Sports Quest v. Dale Earnhardt, Inc.

Sports Quest, Inc. v. Dale Earnhardt, Inc., 2004 NCBC 4

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF IREDELL 02 CVS 0140

SPORTS QUEST, INC. )
)
Plaintiff, )
)
v. )
)
DALE EARNHARDT, INC., a North )
Carolina corporation )
)
Defendants. ) 02 CVS 0140
) (Consolidated)

ACTION PERFORMANCE COMPANIES,
INC. )
)
Plaintiff, )
)
v. )
)
SPORTS QUEST, INC. )
)
Defendant and )
Third-Party Plaintiff, ) 01 CVS 2200
)
v. )
)
FRED WAGENHALS )
)
Third-Party Defendant. )
)

ORDER AND OPINION

{1} This case arises out of Plaintiff Sports Quest’s claim that defendants effectively destroyed
plaintiff’s business as a licensee and marketer of NASCAR related merchandise. Sports Quest asserts
claims against Defendant Dale Earnhardt, Inc. (“DEI”) for breach of contract, fraud, tortious interference
with both business relations and prospective economic advantage, unfair and deceptive trade practices and
civil conspiracy.
{2} In a related and now consolidated case, Plaintiff Action Performance (“Action”) asserts that it
produced and sold $90,310.46 in replica racecars to Defendant Sports Quest but never received payment
for these goods. Action asserts claims against Sports Quest for breach of contract, statement of account
and quantum meruit. Sports Quest counterclaimed that Action and its CEO, Fred Wagenhals
(“Wagenhals”), committed fraud, unfair and deceptive trade practices, tortious interference with contract
and slander. This Court dismissed the counterclaims that Sport Quest had against Action and Wagenhals
in the Order and Opinion of February 12, 2004.
{3} Sports Quest seeks monetary damages from DEI. Action seeks to recover the allegedly past due
payments for merchandise plus interest and the costs of bringing the action.
{4} Sports Quest and DEI submitted further motions for summary judgment on the claims still
pending in this matter. Action also seeks a ruling on summary judgment as to the statement of account
claim to recover the past due payments.

Thomas, Godley & Childers, P.A. by Mark L. Childers; Eisele, Ashburn, Greene & Chapman, P.A.
by Douglas G. Eisele for Plaintiff, Defendant and Third Party Plaintiff Sports Quest, Inc.

Alston & Bird, L.L.P by Bruce J. Rose, Judson Graves, and J. Mark Wilson for Defendant Dale
Earnhardt, Inc.

Gray, Layton, Kersh, Solomon, Sigmon, Furr & Smith, P.A. by William E. Moore, Jr.; Arcangela
M. Mazzariello for Plaintiff Action Performance Companies, Inc. and Third Party Defendant Fred
Wagenhals.

I.

FACTUAL BACKGROUND
A.
THE SPORTS QUEST AND DEI DISPUTE

{5} Sports Quest is a North Carolina corporation with its principal office and place of business in
Iredell County, North Carolina. Sports Quest enters into licensing agreements with NASCAR racing
teams to obtain the rights to market merchandise that bears the intellectual property of these organizations,
including various trademarked and copyrighted items. Kenneth Frady (“Frady”) is the founder and sole
owner of Sports Quest.
{6} DEI is also a North Carolina corporation with its principal office and place of business in Iredell
County, North Carolina. DEI is a privately held company that amongst other operations exclusively
controls the images and likenesses of the late Dale Earnhardt and Dale Earnhardt, Jr. and the automobiles
used by their racing teams. DEI licenses the rights for outside companies to produce, distribute and
market products bearing their likenesses and other intellectual property owned by DEI.
{7} Action is a publicly traded Arizona corporation registered to do business in the State of North
Carolina. Action designs, promotes, markets, and distributes licensed NASCAR related products.
Wagenhals is both a citizen and resident of the State of Arizona and is the president and chief executive
officer as well as a major shareholder of Action.
{8} Beginning in 1998, Sports Quest entered into several licensing agreements with DEI (the “1998
licensing agreements”) to produce and market merchandise that bore images and depictions related to both
Earnhardts and their respective racing teams. Subsequent documents executed by both parties extended
Sports Quest’s licensing rights to the elder Earnhardt until the end of 2002 and to the younger Earnhardt
until the end of 2005. Sports Quest paid royalties based on the sale of licensed products to DEI as
compensation for the licensing rights. The president of Sports Quest, Kenneth Frady, a veteran of
NASCAR merchandising, had developed a relationship with the Earnhardt family before executing the
1998 licensing agreements.
{9} DEI asserts that Sports Quest breached several provisions of the 1998 licensing agreements. First,
DEI asserts that Sport Quest violated the agreements’ prohibition on sublicensing to third party vendors.
Second, DEI alleges that Sports Quest failed to tender royalties due in accordance with the licensing
agreements. Sports Quest does not dispute either violation of the 1998 licensing agreements. Frady,
however, claims that Sports Quest waived the prohibition against sublicensing because DEI knew about it
and did not object.
{10} The critical juncture in this case occurred on June 15, 2000, when Frady met at the DEI offices
with the elder Earnhardt and the recently hired vice president of licensing for DEI, Joe Hedrick. Frady
and the elder Earnhardt signed a letter (the “June 15th letter”) that allegedly altered the terms of the prior
licensing agreements between DEI and Sports Quest. The parties are in dispute over the particular
circumstances, inducements and motivations surrounding the meeting and resultant document.
{11} The June 15th letter had several key provisions at issue in this case. First, Frady admitted that
Sports Quest violated the prohibition on sublicensing contained in the 1998 agreements. Second, DEI
required Sports Quest to send a letter to third parties stating that it had sublicensed the rights to DEI
properties to third parties. The letters were to notify third parties that Sports Quest was no longer an agent
of DEI, sublicensing agreements would be honored by DEI, renewals would be negotiated with DEI, and
all royalty payments should be mailed directly to DEI. Third, the letter stated that a new licensing
agreement between DEI and Sports Quest would follow that would supersede the 1998 agreements and
also provided the terms to be included in that subsequent document. The parties never entered into a
subsequent agreement that incorporated the terms provided for in the June 15th letter.
{12} Sports Quest complied with the terms of the letter and notified sublicensees that DEI would
assume control over agreements concerning properties of DEI. The licensing relationship between DEI
and Sports Quest following June 15, 2000 operated without any major difficulty until early 2001. On
February 18, 2001, Dale Earnhardt, Sr. was killed in an accident during a NASCAR race.
{13} In March 2001, Sports Quest stopped paying royalties without explanation. Sports Quest did not
pay the royalties even after DEI notified Sports Quest in writing that it had breached the 1998
agreements. On November 13, 2001, DEI officially terminated the relationship with Sports Quest based
on violations of the 1998 licensing agreements including nonpayment and sublicensing.
{14} The parties have opposite views as to the purpose of the June 15th letter. DEI asserts that the
agreement was an attempt on its part to cure Sports Quest’s breach of the prohibition on sublicensing
provided for in the 1998 agreements. Sports Quest contends that DEI used the June 15th letter to induce
Sports Quest to sever ties with existing customers by assuming control of these relationships. Frady
claims that DEI deceived him into signing the letter by incorrectly telling him that Sports Quest was in
breach of the 1998 agreements and falsely promising a secure future relationship between DEI and Sports
Quest. Frady also contends that the promises made by DEI in the June 15th meeting induced him to
terminate profitable relationships with customers. A factual dispute clearly exists as to the events
surrounding the June 15th letter.
{15} The dispute also turns on factual issues regarding the collapse of Sports Quest’s financial health.
Sports Quest maintains that DEI and Action conspired to deceive it and exercise economic duress to force
Sports Quest out of business. On the other hand, DEI claims Mr. Frady’s recreational habits and lack of
work ethic destroyed both his relationship with the Earnhardts as well as his business.
B.
THE ACTION AND SPORTS QUEST RELATIONSHIP
{16} The relationship between Action and Sports Quest dates back to 1997. Action provided die-cast
replicas of racecars to Sports Quest for resale to the Hamilton Collection (“Hamilton”). Sports Quest was
simply a middleman. It had no contract; it simply submitted purchase orders when it received orders from
Hamilton In March 2001, Wagenhals informed Hamilton that it would sell replica racecars directly to
Hamilton. The decision to sell directly to Hamilton eliminated Sports Quest’s role in the distribution of
the replica cars. Action also would no longer accept purchase orders from Sports Quest to provide
products to Hamilton.
{17} At the time of the decision to eliminate Sports Quest as an intermediary, Sport Quest owed over
$90,000 to Action for previously shipped die-cast cars. Action seeks to recover that money in this action.
The claims to recover those funds are the only matters left between Action and Sports Quest, as the Court
dismissed the other claims on the motion to dismiss.
II.

SUMMARY JUDGMENT STANDARD

{18} Pursuant to Rule 56(c) of the North Carolina Rules of Civil Procedure, summary judgment shall be
rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to
judgment as a matter of law. N.C. R. Civ. P. 56(e) . A genuine issue is one which can be maintained by
substantial evidence; a material fact is that which would constitute a legal defense preventing the non-
moving party from prevailing. Bd. of Ed. of Hickory Admin. School Unit v. Seagle, 120 N.C. App. 566,
463 S.E.2d 277 (1995).
{19} The North Carolina Court of Appeals has explained that a summary judgment movant may meet
its burden of showing that it is entitled to judgment as a matter of law by showing either (1) an essential
element of the non-movant’s claim is nonexistent, (2) the non-movant cannot produce evidence to support
an essential element of his claim, or (3) the non-movant cannot surmount an affirmative defense which
would bar his claim. Taylor v. Ashburn, 112 N.C. App. 604, 606-607, 436 S.E.2d 276, 278 (1993), cert.
denied, 336 N.C. 77, 445 S.E.2d 46 (1994). Once defendants have met their burden by proving that an
essential element of the opposing party’s claim is nonexistent or by showing through discovery that the
opposing party cannot produce evidence to support an essential element of its claim, the burden shifts to
the non-moving party to show that a genuine issue exists by forecasting sufficient evidence of all essential
elements of the claim. Farrelly v. Ha milton Square, 119 N.C. App. 541, 459 S.E.2d 23 (1995) . The non-
moving party may not rest upon mere allegations or denials in its pleadings but instead is required to offer
evidence tending to establish, beyond mere speculation or conjecture, the essential elements of its claims.
N.C. R. Civ. P. 56(e).

III.

SPORTS QUEST AND DEI DISPUTE

A.
BREACH OF CONTRACT CLAIM & DEI’s
COUNTERCLAIM

{20} Sports Quest’s most central claim in this matter is that DEI breached its contract with Sports
Quest. DEI counterclaims that Sports Quest breached the contract by violating several provisions in the
licensing agreement including the prohibition on sublicensing. The elements of breach of contract are the
existence of a valid contract and breach of the terms of the contract. Poor v. Hill, 138 N.C. App. 19, 26,
530 S.E.2d 838, 843 (2000). A breach of contract is only actionable if a material breach occurs—one that
substantially defeats the purpose of the agreement or goes to the very heart of the agreement, or can be
characterized as a substantial failure to perform. Fletcher v. Fletcher, 123 N.C. App. 744, 752, 474 S.E.2d
802, 807-08 (1996), disc. rev. denied, 345 N.C. 640, 483 S.E.2d 706 (1997) .
{21} The breach of contract claim against DEI is subject to disputed facts. The circumstances
surrounding the alleged breach are still unclear. Both sides present different versions of the impetus for
events that led to this claim. For example, the Court cannot rule on arguments such as the waiver of the
sublicensing prohibition or good faith and fair dealing as matter of law while a factual dispute still exists.
The Court cannot speculate as to what events occurred that led to sublicensing or a failure to exercise the
termination provisions, nor is the record clear on what DEI knew about Sport Quest’s licensing
agreements.
{22} Similarly, DEI’s counterclaim for breach of contract also raises questions of fact that do not permit
a finding of summary judgment. The circumstances surrounding Sports Quest’s alleged breach are as
unclear as the facts concerning the breach allegations against DEI. It is clear that Frady stopped paying
royalties, but the reasons therefore and the determination of whether or not there existed a prior breach by
DEI involve credibility issues that the jury must resolve.
{23} The summary judgment standard does not permit the Court to resolve the factual issues in this
phase of litigation. The claim and counterclaim for breach of contract both involve the resolution of
genuine issues of material fact.
B.
FRAUD
{24} The claim of fraud also raises factual issues that at this juncture remain unresolved. In North
Carolina, the courts define fraud as a false representation or concealment of a material fact, reasonably
calculated to deceive, made with the intent to deceive which does in fact deceive, resulting in damage to
the injured party. Myers & Chapman v. Evans, 323 N.C. 559, 568, 374 S.E. 2d 386, 390 (1988). The
intent to deceive is an essential element of fraud. Id., 374 S.E.2d at 392. The North Carolina Supreme
Court disavowed cases that only implicitly recognized intent to deceive. Id.
{25} The essential nature of intent to deceive to a fraud claim makes finding summary judgment in
favor of either party a difficult proposition. The facts of this case are clearly in dispute as to how DEI
induced Sports Quest to sign the June 15th letter. More importantly, the motivations behind DEI’s action
are unclear and do not provide a basis in which to resolve this claim before trial. The motivations of DEI
regarding this agreement are crucial to the intent element of the fraud claim.
{26} The factual record is not sufficiently clear for the Court to rule on any element of the fraud claim,
especially the element of the intent to deceive.
C.
TORTIOUS INTERFERENCEWITH PROSPECTIVE ECONOMIC ADVANTAGE
{27} Plaintiff Sports Quest asserts that DEI’s actions rise to the level of a business tort that interfered
with its ability to avail itself of economic gain. North Carolina sets a high standard for maintaining a
tortious interference with prospective advantage claim:
In order to maintain an action for tortious interference with prospective advantage, Plaintiff
must show that Defendants induced a third party to refrain from entering into a contract
with Plaintiff without justification. Cameron v. New Hanover Memorial Hospital, 58 N.C.
App. 414, 440, 293 S.E.2d 901, 917 (1982). Additionally, Plaintiff must show that the
contract would have ensued but for Defendants' interference. Id.
DaimlerChrysler v. Kirkhart, 148 N.C. App. 572, 585, 561 S.E.2d 276, 286 (2002).
{28} Essential to the claim is first identifying a contract that the defendant induced a third party to
refrain from entering. Plaintiff fails to identify the requisite future contract in this matter. Sports Quest
alleges that DEI interfered with existing contracts and cites specific agreements in an attempt to support
this claim. Plaintiff, however, fails to identify future contracts with any specificity. [1] Sports Quest’s
expectation of future contracts with current customers does not suffice to maintain a tortious interference
with prospective advantage claim. Dalton v. Camp, 353 N.C. 647,655, 548 S.E.2d 704, 710 (2001).
{29} Sports Quest, moreover, fails to prove that DEI caused Sport Quest’s failure to secure future
contracts with third parties. Contracts obviously did exist between Sports Quest and third parties, but
merely proving these agreements existed does not support the assertion that the relationship would
continue. See id. Plaintiff must offer specific evidence that Sports Quest had a future relationship with
these customers and that DEI caused these customers to refrain from entering into further contracts.
Sports Quest failed to offer evidence that these relationships involved future contracts. Thus, the Court
cannot possibly find that DEI caused customers to refrain from entering into contracts with Sports Quest
because no evidence offered proves further contractual relations.
D.
TORTIOUS INTERFERENCE WITH EXISTING BUSINESS RELATIONS
{30} The claim of tortious interference with existing business relations provides redress when a
defendant induces a third party to not perform an existing contract with the plaintiff. North Carolina law
specifies five elements required to prevail on this claim. Beck v. City of Durham, 154 N.C. App. 221, 232,
573 S.E.2d 183, 191 (2002). First, a valid contract must exist between the plaintiff and a third party that
provides the plaintiff with contractual rights. Second, the defendant must have knowledge that the
contract exists. Third, the defendant must intentionally induce the third party not to perform the
contracts. Fourth, the defendant must induce the nonperformance of the contract without justification.
Fifth, the third party’s failure to perform the contract results in actual damage to the plaintiff. Id.
{31} The first fatal flaws in Sports Quest’s claim for tortious interference with existing business
relations is that not all of their relationships with third parties included contracts. The first element
requires that a valid contract exist. Most notably, Sports Quest’s relationships with Action and Hamilton
did not involve contracts, but the parties memorialized their separate transactions with purchase orders.
{32} As discussed in the opinion issued by this Court in February 2004, the mere acknowledgement or
receipt of a purchase order does not constitute assenting to the terms of an offer and thus does not create a
contractual obligation. See Southern Spindle & Flyer Co. v. Milliken & Co., 53 N.C. App. 785, 788, 281
S.E.2d 734, 736 (1981). In Southern Spindle, the defendant orally contracted with the plaintiff provider
for the servicing of the defendant’s machines. Id. at 786-88, 281 S.E.2d at 735-36. Plaintiff
acknowledged receipt but did not indicate a promise to comply with the terms proscribed in the purchase
order. Id., 53 N.C. App. at 788, 281 S.E.2d at 738. Defendant cancelled the remainder of the oral
contract and plaintiff brought an action to recover the money owed under the agreement. The defendant
filed a motion to dismiss because the purchase order included an arbitration clause. The Southern Spindle
court denied the motion to dismiss and held that the acknowledgement of a purchase order did not mean
that a party assents to the terms provided. Id.
{33} As in Southern Spindle, Sports Quest’s reliance on an acknowledged purchase order is incorrect.
Acknowledged purchase orders do not create by themselves contractual obligations. The purchase orders
were the documents that governed the relationships between Action and Sports Quest or Hamilton and
Sports Quest. Moreover, Action did not accept, sign or acknowledge these purchase orders. Regarding the
relationship with Action or Hamilton, Sports Quest cannot maintain a claim for tortious interference with
existing business relations because neither had a contractual obligation to Sports Quest. [2]
{34} The fourth element requires that the plaintiff act without justification and do so with “no motive
for interference other than malice.” Filmar Racing, Inc. v. Stewart, 141 N.C. App. 668, 674, 541 S.E.2d
733, 738 (2001). The relationships in which Sports Quest bases its claim for tortious interference with
existing business relations do not demonstrate that DEI’s motivation was malicious because DEI acted to
protect a legitimate business interest. See Area Landscaping v. Glaxo-Wellcome, Inc. , 586 S.E.2d 507,
510, 2003 LEXIS 1825, at *5 (2003); Robinson, Bradshaw & Hinson v. Smith, 129 N.C. App. 305, 318,
498 S.E.2d 841, 850 (1998).
{35} I n Area Landscaping, the plaintiff alleged that the defendant Brickman, a rival landscaping
business, interfered with its contract with Glaxo-Wellcome. 586 S.E.2d at 510, 2003 LEXIS 1825, at *5.
Brickman obtained the Glaxo-Wellcome contract by underbidding the plaintiff. The court found that the
plaintiff failed to offer any evidence that Brickman acted with malice as opposed to a legitimate business
interest. Thus, the court affirmed the trial court’s summary judgment ruling in favor of the defendant
because bidding for the contract was a legitimate business interest and did not constitute malicious
interference. Id.
{36} Similarly in the case at hand, Sports Quest offers no evidence that DEI acted only with malicious
intent. DEI’s actions obviously harmed Sports Quest’s financial condition. The harm against Sports
Quest does not suffice to maintain the intentional interference with existing business relations. These
same actions, however, obviously benefited the business interests of DEI in two respects.
{37} First, the elimination of Sports Quest from the intermediary role with Action is a common method
of preserving relationships in today’s economy. Contracting the distribution chain provides such benefits
as improved control over licensing and strengthening preferred distribution relationships. Sports Quest,
moreover, fails to offer specific evidence that DEI acted only with malice in eliminating their intermediary
role or that DEI directly interfered with the Hamilton and Sports Quest relationship. Thus, without
evidence of malicious intent, Sports Quest cannot maintain an action for intentional interference with
existing business relations.
{38} Second, the allegation that the interference with the sublicensees was malicious fails because
DEI’s actions advanced a legitimate business interest. Sublicensing is a means in which the original
licensor can lose control over its brand. The inability of the original licensor to approve or reject items
bearing its trademark can lead to the dilution of the value of the intellectual property. For example, a
massive flooding of the market by sublicensees with items of inferior quality bearing the trademark would
likely reflect adversely on other products bearing the trademark. The mere possibility that this might
occur provided DEI with a legitimate business interest regarding the sublicensees.
{39} Even more detrimental to the licensor is that an oversupply of similar goods bearing the trademark
can lower the price that trademark will command in the market. Simple economics dictates that if an
uncontrolled supply exceeds the demand in the market then consumers will not pay the original price,
thereby creating downward pressure on the value of the trademarked goods. The sublicensing of DEI’s
trademarks by Sports Quest created the risk that DEI could lose control over its intellectual property,
hence endangering its value.
{40} Sports Quest cannot assert that DEI did not advance a legitimate business interest by its attempts to
control the relationships with sublicensees. Regardless of whether DEI waived its prohibition on
sublicensing with Sports Quest, the decision to disallow Sports Quest from continuing to do so was not
without justification. Whether DEI waived the prohibition on sublicensing is inconsequential to this claim
because sublicensing has the potential to harm the value of intellectual property and thus provides a
business justification for the action. The prevention of loss of value is a legitimate business interest that is
beyond only malicious intentions.
{41} Sports Quest failed to offer evidence that a contract existed in its relationship with both Action and
Hamilton. In addition, Sports Quest did not support the proposition that DEI acted only with malicious
intent in its actions regarding the Action and Hamilton relationships. The analysis of this claim pertaining
to Action and Hamilton, however, does not even require a legitimate business interest because no contract
existed in these relationships.
{42} Sports Quest proved that it had a contractual obligation with its sublicensees. DEI, however, had a
legitimate business interest in licensing directly to protect the value of its intellectual property assets.
Therefore the Court finds in favor of DEI’s motion for summary judgment on the intentional interference
with business relations claim. It is also clear that DEI had the right to, and a legitimate business interest
in, directly licensing its property.
E.
CIVIL CONSPIRACY
{43} North Carolina does not recognize civil conspiracy as an independent cause of action. Toomer v.
Garrett, 155 N.C. App. 462, 483, 574 S.E.2d 76, 92 (2002). A civil conspiracy claim requires that the
plaintiff prove an underlying unlawful conduct by alleging both the agreement of two or more parties to
carry out the conduct and an injury resulting from that action. Id. Plaintiff fails to offer evidence that an
agreement existed between DEI and Action to commit unlawful acts that injured Sports Quest. Thus the
civil conspiracy claim fails for two reasons.
{44} First, this Court found that Action did not commit an unlawful act regarding Sports Quest.
Action’s decision to deal directly with Hamilton did not constitute an unlawful act. Second, Sports Quest
does not offer any evidence that Action and DEI entered into an agreement to commit an unlawful act.
Thus Sports Quest does not as a matter of law have a claim for civil conspiracy against DEI.
F.
UNFAIR AND DECEPTIVE TRADE PRACTICE
{45} A plaintiff must establish three elements to maintain an unfair trade practices claim. First, the
plaintiff must show that the defendant committed an unfair or deceptive practice or act. Dalton v. Camp,
353 N.C. 647, 656, 548 S.E.2d 704, 711 (2001). Second, the alleged action must occur in or affect
commerce. Third, the alleged act must injure the plaintiff. Id. A practice is unfair if it is unethical or
unscrupulous and is deceptive if it has the tendency to deceive. Marshall v. Miller, 302 N.C. 539, 548,
276 S.E.2d 397, 403 (1981).
{46} In this case, the unfair trade practice is dependent upon the fraud claim. Sports Quest must prove
the fraud claim to sustain an unfair trade claim. The other allegations against DEI do not rise to the level
of an unfair trade practice, as the actions were in the ordinary course of business. The fraud allegations, if
proven true, provide an avenue for Sports Quest to prevail on the unfair trade claim. If the jury found
fraud in connection with the June 15, 2000 amendment, it would be up to the Court to determine if that
fraud supported an unfair trade claim. If the Court found an unfair trade practice, Sports Quest would then
elect between its fraud damages and its unfair trade damages. The unfair trade claim is reliant on the
success of the fraud claim and hence subsumed by it as well.
IV.
ACTION’S MOTION FOR SUMMARY JUDGMENT ON
MONEY OWED ON ACCOUNT
{47} The Court dismissed all of Sports Quest’s claims against Action in the February 12, 2004 Order.
Sports Quest’s only defense to the claim that it owed Action the sum of $90,310.46 for die cast racecars
was that the pending claims should not be resolved until the Court determined Action’s liability to Sports
Quest. Sports Quest maintained that it should not have to pay Action, as the sum owed would serve as a
set off to Action’s liability to Sports Quest as the result of a verdict in its favor. No claims exist that
would hold Action liable to Sports Quest for any sum. In addition, no issue of genuine material fact exists
as to whether Sports Quest owes Action the sum of $90,310.46 for die cast racecars. Sports Quest does
not deny that it owes Action this sum.
{48} Given that Sports Quest no longer has any claim pending against Action, the Court grants
summary judgment in favor of Action on the statement on account claim. Thus Sports Quest is liable to
Action for the sum of $90,310.46 plus interest as provided by law.
CONCLUSION
Based upon the foregoing, it is hereby ORDERED, ADJUDGED and DECREED:
1. Summary judgment in favor of Sports Quest is DENIED on Sports Quest’s claim
against DEI for breach of contract;
2. Summary judgment in favor of DEI is DENIED on Sports Quest’s claim against
DEI for breach of contract;
3. Summary judgment in favor of Sports Quest is DENIED on DEI’s breach of
contract counterclaim;
4. Summary judgment in favor of DEI is DENIED on DEI’s breach of contract
counterclaim;
5. Summary judgment in favor of Sports Quest is DENIED on the issue of DEI’s
waiver of the sublicensing provision;
6. Summary judgment in favor of Sports Quest is DENIED on Sports Quest’s claim
against DEI for fraud;
7. Summary judgment in favor of DEI is DENIED on Sports Quest’s claim against
DEI for fraud;
8. Summary judgment in favor of DEI is GRANTED on Sports Quest’s claim against
DEI for tortious interference with prospective economic advantage;
9. Summary judgment in favor of DEI is GRANTED on Sports Quest’s claim against
DEI for tortious interference with business relations;
10. Summary judgment in favor of DEI is GRANTED on Sports Quest’s claim against
DEI for civil conspiracy;
11. Summary judgment in favor of DEI is DENIED on Sports Quest’s unfair trade
practice claim against DEI;
12. Summary judgment in favor of Sports Quest is DENIED on Sports Quest’s unfair
trade practice claim against DEI;
13. Summary judgment in favor of DEI is DENIED on Sports Quest’s request for
punitive damages;
14. Summary judgment in favor of Action is GRANTED on Action’s claim against
Sports Quest for statement on account.

This the ____ day of March 2004.

[1] Sports Quest makes a very general and speculative allegation regarding future contracts: “DEI tortiously interfered with SQI’s
prospective economic advantage by preventing SQI from entering into future contracts with the third-party manufacturers and
distributors with whom SQI had existing contracts on June 15, 2000, future contracts with the third-party manufacturers and
distributors, future contracts with Action for the purchase of die cast, and future contracts with Hamilton and others for the sale of
Action die cast.” Sports Quest Brief in Response to DEI and Hedrick’s Motion for Summary Judgment on Plaintiff’s Claims, p.20.
Plaintiff then proceeds to discuss the existing contracts with Sports Quest that DEI allegedly caused third parties to breach. Sports
Quest fails to show that these contracts had a future beyond the existing term and operates under the assumption that they would
inevitably be renewed.
[2] The Court ruled in the last opinion that Action did not breach a contract and that when Sports Quest settled with Hamilton, it
waived the right to seek redress for intentional interference.