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Bobrow Palumbo Sales, Inc. v. Broan-Nutone

January 4, 2007


The opinion of the court was delivered by: Hurley, Senior District Judge


Plaintiff, Bobrow Palumbo Sales, Inc. ("Plaintiff" or "Bobrow") commenced this action alleging claims for unjust enrichment, fraud and misrepresentation, and breach of contract. Presently before the Court is the motion of Defendant Broan-Nutone LLC ("Defendant" or "Broan") for summary judgment dismissing all of Plaintiff's claims and granting Broan summary judgment on its counterclaim for attorney's fees. For the reasons set forth below, Defendant's motion is granted in part and denied in part.


The following facts are taken from the parties' submission and are undisputed, unless noted otherwise.

On or about February 1, 1999, Bobrow and Broan entered into a Retail Manufacturer's Representative Agreement (the "Agreement") by which Broan retained Bobrow to provide certain services relating to the solicitation of orders and sales of Broan products in Home Depot stores in the northeast. (Def. Rule 56.1 Statement at ¶ 2.) Under the Agreement, Bobrow was obligated, among other things, to provide in-store services including the execution of display sets and resets in accordance with schedules and standards established by Broan. (Id. at ¶ 5.)

"Set" and "reset" refer to the placement, display, and stock of Broan's inventory -- consisting of range hoods and fans -- at the point of sale in Home Depot stores. A product is set when it is first introduced into the market at the point of sale. A reset refers to when there is a change, either in the product line, an introduction of a new product or an alteration in the manner in which a product is presented to the consumer on the sales floor. (Id. at ¶ ¶ 6-7.) Setting and resetting a product can involve, for example, moving beams, moving electrical, and building shelving. (Di Salvo Aff. at Ex. C (Palumbo Dep. at p. 25).)

Under the Agreement, Plaintiff assumed all costs incurred in connection with in-store service and solicitation. Broan compensated Plaintiff for the services provided under the Agreement by paying a commission calculated on the amount of net sales of Broan products sold in the Home Depot stores in Plaintiff's territory. (Def. Rule 56.1 Statement at ¶¶ 8 & 12.)

The Agreement provides that it shall "continue for the Term, unless terminated by either party under 30 days written notice with or without good cause." (Id. at ¶ 9.) It also contains a provision that it "constitute[s] the entire Agreement between Broan and [Bobrow] and may not be substituted, varied or abridged in any manner, except as provided herein, unless by written amendment executed by [Bobrow] and a duly authorized agent of Broan." (Id. at ¶ 10.)

Prior to November 1, 2004, Home Depot required that Broan provide in-store service functions, including setting and resetting display products, as a condition of selling products in its stores. Broan hired Bobrow (and other sales representatives for other territories) in order to comply with that requirement. (Id. at ¶ 13.)

In or about mid-2003, Home Depot announced that it would be implementing its In-Store Service Initiative ("ISSI"), also referred to as the "Roadrunner" program. Although announced in 2003, Bobrow was aware, at least as early as 2001, that Home Depot intended to implement changes to its in-store service requirements. (Id. at ¶ ¶ 23 & 26.)

Under the ISSI program, Home Depot would be directly responsible for hiring sales representatives to perform in-store product sets and resets. Under ISSI, the representatives responsible for performing these services were hired directly by, reported to and were paid by Home Depot. Home Depot, in turn, funded this program by extracting a price credit from its vendors. Home Depot implemented the ISSI program department by department beginning with Department 27 (Electrical) in June 2003. Broan's products, range hoods and fans, were not part of Department 27 but rather Department 26. (Id. at ¶¶ 24, 25, & 27.)

Also in 2003, Home Depot ordered that range hood displays be reset again in 2004. (Id. at ¶ 21.) The reset took place from approximately April through July 2004. (Id. at ¶ 30.) After the resets were complete, in or about August 2004, Home Depot announced that the ISSI program was being implemented in Department 26 effective November 1, 2004. (Id.) Home Depot also announced its decision as to who would be selected as a "go-forward" representative under ISSI for Department 26 and others. Plaintiff was not awarded Department 26 although it was awarded a different department. (Id. at ¶ 37.) By letter dated August 30, 2004 Broan notified Bobrow that it was terminating the Agreement effective October 2, 2004. (Id. at ¶ 38.)

The dispute in this case centers around what happened between the time the 2004 range hood reset was announced and the termination of the Agreement, i.e., between approximately October 2003 and August 2004. According to the Plaintiff, once it knew of the ISSI program and the range hood reset scheduled for 2004, it informed Defendant that it would not perform the reset unless it was paid additional compensation. Plaintiff contends that it and Defendant entered into a separate contract, apart from the Agreement, whereby it would be paid its costs for the 2004 reset and that in reliance on Defendant's promise to pay the reset costs, Plaintiff did not terminate the Agreement prior to commencing work on the reset. Plaintiff seeks $258,000 in costs and expenses it alleges is associated with the 2004 range hood reset. Additionally, Plaintiff claims it is entitled to commissions through the end of 2004. Defendant contends that it ...

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