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Judges affirm Indiana retailer owes Levi’s $315,000 after violating policies

October 27, 2014

An Indiana company that operates a website selling jeans must pay Levi Strauss North America more than $315,000 after the company violated Levi’s Internet policies for distributors.

Levi’s authorized Spiece Sales Co. to begin selling Levi’s in its brick-and-mortar stores in 1978. In 2000, the denim giant authorized Spiece to sell its products on Spiece’s website, www.denimexpress.com. The agreement allowed for Levi’s to accept Spiece’s purchase orders conditioned upon Spiece complying with all applicable Levi’s policies and paying for the products it received.

In 2008, Levi’s notified Spiece that the company was in violation of Levi’s Internet policies. Two years later, Spiece had fallen behind on payments to Levi’s. Levi’s revoked Spiece’s privilege to sell its products online and gave Spiece the option of returning the unused inventory or paying for it. Spiece did neither, so Levi’s sued. The trial court ordered Spiece to pay Levi’s $315,076.24, plus costs and post-judgment interest. The trial court also ruled against Spiece on its counterclaims, which included breach of contract, constructive fraud and violations of the Franchise Act.

In Richard I. Spiece Sales Co., Inc. d/b/a Spiece Sales Co., Inc. v. Levi Strauss North America, 85A02-1312-CC-1037, Spiece claimed Levi’s didn’t carry its burden to prove the specific amount claimed on the account and awarded to it. But during the trial, Tom Spiece, owner of Spiece, testified that he recalled saying at his deposition that the company owed Levi’s more than $321,000 for the merchandise, but there was also more than $6,700 in defective merchandise. The trial court subtracted the amount for the defective merchandise from the amount Levi’s sought to come up with the final award.

The judges also rejected Spiece’s claims that the trial court erred in concluding the company failed to carry its burden of proof on its counterclaims for breach of contract, constructive fraud and Franchise Act violations.  Spiece could not prove that it had a contract with Levi’s, Judge James Kirsch pointed out. The letters of agreement sent by Levi’s did not confirm the existence of a contract. Levi’s sold to Spiece only on a purchase order and acceptance basis. Neither company had an ongoing obligation to the other to continue their relationship.

There was no fiduciary relationship between the parties, nor was Spiece considered a franchise of Levi’s, the COA held.
 

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