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Marjam Supply Co., Inc v. Columbia Forest Products Corporation

December 13, 2012

MARJAM SUPPLY CO., INC., PLAINTIFF-RESPONDENT,
v.
COLUMBIA FOREST PRODUCTS CORPORATION, A/K/A COLUMBIA FOREST PRODUCTS, INC., DEFENDANT-APPELLANT, AND LENOBLE LUMBER CO., INC., AND ALAN FOXMAN, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-6532-11.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 27, 2012

Before Judges Reisner and Harris.

Defendant Columbia Forest Products Corporation (Columbia) appeals from the January 6, 2012 order of the Law Division denying its motion to dismiss plaintiff Marjam Supply Co., Inc.'s (Marjam) complaint and to compel arbitration. While acknowledging "the national policy favoring arbitration" declared by the Federal Arbitration Act (the FAA), 9 U.S.C.A. §§1 to 3, see Nitro-Lift Technologies, LLC v. Howard, 568 U.S. ___, ___, ___ S. Ct. ___, ___, ___ L. Ed 2d ___, ___ (Nov. 26, 2012) (slip op. at 1), we find no basis to compel arbitration in this case. Hence, we affirm.

I.

We glean the facts from the pleadings and motion record. Marjam is a building materials distributor and supplier. Columbia is reputed to be North America's largest manufacturer of hardwood plywood and hardwood veneer.

Centre Lumber and Plywood Co., Inc. (Centre) was a building materials distributor, which operated in the New York City metropolitan area. Centre qualified as a "Foundation Member" distributor of Columbia products, which required it to purchase most of its domestic hardwood plywood from Columbia.

On March 25, 2011, Marjam acquired Centre's assets, including its vendor and customer lists, good will as a going concern, and inventory of specialty lumber and wood products, which included a substantial amount of Columbia's products. As part of the acquisition, Marjam hired some of Centre's employees, including defendant Alan Foxman, who was alleged to be Centre's Director of Purchasing and who Columbia purportedly "considered . . . to be, and in fact served as, its 'key customer contact' at Centre and primarily was responsible for Centre's role as a Columbia distributor."

Marjam averred that it purchased Centre's assets principally to acquire Centre's existing Columbia distributorship "within the New York City Metropolitan Area, Long Island, and New Jersey." Four days after Centre was acquired by Marjam, Foxman quit and went to work for defendant LeNoble Lumber Co., Inc. (LeNoble), a competitor within Marjam's newly-acquired market area.

After Marjam and Columbia had been working together buying and selling Columbia's products for about two months,*fn1 Columbia elevated Marjam to the level of a "Cornerstone Member" distributor. This status was memorialized in a document prepared by Columbia entitled, "Columbia Rewards 2011 Enrollment Agreement" (the Enrollment Agreement). In order to maintain its "Cornerstone Member" status and not fall back to the "Foundation Member" level, Marjam was required to purchase all of its domestic hardwood plywood from Columbia. Among the advantages to Marjam of attaining "Cornerstone Member" status was its ability to earn percentage credits -- called Rewards -- for its purchases from Columbia, which Rewards would be "banked" and then used in the following calendar year to offset the cost of goods purchased by Marjam. If Marjam were to reach certain higher sales levels, it could qualify for Columbia's "Elite Status," which would earn greater percentage credits and larger Rewards.

The Enrollment Agreement was executed by the parties on May 26, 2011. It did not contain a dispute resolution mechanism, an arbitration clause, or a choice of law provision.

Transactions conducted in the ordinary course of business between Columbia and Marjam followed a predictable and routine procedure. Marjam would first request and subsequently obtain a price quotation from Columbia for certain products. If the price were right, Marjam's buyer would then submit a written purchase order to Columbia by facsimile transmission. The purchase order would contain, among other things, the goods' description, quantity, price, expected delivery date, and delivery location.

Columbia's sales representative would then email Marjam's buyer an acknowledgement. The acknowledgement would be reviewed and if there were any errors, omissions, or discrepancies, Columbia's representative would be alerted. In the absence of any corrective action, Columbia would process and ship the order, and email an invoice -- as an ...


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