Free Answer to Complaint - District Court of California - California

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 1 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Ross B. Jones, Esq., SBN 120593 MERRILL, ARNONE & JONES, LLP 3554 Round Barn Boulevard, Suite 303 Santa Rosa, California 95403 Telephone: (707) 528-2882 Facsimile: (707) 528-6015 Attorneys for Defendant COMFORTSTALL STABLE SUPPLY COMPANY UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION CHAMPAGNE EDITION, INC., a Foreign Canadian Corporation, Plaintiff, vs. COMFORTSTALL STABLE SUPPLY COMPANY, INC., a California Corporation, and DOES 1 to 50, inclusive Defendants. ___________________________________/ Defendant COMFORTSALL STABLE SUPPLY COMPANY, INC., answers the Complaint of plaintiff CHAMPAGNE EDITION, INC. as follows: FIRST CLAIM 1. Answering paragraph 1 of plaintiff's Complaint, defendant is without COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER AND AFFIRMATIVE DEFENSES TO COMPLAINT; COUNTERCLAIMS DEMAND FOR JURY TRIAL CASE NO. CV-07 6061 MHP

information and belief, sufficient form or belief, as to the truth or falsity as to the allegations of paragraph 1, and on that basis, denies those allegations. 2. Defendant admits that at all times pertinent to this action,

COMFORTSTALL STABLE SUPPLY COMPANY, INC., was a California Corporation with its principal place of business located at 3388 Regional Parkway, Suite A, Santa Rosa, California 95403. 1
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 2 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

3.

Answering paragraph 3 of plaintiff's Complaint, defendant is without

information and belief, sufficient form or belief, as to the truth or falsity as to the allegations of paragraph 3, and on that basis, denies those allegations. 4. Answering paragraph 4 of plaintiff's Complaint, defendant is without

information and belief, sufficient form or belief, as to the truth or falsity as to the allegations of paragraph 4, and on that basis, denies those allegations. 5. Defendant admits that plaintiff sold and delivered flooring merchandise to

defendants and in consideration thereof, defendants agreed to pay plaintiff for the products ordered and received. Except as otherwise expressly admitted, defendant generally and specifically denies each and every, all and singular, allegation contained therein. 6. Answering the allegations contained in paragraph 6 of plaintiff's

Complaint, defendant generally and specifically denies each and every, all and singular, allegation contained therein. 7. Answering the allegations contained in paragraph 7 of plaintiff's

Complaint, defendant generally and specifically denies each and every, all and singular, allegation contained therein. 8. Answering the allegations contained in paragraph 8 of plaintiff's

Complaint, defendant generally and specifically denies each and every, all and singular, allegation contained therein. 9. Answering paragraph 9 of plaintiff's Complaint, defendant is without

information and belief, sufficient form or belief, as to the truth or falsity as to the allegations of paragraph 9, and on that basis, denies those allegations. 10. Answering the allegations contained in paragraph 10 of plaintiff's

Complaint, defendant generally and specifically denies each and every, all and singular, allegation contained therein.

2
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 3 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. 14. 11.

SECOND CLAIM Although paragraph 11 does not require an answer, defendant incorporates

by this reference each of its answers set forth above in response to the allegations contained in paragraphs 1 through 10. 12. Answering the allegations contained in paragraph 12 of plaintiff's

Complaint, defendant generally and specifically denies each and every, all and singular, allegation contained therein. 13. Answering the allegations contained in paragraph 13 of plaintiff's

Complaint, defendant generally and specifically denies each and every, all and singular, allegation contained therein. THIRD CLAIM Although paragraph 14 does not require an answer, defendant incorporates

by this reference each of its answers set forth above in response to the allegations contained in paragraphs 1 through 13. 15. Answering the allegations contained in paragraph 15 of plaintiff's

Complaint, defendant generally and specifically denies each and every, all and singular, allegation contained therein. 16. Answering the allegations contained in paragraph 16 of plaintiff's

Complaint, defendant generally and specifically denies each and every, all and singular, allegation contained therein. AFFIRMATIVE DEFENSES AS SEPARATE AND AFFIRMATIVE DEFENSE(S), defendants allege: First Affirmative Defense (Failure to State Claim) The Complaint, and each claim for relief, fails to state a claim on which

relief can be granted.

3
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 4 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8. 7. 6. 5. 4. 3. 2.

Second Affirmative Defense (Plaintiff's Breach of Contract) Defendant alleges that the claims in the complaint are barred by plaintiff's

failure to fulfill its contractual obligations. Third Affirmative Defense (Estoppel) Plaintiff's claims are barred by general principles of estoppel. Fourth Affirmative Defense (Waiver) Plaintiff's claims are barred by the doctrine of waiver. Fifth Affirmative Defense (Unclean Hands) Plaintiff's claims are barred by the doctrine of unclean hands. Sixth Affirmative Defense (Counterclaims) Defendant has filed Counterclaims herein, the terms of which are

incorporated herein and realleged as affirmative defenses to the allegations contained in the Complaint. Seventh Affirmative Defense (Excuse) Defendant alleges that the claims in the Complaint are barred by the

doctrine of excuse. Eighth Affirmative Defense (Breach of Warranty) Defendant alleges that the plaintiff sold inadequate products to defendant,

and then refused to repair the products or honor its warranty obligations.

4
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 5 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

WHEREFORE, Defendant COMFORTSTALL STABLE SUPPLY COMPANY, INC. prays for judgment on the Complaint as follows: 1. The plaintiff take nothing by its Complaint and that judgment be entered for

this answering defendant on all claims for relief; 2. 3. For defendant's costs of suit including reasonable attorney's fees. For such other and further relief as the court deems just and proper. MERRILL, ARNONE & JONES, LLP By: _/s/ Ross B. Jones Attorney for Defendant

Dated: January 17, 2008

DEMAND FOR JURY TRIAL Defendant and Counterclaimant hereby demands trial by jury. Dated: January 17, 2008 MERRILL, ARNONE & JONES, LLP By: /s/ Ross B. Jones Attorneys for Defendant and Counterclaimant COMFORTSTALL STABLE SUPPLY COMPANY, INC.

COUNTERCLAIMS Jurisdiction and Venue 1. These Counterclaims, as hereinafter more fully appear, arise under the

common law of torts, contracts, and the California Uniform Commercial Code. Jurisdiction is based upon 28 U.S.C. §1367(a). Venue is proper under 28 U.S.C. § 1391(a).

5
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 6 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4. 2.

The Parties Counterclaimant COMFORTSTALL STABLE SUPPLY COMPANY,

INC., is a California Corporation with its principal place of business in Sonoma County, California. 3. Counterclaimant is informed and believes, and based thereon alleges, that

Counterdefendant CHAMPAGNE EDITIONS, INC., is a corporation incorporated under the laws of Canada, and conducting business in the state of California. Transactional Facts Counterclaimant COMFORTSTALL is a distributor of equine products.

COMFORTSTALL sells an equine flooring system for use in horse stalls under the registered trademark COMFORTSTALL®. The COMFORTSTALL® system consists of a special filler material which is placed under a top-cover material. 5. Counterdefendant CHAMPAGNE EDITIONS, Inc. is a Canadian company

that manufactures and distributes equine products throughout North America. 6. During 2003, COMFORTSTALL and Counterdefendant entered into

discussions regarding the possibility of COMFORTSTALL purchasing Counterdefendant's equine products, in particular a material that would be suitable for use as a top-cover for use with Counterclaimant's COMFORTSTALL® system. Pursuant to those discussions, COMFORTSTALL and Counterdefendant entered into a written Nondisclosure Agreement. 7. COMFORTSTALL then began purchasing various equine products from

Counterdefendant. In particular, COMFORTSTALL purchased a top-cover material from Counterdefendant for use in Counterclaimant's COMFORTSTALL® flooring system. 8. Counterclaimant is informed and believes, and based thereon alleges, that

within the last 18 months Counterdefendant changed the top-cover material being delivered to Counterclaimant, and instead began selling Counterclaimant an inferior top-

6
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 7 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

cover product that was not suitable for use as part of the COMFORTSTALL® flooring system. 9. Within the last 12 months Counterclaimant's customers began complaining

about problems with Counterdefendant's top-cover, including stretching, bubbling and tearing of the materials. 10. Counterclaimant made repeated requests of Counterdefendant to repair or

replace the inadequate materials. However, Counterdefendant refused to do so, and asserted that Counterclaimant's use of the product was not covered by Counterdefendant's express warranty. 11. As a result of Counterdefendant refusing to replace the affected materials,

Counterclaimant has expended significant sums in developing and producing replacement materials out-of-pocket for its customers. 12. As a direct result of Counterdefendants refusal to replace affected materials,

and Counterclaimant's development of replacement materials out-of-pocket, a dispute arose between Counterclaimant and Counterdefendant over payment of Counterdefendant's invoices for top-cover materials sold to Counterclaimant. 13. Counterdefendant began contacting Counterclaimant's customers regarding

Counterclaimant's refusal to pay invoices. Counterdefendant then recorded invalid mechanic's liens against the properties of Counterclaimant's customers. FIRST CLAIM FOR RELIEF (Breach of Contract) 14. Counterclaimant repeats and realleges each and every allegation contained

in paragraphs 1 through 13 of this Counterclaim, as though fully set forth herein. 15. On or about October 20, 2003, Counterdefendant and Counterclaimant

entered into a written Mutual Nondisclosure Agreement ("Agreement"), a true and correct copy of which is attached hereto and incorporated by reference as Exhibit A.

7
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 8 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

16.

The Agreement states in part that Confidential Information includes

information relating to Counterclaimant's sales, financing, customers and business. 17. The Agreement required Counterdefendant to maintain in trust and

confidence and not disclose to any third party or use for any unauthorized purpose any Confidential Information. 18. Counterclaimant has performed all covenants and conditions required by it

under the Agreement. 19. Counterdefendant breached the Agreement by disclosing to

Counterclaimant's customers the existence of payment disputes between Counterclaimant and Counterdefendant. 20. Counterdefendant's conduct in disclosing to Counterclaimant's customers

the existence of payment disputes between Counterclaimant and Counterdefendant was not an authorized purpose under the Agreement. 21 As a direct result of Counterdefendant's breach of contract,

Counterclaimant has been damaged in a sum according to proof. SECOND CLAIM FOR RELIEF (Intentional Interference with Prospective Business Advantage) 22. Counterclaimant repeats and realleges each and every allegation contained

in paragraphs 1 through 21 of this Counterclaim, as though fully set forth herein. 23. Counterclaimant sold Counterdefendant's products to Counterclaimant's

customers, relying on Counterdefendant to honor its warranty obligations and sell quality materials. 24. Counterdefendant knew of the above-described relationship existing

between Counterclaimant and its purchasers in that Counterdefendant delivered materials sold to Counterclaimant directly to Counterclaimant's customers. 25. When Counterclaimant's customers began complaining about the quality

and performance of Counterdefendant's materials, and demanding replacement materials, 8
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 9 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Counterdefendant denied responsibility for the non-performing materials, and refused to provide replacement materials, in breach of its express warranty and in breach of the implied warranties of fitness for particular use and merchantability. 26. As a result of Counterdefendant's actions, Counterclaimant was forced to

develop and produce replacement materials at its own cost. 27. Counterclaimant is informed and believes, and based thereon alleges, that

Counterdefendant disclosed to COMFORTSTALL's customers that COMFORTSTALL was not paying Counterdefendant's invoices, with the intent to harm COMFORTSTALL financially and to induce COMFORTSTALL's customers to sever their dealings with COMFORTSTALL, and to coerce COMFORTSTALL into paying disputed invoices caused by Counterdefendant's refusal to replace non-performing materials. 28. Counterdefendant's disclosure to COMFORTSTALL's customers about the

payment disputes between COMFORTSTALL and Counterdefendant were breaches of the Mutual Nondisclosure Agreement between the parties. 29. COMFORTSTALL is informed and believes, and based thereon alleges,

that it suffered economic harm from Counterdefendant's actions in that the wrongful disclosure of the above facts has results in cancelled orders from COMFORTSTALL's customers and otherwise injured COMFORTSTALL's reputation, in a sum according to proof. 30. Counterclaimant is informed and believes and thereon alleges that the

aforementioned acts of Counterdefendant were willful and malicious. Counterclaimant is informed and believes that Counterdefendant's acts were undertaken with the deliberate intent to injure COMFORTSTALL's business. Counterclaimant is therefore entitled to punitive damages. // // // 9
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 10 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 31.

THIRD CLAIM FOR RELIEF (Breach of Implied Warranties) Counterclaimant repeats and realleges each and every allegation contained

in paragraphs 1 through 30 of this Counterclaim, as though fully set forth herein. 32. Counterclaimant required a specific type of material suitable for use as top-

covering for its COMFORTSTALL® equine flooring system. Counterclaimant relied on Counterdefendant's judgement and skill to select and furnish suitable goods for those purposes. 33. Within the last two (2) years, Counterdefendant sold to Counterclaimant

top-cover materials in reliance on Counterdefendant's judgment and skills that such materials were suitable for the intended purposes. 34. At the time of such sales, Counterdefendant had reason to know of the

particular purpose for which the materials were required by virtue of the fact that Counterclaimant's President, Joy Koch, repeatedly communicated with Counterdefendant's President Alan Champagne and other employees of Counterdefendant, and during those communications expressed the particular purpose for which the top-cover was to be used, and that Counterclaimant was relying on Counterdefendant's skill and judgment that its goods were suitable for those purposes. 35. As a result, there was an implied warranty that the goods were fit for

Counterclaimant's purposes. 36. Counterdefendant breached the implied warranty by providing goods that

were not suitable for Counterclaimant's purposes, in that the top-cover stretched, bubbled and tore when used for their intended purpose. 37. Counterclaimant repeatedly notified Counterdefendant of the problems with

the top-cover, and requested replacement materials, but Counterdefendant refused to do so and disclaimed any warranty obligations.

10
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 11 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

38.

As a result, Counterclaimant was forced to expend significant sums

developing and producing replacement materials out-of-pocket, and suffered the loss of business and reputation with its customers, all in an amount according to proof. PRAYER FOR RELIEF AS TO FIRST CLAIM FOR RELIEF: 1. That Counterdefendant be required to pay Counterclaimant such damages it

has suffered or will suffer by reason of Counterdefendant's violation of the Nondisclosure Agreement. 2. That Counterclaimant have and recover the costs, including reasonable

attorney's fees, of this civil action. 4. That Counterclaimant have such other and further relief as the Court may

deem just and proper. AS TO SECOND CLAIM FOR RELIEF: 1. That Counterdefendant be required to pay Counterclaimant such damages it

has suffered or will suffer by reason of Counterdefendant's violation of Counterclaimant's rights under the common law. 2. 3. 4. That Counterdefendant be required to pay exemplary damages. That Counterclaimant have and recover the costs of this civil action. That Counterclaimant have such other and further relief as the Court may

deem just and proper. AS TO THIRD CLAIM FOR RELIEF: 1. That Counterdefendant be required to pay Counterclaimant such damages it

has suffered or will suffer by reason of Counterdefendant's violation of Counterclaimant's rights under the common law. 2. 3. That Counterclaimant have and recover the costs of this civil action. That Counterclaimant have such other and further relief as the Court may

deem just and proper. 11
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP

Case 3:07-cv-06061-MHP

Document 5

Filed 01/17/2008

Page 12 of 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Dated: January 17, 2008

MERRILL, ARNONE & JONES, LLP

By:

/s/ Ross B. Jones Attorneys for Counterclaimant

DEMAND FOR JURY TRIAL Defendant and Counterclaimant hereby demands trial by jury. Dated: January 17, 2008 MERRILL, ARNONE & JONES, LLP

By:

/s/ Ross B. Jones Attorneys for Defendant and Counterclaimant COMFORTSTALL STABLE SUPPLY COMPANY, INC.

12
COMFORTSTALL STABLE SUPPLY COMPANY, INC.'S ANSWER TO COMPLAINT, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS CV 07 6061 / MHP