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Teddi Facing Three Lawsuits

Teddi of California is fending off three separate breach-of-contract lawsuits filed in Los Angeles by licensee Carol Anderson Inc. and two suppliers.

LOS ANGELES — Teddi of California, a mainstay in the moderate sector here, is fending off three separate breach-of-contract lawsuits filed in Los Angeles Superior Court by licensee Carol Anderson Inc. and two suppliers.

The suits seek a total of more than $6.85 million, with the biggest claim of $6.5 million in damages and fees being sought by Carol Anderson Inc., which filed its suit on June 23.

Better sportswear vendor Carol Anderson, owned by the designer herself and her husband, Jan Janura, entered a licensing deal with Teddi last October that eventually would be worth $6 million. The agreement gave design duties to Carol Anderson and manufacturing responsibility to Teddi. Upon the signing the agreement, Teddi paid $700,000 to Anderson, and thereafter, the deal called for quarterly payments equal to an increasing percentage of sales, or at least $125,000 per quarter. Teddi didn’t meet the March payment, according to the suit, nor a one-time design fee of $350,000 at the end of May. Carol Anderson also asserts that Teddi has only shipped 30 percent of its customer orders to clients such as Nordstrom.

In its court filing, Teddi countered that the designer’s employees weren’t cooperative in the transition of the line and that the company’s slow resolution of markdown issues associated with prior shipments delayed shipping.

Carol Anderson counsel Mark Brutzkus of Ezra Brutzkus Gubner LLP declined comment and Teddi attorney Sylvia Lardiere of Browne and Woods didn’t return phone calls.

Also seeking payment from Teddi is Los Angeles-based Design Collection for $200,000 in unpaid invoices. The textile importer and converter filed the suit May 9 and obtained a writ of attachment against Teddi worth $200,000 to $280,000 from the court Friday.

Meanwhile, Colorway Inc. of Los Angeles filed suit two weeks ago seeking $150,000 in payments for items shipped Jan. 31. The suit states that payment was due April 1 to the converter for about 38,000 yards of embroidered denim fabric supplied to Teddi.

Gary Freedman, who’s representing Teddi in the Colorway and the Design Collection suits, said his client will fight the two claims.

“Unfortunately, typical of the apparel industry is that suppliers think they can breach contracts and deliver nonconforming goods without having consequences,” he said.

Sources said Teddi, a reportedly $70 million to $80 million brand owned by the Apparel Group based in Rancho Dominguez, Calif., has arrived at a crossroads after serving the 50-plus customer for nearly half a century. As competitors perk up their offerings and department stores strengthen their private label business, Teddi has seen its wholesale real estate vaporize. Last year, J.C. Penney scaled back on the line, dropping Teddi’s career sportswear and misses’ casualwear to focus on its dresses, while Mervyn’s began eliminating the brand two years ago. Meanwhile, chargebacks haunt the collection, sources said.

Teddi tried to reinvent itself late last year with the debut of Strategy, a more contemporary-styled line aimed at 35-year-olds and older, but officials tabled the launch. In March, its chief executive officer, Stuart Weiser, resigned. Tom Beaver, a Teddi employee who served in sales, has taken over the role.

Industry observers said Teddi isn’t alone in navigating rough apparel waters. They said 2003 isn’t shaping up to be a banner year for manufacturers, citing the economy and consumer jitters. As a result, retailers often hesitate to test novelty concepts or new vendors, observers said.

But vendors themselves share part of the blame. “If you went into the moderate market, it could be last year. There’s not a lot of newness and there’s no reason to buy — that’s a big part of the problem,” said Lynn Miller, merchandise manager of Directives West, a retail buying office and consulting firm in Los Angeles.