Accent wins $3M settlement in suit over Lilly wood finish
By Powell Slaughter -- Furniture Today, February 9, 2003
Los Angeles — Case goods manufacturer and importer Accent Furniture will receive $3 million in settlement of a 1999 lawsuit against coatings supplier Valspar's wood coatings division and California distributor A.G. Layne Inc.
The settlement was reached late last month during the first week of a jury trial here.
Finish manufacturer Lilly Inds., which Valspar acquired in 2000, began supplying Accent's bedroom plant in San Bernardino, Calif., with a stain intended to finish furniture with a golden oak color in 1999.
According to Dennis Boyd, president of Accent, much of the furniture turned red and pink when treated with the Lilly stain. Boyd said his company, which now sells under the Trend Furniture brand, had revenue of $13 million a year at the time and suffered millions in lost sales, resulting in the layoff of many of Accent's 260 employees.
Legal actions began when A.G. Layne, a Lilly distributor, tried to collect from Accent an unpaid invoice of $20,368 for the sale of wood stains. Accent filed a cross-complaint for lost business against Layne and Lilly, claiming $8.1 million in past and future profits, lost inventory and damaged goodwill.
"Color is critical in the furniture industry," said Los Angeles Attorney Roger Clark, who represented Accent. "We think this settlement puts stain formulators everywhere on notice that they must deliver a good, stable product or else suffer the consequences."
Lilly and Layne contended that color problems resulted from Accent's finish application techniques, and said that since audited statements revealed that Accent's largest annual profit before 1999 was $150,000, the manufacturer could not have sustained losses in the amounts claimed.
Lilly and Layne also said they received testimony from customers saying they had gotten no red furniture from Accent, and that Accent's largest customer stopped buying from the company because of pricing disputes.
"We really don't believe there was a problem with the stain, but the settlement of the case made sense from a business perspective," said Joe Thomson, associate general counsel for Valspar. "We like to stand behind our products, but six to eight weeks of jury trial in Los Angeles is very expensive, and given the participation of insurance carriers in the payment we decided to settle."
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