Retail store chain J.C. Penney  is being sued by a New York design and branding firm, Hudson + Broad Inc., for $40 million alleging that the company reneged on its contract.

Hudson + Broad claims that Penney cancelled the orders o create large square fixtures to be used for the store's upcoming "Fair and Square" branding.  The Plexiglas fixtures are integrated with LED lights are part of the store's plans to revamp the interiors and freshen marketing campaigns. 

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An exclusive agreement was signed in 2011 where the design firm would create color changing squares that would be installed around Penney's Manhattan store.  A total of 1800 fixtures were requested but before the planning was complete, J.C. Penney opted to outsource the production elsewhere. 

The current predicament may not sit well with the retail company as it recorded an $87 million loss in the recent quarter.  Its new campaign was to turn things around with updating store interiors and minimizing rolling discounts. 

Hudson + Broad said that they were shocked with Penney's decision and that the project's fixture were still proprietary prior to the outsourcing decision.  No comments were made from J.C. Penney as the case is still pending.  The New York design firm is seeking $20 million for punitive and another $20 for compensatory damages.