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Judge aids J.C. Penney in Martha Stewart case

Martha Stewart testified in a suit brought by Macy’s.

REUTERs/pool

Martha Stewart testified in a suit brought by Macy’s.

NEW YORK — With Ron Johnson out, Martha Stewart is in at J.C. Penney, at least for the moment.

In a contract dispute brought by Macy’s against Penney and Stewart’s company, a judge ruled Friday that Penney could temporarily sell a slew of housewares designed by the home diva and avoid a potential loss estimated at $100 million.

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In his ruling, Justice Jeffrey K. Oing of New York State Supreme Court called Johnson, who was ousted this week as Penney’s chief executive, the ‘‘architect of this entire dispute.’’ Preventing Penney from selling the goods, he said, would result in ‘‘harm to J.C. Penney, even if it is the result of its own acts, but the acts, I believe, were spurred on by their former CEO.’’

The ruling permits Penney to sell Martha Stewart-designed housewares under the JCP Everyday label until a final decision is issued at the end of the trial. The trial continues next week.

Macy’s said it would immediately appeal the ruling.

It came at the end of a turbulent week for Penney. On Monday the company announced that, after a tumultuous 17 months in which Johnson’s turnaround effort flopped and sales plummeted, he would be replaced by his predecessor, Myron E. Ullman III. Private-equity firms have approached Penney with unsolicited investment offers, according to a person briefed on the matter, leading the retailer to hire Blackstone to explore financial options.

The trial resumed Monday after Penney, Martha Stewart Living Omnimedia and Macy’s — which is suing both companies, saying that they violated a contract specifying where Stewart’s branded goods could be sold — failed to reach a settlement during a court-ordered monthlong break.

Macy’s, which has sold Martha Stewart products since 2007, says its contract prevents Stewart’s company from selling her home goods to competitors. There is an exception for sales at Martha Stewart stores, however.

Penney and Stewart’s company say that, because Penney’s planned to set up boutiques within its department stores for the products, the exemption applies. They also say Penney should be able to sell housewares designed by Stewart without her name on them.

Oing has been pushing the companies to settle, and Friday’s ruling could give Penney and Stewart’s company a bargaining chip.

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