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Dynasty Apparel Industries Inc. v. Rentz

February 23, 2007

DYNASTY APPAREL INDUSTRIES INC., PLAINTIFF,
v.
RICHARD RENTZ, DEFENDANT.



The opinion of the court was delivered by: Judge Walter Herbert Rice

FINDINGS OF FACT; OPINION; CONCLUSIONS OF LAW; JUDGMENT TO BE ENTERED IN FAVOR OF DEFENDANT AND AGAINST PLAINTIFF; TERMINATION ENTRY

This is the second lawsuit between these parties. Previously, Defendant Richard J. Rentz ("Defendant" or "Rentz") had sued, among others, Plaintiff Dynasty Apparel Industries, Inc. ("Plaintiff" or "Dynasty"), seeking to recover a sum to which he believed he was entitled, as a result of having introduced the principals of Dynasty to Paul Warfield ("Warfield"). Rentz v. Dynasty Apparel Industries, Inc., Case No. 3:96cv205 (S.D. Ohio). The principals of Dynasty wanted such an introduction, because they hoped that a member of the NFL Hall of Fame, such as Warfield, could help them secure a license from the NFL to manufacture League approved clothing and apparel. With Warfield's assistance, Dynasty was able to secure such a license. In the earlier litigation, Rentz claimed that he had entered into a binding contract with the principals of Dynasty, under which the latter promised to pay him a certain percentage of the their profits from any license they were able to secure from the NFL, as a result of his introducing them to Warfield. The previous lawsuit resulted in a judgment in favor of Rentz, entered in May, 1999. No appeal was taken therefrom, and that judgment is now final.

On June 16, 2000, the parties and their counsel met in Cincinnati, Ohio, in order to discuss the possibility of a resolution of the dispute between them, now reduced to the above referenced judgment. According to Dynasty, they entered into an oral settlement agreement on that date. When Rentz disagreed, Dynasty brought this lawsuit, requesting specific performance of the alleged oral settlement agreement. This matter has been tried to the Court sitting as finder of facts, and the parties have filed their post-trial submissions. See Docs. ##76 and 77.*fn1 In accordance with Rule 52 of the Federal Rules of Civil Procedure, the Court now sets forth its Findings of Fact separately from its Conclusions of Law.

I. Findings of Fact

The Court will initially set forth its historical factual findings, following which it will list its findings pertaining to liability.

1. Plaintiff Dynasty Apparel Industries, Inc. ("Plaintiff" or "Dynasty"), is a corporation organized under the laws of Florida, with its principal place of business located in that state.

2. Defendant Richard J. Rentz ("Defendant" or "Rentz") is a citizen of Ohio.

3. On May 27, 1999, a jury returned a verdict in favor of Rentz and against Dynasty in Rentz v. Dynasty Apparel Industries, Inc., Case No. 3:96cv205 (S.D. Ohio). In particular, the jury found that Rentz was entitled to recover damages in the sum $629,529.85, as well as 1% of the revenues which Dynasty obtained thereafter as a result of its license to manufacture NFL clothing and apparel. On that day, judgment was entered accordingly in favor of Rentz and against Dynasty. See Doc. #95 in Case No. 3:96cv205.

4. From then until mid-June, 2000, the parties engaged in regular negotiations in an effort to bring closure to their relationship. The impetus of these discussions on the part of Rentz was that Dynasty had indicated that any effort to enforce that judgment could cause it to file bankruptcy. On June 28, 1999, Rentz and Christopher Cornyn ("Cornyn"), an attorney representing Rentz, met with Michael Greene ("Greene"), counsel for Dynasty, at Cornyn's offices in Springboro, Ohio. During that meeting, they were joined by Randall Roach ("Roach"), another attorney representing Rentz.*fn2 After that meeting, Cornyn wrote to Greene, stating that Rentz would settle the matter for a structured payment of $650,000, or a lump sum payment of $500,000. Dynasty rejected that offer. On September 7, 1999, Cornyn wrote to Greene and Phillip Hudson ("Hudson"), another attorney representing Dynasty, offering to settle the dispute for the lump sum payment of $430,000.*fn3 In his response to Cornyn under date of October 21, 1999, Greene indicated that, although Dynasty would not accept that settlement proposal, it was willing to pay Rentz $185,000 to settle the matter. By letter dated December 15, 1999, Cornyn indicated to Hudson that Rentz would settle the matter for the payment of $250,000, plus 1% of the gross sales Dynasty generated from its license with the NFL, beginning in 1999. Once again, Dynasty did not accept that settlement proposal. On January 3, 2000, Cornyn wrote again to Hudson, setting forth another settlement proposal, i.e., that Rentz would settle the matter for the payment of $350,000, plus 1% of the gross sales Dynasty generated from its license with the NFL, beginning in 2000.*fn4 That proposal was not accepted. On March 17, 2000, Cornyn wrote Hudson, increasing Rentz's settlement demand to $529,000, plus 1% of the gross sales Dynasty generated from its license with the NFL, beginning on that date. That settlement demand was also rejected by Dynasty.

5. In May, 2000, the parties agreed that Rentz and his counsel would meet a principal of Dynasty and its counsel in Cincinnati, in order to attempt to settle the matter.

6. Shortly after noon, on June 16, 2000, Rentz, Cornyn, Roach, Armando Mendez ("Mendez"), a principal of Dynasty, and Greene met in Cincinnati, in an effort to negotiate a settlement agreement.*fn5 The initial part of the meeting, about one hour, was spent discussing what Greene described as Dynasty's deteriorating financial condition.*fn6 For the next two to three hours, the parties traded offers and counter proposals. Cornyn initially asked whether Dynasty could increase its settlement offer beyond $185,000, its highest offer to date.*fn7 Mendez indicated that, although he would have to discuss the matter with his factor,*fn8 he believed Dynasty would be able to increase the offer by an additional $40,000. After negotiations had continued for about two more hours, those appearing on behalf of Rentz responded by reducing their demand to the lump sum payment of $350,000. Mendez and Greene left the room in which the meeting was taking place in order to caucus.

While they were out of the room, Mendez and Greene were joined by Cornyn, who indicated that Rentz would be willing to accept $325,000 to settle the matter, comprised of an immediate payment of $250,000, and a note for the remaining $75,000. When Mendez and Greene returned, they told Rentz and his counsel that Dynasty could not pay that sum. After further negotiations, Greene and Mendez offered the alternative proposals of either the immediate payment of $235,000, or the immediate payment of $200,000, with a note evidencing the obligation to pay an additional $100,000, in the future. Neither of those alternatives was acceptable Rentz. Mendez indicated that Dynasty could not increase its offer. Therefore, it appeared that negotiations had come to an unsuccessful conclusion.

7. As a result of negotiations having broken down, the atmosphere became very tense, if not hostile. Greene and Mendez walked out of the room and stood in the hall next to an elevator. Cornyn and Roach packed their belongings and got on the elevator in order to exit the hotel and to retrieve their automobile, at which point Greene and Mendez reentered the room.

8. Rentz had remained in the room. While Greene was packing up his belongings, such as his computer and printer, Rentz discussed the matter further with Mendez, pointing out that the parties were only $25,000 apart. He also encouraged Mendez to work with him in an effort to bridge that relatively small gap. After looking to Greene for advice,*fn9 Mendez asked Rentz whether $315,000 was acceptable. Rentz said that it was. The two agreed that, as part of a settlement, Dynasty would pay Plaintiff $210,000, no later than July 14, 2000, with the remaining $105,000 to be paid no later than July 1, 2001. The payment of $315,000 would have satisfied the entire monetary judgment entered against Dynasty, including the obligation that it pay Rentz 1% per year of its sales of NFL apparel, after the date of the jury verdict.*fn10

9. At that point, Greene and Rentz went downstairs in order to retrieve Cornyn and Roach. After they had all returned to the room in which the negotiations had been conducted, Greene attempted to connect his computer and printer, in order to prepare the necessary settlement papers.*fn11 However, a thunder storm was occurring at the time, causing Greene's computer to fail. As a consequence, Cornyn took notes, as Rentz and Mendez set forth the results of their discussions.

10. Rentz and Mendez reported that they had reached a consensus, under which Dynasty would pay Rentz $315,000, with $210,000 to be paid no later than July 14, 2000, and the remaining $105,000 to be paid no later than July 1, 2001.*fn12

The payment of $315,000 would satisfy the entire judgment entered against Dynasty, both its liquidated and unliquidated portions. However, three issues remained to be resolved, before a settlement agreement could be concluded. First, the parties had not resolved the issue of court costs. Mendez was unwilling to agree to pay an open-ended amount of those costs.*fn13 Cornyn was assigned the task of contacting the office of the Clerk of Courts for the Southern District of Ohio to ascertain the amount of such costs. Second, the issue of Warfield's sanctions motion had not been resolved.*fn14 Greene and Mendez were willing to use their best efforts to attempt to convince Warfield and his counsel, Kevin McDermott ("McDermott"), to withdraw that motion, while Cornyn, Rentz and Roach suggested that Dynasty agree to indemnify them for any sanctions imposed, in the event that Warfield did not agree to withdraw the sanctions motion. It was agreed that Mendez and Greene would feel out Warfield and McDermott about whether they would be receptive to withdrawing the sanctions motion, as a prelude to resolving the question with finality.*fn15 Third, Rentz would not enter into an agreement whereby he significantly discounted the judgment he had obtained in ...


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