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Target Corp. v. JJS Developments Ltd.

United States District Court, D. Minnesota

February 9, 2018

Target Corporation, Plaintiff,
v.
JJS Developments LTD o/a ERS International, Defendant.

          Michael A. Ponto and Kyle R. Hardwick, Faegre Baker Daniels LLP, appeared for Target Corporation.

          Leny K. Wallen-Friedman and Diana Young Morrissey, Wallen-Friedman & Floyd, P.A., appeared for JJS Developments LTD o/a ERS International.

          ORDER

          JOAN N. ERICKSEN, UNITED STATES DISTRICT JUDGE

         Target Corporation and JJS Developments LTD o/a ERS International (“ERS”) entered into several contracts for the sale of certain assets by Target to ERS. Claiming that ERS did not pay the amount due after the termination of one of the contracts, Target brought this action against ERS for breach of contract, unjust enrichment, and conversion. ERS asserted counterclaims for fraud, negligent misrepresentation, breach of contract, and breach of the implied covenant of good faith and fair dealing. The case is before the Court on Target's Motion for Summary Judgment. For the reasons set forth below, the Court grants in part and denies in part Target's motion.

         I. BACKGROUND

         Target is a discount retailer. In the course of its business, it acquires assets whose disposal it seeks by recycling or other means. ERS is in the business of asset disposition services, asset destruction auditing, data destruction, and material control services.

         Non-TV Contracts In 2014, Target issued several requests for quotes, seeking a purchaser of certain assets for recycling or other disposition. The assets included electronics from Target's headquarters, assets and electronics from Target's stores and distribution centers, and electronics that Target accepted from its customers for recycling. ERS responded to Target's requests, and Target awarded contracts to ERS. Target and ERS executed a Purchaser Qualification Agreement, as well as three program agreements.[1] Each program agreement had an effective date of June 28, 2014, and an expiration date of June 30, 2016.

         The Purchaser Qualification Agreement states that it “applies to and is incorporated into all agreements relating to the sale . . . of merchandise and other assets (‘Goods') and/or the work, tasks or projects to be performed (‘Services') between [ERS] and Target, including any program agreement specific to the Goods and Services entered into the by the parties (‘Program Agreement')” and that the terms of a program agreement govern in the event of a conflict between the program agreement and the Purchaser Qualification Agreement. The Purchaser Qualification Agreement contains the following warranties by Target:

Target Warranties. Target has the right to sell the Goods; provided, however, that with regard to any Goods that include embedded software or consist, in whole or in part, of other computer software, Target makes no representation or warranty as to Target's right to sell or Purchaser's right to use the embedded software or other computer software. Target is consigning and/or selling the Goods “AS IS”, “WHERE IS”, WITH ALL FAULTS, WITHOUT WARRANTY OR REPRESENTATION OF ANY KIND EXPRESSED OR IMPLIED, INCLUDING ANY WARRANTY AS TO THE NON-INFRINGEMENT OR THE KIND, SIZE, WEIGHT, QUALITY, CHARACTER, FUNCTIONALITY, DESCRIPTION, DURABILITY, CONFORMITY WITH ANY SPECIFICATIONS OR CONDITION OF THE GOODS, THE PACKAGING OR LABELING OF THE GOODS, THE MERCHANTABILITY OF THE GOODS OR THEIR FITNESS FOR ANY PARTICULAR, SPECIAL OR INTENTED PURPOSE. Without limiting the foregoing, the condition and use of the Goods shall be at the sole risk of Purchaser. Target is not responsible for any damages to any person or property as a result of the possible deficiencies or failures of the Goods.

         DDTV

         In July 2014, Target sought a purchaser of certain damaged or defective televisions. ERS responded, and, in August 2014, Target awarded a contract to ERS.[2]ERS agreed to pay $17 per television.

         TV Unsaleables

         A few months later, Target issued a request for quotes. It sought a purchaser of returned and damaged televisions. Target anticipated an 18-month contract starting in December 2014. It advised potential bidders of “substantial volume growth” in May 2015 “due to a change in programs at Target.” Target provided forecasts of the volume of televisions subject to the program from the start of the contract to May 2015 and from May 2015 to the end of the contract. Target also provided estimates of the screen sizes and damage rates. It advised potential bidders that the estimates were not guaranteed:

         “Any volumes, conditions, mixes provided in the sourcing event are not a guarantee.

         Estimates are provided for planning purposes only and will vary with Target store openings and seasonal trends.” ERS responded to the request, and Target awarded the contract to ERS. Target and ERS executed a program agreement for the “Purchase of TV Unsaleables.” The agreement's effective date was December 21, 2014, and its expiration date was June 20, 2016. The program agreement acknowledged the estimates that Target had provided:

Target has made projections and forecasts of the amount of Goods that Target estimates may be available (the actual amount may be less than or more than any projections or forecasts). [ERS] understands and agrees that these numbers are estimates only and, unless otherwise expressly stated in this Program Agreement, Target is not obligated to sell or consign any specific quantity of Goods to Supplier. Goods may be ...

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