EDIBLE GIFTS PLUS, LLC v. RAPPEL
3:15-cv-07904
D.N.J.May 25, 2017Background
- In January 2014 Rappel sold Edible Gifts Plus, LLC to Dizdarevic under an Asset Purchase Agreement and Bill of Sale; the sale closed February 5, 2014.
- The agreement included a non‑compete clause and Schedules listing assets sold, including “Images and Advertising Files.”
- After closing, Rappel placed at least 18 orders for former customers using the same vendors and discounts, totaling about $31,124; Plaintiffs contend this violated the non‑compete.
- Plaintiffs allege Dizdarevic paid for ownership of website product images, but Rappel used third‑party vendor images and may not have conveyed rights to those images.
- Plaintiffs sued for breach of the non‑compete and breach of warranty/marketable title to images (plus other claims); Rappel counterclaimed for unpaid remainder of the purchase price ($5,833.31 plus interest).
- Both sides moved for summary judgment; the court found genuine disputes of material fact on the key issues and denied both motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of non‑compete clause | Rappel violated the non‑compete by selling same products to same customers using same vendors (direct or indirect competition). | Clause limited to an "online" gift business; offline transactions were not barred; some sales were customer‑initiated. | Denied summary judgment: ambiguous intent and material factual disputes exist regarding scope and meaning. |
| Ownership of website product images | "Images and Advertising Files" in Schedule A included vendor product images; Plaintiffs reasonably believed they acquired rights. | Reseller practice uses vendor images; Plaintiffs knew or should have known images were not owned/transferable; post‑closing communications show awareness. | Denied summary judgment: dispute over parties' understanding at time of contract creates genuine issue of material fact. |
| Claim of intentional interference (Count V) | Plaintiffs asserted interference with a contractual relationship (e.g., Lady Fortunes). | Rappel contends Plaintiffs produced no discovery evidence supporting the claim. | Denied summary judgment: defendant failed to meet burden to show no triable issue. |
| Counterclaim for unpaid purchase price | N/A (Plaintiff owes remaining balance). | Rappel seeks summary judgment to collect unpaid $5,833.31 (plus interest). | Denied summary judgment: unresolved fact issues about Rappel's alleged material breaches may excuse performance by buyer. |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard and burdens)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (genuine dispute and jury standard)
- Meyer v. Riegel Prods. Corp., 720 F.2d 303 (3d Cir. guidance on inferences at summary judgment)
- Curley v. Klem, 298 F.3d 271 (evidence sources considered on summary judgment)
- State Troopers Fraternal Ass'n v. State, 149 N.J. 38 (contract interpretation; plain language and parties' intent)
- Marchak v. Claridge Commons, Inc., 134 N.J. 275 (contract construction principles)
- Bosshard v. Hackensack Univ. Med. Ctr., 345 N.J. Super. 78 (when contract interpretation is for the court)
- Travelodge Hotels, Inc. v. Honeysuckle Enters., 357 F. Supp. 2d 788 (material breach may excuse performance)
- Magnet Resources, Inc. v. Summit MRI, Inc., 318 N.J. Super. 275 (same; material breach doctrine)
- Nolan v. Lee, 120 N.J. 465 (contract breach and excuse of performance)