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Linen Room, Inc. v. Angelica Textile Services

April 26, 2010

THE LINEN ROOM, INC., PLAINTIFF-RESPONDENT,
v.
ANGELICA TEXTILE SERVICES, INC., DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-3548-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted April 13, 2010

Before Judges Carchman and Lihotz.

In this commercial contract dispute, defendant Angelica Textile Services (Angelica) appeals from a jury verdict in favor of plaintiff The Linen Room, Inc. (TLR) awarding TLR damages in the amount of $162,892. During the course of the trial, Angelica moved for an involuntary dismissal at the conclusion of TLR's case, a motion for a directed verdict at the conclusion of all of the proofs and a motion for a judgment notwithstanding the verdict. In all instances, Judge Currier denied the applications prompting this appeal. We conclude that she correctly denied the various motions, the jury's verdict was supported by the evidence, and Angelica's arguments are without merit. Accordingly, we affirm.

These are the facts adduced at trial. Angelica is engaged in the business of providing linen and related laundry services to hospitals and other health related facilities. Specifically, Angelica provides these institutions with linens, collects them after use, cleans them and then returns them to the facility.

During the mid-1990's, Donald Chapman (Chapman), sole shareholder of TLR, and a sales representative for WinansMcShane, a "wholesale distributor . . . of paper and janitorial supplies," included Angelica as one of his customers. After observing Angelica's business for several months, Chapman noted Angelica was encountering two primary difficulties: first, since the company was providing its own metal hampers for collecting soiled linens, it was incurring sizable up-front costs each time it secured a new client; and second, clients were asking Angelica to replace the linen hamper bags with a disposable variety to lessen concerns that the reusable bags would wear, potentially exposing blood-borne pathogens or other biohazardous material to the air.

In 1997, Chapman developed a marketing concept whereby he would assume responsibility for manufacturing and procuring the hampers and provide them to Angelica for free, provided the company agreed to exclusively purchase his new linen bags.*fn1

After presenting the concept to an Angelica general manager, Chapman presented the proposal to a meeting of Angelica executives including Angelica's president in Stone Mountain, Georgia. The proposal was accepted with five Angelica plants participating - Edison, New Jersey (Edison); Ballston Spa, New York (Ballston Spa); Chicago, Illinois (Chicago); Batavia, New York (Batavia); and Rockmart, Georgia (Rockmart). Thereafter, an eight-month process of informal "trial and error" ensued, which sought to resolve many of the non-business aspects of the project, particularly hamper design. On May 12, 1998, Chapman sent a letter on Winans-McShane stationary to Wayne Moore, Angelica's Director of Special Projects reflecting Chapman's first official proposal of his "disposable blue soiled linen bag and hamper" program. Under the section marked "Pricing", Chapman set the cost of the bags at $30.75 for "240 cs/12 rolls" and explicitly stated the price "includes hamper[]." (Emphasis added). Chapman also identified several outstanding issues that had arisen during the eight-month trial period. These included:

Lease

*Liability insurance on the hamper?

*Since most of the hampers will be supplied at no charge, who signs the lease?

*If a hospital is on our bag program and Angelica loses the account, what happens?

*What happens if a hospital purchases bags from another company after we have provided hampers?

Maintenance

*Who maintains the hampers?

Miscellaneous

*What accounts are worthwhile for you to convert?

These issues were neither fully addressed nor resolved before the program started.

In consultation with Winans-McShane, TLR was created to oversee and administer the hamper program in its entirety. In a September 8, 1998 letter to Kevin Nowak, then-General Manager of Angelica's Ballston Spa facility, Chapman confirmed TLR "has made a substantial investment in tooling and the acquisition of several thousand hampers after months of consultation" with Nowak and other regional and individual plant managers.

Despite commencement of the program, however, no writing or contract was ever executed reflecting the terms of the arrangement. Chapman acknowledged dealing primarily with individual plant managers, not company-wide decision-makers, and he decided to proceed despite Angelica's failure to address the issues raised in the May 1998 letter. At no point did Angelica commit to a particular policy with regard to termination of the program. Apparently Chapman was unconcerned as evidenced by his failure to request that Angelica pay for a shipment of hampers that disappeared when a hospital client closed during the trial period. Chapman stated Angelica pushed ahead without ...


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