By Patsy R. Brumfield/NEMS Daily Journal
TUPELO – A craft-display business has asked a Texas federal court to uphold an arbitration award plus costs against Baldwyn-based Hancock Fabrics.
Rowdec LLC of California, a private company doing business as Westlake Associates, filed its award petition May 9 against Hancock in the Northern District of Texas.
The exact amount ordered by the arbitrator is not stated in the petition, but publicly traded Hancock recently noted that during 2011, the company “had to defend itself in an arbitration proceeding arising from a disputed consulting agreement” and “incurred substantial professional fees of $1.6 million, which are not expected to reoccur in future periods.”
The Westlake-Hancock contract, like many others, mandated arbitration of any dispute, rather than taking the issues to court.
When Westlake filed its demand for arbitration, it asked for $5 million in actual damages.
The complaint describes Hancock as a specialty retailer of fabrics, operating some 265 stores in 37 states.
Hancock spokesmen did not respond to Daily Journal attempts to get their company’s view about the situation.
Westlake’s lead attorney, George Morrison of Dallas, also did not respond to a Daily Journal question about the total award amount.
The Dallas arbitrator apparently determined that Hancock “breached and repudiated” its 2009 contract with Westlake to build a new craft department for Hancock’s retail stores in exchange for a guaranteed fee, reimbursement for its expenses and royalties.
Westlake claims that Hancock agreed to pay Westlake royalties on all products sold in the Hancock craft department during its six-year contract.
Westlake insists Hancock owes it $548,832.97 in attorneys fees, costs and arbitration expenses, according to the May 9 federal petition.
Hancock apparently ended its relationship with Westlake, the federal court document states, without calculating or paying the royalties or providing sales reports.
The petition also claims that Hancock was ordered to pay Westlake another $100,000 for responses to the Court of Appeals.
“To date, despite request, Hancock has failed to pay” the attorneys fees and interest, which were due by April 23, or to report sales as required by the award, Westlake claims.
Westlake also wants a variety of Hancock information and reports about “identified” products.
Westlake asks the court to confirm its award “in all respects” and make it the final judgment.