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Hallmark Building Supplies sues supplier for breach of contract

Hallmark Building Supplies of Waukesha is suing one of its suppliers for abruptly terminating an exclusive-distributor agreement.

The lawsuit, filed on Feb. 7 in federal court, accuses the composite-decking manufacturer MoistureShield of unlawfully ending the exclusive-distribution agreement and tapping another distributor to compete with Hallmark in some of its exclusive-sales areas.

In December 2017, Hallmark and MoistureShield entered into a distributor agreement that appointed Hallmark as MoistureShield’s exclusive distributor in six states, including Wisconsin.

A month later, Hallmark ordered more than $600,000 in inventory from MoistureShield and agreed to take a previous Wisconsin distributor’s remaining MoistureShield inventory. The complaint said Hallmark then began training its sales teams, initiating leads with dealers and taking other steps to sell MoistureShield products.

In May 2019, the company that owns MoistureShield reformed its business plans, and top officials there canceled their distributor agreement with Hallmark. The complaint said the MoistureShield vice president emailed Hallmark offering a new, non-exclusive distributor agreement — one Hallmark declined.

Hallmark then requested a repurchase of its entire MoistureShield inventory, valued at about $616,000. The complaint said MoistureShield bought about $232,000 of the inventory but refused to buy the rest or transfer it to another dealer.

The complaint said Hallmark hasn’t been able to sell the remaining inventory, leaving the company out hundreds of thousands of dollars.

The lawsuit charges MoistureShield with violating the Wisconsin Fair Dealership Law and the breach of a distributor agreement. It asks for an order requiring MoistureShield to buy the remaining inventory and pay damages and an award for court costs and attorneys’ fees.

About Michaela Paukner, mpaukner@wislawjournal.com

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