D3 International Inc. v. AGGF Cosmetic Group S.p.A.

Background

D3 International Inc. had a written agreement with AGGF Cosmetic Group S.p.A. making D3 the exclusive U.S. distributor of AGGF’s cosmetics from January 1, 2010, through December 31, 2012. The agreement required D3 to make minimum purchases and pay its own advertising and promotional costs. It required any renewal to be confirmed in writing.

The parties continued doing business after December 31, 2012. D3 claimed that they entered an oral agreement under which D3 would remain the exclusive distributor for as long as the defendants continued exporting their products to the United States. The court found that the evidence showed no agreement on essential terms such as price, quantity, duration, or delivery. D3’s president testified that the parties had not discussed those terms and that D3 had been left without the contractual terms in the written agreement.

Cosmetica later ended its relationship with D3 after discussions about D3’s sales performance and unpaid invoices. Cosmetica gave six months’ notice and later appointed The PCA Group as its exclusive U.S. distributor. D3 did not relinquish control of the defendants’ Amazon store when requested, and the defendants alleged that this caused lost sales and interfered with their relationship with The PCA Group. D3 also did not pay €6,718.02 for products supplied under two invoices.

D3’s Claims

D3 asserted two breach-of-contract claims, a quantum meruit claim, and an unjust-enrichment claim. Quantum meruit is a claim seeking reasonable payment for services; unjust enrichment seeks recovery when one party unfairly retains a benefit received at another party’s expense.

The court granted summary judgment dismissing both breach-of-contract claims. It held that D3 had not shown a genuine dispute of material fact about the existence of a later oral contract. The court also ruled that the statement that the defendants were not looking for another distributor described a current fact, not a promise of continuing exclusivity. D3’s own unilateral understanding, industry practice, and course of dealing could not create a contract without an agreement between the parties.

The court also granted summary judgment dismissing D3’s quantum meruit and unjust-enrichment claims. It concluded that D3 had been compensated through the profits and markup it earned from selling the products, that the defendants had not agreed to reimburse D3’s promotional expenses or pay it after termination, and that D3 had not shown a reasonable expectation of additional compensation. The court likewise rejected D3’s claim for projected future distribution revenue.

Account-Stated Counterclaim

An account-stated claim concerns a stated amount that was presented, accepted as correct, and promised to be paid. The court granted summary judgment in favor of Cosmetica on this counterclaim for €6,718.02. D3’s answer to the counterclaims admitted the indebtedness and suggested only that the amount should be offset against what the defendants allegedly owed D3. The court treated that admission as binding and found no evidence disputing that the invoices had been accepted and promised to be paid.

Tortious-Interference Counterclaim

The court denied summary judgment on liability for the defendants’ tortious-interference-with-contract counterclaim. Although the defendants asserted that D3 interfered with their contract with The PCA Group by refusing to transfer control of the Amazon store, they did not provide sufficient evidence about the terms of the The PCA Group agreement, whether it was breached, or whether D3 knew the relevant terms. The court therefore did not find D3 liable on that counterclaim at summary judgment.

Unfair-Competition Counterclaim

The court denied partial summary judgment on liability for the defendants’ New York unfair-competition counterclaim. The defendants claimed that D3 improperly used their trademarks and represented itself as an authorized distributor after the relationship ended. But the defendants did not provide facts describing the Amazon page, how D3 used the marks, whether D3 suggested an affiliation with the defendants, or whether consumers were likely to be confused. The court also noted that the defendants did not contend that the products D3 sold were counterfeit or otherwise not genuine.

Disposition

Judge Liman granted summary judgment dismissing all of D3’s claims and granting Defendants’ account-stated counterclaim. He denied partial summary judgment finding D3 liable for tortious interference with contract and unfair competition. The defendants’ request for costs and fees was denied because their briefing did not address or support that request. The Clerk of Court was directed to close the motion docket entry.