Three judges in an appellate court in Santa Fe, New Mexico have reversed a judgment by a lower court that had awarded $15 million in damages to a shutter company in a suit brought against Home Depot by one of its vendors. The court ruled that a lower court had erroneously awarded the judgment to Santa Fe Custom Shutters and Doors. The vendor had argued that Home Depot violated the state’s Unfair Practices Act and the Texas Deceptive Trade Practices Act. The appeal court did not say that the shutter company’s claims were invalid — just that complaints under the state law can only be brought by consumers, not vendors. The court sent the case back to state district court, where Home Depot still could be found liable for damages for any breach of contract or fraud. The shutter company, Santa Fe Shutters, founded in 1995, went out of business about 1 1/2 years after Home Depot terminated contracts with it in 2000. Based on contracts the company had signed with Home Depot, the shutter company agreed to increase production in return for Home Depot providing marketing services and buying display samples. In January 2003, a state District Judge ruled that Home Depot had broken an oral contract with the Santa Fe firm and awarded the company $11.9 million in damages. In June of that year, she ruled Home Depot must also pay the defunct company more than $2.76 million in attorney’s fees. The lower court ruled that Home Depot had breached the contract by not buying sufficient display samples, failing to place display samples in all its stores in the Fort Worth-Dallas area and failing to market the products. When Home Depot took the case to appeal, the higher court ruled that the trial court mistakenly allowed evidence from a New Mexico manufacturer who also had a bad experience with Home Depot, and improperly excluded testimony from Home Depot witnesses about complaints against Santa Fe Shutters.
For similar stories, search Newsflash by “Home Depot litigation”. In this case, the small vendor gets crushed by the big corporation, not once — but twice. First in the marketplace, then in court. It also illustrates the ultimate weakness of unfair practices laws: by the time a vendor finishes a court challenge, it takes years, and the damage has already been done. In this case, Santa Fe Shutters was forced to close down before the case even got well underway.
