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George Hoffman (10005)Benjamin J. Kotter (9592)Adam H. Reiser (13339)COHNE KINGHORN, P.C.111 East Broadway, 11th FloorSalt Lake City, Utah 84111Telephone: (801) 363-4300Facsimile: (801) 363-4378Email: ghoffman@cohnekinghorn.com
bkotter@cohnekinghorn.comareiser@cohnekinghorn.com
Attorneys for the Debtor-in-Possession DGS Store Fixtures, Inc.
IN THE UNITED STATES BANKRUPTCY COURTDISTRICT OF UTAH, CENTRAL DIVISION
In re:
DGS STORE FIXTURES, INC.,
Debtor.
Bankruptcy Case No. 14-31080
Chapter 11
Honorable Joel T. Marker
Adv. Pro. No. _______________
DGS STORE FIXTURES, INC.,
Plaintiff,
v.
LULULEMON USA, INC.,
Defendant.
COMPLAINT
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Plaintiff DGS Store Fixtures, Inc., debtor and debtor-in-possession (“DGS” or
“Plaintiff”) in the above-captioned bankruptcy case, for causes of action against
defendant Lululemon USA, Inc. (“Lululemon” or “Defendant”), files this Complaint (the
“Complaint”) and alleges as follows:
PARTIES, JURISDICTION AND VENUE
1. DGS filed a voluntary petition for relief under Chapter 11 of Title 11 of the
United States Code (the “Bankruptcy Code”) on October 20, 2014 (the “Petition Date”).
2. Lululemon is a Nevada corporation headquartered in Vancouver, British
Columbia with various retail locations located throughout the United States, including
several retail locations in Utah.
3. This Court has jurisdiction over this adversary proceeding pursuant to
28 U.S.C. §§157 and 1334.
4. This is a core proceeding under 28 U.S.C. §157(b).
5. Venue is proper before this Court pursuant to 28 U.S.C. §§1408 and 1409.
GENERAL ALLEGATIONS
6. DGS sells custom retail store fixtures to large material retail chains, drug
stores, supermarkets, department stores and various specialty retailers, including
Lululemon. Customers, like Lululemon, retain DGS to attain custom fixtures specific to
their individual needs and designs.
7. In 2014, Lululemon and DGS contracted for DGS to provide various
services and/or products in conjunction with the summer 2014 opening of Lululemon’s
Westfield San Francisco Centre store.
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8. On or about April 22, 2014, DGS issued Invoice No. 976451 to Lululemon
for unpaid product and/or services in the amount of $2,817.50.
9. On or about May 28, 2014, DGS issued a credit memorandum (Invoice
No. 98107) to Lululemon in the amount of $560.00.
10. On or about June 10, 2014, DGS issued Invoice No. 98306 to Lululemon
for unpaid product and/or services in the amount of $4,800.00.
11. On or about June 12, 2014, DGS issued Invoice No. 98337 to Lululemon
for unpaid product and/or services in the amount of $70,645.50.
12. In January 2015 DGS received a partial payment of $18,620.50 on the
outstanding Invoices leaving an outstanding principal balance of $77,560.50 as detailed
below:
Invoice No. 97645 $2,817.50Invoice No. 98107 ($560.00)Invoice No. 98306 $4,800.00Invoice No. 98337 $70,645.50Partial Payment ($18,620.50)
Outstanding Balance $59,082.50
13. On February 4, 2015, DGS made formal written demand on Lululemon for
payment of the outstanding principal balance. Despite such demand, Lululemon has
failed, refuses and continues to refuse to pay DGS the amounts due and owing DGS for
the services and/or products DGS has provided to Lululemon.
1This invoice and all the other invoices referred to in this Complaint are referred to collectively as the “Invoices”
and are attached hereto as Exhibit A.
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FIRST CLAIM FOR RELIEF(Breach of Contract)
14. DGS repeats, realleges and incorporates by reference each of the
preceding allegations of the Complaint.
15. DGS and Lululemon entered into one or more contracts for the sale and
purchase of certain products and/or services form DGS to Lululemon as described
above (collectively, the “Contracts”).
16. Lululemon breached the Contracts by failing to pay for the products and/or
services that DGS provided to Lululemon as described above.
17. DGS performed its obligations under the Contracts by delivering the
products and/or services set forth in the Invoices as requested by Lululemon.
18. DGS is entitled to recover no less than $59,082.50from Lululemon which
is the unpaid principal balance due for the products and/or services provided by DGS to
Lululemon.
SECOND CLAIM FOR RELIEF(Breach of Implied Covenant of Good Faith and Fair Dealing)
19. DGS repeats, realleges and incorporates by reference each of the
preceding allegations of the Complaint.
20. The Contracts are enforceable contracts between DGS and Lululemon.
21. Inherent in the Contracts, as implied by Utah law, is a duty to act in good
faith and to deal fairly with the other contracting party or parties.
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22. As described above, Lululemon breached its duty to act in good faith and
deal fairly by, among other things, failing to timely pay DGS for the products and/or
services provided.
23. The wrongful conduct of Lululemon, as described above, is inconsistent
with the Contracts and DGS’s justified expectations when it entered into the Contracts.
24. Lululemon’s breach of the covenant of good faith and fair dealing actually
and proximally causes substantial loss and detriment to DGS’s bankruptcy estate.
25. As a result of Lululemon’s breach of the covenant of good faith and fair
dealing, DGS is entitled to recover damages in an amount to be established at trial, but
in no event less than $59,082.50.
THIRD CLAIM FOR RELIEF(Unjust Enrichment)
26. DGS repeats, realleges and incorporates by reference each of the
preceding allegations of the Complaint.
27. The products and/or services provided by DGS to Lululemon, as set forth
in the Invoices, were a benefit that DGS conferred upon Lululemon, which Lululemon
knowingly accepted and enjoyed.
28. Lululemon was and is aware of the benefit which was conferred upon it by
DGS and has retained the benefit under circumstances which make it inequitable or
unjust, unless DGS is reasonably compensated for its product and/or services.
29. Except for the partial payment, Lululemon has not provided any additional
consideration for the products and/or services provided by DGS to Lululemon as alleged
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herein and has retained such products and/or services without any legal or equitable
claim to the products and/or services.
PRAYER FOR RELIEF
WHEREFORE, DGS respectfully requests this Court to enter judgment in its
favor and against Lululemon as follows:
A. Pursuant to DGS’s First Claim for Relief alleging breach of contract, for
judgment against Lululemon in the amount of no less than $59,082.50, plus pre- and
post-judgment interest from and after the date of the applicable invoice, in an amount to
be determined at trial;
B. Pursuant to DGS’s Second Claim for Relief alleging breach of the implied
covenant of good faith and fair dealing, for judgment against Lululemon in the amount of
no less than $59,082.50, plus pre- and post-judgment interest from and after the date of
the applicable invoice, in an amount to be determined at trial;
C. Pursuant to DGS’s Third Claim for Relief alleging unjust enrichment, for
judgment against Lululemon in the amount of no less than $59,082.50, plus pre- and
post-judgment interest from and after the date of the applicable invoice, in an amount to
be determined at trial;
D. For DGS’s costs and reasonable attorneys’ fees incurred in this matter,
including augmentation thereof for reasonable post-judgment costs and attorneys’ fees
incurred in collecting and enforcing any judgment entered herein; and
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E. For such other and further relief as the Court deem just and proper.
Dated this 7th day of April, 2015.
COHNE KINGHORN, P.C.
/s/ Benjamin J. KotterGeorge HofmannBenjamin J. KotterAdam H. Reiser
Attorneys for DGS Store Fixtures, Inc.
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