JM Smith Corporation v. Cherokee Pharmacy and Medical Supply Inc.
United States District Court for the District of South Carolina
2016 WL 7971313 (2016)
JM Smith Corporation, d/b/a Smith Drug Company (SDC) (plaintiff), distributed pharmaceutical products wholesale to a variety of entities. SDC entered into a contract with four separate pharmacies—Cherokee Pharmacy and Medical Supply, Inc., Cherokee Advanced Care Pharmacy, Cherokee Health Care Supply, Inc., and Cherokee Pharmacy and Medical Supply of Dalton, Inc. (collectively Cherokee Pharmacies) (defendants). Under the contract, SDC was to supply Cherokee Pharmacies with pharmaceutical drugs at specified prices. Cherokee Pharmacies accepted the drugs but then stopped making payments to SDC, claiming that SDC was charging prices higher than those specified in the contract. Cherokee Pharmacies failed to notify SDC about the improper pricing after they discovered—or should have discovered—the improper pricing. SDC brought suit against Cherokee Pharmacies, and Cherokee Pharmacies brought a counterclaim for fraud and improper pricing. SDC moved for summary judgment on the counterclaim, arguing that, under the Uniform Commercial Code (UCC), Cherokee Pharmacies’ failure to notify SDC of the alleged improper pricing after accepting the drugs barred the claim.
Rule of Law
Holding and Reasoning (Cain, J.)
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