williams continued to supply water-based paint despite TMZ’s

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The Court notes TMZ terminated an agreement with another supplier before accepting a larger
advance to enter into the Supply Agreement with Sherwin-Williams. (ECF No. 44-2 ¶¶ 25-29 and
ECF No. 49 ¶¶ 25-29.) However, this conduct was not a factor in the Court’s decision.
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protests. (Id. ¶ 7.) Zappia claimed “TMZ never bargained for, or expected to receive, water-based
paint.” (Id. ¶ 9.) Zappia cited other problems with the paint, including color matching, paint
thickness, and long drying times. (Id. ¶ 11.)
Sherwin-Williams then filed its Motion for Summary Judgment. (ECF No. 44.)
III.

LEGAL STANDARD

Summary judgment is appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter
of law.” Fed. R. Civ. P. 56(c). A factual dispute is genuine only if there is “a sufficient evidentiary
basis on which a reasonable jury could find for the non-moving party,” and it is material only if it
has the ability to “affect the outcome of the suit under governing law.” Kaucher v. Cty. of Bucks,
455 F.3d 418, 423 (3d Cir. 2006); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). Disputes over irrelevant or unnecessary facts will not preclude a grant of summary
judgment. Anderson, 477 U.S. at 248. “In considering a motion for summary judgment, a district
court may not make credibility determinations or engage in any weighing of the evidence; instead,
the non-moving party’s evidence ‘is to be believed and all justifiable inferences are to be drawn in
his favor.’” Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson,
477 U.S. at 255)); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587,
(1986); Curley v. Klem, 298 F.3d 271, 276-77 (3d Cir. 2002).
The party moving for summary judgment has the initial burden of showing the basis for its
motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “If the moving party will bear the
burden of persuasion at trial, that party must support its motion with credible evidence . . . that
would entitle it to a directed verdict if not controverted at trial.” Id. at 331. On the other hand, if

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the burden of persuasion at trial would be on the nonmoving party, the party moving for summary
judgment may satisfy Rule 56’s burden of production by either (1) “submit[ting] affirmative
evidence that negates an essential element of the nonmoving party’s claim” or (2) demonstrating
“that the nonmoving party’s evidence is insufficient to establish an essential element of the
nonmoving party’s claim.” Id. Once the movant adequately supports its motion pursuant to Rule
56(c), the burden shifts to the nonmoving party to “go beyond the pleadings and by her own
affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate
specific facts showing that there is a genuine issue for trial.” Id. at 324; see also Matsushita, 475
U.S. at 586; Ridgewood Bd. of Ed. v. Stokley, 172 F.3d 238, 252 (3d Cir. 1999). In deciding the
merits of a party’s motion for summary judgment, the court’s role is not to evaluate the evidence
and decide the truth of the matter, but to determine whether there is a genuine issue for trial.
Anderson, 477 U.S. at 249. Credibility determinations are the province of the factfinder. Big Apple
BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992).
There can be “no genuine issue as to any material fact,” however, if a party fails “to make
a showing sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322-23. “[A] complete
failure of proof concerning an essential element of the nonmoving party’s case necessarily renders
all other facts immaterial.” Id. at 323; Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir.
1992).
IV.

DECISION
A. TMZ’s Breach of the Supply Agreement

The parties agree Ohio law governs the Supply Agreement. (ECF No. 44-2 ¶¶ 21-22 and
ECF No. 49 ¶¶ 21-22.) Under Ohio law, the Supply Agreement is an installment contract because

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it “authorizes the delivery of goods in separate lots to be separately accepted.” Ohio Rev. Code
Ann. § 1302.70(A). A supplier breaches an installment contract in whole when a “non-conformity
or default with respect to one or more installments substantially impairs the value of the whole
contract.” Ohio Rev. Code Ann. § 1302.70(C). A “buyer may reject any installment which is nonconforming if the non-conformity substantially impairs the value of that installment and cannot be
cured.” Ohio Rev. Code Ann. § 1302.70(B). “But [the buyer] reinstates the contract if he accepts
a non-conforming installment without seasonably notifying of cancellation . . . .” Ohio Rev. Code
Ann. § 1302.70(C).
Here, Defendants argue there are issues of material fact as to whether Sherwin-Williams
breached the Supply Agreement by providing inadequate, or non-conforming, goods and impaired
the value of the contract. (ECF No. 48 at 13-14.) A breach by Sherwin-Williams would relieve
Defendants of their obligations under the Supply Agreement. (Id. (citing Frank Stamato & Co. v.
Borough of Lodi, 4 N.J. 14, 21 (1950)).) Defendants claim TMZ experienced several problems
with Sherwin-Williams’ paint, including color matches and “extremely slow” drying times. (Id. at
15.) Defendants argue the products’ inadequacies constituted a breach of both the Supply
Agreement and the implied covenant of good faith and fair dealing. (Id. at 18.)
Defendants offer no support for their claim Sherwin-Williams breached the Supply
Agreement other than the deposition testimony of Zappia and Edward Bernstein, who has been a
painter for TMZ for fifteen years. (See id. at 2; ECF No. 44-2 ¶¶ 64-65 and ECF No. 49 ¶¶ 64-65.)
“As a general proposition, ‘conclusory, self-serving affidavits are insufficient to withstand a
motion for summary judgment.’” (quoting Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d
156, 161 (3d Cir. 2009)); see also Betts v. New Castle Youth Dev. Ctr., 621 F.3d 249, 251 (3d. Cir.
2010) (citing Williams v. Borough of West Chester, 891 F.2d 458, 460 (3d Cir. 1989))

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(“Unsupported assertions, conclusory allegations, or mere suspicions are insufficient to overcome
a motion for summary judgment.”). Defendants explain this lack of documentary evidence of their
claims by claiming all communications with Sherwin-Williams were made through Penta. (ECF
No. 48 at 8.) At oral argument, Defendants’ counsel emphasized the fact that Sherwin-Williams
has not offered a certification from Penta refuting the testimony of Zappia and Bernstein.
Significantly, however, Defendants have the burden to show a genuine issue of material fact exists,
and Defendants admit they never sought to depose Penta. See Celotex Corp., 477 U.S. at 324
(holding, once the party seeking summary judgment has met its burden of production, the burden
shifts to the nonmoving party to “go beyond the pleadings and by her own affidavits, or by the
depositions, answers to interrogatories, and admissions on file, designate specific facts showing
that there is a genuine issue for trial”); Lenherr v. Morey Org., Inc., 153 F. Supp. 3d 662, 665
(D.N.J. 2015) (“[The] nonmoving party must identify specific facts and affirmative evidence that
contradict those offered by the moving party.”). Therefore, the Court finds there is no material
dispute of fact as to whether Sherwin-Williams breached the Supply Agreement by providing nonconforming goods, and Sherwin-Williams is entitled to judgment as a matter of law.
Even if Sherwin-Williams had breached the Supply Agreement by providing nonconforming goods, that would not preclude a grant of summary judgment to Sherwin-Williams.
See ERB Poultry, Inc. v. CEME, L.L.C., 20 N.E.3d 1228, 1236 (Ohio 2014) (affirming summary
judgment in supplier’s favor when buyer did not reject goods). The Court notes Defendants do not
explain why they never rejected any of the goods, despite the alleged flaws. Defendants state only
that Sherwin-Williams “does not explain how deliveries of paint could be rejected, when prior to
utilizing the paint TMZ did not know whether there was a problem.” (ECF No. 48 at 19.) While
this explanation could explain TMZ’s initial use of the allegedly non-conforming products, it

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cannot account for the fact that TMZ used the products for a year without rejecting a single
installment. (See ECF No. 44-2 ¶ 38 and ECF No. 49 ¶ 38.) Further, Defendants admit there was
an instance in which they raised concerns about the products to Sherwin-Williams, which then
replaced the products. (ECF No. 44-2 ¶ 84 and ECF No. 49 ¶ 84.) When TMZ was dissatisfied
with the water-based system, Sherwin-Williams installed a solvent-based system. (ECF No. 44-2
¶¶ 10-11 and ECF No. 49 ¶¶ 10-11.) Defendants repeatedly accepted non-conforming goods,
which under Ohio law constituted reinstatement of the contract. See Ohio Rev. Code Ann. §
1302.70(C). Therefore, Sherwin-Williams is entitled to judgment as a matter of law.
As the Court finds there are no material facts in dispute as to whether Defendants breached
the Supply Agreement and Sherwin-Williams is entitled to judgment as a matter of law, SherwinWilliams Motion for Summary Judgment as to that issue is GRANTED.
B. Damages
Pursuant to Ohio Law, a plaintiff may recover lost profits if “(1) the profits are within the
contemplation of the parties at the time of contracting[,] (2) the loss of profits is the probable result
of breach, and (3) the profits can be shown with reasonable certainty.” Miami Packaging, Inc. v.
Processing Sys., Inc., 792 F. Supp. 560, 566 (S.D. Ohio 1991) (citations omitted). Here, the profits
were in the contemplation of the parties, as the Supply Agreement provided TMZ would purchase
$554,000.00 worth of goods from Sherwin-Williams. (ECF No. 44-2 ¶ 12 and ECF No. 49 ¶ 12.)
The loss of profits is the probable result of the breach, because TMZ ended its relationship with
Sherwin-Williams after it purchased just $54,861.00 worth of paints and coatings and $10,736.00
worth of associated products. (ECF No. 44-2 ¶ 49 and ECF No. 49 ¶ 49.) Finally, Defendants do
not dispute Sherwin Williams’ calculation of $473,831.54 in damages. (ECF No. 44-2 ¶¶ 49-53
and ECF No. 49 ¶¶ 49-53.)

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Defendants argue Sherwin-Williams is not entitled to recover the damages it seeks because
Zappia believed he could terminate the Supply Agreement at any time as long as he returned the
$85,000.00 Advance. (ECF No. 48 at 20.) However, the Supply Agreement stated a return of the
advance would not be construed as liquidated damages or as a limitation of Sherwin-Williams’
remedies. (ECF No. 44-2 ¶ 17 and ECF No. 48 at 21.) Defendants characterize this provision as
being “[b]uried at the end of the agreement in small print.” (ECF No. 48 at 21.) At oral argument,
Defendants’ counsel made an impassioned argument about Zappia’s lack of business acumen
relative to an entity with the resources of Sherwin-Williams. The Court does not find this argument
persuasive, however, as Zappia has been in the auto body business since 1976 and has participated
in similar supply agreements both before and after this transaction. (See ECF No. 48 at 2-3.)
Pursuant to Ohio law, contract terms are generally enforceable when they have been negotiated by
sophisticated parties in arm’s-length transactions. See Preferred Capital, Inc. v. Associates in
Urology, 453 F.3d 718, 721 (6th Cir. 2006); Energy Marketing Servs., Inc. v. Homer Laughlin
China Co., 186 F.R.D. 369, 375 (S.D. Ohio 1999); Kennecorp Mtge. Brokers, Inc. v. Country Club
Convalescent Hosp., Inc., 66 Ohio St.3d 173, 175 (Ohio 1993). The parties freely entered into the
Supply Agreement and agreed to be bound by its terms. Defendants cite no authority to support
their argument that Zappia’s subjective belief he could terminate the contract precludes SherwinWilliams from an award of lost profits.
The Court finds Sherwin-Williams is entitled to summary judgment on the issue of
damages in the amount of $473,831.54, and its Motion is therefore GRANTED.

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V.

CONCLUSION

For the foregoing reasons, Sherwin-Williams’ Motion for Summary Judgment is hereby
GRANTED. An appropriate Order will follow.

Date: September 18, 2017

/s/ Brian R. Martinotti
HON. BRIAN R. MARTINOTTI
UNITED STATES DISTRICT JUDGE

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