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Home / Verdicts & Settlements / Long-time business deal unravels, ends in fraud lawsuit – $657,434.80 verdict

Long-time business deal unravels, ends in fraud lawsuit – $657,434.80 verdict

Plaintiff, Multi Textiles Inc. (“Multi Textiles”), is an importer, wholesaler, and distributor of textiles. For over 30 years, Multi Textiles supplied defendant, Tidewater Area Central Laundry, Inc. d/b/a Share Hospital Services (“SHS”), a cooperative laundry servicing multiple hospitals in the Hampton Roads region, with specialized textiles, all of which were ordered and manufactured to SHS’ unique specifications (the “SHS Goods”). Pursuant to an oral agreement between the parties, Multi Textiles would procure and import the SHS Goods from its foreign manufacturer and maintain a four- to six-month supply of the SHS Goods in Multi Textiles’ warehouse at all times. Multi Textiles leased a 22,000 square foot warehouse for the sole purpose of storing the SHS Goods.

After decades of a successful business relationship, SHS’s President, Mark Smoyer, passed away in July 2014, and new management changed course and declined to purchase textiles from Multi Textiles that it had committed to purchasing. The amended complaint alleged that the new management team at SHS had a negative view of Multi Textiles and its owner, Satish Samudre.

Regardless of SHS’s decision to cease purchasing textiles from Multi Textiles, the oral agreement still obligated SHS to purchase the remaining inventory that Multi Textiles had manufactured, or was in the process of manufacturing, for SHS. The new management team at SHS also entered into a second written agreement with Multi Textiles to define the timing of when it would purchase some of the remaining inventory, including an obligation to purchase “all inventory” (a definition that was disputed at trial) and an agreement to purchase certain items “as needed” (a phrase disputed between dueling experts). Multi Textiles claimed that this second contract was illusory and SHS had no intention of purchasing inventory pursuant to the terms of that contract.

The jury found that the parties had entered into an oral contract, but that it was not breached. The jury found that SHS did breach the second written contract, and the jury further found the SHS had committed fraud against Multi Textiles. The jury awarded a total of $657,434.80 in damages to Multi Textiles.

[18-T-051]

Type of action: Breach of Contract and Fraud

Injuries alleged: All money damages

Name of case: Multi Textiles Inc. v. Tidewater Area Central Hospital Laundry Inc., D/B/A Shared Hospital Services

Court: Portsmouth Circuit Court

Case no.: CL15003740

Tried before: Jury

Name of judge or mediator: Judge William S. Moore, Jr.

Date resolved: March 30, 2018

Special damages: Sought $350,000 in punitive damages but didn’t receive

Verdict or settlement: Verdict

Amount: $657,434.80

Attorneys for plaintiff: Christopher D. Davis and Julia A. Rust, Chesapeake

Attorneys for defendant: Kelvin Newsome, Norfolk

Plaintiff’s experts: William “Billy” White

Defendant’s experts: John Wintz