136 F. Supp. 3d 792
S.D. Tex.2015Background
- Wartburg distributed Bumbo-manufactured baby seats in the U.S. from 2003–2010 and allegedly was the distributor for major retailers (Wal‑Mart, Toys "R" Us/Babies "R" Us).
- Relationship frayed as Wartburg fell behind on payments; Bumbo sought an alternate U.S. distributor and obtained a preliminary injunction requiring Wartburg to supply its Bumbo inventory to the three major retailers.
- Bumbo later dismissed its own claims and the injunction was dissolved; Wartburg’s counterclaims for breach of contract survived in part (retailer‑limitation claim) after the Fifth Circuit reversed exclusion of that claim under the statute of frauds and remanded.
- The surviving counterclaim alleges Bumbo breached the oral distribution agreement by demanding Wartburg sell only to the three big retailers (to the exclusion of Wartburg’s other customers).
- Bumbo moved for summary judgment arguing (a) any damages for a wrongful injunction are limited to the bond (which was returned), and (b) Wartburg failed to timely disclose damages; the court denied summary judgment and left factual issues (contract terms, who terminated, reasonableness of notice) for trial.
Issues
| Issue | Plaintiff's Argument (Bumbo) | Defendant's Argument (Wartburg) | Held |
|---|---|---|---|
| Whether retailer‑limitation claim is barred by statute of frauds | Claims derive from later oral modification and lack writing → barred | Claim arises from original distribution agreement and falls under UCC exceptions (goods received/accepted; judicial admissions) | Court: Fifth Circuit held retailer‑limitation survives statute of frauds; remanded for factual inquiry |
| Whether Wartburg’s claim is only for wrongful injunction (so damages limited to bond) | Yes — claim effectively seeks damages for wrongful injunction; bond was returned so no recovery | No — claim is breach‑of‑contract rooted in contract terms (injunction part of proof but not sole basis); damages not necessarily limited to bond | Court: Claim not limited to wrongful‑injunction theory; bond rule unsettled; factual issues remain |
| Whether Wartburg’s damages disclosures were untimely and require exclusion | Damages for retailer‑limitation were disclosed very late; exclusion is appropriate under Rule 37 | Disclosures were made when remand clarified surviving claim; Wartburg offered to reopen limited discovery; exclusion would be unduly harsh | Court: Failure was not justified but prejudice curable; denied exclusion and allowed limited reopening |
| Whether there is any genuine issue of material fact on contract terms, termination, and notice | Argued Bumbo had right to suspend/cancel for lack of assurances and did not wrongfully terminate | Wartburg says course of dealing, credit arrangements, and assurances create fact disputes; two‑day notice was unreasonable | Court: Genuine fact disputes exist (who canceled, terms re: retailer limitation, reasonableness of notice); summary judgment denied |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard and "genuine issue" test)
- Celotex Corp. v. Catrett, 477 U.S. 317 (movant burden under Rule 56)
- Hugh Symons Group, plc v. Motorola, Inc., 292 F.3d 466 (statute of frauds under Texas UCC)
- Jonibach Management Trust v. Wartburg Enterprises, Inc., 750 F.3d 486 (Fifth Circuit decision remanding retailer‑limitation claim)
- W.R. Grace & Co. v. Local Union 759, 461 U.S. 757 (injunction bond and recovery for wrongful injunction)
- Continuum Co. v. Incepts, 873 F.2d 801 (bond issues and limits on damages for injunctions)
- Coburn Supply Co. v. Kohler Co., 342 F.3d 372 (reasonable notice in distributor termination context)
- Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574 (drawing inferences for summary judgment)