Summary Judgment In A Commercial Collection Lawsuit: Part II

(c) the defendant will oppose the motion for summary judgment.

An example of a contested motion for summary judgment in a commercial action is Auriga Plasticos, S.A. De C.V. (AURIGA) v. Allison Video, Ltd. (ALLISON VIDEO) in which the plaintiff-seller, AURIGA, a Mexican corporation, sued the defendant-buyer, ALLISON VIDEO, a New York corporation, in the Supreme Court, County of Suffolk, (Index No. 10116/1997), for goods sold.

The amended complaint [FN3], served July 7, 1997, alleged that: [FN4]

FN3 The amended complaint and the other filed papers in this lawsuit are quoted in their original form except that, for the purpose of clarity, non-essential material such as wherefore clauses and paragraph numbers in the affidavits have been omitted and except that syntax, spelling and factual errors in the plaintiff's affidavits and memoranda of law have been corrected. Errors in the defendant's opposing papers have not been corrected and appear in their original form.

FN4 The original complaint did not include the first date of sale. The defendant moved to compel a more definite statement and withdrew the motion when plaintiff served its amended complaint.

1. At all the times hereinafter mentioned, plaintiff was and still is a foreign corporation.

2. At all the times hereinafter mentioned, defendant was and still is a New York corporation whose principal office is located in the County of Suffolk.

3. On or about and between November 15, 1995, and December 5, 1995, plaintiff, at the special instance and request of the defendant, sold and delivered to the defendant, and the defendant accepted, certain goods, wares and merchandise at the agreed price and reasonable value of $167,360.00.

4. No part thereof has been paid although duly demanded and there now remains due and owing to plaintiff from the defendant the sum of $167,360.00 with interest thereon from December 5, 1995.

The defendant's amended answer consisted of the usual DKI with respect to paragraph "1" of the complaint, an admission of paragraph "2" and the usual general denial of paragraph "3" and "4." A notice to take the deposition (EBT) of the plaintiff was served with the answer.

Plaintiff moved for summary judgment by the service of a notice of motion returnable March 23, 1998. [FN5]

FN5 The motion included a request to amend the plaintiff's name to correct a misnomer. Material relating to the amendment of the plaintiff's name has been omitted from the moving affidavit and from the memorandum of law, since that portion of the motion was unopposed and had no bearing on the summary judgment motion.

The moving affidavit of the plaintiff recited:

I am the Credit Manager of the plaintiff, a corporation organized under the laws of the Republic of Mexico, and I have personal knowledge of the facts of this matter.

Plaintiff's amended complaint seek to recover the sum of $167,360.00 from the defendant for goods sold to and accepted by defendant between November 15, 1995, and December 5, 1995.

The defendant appeared in this action and served its amended answer generally denying the allegations of the complaint, except admitting that the defendant is a new York corporation whose principal office is in Suffolk County.

Plaintiff's United States sales agent obtained an order on behalf of the plaintiff from the defendant to sell 4,536,000 cassette shells [FN(a)] to the defendant at a price of eight(8) cents for each.

FN(a) A cassette is a small, flat case containing two reels and a length of magnetic tape that winds between them, used in audio or video tape recorder or players. A shell is the cassette without the tape.

shell to be delivered to the defendant in seven (7) truckloads of 648,000 shells each on specified delivery dates. Exhibit "1" annexed is a November 6, 1995, fax from plaintiff's sales agent to defendant confirming the sale, the defendant's purchase order dated November 8, 1995, confirming the order, and plaintiff's confirming fax dated November 8, 1995, to defendant reconfirming the order.

The delivery schedule was changed by two faxes (Exhibit "2") from plaintiff's sales agent to defendant. The first fax, dated November 9, 1995, confirmed that the defendant would pick up the first shipment from a warehouse in Indianapolis, Indiana, on November 10, 1995. The second fax, dated November 10, 1995, again confirmed pick up of the first shipment on November 10, 1995, by the defendant and the changes in the delivery schedule.

The first shipment was picked up by the defendant on November 10, 1995, at the warehouse in Indianapolis, Indiana, and payment therefor was received by plaintiff by defendant's check dated February 8, 1996. Exhibit "3" annexed is plaintiff's invoice for the first delivery in the sum of $51,840.00, the signed delivery receipt and a copy of defendant's check.

The second shipment was delivered to a common carrier on November 13, 1995, received by defendant in Harrison, New Jersey, on November 16, 1995, and paid for by defendant's check dated January 25, 1996. Exhibit "4" annexed is plaintiff's invoice for the second delivery in the sum of $51,840.00, the signed delivery receipt and a copy of defendant's check.

The third shipment was delivered to a common carrier on November 16, 1995, received by defendant in Harrison, New Jersey, on November 20, 1995, and paid for by defendant's check dated March 13, 1996. Exhibit "5" annexed is plaintiff's invoice in the sum of $51,840.00 for the third delivery, the signed delivery receipt and a copy of defendant's check.

The fourth shipment was delivered to a common carrier on November 22, 1995, received by defendant in Harrison, New Jersey, on December 8, 1995, and partially paid for by defendant's two checks dated June 7, 1996, and July 3, 1996, each in the sum of $20,000.00. Exhibit "6" annexed is plaintiff's invoice in the sum of $51,840.00 for the fourth delivery, the signed delivery receipt and a copies of defendant's two checks totaling $40,000.00. A balance of $11,840.00 remains due and unpaid on the plaintiff's invoice #10895 dated November 21, 1995.

The fifth shipment was delivered to a common carrier on November 30, 1995, and received by defendant in Harrison, New Jersey, on December 4, 1995. Exhibit "7" annexed is plaintiff's invoice #10938 in the sum of $51,840.00 for the fifth delivery and the signed delivery receipt. The entire amount of invoice #10939 in the sum of $51,40.00 remains unpaid.

The sixth shipment was delivered to a common carrier on December 4, 1995, and received by defendant in Harrison, New Jersey, on December 7, 1995. Exhibit "8" annexed is plaintiff's invoice #10970 in the sum of $51,840.00 for the sixth delivery and the signed delivery receipt. The entire amount of invoice #10970 in the sum of $51,40.00 remains unpaid.

The seventh shipment was delivered to a common carrier on December 7, 1995, and received by defendant in Harrison, New Jersey, on December 11, 1995. Exhibit "9" annexed is plaintiff's invoice #11056 in the sum of $51,840.00 for the seventh delivery and the signed delivery receipt. The entire amount of invoice #11056 in the sum of $51,40.00 remains unpaid.

The defendant is indebted to the plaintiff, as follows:

for a total of $167,360.00. No part of the said sum of $167,360.00 has been paid despite repeated demand for payment.

Deponent believes that the cause of action is established sufficiently to warrant the Court, as a matter of law, to direct judgment in plaintiff's favor and that there is no defense to the cause of action set forth in the plaintiff's amended complaint herein.

The motion for summary judgment was supported by plaintiff's memorandum of law that set forth the facts and the law:

FACTS

Pursuant to a written order, between November 10, 1995, and December 11, 1995, plaintiff sold and delivered to defendant 4,536,000 cassette shells. Defendant paid for the first three shipments. Defendant did not pay the balance due on the fourth shipment nor did the defendant pay the amounts due on the fifth, sixth and seventh shipments. The plaintiff's amended complaint seeks to recover from defendant the sum of $167,360.00, the unpaid amount due for the cassette shells that were sold and delivered to the defendant and accepted by it. Defendant's answer generally denies the sale, delivery and acceptance of the cassette shells.

THE LAW

POINT I

PLAINTIFF IS ENTITLED TO SUMMARY JUDGMENT AS A MATTER OF LAW

Defendant, a buyer of goods from plaintiff, must pay the contract price of the goods it accepted, U.C.C.§2-607(1).

The documentary evidence consists of the written purchase order and plaintiff's confirmations (Exhibit "1"), [FN(a)] faxes from plaintiff to defendant changing the delivery dates (Exhibit "2") and the invoices and proofs of delivery for each of the seven shipments of cassette shells (Exhibits "3" through "9") with copies of defendant's checks given in payment of the first three shipments and partial payment of the fourth shipment.

FN(a) All exhibit references are to the moving papers.

The moving affidavit and the documentary evidence is the necessary proof in admissible form sufficient to establish plaintiff's prima facie case, Friends of Animals v. Associated Fur Mfrs., 46 N.Y.2d 1065, 1067 (1979).

To defeat a summary judgment motion, defendant must produce evidentiary proof in admissible form, Id. at 1067, 1068; or as Di Sabato v. Soffes, 9 A.D.2d 297, 301 (1959), held, a defendant who opposes a motion for summary judgment must assemble, lay bare and reveal its proofs, in order to show that it can establish its defense at trial.

The defendant cannot defeat this summary judgment motion by the general denial contained in its answer, Iandoli v. Lange, 35 A.D.2d 793 (1970); nor can the defendant defeat this summary judgment motion by repeating the allegations contained in its answer, verified or unverified, Indig v. Finkelstein, 23 N.Y.2d 728, 729 (1968); nor can the defendant defeat this summary judgment motion by bald conclusory assertions, even if believable, Capri Jewelry, Inc. v. Chayavi, 117 A.D.2d 464, 467-68 (1986).

The defendant served an affidavit opposing the motion for summary judgment with a cross-motion to amend its answer to include a counterclaim. The ground for the cross-motion was "that defendant's amended counterclaim is so closely related to plaintiff's claims that it would be counter productive of judicial economy to require defendant to commence a separate action...." The defendant's attorney also served his own opposing affirmation noting the plaintiff's failure to appear for the EBT noticed by the defendant despite numerous adjournments obtained by plaintiff's attorney warranted denial of the summary judgment motion. [FN6]

FN6 CPLR 3214(b) reads: "Service of a notice of motion under rule 3211, 3212, or section 3213 stays disclosure until determination of the motion unless the court orders otherwise."

The opposing affidavit of the defendant recited:

I am the President of Allison Video, Ltd. (hereafter "Allison"), a corporation organized under the laws of the State of New York. I have personal knowledge of the facts of this matter. I submit this affidavit in opposition to plaintiff's motion for summary judgment and in support of Allison's cross-motion to amend its answer to add a counterclaim for breach of contract.

Plaintiff's motion for summary judgment must be denied. Although Allison did enter a sales agreement to purchase cassette shells from plaintiff, plaintiff's continual breaching of the purchase agreement by performing the sales order in a nonconforming manner caused Allison to incur substantial costs which significantly diminish and negate plaintiff's claim. When Allison agreed to purchase the cassette shells, plaintiff promised to ship the shells in plain packaging in seven shipments to be completed by November 27, 1995. However, plaintiff failed to meet these requirements. Instead, plaintiff sent a large number of the cassettes in the wrong packaging and continually made its deliveries late, even after it unilaterally revised the delivery dates. These breaches of the sales agreement caused Allison to incur substantial costs and damages as Allison had to repackage the cassettes and make extraordinary efforts to meet its customers' demands for the cassettes despite plaintiff's failure to deliver the cassettes in a timely manner. Accordingly, plaintiff's motion for summary judgment should be denied.

Allison is engaged, inter alia, in the business of manufacturing, selling and distributing cassette shells. When Allison cannot meet customer demand through its own manufacturing efforts it purchases the necessary cassette shells from other manufacturers.

On or about November 6, 1995, Allison, in order to meet increased customer demand, contacted plaintiff's sales agent, Auriga Aurex, Inc., to arrange the purchase of 4,536,000 cassette shells at eight cents per shell. During negotiations with Auriga Aurex's sales representative, Dennis Schleich, I stressed that Allison needed the cassette shells by November 27, 1995, in order to meet contracts it had with its customers. Moreover, I stated that since Allison would upon receipt of the cassettes immediately re-ship the cassettes to its customers the cassettes had to be in plain packaging. Schleich promised that plaintiff could meet these requirements. Based upon these assurances, Allison agreed to purchase the 4,536,000 cassette shells pursuant to the following delivery terms: the cassettes would be shipped in brick-pak or white boxes, not Auriga packaging, and the deliveries to Allison's warehouse in Harrison, New Jersey would take place on November 10, 13, 15, 17, 20, 22 and 27. This agreement was memorialized in the purchase order Allison issued to Auriga Aurex on November 8, 1995. (See Exhibit A: Purchase Order).

Almost immediately, plaintiff began to breach the terms of the sales agreement causing Allison to incur increased costs. First, on or about November 9, 1995, less than twenty-four hours before the first shipment was to be delivered, plaintiff informed me that it would not be able to deliver the first shipment to Allison's warehouse as it had promised. Despite my protests that the missed shipment would cause Allison to lose substantial sales and damage its relationships with its customers, plaintiff's representatives stated that plaintiff could not and would not meet the terms of the initial sales agreement, but that the necessary number of cassette shells were located in Indiana if Allison wanted to pick them up itself.

If Allison did not obtain the cassette shells it would have sustained substantial damages because it would have breached its own contracts with its customers. Moreover, there was no other means for obtaining the cassettes on the less than twenty-four hours notice provided by the plaintiff. Thus, in order to mitigate the damages Allison would incur as a result of plaintiff's first breach of the sales contract, I arranged to have Allison pick up the cassettes in Indiana. This cost Allison approximately $2,500.00.

After Allison arranged and paid for picking up the first shipment in Indiana, plaintiff continued to breach the terms of the purchase agreement by delivering the next six shipments late. Despite my protests, plaintiff unilaterally revised the delivery dates of the subsequent six shipments from commencing November 13 and ending November 27, 1995, to six shipments commencing on November 20 and ending December 8, 1995.

Moreover, plaintiff did not even meet its own unilaterally revised delivery dates. Allison did not receive the fourth shipment until December 8, 1995, approximately 21 days after the originally agreed upon delivery date of November 17, 1995, and approximately 11 days after plaintiff's unilaterally revised delivery date of November 27, 1995. The fifth shipment was not received until December 4, 1995, approximately 14 days after the originally agreed upon delivery date of November 20, 1995, and approximately 4 days after plaintiff's unilaterally revised delivery date of November 30, 1995. The sixth shipment was not received until December 7, 1994, approximately 15 days after the originally agreed upon delivery date of November 22, 1995, and approximately 3 days after the plaintiff's unilaterally revised delivery date of December 4, 1995. Finally, the seventh shipment was not received until December 11, 1995, approximately 14 days after the originally agreed upon delivery date of November 27, 1995, and approximately 3 days after the plaintiff's unilaterally revised delivery date of December 8, 1995.

As a result of these late shipments, Allison incurred substantial costs as it attempted to mitigate the damages it would sustain as a result of plaintiff's breach. Plaintiff's delayed deliveries caused Allison to breach some of its contracts with its customers and to nearly breach a large number of its other contracts. In order to decrease the number of lost customers, Allison employed various methods to satisfy its customers--despite plaintiff's breach--all of which cost Allison substantial sums of money. Allison had to offer discounts to many of its customers in return for them accepting smaller or delayed shipments of cassettes. Moreover, I also scrambled to obtain cassettes from other sources to make up for the shortfall caused by plaintiff's delayed shipments. For example, I contacted Allison customers which had recently received large shipments of Allison cassettes and repurchased a large number of cassettes from their inventories so that I could then have then delivered to the customers who were supposed to receive the cassettes Allison was purchasing from plaintiff. Finally, Allison also paid increased shipping and handling costs in order to decrease the amount of turn around time between the time Allison received plaintiff's delayed deliveries and when the cassettes were shipped to Allison's customers. These efforts to mitigate the effect of plaintiff's delayed performance costs Allison approximately $20,000.00.

Despite these efforts to fulfill customer demand, many customers simply canceled their orders with Allison when Allison could not fulfill the orders in a timely manner as a result of plaintiff's delayed performance. Allison lost approximately $250,000.00 to $500,000.00 in sales orders, and profits of approximately $40,000.00 to $80,000.00.

Plaintiff also failed to ship the second and third deliveries in plain packaging as originally agreed. Since Allison was purchasing these cassettes for immediate resale the original purchase order called for plaintiff to ship the cassettes in brick-pak or white boxes, not Auriga packaging. However, in the same facsimile in which plaintiff unilaterally revised the delivery dates, it unilaterally informed us that the second and third deliveries of the cassettes would bear Auriga markings. As a result, Allison had to spend approximately $8,000.00 to open and repackage the cassettes upon receiving them from plaintiff.

During Allison's dealings with plaintiff, I continually attempted to obtain redress from the plaintiff. I called plaintiff's representative Schleich numerous times to complain about the poor treatment Allison was receiving and about the increased costs Allison was sustaining as a result of plaintiff's unilateral revisions of the purchase order, mis-packaging and delayed deliveries. Many times Schleich would simply refuse to take or return my calls. The few times I was able to speak to him, he would simply inform me that there was nothing more that he or the plaintiff could or would do and I should take whatever action I felt was necessary.

Additionally, a large number of the cassette shells delivered by plaintiff were of inferior and substandard quality. A number of Allison's customers voiced complaints that the tape only "ran" through the cassette shells with difficulty. In fact, plaintiff had to eventually replace a large number of cassette shells which Allison had sold and delivered to Cinran. As a result of these customer complaints, Allison has suffered the loss of substantial good will with its customers.

Since Allison has incurred substantial costs as a result of plaintiff's non-conforming performance in delivering the cassettes, it has meritorious counterclaims which would significantly diminish or negate plaintiff's claim. Accordingly, an award of summary judgment in favor of plaintiff is not warranted and this court should grant Allison's request to amend its answer. (See Exhibit B: Proposed amended answer).

The proposed counterclaim alleged:

4. On or about November 6, 1998, defendant and plaintiff entered into a contract in which plaintiff agreed to deliver cassette shells at an agreed price by shipping the cassette shells in plain packaging in seven deliveries to defendant's warehouse in Harrison, New Jersey, with the seven shipments to be completed on November 10, 13, 15, 17, 20, 22 and 27, 1995.

5. Plaintiff failed to meet the requirements of the contract in that it performed in a nonconforming manner.

6. Plaintiff did not deliver the first shipment to defendant's warehouse in Harrison, New Jersey. Instead, defendant had to pick up the cassette shells itself from a warehouse in Indiana.

7. Plaintiff's mis-packaged the second and third shipments. Instead of being in plain packaging the cassette shells bore Auriga markings. Defendant had to open and repackage the cassette shells.

8. Plaintiff continually delivered the shipments late. The fourth shipment was not delivered until December 8, 1995. The fifth shipment was not delivered until December 4, 1995. The sixth shipment was not delivered until December 7, 1995. The seventh shipment was not delivered until December 11, 1995.

9. As a result of plaintiff's nonconforming performance, defendant lost customers and incurred substantial costs in attempting to mitigate the damages caused by plaintiff.

10. By reason of the foregoing, defendant has been incurred in an amount to be determined at trial, but estimated to be approximately $110,000.00, exclusive of interest and costs.

To see this article in a full-page format please link to http://jccc.wld.com/article-01.htm#ii