Opinion ID: 453199
Heading Depth: 2
Heading Rank: 2

Heading: Relations Among the Parties

Text: 15 In 1977, Terry's apparently made the decision to aggressively enter the commercial carpet market. Terry's began to purchase small amounts of commercial carpet from Lees for smaller, negotiated jobs which did not involve competitive bidding. Terry's also entered the competitive bidding market, with its principal supplier being Trend Carpet Mills. Terry's and Eatman's began to compete for major commercial jobs, several involving state institutions. At this time, Eatman's was already a much larger commercial account for Lees and was programmed by Lees as a principal commercial dealer. Eatman's was also a large distributor for Bigelow-Sanford, and both Lees and Bigelow-Sanford competed for Eatman's business. 16 Ralph Betts, president of Terry's, began to approach John Cummings, Lees' sales representative for eastern North Carolina, about being programmed as a principal Lees commercial dealer. Cummings consulted with his superiors, and a decision was made not to program Terry's as a major commercial dealer. The status of Terry's was discussed by Betts and Cummings at the semi-annual industry market held in Atlanta, Georgia, in July 1980. Cummings informed Betts that Lees did not wish to carry Terry's as a major commercial dealer. The effect of this decision was that Terry's basically had to purchase at list price. Cummings, in his affidavit, stated that he informed Betts that this decision was based on Lees' judgment that it would be best to continue marketing through its well-established commercial dealers and also on Lees' determination that it could not compete with Terry's principal commercial supplier, Trend Carpet Mills, which was generally regarded in the industry as having very low prices. 5 Joint Appendix at 217. 17 Betts' recollection of this discussion with Cummings is significantly different. According to Betts' affidavit and deposition, he was informed by Cummings that Lees would not program Terry's as a major commercial dealer because Bill Eatman had guaranteed Lees a million dollars in sales and so it was agreed that Terry's would not get any lower prices. Joint Appendix at 393. Cummings denies telling Betts that there was any million dollar guarantee from Eatman's. He recalls that he told Betts that the Eatman's account had the potential to do a million dollars worth of business and that Eatman's had been doing that volume of business with Bigelow-Sanford. Joint Appendix at 201. 18 In late fall of 1980, both Terry's and Eatman's bid on a job for the Armstrong Media Center at a junior high school in Fayetteville, North Carolina. Terry's bid Lees carpet and won the job with a bid which was the same as Lees' list price for the carpet, the only price available to Terry's. Eatman's had been instrumental in persuading the architect to designate Lees carpet as an acceptable carpeting for the project; but Eatman's ultimately bid carpet made by Bigelow-Sanford, a major competitor of Lees. Cummings stated in his affidavit that he learned Terry's had won the Fayetteville job during a visit to Eatman's when he was shown a copy of the contractor's letter to bidders informing them that Terry's had won the bid with Lees carpet. Joint Appendix at 218. Cummings stated that he was surprised because Terry's had not placed the carpet order through him. Upon further investigation, Cummings discovered that Terry's had purchased the carpet at a significant discount from another Lees distributor, Fashion Carpets of Houston, Texas. Lees decided to allow the sale to go through because the order had already been processed at the mill. When Cummings informed Mr. Eatman of this decision, Eatman became angry, allegedly because Cummings had previously forbidden Eatman's to sell Lees carpet to a carpet dealer in Florida. Cummings described Mr. Eatman's reaction in a letter dated January 9, 1981, to his superior, Jack Collier. Cummings expressed his concern that the decision to let the sale go through would have an adverse effect on his credibility with Eatman's. 6 Cummings never received a commission on this sale. 19 At the industry market in January 1981, Cummings discussed with Betts the purchase from Fashion Carpets and informed Betts that such a practice was against Lees' policy. Betts responded that he planned to continue making such purchases until Terry's received competitive prices from Lees and that he was in fact trying to purchase some carpet from a dealer in Virginia. 7 On February 9, 1981, Cummings and Collier met with Betts. Collier informed Betts that Terry's would be terminated as a Lees' dealer because of its stated intention of continuing to violate Lees' anti-bootlegging policy. 8 20 Since its termination by Lees, Terry's has continued to sell in both the residential and commercial carpet markets. Its business has apparently prospered despite the fact that it is no longer a Lees' dealer. 9