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BMK Solutions, LLC v. Biostat, LLC

United States District Court, E.D. Virginia, Norfolk Division

June 3, 2016

BIOSTAT, LLC, Defendant.

          OPINION & ORDER

         This case came before the Court on the Amended Complaint filed by BMK Solutions, LLC ("BMK" or "Plaintiff) and the Amended Answer filed by BioStat, LLC ("BioStat" or "Defendant"). ECF No. 12; ECF No. 15. On April 6, 2015, Plaintiff sued Defendant alleging breach of a contract for goods for nonfulfillment by the seller, BioStat. In the alternative to its claim for breach of contract, the BMK alleged unjust enrichment or tortious conversion by BioStat for failure to return two initial deposits. Ultimately, BMK sought a judgment in its favor for the amount of the initial deposits plus interest. BioStat claimed in the alternative that the BMK had previously breached the contract for sale by anticipatory repudiation.

         The Court FINDS that BMK did not breach the contract and that BioStat breached the contract for sale of goods by nondelivery. Therefore under Va. Code §8.2-711, the Court AWARDS recovery to BMK for the price paid in the amount of $201, 080.00 with interest at six percent per annum from June 27, 2014. Va. Code § 6.2-302. The Court FINDS that the Defendant suffered no damages and attempted to be enriched unjustly the payments in controversy, but it is unnecessary to rule on the unjust enrichment claim presented by Plaintiff as there was a clear breach of contract by the Defendant. Similarly, the Plaintiffs tortious conversion claim is also foreclosed by clear breach of contract. The Court's findings of fact and conclusions of law are set forth below.


         The findings herein are based upon the evidence presented at trial. Where factual conflicts in the evidence existed, the findings here are the facts the Court has determined the more credible.

         A. The Parties

         BMK Solutions, LLC ("BMK" or "Plaintiff) is a Virginia limited liability company with its principal place of business in Virginia Beach, Virginia. BMK is a company that primarily engages in fulfilling government contracts, specifically in the production of medical kits and like products. BioStat, LLC ("BioStat" or "Defendant") is a Florida limited liability company with its principal place of business in Orlando, Florida. BioStat, at the time of the conduct in question, was the exclusive North American distributor of Medtrade Products, a British company which manufactured gauze and bandage products.

         B. The Purchase Orders

         The parties began negotiation for a larger contemplated agreement for consignment, distribution, and sale in January 2014. BioStat, the exclusive distributor of Medtrade product, seemingly sought a warehouse and fulfilment partner to effectively distribute these products in the United States. BioStat had been without such a distributor for several months, and claimed that it had outstanding orders to be fulfilled but lacked the infrastructure to store and ship orders after the end of its previous distribution contract. BMK had the needed infrastructure and wished to include Medtrade products within the medical kits it produced. BMK was Tactical Combat Casualty Care ("TCCC") certified which allowed it to sell to combat unites of the U.S. Armed Forces. BioStat was no so certified, and the process of certification takes months to complete. BioStat was not TCCC certified until shortly before it breached the contract.

         While negotiations for this contemplated agreement were underway, but prior to any formalized agreement, the parties negotiated a large purchase of products. In an email dated January 15, 2014 Mark Geier, the CEO of BioStat, wrote to Peter Campbell, the consultant for BMK who was attempting to negotiate the final contemplated agreement. In the email, entitled "Initial Stocking, " Geier questioned Campbell about the status of the financing for the initial order of products by BMK. As Geier summarized from the parties' previous oral discussions, "The order we discussed last week was approx $343K total, which requires a first stage payment of approx $170K, " then asked if BioStat might go ahead with that order. Later that day, Campbell responded with estimates of the products, quantity, cost per unit, and expected payments.

         Brian Miliken, the CEO of BMK, finalized contract between the companies two days later, when he sent a purchase order to Geier. In the email forwarding the purchase order, Miliken stated the following,

Here's our PO to get started. It was a Pleasure to meet you on the phone yesterday. Looking forward to meeting you guys in person. Let me know how you would like to handle payment. Have a great day and I'll talk to you soon.
BioStat will utilize BMK inventory for all orders over 100 units, but on occasional basis fill orders out of limited BioStat inventory. BMK will be the only authorized distributor to have on a GS A schedule BMK will maintain a quarterly stocking level of $250, 000

         Attached to this email was a purchase order, Purchase Order No. 1535 ("First Purchase Order"). This First Purchase Order contained a description of products, quantity, rate, and amount for an order totaling $397, 700. The expected ship date was listed as January 24, 2014, the terms were "Due on Receipt, " and the "Ship To" section of the purchase order provided BMK's address. Geier, for BioStat, immediately responded to Miliken's email with wiring instructions for the $159, 080, but went on to dispute the summary of interim terms between the parties. Geier wrote, "We will endeavor to utilize BMK for orders over 100 units, but you are likely to find that a quarterly stocking level of $250K in product will be insufficient for that mission. Let mutually keep tabs on inventory with an eye to adjust as necessary moving forward."

         The first contract between the parties had thus been formed for the sale of $397, 700 in products. On January 20, 2014, BMK made the initial payment totaling $159, 080 to BioStat by wire transfer (herein First Initial Payment). This payment was in partial fulfilment of the First Purchase Order amounting to approximately forty-percent of the total contract price.

         On January 24, 2014, BioStat having pocketed the $159, 080, did not ship the product. Instead of shipping the goods as set forth in the First Purchase Order, BioStat, through Geier, contacted BMK about a different potential purchase order. In email, Geier wrote,

We have sales of the 4x4 and 8x8 EMS products and we want to run them through the "BMK system" rather than set up a separate mechanism. Retail on those two products would be $13 for the 4x4 and $15 for the 8x8, with a target for ultimate GSA being $12 and $14 respectively.
BMK pricing would be $7.50 for the 4x4 and $8.75 for the 8x8.
I would like to add those two items to our "agreement in progress" and initiate a purchase order to cover the sales we have in process. It would amount to approx $82Kon the PO with a deposit of $4IK.

         Thus BioStat admitted an ongoing prearranged sale to an ultimate user of the product, and was proposing that BMK process the shipment of these orders and make a nice profit. After an oral conversation, Geier again wrote Campbell at BMK that he would get the product numbers and purchase order in place in ...

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