## Facts

- Di-Star, Ltd. was a wholesaler of ideal-cut diamonds sold under the “Hearts on Fire” brand.
- On May 30, 1997, Di-Star and Wixon Jewelers, Inc., a Minnesota retailer, entered a written distribution agreement.
- The agreement provided that Wixon would be the exclusive retailer of Hearts on Fire diamonds in the Minneapolis–Saint Paul area so long as Wixon met specified purchase requirements.
- The written agreement required Wixon to (1) initially purchase six branded diamonds and (2) thereafter order at least $2,500 of Hearts on Fire diamonds per month to maintain exclusivity; the agreement had no fixed end date.
- Wixon purchased the initial six diamonds, but then made only two additional purchases (in November 1997 and December 1997) and did not meet the $2,500 monthly minimum for most months.
- Di-Star notified Wixon that Wixon was in breach of the agreement and that Di-Star would begin distributing Hearts on Fire diamonds through an additional Minneapolis–Saint Paul retailer.
- Wixon canceled the relationship and sued Di-Star and two of its officers (Glenn Rothman and Jack Gredinger), alleging (among other claims) breach of contract and fraud in the inducement, and claiming it would lose more than $1,000,000 in profits over the next ten years.
- Wixon contended the parties had orally modified the monthly minimum to an annual minimum—$30,000 per year—so the total purchase amount would be comparable but purchases could be less frequent.
- The district court granted summary judgment for Di-Star and the individual defendants; Wixon appealed only the rulings on breach of contract and fraud in the inducement.

## Issues

1. Whether the alleged oral modification changing Wixon’s minimum purchase obligation from $2,500 per month to $30,000 per year was enforceable under Minnesota’s UCC statute of frauds.
2. Whether Wixon could maintain a fraud-in-the-inducement claim based on alleged misrepresentations related to exclusivity and the parties’ expected performance.

## Decision

- The Eighth Circuit affirmed summary judgment for Di-Star and its officers.
- The alleged oral modification was unenforceable because it was a modification of a contract for the sale of goods and, as modified, fell within the UCC statute of frauds; Wixon identified no writing sufficient to satisfy the statute’s requirements.
- Because the written $2,500-per-month minimum controlled, Wixon’s failure to meet that condition meant Wixon was in breach and could not treat Di-Star’s appointment of another retailer as a breach of the exclusivity arrangement.
- Wixon’s fraud-in-the-inducement claim failed because Wixon could not show actionable misrepresentation and justifiable reliance where Di-Star’s challenged conduct was consistent with the written agreement once Wixon failed to satisfy the minimum purchase requirement.

## Legal Principles

- Under Minnesota’s adoption of UCC Article 2, contracts for the sale of goods priced at $500 or more must be evidenced by a writing that is sufficient under UCC § 2-201.
- Under UCC § 2-209(3), a modification must satisfy the statute of frauds if the contract as modified would fall within § 2-201; an oral modification that changes the buyer’s purchase obligation in a goods contract is unenforceable absent a sufficient writing.
- The statute-of-frauds writing must indicate a contract for sale and include a quantity term; if the claimed modification alters the operative quantity or minimum-purchase requirement, the absence of a sufficient writing bars enforcement of the modification.
- When a buyer’s contractual benefit (such as territorial exclusivity) is expressly conditioned on meeting a minimum purchase requirement, the buyer’s failure to meet the condition prevents recovery for the seller’s withdrawal of that benefit in response to the buyer’s nonperformance.
- A fraud-in-the-inducement claim requires proof of a material misrepresentation (or concealment where there is a duty to disclose), knowledge of falsity, intent to induce reliance, actual and justifiable reliance, and damages; a plaintiff cannot base justifiable reliance on an oral understanding that contradicts an operative written agreement and is unenforceable under the statute of frauds.

## Conclusion

The Eighth Circuit held that Wixon’s asserted oral change to the minimum purchase term was barred by the UCC statute of frauds because it was not supported by a sufficient writing, leaving the written $2,500-per-month requirement in force; since Wixon did not meet that minimum, Di-Star’s decision to add another retailer did not constitute a breach of the exclusivity arrangement, and Wixon’s related fraud-in-the-inducement theory also failed.


Wixon Jewelers, Inc. V. Di-Star, Ltd., 218 F.3d 913 (2000)