Home Depot Can't Transfer Bulk of Contract Dispute to Georgia, SDNY Judge Rules
The lawsuit, filed by mobile electronics manufacturer ESI Cases and Accessories Inc., accused the retailer of reneging on an 2017 agreement to buy $1.8 million worth of custom-made cell phone accessories featuring the Home Depot trademark.
September 12, 2019 at 05:50 PM
3 minute read
Home Depot Sign. Photo: Melanie BellA Manhattan federal judge has denied the bulk of Home Depot's bid to move a dispute with a vendor to the company's home state of Georgia, saying contractual provision it relied on was to vague to support the request.
The lawsuit, filed by mobile electronics manufacturer ESI Cases and Accessories Inc., accused the retailer of reneging on an 2017 agreement to buy $1.8 million worth of custom-made cell phone accessories featuring the Home Depot trademark. According to ESI, the company instead offered to pay for only "a portion" of the products after they were finished, at a 50% discount to the price the parties had initially agreed to.
Home Depot had tried to have the entire case transferred from the U.S. District Court for the Southern District of New York to Atlanta, where the company is headquartered. Attorneys for the firm pointed to an often-used forum-selection clause in its contract, mandating that civil lawsuits be brought in either the Atlanta Division of the U.S. District Court for the Northern District of Georgia or the Fulton Superior Business Court.
U.S. District Judge Jesse M. Furman of the Southern District of New York, on Tuesday acknowledged that courts have typically "given broad effect" to forum-selection clauses like the one Home Depot employed. However, it was not clear from the contract's language what subject matter the provision was intended to cover.
"The problem for Home Depot is that the SBA provides little insight into what the 'subject matter' of the contract is," Furman wrote in a 19-page opinion.
"The bottom line is that absent any evidence that the 'subject matter' of the [contract] encompasses the manufacture of custom-made goods, the court cannot conclude that Home Depot has carried its burden to show that ESI's claims relating to the alleged manufacturer agreement fall within the scope of the [contract] and its forum-selection clause," he said.
The ruling did grant Home Depot's motion to transfer on one count stemming from a separate transaction and dismissed ESI's claims for unjust enrichment and fraudulent concealment. But the rest of the suit for breach of contract and promissory estoppel would be allowed to proceed in the Southern District.
Terrence Oved and Andrew Urgenson, who represent ESI in the case, praised the decision in a statement issued Thursday.
"Our client is pleased that the court issued a comprehensive, thorough and well-reasoned opinion confirming its right to pursue its claims against Home Depot in New York, the appropriate forum of its choosing," said the attorneys, both partners at Oved & Oved in Manhattan.
An attorney for Home Depot did not immediately respond to a call seeking comment on the ruling.
The company is represented by Ronan P. Doherty and Benjamin Thorpe of Bondurant, Mixson & Elmore and David M. Pollack of Lewis Brisbois Bisgaard & Smith.
The case is captioned ESI Cases and Accessories v. Home Depot Product Authority.
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