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Sports South, LLC v. Johnson

United States District Court, E.D. Kentucky, Central Division, Lexington

May 1, 2014

EARLEY M. JOHNSON, II, et al., Defendants.


JOSEPH M. HOOD, Senior District Judge.

This matter is before the Court upon cross-motions for Summary Judgment filed by Plaintiff Sports South, LLC and Defendant Security Safe Outlet, Inc. [D.E. 32, 43]. This matter being fully briefed, and the Court being otherwise sufficiently advised, it is ripe for review.

I. Procedural Background

Security Safe Outlet, Inc. was a Kentucky corporation doing business in Paris, Kentucky. [D.E. 1 at 2; D.E. 10 at 1-2]. Security Safe applied for credit with Plaintiff Sports South, LLC [D.E. 32-10], and the application was approved. Sports South avers that it supplied Security Safe with hundreds of pieces of inventory between March 23, 2012 and December 14, 2012, and sent multiple invoices for the purchase price of the inventory. [D.E. 1 at 2]. According to Sports South, an amount equal to $279, 733.25 remains unpaid. [D.E. 1 at 3]. Security Safe admits in its Answer that it ordered and received goods from Sports South, but disputes the amount owed. [D.E. 12 at 2].

Sports South filed a complaint against Security Safe, Earley M. Johnson II, President of Security Safe, and Jennifer D. Arnett, Vice-President of Security Safe, for breach of contract. The Court previously granted Defendants Johnson and Arnett's Motion for Judgment on the Pleadings and dismissed Sports South's claims against Johnson and Arnett. [D.E. 40]. Sports South and Security Safe have now filed cross-motions for summary judgment on Sports South's breach of contract claim against Security Safe.

II. Standard of Review

A motion for summary judgment may only be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "On summary judgment the inferences to be drawn from the underlying facts... must be viewed in the light most favorable to the party opposing the motion." U.S. v. Diebold, Inc., 369 U.S. 654, 655 (1962). "[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a sufficient showing 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 Corp. v. Catrett, 477 U.S. 317, 322 (1986).

III. Analysis

There remain genuine issues of material fact as to the total amount owed by Security Safe, thus the Court will deny the cross-motions for summary judgment. Sports South claims that because Security Safe admits that it ordered goods, that it received those goods, and that Sports South has established the debt owed by Security Safe, the Court should enter judgment against Security Safe, with pre- and post-judgment interest. Security Safe argues that Sports South's claim is barred by the statute of frauds, and, alternatively, that genuine issues of material fact exist as to the terms of the credit agreement and balance owed by Security Safe.

It is undisputed that Sports South and Security Safe entered into an agreement for the sale of goods. See KRS 355.2-105(1) ("Goods' means all things... which are movable at the time of identification to the contract of sale other than the money in which the price is to be paid, investment securities... and things in action."); [D.E. 12 at 2] (admitting that Security Safe placed orders and received merchandise). Defendant argues that KRS 371.010(9), Kentucky's statute of frauds for credit agreements bars this action. Plaintiff responds that the statute of frauds does not apply, and, if it does, the statute of frauds within Kentucky's Uniform Commercial Code (UCC) controls. The Court finds that the sale of goods is partially within the statute of frauds, and that the UCC controls.

In determining that the UCC statute of frauds controls this action, the Court finds the reasoning of Automated Cutting Technologies, Inc. v. BJS North America E, Inc. to be persuasive.

As other courts confronting the issue of dual statutes have held, the UCC's statute of frauds controls where it applies. The Court finds that, as a specific section addressing the requirement of a writing, and the enforceability of that writing, section 2-201 acts to preempt [KRS] 371.010. The latter is displaced by the particular provisions of the Uniform Commercial Code, ' KRS 355.1-103(2), and thus does not apply to transactions in goods. Section 2-201 provides the decisional basis.

Automated Cutting Techs., Inc. v. BJS N. Am. E, Inc., No. 5:10cv-208-REW, 2012 WL 2872823, at *4 (E.D. Ky. July 12, 2012). Thus, KRS 355.2-201 applies to this action, not KRS 371.010(9).

Multiple contracts were created between Sports South and Security Safe and not all of those contracts are subject to the statute of frauds. Sports South argues that the amount owed on the contract has been established by the multiple invoices sent to Security Safe. In their briefing, the parties did not discuss whether this was a breach of a single contract for the sale of goods or multiple contracts for the sale of goods. The only evidence of a contract are the invoices provided by Sports South and the internal balance sheet provided by Security Safe. The parties claim that the goods were ordered via purchase order. Thus, the Court finds that each purchase order constituted an offer to purchase and the shipping of the goods constituted an acceptance of the offer. See McJunkin Corp. v. Mechanicals, Inc., ...

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