LEHMANN COLORADO MEATS, INC. v. RIDGEFIELD FARMS, LLC

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0259-04T50259-04T5

LEHMANN COLORADO MEATS, INC.,

Plaintiff-Respondent,

v.

RIDGEFIELD FARMS, LLC,

Defendant-Appellant.

_______________________________

 

Argued November 7, 2005 - Decided

Before Judges A. A. Rodr guez, Alley and Yannotti.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, BER-L-342-03.

James Fitzgerald argued the cause for appellant (Friedman, Kates, Pearlman, and Fitzgerald, attorneys; Mr. Fitzgerald, on the brief).

Alice Beirne argued the cause for respondent (Epstein Beirne, attorneys; Ms. Beirne, on the brief).

PER CURIAM

Defendant appeals from a judgment entered on a jury verdict, which found both defendant and plaintiff liable for breach of contract. It urges that we reverse, or alternatively alter the amount of damages awarded to plaintiff, award defendant attorneys' fees and prejudgment interest, and determine that the trial court erred in allowing plaintiff to read into evidence the deposition testimony of a witness on the grounds the witness was not actually unavailable. In addition, defendant alleges the trial court erred in multiple respects by "reneging" on its promises and failing to alter the judgment.

Plaintiff, Lehmann Colorado Meats, Inc., instituted an action against defendant, Ridgefield Farms LLC, on January 14, 2003, alleging that on or about August 2, 2002, the parties entered into a contract whereby defendant agreed to sell to plaintiff various meat products at specified prices commencing August 12, 2002, through January 31, 2003. Plaintiff asserted that subsequent to the making of the contract, defendant breached it by failing to deliver the required products, and alleged that as a result of the breach, plaintiff suffered $300,000 in damages, representing the cost to plaintiff in order to "cover" for said goods.

In defendant's answer and counterclaim filed on March 26, 2003, it denied plaintiff's allegations and asserted three counterclaims against defendant. It alleged, first, that plaintiff had breached the contract entered into in August 2002, by failing to pay for products that defendant delivered to plaintiff, and second, that defendant was entitled to recovery of the reasonable value of the meat products sold to plaintiff, including interest, collection costs, and attorneys' fees. Defendant sought $133,148.37 in damages, together with interest at the rate of 1-1/2% per month and costs of collection including but not limited to attorneys fees of 33%. Defendant further alleged tortious interference with business and injury to business reputation, but the trial court dismissed this claim at the beginning of the trial.

The transactional background in this case in this suit is as follows:

Defendant allegedly is a packer of meat products, packing meat products under its own name, with its own trademark and its own brand. It sells its products to distributors, which in turn sell them to end users.

Plaintiff is a distributor of meat and meat products and is involved in selling meat and meat products to restaurants, hospitals, and cafeterias in the New York Metropolitan area.

Defendant was formed as a corporation in April 2001. Washington Beef, Inc., also a packer, supplied product to defendant and served as a clearinghouse for credit and extended credit to defendant's customers. In the early summer of 2001, defendant conducted business with plaintiff. Plaintiff completed a credit application through Washington Beef to purchase meat. The credit application calling for payment in net seven days from billing date. Plaintiff, however, altered the terms to read "seven days from date of receipt or fourteen days from invoice date."

Plaintiff submitted the credit application by fax to defendant, but submitted payment directly to Washington Beef. At trial, defendant contended that the credit application was still in effect in August 2002.

Although defendant initially obtained all its beef from Washington Beef, in August 2002, defendant entered into an agreement with Prairieland Processors Inc. (PPI), a packer based in Colorado. By contracting with PPI defendant was able to expand its line of meat products, upon which it notified its customers, including plaintiff, about its new line of products. Defendant's president Phillip Friend contacted plaintiff's president Jeffrey Lehmann and its chief operating officer, Robert Mark. Friend informed Mark that defendant could supply plaintiff with a variety of meat products and that defendant would like to do business with plaintiff.

At trial, Friend testified that during their conversation, Friend informed Mark that the credit terms of a prospective deal would be seven days with a seven-day grace period. These terms, defendant contends were essential to defendant entering into a deal with plaintiff. Defendant contends Friend told Mark that if plaintiff did not make payments in a timely fashion, defendant would have to stop selling and stop shipping the meat products.

Lehmann denied ever knowing that payment would be due in fourteen days of receipt. Mark and Friend negotiated the terms of the contract on behalf of plaintiff and defendant. Mark requested that there be something in writing recognizing the agreement between plaintiff and defendant. Defendant sent plaintiff two emails dated August 2, 2002. The first email stated that per the conversation between Friend and Mark, plaintiff:

will receive our choice peeled tenders starting the ship week of 8/12 at $6.50 delivered. Each week through the end of January 2003 Lehmann [plaintiff] will receive 125 bxs of Tenders this way. Also booked for the same time period is 50bxs of choice Export Ribs at $3.55/lb.

This is just a start. It gives us a truck rolling in there every week and the ability to add on other products Prime, Choice, Select, and No Roll products that we make.

A second e-mail from defendant explained the rebates plaintiff would receive, stating, "[a]ll Tenders on contract between RF [defendant] and L/C [plaintiff] will accrue $0.30/lb and all Export Ribs on contract will accrue $0.05/lb. The Accrual fund will be rebated to Lehmann on a monthly basis no later than the 3rd week of the month following delivery."

On August 15, 2002, defendant made the first shipment to plaintiff. The shipment contained seventy-five boxes of choice tenders and fifty boxes of ungraded or no roll tenders. Plaintiff issued a check for $94,995.88 on August 29, 2002 to defendant for the first shipment. Plaintiff, however, did not send the check on August 29, 2002, because defendant telephoned plaintiff to notify them payment on the first shipment was past due. On September 4, 2002 defendant sent a follow-up fax to plaintiff confirming that payment was due no later than September 4, 2002. The fax included defendant's FedEx account number for plaintiff to use to make payment. Defendant received payment on September 5, 2002 for the August 15, 2002 shipment. At trial, plaintiff claimed that the reason for the September 4, 2002 fax was that defendant was having a shortfall of some kind and needed payment earlier than the contract required.

On August 20, 2002 defendant sent a fax to plaintiff stating that defendant had a joint venture with PPI and informing their customers the terms of payment would be "net 7", which Mark admitted in his deposition testimony is the terminology used in the industry to mean payment is due seven days from date of invoice. Plaintiff never objected to or questioned the terms of the fax.

On September 30, 2002 defendant issued a check to plaintiff for $8,521.57 for rebates on purchases made in August.

Thereafter, defendant continued to make shipments to plaintiff until approximately November 18, 2002.

Defendant contends that plaintiff failed to make any of its payments on time. Friend testified at trial that he spoke to Mark or Lehmann on a continual basis to demand payment and to figure out a payment schedule to prevent interruption of deliveries. As a result of the late payments by plaintiff, in November 2002, defendant stopped shipping meat products to plaintiff.

Plaintiff contends that defendant failed to make full shipments between August and November and that defendant failed to comply with contract quantities. At trial, Lehmann testified that he spoke to defendant numerous times, through a Dave Ellicott, reporting that the shipments were short. Lehmann testified that Ellicott informed him that defendant would make up the shipments.

At trial, Friend admitted that defendant was aware of complaints from plaintiff that the shipments were short. Friend, however, testified that the shipments were not short but based upon plaintiff's need. According to Friend's testimony, he and Mark worked out the shipments in order to allow for flexibility for both companies. Plaintiff at trial also contended that plaintiff never received any more of the rebates it was entitled to after the September 30, 2002 check.

For the shipments made between August 15, 2002 through October 26, 2002 plaintiff's payment for shipments were made anywhere between twenty-one and forty-eight days. Plaintiff testified at trial that the terms of payment were never fourteen days. Indeed, Lehmann testified that plaintiff had between twenty and twenty-one days to make payment to defendant. The delivery slips sent along with the shipments to plaintiff all contained the term "net 7".

At trial, defendant introduced the deposition testimony of Mr. Robert Greenzeig, owner of Interstate Foods, Inc., one of plaintiff's suppliers, who stated the industry standard is that packers require distributors to pay for meat products within 7-14 days. Additionally, he testified that it is the industry standard for the packer to stop shipments if a distributor does not make timely payments.

On or about November 18, 2002, defendant stopped shipments. When defendant stopped shipments, plaintiff sought its supply of meat products from other vendors. Plaintiff paid $7.95/lb for choice tenders, $7.90 for ungraded tenders, and $3.80/lb for Export Ribs. Plaintiff continued to make payments to defendant for open invoices until December 5, 2002. Plaintiff testified that because of defendant's failure to ship product, plaintiff's cost in covering the goods was $129,724.29. Plaintiff also testified that it suffered lost profits totaling $30,000.

Plaintiff admitted that it owed at least $125,000, though plaintiff claimed that it was entitled to certain adjustments for defective products. Defendant claimed plaintiff owed the full balance of $133,148.37 plus interest and attorneys' fees.

We reverse and remand for a new trial for two reasons.

The first basis for our action is the trial judge's decision which allowed plaintiff to read at trial the deposition testimony of Robert Mark, plaintiff's Chief Operating Officer. The record indicates that defendant served a notice in lieu of subpoena upon plaintiff on June 18, 2004 and expected plaintiff to produce Mark for trial. Plaintiff did not inform defendant until the first day of trial that Mark had been fired about a month before. Plaintiff endeavored, but without success, to serve a subpoena upon Mark on July 16, 2002, the Friday before the trial was scheduled to begin. According to plaintiff, it did not attempt to serve the subpoena earlier because it expected the matter to be arbitrated and filed a motion returnable on July 16, 2002, the Friday before the trial date, seeking to compel arbitration.

Plaintiff's contentions are clearly without merit. Plaintiff had ample notice that the trial would go forward on July 19, 2002. That is precisely what the scheduling order provided. Although plaintiff made a motion to compel arbitration, that did not affect the pending trial date. In our view, the judge erred in allowing plaintiff to read the deposition testimony into the record. Mark was not "unavailable" under N.J.R.E. 804. Defendant was greatly prejudiced by this ruling because it was not afforded the opportunity to challenge Mark's assertions before the jury and his testimony went to critical issues in the case, specifically the terms of the contract.

In our view, moreover, the damage award is fundamentally flawed. Defendant correctly asserts that plaintiff failed to present sufficient competent evidence to support its damage claims. Here, the judge barred the introduction of certain invoices which plaintiff intended to use to prove that it purchased meat when defendant failed to deliver. The judge found that the invoices were not properly authenticated. Plaintiff was then permitted to introduce two charts which purportedly summarized the damage claim. However, Evidence Rule 1006, which permits the admission into evidence of certain summaries of documents, was of no application here. There was no documentary proof to support the statements in the chart. The evidence was insufficient to prove the amount of damages with "reasonable certainty." P.F.I., Inc. v. Kulis, 363 N.J. Super. 292, 300 (App. Div. 2003), certif. denied, 178 N.J. 453 (2004).

These errors were severely prejudicial and tainted the entire trial. We therefore reverse and remand for a new trial.

 

Whether defendant is a packer was a contested issue at trial. Plaintiff contends that defendant is a distributor of meat, not a packer, since defendant never had a place where meat was cut, nor owned a slaughterhouse, nor had employees who performed meatpacking functions. Defendant contends otherwise.

Defendant contends that there are multiple documents stating that payment was due in fourteen days. The credit application, the August 20, 2002 fax, the September 4, 2002 fax, plaintiff's first payment dated August 29, 2002, and the August 2, 2002 email pertaining to rebates.

Plaintiff alleges it was unable to cover its entire shortfall.

Plaintiff contends it stopped making payments on the remaining invoices because plaintiff knew defendant would owe it a large credit because of the failure to deliver.

(continued)

(continued)

11

A-0259-04T5

November 28, 2005