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KIRKPATRICK v. RAYS GROUP
October 13, 1999
PATRICIA KIRKPATRICK, D/B/A WEE GOLF, A DIVISION OF ANYTHING'S POSSIBLE, PLAINTIFF,
THE RAYS GROUP, AN UNINCORPORATED ASSOCIATION THAT INCLUDES RAYS APPAREL, INC. D/B/A ZEPPELIN, D/B/A UH! OH, D/B/A BISTRO, D/B/A JACK AND SPIKE, D/B/A SCUSA, D/B/A TEENIE WEENIE BAMBINI, D/B/A BONDI BEACH, D/B/A AM-FM, D/B/A ZEPPI, D/B/A OP OCEAN PACIFIC, AND JAMES STARK D/B/A STARK CONCEPTS, RAYS & ASSOCIATES LTD., AND RAYS GROUP, DEFENDANTS.
The opinion of the court was delivered by: Arcara, District Judge.
The above-referenced case was referred to Magistrate Judge
Leslie G. Foschio pursuant to 28 U.S.C. § 636(b)(1)(B), on
February 10, 1999. On September 17, 1999, Magistrate Judge
Foschio filed a Report and Recommendation, recommending that
defendants' motion to dismiss should be granted in part and
denied in part.
The Court has carefully reviewed the Report and Recommendation,
the record in this case, and the pleadings and materials
submitted by the parties. No objections having been timely filed,
it is hereby
ORDERED, that pursuant to 28 U.S.C. § 636(b)(1), and for the
reasons set forth in Magistrate Judge Foschio's Report and
Recommendation, defendants' motion to dismiss is granted in part
and denied in part. The case is referred back to Magistrate Judge
Foschio for further proceedings.
REPORT and RECOMMENDATION
FOSCHIO, United States Magistrate Judge.
This case was referred to the undersigned on February 10, 1999
by the Hon. Richard J. Arcara for report and recommendation on
all dispositive motions. The matter is presently before the court
on Defendants' motion to dismiss filed February 1, 1999 (Docket
Item No. 5).
Plaintiff, Patricia Kirkpatrick, d/b/a Wee Golf/Anything's
Possible ("Plaintiff'), commenced this contract action on January
24, 1999 against Defendants The Rays Group,*fn1 James Stark,
d/b/a Stark Concepts,
Rays & Associates Ltd., and Rays Group. Plaintiff asserts five
causes of action including violation of the Uniform Commercial
Code, breach of contract, tortious interference with contractual
relations, unjust enrichment and fraud.
On February 1, 1999 Defendants moved to dismiss the complaint
as against all Defendants for improper venue, as against
Defendants James Stark, Rays & Associates Ltd., and Rays Group
for failure to state a claim, and as against Defendants Rays &
Associates and Rays Group for lack of personal jurisdiction. In
support of the motion, Defendants filed a Memorandum of Law in
Support of Defendants' Motion to Dismiss the Complaint (Docket
Item No. 6) ("Defendants' Memorandum"), and the Affidavit of
James Stark (attached to Docket Item No. 5) ("Stark Affidavit").
In opposition to the motion to dismiss, Plaintiff filed on March
19, 1999 a Memorandum of Law in Opposition to Defendants' Motion
to Dismiss (Docket Item No. 10) ("Plaintiff's Memorandum") and
the Affidavit of Patricia Kirkpatrick (Docket Item No. 11)
("Kirkpatrick Affidavit"). In reply, Defendants filed, on April
6, 1999, a Reply Memorandum of Law in Support of Defendants'
Motion to Dismiss the Complaint (Docket Item No. 13)
("Defendants' Reply") and the Reply Affidavit of James Stark in
Further Support of Motion to Dismiss (Docket Item No. 14) ("Stark
Reply Affidavit"). Oral argument was deemed unnecessary.
Based on the following, Defendants' motion to dismiss should be
GRANTED in part and DENIED in part.
Plaintiff Patricia Kirkpatrick, d/b/a Wee Golf, a division of
Anything's Possible ("Wee Golf"), is President of Wee Golf. Wee
Golf's place of business located at 5177 Homestead Place,
Lewiston, New York. Peggy Beakes, Vice President of Wee Golf,
works out of an office located at 870 Fawn Grove Road in Fawn
Grove, Pennsylvania. Beakes prepares purchase orders for Wee Golf
and sometimes receives shipments of ordered merchandise. Beakes
is compensated by Plaintiff for such services, but has no
investment or ownership interest in Wee Golf.
Plaintiff sells and distributes traditional golf apparel and
accessories for children and juniors, wholesale, to golf pro
shops and resorts throughout the United States and, on a retail
basis through advertisements placed in print publications, as
well as over the Internet. Plaintiff considers Wee Golf to be the
leading supplier of children's golf wear and that it is the first
company in the United States to offer a complete line of golf
apparel and accessories for children ages 2 to 7.
Defendant Rays Apparel, Inc. ("Rays Apparel, Inc."), a
California corporation in the business of manufacturing and
selling apparel, maintains its principal office in Costa Mesa
California and another office and showroom at 485 Seventh Street
in the New York City "garment district." Defendant James Stark
("Stark"), both a shareholder and President of Rays Apparel,
resides in Laguna Hills, California. Prior to creating Rays
Apparel, Stark conducted business with his wife under the name
"Stark Concepts." Stark's brother, Bill Starks, is Vice President
of Sales for Rays Apparel. Lisa Dibsie is a sales representative
for Rays Apparel, Inc. and works
out of its New York City office. Rays & Associates Ltd., ("Rays &
Associates") is a business entity located in the Cayman Islands,
and Rays Group ("Rays Group"), is a business entity located in
Rays Apparel, Inc. manufactures children's and men's sportswear
which it sells wholesale either under one of its own registered
trademarks or on a "private label" basis. Rays Apparel's sales
force is headquartered in its New York City office. Its
merchandise is manufactured either in Southern California through
Rays Apparel's own production division or is subcontracted to
other companies located in the Far East.
Rays Apparel, Inc. included several lines of children's
golf-related apparel, i.e., shorts, polo shorts, sweaters and
vests, among its clothing lines before Plaintiff sought to
conduct business with it. Those clothing lines were sold by Rays
Apparel, Inc. primarily under the brand name Uh! Oh, separated by
colors and styles into various "collections" referred to as
"Caddy Shack," "Tin Cup," "Milano," "Tuscany" and "St. Andrews."
Plaintiff first met Stark in the Fall of 1996 at Rays Apparel's
booth at an industry trade show, International Kids Fashion Show,
held at the Jacob Javits Center in New York City. At that time,
Plaintiff informed Stark of her company's business and indicated
her intention to expand into the "green grass" business which is
understood in the apparel industry as referring to golf country
clubs, pro shops and resorts. As there were no present plans for
Rays Apparel, Inc. to expand into that market, Plaintiff was not
considered a direct competitor and Stark agreed to consider
selling to her. Plaintiff placed her first order with Rays
Apparel, Inc. in February, 1997.
On October 24, 1997, Plaintiff ordered merchandise from Rays
Apparel, Inc. ("Purchase Order No. WG11011") which she intended
to sell as part of Wee Golf's summer 1998 collection.*fn3
Included in that order of children's golf apparel referred to by
Rays Apparel, Inc. as the "Milano Collection," were 600 green
knit vests which were to be manufactured and sold to Plaintiff
without Rays Apparel, Inc. Uh!Oh labels or the crests which were
usually embroidered on the left chest. It was Plaintiff's
intention that the labels of her customers would be placed in the
garments. The total amount of that order was $33,114. January 25,
1998 was the stated delivery date on the purchase order and
February 25, 1998 was the stated cancel date. The goods were to
be shipped to Beakes in Pennsylvania, although the bill for those
goods was to be sent to Plaintiff in Lewiston, New York.
Shortly after placing the order, Plaintiff was informed of a
shortage in the turquoise jacquard polo shirts which were among
the items listed in Purchase Order No. WG11011. On November 3,
1997, Plaintiff agreed to the substitution of a different
turquoise jacquard polo shirt for the ones originally ordered.
Relying on the purchase order, Plaintiff accepted orders from
customers and incurred expenses by attending trade shows where
the Milano apparel line was promoted as well as by advertising
On January 27, 1998, Plaintiff placed another order with Rays
Apparel, Inc. ("Purchase Order No. WG8180"), which she intended
to sell as part of her spring and summer collection. Included in
that purchase order was children's golf apparel carried in Rays
Apparel's St. Andrews and Tuscany collections. The total amount
of that order was $85,929 and the stated "delivery window" was
May 25 to June 25, 1998.
On March 2, 1998, Lisa Dibsie informed Plaintiff through a
proposed revision to Purchase Order No. WG11011 sent to Peggy
Beakes of another problem, specifically, that of the 330 solid
periwinkle polo shirts ordered, only 36 were available for
shipment. Dibsie requested Beakes respond as to whether Plaintiff
would accept shipment of Purchase Order No. WG11011 as revised.
Thereafter, on March 4, 1998, Beakes sent Dibsie a revised
Purchase Order No. WG11011 in which fewer quantities of the same
goods contained in the original Purchase Order No. WG11011,
except for the turquoise jacquard polo shirts which had been
canceled, were ordered.*fn4 For example, only 66 of the original
600 green knit vests originally ordered and only 36 of the 330
periwinkle polo shirts originally ordered were requested. The
total amount of goods orders per Purchase Order No. WG11011 as
revised by Plaintiff was $10,130. According to Plaintiff, the
reduction in the order was attributed to her need to "balance"
the collection. Beakes also submitted an additional order for
walnut linen and cotton shorts of the Milano collection, Purchase
Order No. WG8197, which totaled $1,473.60.
Intending to expedite shipment of Purchase Orders Nos. WG11011
and WG8197, the Milano collection items, Plaintiff, in a letter
to Dibsie, dated March 4, 1998, offered to send payment in the
form of a check to cover both those orders. Plaintiff also
requested confirmation as to when the Milano collection would be
ready for shipment as well as whether any problems were
anticipated with the St. Andrews and Tuscany collections, from
which the items contained in Purchase Order No. WG8180 were
ordered. In that letter, Dibsie was also advised that Plaintiff's
ability to fill customer orders depended on timely receipt of the
goods ordered from Rays Apparel, Inc. and that Plaintiff had
expended significant funds to promote the line.
Plaintiff maintains that Stark's brother, Bill Stark, called
her on March 4, 1998 and attempted to persuade her to convince
her customers to accept shipments for merchandise other than what
Plaintiff had ordered from the Milano collection. On March 5,
1998, Bill Stark again telephone Plaintiff and advised her that
although the solid polo shirts that matched the green vests
Plaintiff had ordered were not available, Plaintiff should accept
the original number of green vests, i.e., 600 as Plaintiff had
originally, ordered as her customers "would figure out other ways
to put an outfit together." Complaint, ¶ 111. According to
Plaintiff, Bill Stark also stated that because the green vest had
been "special ordered," as they were manufactured without the
embroidered crest on the left chest, Plaintiff was required to
take all of them. Plaintiff responded that ...