The opinion of the court was delivered by: Judge Sara Lioi
MEMORANDUM OPINION AND ORDER
On September 30, 2010, the Court issued a Memorandum Opinion and Order (Doc. No. 256) ruling on defendant's motion for summary judgment. On September 21, 2011, ruling on defendant's motion for reconsideration, the Court issued a second Memorandum Opinion and Order (Doc. No. 267) clarifying the first order. The Court is now engaged in pretrial preparation, including examination of motions in limine. This preparation has clarified the Court's analysis of the case and requires that previous rulings be revisited. As a result, as discussed herein, Doc. Nos. 256 and 267 are VACATED and replaced entirely by this Memorandum Opinion and Order.
Before the Court is the motion for summary judgment (Doc. No. 239) of defendant Thomasville Furniture, Inc. ("Thomasville"). Plaintiff JGR, Inc. ("JGR") filed its brief in opposition (Doc. No. 240) and Thomasville filed a reply (Doc. No. 241). With leave, JGR filed a sur-reply (Doc. No. 245) and Thomasville filed an additional reply (Doc. No. 246). After the undersigned received this case from the docket of Judge Ann Aldrich, the parties, at the Court's request, filed a Joint Statement (Doc. No. 254), which has also been considered, along with the various opinions from three appeals. For the reasons discussed below, the motion for summary judgment is denied.
A. Factual Background *fn1
JGR is a furniture retailer and Thomasville is a furniture distributor. Gerald Yosowitz was the president of JGR and principal shareholder in JGR. (Compl. ¶ 4.) Prior to establishing JGR, Yosowitz worked at Furniture Land, in Mentor, Ohio, later known as "Baker's," and was its president from about 1978 to 1988. Wanting to open his own furniture business, he resigned from Furniture Land in February 1988, giving four months notice. (2002 Trial, Tr. at 55-56, Doc. No. 75.)*fn2 As he began to make plans for his own store, he became aware that Mike Baker, one of Furniture Land's owners, planned to do what he could to make sure Yosowitz did not succeed. Yosowitz testified that Baker told him to come back to work for Furniture Land or to get out of the furniture business altogether. (Id. at 58.) However, Yosowitz was determined to carry out his plan for his own business. (Id. at 62.) He leased a building at the Great Lakes Mall, across the street from a Furniture Land store. (Id.) His long range plan was to open four stores. He formed JGR in January of 1990 with three other partners, all of whom had worked for Furniture Land at one time. (Id. at 62-64.)
In April 1990, while at a furniture market in North Carolina looking for furniture manufacturers to do business with, Yosowitz learned that negotiations between Thomasville and Furniture Land had broken off. Since he had recently lost a deal with another manufacturer, he approached Thomasville to inquire about becoming a Thomasville Gallery, but informed Thomasville that JGR would enter into a contract only on the condition that Thomasville would not contract with Furniture Land. (Id. at 67, 71.) Thomasville gave JGR oral assurances. In order to further induce JGR to become a Thomasville vendor, Thomasville also allegedly orally agreed to assist JGR in obtaining lines of credit for purposes of opening a total of four stores over the next year and a half. (Compl. ¶¶ 6, 7.)
On May 6, 1990, JGR and Thomasville entered into a contract ("1990 Gallery Agreement") (Compl. ¶ 8), which stipulated that JGR would dedicate approximately 6000 square feet of its showroom to displays of Thomasville furniture (id. ¶ 7). However, this contract made no mention of Thomasville's promise not to do business with Furniture Land. Thomasville Furn. Indus., Inc. v. JGR, Inc., 3 Fed. Appx. 467, 469 (6th Cir. 2001). The contract further stated that JGR had a "non-exclusive right to use the trademarks of 'Thomasville' and 'Thomasville Gallery' . . . [and the] designation may be withdrawn by Thomasville or [JGR] at any time." Id. at 469-70 (quoting the 1990 Gallery Agreement). On September 15, 1990, JGR opened its first store at Great Lakes Mall in Mentor, Ohio.*fn3 (Compl. ¶ 9.)
In February 1991, JGR learned that Thomasville was again negotiating with Furniture Land. (Compl. ¶ 10.) "[JGR] reminded [Thomasville] of [its] oral assurance not to sell to Furniture Land or Baker's. [Thomasville] responded that they were 'just talking' with Furniture Land, and for the next year did not give [JGR] a definite answer on whether [Thomasville] would ultimately sell to Furniture Land. [JGR] was convinced that if Furniture Land began to sell Thomasville products, Furniture Land would undercut [JGR] and drive [it] out of business. [JGR] considered dropping the Thomasville line, but decided that [it] had become so associated with the brand that switching product lines would be financially disastrous. Nevertheless, because [JGR's] employees were aware of the uncertainty, they began to steer customers away from Thomasville products, and sales dropped." Thomasville Furn. Indus., 3 Fed. Appx. at 470.
Furniture Land, and for the next year did not give [JGR] a definite answer on whether [Thomasville] would ultimately sell to Furniture Land. [JGR] was convinced that if Furniture Land began to sell Thomasville products, Furniture Land would undercut [JGR] and drive [it] out of business. [JGR] considered dropping the Thomasville line, but decided that [it] had become so associated with the brand that switching product lines would be financially disastrous. Nevertheless, because [JGR's] employees were aware of the uncertainty, they began to steer customers away from Thomasville products, and sales dropped." Thomasville Furn. Indus., 3 Fed. Appx. at 470.
In April 1992, Thomasville advised JGR that it was amending its Gallery Agreement and that, in order to remain a Thomasville Gallery dealer, JGR would have to increase the size of its gallery to 7,500 square feet. (Compl. ¶ 11.) The agreement was again non-exclusive (Compl., Exh. C at 3) and was intended to supersede the 1990 Gallery Agreement. Yosowitz conditioned JGR's acceptance of the terms of the 1992 Gallery Agreement on the requirement that all other retailers in JGR's market would be held to the same square footage requirement. Thomasville Furn. Indus., 3 Fed. Appx. at 470.
On November 15, 1992, Thomasville began doing business with Furniture Land under terms that were more favorable than those offered to JGR (Compl. ¶ 13), specifically, it "would not be required to meet [Thomasville's] gallery space requirements." Thomasville Furn. Indus., 3 Fed. Appx. at 470. Shortly thereafter, Furniture Land, renamed as "Baker's," opened up across the street from JGR and began selling Thomasville furniture. Id. at 471.
On November 16, 1992, Thomasville informed JGR that it would no longer ship Thomasville products to JGR without pre-payment. (Compl. ¶ 14.) JGR subsequently closed on October 4, 1993, at which point it owed Thomasville over $500,000 for its furniture inventory. Thomasville Furn. Indus., 3 Fed. Appx. at 471.
JGR claims that, as a result of Thomasville breaching the terms of the contract, JGR began to lose business and, because Baker's was not required to maintain 7,500 square feet of floor space for Thomasville furniture, it was able to lower its prices and beat any price that JGR was offering. JGR alleges that Baker's sent customers over to JGR with instructions to shop there, find the Thomasville furniture they liked, and then return to Baker's to make the purchase at a price lower than that quoted by JGR.*fn4 Further, JGR alleges that, because Thomasville allowed Baker's to operate without the minimum space requirement, Thomasville only then decided to stop shipping furniture to JGR without pre-payment. Accordingly, JGR claimed that Thomasville's breach of contract led to JGR's demise.
On July 1, 1996, Thomasville filed a federal lawsuit against JGR invoking diversity jurisdiction. (Case No. 1:96CV1424, hereafter "Case 1.") The case was assigned to the docket of Judge Ann Aldrich. Thomasville alleged an action on account, namely, that JGR owed it $664,636.24 for furniture delivered between December 14, 1990 and September 1, 1993, and a breach of contract claim seeking the same amount in damages.
On July 23, 1996, JGR filed a state court action against Thomasville alleging two claims: (1) breach of contract, and (2) fraudulent misrepresentation. Thomasville removed the case pursuant to 28 U.S.C. § 1446. It was assigned to the docket of Judge Donald Nugent and was later transferred to Judge Aldrich on the basis of relatedness. (Case No. 1:96CV1780, hereafter "Case 2.") The cases were apparently consolidated, although neither docket reflects any formal consolidation order.*fn5
Thomasville filed a motion for summary judgment on the issues in both cases, arguing that JGR's claims in Case 2 were barred by the statute of frauds because they were based on an alleged oral contract and that Thomasville was entitled to summary judgment with respect to its action on account in Case 1. JGR, in opposition, asserted that its claim was not grounded solely on the breach of an oral promise but also on a breach of the implied covenant of good faith and fair dealing arising out of the parties' contractual relationship and that such a violation was outside the reach of the statute of frauds.
The summary judgment motion was granted in its entirety by Judge Aldrich on September 7, 1999; the Court dismissed JGR's claims against Thomasville in Case 2 on statute of fraud grounds and entered a stipulated judgment, ordering JGR to pay Thomasville $869,829.94 in damages in Case 1 (consisting of $536,931.94 for goods sold plus interest at the rate of 10% from July 15, 1993 to October 1, 1999 in the amount of $332,898.00). (See Doc. No. 36; see also Case 1, Doc. No. 65.) The latter judgment was memorialized on the docket of Case 1 on November 15, 1999 when the Court denied JGR's motion for reconsideration of the summary judgment ruling; it was officially entered as a final judgment on December 20, 1999. (See, Case 1, Doc. Nos. 61 and 64.)
On February 7, 2001, the Court of Appeals reversed the summary judgment order and remanded for further consideration of "the question of the scope of the written terms of the 1992 Agreement[.]" Thomasville Furniture Industries, Inc. v. JGR, Inc., 3 Fed. Appx. 467, 475 (6th Cir. 2001) (hereafter, "first appeal"). The Court of Appeals found that JGR's claim was not based solely on an oral promise and that there was a question of fact as to whether a 1992 letter from Thomasville giving assurances that all of its galleries would be held to the same square footage requirements was part of the 1992 Gallery Agreement.*fn6 If it was, Ohio law would allow JGR to pursue a cause of action for breach of an "implied covenant of good faith and fair dealing based on the terms of an existing written contract." Id. at 471.*fn7
On remand, the jury found that the 1992 letter was part of the 1992 Gallery Agreement and that Thomasville breached that contract. The jury awarded JGR $0 for lost profits and $1,500,000 for loss of business value. (Doc. No. 50.) Thomasville appealed the judgment claiming that there was no basis for loss of business value damages and JGR cross-appealed the denial of its motion for pre-judgment interest. See JGR, Inc. v. Thomasville Furniture Industries, Inc., 370 F.3d 519 (6th Cir. 2004) (hereafter, "second appeal"). The Court of Appeals held that the damages witness for JGR, James Gornik,*fn8 testified as a lay, not expert, witness. It concluded that it was an abuse of discretion for the district court to have permitted Gornik to offer lay opinion testimony on JGR's lost profits and loss of business value because, not being an officer or director of JGR, he had no first hand knowledge of the company's finances and had based his opinions on information which had been supplied to him by Yosowitz but which he had not ...