THE HOME SHOPPE
and
DOUG HARRIS

P.S. Docket No. MD 07-124

APPEARANCE FOR DISPUTANT
THE HOME SHOPPE

APPEARANCE FOR DISPUTANT
DOUG HARRIS

INITIAL DECISION

           This mail dispute has been docketed pursuant to Postal Operations Manual (POM 9, July 2002) Section 616.21, which requires the Chief Field Counsel to forward certain unresolved mail disputes to the Judicial Officer for resolution. The mail in dispute is that addressed to IST Systems, Inc., and/or IST Home Solutions, Inc., at 4154-C Silverpeak Parkway, Suwanee, GA 30024-6702. The Suwanee Postmaster is currently holding the mail.

           Mr. Harris filed a sworn written statement, as required by the Rules of Practice, 39 C.F.R. §965.5, along with some supporting documents. Mr. Oxford filed a sworn statement on behalf of The Home Shoppe, along with some supporting documents. Both parties also filed rebuttal, in accordance with 39 C.F.R. §965.6. The following findings of fact are based on all the material submitted by the parties, including material forwarded by the United States Postal Service Law Department, Atlanta Office.

FINDINGS OF FACT

           1. For some time prior to December 2006, Mr. Harris owned and operated business entities collectively known as IST.[1] (Harris affidavit).

           2. In approximately October 2006, Mr. Harris began discussions with Mr. Oxford of HDI Home, Inc., which does business under the name “The Home Shoppe,” with a view toward HDI acquiring IST, or at least some financial interest in IST. (Harris affidavit; Oxford affidavit).

           3. Sometime in December 2006, Mr. Oxford presented a letter to Mr. Harris, stating the intent of HDI “regarding the purchase of the assets of IST, Inc., as stated in this letter.” The letter stated that the effective date “of this agreement” would be December 4, 2006. After some discussion and some minor handwritten changes, Mr. Oxford signed the letter as CEO of HDI, Inc., and Mr. Harris signed as President of IST, Inc. (Harris affidavit; Oxford affidavit; letter attached to Oxford affidavit as Exhibit A).

           4. The letter stated, “This letter constitutes the entire understanding between the parties and supersedes all prior agreements, representations, or understandings of the parties (whether written or oral).” Further, the letter stated, “The principle (sic) terms of the transaction will be as follows:

Home Shoppe will acquire substantially all of the assets, tangible and intangible owned by IST that are used in or necessary for the conduct of it’s business including all existing stock, intellectual property, fixed assets any and all customer lists, contracts in progress including any payments made by customer after the effective date of this letter, the complete sales pipeline and/or prospects currently being pursued for engagement, and all goodwill associated with the IST’s business, all free and clear of any security interest, liens, mortgages or other encumbrances.

In addition to the $39,413.27 cash which was paid by Home Shoppe to IST, Inc. on December 4, 2006 and in further consideration, Doug Harris will be employed by The Home Shoppe at a monthly salary of $5,000 plus a sales commission of 5% of gross profit on all new business sold by him. Doug will receive a $1,000 per month draw against commissions for the purpose of making monthly payments on his personal line of credit. Home Shoppe will also give Doug Harris 50,000 HDI, Inc. stock options in the Home Shoppe Incentive Stock Option Plan. Doug Harris agrees to work for Home Shoppe under Home Shoppe’s standard non-complete agreement to be executed at a later date. Doug Harris will be immediately eligible for health benefits in accordance with the Home Shoppe health plan.

In further consideration, Home Shoppe shall transition current technical employees of IST to Home Shoppe payroll effective as of the beginning of the current IST payroll period.

Additionally Home Shoppe will assume responsibility for payment of $137,472.05 to the vendors listed on the attached sheet.

Unless the transition will accelerate the loans, Home Shoppe will assume existing loans against all company owned vehicles.

The letter concluded with the following:

“Promptly following the execution of this letter of intent, Seller will allow Buyer to examine all financial, accounting and business records and contracts as well as other legal documents necessary to complete due diligence. Any information obtained as a result of the examination will be held in strict confidence.”

           5. Following the signing of the above letter, Mr. Harris was placed on The Home Shoppe payroll and received several The Home Shoppe checks from late December 2006 through mid-February 2007. (Harris affidavit; Oxford affidavit; Oxford reply, Ex. H).

6. On January 11, 2007, The Home Shoppe paid overdue rent on the premises at 4154-C Silverpeak Parkway. (Oxford reply, Ex. B).

7. In February and March 2007, The Home Shoppe paid vehicle lease and insurance payments and utility bills that were billed to IST. (Oxford reply, Exs. C, D and E).

8. It is unclear whether this mail dispute was precipitated by a change-of-address order or something else, but both parties have made claims for the mail addressed to IST at 4154-C Silverpeak Parkway. (Law Department forwarding letter).

DECISION

           Mr. Harris argues that the December 2006 letter is not a contract for sale, that he has not conveyed any of his ownership interest in IST, and that he is still the sole shareholder and the president of the company. He contends that the December letter was only part of preliminary discussion between the parties as to what their eventual arrangement might be.

           The Home Shoppe argues that it acquired IST, effective December 4, 2006, in exchange for consideration in the form of cash, an agreement to assume various debts of IST, and an agreement to employ Mr. Harris. Their contention, therefore, is that Mr. Harris no longer holds any position of authority in the business and that The Home Shoppe is entitled to the mail.

           Even though there are some ambiguities in the December letter, as Mr. Harris argues, they are not of such importance to defeat The Home Shoppe’s claim that it became the owner of Mr. Harris’s business, effective December 4, 2006. The fact that the parties entered into a contract on that date is evidenced by consideration in the form of cash, an agreement by The Home Shoppe to assume several of IST’s debts and to employ Mr. Harris, which agreements The Home Shoppe made good on during the ensuing months. That The Home Shoppe took over control of the business after December 2006 is clear even from Mr. Harris’s statement, wherein he states that, while he had some reservations about the arrangement, he realized “that I had effectively given the keys and a great deal of control over operations of the IST Entities to the Home Shoppe’s agents.”

           Because The Home Shoppe has purchased and taken control of the operation of the business, The Home Shoppe is entitled to mail addressed to the business.

           This decision deals only with delivery of mail. It does not determine ownership of the contents of the mail and does attempt to resolve any underlying financial disputes between the parties. If either party obtains a court order directing delivery of the mail, postal regulations provide that the mail will be delivered according to such an order. POM §616.3. If The Home Shoppe receives any mail that is intended for Mr. Harris personally, or for any business entity not associated with The Home Shoppe, it is its responsibility to forward that mail.[2]

           The Judicial Officer should issue an Order to the Suwanee Postmaster that mail addressed to IST Systems, Inc., and/or IST Home Solutions, Inc., at 4154-C Silverpeak Parkway, Suwanee, GA 30024-6702 should be delivered as directed by Cliff Oxford on behalf of The Home Shoppe.

Bruce R. Houston
Chief Administrative Law Judge

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[1] Mr. Harris identifies IST Systems, Inc., IST Home Solutions, Inc., and Trinity Security Systems. The record does not clearly distinguish the three names, and this mail dispute appears to involve only the first two.

[2] Part of Mr. Hunter’s argument in his Memorandum of Law is that Ms. Curran, in her letter to the postmaster, claimed only mail addressed to IST Home Solutions, Inc., implying that this was the only entity HDI intended to purchase. He argues, therefore, that any mail otherwise addressed should not be in dispute and should be delivered to Mr. Harris. The overall record, however, does not distinguish between the various IST names. The December letter refers to “IST,” or “IST, Inc.,” and Mr. Harris signed as President of IST, Inc. Mr. Harris’s sworn statement refers to the “IST Entities.” I do not find a sufficient basis for separating mail addressed to IST Systems, Inc., from that addressed to IST Home Solutions, Inc.