Case Doc 1 Filed 04/07/15 Entered 04/07/15 11:42:31 Desc Main Document Page 1 of 13

Transcription

1 Document Page 1 of 13 George Hoffman (10005) Benjamin J. Kotter (9592) Adam H. Reiser (13339) COHNE KINGHORN, P.C. 111 East Broadway, 11 th Floor Salt Lake City, Utah Telephone: (801) Facsimile: (801) ghoffman@cohnekinghorn.com bkotter@cohnekinghorn.com areiser@cohnekinghorn.com Attorneys for the Debtor-in-Possession DGS Store Fixtures, Inc. IN THE UNITED STATES BANKRUPTCY COURT DISTRICT OF UTAH, CENTRAL DIVISION In re: Bankruptcy Case No DGS STORE FIXTURES, INC., Debtor. Chapter 11 Honorable Joel T. Marker DGS STORE FIXTURES, INC., Plaintiff, Adv. Pro. No. v. LULULEMON USA, INC., Defendant. COMPLAINT

2 Document Page 2 of 13 Plaintiff DGS Store Fixtures, Inc., debtor and debtor-in-possession ( DGS or Plaintiff ) in the above-captioned bankruptcy case, for causes of action against defendant Lululemon USA, Inc. ( Lululemon or Defendant ), files this Complaint (the Complaint ) and alleges as follows: PARTIES, JURISDICTION AND VENUE 1. DGS filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code ) on October 20, 2014 (the Petition Date ). 2. Lululemon is a Nevada corporation headquartered in Vancouver, British Columbia with various retail locations located throughout the United States, including several retail locations in Utah. 3. This Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. 157 and This is a core proceeding under 28 U.S.C. 157(b). 5. Venue is proper before this Court pursuant to 28 U.S.C and GENERAL ALLEGATIONS 6. DGS sells custom retail store fixtures to large material retail chains, drug stores, supermarkets, department stores and various specialty retailers, including Lululemon. Customers, like Lululemon, retain DGS to attain custom fixtures specific to their individual needs and designs. 7. In 2014, Lululemon and DGS contracted for DGS to provide various services and/or products in conjunction with the summer 2014 opening of Lululemon s Westfield San Francisco Centre store.

3 Document Page 3 of On or about April 22, 2014, DGS issued Invoice No to Lululemon for unpaid product and/or services in the amount of $2, On or about May 28, 2014, DGS issued a credit memorandum (Invoice No ) to Lululemon in the amount of $ On or about June 10, 2014, DGS issued Invoice No to Lululemon for unpaid product and/or services in the amount of $4, On or about June 12, 2014, DGS issued Invoice No to Lululemon for unpaid product and/or services in the amount of $70, In January 2015 DGS received a partial payment of $18, on the outstanding Invoices leaving an outstanding principal balance of $77, as detailed below: Invoice No $2, Invoice No ($560.00) Invoice No $4, Invoice No $70, Partial Payment ($18,620.50) Outstanding Balance $59, On February 4, 2015, DGS made formal written demand on Lululemon for payment of the outstanding principal balance. Despite such demand, Lululemon has failed, refuses and continues to refuse to pay DGS the amounts due and owing DGS for the services and/or products DGS has provided to Lululemon. 1 This invoice and all the other invoices referred to in this Complaint are referred to collectively as the Invoices and are attached hereto as Exhibit A.

4 Document Page 4 of 13 FIRST CLAIM FOR RELIEF (Breach of Contract) 14. DGS repeats, realleges and incorporates by reference each of the preceding allegations of the Complaint. 15. DGS and Lululemon entered into one or more contracts for the sale and purchase of certain products and/or services form DGS to Lululemon as described above (collectively, the Contracts ). 16. Lululemon breached the Contracts by failing to pay for the products and/or services that DGS provided to Lululemon as described above. 17. DGS performed its obligations under the Contracts by delivering the products and/or services set forth in the Invoices as requested by Lululemon. 18. DGS is entitled to recover no less than $59,082.50from Lululemon which is the unpaid principal balance due for the products and/or services provided by DGS to Lululemon. SECOND CLAIM FOR RELIEF (Breach of Implied Covenant of Good Faith and Fair Dealing) 19. DGS repeats, realleges and incorporates by reference each of the preceding allegations of the Complaint. 20. The Contracts are enforceable contracts between DGS and Lululemon. 21. Inherent in the Contracts, as implied by Utah law, is a duty to act in good faith and to deal fairly with the other contracting party or parties.

5 Document Page 5 of As described above, Lululemon breached its duty to act in good faith and deal fairly by, among other things, failing to timely pay DGS for the products and/or services provided. 23. The wrongful conduct of Lululemon, as described above, is inconsistent with the Contracts and DGS s justified expectations when it entered into the Contracts. 24. Lululemon s breach of the covenant of good faith and fair dealing actually and proximally causes substantial loss and detriment to DGS s bankruptcy estate. 25. As a result of Lululemon s breach of the covenant of good faith and fair dealing, DGS is entitled to recover damages in an amount to be established at trial, but in no event less than $59, THIRD CLAIM FOR RELIEF (Unjust Enrichment) 26. DGS repeats, realleges and incorporates by reference each of the preceding allegations of the Complaint. 27. The products and/or services provided by DGS to Lululemon, as set forth in the Invoices, were a benefit that DGS conferred upon Lululemon, which Lululemon knowingly accepted and enjoyed. 28. Lululemon was and is aware of the benefit which was conferred upon it by DGS and has retained the benefit under circumstances which make it inequitable or unjust, unless DGS is reasonably compensated for its product and/or services. 29. Except for the partial payment, Lululemon has not provided any additional consideration for the products and/or services provided by DGS to Lululemon as alleged

6 Document Page 6 of 13 herein and has retained such products and/or services without any legal or equitable claim to the products and/or services. PRAYER FOR RELIEF WHEREFORE, DGS respectfully requests this Court to enter judgment in its favor and against Lululemon as follows: A. Pursuant to DGS s First Claim for Relief alleging breach of contract, for judgment against Lululemon in the amount of no less than $59,082.50, plus pre- and post-judgment interest from and after the date of the applicable invoice, in an amount to be determined at trial; B. Pursuant to DGS s Second Claim for Relief alleging breach of the implied covenant of good faith and fair dealing, for judgment against Lululemon in the amount of no less than $59,082.50, plus pre- and post-judgment interest from and after the date of the applicable invoice, in an amount to be determined at trial; C. Pursuant to DGS s Third Claim for Relief alleging unjust enrichment, for judgment against Lululemon in the amount of no less than $59,082.50, plus pre- and post-judgment interest from and after the date of the applicable invoice, in an amount to be determined at trial; D. For DGS s costs and reasonable attorneys fees incurred in this matter, including augmentation thereof for reasonable post-judgment costs and attorneys fees incurred in collecting and enforcing any judgment entered herein; and

7 Document Page 7 of 13 E. For such other and further relief as the Court deem just and proper. Dated this 7 th day of April, COHNE KINGHORN, P.C. /s/ Benjamin J. Kotter George Hofmann Benjamin J. Kotter Adam H. Reiser Attorneys for DGS Store Fixtures, Inc.

8 Document Page 8 of 13

9 Document Page 9 of 13

10 Document Page 10 of 13

11 Document Page 11 of 13

12 Document Page 12 of 13

13 Document Page 13 of 13